Document and Entity Information

3 Months Ended

Mar. 31, 2016

Apr. 29, 2016

Document Information [Line Items]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Mar. 31, 2016

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

Q1

Entity Registrant Name

TimkenSteel Corporation

Entity Central Index Key

0001598428

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Entity Common Stock, Shares Outstanding

44,220,054

Consolidated Statements of Operations (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Income Statement [Abstract]

Net sales

$ 217.9

$ 388.7

Cost of products sold

214.5

347.1

Gross Profit

3.4

41.6

Selling, general and administrative expenses

22.9

29.1

Impairment charges

0

0.4

Operating (Loss) Income

(19.5)

12.1

Interest expense

2.0

0.1

Other expense, net

0.8

0.9

(Loss) Income Before Income Taxes

(22.3)

11.1

(Benefit) provision for income taxes

(8.7)

4.2

Net (Loss) Income

$ (13.6)

$ 6.9

Basic (loss) earnings per share

$ (0.31)

$ 0.15

Diluted (loss) earnings per share

$ (0.31)

$ 0.15

Dividends per share

$ 0.00

$ 0.14

Consolidated Statements of Comprehensive (Loss) Income (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Statement of Comprehensive Income [Abstract]

Net (loss) income

$ (13.6)

$ 6.9

Foreign currency translation adjustments

(0.5)

(0.9)

Pension and postretirement liability adjustment

4.2

6.5

Other comprehensive income, net of tax

3.7

5.6

Comprehensive (Loss) Income, net of tax

$ (9.9)

$ 12.5

Consolidated Balance Sheets (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Current Assets

Cash and cash equivalents

$ 37.5

$ 42.4

Accounts receivable, net of allowances

95.0

80.9

Inventories, net

160.9

173.9

Deferred charges and prepaid expenses

4.4

11.4

Other current assets

7.9

9.2

Total Current Assets

305.7

317.8

Property, Plant and Equipment, Net

760.5

769.3

Pension assets

23.4

20.0

Intangible assets, net

29.1

30.6

Other non-current assets

5.4

4.1

Total Other Assets

57.9

54.7

Total Assets

1,124.1

1,141.8

Current Liabilities

Accounts payable, trade

56.1

49.5

Salaries, wages and benefits

19.6

21.4

Accrued pension and postretirement

3.2

Other current liabilities

19.4

30.1

Total Current Liabilities

98.3

104.2

Long-term debt

185.2

200.2

Accrued pension and postretirement costs

129.5

114.1

Deferred income taxes

21.5

26.9

Other non-current liabilities

11.6

10.0

Total Non-Current Liabilities

347.8

351.2

Commitments and contingencies

0

Shareholders’ Equity

Preferred shares, without par value; authorized 10.0 million shares, none issued

0

Common shares, without par value; authorized 200.0 million shares; issued 2016 and 2015 - 45.7 million shares

0

Additional paid-in capital

1,058.5

1,058.2

Retained deficit

(75.3)

(61.7)

Treasury shares - 2016 and 2015 - 1.5 million, respectively

(45.1)

(46.3)

Accumulated other comprehensive loss

(260.1)

(263.8)

Total Shareholders’ Equity

678.0

686.4

Total Liabilities and Shareholders’ Equity

$ 1,124.1

$ 1,141.8

Consolidated Balance Sheets Parenthetical (USD $)

In Millions, except Share data, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Statement of Financial Position [Abstract]

Allowances for accounts receivable

$ 1.4

$ 1.5

Company preferred stock, no par value, authorized

10,000,000

Company Preferred stock, no par value, issued

0

Company common stock, no par value, authorized

200,000,000

Common Stock, Shares, Issued

45,700,000

Treasury Stock, Shares

1,500,000

Consolidated Statements of Cash Flows (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Net Cash Provided by (Used in) Operating Activities [Abstract]

Net (loss) income

$ (13.6)

$ 6.9

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

18.7

17.6

Impairment charges

0

0.4

Loss on sale or disposal of assets

0.8

0.2

Deferred income taxes

(8.7)

3.6

Stock-based compensation expense

1.5

2.0

Pension and postretirement expense

6.6

8.6

Pension and postretirement contributions and payments

(1.9)

(5.2)

Reimbursement from postretirement plan assets

13.3

0

Changes in operating assets and liabilities:

Accounts receivable

(14.1)

0.4

Inventories, net

13.0

16.6

Accounts payable

6.6

(23.4)

Other accrued expenses

(10.7)

(31.3)

Prepaid expenses

7.0

19.8

Other, net

1.6

(1.6)

Net Cash Provided by Operating Activities

20.1

14.6

Investing Activities

Capital expenditures

(8.5)

(17.9)

Proceeds from disposals of property, plant and equipment

0

0.2

Net Cash Used by Investing Activities

(8.5)

(17.7)

Financing Activities

Cash dividends paid to shareholders

0

(6.3)

Purchase of treasury shares

0

(4.7)

Proceeds from exercise of stock options

0

1.1

Payment on long-term debt

(15.0)

(20.0)

Proceeds from issuance of debt

0

30.0

Deferred financing costs

(1.5)

0

Net transfers to Timken and affiliates

0

(0.5)

Net Cash Used by Financing Activities

(16.5)

(0.4)

Effect of exchange rate changes on cash

0

Decrease In Cash and Cash Equivalents

(4.9)

(3.5)

Cash and cash equivalents at beginning of period

42.4

34.5

Cash and Cash Equivalents at End of Period

$ 37.5

$ 31.0

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to TimkenSteel’s Audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2015.

TimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. TimkenSteel’s portfolio includes special bar quality steel (SBQ), seamless mechanical tubes (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

The SBQ bars and tube production process occurs out of the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production process occurs out of three downstream manufacturing facilities: the TimkenSteel Material Services, Tryon Peak, and St. Clair facilities. Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the fourth quarter of 2015, in addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the two segment operating structure. The Company is now organized in a centralized manner based on functionality. As a result, TimkenSteel is conducting its business activities and reporting financial results in one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore the Company notes that monitoring financial results as one reportable segment will help the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. It is effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption permitted. TimkenSteel has adopted ASU 2015-05 effective January 1, 2016 on a prospective basis. The adoption of this ASU did not have a material effect on the Consolidated Financial Statements of TimkenSteel.

In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The adoption of ASU 2015-03 as of March 31, 2016 did not have a material effect on the Consolidated Balance Sheets of TimkenSteel.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes.” This guidance requires companies to classify all deferred tax asset and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Also, companies will no longer allocate valuation allowances between current and noncurrent deferred tax assets because those allowances will be classified as noncurrent. It is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. TimkenSteel adopted ASU 2015-17 as of December 31, 2015 and is presenting the changes prospectively.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent),” which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. However, sufficient information must be provided to permit reconciliation of the fair value of assets categorized within the fair value hierarchy to the amounts presented in the financial statements. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Upon adoption, the amendments shall be applied retrospectively to all periods presented. TimkenSteel adopted ASU 2015-07 effective December 31, 2015.

In August 2015, the FASB issued ASU 2015-15, "Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". This ASU provides additional guidance to ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-3), which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. This guidance explains that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The adoption of ASU 2015-15 did not affect the results of operations and financial position of TimkenSteel.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2014-15 did not affect the results of operations and financial condition of TimkenSteel.

Recently Issued Accounting Standards

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This ASU will affect several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification on the statement of cash flows and accounting for forfeitures. It is effective for fiscal years beginning after December 15, 2016, including interim periods, with early adoption permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which amends the principal versus agent guidance in ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” by clarifying how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The effective date and transition requirements are the same as those for ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. TimkenSteel is currently evaluating the impact of adopting this ASU on its results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and right-of-use asset on the balance sheet for operating leases with a term greater than one year. The guidance requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. It is effective for annual reporting periods beginning after December 15, 2018. TimkenSteel regularly enters into operating leases which previously did not require recognition on the balance sheet. The Company is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory (Topic 330),” which provides guidance that simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in, first-out (LIFO) and therefore applies only to the approximately 37% of inventory that TimkenSteel values by first-in, first-out (FIFO), average cost or specific identification methods. It is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date". This ASU defers the effective date of ASU 2014-09 for all entities by one year. Early application is permitted but not before the original effective date of annual periods beginning after December 15, 2016. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

Inventories

The components of inventories, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016			December 31, 2015
Inventories, net:
Manufacturing supplies		$41.4			$43.3
Raw materials	13.1			14.6
Work in process	57.9			59.5
Finished products	57.6			64.9
Subtotal	170.0			182.3
Allowance for surplus and obsolete inventory	(9.1		)	(8.4		)
Total Inventories, net		$160.9			$173.9

Inventories are valued at the lower of cost or market, with approximately 63% valued by the LIFO method and the remaining inventories, including manufacturing supplies inventory as well as international (outside the United States) inventories, valued by FIFO, average cost or specific identification methods.

An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.

The LIFO reserve as of March 31, 2016 and December 31, 2015 was $48.9 million and $51.4 million, respectively. TimkenSteel projects that its LIFO reserve will decrease for the year ending December 31, 2016 due primarily to lower anticipated manufacturing costs.

Property, Plant and Equipment

The components of property, plant and equipment, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016			December 31, 2015
Property, Plant and Equipment, net:
Land		$13.4			$13.4
Buildings and improvements	417.6			418.2
Machinery and equipment	1,318.5			1,298.2
Construction in progress	62.4			74.9
Subtotal	1,811.9			1,804.7
Less allowances for depreciation	(1,051.4		)	(1,035.4		)
Property, Plant and Equipment, net		$760.5			$769.3

Total depreciation expense was $17.1 million and $15.9 million for the three months ended March 31, 2016 and 2015, respectively. TimkenSteel recorded capitalized interest related to construction projects of $0.2 million and $1.0 million for the three months ended March 31, 2016 and 2015, respectively. TimkenSteel recorded impairment charges of $0.4 million related to the discontinued use of certain assets during the three months ended March 31, 2015.

On February 26, 2016, TimkenSteel entered into an agreement for a sale and leaseback transaction (the “Transaction”) regarding its Canton, Ohio office facilities for a purchase price of $20 million. TimkenSteel will lease back the facilities for a term of 20 years. TimkenSteel anticipates closing the Transaction late in the second quarter of 2016.

Intangible Assets

The components of intangible assets, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016						December 31, 2015
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Subject to Amortization:
Customer relationships		$6.8		$3.7		$3.1		$6.8		$3.7		$3.1
Technology use	9.0		4.8		4.2		9.0		4.7		4.3
Capitalized software	58.0		36.2		21.8		57.9		34.7		23.2
Total Intangible Assets		$73.8		$44.7		$29.1		$73.7		$43.1		$30.6

Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives. Amortization expense for intangible assets for the three months ended March 31, 2016 and 2015 was $1.6 million and $1.7 million, respectively.

Financing Arrangements

The components of long-term debt as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016		December 31, 2015
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.38% as of March 31, 2016)		$12.2		$12.2
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.39% as of March 31, 2016)	9.5		9.5
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.39% as of March 31, 2016)	8.5		8.5
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)	155.0		170.0
Total Long-Term Debt		$185.2		$200.2

Amended Credit Agreement

On February 26, 2016, the Company, as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into Amendment No. 1 to the Amended and Restated Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.

The Amended Credit Agreement provides for a $265.0 million asset-based revolving credit facility, including a $13.3 million sublimit for the issuance of commercial and standby letters of credit and a $26.5 million sublimit for swingline loans. The availability of borrowings under the Amended Credit Agreement is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of TimkenSteel and the subsidiaries of TimkenSteel guaranteeing TimkenSteel’s obligations thereunder, each multiplied by an applicable advance rate. The Amended Credit Agreement includes a block on availability equal to the greater $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing the Company’s borrowing base by the availability block.

The Amended Credit Agreement contains certain customary covenants, including covenants that limit the ability of TimkenSteel and its subsidiaries to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness (iv) enter into consolidations, mergers, acquisitions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. Further, the Amended Credit Agreement contains financial covenants that (i) limit the amount of capital expenditures TimkenSteel may make to $45 million in fiscal year 2016 and $50 million in fiscal years thereafter and (ii) require the Company to maintain a minimum specified fixed charge coverage ratio for the year-to-date periods ending June 30, 2017, July 31, 2017 and August 31, 2017.

Borrowings under the Amended Credit Agreement bear interest based on the daily balance outstanding at LIBOR (with no rate floor), plus an applicable margin (varying from 3.00% to 3.50%) and an additional 0.75% on the machinery and equipment component or, in certain cases, an alternate base rate (based on certain lending institutions’ Prime Rate or as otherwise specified in the Amended and Restated Credit Agreement, with no rate floor), plus an applicable margin (varying from 2.00% to 2.50%). The Amended Credit Agreement also carries a commitment fee equal to the unused borrowings multiplied by an applicable margin 0.50%. The applicable margins are calculated quarterly and vary based on TimkenSteel’s average quarterly availability as set forth in the Amended Credit Agreement. The interest rate under the Amended Credit Agreement was 4.22% as of March 31, 2016. The amount available under the Amended Credit Agreement as of March 31, 2016 was $17.1 million net, after reducing for the block on availability of $33.1 million.

Advanced Quench-and-Temper Facility

In the second quarter of 2015, TimkenSteel entered into a capital lease arrangement with the Stark County Port Authority in connection with the construction of a new advanced quench-and-temper facility in Perry Township, Ohio and the issuance of an Industrial Revenue Bond. The bond is held 100% by TimkenSteel Material Services, LLC (a wholly-owned subsidiary of TimkenSteel) and, accordingly, the obligation under the lease agreement and investment in the Industrial Revenue Bond, as well as the related interest income and expense, are eliminated in the Consolidated Financial Statements. As of March 31, 2016, $34.6 million has been spent on the new advanced quench-and-temper facility and is reported in property, plant and equipment, net in the Consolidated Balance Sheets. Of this amount, $7.2 million has been financed through the capital lease arrangement described above.

Revenue Refunding Bonds

On June 1, 2014, Timken purchased, in lieu of redemption, the State of Ohio Water Development Revenue Refunding Bonds (Water Bonds), State of Ohio Air Quality Development Revenue Refunding Bonds (Air Quality Bonds) and State of Ohio Pollution Control Revenue Refunding Bonds (Pollution Control Bonds) (collectively, Bonds). Pursuant to an Assignment and Assumption Agreement dated June 24, 2014 (Assignment) between Timken and TimkenSteel, Timken assigned all of its right, title and interest in and to the loan agreements and the notes associated with the Bonds to, and these obligations were assumed by, TimkenSteel. Additionally, replacement letters of credit were issued for the Water Bonds and the Pollution Control Bonds. The Bonds were remarketed on June 24, 2014 (Remarketing Date) in connection with the conversion of the interest rate mode for the Bonds to the weekly rate and the delivery of the replacement letters of credit, as applicable. TimkenSteel is responsible for payment of the interest and principal associated with the Bonds subsequent to the Remarketing Date.

All of TimkenSteel’s long-term debt is variable-rate debt and, as a result, the carrying value of this debt is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates, which is considered a Level 2 fair value input as defined by Accounting Standard Codification (ASC) 820, “Fair Value Measurements”. The valuation of Level 2 is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended March 31, 2016 and 2015 by component are as follows:



	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance at December 31, 2015		($6.3	)		($257.5	)		($263.8	)
Other comprehensive income (loss) before reclassifications, before income tax	(0.5		)	—			(0.5		)
Amounts reclassified from accumulated other comprehensive loss, before income tax	—			6.5			6.5
Income tax expense	—			(2.3		)	(2.3		)
Net current period other comprehensive (loss), net of income taxes	(0.5		)	4.2			3.7
Balance at March 31, 2016		($6.8	)		($253.3	)		($260.1	)



	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance at December 31, 2014		($4.8	)		($292.5	)		($297.3	)
Other comprehensive income (loss) before reclassifications, before income tax	(0.9		)	0.8			(0.1		)
Amounts reclassified from accumulated other comprehensive loss, before income tax	—			9.1			9.1
Income tax expense	—			(3.4		)	(3.4		)
Net current period other comprehensive (loss), net of income taxes	(0.9		)	6.5			5.6
Balance at March 31, 2015		($5.7	)		($286.0	)		($291.7	)

The reclassification of the pension and postretirement liability adjustment was included in costs of products sold and selling, general and administrative expenses in the Unaudited Consolidated Statements of Operations. These components are included in the computation of net periodic benefit cost.

Changes in Shareholders' Equity

Changes in the components of shareholders’ equity for the three months ended March 31, 2016 were as follows:



	Total			Additional Paid-in Capital			Retained (Deficit)			Treasury Shares			Accumulated Other Comprehensive Loss
Balance as of December 31, 2015		$686.4			$1,058.2			($61.7	)		($46.3	)		($263.8	)
Net loss	(13.6		)	—			(13.6		)	—			—
Pension and postretirement adjustment, net of tax	4.2			—			—			—			4.2
Foreign currency translation adjustments	(0.5		)	—			—			—			(0.5		)
Stock-based compensation expense	1.5			1.5			—			—			—
Issuance of treasury shares	—			(1.2		)	—			1.2			—
Balance as of March 31, 2016		$678.0			$1,058.5			($75.3	)		($45.1	)		($260.1	)

Retirement and Postretirement Benefits

Retirement and Postretirement Plans

The components of net periodic benefit cost for the three months ended March 31, 2016 and 2015 were as follows:



	Three Months Ended March 31, 2016						Three Months Ended March 31, 2015
Components of net periodic benefit cost:	Pension			Postretirement			Pension			Postretirement
Service cost		$4.2			$0.4			$4.2			$0.4
Interest cost	13.1			2.3			13.0			2.4
Expected return on plan assets	(18.2		)	(1.7		)	(18.8		)	(1.7		)
Amortization of prior service cost	0.2			0.3			0.1			0.3
Amortization of net actuarial loss	6.0			—			8.6			0.1
Net Periodic Benefit Cost		$5.3			$1.3			$7.1			$1.5

Net periodic benefit costs are included in the Unaudited Consolidated Statements of Operations as a component of cost of products sold and selling, general and administrative expenses.

Earnings Per Share

On June 30, 2014, 45.4 million TimkenSteel common shares were distributed to Timken shareholders in conjunction with the spinoff. For the three months ended March 31, 2015, 2.4 million of equity-based awards were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. In periods in which a net loss has occurred, as is the case for the three months ended March 31, 2016, the dilutive effect of stock-based awards is not recognized and thus is not utilized in the calculation of diluted earnings per share.

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the three months ended March 31, 2016 and 2015:



	Three Months Ended March 31,
	2016			2015
Numerator:
Net (loss) income for basic and diluted earnings per share		($13.6	)		$6.9

Denominator:
Weighted average shares outstanding, basic	44,206,837			44,769,679
Dilutive effect of stock-based awards	—			250,344
Weighted average shares outstanding, diluted	44,206,837			45,020,023

Basic (loss) earnings per share		($0.31	)		$0.15
Diluted (loss) earnings per share		($0.31	)		$0.15

Income Tax (Benefit) Provision

TimkenSteel’s (benefit) provision for income taxes in interim periods is computed by applying the appropriate estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items, including interest on prior-year tax liabilities, are recorded during the periods in which they occur.



	Three Months Ended March 31,
	2016			2015
(Benefit) provision for income taxes		($8.7	)		$4.2
Effective tax rate	39.0		%	37.8		%

The effective tax rate for the three months ended March 31, 2016 was higher than the U.S. federal statutory rate of 35% due primarily to U.S. state and local taxes and certain discrete tax items.

The effective tax rate for the three months ended March 31, 2015 was higher than the U.S. federal statutory rate of 35% primarily due to U.S. state and local tax rate differences.

Contingencies

TimkenSteel has a number of loss exposures that are incurred in the ordinary course of business such as environmental claims, product warranty claims, litigation and accounts receivable reserves. Establishing loss reserves for these matters requires management’s estimate and judgment regarding risk exposure and ultimate liability or realization. These loss reserves are reviewed periodically and adjustments are made to reflect the most recent facts and circumstances.

Environmental Matters

From time to time, TimkenSteel may be a party to lawsuits, claims or other proceedings related to environmental matters and/or may receive notices of potential violations of environmental laws and regulations from the U.S. Environmental Protection Agency and similar state or local authorities. TimkenSteel recorded reserves for such environmental matters as other current liabilities on the Unaudited Consolidated Balance Sheets. Accruals related to such environmental matters represent management’s best estimate of the fees and costs associated with these matters. Although it is not possible to predict with certainty the outcome of such matters, management believes that their ultimate dispositions should not have a material adverse effect on TimkenSteel’s financial position, cash flows, or results of operations.



	2016			2015
Beginning Balance, January 1		$1.3			$1.3
Expenses	0.1			—
Payments	(0.1		)	(0.1		)
Ending Balance, March 31		$1.3			$1.2

Restructuring Charges

During the second quarter of 2015, TimkenSteel approved and began implementing a cost reduction plan that resulted in the reduction of TimkenSteel’s salaried and hourly headcount. As of March 31, 2016 and December 31, 2015, TimkenSteel recorded a $0.3 million and $2.3 million reserve for such restructuring charges, respectively, classified as other current liabilities on the Consolidated Balance Sheets. The following is a rollforward of the consolidated restructuring accrual for the three months ended March 31, 2016:



Balance at December 31, 2015		$2.3
Expenses	—
Payments	(2.0		)
Balance at March 31, 2016		$0.3

Segment Information

TimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. TimkenSteel’s portfolio includes special bar quality steel (SBQ), seamless mechanical tubes (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

The SBQ bars and tube production process occurs out of the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production process occurs out of three downstream manufacturing facilities: the TimkenSteel Material Services, Tryon Peak, and St. Clair facilities. Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the fourth quarter of 2015, in addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the two segment operating structure. The Company is now organized in a centralized manner based on functionality. As a result, TimkenSteel is conducting its business activities and reporting financial results in one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore the Company notes that monitoring financial results as one reportable segment will help the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations. The Company’s Consolidated Financial Statements will reflect the realignment of the reportable segments for periods beginning after January 1, 2016 and for all comparable periods presented.

Basis of Presentation (Policies)

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to TimkenSteel’s Audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2015.

TimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. TimkenSteel’s portfolio includes special bar quality steel (SBQ), seamless mechanical tubes (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

The SBQ bars and tube production process occurs out of the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production process occurs out of three downstream manufacturing facilities: the TimkenSteel Material Services, Tryon Peak, and St. Clair facilities. Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the fourth quarter of 2015, in addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the two segment operating structure. The Company is now organized in a centralized manner based on functionality. As a result, TimkenSteel is conducting its business activities and reporting financial results in one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore the Company notes that monitoring financial results as one reportable segment will help the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations.

Recent Accounting Pronouncements (Policies)

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. It is effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption permitted. TimkenSteel has adopted ASU 2015-05 effective January 1, 2016 on a prospective basis. The adoption of this ASU did not have a material effect on the Consolidated Financial Statements of TimkenSteel.

In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The adoption of ASU 2015-03 as of March 31, 2016 did not have a material effect on the Consolidated Balance Sheets of TimkenSteel.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes.” This guidance requires companies to classify all deferred tax asset and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Also, companies will no longer allocate valuation allowances between current and noncurrent deferred tax assets because those allowances will be classified as noncurrent. It is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. TimkenSteel adopted ASU 2015-17 as of December 31, 2015 and is presenting the changes prospectively.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent),” which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. However, sufficient information must be provided to permit reconciliation of the fair value of assets categorized within the fair value hierarchy to the amounts presented in the financial statements. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Upon adoption, the amendments shall be applied retrospectively to all periods presented. TimkenSteel adopted ASU 2015-07 effective December 31, 2015.

In August 2015, the FASB issued ASU 2015-15, "Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". This ASU provides additional guidance to ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-3), which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. This guidance explains that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The adoption of ASU 2015-15 did not affect the results of operations and financial position of TimkenSteel.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2014-15 did not affect the results of operations and financial condition of TimkenSteel.

Recently Issued Accounting Standards

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This ASU will affect several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification on the statement of cash flows and accounting for forfeitures. It is effective for fiscal years beginning after December 15, 2016, including interim periods, with early adoption permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which amends the principal versus agent guidance in ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” by clarifying how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The effective date and transition requirements are the same as those for ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. TimkenSteel is currently evaluating the impact of adopting this ASU on its results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and right-of-use asset on the balance sheet for operating leases with a term greater than one year. The guidance requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. It is effective for annual reporting periods beginning after December 15, 2018. TimkenSteel regularly enters into operating leases which previously did not require recognition on the balance sheet. The Company is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory (Topic 330),” which provides guidance that simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in, first-out (LIFO) and therefore applies only to the approximately 37% of inventory that TimkenSteel values by first-in, first-out (FIFO), average cost or specific identification methods. It is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date". This ASU defers the effective date of ASU 2014-09 for all entities by one year. Early application is permitted but not before the original effective date of annual periods beginning after December 15, 2016. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

Inventories (Tables)

Schedule of Inventory, Current

The components of inventories, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016			December 31, 2015
Inventories, net:
Manufacturing supplies		$41.4			$43.3
Raw materials	13.1			14.6
Work in process	57.9			59.5
Finished products	57.6			64.9
Subtotal	170.0			182.3
Allowance for surplus and obsolete inventory	(9.1		)	(8.4		)
Total Inventories, net		$160.9			$173.9

Property, Plant and Equipment (Tables)

Property, Plant and Equipment

The components of property, plant and equipment, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016			December 31, 2015
Property, Plant and Equipment, net:
Land		$13.4			$13.4
Buildings and improvements	417.6			418.2
Machinery and equipment	1,318.5			1,298.2
Construction in progress	62.4			74.9
Subtotal	1,811.9			1,804.7
Less allowances for depreciation	(1,051.4		)	(1,035.4		)
Property, Plant and Equipment, net		$760.5			$769.3

Intangible Assets (Tables)

Schedule of Finite-Lived Intangible Assets

The components of intangible assets, net as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016						December 31, 2015
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Subject to Amortization:
Customer relationships		$6.8		$3.7		$3.1		$6.8		$3.7		$3.1
Technology use	9.0		4.8		4.2		9.0		4.7		4.3
Capitalized software	58.0		36.2		21.8		57.9		34.7		23.2
Total Intangible Assets		$73.8		$44.7		$29.1		$73.7		$43.1		$30.6

Financing Arrangements (Tables)

Schedule of Long-term Debt Instruments

The components of long-term debt as of March 31, 2016 and December 31, 2015 were as follows:



	March 31, 2016		December 31, 2015
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.38% as of March 31, 2016)		$12.2		$12.2
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.39% as of March 31, 2016)	9.5		9.5
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.39% as of March 31, 2016)	8.5		8.5
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)	155.0		170.0
Total Long-Term Debt		$185.2		$200.2

Accumulated Other Comprehensive Loss (Tables)

Schedule of Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive loss for the three months ended March 31, 2016 and 2015 by component are as follows:



	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance at December 31, 2015		($6.3	)		($257.5	)		($263.8	)
Other comprehensive income (loss) before reclassifications, before income tax	(0.5		)	—			(0.5		)
Amounts reclassified from accumulated other comprehensive loss, before income tax	—			6.5			6.5
Income tax expense	—			(2.3		)	(2.3		)
Net current period other comprehensive (loss), net of income taxes	(0.5		)	4.2			3.7
Balance at March 31, 2016		($6.8	)		($253.3	)		($260.1	)



	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance at December 31, 2014		($4.8	)		($292.5	)		($297.3	)
Other comprehensive income (loss) before reclassifications, before income tax	(0.9		)	0.8			(0.1		)
Amounts reclassified from accumulated other comprehensive loss, before income tax	—			9.1			9.1
Income tax expense	—			(3.4		)	(3.4		)
Net current period other comprehensive (loss), net of income taxes	(0.9		)	6.5			5.6
Balance at March 31, 2015		($5.7	)		($286.0	)		($291.7	)

Changes in Shareholders' Equity (Tables)

Schedule of Stockholders Equity

Changes in the components of shareholders’ equity for the three months ended March 31, 2016 were as follows:



	Total			Additional Paid-in Capital			Retained (Deficit)			Treasury Shares			Accumulated Other Comprehensive Loss
Balance as of December 31, 2015		$686.4			$1,058.2			($61.7	)		($46.3	)		($263.8	)
Net loss	(13.6		)	—			(13.6		)	—			—
Pension and postretirement adjustment, net of tax	4.2			—			—			—			4.2
Foreign currency translation adjustments	(0.5		)	—			—			—			(0.5		)
Stock-based compensation expense	1.5			1.5			—			—			—
Issuance of treasury shares	—			(1.2		)	—			1.2			—
Balance as of March 31, 2016		$678.0			$1,058.5			($75.3	)		($45.1	)		($260.1	)

Retirement and Postretirement Benefits (Tables)

Schedule of Defined Benefit Plans Disclosures

The components of net periodic benefit cost for the three months ended March 31, 2016 and 2015 were as follows:



	Three Months Ended March 31, 2016						Three Months Ended March 31, 2015
Components of net periodic benefit cost:	Pension			Postretirement			Pension			Postretirement
Service cost		$4.2			$0.4			$4.2			$0.4
Interest cost	13.1			2.3			13.0			2.4
Expected return on plan assets	(18.2		)	(1.7		)	(18.8		)	(1.7		)
Amortization of prior service cost	0.2			0.3			0.1			0.3
Amortization of net actuarial loss	6.0			—			8.6			0.1
Net Periodic Benefit Cost		$5.3			$1.3			$7.1			$1.5

Earnings Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the three months ended March 31, 2016 and 2015:



	Three Months Ended March 31,
	2016			2015
Numerator:
Net (loss) income for basic and diluted earnings per share		($13.6	)		$6.9

Denominator:
Weighted average shares outstanding, basic	44,206,837			44,769,679
Dilutive effect of stock-based awards	—			250,344
Weighted average shares outstanding, diluted	44,206,837			45,020,023

Basic (loss) earnings per share		($0.31	)		$0.15
Diluted (loss) earnings per share		($0.31	)		$0.15

Income Tax (Benefit) Provision (Tables)

Schedule of Components of Income Tax Expense (Benefit)



	Three Months Ended March 31,
	2016			2015
(Benefit) provision for income taxes		($8.7	)		$4.2
Effective tax rate	39.0		%	37.8		%

Contingencies (Tables)

Schedule of Loss Contingencies by Contingency



	2016			2015
Beginning Balance, January 1		$1.3			$1.3
Expenses	0.1			—
Payments	(0.1		)	(0.1		)
Ending Balance, March 31		$1.3			$1.2

Restructuring Charges (Tables)

Schedule of Restructuring Reserve by Type of Cost

The following is a rollforward of the consolidated restructuring accrual for the three months ended March 31, 2016:



Balance at December 31, 2015		$2.3
Expenses	—
Payments	(2.0		)
Balance at March 31, 2016		$0.3

Basis of Presentation (Details)

3 Months Ended

12 Months Ended

Mar. 31, 2016

segment

T

manufacturing_facility

Dec. 31, 2015

segment

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Annual Melt Capacity

2,000,000

Number of Manufacturing Facilities

3

Number of Operating Segments

1

2

Number of Reportable Segments

1

Recent Accounting Pronouncements (Details) (Accounting Standards Update 2015-11 [Member])

Jul. 31, 2015

Accounting Standards Update 2015-11 [Member]

Item Effected [Line Items]

Percentage of FIFO Inventory

37.00%

Inventories (Details 1) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Inventory [Line Items]

Manufacturing supplies

$ 41.4

$ 43.3

Raw materials

13.1

14.6

Work in process

57.9

59.5

Finished products

57.6

64.9

Subtotal

170.0

182.3

Allowance for surplus and obsolete inventory

(9.1)

(8.4)

Total Inventories, net

$ 160.9

$ 173.9

Inventories (Details 2) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Inventory [Line Items]

Percentage of LIFO Inventory

63.00%

Inventory, LIFO Reserve

$ 48.9

$ 51.4

Property, Plant and Equipment (Details 1) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Property, Plant and Equipment [Line Items]

Land

$ 13.4

Buildings and improvements

417.6

418.2

Machinery and equipment

1,318.5

1,298.2

Construction in progress

62.4

74.9

Subtotal

1,811.9

1,804.7

Less allowances for depreciation

(1,051.4)

(1,035.4)

Property, Plant and Equipment, net

$ 760.5

$ 769.3

Property, Plant and Equipment (Details 2) (USD $)

In Millions, unless otherwise specified

0 Months Ended

3 Months Ended

Feb. 26, 2016

Mar. 31, 2016

Mar. 31, 2015

Feb. 26, 2016

Property, Plant and Equipment [Abstract]

Depreciation

$ 17.1

$ 15.9

Interest Costs Capitalized

0.2

1.0

Impairment charges

0

0.4

Sale Leaseback Transaction, Purchase Price

$ 20

Sale Leaseback Transaction, Term

20 years

Intangible Assets (Details) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

$ 73.8

$ 73.7

Accumulated Amortization

44.7

43.1

Net Carrying Amount

29.1

30.6

Customer Relationships [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

6.8

Accumulated Amortization

3.7

Net Carrying Amount

3.1

Technology-Based Intangible Assets [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

9.0

Accumulated Amortization

4.8

4.7

Net Carrying Amount

4.2

4.3

Computer Software, Intangible Asset [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

58.0

57.9

Accumulated Amortization

36.2

34.7

Net Carrying Amount

$ 21.8

$ 23.2

Intangible Assets (Details 2) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Amortization of Intangible Assets

$ 1.6

$ 1.7

Financing Arrangements (Details 1) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2016

Dec. 31, 2015

Debt Instrument [Line Items]

Long-term debt

$ 185.2

$ 200.2

Revolving Credit Facility [Member]

Debt Instrument [Line Items]

Long-term debt

155.0

170.0

Debt Instrument, Interest Rate, Stated Percentage

4.22%

State of Ohio Water Development Revenue Refunding Bonds [Member]

Debt Instrument [Line Items]

Long-term debt

12.2

Debt Instrument, Interest Rate, Stated Percentage

0.38%

State of Ohio Air Quality Development Revenue Refunding Bonds [Member]

Debt Instrument [Line Items]

Long-term debt

9.5

Debt Instrument, Interest Rate, Stated Percentage

0.39%

State of Ohio Pollution Control Revenue Refunding Bonds [Member]

Debt Instrument [Line Items]

Long-term debt

$ 8.5

Debt Instrument, Interest Rate, Stated Percentage

0.39%

Financing Arrangements (Details 2) (USD $)

In Millions, unless otherwise specified

3 Months Ended

0 Months Ended

3 Months Ended

Mar. 31, 2016

Dec. 31, 2015

Mar. 31, 2016

Revolving Credit Facility [Member]

Mar. 31, 2016

Minimum [Member]

Mar. 31, 2016

Minimum [Member]

London Interbank Offered Rate (LIBOR) [Member]

Mar. 31, 2016

Minimum [Member]

Prime Rate [Member]

Mar. 31, 2016

Maximum [Member]

London Interbank Offered Rate (LIBOR) [Member]

Mar. 31, 2016

Maximum [Member]

Prime Rate [Member]

Mar. 31, 2016

Advanced Quench-and-Temper Facility [Member]

Feb. 26, 2016

Amended Credit Facility [Member]

Feb. 26, 2016

Amended Credit Facility [Member]

Standby Letters of Credit [Member]

Feb. 26, 2016

Amended Credit Facility [Member]

Swingline Loan [Member]

Feb. 26, 2016

Amended Credit Facility [Member]

Maximum [Member]

Mar. 31, 2016

Machinery and Equipment [Member]

London Interbank Offered Rate (LIBOR) [Member]

Mar. 31, 2016

TimkenSteel Material Services, LLC [Member]

Advanced Quench-and-Temper Facility [Member]

Debt Instrument [Line Items]

Line of Credit Facility, Maximum Borrowing Capacity

$ 265.0

Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases

13.3

26.5

Debt Instrument, Covenant Compliance, Available Borrowing

28.9

Debt Instrument, Covenant Compliance, Available Borrowing, Percentage

12.50%

Debt Instrument, Covenant Compliance, Specific Event, Available Borrowing

20.0

Debt Instrument, Covenant Compliance, Specific Event, Available Borrowing, Percentage

12.50%

Debt Instrument, Covenant Compliance, Capital Expenditures Remainder of Fiscal Year

45

Debt Instrument, Covenant Compliance, Capital Expenditures After Current Fiscal Year

50

Debt Instrument, Basis Spread on Variable Rate

3.00%

2.00%

3.50%

2.50%

0.75%

Line of Credit Facility, Commitment Fee Percentage

0.50%

Debt Instrument, Interest Rate, Stated Percentage

4.22%

Line of Credit Facility, Remaining Borrowing Capacity

17.1

Line of Credit Facility, Remaining Borrowing Capacity, Including Block on Availability

33.1

Capital Leased Assets, Bond Ownership Percentage

100.00%

Construction in progress

62.4

74.9

34.6

Capital Leased Assets, Gross

$ 7.2

Accumulated Other Comprehensive Loss (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Mar. 31, 2016

Accumulated Translation Adjustment [Member]

Mar. 31, 2015

Accumulated Translation Adjustment [Member]

Mar. 31, 2016

Accumulated Defined Benefit Plans Adjustment [Member]

Mar. 31, 2015

Accumulated Defined Benefit Plans Adjustment [Member]

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss) [Member]

Dec. 31, 2015

Accumulated Other Comprehensive Income (Loss) [Member]

Mar. 31, 2015

Accumulated Other Comprehensive Income (Loss) [Member]

Dec. 31, 2014

Accumulated Other Comprehensive Income (Loss) [Member]

AOCI Attributable to Parent, Net of Tax [Roll Forward]

Beginning Balance

$ (6.3)

$ (4.8)

$ (257.5)

$ (292.5)

$ (260.1)

$ (263.8)

$ (291.7)

$ (297.3)

Other comprehensive income (loss) before reclassifications, before income tax

(0.5)

(0.1)

(0.5)

(0.9)

0

0.8

Amounts reclassified from accumulated other comprehensive loss, before income tax

6.5

9.1

0

6.5

9.1

Income tax expense

(2.3)

(3.4)

0

(2.3)

(3.4)

Net current period other comprehensive (loss), net of income taxes

3.7

5.6

(0.5)

(0.9)

4.2

6.5

Ending Balance

$ (6.8)

$ (5.7)

$ (253.3)

$ (286.0)

$ (260.1)

$ (263.8)

$ (291.7)

$ (297.3)

Changes in Shareholders' Equity (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Balance as of December 31, 2015

$ 686.4

Net (loss) income

(13.6)

6.9

Pension and postretirement adjustment, net of tax

4.2

Foreign currency translation adjustments

(0.5)

(0.9)

Stock-based compensation expense

1.5

Issuance of treasury shares

0

Balance as of March 31, 2016

678.0

Additional Paid-in Capital [Member]

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Balance as of December 31, 2015

1,058.2

Net (loss) income

0

Pension and postretirement adjustment, net of tax

0

Foreign currency translation adjustments

0

Stock-based compensation expense

1.5

Issuance of treasury shares

(1.2)

Balance as of March 31, 2016

1,058.5

Retained Earnings [Member]

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Balance as of December 31, 2015

(61.7)

Net (loss) income

(13.6)

Pension and postretirement adjustment, net of tax

0

Foreign currency translation adjustments

0

Stock-based compensation expense

0

Issuance of treasury shares

0

Balance as of March 31, 2016

(75.3)

Treasury Stock [Member]

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Balance as of December 31, 2015

(46.3)

Net (loss) income

0

Pension and postretirement adjustment, net of tax

0

Foreign currency translation adjustments

0

Stock-based compensation expense

0

Issuance of treasury shares

1.2

Balance as of March 31, 2016

(45.1)

Accumulated Other Comprehensive Income (Loss) [Member]

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Balance as of December 31, 2015

(263.8)

Net (loss) income

0

Pension and postretirement adjustment, net of tax

4.2

Foreign currency translation adjustments

(0.5)

Stock-based compensation expense

0

Issuance of treasury shares

0

Balance as of March 31, 2016

$ (260.1)

Retirement and Postretirement Benefits (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Pension Plan [Member]

Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]

Service cost

$ 4.2

Interest cost

13.1

13.0

Expected return on plan assets

(18.2)

(18.8)

Amortization of prior service cost

0.2

0.1

Amortization of net actuarial loss

6.0

8.6

Net Periodic Benefit Cost

5.3

7.1

Other Postretirement Benefit Plan [Member]

Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]

Service cost

0.4

Interest cost

2.3

2.4

Expected return on plan assets

(1.7)

Amortization of prior service cost

0.3

Amortization of net actuarial loss

0

0.1

Net Periodic Benefit Cost

$ 1.3

$ 1.5

Earnings Per Share (Details) (USD $)

In Millions, except Share data, unless otherwise specified

0 Months Ended

3 Months Ended

Jun. 30, 2014

Mar. 31, 2016

Mar. 31, 2015

Earnings Per Share [Abstract]

Stock Issued During Period, Shares, New Issues

45,400,000

Anti-dilutive Shares

2,400,000

Net (loss) income for basic and diluted earnings per share

$ (13.6)

$ 6.9

Weighted average shares outstanding, basic

44,206,837

44,769,679

Dilutive effect of stock-based awards

0

250,344

Weighted average shares outstanding, diluted

44,206,837

45,020,023

Basic (loss) earnings per share

$ (0.31)

$ 0.15

Diluted (loss) earnings per share

$ (0.31)

$ 0.15

Income Tax (Benefit) Provision (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Income Tax Disclosure [Abstract]

(Benefit) provision for income taxes

$ (8.7)

$ 4.2

Effective tax rate

39.00%

37.80%

Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent

35.00%

Contingencies (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Accrual for Environmental Loss Contingencies [Roll Forward]

Beginning Balance, January 1

$ 1.3

Expenses

0.1

0

Payments

(0.1)

Ending Balance, March 31

$ 1.3

$ 1.2

Restructuring Charges (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2016

Restructuring Reserve [Roll Forward]

Balance at December 31, 2015

$ 2.3

Expenses

0

Payments

(2.0)

Balance at March 31, 2016

$ 0.3

Segment Information (Details)

3 Months Ended

12 Months Ended

Mar. 31, 2016

segment

T

manufacturing_facility

Dec. 31, 2015

segment

Segment Reporting [Abstract]

Annual Melt Capacity

2,000,000

Number of Manufacturing Facilities

3

Number of Operating Segments

1

2

Number of Reportable Segments

1