Document
050000002000002000002000000050000002018-12-3125000000false--12-31FY20170000918160YesLarge Accelerated FilerNoYesAKS2019-12-312019-12-312019-12-312020-12-312018-01-012018-01-012018-01-012018-01-010.010.014500000004500000003147395003157827643141605573148845690.120.11The Credit Facility contains common restrictions, including limitations on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliate transactions. The Credit Facility requires that we maintain a minimum fixed charge coverage ratio of one to one if availability under the Credit Facility is less than $150.0. The Credit Facility?s current availability significantly exceeds $150.0. Availability is calculated as the lesser of the total commitments under the Credit Facility or eligible collateral after advance rates, less outstanding revolver borrowings and letters of credit. We secure our Credit Facility obligations with our inventory and accounts receivable, and the Credit Facility?s availability fluctuates monthly based on the varying levels of eligible collateral.0.1080.0830.1080.0710.0832023-07-152019-11-152022-04-152027-03-152020-05-152021-10-012025-10-152028-06-012019-11-152027-03-142025-03-142025-10-142023-07-152022-03-142018-09-302020-10-142019-07-142024-03-142021-09-302022-10-142021-07-142023-03-142019-09-302021-10-142020-07-142025-03-152024-03-152022-10-152021-07-152017-10-012023-03-152019-10-012021-10-152020-07-152022-03-152018-10-012020-10-152019-07-152.860.030.000.000.002.860.030.0284000008400000840000069500000000321000002022-09-3050730000077000006200000201320072023-12-312037-12-3100P2YP3Y0.7590.9150.6400.6760.9030.6150.0170.0180.0220.0100.0120.016P6Y7MP3Y1MP6Y8MP3Y3MP6Y6MP3Y4M2027-12-312028-12-3157894389819550730000077000006200000 0000918160 2017-01-01 2017-12-31 0000918160 aks:PrecisionPartnersHoldingCompanyMember 2017-01-01 2017-12-31 0000918160 2017-06-30 0000918160 2018-02-09 0000918160 2015-01-01 2015-12-31 0000918160 2016-01-01 2016-12-31 0000918160 2017-12-31 0000918160 2016-12-31 0000918160 aks:SuncokeMiddletownMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2016-12-31 0000918160 aks:OtherVariableInterestEntitiesMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2016-12-31 0000918160 aks:SuncokeMiddletownMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2017-12-31 0000918160 aks:OtherVariableInterestEntitiesMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2017-12-31 0000918160 aks:SuncokeMiddletownMember 2017-01-01 2017-12-31 0000918160 aks:SuncokeMiddletownMember 2015-01-01 2015-12-31 0000918160 aks:AFSGHoldingsIncMember 2015-01-01 2015-12-31 0000918160 aks:SuncokeMiddletownMember 2016-01-01 2016-12-31 0000918160 us-gaap:ConsolidatedEntityExcludingVariableInterestEntitiesVIEMember 2016-01-01 2016-12-31 0000918160 2014-12-31 0000918160 us-gaap:ConsolidatedEntityExcludingVariableInterestEntitiesVIEMember 2017-01-01 2017-12-31 0000918160 2015-12-31 0000918160 us-gaap:ConsolidatedEntityExcludingVariableInterestEntitiesVIEMember 2015-01-01 2015-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2015-12-31 0000918160 us-gaap:RetainedEarningsMember 2015-01-01 2015-12-31 0000918160 us-gaap:TreasuryStockMember 2016-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2017-01-01 2017-12-31 0000918160 us-gaap:CommonStockMember 2014-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2015-01-01 2015-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2016-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2016-01-01 2016-12-31 0000918160 us-gaap:TreasuryStockMember 2017-01-01 2017-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2016-01-01 2016-12-31 0000918160 us-gaap:TreasuryStockMember 2015-01-01 2015-12-31 0000918160 us-gaap:RetainedEarningsMember 2017-12-31 0000918160 us-gaap:RetainedEarningsMember 2014-12-31 0000918160 us-gaap:CommonStockMember 2015-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-01-01 2017-12-31 0000918160 us-gaap:TreasuryStockMember 2015-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2015-01-01 2015-12-31 0000918160 us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0000918160 us-gaap:RetainedEarningsMember 2015-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2015-01-01 2015-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000918160 us-gaap:CommonStockMember 2017-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2014-12-31 0000918160 us-gaap:RetainedEarningsMember 2016-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-12-31 0000918160 us-gaap:TreasuryStockMember 2014-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2015-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2017-01-01 2017-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2016-12-31 0000918160 us-gaap:CommonStockMember 2016-01-01 2016-12-31 0000918160 us-gaap:CommonStockMember 2016-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000918160 us-gaap:TreasuryStockMember 2016-01-01 2016-12-31 0000918160 us-gaap:CommonStockMember 2017-01-01 2017-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2014-12-31 0000918160 us-gaap:TreasuryStockMember 2017-12-31 0000918160 us-gaap:NoncontrollingInterestMember 2017-12-31 0000918160 us-gaap:RetainedEarningsMember 2016-01-01 2016-12-31 0000918160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-01-01 2016-12-31 0000918160 us-gaap:AdditionalPaidInCapitalMember 2015-12-31 0000918160 aks:StainlessAndElectricalMember 2017-01-01 2017-12-31 0000918160 aks:OtherProductLinesMember 2015-01-01 2015-12-31 0000918160 aks:CarbonMember 2015-01-01 2015-12-31 0000918160 aks:CarbonMember 2016-01-01 2016-12-31 0000918160 aks:StainlessAndElectricalMember 2015-01-01 2015-12-31 0000918160 aks:OtherProductLinesMember 2017-01-01 2017-12-31 0000918160 aks:StainlessAndElectricalMember 2016-01-01 2016-12-31 0000918160 aks:OtherProductLinesMember 2016-01-01 2016-12-31 0000918160 aks:CarbonMember 2017-01-01 2017-12-31 0000918160 us-gaap:CommodityMember us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerAMember 2017-01-01 2017-12-31 0000918160 aks:DearbornWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:ForeignCustomersMember 2016-01-01 2016-12-31 0000918160 us-gaap:MachineryAndEquipmentMember us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerAMember 2016-01-01 2016-12-31 0000918160 aks:WalbridgeTubeMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsExpiringWithinOneYearMember aks:SteelworkersPensionTrustMember 2017-12-31 0000918160 us-gaap:AccountsReceivableMember us-gaap:CreditConcentrationRiskMember aks:AutomotiveMarketMember 2017-01-01 2017-12-31 0000918160 aks:AshlandWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsExpiringWithinOneYearMember aks:SteelworkersPensionTrustMember 2017-12-31 0000918160 aks:MiddletownWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsExpiringWithinOneYearMember aks:IamNationalPensionFundsNationalPensionPlanMember 2017-12-31 0000918160 us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerBMember 2016-01-01 2016-12-31 0000918160 us-gaap:MachineryAndEquipmentMember us-gaap:WeightedAverageMember 2017-01-01 2017-12-31 0000918160 aks:RockportWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:ForeignCustomersMember 2017-01-01 2017-12-31 0000918160 us-gaap:ForwardContractsMember us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:BuildingMember 2017-01-01 2017-12-31 0000918160 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerAMember 2016-01-01 2016-12-31 0000918160 us-gaap:AccountsReceivableMember us-gaap:CreditConcentrationRiskMember aks:AutomotiveMarketMember 2016-01-01 2016-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:ForeignCustomersMember 2015-01-01 2015-12-31 0000918160 us-gaap:LandImprovementsMember 2017-01-01 2017-12-31 0000918160 aks:MansfieldWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember aks:SteelworkersPensionTrustMember 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerAMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:InfrastructureAndManufacturingMarketMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:AutomotiveMarketMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:AutomotiveMarketMember 2016-01-01 2016-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:DistributorsAndConvertersMarketMember 2016-01-01 2016-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:DistributorsAndConvertersMarketMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:InfrastructureAndManufacturingMarketMember 2015-01-01 2015-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:DistributorsAndConvertersMarketMember 2015-01-01 2015-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:AutomotiveMarketMember 2015-01-01 2015-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:InfrastructureAndManufacturingMarketMember 2016-01-01 2016-12-31 0000918160 us-gaap:MachineryAndEquipmentMember us-gaap:MinimumMember 2017-01-01 2017-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerBMember 2015-01-01 2015-12-31 0000918160 us-gaap:SalesRevenueGoodsNetMember us-gaap:CustomerConcentrationRiskMember aks:MajorCustomerAMember 2015-01-01 2015-12-31 0000918160 us-gaap:OtherIntangibleAssetsMember 2017-12-31 0000918160 us-gaap:TechnologyBasedIntangibleAssetsMember 2017-12-31 0000918160 us-gaap:CustomerRelationshipsMember 2017-12-31 0000918160 us-gaap:ConstructionInProgressMember 2016-12-31 0000918160 us-gaap:BuildingMember 2016-12-31 0000918160 us-gaap:MachineryAndEquipmentMember 2016-12-31 0000918160 us-gaap:BuildingMember 2017-12-31 0000918160 aks:LandLandImprovementsAndLeaseholdsMember 2017-12-31 0000918160 aks:LandLandImprovementsAndLeaseholdsMember 2016-12-31 0000918160 us-gaap:ConstructionInProgressMember 2017-12-31 0000918160 us-gaap:MachineryAndEquipmentMember 2017-12-31 0000918160 aks:AshlandWorksHotEndMember 2016-01-01 2016-12-31 0000918160 aks:AshlandWorksHotEndMember 2015-12-31 0000918160 aks:AshlandWorksHotEndMember 2017-01-01 2017-12-31 0000918160 aks:AshlandWorksHotEndMember 2016-12-31 0000918160 aks:AshlandWorksHotEndMember 2017-12-31 0000918160 us-gaap:TechnologyBasedIntangibleAssetsMember 2017-01-01 2017-12-31 0000918160 us-gaap:MaximumMember aks:AshlandWorksHotEndMember 2017-12-31 0000918160 aks:SupplementalUnemploymentBenefitsMember aks:AshlandWorksHotEndMember 2015-10-01 2015-12-31 0000918160 us-gaap:CustomerRelationshipsMember 2017-01-01 2017-12-31 0000918160 aks:AshlandWorksHotEndMember 2015-10-01 2015-12-31 0000918160 aks:AshlandWorksHotEndMember 2017-10-01 2017-12-31 0000918160 aks:EquipmentIdlingAndOtherCostsMember aks:AshlandWorksHotEndMember 2015-10-01 2015-12-31 0000918160 aks:PrecisionPartnersHoldingCompanyMember 2017-08-04 0000918160 aks:PrecisionPartnersHoldingCompanyMember 2017-12-31 0000918160 aks:PrecisionPartnersHoldingCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2017-01-01 2017-12-31 0000918160 us-gaap:CostOfSalesMember 2016-01-01 2016-12-31 0000918160 aks:SpartanSteelCoatingLLCMember 2017-12-31 0000918160 aks:IronOrePelletsAgreementsMember 2017-10-01 2017-12-31 0000918160 aks:IronOrePelletsAgreementsMember 2016-10-01 2016-12-31 0000918160 aks:GlobalSettlementAgreementMember 2016-10-07 2016-10-07 0000918160 us-gaap:OtherNonoperatingIncomeExpenseMember aks:MagnetationLlcMember 2015-01-01 2015-12-31 0000918160 aks:MagnetationLlcMember 2015-03-31 0000918160 us-gaap:CostOfSalesMember 2017-01-01 2017-12-31 0000918160 us-gaap:CostOfSalesMember 2015-01-01 2015-12-31 0000918160 aks:MagnetationLlcMember 2015-01-01 2015-03-31 0000918160 aks:RockportRollShopLLCMember 2017-12-31 0000918160 aks:DelacoProcessingLLCMember 2017-12-31 0000918160 aks:CombinedMetalsofChicagoLLCMember 2017-12-31 0000918160 us-gaap:DomesticCountryMember us-gaap:ResearchMember 2017-12-31 0000918160 us-gaap:ScenarioForecastMember 2018-01-01 2018-01-01 0000918160 us-gaap:DomesticCountryMember 2017-12-31 0000918160 us-gaap:StateAndLocalJurisdictionMember aks:OperatingLossandTaxCreditCarryforwardsMember 2017-12-31 0000918160 aks:ChangeInDeferredAssetsRelatedToOtherComprehensiveIncomeMember 2017-01-01 2017-12-31 0000918160 aks:IncludedInIncomeTaxExpenseBenefitMember 2016-01-01 2016-12-31 0000918160 aks:EffectoftaxratechangesMember 2016-01-01 2016-12-31 0000918160 aks:EffectoftaxratechangesMember 2015-01-01 2015-12-31 0000918160 aks:ChangeInDeferredAssetsRelatedToOtherComprehensiveIncomeMember 2015-01-01 2015-12-31 0000918160 aks:EffectoftaxratechangesMember 2017-01-01 2017-12-31 0000918160 aks:IncludedInIncomeTaxExpenseBenefitMember 2015-01-01 2015-12-31 0000918160 aks:ChangeInDeferredAssetsRelatedToOtherComprehensiveIncomeMember 2016-01-01 2016-12-31 0000918160 aks:IncludedInIncomeTaxExpenseBenefitMember 2017-01-01 2017-12-31 0000918160 us-gaap:DomesticCountryMember us-gaap:ResearchMember us-gaap:LatestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:StateAndLocalJurisdictionMember us-gaap:EarliestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:DomesticCountryMember us-gaap:EarliestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:DomesticCountryMember aks:OperatingLossandTaxCreditCarryforwardsMember us-gaap:EarliestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:DomesticCountryMember us-gaap:ResearchMember us-gaap:EarliestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:DomesticCountryMember aks:OperatingLossandTaxCreditCarryforwardsMember us-gaap:LatestTaxYearMember 2017-01-01 2017-12-31 0000918160 us-gaap:StateAndLocalJurisdictionMember aks:OperatingLossandTaxCreditCarryforwardsMember us-gaap:EarliestTaxYearMember 2017-01-01 2017-12-31 0000918160 aks:SeniorNotesDueMay2020Member 2017-03-31 0000918160 aks:SeniorNotesDueOctober2021Member 2017-12-31 0000918160 aks:SeniorNotesDueMarch2027Member 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodOneMember aks:SeniorSecuredNotesDueJuly2023Member 2017-01-01 2017-12-31 0000918160 aks:SeniorNotesDueApril2022Member 2017-06-30 0000918160 aks:SeniorSecuredNotesDueJuly2023Member 2017-12-31 0000918160 aks:ExchangeableSeniorNotesDueNovember2019Member 2016-12-31 0000918160 us-gaap:RevolvingCreditFacilityMember 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodFiveMember aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 aks:ExchangeableSeniorNotesDueNovember2019Member 2017-01-01 2017-12-31 0000918160 aks:SeniorNotesDueMay2020Member 2017-01-01 2017-12-31 0000918160 aks:ExchangeableSeniorNotesDueNovember2019Member 2012-11-02 2012-11-30 0000918160 aks:ExchangeableSeniorNotesDueNovember2019Member us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodTwoMember aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 aks:ExchangeableSeniorNotesDueNovember2019Member 2017-12-31 0000918160 aks:SeniorNotesDueOctober2025Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodThreeMember aks:SeniorSecuredNotesDueJuly2023Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodTwoMember aks:SeniorNotesDueOctober2025Member 2017-01-01 2017-12-31 0000918160 aks:SeniorNotesDueOctober2025Member 2017-12-31 0000918160 aks:SeniorNotesDueApril2022Member 2017-01-01 2017-12-31 0000918160 aks:UnsecuredIndustrialRevenueBondsMember 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodThreeMember aks:SeniorNotesDueOctober2025Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodFourMember aks:SeniorSecuredNotesDueJuly2023Member 2017-01-01 2017-12-31 0000918160 aks:SecuredIndustrialRevenueBondsMember 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodFourMember aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodFourMember aks:SeniorNotesDueOctober2025Member 2017-01-01 2017-12-31 0000918160 aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 aks:SeniorSecuredNotesDueDecember2018Member 2016-01-01 2016-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodTwoMember aks:SeniorNotesDueOctober2021Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodOneMember aks:SeniorNotesDueOctober2021Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodThreeMember aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodThreeMember aks:SeniorNotesDueOctober2021Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodTwoMember aks:SeniorSecuredNotesDueJuly2023Member 2017-01-01 2017-12-31 0000918160 aks:ReplacedCreditFacilityMember 2017-08-31 0000918160 us-gaap:RevolvingCreditFacilityMember 2016-12-31 0000918160 aks:SeniorNotesDueMay2020Member 2017-12-31 0000918160 aks:SeniorNotesDueApril2022Member 2016-12-31 0000918160 aks:SeniorNotesDueApril2022Member 2017-12-31 0000918160 aks:SeniorNotesDueMarch2027Member 2017-09-30 0000918160 aks:IndustrialRevenueBondsMember 2016-12-31 0000918160 aks:IndustrialRevenueBondsMember 2017-12-31 0000918160 aks:SeniorSecuredNotesDueJuly2023Member 2016-12-31 0000918160 aks:SeniorNotesDueOctober2021Member 2016-12-31 0000918160 aks:SeniorNotesDueMay2020Member 2016-12-31 0000918160 aks:SeniorNotesDueOctober2025Member 2016-12-31 0000918160 aks:SeniorNotesDueMarch2027Member 2016-12-31 0000918160 aks:SeniorSecuredNotesDueJuly2023Member 2017-04-01 2017-06-30 0000918160 aks:SeniorNotesDueOctober2021Member 2017-01-01 2017-12-31 0000918160 us-gaap:RevolvingCreditFacilityMember 2017-01-01 2017-12-31 0000918160 aks:IndustrialRevenueBondsMember 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodOneMember aks:SeniorNotesDueOctober2025Member 2017-01-01 2017-12-31 0000918160 us-gaap:DebtInstrumentRedemptionPeriodOneMember aks:SeniorNotesDueMarch2027Member 2017-01-01 2017-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2017-01-01 2017-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2015-01-01 2015-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2016-01-01 2016-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-01-01 2017-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2016-01-01 2016-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2015-01-01 2015-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2015-12-31 0000918160 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2015-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:EAFEEquitySecuritiesCommonCollectiveTrustsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:USEquitySecuritiesCommonCollectiveTrustsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:USTreasurySecuritiesMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:OtherAggregatedInvestmentsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:OtherAggregatedInvestmentsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:USTreasurySecuritiesMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:GlobalEquityInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:USEquitySecuritiesCommonCollectiveTrustsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.CorporateFixedIncomeSecuritiesCommonCollectiveTrustsMemberMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:EAFEEquitySecuritiesCommonCollectiveTrustsMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:OtherInvestmentCompaniesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.CorporateFixedIncomeSecuritiesCommonCollectiveTrustsMemberMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:GlobalFixedIncomeInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 aks:U.S.HighYieldCorporateFixedIncomeSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 aks:USEquitySecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember 2016-12-31 0000918160 us-gaap:EquitySecuritiesMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:ChangeInAssumptionsForPensionPlansMember us-gaap:PensionPlansDefinedBenefitMember 2017-01-01 2017-12-31 0000918160 aks:ZanesvilleWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember aks:IamNationalPensionFundsNationalPensionPlanMember 2017-12-31 0000918160 aks:ButlerWorksMember us-gaap:WorkforceSubjectToCollectiveBargainingArrangementsMember aks:IamNationalPensionFundsNationalPensionPlanMember 2017-12-31 0000918160 us-gaap:ChangeInAssumptionsForPensionPlansMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2016-01-01 2016-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2016-10-01 2016-12-31 0000918160 us-gaap:FixedIncomeSecuritiesMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:PensionPlansDefinedBenefitMember 2017-12-31 0000918160 us-gaap:PensionPlansDefinedBenefitMember 2016-07-01 2016-09-30 0000918160 us-gaap:PensionPlansDefinedBenefitMember us-gaap:ScenarioForecastMember 2018-01-01 2018-01-01 0000918160 us-gaap:ChangeInAssumptionsForPensionPlansMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-01-01 2017-12-31 0000918160 us-gaap:ChangeInAssumptionsForPensionPlansMember us-gaap:PensionPlansDefinedBenefitMember 2016-01-01 2016-12-31 0000918160 aks:SteelworkersPensionTrustMember 2016-01-01 2016-12-31 0000918160 aks:IamNationalPensionFundsNationalPensionPlanMember 2017-01-01 2017-12-31 0000918160 aks:IamNationalPensionFundsNationalPensionPlanMember 2015-01-01 2015-12-31 0000918160 aks:IamNationalPensionFundsNationalPensionPlanMember 2016-01-01 2016-12-31 0000918160 aks:SteelworkersPensionTrustMember 2015-01-01 2015-12-31 0000918160 aks:SteelworkersPensionTrustMember 2017-01-01 2017-12-31 0000918160 aks:CapitalInvestmentCommitmentsMember 2017-12-31 0000918160 aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-01-01 2017-12-31 0000918160 aks:AntitrustCaseMember 2014-03-01 2014-03-31 0000918160 aks:ZanesvilleWorksRCRAMember 2017-12-31 0000918160 aks:MansfieldWorksMember 2017-12-31 0000918160 aks:AmbridgeWorksMember 2017-12-31 0000918160 aks:CivilPenaltyMember aks:MiddletownWorksMember 2017-12-31 0000918160 aks:DicksCreekMember 2017-12-31 0000918160 aks:AshlandCokePlantMember 2017-12-31 0000918160 aks:HamiltonPlantMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember 2016-12-31 0000918160 us-gaap:AsbestosIssueMember 2015-01-01 2015-12-31 0000918160 us-gaap:AsbestosIssueMember 2017-01-01 2017-12-31 0000918160 us-gaap:AsbestosIssueMember 2016-01-01 2016-12-31 0000918160 aks:AsbestosClaimsOfRange3Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-12-31 0000918160 aks:AsbestosClaimsWithoutSpecificDollarClaimForDamagesMember 2017-12-31 0000918160 aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-12-31 0000918160 aks:AsbestosClaimsRange2Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-12-31 0000918160 us-gaap:AsbestosIssueMember 2017-12-31 0000918160 aks:AsbestosClaimsOfRange1Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-12-31 0000918160 aks:AsbestosClaimsOfRange1Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-01-01 2017-12-31 0000918160 aks:AsbestosClaimsOfRange3Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-01-01 2017-12-31 0000918160 aks:AsbestosClaimsRange2Member aks:AsbestosClaimsWithSpecificDollarClaimForDamagesMember 2017-01-01 2017-12-31 0000918160 us-gaap:RevolvingCreditFacilityMember us-gaap:MaximumMember 2017-12-31 0000918160 2016-11-01 2016-11-30 0000918160 2016-05-04 0000918160 2016-11-01 0000918160 us-gaap:RevolvingCreditFacilityMember us-gaap:MinimumMember 2017-12-31 0000918160 2008-10-31 0000918160 2016-05-01 2016-05-31 0000918160 us-gaap:PerformanceSharesMember 2017-12-31 0000918160 us-gaap:RestrictedStockMember 2016-01-01 2016-12-31 0000918160 us-gaap:EmployeeStockOptionMember 2017-01-01 2017-12-31 0000918160 us-gaap:EmployeeStockOptionMember 2017-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MinimumMember 2017-01-01 2017-12-31 0000918160 us-gaap:EmployeeStockOptionMember 2016-01-01 2016-12-31 0000918160 us-gaap:RestrictedStockUnitsRSUMember 2017-01-01 2017-12-31 0000918160 us-gaap:PerformanceSharesMember 2017-01-01 2017-12-31 0000918160 us-gaap:RestrictedStockMember 2017-01-01 2017-12-31 0000918160 us-gaap:RestrictedStockMember 2015-01-01 2015-12-31 0000918160 us-gaap:RestrictedStockMember 2017-12-31 0000918160 us-gaap:EmployeeStockOptionMember 2016-12-31 0000918160 us-gaap:RestrictedStockMember 2016-12-31 0000918160 us-gaap:PerformanceSharesMember 2016-12-31 0000918160 us-gaap:EmployeeStockOptionMember 2015-01-01 2015-12-31 0000918160 us-gaap:PerformanceSharesMember 2015-01-01 2015-12-31 0000918160 us-gaap:PerformanceSharesMember 2016-01-01 2016-12-31 0000918160 us-gaap:RestrictedStockUnitsRSUMember 2016-01-01 2016-12-31 0000918160 us-gaap:RestrictedStockUnitsRSUMember 2015-01-01 2015-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MinimumMember 2016-01-01 2016-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MaximumMember 2016-01-01 2016-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MinimumMember 2015-01-01 2015-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MaximumMember 2015-01-01 2015-12-31 0000918160 us-gaap:EmployeeStockOptionMember us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 aks:PensionAndOpebExpenseIncomeMember 2016-01-01 2016-12-31 0000918160 aks:PensionAndOpebExpenseIncomeMember 2015-01-01 2015-12-31 0000918160 aks:PensionAndOpebExpenseIncomeMember 2017-01-01 2017-12-31 0000918160 aks:SuncokeMiddletownMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2015-01-01 2015-12-31 0000918160 aks:SuncokeMiddletownMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2017-01-01 2017-12-31 0000918160 aks:VicksmetalArmcoAssociatesMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2017-01-01 2017-12-31 0000918160 aks:SuncokeMiddletownMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2016-01-01 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel2Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel2Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel1Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:LongTermDebtMember us-gaap:FairValueInputsLevel1Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2016-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000918160 us-gaap:FairValueInputsLevel2Member us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:DerivativeFinancialInstrumentsAssetsMember us-gaap:FairValueInputsLevel2Member us-gaap:MaximumMember 2017-01-01 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2016-12-31 0000918160 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2016-12-31 0000918160 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000918160 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2017-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:CostOfSalesMember 2016-01-01 2016-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:SalesMember 2016-01-01 2016-12-31 0000918160 us-gaap:ForeignExchangeContractMember us-gaap:OtherIncomeMember 2015-01-01 2015-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:SalesMember 2017-01-01 2017-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:CostOfSalesMember 2015-01-01 2015-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:CostOfSalesMember 2017-01-01 2017-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2016-01-01 2016-12-31 0000918160 us-gaap:ForeignExchangeContractMember us-gaap:OtherIncomeMember 2017-01-01 2017-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2015-01-01 2015-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:SalesMember 2015-01-01 2015-12-31 0000918160 us-gaap:ForeignExchangeContractMember us-gaap:OtherIncomeMember 2016-01-01 2016-12-31 0000918160 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2017-01-01 2017-12-31 0000918160 currency:CAD us-gaap:ForeignExchangeContractMember 2016-12-31 0000918160 aks:ElectricityMember us-gaap:CommodityContractMember 2017-12-31 0000918160 currency:EUR us-gaap:ForeignExchangeContractMember 2017-12-31 0000918160 aks:IronOreMember us-gaap:CommodityContractMember 2017-12-31 0000918160 aks:NickelMember us-gaap:CommodityContractMember 2016-12-31 0000918160 aks:NaturalGasMember us-gaap:CommodityContractMember 2017-12-31 0000918160 aks:ZincMember us-gaap:CommodityContractMember 2017-12-31 0000918160 currency:CAD us-gaap:ForeignExchangeContractMember 2017-12-31 0000918160 aks:ElectricityMember us-gaap:CommodityContractMember 2016-12-31 0000918160 aks:IronOreMember us-gaap:CommodityContractMember 2016-12-31 0000918160 currency:EUR us-gaap:ForeignExchangeContractMember 2016-12-31 0000918160 aks:ZincMember us-gaap:CommodityContractMember 2016-12-31 0000918160 aks:NaturalGasMember us-gaap:CommodityContractMember 2016-12-31 0000918160 aks:NickelMember us-gaap:CommodityContractMember 2017-12-31 0000918160 aks:NaturalGasMember us-gaap:CommodityContractMember 2017-01-01 2017-12-31 0000918160 aks:ZincMember us-gaap:CommodityContractMember 2017-01-01 2017-12-31 0000918160 currency:CAD us-gaap:ForeignExchangeContractMember 2017-01-01 2017-12-31 0000918160 aks:ElectricityMember us-gaap:CommodityContractMember 2017-01-01 2017-12-31 0000918160 aks:RestrictedStockAndRsusMember 2016-01-01 2016-12-31 0000918160 aks:RestrictedStockAndRsusMember 2017-01-01 2017-12-31 0000918160 aks:ResearchAndInnovationCenterMiddletownOHMember 2017-01-01 2017-12-31 0000918160 aks:RestrictedStockAndRsusMember 2015-01-01 2015-12-31 0000918160 aks:ResearchAndInnovationCenterMiddletownOHMember 2015-01-01 2015-12-31 0000918160 aks:ResearchAndInnovationCenterMiddletownOHMember 2016-01-01 2016-12-31 0000918160 aks:IronOrePelletsAgreementsMember 2016-01-01 2016-12-31 0000918160 aks:IronOrePelletsAgreementsMember 2017-01-01 2017-12-31 0000918160 2016-01-01 2016-03-31 0000918160 2016-07-01 2016-09-30 0000918160 2017-01-01 2017-03-31 0000918160 2017-04-01 2017-06-30 0000918160 2016-10-01 2016-12-31 0000918160 2017-10-01 2017-12-31 0000918160 2016-04-01 2016-06-30 0000918160 2017-07-01 2017-09-30 0000918160 us-gaap:GuarantorSubsidiariesMember 2015-01-01 2015-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2015-01-01 2015-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2015-01-01 2015-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2015-01-01 2015-12-31 0000918160 us-gaap:ParentCompanyMember 2015-01-01 2015-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2015-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2015-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2014-12-31 0000918160 us-gaap:ParentCompanyMember 2015-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2014-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2014-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2014-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2015-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2015-12-31 0000918160 us-gaap:ParentCompanyMember 2014-12-31 0000918160 us-gaap:ParentCompanyMember 2017-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2017-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2017-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2017-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2017-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2016-01-01 2016-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2016-01-01 2016-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2016-01-01 2016-12-31 0000918160 us-gaap:ParentCompanyMember 2016-01-01 2016-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2016-01-01 2016-12-31 0000918160 us-gaap:ParentCompanyMember 2016-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2016-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2016-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2016-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2016-12-31 0000918160 us-gaap:GuarantorSubsidiariesMember 2017-01-01 2017-12-31 0000918160 us-gaap:ConsolidationEliminationsMember 2017-01-01 2017-12-31 0000918160 us-gaap:SubsidiaryIssuerMember 2017-01-01 2017-12-31 0000918160 us-gaap:NonGuarantorSubsidiariesMember 2017-01-01 2017-12-31 0000918160 us-gaap:ParentCompanyMember 2017-01-01 2017-12-31 iso4217:USD xbrli:shares aks:employees xbrli:pure iso4217:USD xbrli:shares aks:defendants utreg:Rate aks:claims-lawsuits aks:plaintiffs utreg:MMBTU iso4217:CAD iso4217:EUR utreg:MW utreg:t utreg:lb
                   


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2017
OR
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from        to         
Commission File No. 1-13696
AK STEEL HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
31-1401455
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
9227 Centre Pointe Drive, West Chester, Ohio
 
45069
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (513) 425-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class 
 
Name of Each Exchange on Which Registered
Common Stock $0.01 Par Value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes  ☐ No  

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes    No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
Smaller reporting company
 
Emerging growth company
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. Yes No

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934.  Yes  ☐  No  ☒

Aggregate market value of the registrant’s voting stock held by non-affiliates at June 30, 2017: $2,056,142,010
There were 315,283,596 shares of common stock outstanding as of February 9, 2018.

DOCUMENTS INCORPORATED BY REFERENCE
The information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and incorporated by reference from, the registrant’s definitive proxy statement for the annual meeting of stockholders (the “2018 Proxy Statement”), which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2017.
 
 
 
 
 


                   


AK Steel Holding Corporation
Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

-i-

Table of Contents

(Dollars in millions, except per share and per ton amounts or as otherwise specifically noted)

PART I

Item 1.
Business.

Overview

AK Steel Holding Corporation (“AK Holding”) was formed under the laws of Delaware in 1993. Through its wholly owned subsidiary, AK Steel Corporation (“AK Steel”), it is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, electrical power generation and distribution markets. AK Holding’s subsidiaries also provide customer solutions with carbon and stainless steel tubing products, tool design, hot- and cold-stamped steel components and assemblies. AK Steel is the successor to Armco Inc., and has built upon Armco’s rich history of creating leading-edge steel innovations since its formation in 1899. Unless the context indicates otherwise, references to “we,” “us” and “our” refer to AK Holding and its subsidiaries.

Our mission is to create innovative, high-quality steel solutions for our customers in a safe, responsible and profitable manner, and our key values of safety, quality, productivity and innovation, along with environmental responsibility and sustainability, are the foundation of our mission. Our approximately 9,200 employees at manufacturing operations across seven states in the eastern U.S., as well as in Canada and Mexico, continue our legacy of innovation and operational excellence across markets and within our product portfolios to meet and surpass our customers’ needs for high-value steel products. We are the only steelmaker in North America that can produce all three major categories of flat-rolled steels—carbon, stainless and electrical. In 2017, we enhanced our portfolio of steel solutions by acquiring PPHC Holdings, LLC (“Precision Partners”), which provides advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies for the automotive market. In 2014, we acquired Severstal Dearborn, LLC, which primarily consisted of the integrated steelmaking assets located in Dearborn, Michigan, and the Mountain State Carbon, LLC cokemaking facility located in Follansbee, West Virginia.

Customers and Markets

We target customers who require the most technically demanding, highest-quality steel products, precise “just-in-time” delivery, technical support and product development assistance. Our enhanced product quality and delivery capabilities, as well as our emphasis on collaborative customer technical support and product planning, are critical factors in our ability to serve our customer markets. Our strategy is to focus on markets for our steel products that deliver higher margins, where possible, and reduce amounts sold into the lower margin steel spot markets, which have experienced substantial volatility in pricing over the past several years primarily as a result of the impact of low-priced, unfairly traded imports of foreign steel.

We sell our products to customers in three broad market categories: (i) automotive; (ii) infrastructure and manufacturing; and (iii) distributors and converters. The following table presents the percentage of our net sales to each of these markets:
Market
 
2017
 
2016
 
2015
Automotive
 
65
%
 
66
%
 
60
%
Infrastructure and Manufacturing
 
16
%
 
16
%
 
16
%
Distributors and Converters
 
19
%
 
18
%
 
24
%

We sold approximately 70% of our flat-rolled steel shipments in 2017 under fixed base price contracts. These contracts are typically for one year and expire at various times throughout the year. Some of these contracts have a surcharge mechanism that passes through certain changes in input costs. We sold the remainder of our flat-rolled steel shipments in 2017 into the spot market at prevailing market prices or under annual contracts that have pricing provisions that are typically linked to a steel index with price adjustments based on a previous monthly or quarterly reference point.

Automotive Market

The automotive industry is our core market. We aim to address the principal needs of major automotive manufacturers and their suppliers, as we specialize in producing hard-to-make, high-quality steel products combined with demanding delivery performance, customer technical support and collaborative efforts to develop breakthrough solutions to help our customers meet their product requirements. In addition, many competitors do not have the capability to supply all of the products that we make for our automotive customers, such as steel for exposed automotive applications, the most advanced grades of advanced high strength steels (“AHSS”) and value-added stainless chrome products. The exacting requirements for servicing the automotive market generally enable us to obtain higher selling prices than sales of more commodity types of carbon and stainless steels to other markets.

- 1-

Table of Contents


In light of the automotive market’s importance to us, North American light vehicle production has a significant impact on our total sales and shipments. North American light vehicle production for 2017 declined slightly to approximately 17.1 million units, representing a 3% decrease from the prior year. However, production declined more in the United States and Canada, where most of our steel is used. Demand for SUVs, crossovers and larger vehicles continued to increase while demand for smaller sedans and compact cars declined, and we benefited from intentionally targeting larger vehicle platforms to take advantage of the trend. In addition to benefiting from our exposure to consumers’ strong demand for larger vehicles, these vehicles also typically contain a higher volume of steel than smaller sedans and compact cars, providing us the opportunity to sell a greater proportion of our steel products to our automotive customers. Reflecting our concentration in the automotive industry, Ford Motor Company accounted for 12% of our net sales in each of 2017 and 2016, with FCA US LLC (an affiliate of Fiat Chrysler Automobiles N.V.) accounting for 11% of our net sales in 2016 but less than 10% of net sales in 2017. No other customer represented more than 10% of our net sales in either year.

Automotive manufacturers are under pressure to achieve heightened federally mandated fuel economy standards through 2025 (the Corporate Average Fuel Economy, or “CAFE,” standards). The CAFE standards generally require automobile manufacturers to meet an average fuel economy goal of 54.5 miles per gallon across the fleet of vehicles they produce by the year 2025, with certain milestones to be met in interim periods. As a result, our automotive customers are currently exploring various avenues for achieving the standards, including lightweighting of components and developing more efficient engines. Lightweighting efforts include testing alternatives to traditional carbon steels, such as AHSS, aluminum and other materials. This could reduce the aggregate volume of steel consumed by the automotive industry and impact our share of that volume. However, we believe there will be an increase in the demand for current and next-generation AHSS and our AHSS and other innovative steels will command values that will be margin enhancing. Therefore, we are working very closely with our automotive customers and their suppliers to develop innovative solutions using our developments in lightweighting, efficiency, strength, ductility and formability across our extensive product portfolio, in combination with our stamping capabilities. We are also working with our customers to develop heat-resistant steels for exhaust systems that can accommodate new engines running at higher temperatures to increase fuel economy.

Automotive manufacturers have also been increasing their development of hybrid/electric vehicles (“H/EVs”) in order to respond to the CAFE standards and growing customer acceptance of H/EVs. Many motors used in H/EVs being sold in the U.S. today are imported from foreign suppliers, but a trend toward local sourcing and manufacturing appears to be underway. We believe our strong foundation in electrical steels and collaboration with automotive manufacturers will provide us with an advantage in this market as it grows and matures in the future.

Infrastructure and Manufacturing Market

The infrastructure and manufacturing market primarily represents sales to manufacturers of power transmission and distribution transformers, who produce equipment for the electrical grid, as well as manufacturers of heating, ventilation and air conditioning equipment and appliances. Domestic construction activity and the replacement of aging infrastructure directly affects sales of our carbon, stainless and electrical steel products, particularly for grain-oriented electrical steel (“GOES”). Housing starts in the U.S. improved approximately 2% over the prior year, and we expect a general lift in demand for a variety of our steel products as new construction accelerates. Over a longer timeframe, we believe that the growth of H/EVs may drive higher demand for GOES to use in the electrical infrastructure necessary to support the charging needs for this additional demand for electricity.

In January 2016, new higher efficiency standards for electrical distribution transformers went into effect in the United States, which strengthened the domestic demand for GOES products. However, electrical steel pricing declined in many international markets, which resulted in GOES imports into the U.S. doubling in 2017 from 2016 and suppressing domestic electrical steel pricing in 2017. We continue to assess various alternatives to ensure that foreign producers of GOES are required to comply with U.S. trade laws, including encouraging the vigorous enforcement of existing laws and regulations.

Distributors and Converters Market

Steel distributors and converters typically source from the commodity carbon, stainless and electrical spot markets. Demand and pricing can be highly dependent on a variety of factors outside of our control, including global and domestic capacity of commodity steel products, the relative health of countries’ economies and whether they are consuming or exporting excess steel capacity, the nature of international trade agreements and international currencies, in addition to other factors, and therefore are subject to a high degree of volatility. Because of this volatility and our strategy to rationalize sales of unprofitable business, we have been reducing our exposure to this market.


- 2-

Table of Contents

Geographic Presence

We sell our carbon steel products principally to customers in North America, and we sell our electrical and stainless steel products primarily in North America and Europe. Our customer base is geographically diverse and there is no single country outside the U.S. where our sales are material compared to our total net sales. Our material long-lived assets are located in the United States and Canada. The following shows net sales by geographic area and as a percentage of worldwide net sales:
 
 
2017
 
2016
 
2015
Geographic Area
 
Net Sales
 
%
 
Net Sales
 
%
 
Net Sales
 
%
United States
 
$
5,453.4

 
90
%
 
$
5,226.9

 
89
%
 
$
5,837.2

 
87
%
Foreign countries
 
627.1

 
10
%
 
655.6

 
11
%
 
855.7

 
13
%
Total
 
$
6,080.5

 
100
%
 
$
5,882.5

 
100
%
 
$
6,692.9

 
100
%

Research, Innovation and Product Development

Our vision is to create innovative steel products and processes that surpass our customers’ needs today and for the future. Our product portfolio includes all the major categories of flat-rolled steel—carbon, stainless and electrical—and carbon and stainless tubular products. We are unwavering in our quality expectations, and we take a planned approach to continuously improve our products, processes and services. This approach is key to our strategic partnerships with our customers and earns awards from them, like the “Raw Material Supplier of the Year” award for 2017 from FCA US LLC. The award recognizes companies that have shown extraordinary commitment to innovation, quality, warranty, cost, delivery and FCA’s foundational principles, and we were the only steel company to receive the award in 2017.

Providing new, innovative products and breakthrough solutions is a strategic priority, as we believe differentiation of higher value carbon, stainless and electrical steels to meet challenging applications enables us to maintain and enhance our margins. We conduct a broad range of research and development activities aimed at improving existing products and developing new products, and our tradition of leading steel innovation has produced a highly diversified flat-rolled steel product line. In recent years, we have increased our historic commitment to research and development with greater investment in research and innovation, both in personnel and capabilities. To support the cutting-edge efforts of our researchers and engineers, in 2016 we opened our new, state-of-the-art Research and Innovation Center in Middletown, Ohio.

Carbon Steel

We sell flat-rolled carbon steel products, consisting of premium-quality coated, cold-rolled, and hot-rolled carbon steel products, primarily to automotive manufacturers and their suppliers, as well as to customers in the infrastructure and manufacturing market. We also sell carbon steel products to distributors, service centers and converters, who may further process these products before reselling them. We are particularly focused on AHSS for the automotive market, and we produce virtually every AHSS grade that our customers currently need. Our automotive customers have incorporated into their products our AHSS grades, such as Dual Phase 780 and 980, for both stamped and roll-formed parts. In addition, we are currently the only domestic steel company that is marketing a groundbreaking third-generation AHSS product, which has unparalleled strength and formability attributes that may give automotive manufacturers unique opportunities for designing future vehicle platforms.

Looking forward, we have developed the next generation of AHSS with even greater strength and formability, and we believe that our addition of Precision Partners dramatically accelerates our efforts to drive adoption of our innovative steel products by automotive manufacturers and their Tier 1 suppliers. Our research and technical experts, along with Precision Partners’ engineers, have already begun numerous collaboration projects aimed at achieving this goal, as Precision Partners’ expertise in tool design and stamping capabilities has allowed us to deliver to customers fully formed prototypes of automotive components utilizing our innovative steel products. As such, we are now able to provide true component solutions through prototype automotive parts, rather than attempting to showcase our advanced steels to customers through computer models and flat-rolled steel samples, as in the past. This approach has and will continue to demonstrate to customers that they can significantly lightweight automotive parts on an accelerated timeline and in a cost-effective manner by using our high-strength, highly formable grades of steel in place of traditional lower-strength grades. In addition, these collaborative projects are enhancing Precision Partners’ knowledge and experience in tool design and build, and stamping of new, advanced grades of steel, enabling it to provide expert solutions to automotive customers now and in the future.

Press-Hardenable Steel

We continue to develop innovative press-hardenable steel (“PHS”) products for hot-stamping applications that achieve lightweighting solutions for our customers. Our ULTRALUME® PHS is an aluminized Type 1 heat-treatable boron steel our customers depend on when they require high-strength parts with complex geometries. These steels enable automotive manufacturers to reduce vehicle

- 3-

Table of Contents

weight while continuing to keep pace with critical safety requirements. In addition, our acquisition of Precision Partners, which provides hot-stamping and advanced-engineered solutions and tool design and build solutions to automotive customers, strategically advances our mission to innovate in the high-growth automotive lightweighting space and helps enhance our position in hot-stamping technology.

Third-Generation Advanced High-Strength Steel

We continue to push our innovation efforts toward groundbreaking steel technologies. Our NEXMET™ 440EX product is intended for automotive manufacturers to use in surface-critical, exposed auto body panels. We introduced our NEXMET 1000 and NEXMET 1200 AHSS products to enable our customers to achieve significant lightweighting in their automobiles’ unexposed structural components. NEXMET 1200, for example, has better global formability than conventional dual phase 600 steel, at twice the strength level. These AHSS products allow automotive engineers to design lightweight parts that meet rigorous service and safety requirements. We supplied demonstration samples of coated NEXMET 1000 and NEXMET 1200 AHSS products to numerous automotive customers in 2017 as a key step in the material qualification process. The NEXMET family of steels helps our customers achieve vehicle weight savings for ambitious fuel efficiency standards while avoiding significant capital costs required to re-design production facilities to use alternative materials in their vehicles. We introduced these solutions after completing a strategically vital upgrade of our state-of-the-art continuous galvanizing line at our Dearborn Works facility. Enhanced furnace technology and modifications to the line’s configuration expanded the line’s capabilities to enable it to also operate as a continuous anneal line.

We believe the combination of Precision Partners’ cold-stamping and advanced die-making capabilities, AK Tube LLC’s (“AK Tube”) advanced tubemaking capabilities and AK Steel’s new product introductions will enhance our ability to deliver innovative, lightweighting solutions for our customers. We anticipate that 3rd Gen AHSS products with high strength and formability will enable automotive manufacturers opportunities to stamp and form lightweight parts using traditional manufacturing methods, at a lower cost than aluminum or other materials.

Our innovation initiatives include collaborations with other companies, such as The NanoSteel Company. During 2016, we delivered NanoSteel® NXG™ 1200, a third-generation, advanced high-strength steel (“3rd Gen AHSS”), to several automotive manufacturers for testing and evaluation. This 3rd Gen AHSS solution, produced at our facilities using proprietary production methods, possesses a unique combination of high ultimate tensile strength and high material formability that we believe represents a leap in performance over many other AHSS products.

Specialty Stainless and Electrical Steel

We continue to develop new and improved specialty stainless and electrical steels for expanding applications in the automotive, infrastructure and manufacturing, and other markets. We are working with our automotive customers and their exhaust system suppliers to develop new stainless steels for exhaust systems that must support engines running at higher temperatures that are needed to achieve increased fuel economy. Our new steels’ capabilities demonstrate improved thermal fatigue and corrosion resistance. We are also developing innovative solutions for customers in other markets. For example, we are developing steels with specialized finishes and colors to provide differentiation and cost savings solutions for our customers in the architectural and appliance markets.

We are a global leader in producing the highest-quality electrical steel products, and our electrical steels are among the most energy efficient in the world. We sell our electrical steel products, which are iron-silicon alloys with unique magnetic properties, primarily to manufacturers of power transmission and distribution transformers and electrical motors and generators, in the infrastructure and manufacturing markets. These customers desire the highest-quality electrical steels that provide the low core loss and high permeability required for more efficient and economical electrical transformers, which help to lower costs of electricity distribution.

We focus on the high-end of the electrical steel market, as GOES is technically challenging to produce and typically commands a higher selling price than grades of non-oriented electrical steel (“NOES”). We believe the superior efficiency of our GOES products is attractive to customers in markets with increasing efficiency standards, such as Europe and the United States.

In May 2017, the U.S. Department of Energy (“DOE”) selected AK Steel to receive an award under the Advanced Manufacturing Office’s Next Generation Electric Machines program to develop the next generation of advanced NOES for motors used in a wide variety of industrial and automotive applications. The three-year project will be conducted in collaboration with the DOE, Oak Ridge National Laboratory’s Power Electronics and Electric Machinery Research Center, and Regal Beloit Corporation, a leading manufacturer of electric motors and motion control products. We will receive up to $1.8 to jointly develop an innovative motor design with high-alloy NOES with a goal to achieve an efficiency improvement of more than 30% when compared to existing motor designs. While the program targets a vast array of industrial motors, pumps and generators, we intend to use the research from this project in NOES applications for H/EVs since they represent one of the fastest growing markets for NOES. This could be a transformational step forward if we are successful in this project as it would provide a substantial enhancement to the range of battery electric vehicles.


- 4-

Table of Contents

Sustainability

We are committed to operating in a sustainable manner. Beyond ensuring that we are acting responsibly to serve our communities and the environment, operating AK Steel sustainably also provides us opportunities to grow our business, increase customer collaboration and loyalty, attract, retain and motivate employees, and differentiate us from our steel and non-steel competitors. Steel is the most recycled material on the planet—more than aluminum, plastic, paper and glass combined each year—which provides a strong foundation for our sustainability efforts across the company.

Safety

The safety of our employees is a core value for us. Our occupational health and safety policies and programs are the cornerstone of our operating philosophy and are integrated into all of our daily operations and activities. We rigorously manage, control and focus on eliminating or minimizing potential exposure to the hazards associated with making and working with steel. Our low recordable injury rate, based on U.S. Occupational Safety and Health Administration (“OSHA”) criteria, reflects our effectiveness in protecting our employees. In 2017, three of our facilities operated with zero OSHA recordable injuries for the entire year, and five of our facilities operated with zero OSHA recordable injuries during the fourth quarter. We also consistently lead the U.S. steel industry in safety, outperforming the steel industry average injury frequencies for each of the last ten years, and we have received numerous awards recognizing our safety performance. For example, in 2017 our Coshocton Works and Zanesville Works both received the “Special Award for Safety” from the Ohio Bureau of Workers’ Compensation, division of Safety and Hygiene (“Ohio BWC”), recognizing more than 500,000 hours and at least six months without an injury resulting in a day or more away from work. In 2017, Zanesville Works also received the Ohio BWC’s “100% Award,” recognizing zero injuries or illnesses resulting in a day or more away from work during the previous year. Our 2017 performance at our steelmaking facilities (year-to-date through the third quarter, which is the latest industry information currently available), measured as the number of OSHA recordable injuries per 200,000 labor hours, was 0.34, which was more than four times better than the industry average. This 2017 performance was also an improvement over our 2016 OSHA recordable injury rate of 0.44 per 200,000 labor hours, which again led the domestic steel industry during that year.

Environmental Responsibility

We maintain an unwavering commitment to responsible environmental performance throughout our operations. In 2017 we experienced another year of outstanding environmental performance overall, as well as setting records at several of our individual facilities. Under the Clean Water Act, our steelmaking facilities recorded only two water discharge permit exceedances in 2017, which we believe was an all-time low for us. Under the Clean Air Act, in 2017 we recorded our lowest total number of Title V air permit deviations in the last five years. We are particularly proud of the achievements that we have made to improve the air permit performance of Dearborn Works since our acquisition. In 2013, the last year that Dearborn Works was operated under its former ownership and not AK Steel, it experienced over 24,000 air permit deviations. In 2017, the third full year of AK Steel’s ownership of Dearborn Works, it experienced only ten deviations. Although we strive for zero deviations at all of our facilities, this performance represents over a 99.9% improvement for air permit performance at Dearborn Works since we acquired the plant.

We believe that our strong environmental performance is a direct result of the proactive approach we take to environmental management and the close collaborative efforts that we undertake across the company. We target sustainable performance in all aspects of our operations, including continuous improvement in operations that include air, water and waste management. Our comprehensive environmental policy provides that we will:

commit the necessary resources to comply with all applicable environmental laws, regulations, permits and agreements applicable to us;
reduce environmental risks through operating practices and emergency preparedness programs;
encourage recycling, recovery and reuse of residual materials, as well as the reduction and prevention of emissions and releases when feasible;
participate in efforts to develop and implement environmental laws and regulations;
continually evaluate compliance with applicable environmental laws and regulations; and
strive for continually improving the effectiveness of our environmental management efforts.

Certain production units in our operations are inherently water-intensive. However, we continuously seek opportunities to reduce water usage and increase water reuse at our steelmaking plants. In addition, our steelmaking facilities are located near abundant sources of water and we do not believe that any of those operations are located in regions that experience high water stress.

The International Organization for Standardization (“ISO”) has certified all of our steelmaking plants with ISO 14001 environmental management certification, and our environmental affairs professionals oversee environmental compliance throughout our organization. We also invest heavily in equipment to help meet our environmental objectives. For example, in 2017, we spent $129.5 to operate and maintain our environmental controls and invested $6.8 in environmental projects.

- 5-

Table of Contents


Strategic Opportunities Related to Climate Change

Our strategy of creating new innovative steels and improving existing products enables us to contribute to carbon reduction efforts and the achievement of sustainability goals down the product supply chain. Innovative products in each of the carbon, stainless, electrical and tubular steel families further the sustainability goals of many of our customers. For example, in the automotive market our customers are benefiting from our carbon lightweighting solutions to meet their heightened fuel economy targets under the CAFE standards. We are also providing customers with stainless steel and tubular solutions that allow for greater heat resistance in vehicle exhaust systems, enabling exhaust systems to handle the higher engine exhaust temperatures needed for increased fuel economy. In addition, we continue to develop higher-efficiency NOES products for use in future H/EVs and GOES products for their required infrastructure, a market that we anticipate will grow over time. Our steels also contribute to sustainability goals beyond the automotive market. For instance, our GOES products are among the highest-efficiency electrical steels in the world. These GOES products provide low core loss and high permeability to move electricity across electrical grids in the U.S. and around the world more efficiently through better-performing electrical transformers.

While greenhouse gas emissions are a natural byproduct of steel manufacturing today, we continue to take steps to increase energy efficiency while remaining competitive in the global steel marketplace. For example, through the American Iron and Steel Institute (“AISI”), we participate in the DOE’s Climate VISION agreement. This program assists domestic steelmakers in their continued efforts to lead the global steel sector in voluntary emissions reductions. We are also a member of the federal ENERGY STAR program, which identifies and promotes energy-efficient products to help reduce greenhouse gas emissions. ENERGY STAR is a joint program of the EPA and DOE, helping businesses and consumers save money and protect the environment through energy-efficient products and practices. As with other companies engaged in the production of steel, certain aspects of our production process are carbon-intensive and current technology does not currently afford us the ability to dramatically lower our direct greenhouse gas emissions without significantly reducing the scope of our operations. However, we and other steel producers in the United States are actively participating in research and development to develop technology, processes and approaches to reduce emissions during the steelmaking processes, but these developments are likely to occur over the longer term.

In addition, the production phase of steelmaking is less carbon-intensive than the processes for producing certain other competing materials, such as aluminum. Thus, while the CAFE standards have motivated the use of aluminum in some vehicles to help achieve lightweighting goals, we intend to continue to educate governments, the automotive industry and other key stakeholders that steel is the most sustainable metal to reduce greenhouse gas emissions through the life cycle of a vehicle. These benefits are even greater for customers utilizing our advanced steel products for lightweighting.

Production Resources

Employees

Approximately 5,700 of our 9,200 employees are represented by labor unions. The labor contracts covering these represented employees expire between 2018 and 2021. See the discussion under Labor Agreements in Item 7 for additional information on these agreements.

Raw Materials and Other Inputs

Our steel manufacturing operations require carbon and stainless steel scrap, coal, coke, chrome, iron ore, nickel and zinc as primary raw materials. We also use natural gas, electricity, electrodes and industrial gases. We typically purchase carbon and stainless steel scrap, natural gas, a substantial portion of our electricity and most other raw materials at prevailing market prices, which may fluctuate with market supply and demand. However, we make most of our purchases of iron ore, coke, industrial gases and a portion of our electricity at negotiated prices under annual or multi-year agreements with periodic price adjustments. We purchase substantially all our iron ore from one supplier under multi-year contracts. We typically purchase most of our metallurgical coal under annual fixed-price agreements, but we also obtain approximately 15% of our metallurgical coal needs from our own mine at AK Coal Resources, Inc. (“AK Coal”). Additionally, we may hedge portions of our energy and raw materials purchases to reduce volatility and risk, which is discussed in more detail in Quantitative and Qualitative Disclosures about Market Risk in Item 7A.

We also attempt to reduce the risk of future supply shortages and price volatility in other ways. If multi-year contracts are available in the marketplace, we may use these contracts to secure enough supply to satisfy our key raw material needs. When multi-year contracts are not available, or are not available on acceptable terms, we purchase the remainder of our raw materials needs under annual contracts or make spot purchases. We also regularly evaluate alternative sources and substitute materials. We believe that we have secured, or will be able to secure, adequate supply sources for our raw materials and energy requirements for 2018.


- 6-

Table of Contents

Competition

We principally compete with domestic and foreign producers of flat-rolled carbon, stainless and electrical steel, carbon and stainless tubular products, aluminum, carbon fiber, concrete and other materials that may be used as a substitute for flat-rolled steels in manufactured products. With the acquisition of Precision Partners, we also compete against other tooling and stamping companies in a highly fragmented market.

Price, quality, on-time delivery, customer service and product innovation are the primary competitive factors in the steel industry and vary in importance according to the product category and customer requirements. Steel producers that sell to the automotive market are facing increasing competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that will enable them to satisfy more stringent, government-imposed fuel efficiency standards. To address automotive manufacturers’ lightweighting needs that the aluminum industry is targeting, we and others in the steel industry are developing AHSS grades that we believe provide weight savings similar to aluminum, while being stronger, less costly, more sustainable, easier to repair and more environmentally friendly. In addition, our automotive customers who continue to use steel, as opposed to aluminum and other alternative materials, are able to forego the significant capital expenditures required to re-tool their manufacturing process in order for their operations to accommodate the use of non-steel materials.

Mini-mills generally offer a narrower range of products than integrated steel mills, but have been expanding their product capabilities in recent years. In addition, mini-mills have some competitive cost advantages as a result of their different production processes and lower labor costs associated with what are often non-union workforces. However, mini-mills do not have the equipment capabilities to produce all of the products that we offer, nor do they possess our depth of research and development. For example, mini-mills do not strategically target demanding automotive sheet applications for the exposed panels of vehicles, which is one of the technically challenging products in which we specialize.

Domestic steel producers, including us, face significant competition from foreign producers. For many reasons, these foreign producers often are able to sell products in the U.S. at prices substantially lower than domestic producers. Depending on the country of production, these reasons may include generous government subsidies; lower labor, raw material, energy and regulatory costs; less stringent environmental regulations; less stringent safety requirements; the maintenance of artificially low exchange rates against the U.S. dollar; and preferential trade practices in their home countries. In recent years, the annual level of imports of foreign steel into the United States has increased over historical levels and is affected to varying degrees by the relative level of steel production in China and other countries, the strength of demand for steel outside the U.S. and the relative strength or weakness of the U.S. dollar against various foreign currencies.

In 2015, the combination of overcapacity and slowing domestic demand in countries such as China resulted in imports of low-priced foreign steel into the U.S. at levels significantly higher than previous periods. As the supply of imported steel surged, it caused dramatic downward pressure on the price of flat-rolled steels in the American marketplace. Imports of finished steel into the United States accounted for approximately 27%, 26% and 29% of domestic steel market consumption in 2017, 2016 and 2015, levels that are higher than the historic norm. During 2016, we successfully concluded the anti-dumping (“AD”) and countervailing duty (“CVD”) cases that we and other major domestic steel producers initiated in 2015 against imports of corrosion-resistant (“Coated”), cold-rolled and hot-rolled carbon steel products from multiple foreign countries. The final duties determined by the United States Department of Commerce (“Commerce Department”), which in some cases exceed 400% for combined AD and CVD duties, will remain in effect for a minimum of five years.

Following those determinations, in September 2016, we and other domestic producers made filings with the Commerce Department asserting that Chinese steel producers are attempting to circumvent the AD and CVD duties against Coated and cold-rolled carbon steel by transshipping Chinese steel through Vietnam for minor processing before importing these final steel products into the U.S. market. On December 5, 2017, the Commerce Department announced preliminary affirmative rulings that Coated and cold-rolled carbon steel imported from Vietnam produced from steel that originated in China is circumventing existing AD and CVD orders on these products imported from China. The Commerce Department instructed the U.S. Customs and Border Protection to begin collecting cash deposits on all imports of Coated and cold-rolled carbon steel produced in Vietnam using Chinese-origin steel.

In addition, during the first quarter of 2017, pursuant to trade cases that we and other domestic producers of stainless steel initiated, the Commerce Department assessed final duties against Chinese stainless steel imports, which in some cases exceed 265% for combined AD and CVD duties. These duties will remain in effect for a minimum of five years.

We continue to provide pension and healthcare benefits to a great number of our retirees, resulting in a competitive disadvantage compared to certain other domestic and foreign steel producers that do not provide such benefits to any or most of their retirees. However, we have taken a number of actions to reduce pension and healthcare benefits costs, including negotiating progressive labor agreements that have significantly reduced total employment costs at all of our union-represented facilities, transferring all responsibility for healthcare benefits for various groups of retirees to Voluntary Employee Benefits Association trusts,

- 7-

Table of Contents

offering voluntary lump-sum settlements to pension plan participants, lowering retiree benefit costs for salaried employees, and transferring pension obligations to a highly rated insurance company. These actions have not only reduced some of the risks associated with our pension fund obligations, but more importantly have reduced our risk exposure to the financial markets that drive pension funding requirements. We continue to actively seek opportunities to reduce pension and healthcare benefits costs.

Executive Officers of the Registrant

The following table provides the name, age and principal position of each of our executive officers as of February 9, 2018:
Name
 
Age
 
Position
Roger K. Newport
 
53
 
Chief Executive Officer
Kirk W. Reich
 
49
 
President and Chief Operating Officer
Joseph C. Alter
 
40
 
Vice President, General Counsel and Corporate Secretary
Brian K. Bishop
 
46
 
Vice President, Carbon Steel Operations
Stephanie S. Bisselberg
 
47
 
Vice President, Human Resources
Renee S. Filiatraut
 
54
 
Vice President, Litigation, Labor and External Affairs
Gregory A. Hoffbauer
 
51
 
Vice President, Controller and Chief Accounting Officer
Michael A. Kercsmar
 
46
 
Vice President, Specialty Steel Operations
Scott M. Lauschke
 
48
 
Vice President, Sales and Customer Service
Eric S. Petersen
 
48
 
Vice President, Research and Innovation
Maurice A. Reed
 
55
 
Vice President, Engineering, Raw Materials and Energy
Christopher J. Ross
 
50
 
Vice President and Treasurer
Jaime Vasquez
 
55
 
Vice President, Finance and Chief Financial Officer

Roger K. Newport has served as Chief Executive Officer since January 2016. Prior to that, Mr. Newport served as Executive Vice President, Finance and Chief Financial Officer since May 2015. Prior to that, Mr. Newport served as Senior Vice President, Finance and Chief Financial Officer since May 2014, and as Vice President, Finance and Chief Financial Officer since May 2012. Prior to that, Mr. Newport served in a variety of other capacities since joining us in 1985, including Vice President—Business Planning and Development, Controller and Chief Accounting Officer, Assistant Treasurer, Investor Relations, Manager—Financial Planning and Analysis, Product Manager, Senior Product Specialist and Senior Auditor.

Kirk W. Reich has served as President and Chief Operating Officer since January 2016. Prior to that, Mr. Reich served as Executive Vice President, Manufacturing since May 2015. Before assuming that role, Mr. Reich served as Senior Vice President, Manufacturing since May 2014, and as Vice President, Procurement and Supply Chain Management since May 2012. Prior to that, Mr. Reich served in a variety of other capacities since joining us in 1989, including Vice President—Specialty Steel Operations, General Manager—Middletown Works, Manager—Mobile Maintenance/Maintenance Technology, General Manager—Mansfield Works, Manager—Processing and Shipping, Technical Manager, Process Manager and Civil Engineer.

Joseph C. Alter has served as Vice President, General Counsel and Corporate Secretary since May 2015. Prior to that, Mr. Alter served as Vice President, General Counsel and Chief Compliance Officer since May 2014 and Assistant General Counsel, Corporate and Chief Compliance Officer since December 2012. Since joining us in 2009, Mr. Alter served as Corporate Counsel and Chief Compliance Officer and as Corporate Counsel. Prior to joining us, Mr. Alter was Corporate Counsel at Convergys Corporation and an attorney with the law firm of Keating Muething & Klekamp PLL.

Brian K. Bishop has served as Vice President, Carbon Steel Operations since March 2016. Prior to that, Mr. Bishop served as Director, Carbon Steel Operations since July 2015 and General Manager, Dearborn Works since September 2014. Prior to that, Mr. Bishop was General Manager—Maintenance, Repair and Operations Purchasing since May 2013 and General Manager, Middletown Works since June 2010. Since joining us in 1995, Mr. Bishop progressed through a number of positions, including General Manager—Mansfield Works, Manager—Occupational Safety and Health and Shift Manager at Middletown Works.

Stephanie S. Bisselberg has served as Vice President, Human Resources since April 2013. Prior to that, Ms. Bisselberg served as Assistant General Counsel, Labor from October 2010. She also served as Labor Counsel and Assistant Labor Counsel since joining us in 2004. Prior to joining us, Ms. Bisselberg was an attorney with the law firm of Taft, Stettinius and Hollister LLP.

Renee S. Filiatraut has served as Vice President, Litigation, Labor and External Affairs since May 2014. Prior to that, Ms. Filiatraut served as Assistant General Counsel, Litigation since December 2012. Before joining us as Litigation Counsel in 2011, Ms. Filiatraut was a Partner with Thompson Hine LLP.

- 8-

Table of Contents


Gregory A. Hoffbauer has served as Vice President, Controller and Chief Accounting Officer since January 2016. Prior to that, Mr. Hoffbauer served as Controller and Chief Accounting Officer since February 2013. Before joining us as Assistant Controller in January 2011, Mr. Hoffbauer was Director of Accounting with NewPage Corporation. Mr. Hoffbauer also was Controller for Day International, Inc. and served in a number of increasingly responsible accounting and auditing positions for Deloitte & Touche LLP, including Audit Senior Manager.

Michael A. Kercsmar has served as Vice President, Specialty Steel Operations since March 2016. Prior to that, Mr. Kercsmar served as Director, Specialty Steel Operations since July 2015 and General Manager, Coshocton Works and Zanesville Works since June 2013. Prior to that, Mr. Kercsmar served as General Manager, Mansfield Works since June 2010. Mr. Kercsmar served in a number of roles since joining us in 1997, including Manager—Occupational Safety and Health at Middletown Works, Department Manager—South Coating, and Shift Manager in the cold strip mill at Middletown Works.

Scott M. Lauschke has served as Vice President, Sales and Customer Service since February 2015. Before joining us, Mr. Lauschke was Vice President and General Manager of AFGlobal Corporation from July 2013 through November 2014. Before that, Mr. Lauschke served in various roles of increasing responsibility at The Timken Company from October 1997, including General Sales Manager from May 2009 through April 2013.

Eric S. Petersen has served as Vice President, Research and Innovation since February 2015. Prior to that, Mr. Petersen was Vice President, Sales and Customer Service since July 2013 and Director, Specialty and International Sales since November 2012. Prior to that, Mr. Petersen served in a variety of other capacities since joining us in 1991, including Director—Research and Innovation, Director—Customer Technical Services and Research, General Manager—Quality Assurance, General Manager—Carbon Steel Technology, General Manager—Rockport Works, Manager of various departments at Rockport Works and Middletown Works; Quality Control and Operations Management positions and Associate Process Engineer, Associate Metallurgist and Assistant Metallurgist at Middletown Works.

Maurice A. Reed has served as Vice President, Engineering, Raw Materials and Energy since May 2012. Prior to that, Mr. Reed served in a variety of other capacities since joining us in 1996, including Director—Engineering and Raw Materials, Director—Engineering and Energy, General Manager—Engineering, Operations Support and Primary Process Research and General Manager—Engineering. Before joining us, Mr. Reed held a number of increasingly responsible engineering technology positions for National Steel Corporation.

Christopher J. Ross has served as Vice President and Treasurer since January 2018. Prior to that, Mr. Ross was Treasurer since February 2016 and General Manager, Cash Management and Finance since August 2012. Mr. Ross served in a number of roles since joining us in 1997, including General Manager—Strategic Planning and Financial Analysis, General Manager—Investor Relations and Diversified Business Group, Assistant Treasurer, Manager—Investor Relations, Product Manager—Hot Dip Galvanized and Electrogalvanized, Senior Accountant—Financial Planning and Analysis and Cost Accountant at Middletown Works.

Jaime Vasquez has served as Vice President, Finance and Chief Financial Officer since January 2016. Before joining us in September 2014 as Director, Finance, Mr. Vasquez held several positions with Carpenter Technology Corporation, including Vice President, Chief Financial Officer for the Performance Engineered Products Group from October 2013; Vice President, Corporate Development from July 2011; President, Asia Pacific; and Vice President, Treasurer and Investor Relations.

Available Information

We maintain a website at www.aksteel.com. Information about us is available on the website free of charge, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. Such information is posted to the website as soon as reasonably practicable after submission to the Securities and Exchange Commission. Information on our website is not incorporated by reference into this report.

Item 1A.
Risk Factors.

We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those we currently expect. While the items listed below represent the most significant risks to us, we regularly monitor and report risks to the Board of Directors through a formal Total Enterprise Risk Management program.

Risk of reduced selling prices, shipments and profits associated with a highly competitive and cyclical industry. The competitive landscape in the steel industry reflects shifting domestic and international political priorities, an uncertain global trade landscape, and continued intense competition from domestic and foreign steel competitors. These conditions directly impact our

- 9-

Table of Contents

pricing. It is impossible to predict whether the domestic and/or global economies or industry sectors of those economies that are key to our sales will continue to improve and generate enough demand to absorb some of the existing excess capacity in the steel industry, as well as new or expanded capacity. Also, we cannot know how customers or competitors will react to these and other factors and how their actions could affect market dynamics and sales of, and prices for, our products. Market price and demand for steel are very hard to predict and decreases in either or both could adversely impact our sales, financial results and cash flows. In addition, our direct sales to the automotive industry generate approximately 65% of our revenue and we make additional sales to distributors and converters whom, we believe, ultimately resell some of that volume to the automotive market. If automotive demand should decline substantially or we lose market share to competitors, our sales, financial results and cash flows could be severely impacted.

Risk of domestic and global steel overcapacity.  Significant global steel capacity and new or expanded production capacity in the United States in recent years has caused and continues to cause capacity to exceed demand globally, as well as in our primary markets in North America, which has and may continue to result in lower prices and shipments of our products. In fact, significant increases in production capacity in the U.S. by our competitors already have occurred in recent years as new carbon and stainless steelmaking and finishing facilities have begun production. In addition, foreign competitors have substantially increased their production capacity in the last few years and, in some instances appear to have targeted the U.S. market for imports. Also, some foreign economies, such as China, seem to be slowing relative to recent historical norms, resulting in an increased volume of steel products that cannot be consumed by industries in those foreign steel producers’ own countries. These and other factors have contributed to a high level of imports of foreign steel into the U.S. in recent years compared to historical levels and create a risk of even greater levels of imports, depending upon foreign market and economic conditions, the value of the U.S. dollar relative to other currencies, and other variables beyond our control. A significant further increase in domestic capacity or foreign imports could adversely affect our sales, financial results and cash flows.

Risks related to U.S. government actions on NAFTA and/or other trade agreements, treaties or policies.  The U.S. government has recently indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries, including the North American Free Trade Agreement (“NAFTA”). Despite several rounds of negotiation thus far among the NAFTA member countries and other discussions with foreign governments, it remains unclear what the U.S. Administration will or will not do with respect to NAFTA or other international trade agreements, treaties and policies. If the U.S. government takes action to withdraw from or materially modify NAFTA or other international trade agreements, treaties or policies, it has the potential to adversely impact our business, customers and/or suppliers directly by disrupting trade and commercial transactions and/or indirectly by adversely affecting the U.S. economy or certain sectors thereof, thereby impacting demand for our customers’ products, and in turn negatively affecting demand for our products. Key links of the supply chain for some of our key customers, including automotive manufacturers, could be negatively impacted by a withdrawal from or significant change to NAFTA or other international trade agreements. As such, if the U.S. withdraws from or negotiates material modifications to the terms of NAFTA or other significant trade agreements and/or treaties, or makes significant changes to its trade policies, such actions could materially adversely affect our sales, financial results and cash flows.

Risk of changes in the cost of raw materials, supplies and energy.  The price that we pay for energy and key supplies and raw materials, such as electricity, natural gas, industrial gases, graphite electrodes, iron ore, chrome, zinc and coal, can fluctuate significantly based on market factors. In some cases the prices at which we sell steel will not change in tandem with changes in our raw materials, supplies and energy costs. Global demand and supply, particularly Chinese demand and supply, for certain raw materials can have a significant influence on our costs for those raw materials, especially iron ore and coal, as well as supplies for production whose prices are impacted by raw material prices, such as graphite electrodes and refractory materials. However, our sales prices are generally driven by North American demand, which can compress our margins in cases where raw material costs increase and our sales prices do not move in a similar manner. The majority of our shipments are sold under contracts that do not allow us to pass through all increases in raw materials, supplies and energy costs. Some of our shipments to contract customers include variable-pricing mechanisms allowing us to adjust the total sales price based upon changes in specified raw materials, supplies and energy costs. Those adjustments, however, rarely reflect all of our underlying raw materials, supplies and energy cost changes. The scope of the adjustment may be limited by the terms of the negotiated language including limitations on when the adjustment occurs. For shipments made to the spot market, market conditions or timing of sales may not allow us to recover the full amount of an increase in raw material, supplies or energy costs. In such circumstances, a significant increase in raw material, supplies or energy costs likely would adversely impact our financial results and cash flows. Conversely, in certain circumstances, we may not realize all of the benefits when the price for certain raw materials, supplies or energy declines. For example, this can occur when we lock in the price of a raw material over a set period and the spot market price for the material declines during that period. Our need to consume existing inventories may also delay the impact of a change in prices of raw materials or supplies. New inventory may not be purchased until some portion of the existing inventory is consumed. The impact of this risk is particularly significant for iron ore and coke because of the volumes held in inventory. We manage our exposure to the risk of iron ore price increases by hedging a portion of our annual iron ore supply and by entering supply agreements where the IODEX, the global iron ore price index, is only one factor affecting our price of iron ore pellets. The impact of significant fluctuations in the price we pay for raw materials can be exacerbated by our “last-in, first-out” (“LIFO”) accounting method for valuing inventories. Using the LIFO method means that we treat the last coil of steel completed

- 10-

Table of Contents

as the first one sold, which means that our inventory value can reflect earlier input costs that do not reflect current input costs. The impact of LIFO accounting may be particularly significant in period-to-period comparisons.

Risk from our significant amount of debt and other obligations.  On December 31, 2017, we had $2,165.5 of indebtedness outstanding. We also had pension and other postretirement benefit obligations totaling $934.3. We anticipate approximately $51.0 of required annual pension contributions for 2018. Based on current funding projections, we expect to make contributions to the master pension trust of approximately $35.0 for 2019 and $10.0 for 2020, though funding projections for 2019 and beyond could be affected by differences between expected and actual returns on plan assets, actuarial data and assumptions relating to plan participants, the discount rate used to measure the pension obligations and changes to regulatory funding requirements. We can borrow additional amounts under our $1,350.0 revolving credit facility. At December 31, 2017, we had $450.0 of outstanding borrowings under this credit facility with outstanding letters of credit of $71.5, resulting in maximum remaining availability of $828.5 under the credit facility (subject to customary borrowing conditions, including a borrowing base). Borrowing capacity under the credit facility is determined by the value of eligible collateral less outstanding borrowings and letters of credit. At December 31, 2017, borrowing availability under the credit facility was $807.3 based on eligible collateral at that time. Our debt and pension obligations, along with other financial obligations, could have important consequences. For example, they could increase our vulnerability to general adverse economic and industry conditions; require a substantial portion of our cash flows to be dedicated to interest payments and debt service, reducing the amount of cash flows available for other purposes, such as working capital, capital expenditures, acquisitions, joint ventures or general corporate purposes; limit our ability to obtain future additional financing; reduce our planning flexibility for, or ability to react to, changes in our business and the industry; and place us at a competitive disadvantage with competitors who may have less indebtedness and other obligations or greater access to financing.

Risk of severe financial hardship or bankruptcy of one or more of our major customers or key suppliers.  Sales and operations of a majority of our customers are sensitive to general economic conditions, especially as they affect the North American automotive and housing industries. If there is a significant weakening of current economic conditions, whether because of secular or cyclical issues, it could lead to financial difficulties or even bankruptcy filings by our customers. The concentration of customers in a specific industry, such as the automotive industry, may increase our risk because of the likelihood that circumstances may affect multiple customers at the same time. The nature of that impact would likely include lost sales or losses associated with the potential inability to collect all outstanding accounts receivable. Such an event could also negatively impact our financial results and cash flows. In addition, many of our key suppliers, particularly those who supply us with critical raw materials for the steelmaking process, have recently faced severe financial challenges or bankruptcy and other suppliers may face such circumstances in the future. For example, the significant decline in commodity prices during 2015 led to increased economic distress and even bankruptcy filings for several of the domestic sources of metallurgical coal, as well as one of our iron ore suppliers. Also, we purchase substantially all of our iron ore from one supplier under two multi-year contracts. This reliance on a single supplier for a primary raw material may increase our risk of increased costs from substitute suppliers or supply chain disruptions in the event of their financial hardship or bankruptcy. Key suppliers facing financial hardship or operating in bankruptcy could experience operational disruption or even face liquidation, which could result in our inability to secure replacement raw materials on a timely basis, or at all, or cause us to incur increased costs to do so. Such events could adversely impact our operations, financial results and cash flows.

Risk related to our significant proportion of sales to the automotive market. In 2017, approximately 65% of our sales were to the automotive market. In addition to the size of our exposure to the automotive industry, we face risks related to our relative concentration of sales to certain specific automotive manufacturers. In 2017, one customer accounted for 12% of our net sales. Automotive production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit, and consumer spending and preferences. If automotive production and sales decline, our sales and shipments to the automotive market are likely to decline in a similarly corresponding manner. Adverse impacts that we may sustain as a result include, without limitation, lower margins because of the need to sell our steel to less profitable customers and markets, higher fixed costs from lower steel production if we are unable to sell the same amount of steel to other customers and markets, and/or lower sales, shipments and margins generally as our competitors face similar challenges and compete vigorously in other markets. These adverse impacts would negatively affect our sales, financial results and cash flows. Additionally, the trend toward lightweighting in the automotive industry, which requires lighter gauges of steel at higher strengths, could result in a lower volume of steel required by that industry over time. Moreover, competition for automotive business has intensified in recent years, as steel producers and companies producing alternative materials have focused their efforts on capturing and/or expanding their market share of automotive business because of less favorable conditions in other markets for steel and other metals, including commodity products and steel for use in the oil and gas markets. As a result, the potential exists that we may lose market share to existing or new entrants or that automotive manufacturers will take advantage of the intense competition among potential suppliers to pressure our pricing and margins in order to maintain or expand our market share with them, which could negatively affect our sales, financial results and cash flows.

Risk of reduced demand in key product markets due to competition from aluminum and other alternatives to steel.  The automotive market is important to our business, both in terms of volume and margins. Automotive manufacturers are under pressure to meet increasing government-mandated fuel economy standards through 2025. Automotive manufacturers have begun to incorporate aluminum and other alternative materials into their vehicles and continue to investigate the potential risks and benefits of expanding

- 11-

Table of Contents

the use of non-steel materials. For example, one major automotive company previously elected to substitute aluminum for carbon steel in the body of some of its vehicles. Although automotive manufacturers have incorporated aluminum and other competing materials at a much slower rate than some experts previously expected, if demand for steel from one or more of our major automotive customers were to significantly decline because of increased use of aluminum or other competing materials in substitution for steel, it likely would negatively affect our sales, financial results and cash flows.

Risks of excess inventory of raw materials.  We have certain raw material supply contracts that include minimum annual purchases, subject to exceptions for force majeure and other circumstances. If our need for a particular raw material is reduced for an extended period significantly below what we projected at the contract’s inception, or what we projected at the time an annual nomination was made under certain contracts, we could be required to purchase quantities of raw materials that exceed our anticipated annual needs. Our decision to temporarily idle the Ashland Works blast furnace and steelmaking operations (“Ashland Works Hot End”) in 2015 increases this risk, as those operations were a major consumer of several key raw materials for which we have take-or-pay obligations, including coke. If our existing supply contracts require us to purchase raw materials in quantities beyond our needs, and if we do not succeed in reaching an agreement with a particular raw material supplier to reduce the quantity of raw materials we purchase from that supplier, then we would likely be required to purchase more of a particular raw material in a given year than we need, negatively affecting our financial results, liquidity and cash flows. Changes in our raw material, finished and semi-finished inventory levels and our LIFO method for valuing inventories could increase the negative impact on our financial results.

Risk of supply chain disruptions or poor quality of raw materials or supplies. Our sales, financial results and cash flows could be adversely affected by transportation, raw material, energy or other key supply disruptions, or poor quality of raw materials, particularly scrap, coal, coke, iron ore and alloys. For example, the market for graphite electrodes has tightened significantly as a result of supply-side shortages of certain raw materials used for their production, and the supply chain has become increasingly challenged. In addition, we may experience supply chain disruptions or increased costs from transportation-related challenges due to new or enhanced regulation, changes to providers’ operations, labor shortages or other factors. Disruptions or quality issues, whether the result of severe financial hardships or bankruptcies of suppliers, natural or man-made disasters, other adverse weather events, or other unforeseen events, could reduce production or increase costs at one or more of our plants and potentially adversely affect customers or markets to which we sell our products. Any significant disruption or quality issue in any of the areas addressed above would adversely affect our sales, financial results and cash flows.

Risk of production disruption or reduced production levels.  When business conditions permit, we attempt to operate our facilities at production levels that are at or near capacity. High production levels are important to our financial results because they enable us to spread fixed costs over a greater number of production tons. We have implemented a strategy to target markets for our products that deliver higher margins, where possible, and reduce amounts sold into the lower margin spot markets. This ongoing strategy relies on our ability to sell higher margin products that overcome the effects of lower production volumes on our fixed costs. If we are unable to sustain this strategy successfully, it would adversely affect our sales, financial results and cash flows. Production disruptions could be caused by unanticipated plant outages or equipment failures, a lack of redundancy for key production assets, or lack of adequate raw materials, energy or other supplies, particularly under circumstances where we lack adequate redundant facilities. Production disruptions could result in significant costs and potential liability to us, as well as negative publicity and damage to our reputation with current or potential customers. In addition, the occurrence of natural or man-made disasters, adverse weather conditions or similar events could significantly disrupt our operations, negatively impact the operations of other companies or contractors we depend upon, or adversely affect customers or markets who buy our products. Any significant disruption or reduced level of production would adversely affect our sales, financial results and cash flows.

Risks associated with our healthcare obligations.  We provide healthcare coverage to our active employees and to a significant portion of our retirees, as well as certain members of their families. We are self-insured for substantially all of our healthcare coverage. While we have reduced our exposure to rising healthcare costs to a significant degree through cost sharing, cost caps and VEBA trusts, the cost of providing such healthcare coverage may be greater on a relative basis for us than for our competitors because they either provide a lesser level of benefits, require that their participants pay more for their benefits, or do not provide coverage to as broad a group of participants (e.g., they do not provide retiree healthcare benefits). In addition, our costs for retiree healthcare obligations could be affected by fluctuations in interest rates or by federal healthcare legislation.

Risks associated with our pension obligations.  We have a substantial pension obligation that, along with the related pension expense (income) and funding requirements, is directly affected by various changes in assumptions, including the selection of appropriate mortality assumptions and discount rates. These items also are affected by the rate and timing of employee retirements, actual experience compared to actuarial projections and asset returns in the securities markets. Such changes could increase our cost for those obligations, which could have a material adverse effect on our results and ability to meet those obligations. In addition, changes in the law for pension funding could also materially adversely affect our costs and ability to meet our pension obligations. Also, under the method of accounting we use for pension obligation reporting, we recognize into our results of operations, as a “corridor” adjustment, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets. These corridor adjustments are driven mainly by changes in assumptions and by events and circumstances beyond our

- 12-

Table of Contents

control, primarily changes in interest rates, performance of the financial markets, and mortality and retirement projections. A corridor adjustment, if required after a re-measurement of our pension obligations, historically has been recorded in the fourth quarter of the year, though one may be recorded at any time if an interim remeasurement occurs. A corridor adjustment can have a significant impact on our financial statements when it occurs, although its immediate recognition reduces the impact of unrealized gains or losses on future periods. A corridor charge does not have any immediate impact on our cash flows. We also contribute to multiemployer pension plans according to collective bargaining agreements that cover certain union-represented employees. Participating in these multiemployer plans exposes us to potential liabilities if the multiemployer plan is unable to pay its unfunded obligations or we choose to stop participating in the plan.

Risk of not reaching new labor agreements on a timely basis.  Most of our hourly employees are represented by various labor unions and are covered by collective bargaining agreements with expiration dates between March 2018 and September 2021. Two of those contracts are scheduled to expire in 2018. The labor contract with the International Association of Machinists and Aerospace Workers, Local 1943, which represents approximately 1,725 hourly employees at our Middletown Works located in Middletown, Ohio, expires on March 15, 2018. The labor contract with the United Steel Workers, Local 1865, which represents approximately 305 hourly employees at our Ashland Works located in Ashland, Kentucky, expires on September 1, 2018. We intend to negotiate with these unions to reach new, competitive labor agreements in advance of the current expiration dates. We cannot predict, however, when new, competitive labor agreements with the unions will be reached or what the impact of such agreements will be on our operating costs, operating income and cash flows. There is the potential of work stoppages at these locations in 2018 and beyond if we cannot reach timely agreements in contract negotiations before the contract expirations. If work stoppages occur, they could have a material impact on our operations, financial results and cash flows. For labor contracts at other locations which expire after 2018, a similar risk applies.

Risks associated with major litigation, arbitrations, environmental issues and other contingencies.  We have described several significant legal and environmental proceedings in Note 10 to the consolidated financial statements in Item 8. For environmental issues, changes in application or scope of regulations applicable to us could have significant adverse impacts, including requiring capital expenditures to ensure compliance with the regulations, increased difficulty in obtaining future permits or meeting future permit requirements, incurring costs for emission allowances, restriction of production, and higher prices for certain raw materials. One or more of these adverse developments could negatively impact our operations, financial results and cash flows. For litigation, arbitrations and other legal proceedings, it is not possible to predict with certainty the outcome of such matters and we could incur future judgments, fines or penalties or enter into settlements of lawsuits, arbitrations and claims that could have an adverse effect on our business, results of operations and financial condition. In addition, while we maintain insurance coverage for certain claims, we may not be able to obtain insurance on acceptable terms in the future and, if we obtain such insurance, it may not provide adequate coverage against all claims. We establish reserves based on our assessment of contingencies, including contingencies for claims asserted against us in connection with litigation, arbitrations and environmental issues. Adverse developments in litigation, arbitrations, environmental issues or other legal proceedings may affect our assessment and estimates of the loss contingency recorded as a reserve and require us to make payments in excess of our reserves, which could negatively affect our operations, financial results and cash flows.

Risk associated with regulatory compliance and changes. Our business and the businesses of our customers and suppliers are subject to a wide variety of government regulations, including those relating to environmental permitting requirements. The regulations promulgated or adopted by various government agencies, and the interpretations and application of such regulations, are dynamic and constantly evolving. If new regulations arise, the application of existing regulations expands, or the interpretation of applicable regulations changes, we may incur additional costs for compliance, including capital expenditures. For example, the United States Environmental Protection Agency (“EPA”) is required to routinely reassess the National Ambient Air Quality Standards (“NAAQS”) for criteria pollutants like nitrogen dioxide, sulfur dioxide, lead, ozone and particulate matter. These standards are frequently subject to litigation and revision. Revisions to the NAAQS could require us to make significant capital expenditures to ensure compliance and could make it more difficult for us to obtain required permits in the future. These risks are higher for our facilities that are located in non-attainment areas. Complex foreign and U.S. laws and regulations apply to our international operations, including but not limited to the Foreign Corrupt Practices Act, regulations related to import/export controls, the Office of Foreign Assets Control sanctions program, anti-boycott provisions and transportation and logistics regulations. These laws and regulations and changes in these laws and regulations may increase our cost of doing business in international jurisdictions and expose our operations and our employees to elevated risk. We have implemented policies and processes designed to comply with these laws and regulations, but failure by our employees, contractors or agents to comply with these laws and regulations could result in possible administrative, civil or criminal liability and reputational harm to us and our employees. We may also be indirectly affected through regulatory changes that impact our customers or suppliers. Regulatory changes that impact our customers could reduce the quantity of our products they demand or the price of our products that they are willing to pay. Regulatory changes that impact our suppliers could decrease the supply of products or availability of services they sell to us or could increase the price they demand for products or services they sell to us.


- 13-

Table of Contents

Risks associated with climate change and greenhouse gas emissions. Our business and operations, as well as the business and operations of our key suppliers and customers, may become subject to legislation or regulation intended to limit climate change or greenhouse gas emissions. It is possible that limitations on greenhouse gas emissions may be imposed in the United States through legislation or regulation. For example, the EPA has issued and/or proposed regulations addressing greenhouse gas emissions, including regulations that will require large sources and suppliers in the United States to report greenhouse gas emissions. In addition, the U.S. Congress has introduced from time to time legislation aimed at limiting carbon emissions from carbon-intensive business operations. The CAFE standards and other existing and future climate change-related legislation and regulation could also affect our customers, and in particular our automotive customers, as they may assess and elect to use lower volumes of steel to achieve mandates related to emissions. Similarly, our suppliers may incur cost increases in order to comply with climate control legislation and regulation, which they could in turn attempt to pass through to us in the form of higher prices for critical goods and/or services. It is impossible, however, to forecast the terms of the final regulations and legislation, if any, and the resulting effects on us. Depending upon the terms of any such legislation or regulation, however, we could suffer negative financial impacts because of increased energy, operational, environmental and other costs to comply with the limitations that would be imposed on greenhouse gas emissions. In addition, depending upon whether similar limitations are imposed globally, the regulations and/or legislation could negatively impact our ability to compete with foreign steel companies situated in areas not subject to such limitations. Unless and until all of the terms of such regulation and legislation are known, however, we cannot reasonably or reliably estimate their impact on our financial condition, operating performance or ability to compete.

Risks associated with financial, credit, capital and banking markets.  In the ordinary course of business, we seek to access financial, credit, capital and/or banking markets at competitive rates. Currently, we believe we have adequate access to these markets to meet our reasonably anticipated business needs. We provide and receive normal trade financing to our customers and from our suppliers. If access to competitive financial, credit, capital and/or banking markets by us, or our customers or suppliers, is impaired, our operations, financial results and cash flows could be adversely impacted.

Risk associated with derivative contracts to hedge commodity pricing volatility. We use cash-settled commodity price swaps and options to reduce pricing volatility for a portion of our raw material, energy and other commodity purchases. We employ a systematic approach in order to mitigate the risk of potential volatile price movements of certain commodities. This approach is intended to protect us against a sharp rise in the price of commodities. However, engaging in the use of swaps, options and similar agreements for hedging entails a variety of risks. For example, if the price of an underlying commodity falls below the price at which we hedged the commodity, we will benefit from the lower market price for the commodity purchased, but may not realize the full benefit of the lower commodity price because of the hedged transaction. In certain circumstances we also could be required to provide collateral for a potential derivative liability or close our hedging transaction for the commodity. Additionally, there may be a timing lag (particularly for iron ore) between a decline in the price of a commodity underlying a derivative contract, which could require us to make payments in the short-term to provide collateral or settle the relevant hedging transaction, and the period when we experience the benefits of the lower cost input through physical purchases of the commodity the hedge covers. Further, for derivatives designated as cash flow hedges, we initially record the effective gains and losses in accumulated other comprehensive income (loss) and reclassify them to earnings in the same period we recognize the effect of the associated hedged transaction. We record all derivative gains or losses for which hedge accounting treatment has not been elected or from hedge ineffectiveness to earnings in the period the gain or loss occurs. Changes in the fair value of derivatives for which hedge accounting treatment has not been elected or greater hedge ineffectiveness than we anticipated on cash flow hedges may result in increased volatility in our reported earnings. For example, we immediately recognize changes in the fair value of our iron ore derivative contracts in earnings when the fair value changes, instead of when we recognize the underlying cost of iron ore, thus potentially increasing the volatility of our results of operations. Each of these risks related to our hedging transactions could adversely affect our financial results and cash flows.

Risks related to the potential permanent idling of facilities. We perform strategic reviews of our business, which may include evaluating each of our plants and operating units to assess their viability and strategic benefits. As part of these reviews, we may idle—whether temporarily or permanently—certain of our existing facilities in order to reduce participation in markets where we determine that our returns are not acceptable. For example, in December 2015 we temporarily idled the Ashland Works Hot End to mitigate our exposure to the carbon steel spot market. If we decide to permanently idle the Ashland Works Hot End or any other facility or assets, we are likely to incur and accelerate significant cash expenses, including those relating to labor benefit obligations, take-or-pay supply agreements and accelerated environmental remediation costs, as well as substantial non-cash charges for impairment of those assets and the effects on pension and OPEB liabilities. We could incur similar types of cash and non-cash costs if we elect to temporarily or permanently idle any of our other currently operating assets or facilities. If we elect to permanently idle material facilities or assets, it could adversely affect our operations, financial results and cash flows.

Risk of inability to fully realize benefits of margin enhancement initiatives. In recent years we have undertaken several significant projects in an effort to lower costs and enhance margins. These projects and initiatives include efforts to focus production and sales on higher margin products, increase our operating rates and lower our costs. We identified a number of areas for enhancing profitability, including increasing our percentage of contract sales, producing and selling a higher-margin mix of products (including lowering our sales to the carbon steel spot market, which drove our decision to temporarily idle the Ashland Works Hot End) and developing new

- 14-

Table of Contents

products that can command higher prices from customers. If one or more of these key cost-savings or margin enhancement projects are unsuccessful, or are significantly less effective in achieving the level and timing of combined cost savings or margin enhancement than we anticipated, or if we do not achieve results as quickly as anticipated, our financial results and cash flows could be adversely impacted.

Risk of information technology (“IT”) security threats, cybercrime and exposure of private information. We rely on IT systems and networks in almost every aspect of our business activities. In addition, we and certain of our third-party data processing providers collect and store sensitive data, and our vendors or suppliers may collect and store sensitive data about us in their information system environments. We have taken, and intend to continue to take, what we believe are appropriate and reasonable steps to prevent security breaches in our systems and networks. In recent years, however, both the number and sophistication of IT security threats and cybercrimes have increased. Additionally, regulation has increased for companies to prevent security breaches and notify stakeholders if data is exposed. These IT security threats and increasingly sophisticated cybercrimes, including advanced persistent attacks, pose a risk to system security and the confidentiality, availability and integrity of our data. A breach in security could expose us to risks of production downtimes and operations disruptions, misuse of information or systems, or the compromise of confidential information, which in turn could adversely affect our reputation, competitive position, business and financial results.

Risk of failure to achieve expected benefits of the Precision Partners acquisition and/or to integrate Precision Partners successfully. We may be unable to achieve the strategic, operational, financial and other benefits contemplated as part of the acquisition of Precision Partners to the full extent expected or in a timely manner. If we are not as successful or timely as we expect in integrating Precision Partners, we may not fully realize the potential growth opportunities, ability to provide enhanced solutions to our customers, leveraging and acceleration of combined research and innovation efforts, and anticipated financial and non-financial benefits and opportunities from the acquisition. Goodwill is a significant part of Precision Partners’ assets and our inability to realize the benefits of the acquisition could result in an impairment of goodwill. These circumstances, either alone or in combination, could have other adverse effects on our business, financial results and cash flows.

Risks associated with changes in tax laws and regulations. We are a large corporation with operations in the U.S. and other jurisdictions. As such, we are subject to tax laws and regulations of the U.S. federal, state and local governments, as well as various foreign jurisdictions. We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate. Significant judgment is required in determining our tax provision for income taxes. Changes in tax laws or regulations may be enacted that could adversely affect our overall tax assets and liabilities. For example, on December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the estimates provided elsewhere in this Annual Report, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have used to calculate the transition impacts. Any changes in enacted tax laws (such as the recent U.S. tax legislation), rules or regulatory or judicial interpretations, any adverse outcome in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could materially and adversely impact our financial condition and results of operations.

Item 1B.
Unresolved Staff Comments.

None.

Item 2.
Properties.

We lease our corporate headquarters in West Chester, Ohio, through 2029, with two five-year options to extend the lease. We own our Research and Innovation Center located in Middletown, Ohio. We also lease an administration building located in Dearborn, Michigan.

Our operations consist primarily of eight steelmaking and finishing plants in the United States. We own all of our steelmaking and finishing facilities. In addition, we operate two coke plants, a metallurgical coal production facility, three tube manufacturing plants and eight tooling and stamping operations in the United States, Canada and Mexico.

Ashland Works is located in Ashland, Kentucky, and its coating line helps to complete finishing of material processed at Middletown Works. In December 2015, we temporarily idled the Hot End, which includes a blast furnace, basic oxygen furnaces and continuous caster, in response to excess global supply and the increase in low-priced imports into the United States. The Ashland Works Hot End remains temporarily idled.

Butler Works is located in Butler, Pennsylvania, and produces stainless, electrical and carbon steel. Melting takes place in a highly-efficient electric arc furnace that feeds an argon-oxygen decarburization unit for the specialty steels. A ladle metallurgy furnace feeds

- 15-

Table of Contents

two double-strand continuous casters. Butler Works also includes a hot rolling mill, annealing and pickling units and two tandem cold rolling mills. It also has various intermediate and finishing operations for both stainless and electrical steels.

Coshocton Works is located in Coshocton, Ohio, and consists of a stainless steel finishing plant containing two Sendzimer mills and two Z-high mills for cold reduction, four annealing and pickling lines, nine bell annealing furnaces, four hydrogen annealing furnaces, two bright annealing lines and other processing equipment, including temper rolling, slitting and packaging facilities.

Dearborn Works is located in Dearborn, Michigan and its operations include carbon steel melting, casting, hot and cold rolling and finishing operations for carbon steel. It consists of a blast furnace, basic oxygen furnaces, two ladle metallurgy furnaces, a vacuum degasser and two slab casters. Dearborn Works also has a hot rolling mill, a pickle line/tandem cold mill, batch anneal shops, a temper mill and a hot-dip galvanizing line for finishing products.

Mansfield Works is located in Mansfield, Ohio, and produces stainless steel. Operations include a melt shop with two electric arc furnaces, a ladle metallurgy furnace, an argon-oxygen decarburization unit, a thin-slab continuous caster and a hot rolling mill.

Middletown Works is located in Middletown, Ohio, and melts carbon steel and processes carbon and stainless steel. It consists of a coke facility, blast furnace, basic oxygen furnaces and continuous caster for the production of carbon steel. Middletown Works also has a hot rolling mill, cold rolling mill, two pickling lines, four annealing facilities, two temper mills and three coating lines for finishing products.

Rockport Works is located near Rockport, Indiana, and consists of a carbon and stainless steel finishing plant containing a continuous cold rolling mill, a continuous hot-dip galvanizing and galvannealing line, a continuous carbon and stainless steel pickling line, a continuous stainless steel annealing and pickling line, hydrogen annealing facilities and a temper mill.

Zanesville Works is located in Zanesville, Ohio, and consists of a finishing plant for some of the stainless and electrical steel produced at Butler Works and Mansfield Works and has a Sendzimer cold rolling mill, annealing and pickling lines, high-temperature box anneal and other decarburization and coating units.

AK Tube, a subsidiary, owns a plant in Walbridge, Ohio, which operates six electric resistance welded tube mills and a slitter. It also has a plant on leased property in Columbus, Indiana, which operates seven electric resistance welded tube mills, two high-speed cold saws and one nick-and-shear cutting machine. AK Tube’s leased plant in Queretaro, Mexico, operates one electric resistance welded tube mill and one high-speed cold saw.

AK Coal, a subsidiary, produces metallurgical coal from reserves in Somerset County, Pennsylvania.

Mountain State Carbon, LLC, a subsidiary, produces furnace and foundry coke from its cokemaking facility in Follansbee, West Virginia, which consists of four batteries.

Precision Partners, a subsidiary, provides advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies for the automotive market across eight plants in Ontario, Alabama and Kentucky. Our facilities feature five large-bed, hot-stamping presses providing nine lines of production; 80 cold-stamping presses ranging from 200 tons to 3,000 tons of pressing capacity; 17 large-bed, high-tonnage tryout presses with prove-out capabilities for new tool builds; and 125 multi-axis welding assembly cells. We own one facility in Ontario and the remainder are leased.

Item 3.
Legal Proceedings.

Information for this item may be found in Note 10 to the consolidated financial statements in Item 8 and in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7, both of which are incorporated herein by reference.

Item 4.
Mine Safety Disclosures.

The operation of AK Coal’s North Fork Mine and Coal Innovations, LLC coal wash plant (collectively, the “AK Coal Operations”) are subject to regulation by the Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977, as amended (“Mine Act”). MSHA inspects mining and processing operations, such as the AK Coal Operations, on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Exhibit 95.1 to this Annual Report presents citations and orders from MSHA and other regulatory matters required to be disclosed by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise under this Item 4.



- 16-

Table of Contents

PART II

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

AK Holding’s common stock has been listed on the New York Stock Exchange since April 5, 1995 (symbol: AKS). The reported high and low sales prices of the common stock for each quarter are presented below:
 
2017
 
2016
 
High
 
Low
 
High
 
Low
First Quarter
$
11.28

 
$
6.70

 
$
4.48

 
$
1.64

Second Quarter
7.70

 
5.30

 
5.50

 
3.31

Third Quarter
6.88

 
5.01

 
7.09

 
3.87

Fourth Quarter
6.29

 
4.00

 
11.39

 
4.42


As of February 9, 2018, there were 315,283,596 shares of common stock outstanding and held of record by 3,629 stockholders. The closing stock price on February 9, 2018, was $4.50 per share. Because depositories, brokers and other nominees held many of these shares, the number of record holders is not representative of the number of beneficial holders. There were no unregistered sales of equity securities in the year ended December 31, 2017.

Although we do not currently pay a dividend, no covenant restrictions currently would restrict our ability to declare and pay a dividend to our stockholders. Dividends are permitted if no default or event of default exists and (i) availability under the Credit Facility exceeds 20% of the lesser of the Credit Facility commitment or eligible collateral after advance rates or (ii) availability exceeds 15% of the lesser of the Credit Facility commitment or eligible collateral after advance rates and we meet a fixed charge coverage ratio of one to one as of the most recently ended fiscal quarter. At December 31, 2017, the availability under the Credit Facility significantly exceeds these amounts. If we cannot meet either of these thresholds, annual dividends would be limited to the greater of $18.0 or 0.5% of consolidated total assets, with additional dividends permitted equal to the greater of $25.0 or 0.7% of consolidated total assets in aggregate over the life of the Credit Facility.

ISSUER PURCHASES OF EQUITY SECURITIES
Period
 
Total
Number of
Shares
Purchased (a)
 
Average Price Paid Per
Share (a)
 
Total Number of
Shares (or Units)
Purchased as 
Part of Publicly
Announced Plans
or Programs (b)
 
Approximate
Dollar Value of
Shares that May
Yet be Purchased
Under the Plans or
Programs (b)
October 2017
 
609

 
$
5.88

 

 
 
November 2017
 

 

 

 
 
December 2017
 

 

 

 
 
Total
 
609

 
5.88

 

 
$
125.6


(a)
Employees may have us withhold shares to pay federal, state and local taxes due upon the vesting of restricted stock or performance shares under the terms of the AK Steel Holding Corporation Stock Incentive Plan. In this event, the withheld shares have a fair market value equal to the minimum statutory withholding rate that tax authorities could impose on the transaction. We repurchase the withheld shares at the quoted average of the reported high and low sales prices on the day we withhold the shares.
(b)
On October 21, 2008, the Board of Directors authorized us to repurchase, from time to time, up to $150.0 of our outstanding equity securities. The Board of Directors’ authorization specified no expiration date. We did not repurchase any of our equity securities under this authorization in 2017.



- 17-

Table of Contents

The following graph compares cumulative total stockholder return on AK Holding’s common stock for the five-year period from January 1, 2013 through December 31, 2017, with the cumulative total return for the same period of (i) the Standard & Poor’s Small Cap 600 Stock Index, and (ii) the New York Stock Exchange Arca Steel Index. These comparisons assume an investment of $100 at the beginning of the period and reinvestment of dividends.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12064036&doc=20
 
January 1,
 
December 31,
 
2013
 
2013
 
2014
 
2015
 
2016
 
2017
AK Holding
$
100

 
$
173

 
$
125

 
$
47

 
$
215

 
$
119

NYSE Arca Steel
100

 
98

 
71

 
39

 
75

 
92

S&P 600 Small Cap
100

 
136

 
142

 
137

 
171

 
191



- 18-

Table of Contents

Item 6.
Selected Financial Data.

The following selected historical consolidated financial data should be read along with the consolidated financial statements presented in Item 8 and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in Item 7.
 
2017
 
2016
 
2015
 
2014
 
2013
 
(dollars in millions, except per share and per ton data)
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
Net sales
$
6,080.5

 
$
5,882.5

 
$
6,692.9

 
$
6,505.7

 
$
5,570.4

Pension and OPEB net corridor charge

 
43.1

 
131.2

 
2.0

 

Operating profit (a)
220.0

 
230.2

 
86.7

 
139.4

 
135.8

Net income (loss) attributable to AK Steel Holding Corporation (b)
6.2

 
(7.8
)
 
(509.0
)
 
(96.9
)
 
(46.8
)
Basic and diluted earnings (loss) per share (b)
0.02

 
(0.03
)
 
(2.86
)
 
(0.65
)
 
(0.34
)
Other Data:
 
 
 
 
 
 
 
 
 
Total flat-rolled shipments (in thousands of tons)
5,596.2

 
5,936.4

 
6,974.0

 
6,132.6

 
5,275.8

Selling price per flat-rolled ton
$
1,022

 
$
955

 
$
929

 
$
1,021

 
$
1,014

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
38.0

 
$
173.2

 
$
56.6

 
$
70.2

 
$
45.3

Working capital
832.9

 
958.4

 
763.6

 
832.8

 
372.2

Total assets
4,296.1

 
4,036.0

 
4,084.4

 
4,828.0

 
3,579.1

Current portion of long-term debt

 

 

 

 
0.8

Long-term debt (excluding current portion)
2,110.1

 
1,816.6

 
2,354.1

 
2,422.0

 
1,479.6

Current portion of pension and other postretirement benefit obligations
40.1

 
41.3

 
77.7

 
55.6

 
85.9

Pension and other postretirement benefit obligations (excluding current portion)
894.2

 
1,093.7

 
1,146.9

 
1,225.3

 
965.4

Total equity (deficit)
129.2

 
90.7

 
(595.6
)
 
(77.0
)
 
192.7


(a)
Under our method of accounting for pensions and other postretirement benefits, we recorded pension corridor charges of $78.4, $144.3 and $2.0 in 2016, 2015 and 2014, and OPEB corridor credits of $35.3 and $13.1 in 2016 and 2015. In 2017, we recorded an asset impairment charge of $75.6 related to the temporarily idled Ashland Works Hot End and a credit of $19.3 for the reversal of a liability for transportation costs. In 2016, we also recorded pension settlement charges of $25.0 and costs of $69.5 to terminate a pellet offtake agreement and for related transportation costs. In 2015, we also recorded a charge for a temporary facility idling of $28.1.
(b)
Included in 2017 was a non-cash charge of $32.1, or $0.10 per diluted share, for the effects of the Tax Cuts and Jobs Act. In 2015, we recorded charges for the impairments of our investments in Magnetation of $256.3, or $1.44 per diluted share, and AFSG Holdings, Inc. (“AFSG”) of $41.6, or $0.23 per diluted share.

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Executive Overview

We are a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, electrical power generation and distribution markets. We leverage our advanced research and development and operational excellence to specialize in technically challenging steel products and to innovate across markets and within our product portfolios to add value to our steel solutions. We are the only steelmaker in North America that can produce all three major categories of flat-rolled steels—namely carbon, stainless and electrical. In addition, through our subsidiaries, we provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped components and complex assemblies.

In 2016, we began the process to improve our product mix, deemphasize commodity products, enhance our operational footprint and strengthen our balance sheet, and we continued to seek ways to enhance our margins in 2017. Product innovation has been a key tenet of our long-term strategy to differentiate us from our competitors. Our engineers and researchers continue to explore new solutions to serve our product development goals and operational challenges. We expanded our growth platform by launching our new NEXMET family of AHSS coated carbon steel products. We began to produce our breakthrough NEXMET steel from a new, state-of-the-art continuous galvanizing line at our Dearborn Works. In addition, our researchers are jointly working with the DOE to develop the next

- 19-

Table of Contents

generation of NOES for use in industrial motors, which we believe has applications for H/EVs and their significant future growth projections.

We are known throughout the steel industry for our operational excellence. During 2017, we enhanced our core steelmaking business by completing major investments at our Middletown Works blast furnace, melt shop and electrogalvanizing line. We also upgraded the melt shop and invested in new caster technology at our Mansfield Works. Because we produce technically challenging steels for customers who demand the highest quality products on a just-in-time basis, the stability and dependability of our operations is paramount to our business model.

To give us additional flexibility to invest in strategic initiatives, we continued to improve our capital structure in 2017 by extending maturities and reducing interest rates and costs of our debt obligations and de-risking our balance sheet. This included refinancing debt at lower rates, eliminating certain financing obligations and extending and spreading out debt maturities.

One of our core strategies is to continue to diversify into downstream applications over time. To that end, on August 4, 2017, we acquired 100% of the equity of Precision Partners, which provides advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies for the automotive market. As further discussed below, the acquisition of Precision Partners allows us to get closer to our customers by moving down the automotive supply chain into a business that generally has higher margins and lower capital intensity than our legacy steel operations. We also believe that collaborative efforts between our steelmaking experts and Precision Partners can dramatically accelerate our efforts to drive adoption of our innovative steel products by automotive manufacturers and their suppliers, particularly in lightweighting applications. Our financial results include the effects of the acquisition and Precision Partners’ operations for periods after August 4, 2017, which affects comparability to prior periods. See Acquisition of Precision Partners for more information.

2017 Financial Overview

Our 2017 net income of $6.2, or $0.02 per diluted share of common stock, improved from our 2016 net loss of $7.8, or $0.03 per diluted share. Our 2017 adjusted net income (as defined in Non-GAAP Financial Measures) of $94.6, or $0.30 per diluted share, compared to 2016 adjusted net income of $129.8, or $0.56 per diluted share. Our adjusted EBITDA (as defined in Non-GAAP Financial Measures) was $416.4, or 6.8% of net sales, for 2017, compared to adjusted EBITDA of $501.9, or 8.5% of net sales, for 2016. Our reported results reflected net charges totaling $88.4, or $0.28 per diluted share, in 2017, and $137.6, or $0.59 per diluted share, in 2016. The 2017 net charges were for non-cash charges to reflect asset impairments at our temporary idled Ashland Works Hot End and for a reduction in the value of deferred tax assets related to recent U.S. tax legislation, as well as a credit for the benefits of a transportation agreement.

Average selling price per flat-rolled steel ton increased by 7% in 2017 from 2016, primarily due to higher prices for automotive and carbon spot market sales, and higher surcharge revenue due to higher raw material costs, partially offset by lower shipments to the automotive market. Our 2017 results included a LIFO charge of $113.4, compared to a LIFO credit of $23.3 for 2016, reflecting the increases in raw material costs year over year. In addition, we completed major planned maintenance outages totaling $84.9 and $62.1 for 2017 and 2016. We recorded unrealized gains on iron ore derivatives of $31.6 in 2017, as compared to unrealized gains of $45.6 in 2016. Also included in 2017 results were $21.5 of expenses related to debt refinancing, with similar expenses of $9.4 in 2016.

During the quarter ended December 31, 2017, we recognized a non-cash asset impairment charge of $75.6, primarily related to the long-lived assets associated with the Ashland Works Hot End. The Ashland Works Hot End remains on temporary idle and no determination has been made regarding the long-term status of the operations. However, we now believe it is less likely that the Ashland Works Hot End will restart in the near term based on forecasted supply and demand characteristics of the markets that we serve.

In the fourth quarter of 2017, we reached an agreement that reduced our transportation obligations and provides a timeframe to begin using the rail cars that were idled after the 2016 termination of a pellet supply agreement. As a result, a credit of $19.3 was recorded in the fourth quarter of 2017 to reduce the unpaid liability.

The Tax Cuts and Jobs Act of 2017, signed into law on December 22, 2017, reduced our corporate income tax rates, resulting in a corresponding decrease in the value of our deferred tax assets. As a result, our income tax expense for the fourth quarter of 2017 included a non-cash charge of $32.1, or $0.10 per diluted share.

In 2017, we continued to pursue our goal of increasing our financial flexibility for future strategic actions. We entered a new revolving credit facility (the “Credit Facility”) that extends to 2022 and lowered our borrowing rates. Additionally, we issued $680.0 in two senior notes offerings during the year, and redeemed almost $810.0 of old notes, lowering our principal amount of outstanding senior notes by $130.0, as well as extending maturities and lowering interest rates. Also in 2017, we acquired the lease of our Research and Innovation Center, effectively settling the obligation.

- 20-

Table of Contents


2017 Compared to 2016

Steel Shipments

Flat-rolled steel shipments in 2017 were 5,596,200 tons, a 6% decrease compared to 2016 shipments of 5,936,400 tons. The decrease in shipments was principally driven by a 10% decline in shipments to the automotive market compared to 2016, primarily as a result of reduced North American light vehicle production. Shipments of flat-rolled steel by product category for 2017 and 2016, as a percent of total flat-rolled steel shipments, were as follows:

Flat-Rolled Steel Shipments by Product Category
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12064036&doc=21 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12064036&doc=19
 
 
 
 
 
 
 
 
 
Net Sales

Net sales in 2017 were $6,080.5, a 3% increase from 2016 net sales of $5,882.5. Our average net selling price was $1,022 per flat-rolled steel ton in 2017, a 7% increase from the 2016 average net selling price of $955 per flat-rolled ton. The increases reflect our strategy of producing and selling higher-value carbon, stainless and electrical steels, higher prices on both automotive and spot market sales, and higher surcharges on specialty steel products. Revenues for 2017 also included net sales of Precision Partners following the August 4, 2017 acquisition. Net sales to customers outside the United States were $627.1, or 10% of total sales, for 2017, compared to $655.6, or 11% of total sales, for 2016, primarily due to lower international sales of carbon and electrical steel.

The following table shows the percentage of our net sales to each of our markets:
Market
 
2017
 
2016
Automotive
 
65
%
 
66
%
Infrastructure and Manufacturing
 
16
%
 
16
%
Distributors and Converters
 
19
%
 
18
%

Cost of Products Sold

Cost of products sold in 2017 was $5,359.7, or 88.1% of net sales, and increased from 2016 cost of products sold of $5,064.7, or 86.1% of net sales, largely due to higher costs for raw materials, primarily scrap, chrome and other alloys. Included in 2017 was a LIFO charge of $113.4, compared to a LIFO credit of $23.3 in 2016. Cost of products sold included planned maintenance outage costs of $84.9 in 2017, compared to $62.1 in 2016. The higher planned maintenance outage costs in 2017 were primarily a result of larger planned maintenance projects at our Middletown Works blast furnace and steelmaking shops and our Mansfield Works melt shop.

Beginning in the third quarter of 2016, our iron ore derivatives no longer qualified for hedge accounting treatment. Therefore, we recorded adjustments to mark these derivatives to fair value each period and recognized the resulting unrealized gains or losses immediately in cost of products sold, versus recognizing them in the period that iron ore purchases affect earnings. In 2017, we recognized $31.6 of unrealized gains since the market price of iron ore and the fair value of the derivative contracts increased. Cost of products sold for the fourth quarter of 2016 included $33.8 of unrealized gains on iron ore derivatives contracts that were scheduled to

- 21-

Table of Contents

settle in 2017 and 2018. As a result, cost of products sold for 2017 did not reflect $36.0 of realized gains from the contracts that settled during the year, but that were recognized in prior periods.

Selling and Administrative Expense

Selling and administrative expense increased to $282.9 in 2017 from $277.2 in 2016. The increase included acquisition costs of $6.2 in 2017 related to the Precision Partners acquisition and on-going expenses after its acquisition, partially offset by lower costs for employee incentive compensation in 2017 than in 2016.

Depreciation Expense

Depreciation expense increased slightly to $226.0 in 2017 from $216.6 in 2016. We recognized $5.8 of depreciation expense for Precision Partners’ property, plant and equipment since the August 4, 2017 acquisition.

Pension and Other Postretirement Employee Benefit (“OPEB”) Expense (Income)

Pension and OPEB income of $64.4 in 2017 increased from income of $43.8 in 2016. The increase in income was principally a result of lower amortization of unrealized actuarial losses. In 2017, we incurred no pension or OPEB corridor adjustments. In 2016, we incurred a pension corridor charge of $78.4 and an OPEB corridor credit of $35.3. Although the corridor adjustments affect reported operating and net income, they do not affect our cash flows in the current period. However, we expect to ultimately settle the pension and OPEB obligations in cash. See Critical Accounting Estimates for information on our policy for measurement and recognition of corridor adjustments. We also recorded settlement losses of $25.0 in 2016 as a result of the purchase of non-participating annuity contracts for certain retirees and lump sum payouts to new retirees.

Charges (Credit) for Termination of Pellet Agreement and Related Transportation Costs

In the fourth quarter of 2016, the United States Bankruptcy Court for the District of Minnesota approved a settlement agreement with certain third parties to terminate our long-term iron ore pellet offtake agreement with Magnetation and to wind down Magnetation’s business. In connection with that approval, we recognized charges of $69.5 in the fourth quarter of 2016 that covered both a $36.6 payment we made to the bankruptcy estate in the quarter and additional charges of $32.9 for remaining obligations under contracts with other third parties to transport pellets to our facilities. In the fourth quarter of 2017, we reached an agreement for transportation services that provides a timeframe to begin using the rail cars that were idled after the termination of the pellet supply agreement. As a result, we recorded a credit of $19.3 to reduce the unpaid liability during the fourth quarter of 2017. See Magnetation and Note 4 to the consolidated financial statements for further information.

Asset Impairment Charge

In 2017, we recognized a non-cash asset impairment charge of $75.6, primarily related to the long-lived assets associated with the temporarily idled Ashland Works Hot End. See Note 2 to the consolidated financial statements for further information.

Operating Profit

Operating profit for 2017 of $220.0 was lower than 2016 operating profit of $230.2. Included in the 2017 operating profit was the credit of $19.3 to reduce the transportation liability related to our terminated iron ore pellet offtake agreement and a non-cash asset impairment charge of $75.6, primarily for the Ashland Works Hot End fixed assets. Included in the 2016 operating profit was a net pension/OPEB corridor charge of $43.1, pension settlement charges of $25.0 and charges for the termination of the Magnetation pellet offtake agreement and related transportation costs of $69.5. Also included in operating profit was SunCoke Middletown’s operating profit of $61.7 and $66.0 for 2017 and 2016.

Interest Expense

Interest expense for 2017 decreased to $152.3 from $163.9 in 2016. The decrease from 2016 primarily reflected our successful actions to reduce our principal amount of senior unsecured notes and to refinance debt with lower interest rates in 2017.

Other Income (Expense)

Other income (expense) was expense of $17.1 and $4.9 for 2017 and 2016, primarily as a result of expenses of $21.5 and $9.4 that we incurred in connection with the refinancing of debt in 2017 and 2016. See Note 6 to the consolidated financial statements for further information on long-term debt financing.


- 22-

Table of Contents

Income Tax Expense (Benefit)

The Tax Cuts and Jobs Act of 2017, signed into law on December 22, 2017, reduced corporate income tax rates and the corresponding value of our deferred tax assets. As a result, the company’s income tax expense for the fourth quarter of 2017 includes a $32.1 non-cash charge related to this change. We do not expect to incur cash tax liabilities in the near term, including any transition tax on undistributed earnings of our foreign subsidiaries, associated with the U.S. tax legislation due to the availability of existing net operating loss carryforwards.

Other than the effects of the new tax law, our income tax provision is primarily related to changes in our LIFO reserve, which results in a tax valuation allowance adjustment related to our deferred tax assets, and from the allocation of income tax expense to other comprehensive income. The 2017 benefit was primarily attributable to charges to the LIFO reserve. In addition, the 2017 and 2016 results included non-cash income tax benefits of $8.6 and $4.5 from allocating income tax expense to other comprehensive income. As a result, we recorded an income tax benefit of $17.0 in 2017, compared to income tax expense of $3.2 in 2016.

Net Income (Loss) and Adjusted Net Income (Loss) Attributable to AK Steel Holding Corporation

Net income attributable to AK Holding in 2017 was $6.2, or $0.02 per diluted share. The net income in 2017 included a credit of $19.3, or $0.06 per diluted share, to adjust the transportation liability associated with a terminated pellet offtake agreement, an asset impairment charge of $75.6, or $0.24 per diluted share, and a charge for tax legislation of $32.1, or $0.10 per diluted share. Excluding the above items, we reported adjusted net income of $94.6, or $0.30 per diluted share, for 2017.

Net loss attributable to AK Holding in 2016 was $7.8, or $0.03 per diluted share. The net loss in 2016 included a pension corridor charge of $78.4, an OPEB corridor credit of $35.3, and pension settlement charges of $25.0, netting to $68.1, or $0.29 per diluted share. Additionally, the net loss in 2016 included charges to terminate a pellet offtake agreement and related transportation costs of $69.5, or $0.30 per diluted share. Excluding these charges, our adjusted net income was $129.8, or $0.56 per diluted share, for 2016.

Adjusted EBITDA

Adjusted EBITDA was $416.4, or 6.8% of net sales, in 2017, as compared to $501.9, or 8.5% of net sales, in 2016.

2016 Compared to 2015

Steel Shipments

Flat-rolled steel shipments in 2016 were 5,936,400 tons, a 15% decrease from 2015 flat-rolled steel shipments of 6,974,000 tons. The decrease in flat-rolled steel shipments was principally driven by our strategic decision to reduce commodity steel sales to the distributors and converters market, which declined by 41% from 2015. Shipments of flat-rolled steel by product category for 2016 and 2015 as a percent of total flat-rolled steel shipments, were as follows:

Shipments by Product Category
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12064036&doc=18http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12064036&doc=17
 
 
 
 
 
 
 
 
 

- 23-

Table of Contents

Net Sales

Net sales in 2016 were $5,882.5, a 12% decrease from 2015 net sales of $6,692.9. We received lower pricing in our automotive contracts in 2016, but the impact of better market conditions, reducing our participation in the commodity steel markets and capturing higher spot market pricing offset the automotive contract pricing declines. Our average selling price was $955 per net flat-rolled ton in 2016, a 3% increase from the 2015 average selling price of $929 per net flat-rolled ton. Net sales to customers outside the United States were $655.6, or 11% of total sales, for 2016, compared to $855.7, or 13% of total sales, for 2015 with the 2016 decrease primarily due to lower electrical steel shipments.    

The following table shows the percentage of our net sales attributable to each of our markets:
Market
 
2016
 
2015
Automotive
 
66
%
 
60
%
Infrastructure and Manufacturing
 
16
%
 
16
%
Distributors and Converters
 
18
%
 
24
%

Cost of Products Sold

Cost of products sold in 2016 was $5,064.7, or 86.1% of net sales, and declined from 2015 cost of products sold of $6,032.0, or 90.1% of net sales, largely as a result of our decision to reduce shipments to the commodity spot markets. To generate these results, we optimized our operational footprint, pursued cost efficiencies and benefited from lower costs for raw materials. We also recorded unrealized gains of $45.6 from iron ore derivatives that no longer qualify for hedge accounting treatment after the termination of the pellet offtake agreement with Magnetation. Cost of products sold included outage costs of $62.1 in 2016, compared to $50.6 in 2015. In addition, LIFO credits were $23.3 in 2016, compared to LIFO credits of $195.3 in 2015. Costs for equipment maintenance, utilities and supplier obligations related to the temporarily idled facility were $22.1 in 2016.

Selling and Administrative Expense

Selling and administrative expense increased to $277.2 in 2016 from $261.9 in 2015. The increase was due primarily to an increase for employee incentive compensation as a result of meeting objectives under annual and long-term performance-based compensation plans, partially offset by cost reduction efforts achieved throughout 2016.

Depreciation Expense

Depreciation expense increased to $216.6 in 2016 from $216.0 in 2015.

Pension and OPEB Expense (Income)

Pension and OPEB income of $43.8 in 2016 decreased from income of $63.0 in 2015. The decrease in income was principally a result of lower pension assets and related expected returns on assets.

We incurred a pension corridor charge of $78.4 and an OPEB corridor credit of $35.3 in 2016, and a pension corridor charge of $144.3 and an OPEB corridor credit of $13.1 in 2015. Although the corridor adjustments reduce reported operating and net income, they do not affect our cash flows in the current period. However, we expect to ultimately settle the pension obligation in cash. See Critical Accounting Estimates for information on our policy for measurement and recognition of corridor charges (credits). We also recorded settlement losses of $25.0 in 2016 as a result of the purchase of non-participating annuity contracts for certain retirees and lump sum payouts to new retirees.

Charges for Termination of Pellet Agreement and Related Transportation Costs

In the fourth quarter of 2016, the United States Bankruptcy Court for the District of Minnesota approved a settlement agreement with certain third parties to terminate our long-term iron ore pellet offtake agreement with Magnetation and to wind down Magnetation’s business. In connection with that approval, we recognized charges of $69.5 in the fourth quarter of 2016 that covered both a $36.6 payment we made to the bankruptcy estate in the quarter and additional charges of $32.9 for remaining obligations under contracts with other third parties to transport pellets to our facilities for the next 12 years. See Magnetation and Note 4 to the consolidated financial statements for further information.


- 24-

Table of Contents

Charge for Facility Idling

In the fourth quarter of 2015, we temporarily idled the Ashland Works Hot End. We incurred a $28.1 charge in 2015 for supplemental unemployment and other employee benefit costs and equipment idling costs. Costs for equipment maintenance, utilities and supplier obligations related to the temporarily idled facility were $22.1 in 2016.

Operating Profit

Operating profit for 2016 of $230.2 was higher than 2015 operating profit of $86.7. Included in the 2016 operating profit was the net pension/OPEB corridor charge of $43.1, the pension settlement charges of $25.0 and charges for the termination of the Magnetation pellet offtake agreement and related transportation costs of $69.5. Included in the 2015 operating profit was a $28.1 charge to temporarily idle the Ashland Works Hot End and the net pension/OPEB corridor charge of $131.2. Also included was operating profit from SunCoke Middletown of $66.0 and $62.6 for 2016 and 2015.

Interest Expense

Interest expense for 2016 decreased to $163.9 from $173.0 in 2015. The decrease was primarily as a result of lower average Credit Facility borrowings outstanding during 2016 as compared to 2015 due to the two successful equity offerings completed during 2016.

Impairment of Magnetation Investment

We recognized a non-cash impairment charge of $256.3 for 2015 related to our investment in Magnetation. For further discussion, see the Magnetation section below and Note 4 to the consolidated financial statements.

Impairment of AFSG Investment

During the fourth quarter of 2015, AK Steel received a cash distribution of $14.0 from AFSG. After this distribution, we determined that our remaining investment in AFSG was impaired and we recognized a non-cash charge of $41.6 to write off the remaining investment in AFSG.

Other Income (Expense)

Other income (expense) was $4.9 of expense for 2016 and other income of $1.4 for 2015. During 2016, we repurchased the $380.0 of senior secured notes due 2018 and an aggregate principal amount of $10.4 of senior notes due 2022. These 2016 debt transactions generated $9.4 of losses in other income (expense). During 2015, we repurchased an aggregate principal amount of $23.8 of the 2021 Notes in private, open market transactions and recognized gains on the repurchases of $9.4. See Note 6 to the consolidated financial statements for further information on long-term debt financing. Other income (expense) included our share of Magnetation losses of $16.3 for 2015.

Income Taxes

We recorded income tax expense of $3.2 in 2016, compared to $63.4 in 2015. We adjust our tax valuation allowance on our deferred tax assets for changes in our LIFO reserve, significantly affecting our income tax provision. Therefore, the income tax expense was lower in 2016 from 2015 principally due to a significant decline in LIFO credit. In addition, 2016 income tax expense included a non-cash income tax benefit of $4.5 from allocating income tax expense to other comprehensive income, compared to $13.2 in 2015.

Net Income (Loss) and Adjusted Net Income (Loss) Attributable to AK Steel Holding Corporation

Net loss attributable to AK Holding in 2016 was $7.8, or $0.03 per share. The net loss in 2016 included a pension corridor charge of $78.4, an OPEB corridor credit of $35.3 and a pension settlement charge of $25.0, netting to $68.1, or $0.29 per diluted share. Additionally the net loss in 2016 included charges to terminate the Magnetation pellet offtake agreement and related transportation costs of $69.5, or $0.30 per diluted share. Excluding the above charges, we had adjusted net income of $129.8, or $0.56 per diluted share, for 2016.

Net loss attributable to AK Holding in 2015 was $509.0, or $2.86 per diluted share. The net loss in 2015 included a pension corridor charge of $144.3 and an OPEB corridor credit of $13.1, netting to $131.2, or $0.74 per diluted share. Additionally, the net loss in 2015 included an impairment charge for the Magnetation investment of $256.3, or $1.44 per diluted share, and an impairment charge for the AFSG investment of $41.6, or $0.23 per diluted share, and a charge to temporarily idle the Ashland Works Hot End of $28.1, or $0.16 per diluted share. Excluding these charges, we had an adjusted net loss of $51.8, or $0.29 per diluted share, for 2015.


- 25-

Table of Contents

Adjusted EBITDA

Adjusted EBITDA was $501.9, or 8.5% of net sales, for 2016, and $393.4, or 5.9% of net sales, for 2015.

Non-GAAP Financial Measures

In certain of our disclosures, we have reported adjusted EBITDA, adjusted EBITDA margin and adjusted net income (loss) that exclude the effects of noncontrolling interests, pension and OPEB net corridor and settlement charges, charges (credit) for the termination of an iron ore pellet offtake agreement and related transportation costs, impairment charges for our investments in Magnetation and AFSG, charges for temporarily idling facilities, an asset impairment charge and a charge for the change in U.S. income tax law. We believe that reporting adjusted net income (loss) attributable to AK Holding (as a total and on a per share basis) with these items excluded more clearly reflects our current operating results and provides investors with a better understanding of our overall financial performance.

EBITDA is an acronym for earnings before interest, taxes, depreciation and amortization. It is a metric that is sometimes used to compare the results of different companies by removing the effects of different factors that might otherwise make comparisons inaccurate or inappropriate. For purposes of this report, we have made adjustments to EBITDA to also exclude the effect of noncontrolling interests, pension and OPEB net corridor and settlement charges, charges (credit) for the termination of an iron ore pellet offtake agreement and related transportation costs, impairment charges for our investments in Magnetation and AFSG and charges for temporarily idling facilities, an asset impairment charge and a charge for the change in U.S. income tax law. The adjusted results, although not financial measures under generally accepted accounting principles in the United States (“GAAP”) and not identically applied by other companies, facilitate the ability to analyze our financial results in relation to those of our competitors and to our prior financial performance by excluding items that otherwise would distort the comparison. Adjusted EBITDA, adjusted EBITDA margin and adjusted net income (loss) are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with GAAP and are not necessarily comparable to similarly titled measures used by other companies.

We recognize in our results of operations, as a corridor adjustment, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets. Amounts inside this 10% corridor are amortized over the plan participants’ life expectancy. The need for a corridor charge is considered at any remeasurement date, but has generally only been recorded in the fourth quarter at the time of the annual remeasurement. After excluding the corridor charge, the remaining pension and OPEB expenses included in the non-GAAP measure are comparable to the accounting for pension and OPEB expenses on a GAAP basis in the first three quarters of the year and we believe this is useful to investors in analyzing our results on a quarter-to-quarter basis, as well as analyzing our results on a year-to-year basis. As a result of the corridor method of accounting, our subsequent financial results on both a GAAP and a non-GAAP basis do not contain any amortization of prior period actuarial gains or losses that exceeded the corridor threshold because those amounts were immediately recognized as a corridor adjustment in the period incurred. Actuarial net gains and losses occur when actual experience differs from any of the many assumptions used to value the benefit plans, or when the assumptions change, as they may each year when we perform a valuation. The two most significant of those assumptions are the discount rate we use to value projected plan obligations and the rate of return on plan assets. In addition, changes in other actuarial assumptions and the degree by which the unrealized gains or losses are within the corridor threshold before remeasurement will affect the corridor adjustment calculation. The effect of prevailing interest rates on the discount rate as of a measurement date and actual return on plan assets compared to the expected return will have a significant impact on our liability, corridor adjustment and following year’s expense for these benefit plans. For example, actuarial assumptions we made to remeasure the funded status of our pension and OPEB obligations in the fourth quarter of 2016 affected actuarial losses and the related pension/OPEB net corridor charge. The net corridor charge reflected (i) a decrease in the discount rate assumption used to determine pension liabilities from 4.15% at December 31, 2015 to 3.35% at the October 2016 remeasurement (an actuarial loss of approximately $221.1), partially offset by (ii) gains from changes in pension and OPEB mortality assumptions, lower claims costs and other demographic factors (netting to a gain of approximately $76.4) and (iii) the net effect of the difference between the expected annualized return on assets of 7.25% ($129.4) and the actual annualized return on assets of 12.7% as of the October 2016 remeasurement ($228.8) (netting to a gain of $99.4). We believe that the corridor method of accounting for pension and OPEB obligations is rarely used by other publicly traded companies. However, because other companies use different approaches to recognize actuarial gains and losses, our resulting pension and OPEB expense on a GAAP basis or a non-GAAP basis may not be comparable to other companies’ pension and OPEB expense on a GAAP basis. Although the net corridor charge reduces reported operating and net income, it does not affect our cash flows in the current period. However, we expect to ultimately settle the pension and OPEB obligations in cash.

Neither current shareholders nor potential investors in our securities should rely on adjusted EBITDA, adjusted EBITDA margin or adjusted net income (loss) as a substitute for any GAAP financial measure and we encourage investors and potential investors to review the following reconciliations of adjusted EBITDA and adjusted net income (loss).


- 26-

Table of Contents

Reconciliation of Adjusted EBITDA
 
 
2017
 
2016
 
2015
Net income (loss) attributable to AK Holding
 
$
6.2

 
$
(7.8
)
 
$
(509.0
)
Net income attributable to noncontrolling interests
 
61.4

 
66.0

 
62.8

Income tax expense (benefit)
 
(17.0
)
 
3.2

 
63.4

Interest expense
 
152.3

 
163.9

 
173.0

Interest income
 
(1.4
)
 
(1.6
)
 
(1.3
)
Depreciation
 
226.0

 
216.6

 
216.0

Amortization
 
10.3

 
4.8

 
8.4

EBITDA
 
437.8

 
445.1

 
13.3

Less: EBITDA of noncontrolling interests (a)
 
77.7

 
80.8

 
77.1

Pension and OPEB net corridor and settlement charges
 

 
68.1

 
131.2

Charges (credit) for termination of pellet agreement and related transportation costs
 
(19.3
)
 
69.5

 

Impairment of Magnetation investment
 

 

 
256.3

Impairment of AFSG investment
 

 

 
41.6

Charge for facility idling
 

 

 
28.1

Asset impairment charge
 
75.6

 

 

Adjusted EBITDA (b)
 
$
416.4

 
$
501.9

 
$
393.4

Adjusted EBITDA margin
 
6.8
%
 
8.5
%
 
5.9
%

(a)
The reconciliation of net income attributable to noncontrolling interests to EBITDA of noncontrolling interests is as follows:
 
 
2017
 
2016
 
2015
Net income attributable to noncontrolling interests
 
$
61.4

 
$
66.0

 
$
62.8

Depreciation
 
16.3

 
14.8

 
14.3

EBITDA of noncontrolling interests
 
$
77.7

 
$
80.8

 
$
77.1


(b)
Included in adjusted EBITDA and adjusted net income (loss) for the years ended December 31, 2017 and 2016, were $31.6 and $45.6, or $0.10 and $0.20 per diluted share, of unrealized gains on iron ore derivatives that do not qualify for hedge accounting.


- 27-

Table of Contents

Reconciliation of Adjusted Net Income (Loss)
 
 
2017
 
2016
 
2015
Reconciliation to Net Income (Loss) Attributable to AK Holding
 
 
 
 
 
 
Net income (loss) attributable to AK Holding, as reported
 
$
6.2

 
$
(7.8
)
 
$
(509.0
)
Pension and OPEB net corridor and settlement charges
 

 
68.1

 
131.2

Charges (credit) for termination of pellet agreement and related transportation costs
 
(19.3
)
 
69.5

 

Impairment of Magnetation investment
 

 

 
256.3

Impairment of AFSG investment
 

 

 
41.6

Charge for facility idling
 

 

 
28.1

Asset impairment charge
 
75.6

 

 

Non-cash charge for U.S. tax legislation
 
32.1

 

 

Adjusted net income (loss) attributable to AK Holding (b)
 
$
94.6

 
$
129.8

 
$
(51.8
)
 
 
 
 
 
 
 
Reconciliation to Diluted Earnings (Loss) per Share
 
 
 
 
 
 
Diluted earnings (loss) per share, as reported
 
$
0.02

 
$
(0.03
)