TimkenSteel-2014-Annual-Report-FINAL-03112015_v001_d4t4ig

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LEGAL PROCEEDINGS We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. PATENTS, TRADEMARKS AND LICENSES We own a number of U.S. and foreign patents, trademarks, licenses, copyrights and trade secrets, as well as substantial know-how and technology relating to certain products and the processes for their production. While we regard these as important, we do not deem our business as a whole, or any segment, to be materially dependent upon any one item or group of items. EMPLOYMENT At December 31, 2014, we had approximately 3,000 employees. Approximately 57% of our employees are covered under one of two collective bargaining agreements that run through December 2016 and September 2017, respectively. AVAILABLE INFORMATION We use our Investor Relations website at http://investors.timkensteel.com, as a channel for routine distribution of important information, including news releases, analyst presentations and financial information. We post filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC), including our annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, respectively; our proxy statements; and any amendments to those reports or statements. All such postings and filings are available on our website free of charge. In addition, our website allows investors and other interested persons to sign up to automatically receive e-mail alerts when we post news releases and financial information on our website. The SEC also maintains a web site, www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Annual Report unless expressly noted. 6
ITEM 1A. RISK FACTORS The following are certain risk factors that could affect our business, financial condition and results of operations. The risks that are highlighted below are not the only ones we face. You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K. Some of these risks relate principally to our spinoff from Timken, while others relate principally to our business and the industry in which we operate or to the securities markets in general and ownership of our common shares. If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected. RISKS RELATING TO OUR INDUSTRY AND OUR BUSINESS Competition in the steel industry, together with potential global overcapacity, could result in significant pricing pressure for our products. Competition within the steel industry, both domestically and worldwide, is intense and is expected to remain so. The steel industry has historically been characterized by periods of excess global capacity and supply. Excess global capacity and supply has, and could continue to, negatively affected domestic steel prices, which could adversely impact our results of operations and financial condition. High levels of steel imports into the United States could exacerbate the decrease in domestic steel prices. Additionally, in some applications, steel competes with other materials. Increased use of materials in substitution for steel products could have a material adverse effect on prices and demand for our steel products. Any change in the operation of our raw material surcharge mechanisms, a raw material market index or the availability or cost of raw materials and energy resources could materially affect our revenues and earnings. We require substantial amounts of raw materials, including scrap metal and alloys and natural gas, to operate our business. Many of our customer contracts contain surcharge pricing provisions that are designed to enable us to recover raw material cost increases. The surcharges are generally tied to a market index for that specific raw material. Recently, many raw material market indices have reflected significant fluctuations. Any change in a raw material market index could materially affect our revenues. Any change in the relationship between the market indices and our underlying costs could materially affect our earnings. Any change in our projected year-end input costs could materially affect our last-in, first-out (LIFO) inventory valuation method and earnings. A rapid rise in raw material costs could have a negative effect on our operating results. Since we value the majority of our inventory utilizing the LIFO inventory valuation method, changes in the cost of raw materials and production activities are recognized in cost of products sold in the current period even though these material and other costs may have been incurred at significantly different values due to the length of time of our production cycle. In a period of rising prices, cost of products sold expense recognized under LIFO is generally higher than the cash costs incurred to acquire the inventory sold. Conversely, in a period of declining raw material prices, cost of sales recognized under LIFO is generally lower than cash costs incurred to acquire the inventory sold. Moreover, future disruptions in the supply of our raw materials could impair our ability to manufacture our products for our customers or require us to pay higher prices in order to obtain these raw materials from other sources, and could thereby affect our sales and profitability. Any increase in the prices for such raw materials could materially affect our costs and therefore our earnings. We rely to a substantial extent on third parties to supply certain raw materials that are critical to the manufacture of our products. Purchase prices and availability of these critical raw materials are subject to volatility. At any given time we may be unable to obtain an adequate supply of these critical raw materials on a timely basis, on acceptable price and other terms, or at all. If suppliers increase the price of critical raw materials, we may not have alternative sources of supply. In addition, to the extent we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials. 20 14 TIMKENSTEEL ANNUAL REPORT 7
Page 2 and 3: TimkenSteel is built on values that
Page 4 and 5: Dear fellow shareholders, In this i
Page 6 and 7: OUR STRATEGY TO GENERATE CUSTOMER A
Page 8 and 9: people who thrive on challenges
Page 10 and 11: Talk to any engineer at TimkenSteel
Page 12 and 13: innovation that creates opportunity
Page 14 and 15: We’re a leader in profitable nich
Page 16 and 17: leadership Ward J. “Tim” Timken
Page 18 and 19: oard of directors Ward J. “Tim”
Page 21 and 22: UNITED STATES SECURITIES AND EXCHAN
Page 23 and 24: PART I. ITEM 1. BUSINESS OVERVIEW T
Page 25 and 26: STRENGTHS AND STRATEGY We believe o
Page 27: us greater flexibility to substitut
Page 31 and 32: A decline in consumer and business
Page 33 and 34: We may be subject to risks relating
Page 35 and 36: We may issue preferred shares with
Page 37 and 38: With respect to taxes and other lia
Page 39 and 40: ITEM 2. PROPERTIES We are headquart
Page 41 and 42: PERFORMANCE GRAPH: The following gr
Page 43 and 44: ITEM 7. MANAGEMENT’S DISCUSSION A
Page 45 and 46: Key indicators for our market inclu
Page 47 and 48: Unallocated Years Ended December 31
Page 49 and 50: Unallocated Years Ended December 31
Page 51 and 52: Current liabilities increased to $2
Page 53 and 54: CONTRACTUAL OBLIGATIONS The followi
Page 55 and 56: jurisdiction when it is more likely
Page 57 and 58: ITEM 7A. QUANTITATIVE AND QUALITATI
Page 59 and 60: REPORT OF INDEPENDENT REGISTERED PU
Page 61 and 62: CONSOLIDATED STATEMENTS OF COMPREHE
Page 63 and 64: CONSOLIDATED STATEMENTS OF CHANGES
Page 65 and 66: NOTES TO CONSOLIDATED FINANCIAL STA
Page 67 and 68: If an asset or asset group is consi
Page 69 and 70: Pension and Other Postretirement Be
Page 71 and 72: NOTE 4 - PROPERTY, PLANT AND EQUIPM
Page 73 and 74: Revenue Refunding Bonds On June 1,
Page 75 and 76: and accumulated other comprehensive
Page 77 and 78: The components of net periodic bene
Page 79 and 80:
Defined Contribution Plan Prior to
Page 81 and 82:
The following summarizes TimkenStee
Page 83 and 84:
Net Sales: Years Ended December 31,
Page 85 and 86:
The provision for income taxes cons
Page 87 and 88:
As of December 31, 2014, Timken is
Page 89 and 90:
Employee Matters Agreement - Timken
Page 91 and 92:
ITEM 9. CHANGES IN AND DISAGREEMENT
Page 93 and 94:
ITEM 14. PRINCIPAL ACCOUNTING FEES
Page 95 and 96:
Exhibit Number Exhibit Description
Page 97 and 98:
SIGNATURES Pursuant to the requirem
Page 99 and 100:
EXHIBIT 31.2 CERTIFICATION I, Chris
Page 101 and 102:
CORPORATE OFFICES TimkenSteel Corpo
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