Supplementary Financial Statement Information (Notes)

12 Months Ended

Dec. 31, 2019

Supplementary Financial Statement Information [Abstract]

Supplementary Financial Statement Information

Revenue

Net sales by market are presented below:



	2019		2018		2017
Automotive	$	4,172.2	$	4,284.7	$	3,951.5
Infrastructure and Manufacturing	1,006.0		1,049.1		948.0
Distributors and Converters	1,181.2		1,484.4		1,181.0
Total	$	6,359.4	$	6,818.2	$	6,080.5

Net sales by product line are presented below:



	2019		2018		2017
Carbon steel	$	4,143.6	$	4,409.1	$	4,034.5
Stainless and electrical steel	1,617.5		1,793.8		1,687.6
Tubular products, components and other	598.3		615.3		358.4
Total	$	6,359.4	$	6,818.2	$	6,080.5

We sell domestically to customers located primarily in the Midwestern and Eastern United States and to foreign customers located primarily in Canada, Mexico and Western Europe. Net sales to customers located outside the United States totaled $569.4, $634.8 and $627.1 for 2019, 2018 and 2017.

Research and Development Costs

We conduct 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 selling and administrative expenses when incurred, totaled $30.7, $29.4 and $28.1 in 2019, 2018 and 2017.

Allowance for Credit Losses

Changes in the allowance for credit losses for the years ended December 31, 2019, 2018 and 2017, are presented below:



	2019			2018			2017
Balance at beginning of year	$	6.6		$	6.8		$	7.8
Increase (decrease) in allowance	(1.6		)	0.3			(1.0		)
Receivables written off	(0.7		)	(0.5		)	—
Balance at end of year	$	4.3		$	6.6		$	6.8

Inventory

Inventories as of December 31, 2019 and 2018, consist of:



	2019		2018
Finished and semi-finished	$	971.4	$	1,054.4
Raw materials	374.8		365.5
Inventory	$	1,346.2	$	1,419.9

Property, Plant and Equipment

Property, plant and equipment as of December 31, 2019 and 2018, consist of:



	2019			2018
Land, land improvements and leaseholds	$	271.2		$	272.1
Buildings	514.8			509.7
Machinery and equipment	6,213.6			6,061.6
Construction in progress	169.3			125.8
Total	7,168.9			6,969.2
Less accumulated depreciation	(5,237.0		)	(5,057.6		)
Property, plant and equipment, net	$	1,931.9		$	1,911.6

Interest on capital projects capitalized in 2019, 2018 and 2017 was $3.1, $1.6 and $1.9. Asset retirement obligations were $10.6 and $8.5 at December 31, 2019 and 2018.

Goodwill and Intangible Assets

Changes in goodwill for the years ended December 31, 2019, 2018 and 2017 are presented below:



	2019		2018		2017
Balance at beginning of year	$	255.0	$	253.8	$	32.8
Acquisition	0.5		1.2		221.0
Balance at end of year	$	255.5	$	255.0	$	253.8

At December 31, 2019, goodwill consisted of $222.7 related to our Precision Partners business and $32.8 related to our AK Tube business.

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



	Gross Amount		Accumulated Amortization			Net Amount
As of December 31, 2019
Customer relationships	$	36.6	$	(12.5	)	$	24.1
Technology	23.0		(9.2		)	13.8
Intangible assets	$	59.6	$	(21.7	)	$	37.9

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 $9.7, $9.0 and $4.0 in 2019, 2018 and 2017. Amortization expense is included in costs of products sold. The remaining average life of our intangible assets is 4.6 years for customer relationships and 3.6 years for technology. Estimated annual amortization expense for intangible assets over the next five years is $10.6 for 2020, $8.4 for 2021, $8.4 for 2022, $7.1 for 2023 and $3.4 in 2024.

Other Non-current Assets

Other non-current assets as of December 31, 2019 and 2018, consist of:



	2019		2018
Operating lease assets	$	244.5	$	—
Investments in affiliates	79.5		80.5
Other	21.0		23.4
Other non-current assets	$	345.0	$	103.9

Accrued Liabilities

Accrued liabilities as of December 31, 2019 and 2018, consist of:



	2019		2018
Salaries, wages and benefits	$	83.0	$	127.8
Current portion of operating lease liabilities	49.6		—
Interest	33.8		34.8
Other	148.0		126.3
Accrued liabilities	$	314.4	$	288.9

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 had 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 impacted our pricing, which in turn directly impacted our assessment of the demand forecasts for the markets we serve. Despite several favorable trade actions, carbon steel imports remained at a high level, driven by global overcapacity, particularly in China. We expected global overcapacity to be exacerbated by several domestic steel companies that had restarted or planned new capacity additions in the United States. In addition, we concluded that we had sufficient coating capacity to meet our customers’ needs without using our coating operations at Ashland Works. We transitioned products to our other, lower cost coating lines in the U.S. and closed the Ashland Works coating line in November 2019.

For the year ended December 31, 2019, we recorded a charge of $69.3, which included $18.5 for termination of take-or-pay supply agreements, $20.1 for supplemental unemployment and other employee benefit costs, pension and other postretirement benefit (“OPEB”) termination benefits of $13.3 (recorded in pension and OPEB (income) expense), an estimated multiemployer plan withdrawal liability of $10.0, and $7.4 for other costs. The supplemental unemployment and other employee benefit costs are expected to be paid primarily in 2020 and 2021. The actual multiemployer plan withdrawal liability will not be known until a future date and is expected to be paid over a number of years. Ongoing costs to maintain the equipment and utilities and meet supplier obligations related to the idled Ashland Works Hot End were $12.6, $20.0 and $21.2 for the years ended December 31, 2019, 2018 and 2017. These cash costs related to closing the facility will decline in future years. We recorded $4.0 of accelerated depreciation related to the coating line fixed assets for the year ended December 31, 2019 to fully depreciate them.

The supplemental unemployment and other employee benefit costs were recorded as accrued and other non-current liabilities, and the activity for the year ended December 31, 2019, was as follows:



	2019
Charge for supplemental unemployment and other employee benefit costs	$	20.1
Payments	(1.0		)
Balance at end of year	$	19.1

In the fourth quarter of 2015, we temporarily idled the Ashland Works Hot End. We incurred charges in the fourth quarter of 2015 for supplemental unemployment and other employee benefit costs that were recorded as accrued liabilities, and the activity for the years ended December 31, 2018, and 2017 was as follows:



	2018			2017
Balance at beginning of year	$	1.5		$	6.2
Payments	(1.5		)	(5.3		)
Additions to the reserve	—			0.6
Balance at end of year	$	—		$	1.5

During 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.