Supplementary Financial Statement Information (Notes)

6 Months Ended

Jun. 30, 2019

Supplementary Financial Statement Information

Revenue

Net sales by market are presented below:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Automotive	$	1,081.7	$	1,108.7	$	2,172.6	$	2,227.8
Infrastructure and Manufacturing	267.7		263.8		545.8		505.1
Distributors and Converters	331.1		374.1		659.8		672.6
Total	$	1,680.5	$	1,746.6	$	3,378.2	$	3,405.5

Net sales by product line are presented below:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Carbon steel	$	1,102.2	$	1,102.4	$	2,201.4	$	2,171.0
Stainless and electrical steel	431.0		483.1		875.5		909.2
Tubular products, components and other	147.3		161.1		301.3		325.3
Total	$	1,680.5	$	1,746.6	$	3,378.2	$	3,405.5

We sell domestically to customers located primarily in the Midwestern, Southern and Eastern United States and to foreign customers, primarily in Canada, Mexico and Western Europe. Net sales to customers located outside the United States were $152.1 and $295.3 for the three and six months ended June 30, 2019, compared to $172.9 and $340.7 for the corresponding periods in 2018.

Inventory

Inventories as of June 30, 2019 and December 31, 2018, are presented below:



	June 30, 2019		December 31, 2018
Finished and semi-finished	$	1,003.8	$	1,054.4
Raw materials	350.1		365.5
Inventory	$	1,353.9	$	1,419.9

Other Non-Current Assets

Intangible assets at June 30, 2019 and December 31, 2018, consist of:



	Gross Amount		Accumulated Amortization			Net Amount
As of June 30, 2019
Customer relationships	$	36.6	$	(10.0	)	$	26.6
Technology	23.0		(6.2		)	16.8
Intangible assets	$	59.6	$	(16.2	)	$	43.4

As of December 31, 2018
Customer relationships	$	36.6	$	(7.4	)	$	29.2
Technology	19.3		(4.6		)	14.7
Intangible assets	$	55.9	$	(12.0	)	$	43.9

Amortization expense related to intangible assets was $2.2 and $4.2 for the three and six months ended June 30, 2019, compared to $2.3 and $4.7 for the three and six months ended June 30, 2018.

Investments in Affiliates

We have investments in several businesses that are accounted for using the equity method of accounting. Summarized financial statement data for all investees is presented below.



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue	$	83.0	$	83.5	$	160.8	$	158.3
Gross profit	24.0		23.6		45.5		44.7
Net income	4.3		5.1		7.0		9.3

Our share of income of equity investees (included in cost of products sold)	1.4		1.7		2.1		3.0

Ashland Works Closure

In January 2019, our Board of Directors approved and we announced the planned closure of our Ashland Works, including the previously idled blast furnace and steelmaking operations (“Ashland Works Hot End”) and the hot dip galvanizing coating line that has continued to operate. Factors that influenced our decision to close Ashland Works included an uncertain global trade landscape influenced by shifting domestic and international political priorities, Ashland Works’ high cost of production, and continued intense competition from domestic and foreign steel competitors. These conditions directly impact our pricing, which in turn directly impacts our assessment of the demand forecasts for the markets we serve. Despite several successful trade actions, we continue to see a high level of carbon steel imports driven by global overcapacity, particularly in China. The global overcapacity is expected to be exacerbated by several domestic steel companies that have restarted or plan new capacity additions in the United States. In addition, we have concluded that we have sufficient coating capacity to meet our customers’ needs without using our coating operations at Ashland Works. We are presently transitioning products to our other U.S. coating lines, and plan to close the Ashland Works coating line before the end of 2019.

We recorded a charge of $77.4 during the first quarter of 2019, which included $18.5 for termination of take-or-pay supply agreements, $15.2 for supplemental unemployment and other employee benefit costs, pension and OPEB termination benefits of $13.3 (recorded in pension and OPEB (income) expense), an estimated multiemployer plan withdrawal liability of $23.0, and $7.4 for other costs. The supplemental unemployment and other employee benefit costs are expected to be paid primarily in 2020 and 2021. For the $77.4 charge, we expect to make cash payments of approximately $15.0 in 2019, $30.0 in 2020 and the remaining amount over several years thereafter. The actual multiemployer plan withdrawal liability will not be known until 2020 and is expected to be paid over a number of years. In addition to the $77.4 charge recorded in the first quarter of 2019, we expect to record expenses of approximately $14.0 over the full-year 2019, consisting of cash costs of approximately $10.0 related to closing the facility and $4.0 of accelerated depreciation related to the coating line fixed assets. These cash costs related to closing the facility will decline in future years and no depreciation expense will be incurred beyond 2019. During the second quarter of 2019, we recorded adjustments to these amounts, consisting of $5.0 of additional employee benefit costs agreed to with the United Steelworkers for concluding the collective bargaining agreement, offset by a $5.0 reduction in the estimated multiemployer plan withdrawal liability. Ongoing costs to maintain the equipment and utilities and meet supplier obligations related to the idled Ashland Works Hot End were $2.4 and $4.9 for the three and six months ended June 30, 2019, and $5.0 and $10.4 for the corresponding periods in 2018.