Supplementary Financial Statement Information

Related Party Transactions

The Company regularly transacts business with certain of its equity investees—Combined Metals of Chicago, LLC and Rockport Roll Shop LLC. The following relates to the Company’s transactions with these equity investees for the years indicated:



	2012		2011		2010
Sales to equity investees	$	60.4	$	52.8	$	41.2
Purchases from equity investees	11.8		12.4		16.1

The following is the Company’s outstanding receivables and payables with the above equity investees as of the end of the year indicated:



	2012		2011
Accounts receivable from equity investees	$	2.3	$	2.7
Accounts payable to equity investees	1.1		0.9
Notes receivable from equity investees	7.6		7.6

Research and Development Costs

The Company conducts a broad range of research and development activities aimed at improving existing products and manufacturing processes and developing new products and processes. Research and development costs, which are recorded as expense when incurred, totaled $12.5, $13.2 and $9.7 in 2012, 2011 and 2010, respectively.

Allowance for Doubtful Accounts

The following shows changes in the allowance for doubtful accounts for the years ended December 31, 2012, 2011 and 2010:



	2012			2011			2010
Balance at beginning of year	$	11.9		$	13.1		$	13.4
Increase (decrease) in allowance	(2.7		)	(1.1		)	1.4
Receivables written off	(0.1		)	(0.1		)	(1.7		)
Balance at end of year	$	9.1		$	11.9		$	13.1

Inventories

Inventories as of December 31, 2012 and 2011, consist of:



	2012			2011
Finished and semi-finished	$	728.5		$	640.1
Raw materials	315.7			302.6
Total cost	1,044.2			942.7
Adjustment to state inventories at LIFO value	(435.0		)	(524.0		)
Net inventories	$	609.2		$	418.7

During 2012, 2011 and 2010, liquidation of LIFO layers generated income of $0.9, $109.9 and $13.0, respectively.

The following shows changes in the LIFO reserve for the years ended December 31, 2012, 2011 and 2010:



	2012			2011		2010
Balance at beginning of year	$	524.0		$	514.2	$	405.2
Change in reserve	(89.0		)	9.8		109.0
Balance at end of year	$	435.0		$	524.0	$	514.2

Property, Plant and Equipment

The Company’s property, plant and equipment balances as of December 31, 2012 and 2011 are as follows:



	2012			2011
Land, land improvements and leaseholds	$	239.8		$	217.2
Buildings	428.3			397.8
Machinery and equipment	5,224.4			5,303.9
Construction in progress	51.4			48.3
Total	5,943.9			5,967.2
Less accumulated depreciation	(3,931.6		)	(3,797.0		)
Property, plant and equipment, net	$	2,012.3		$	2,170.2

The amount of interest on capital projects capitalized in 2012, 2011 and 2010 was $2.5, $6.7 and $10.1, respectively.

During December 2010, the Company announced that it was permanently closing its Ashland, Kentucky coke plant during 2011 and recorded an approximate $45.9 impairment charge for the coke plant assets in 2010.

Asset Retirement Obligations

The following reflects changes in the carrying amounts of asset retirement obligations for the years ended December 31, 2012, 2011 and 2010:



	2012			2011		2010
Balance at beginning of year	$	5.8		$	5.3	$	4.9
Adjustment to obligations	(0.9		)	—		—
Accretion expense	0.5			0.5		0.4
Balance at end of year	$	5.4		$	5.8	$	5.3

Metallurgical Coal Transaction

In October 2011, AK Steel acquired 100% of the stock of a company now known as AK Coal Resources, Inc. AK Coal controls, through ownership or lease, significant reserves of low-volatile metallurgical coal, which is used to produce coke needed for iron-making blast furnaces. AK Steel agreed to pay $36.0 for the stock, consisting of a $24.0 payment made at closing and payments of the remaining amount over a three-year period. At the present time, AK Coal leases a portion of its reserves to third party miners and collects royalties from their production. The balance of its coal reserves is not currently being mined. AK Steel has commenced development of a mining plan and has filed for the necessary permits to mine the coal. Commencement of mining operations and coal production is contingent upon, among other things, obtaining all necessary permits and making necessary capital investments in equipment.