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

Current liabilities increased to $225.5 million as of December 31, 2014 as compared to $154.9 million
as of December 31, 2013. The increase was due primarily to higher accounts payable resulting
from higher purchases to meet our production requirements. In addition, during the second quarter
of 2014, the assets and liabilities of certain under-funded Timken pension and postretirement plans
related to our employees and retirees were transferred to pension and postretirement plans sponsored
by us, which are recorded as both current and long-term liabilities. Long-term debt increased due
to our borrowings of $155.0 million under our credit facility to fund capital expenditures, to pay a
$50.0 million dividend to Timken in connection with the spinoff, to repurchase shares at a cost
of $30.6 million, to purchase shares withheld for taxes 4.1 million, to fund cash dividends of
$12.7 million paid to shareholders and to fund our operations. The decrease in our deferred income
taxes related primarily to the increase of pension and postretirement liabilities. Refer to the Consolidated
Statements of Changes in Equity for details of the decrease in total equity.
LIQUIDITY AND CAPITAL RESOURCES
Based on historical performance and current expectations, we believe our cash and cash equivalents,
the cash generated from our operations, available credit facilities and our ability to access capital
markets will satisfy our working capital needs, capital expenditures, quarterly dividends, share
repurchases and other liquidity requirements associated with our operations for at least the next
twelve months.
CASH FLOWS
The following table reflects the major categories of cash flows for years ended December 31, 2014,
2013 and 2012. For additional details, please see the Consolidated Statements of Cash Flows contained
elsewhere in this Annual Report.
Cash Flows Years Ended December 31,
2014 2013 2012
Net cash provided by operating activities $ 93.9 $ 175.1 $ 296.6
Net cash (used) by investing activities (129.6) (183.6) (167.0)
Net cash provided (used) by financing activities 70.2 8.5 (129.6)
Increase in Cash and Cash Equivalents $ 34.5 $ – $ –
Operating activities
Net cash provided by operating activities for the years ended December 31, 2014 and 2013 was
$93.9 million and $175.1 million, respectively. The $53.3 million decrease was primarily the result of
increased use of cash related to changes in our inventory and accounts receivable balances partially
offset by higher net income and cash provided by the changes in our accrued expense balances.
Net cash provided by operating activities for the years ended December 31, 2013 and 2012 was
$175.1 million and $296.6 million, respectively. The decrease in cash provided by operations of $121.5
million for 2013 as compared to 2012 was primarily the result of lower net income and lower cash
provided by our accounts receivable and inventory positions. These decreases were partially offset by
a change in our deferred income taxes, as well as increased cash provided by improvements in our
accounts payable and accrued liabilities.
Investing activities
Net cash used by investing activities for the years ended December 31, 2014 and 2013 was $129.6 million
and $183.6 million, respectively. Cash used for investing activities primarily relates to capital investments
in our production processes.
Our business sometimes requires capital investments to remain competitive and to ensure we can implement
strategic initiatives. Our $288 million construction in progress balance as of December 31, 2014 includes:
(a) an investment of approximately $196 million in the jumbo bloom vertical caster to improve productivity,
increase capacity and expand our product range; (b) $30 million relating to growth initiatives (i.e., new
product offerings, additional capacity and new capabilities) and continuous improvement projects; and
(c) $62 million relating primarily to routine capital costs to maintain the reliability, integrity and safety of
our manufacturing equipment and facilities. We expect to incur approximately $28 million of additional
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TIMKENSTEEL ANNUAL REPORT
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