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

The effect of temporary differences giving rise to deferred tax assets and liabilities at December 31, 2014
and 2013 was as follows:
December 31,
2014 2013
Deferred tax assets:
Pension and other postretirement benefits $ 52.7 $ –
Other employee benefit accruals 17.2 5.2
Tax loss carryforwards 18.1 14.1
Intangible assets 3.0 3.1
Other, net 1.7 8.3
Deferred tax assets subtotal $ 92.7 $ 30.7
Valuation allowances (11.7) (14.1)
Deferred tax assets 80.8 16.6
Deferred tax liabilities:
Depreciation ($ 131.9) ($ 93.4)
Inventory (3.7) (7.6)
Deferred tax liabilities subtotal (135.6) (101.0)
Net deferred tax liabilities ($ 54.8) ($ 84.4)
As of December 31, 2014, TimkenSteel had loss carryforwards in the U.S. and various non-U.S.
jurisdictions with tax benefits totaling $18.1 million having various expiration dates. TimkenSteel has
provided valuation allowances of $11.7 million against these carryforwards. The majority of the non-U.S.
loss carryforwards represent local country net operating losses for branches of TimkenSteel or entities
treated as branches of TimkenSteel under U.S. tax law. Tax benefits have been recorded for these
losses in the United States. The related local country net operating loss carryforwards are offset fully by
valuation allowances.
As of December 31, 2014, TimkenSteel had no total gross unrecognized tax benefits, and no amounts
which represented unrecognized tax benefits that would favorably impact TimkenSteel’s effective income
tax rate in any future periods if such benefits were recognized. As of December 31, 2014, TimkenSteel
does not anticipate a change in its unrecognized tax positions during the next 12 months. TimkenSteel
had no accrued interest and penalties related to uncertain tax positions as of December 31, 2014.
TimkenSteel records interest and penalties related to uncertain tax positions as a component of income
tax expense. As of December 31, 2013, TimkenSteel had $0.7 million of total gross unrecognized tax
benefits. Included in this amount was $0.4 million, which represented the amount of unrecognized tax
benefits that would favorably impact TimkenSteel’s effective income tax rate in any future periods if
such benefits were recognized. TimkenSteel had accrued $0.1 million of interest and penalties related to
uncertain tax positions as of December 31, 2013. TimkenSteel records interest and penalties related to
uncertain tax positions as a component of income tax expense.
The reconciliation of TimkenSteel’s total gross unrecognized tax benefits is as follows:
Years Ended December 31,
2014 2013 2012
Beginning balance, January 1 $ 0.7 $ 8.0 $ 8.0
Tax positions related to prior years:
Additions – 0.3 0.1
Reductions (0.7) (6.0) (0.1)
Settlements – (1.6) –
Ending balance, December 31 $ – $ 0.7 $ 8.0
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