T     Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2015

OR

£     Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from        to         

Commission File No. 1-13696

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (513) 425-5000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   T   No   £

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes   £ No   T

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   T   No   £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   T   No   £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   T

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934.   Yes   £   No   T

Aggregate market value of the registrant's voting stock held by non-affiliates at June 30, 2015 : $680,365,760

There were 178,344,667 shares of common stock outstanding as of February 17, 2016 .

DOCUMENTS INCORPORATED BY REFERENCE

The information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and incorporated by reference from, the registrant's definitive proxy statement for the annual meeting of stockholders (the " 2016 Proxy Statement"), which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2015 .

AK Steel Holding Corporation

Table of Contents

(Dollars in millions, except per share and per ton amounts or as otherwise specifically noted)

PART I

Operations Overview

AK Steel Holding Corporation ("AK Holding") is a corporation formed under the laws of Delaware in 1993 and is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly-owned subsidiary, AK Steel Corporation ("AK Steel"). AK Steel is the successor through merger in 1999 to Armco Inc., which was formed in 1900. Unless the context indicates otherwise, references to "we," "us" and "our" refer to AK Holding and its subsidiaries.

We operate eight steelmaking and finishing plants, two coke plants and two tube manufacturing plants across six states-Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. These operations produce flat-rolled carbon, specialty stainless and electrical steels that we sell in sheet and strip form, and carbon and stainless steel that we finish into welded steel tubing. We also produce metallurgical coal through our AK Coal Resources, Inc. ("AK Coal") subsidiary. In addition, we operate trading companies in Mexico and Europe that buy and sell steel and steel products and other materials.

In 2014, we acquired Severstal Dearborn, LLC ("Dearborn"). The assets acquired include the integrated steelmaking assets located in Dearborn, Michigan ("Dearborn Works"), the Mountain State Carbon, LLC ("Mountain State Carbon") cokemaking facility located in Follansbee, West Virginia, and interests in joint ventures that process flat-rolled steel products.

Customers and Markets

We sell flat-rolled carbon steel products, consisting of coated, cold-rolled, and hot-rolled carbon steel products, primarily to automotive manufacturers and their suppliers, as well as to customers in the infrastructure and manufacturing market. The infrastructure and manufacturing market primarily includes electrical transmission, heating, ventilation and air conditioning equipment, and appliances. We also sell carbon steel products to distributors, service centers and converters, who may further process these products before reselling them. Our goal is to carry appropriate inventory levels that will meet our customers' needs, particularly for the "just-in-time" delivery requirements necessary to service the demanding automotive market. During 2015, we began to implement a strategy to target markets for our carbon steel products that deliver higher margins, where possible, and reduce amounts sold into the lower margin carbon steel spot market, which experienced a sharp decline in pricing as a result of a deluge of low-priced imports of foreign steel. As a result, in late 2015 we temporarily idled the blast furnace and steelmaking operations (the "Hot End") at our Ashland Works in Kentucky to improve capacity utilization at our Middletown Works and our Dearborn Works and our overall profitability.

We sell our stainless steel products to manufacturers and their suppliers in the automotive industry, to manufacturers of food handling, chemical processing, pollution control, medical and health equipment, and to distributors and service centers.

For carbon and stainless steels, we target customers who require the highest quality flat-rolled steel with precise "just-in-time" delivery and technical support. Our enhanced product quality and delivery capabilities, as well as our emphasis on collaborative customer technical support and product planning, are critical factors in our ability to serve these markets.  

We sell our electrical steel products in the infrastructure and manufacturing market primarily to manufacturers of power transmission and distribution transformers, both for new and replacement installation. We also sell electrical steel products to manufacturers of electrical motors and generators. We target our electrical steel products to customers who desire the highest quality iron-silicon alloys that provide low core loss and high permeability required for more efficient and economical electrical transformers. Our electrical steels are among the most energy efficient in the world. As with customers of our other steel products, we provide our electrical steel customers outstanding technical support and product development assistance.

For our carbon steel, stainless steel and electrical steel products, we intentionally limit our participation in the commodity portions of those markets, where attributes such as high quality, technical support and innovation are less valued and where selling prices and product margins are generally lower.

Because of our focus on shipments to the automotive industry and our decision to ship fewer tons to the spot market, Ford Motor Company and Fiat Chrysler Automobiles accounted for 12% and 11% of our net sales in 2015. No customer accounted for more than 10% of our net sales in 2014 or 2013. The following table presents the percentage of our net sales to each of our markets:

We sell our carbon steel products principally to customers in the United States. We sell our electrical and stainless steel products both domestically and internationally. Our customer base is geographically diverse and there is no single country outside the United States where our sales are material compared to our total net sales. We do not have any material long-lived assets located outside the United States. The following shows net sales by geographic area and as a percentage of worldwide net sales:

We shipped approximately 81% of our flat-rolled steel products in 2015 to contract customers, with the balance to customers in the spot market at prevailing prices at the time of sale. We have contracts with all of our major automotive and most of our infrastructure and manufacturing market customers. These contracts include prices for each product during contract periods, which are generally one year or less. In 2015, approximately 58% of our shipments to contract customers allowed price adjustments during the contract period. Changes in steel price indices trigger contract price adjustments for about one-fourth of our shipments to contract customers. When adjustments occur, the resulting adjustments typically occur at three- or six-month intervals. In certain circumstances, we adjust contract prices if particular raw material price changes exceed agreed-upon parameters.

The automotive market is an important element of our business and growth strategy and, therefore, North American light vehicle production has a significant impact on our total sales and shipments. In 2015, automotive manufacturers experienced a record year in North America, as light vehicle production was approximately 17.5 million units, representing a 3% increase from the prior year. The improvement in the automotive market and our increased share of that market resulted in increased sales and shipments of our steel in 2015. We remain keenly focused on capturing additional market share in the automotive sector and most automotive manufacturers are predicting a further increase in total North American light vehicle production volumes for 2016.

In 2015 , housing starts in the United States reached levels not achieved since 2007. We typically benefit from increasing housing starts since it generally results in increased production by power transmission and distribution transformer manufacturers, to whom we sell electrical steels, and appliance manufacturers, to whom we sell stainless and carbon steels. Although we saw improvements in higher value electrical steel prices and demand during 2015 , low prices resulting from the high level of commodity steel imports from foreign producers into the United States resulted in lower shipments to the spot markets. Electrical steel sales and shipments to customers in foreign countries also have been negatively affected by excess global production capacity and what we believe to be preferential trade practices by certain countries that make our products more expensive to sell in that country.

Raw Materials and Other Inputs

Our steel manufacturing operations require iron ore, coal, coke, chrome, nickel, silicon, manganese, zinc, limestone, and carbon and stainless steel scrap as primary raw materials. We also use large volumes of natural gas, electricity and industrial gases. In addition, in past years we have purchased carbon steel slabs from other steel producers to supplement our production from our own steelmaking facilities. We purchased approximately 126,000 tons of carbon steel slabs in 2015 , all of which were purchased in the first quarter of the year. We do not currently anticipate purchasing carbon slabs in 2016.

We typically purchase carbon and stainless steel scrap, natural gas, a substantial portion of our electricity, carbon steel slabs, and most other raw materials at prevailing market prices, which may fluctuate with market supply and demand. However, we make most of our purchases of iron ore, coke, industrial gases and a portion of our electricity at negotiated prices under annual or multi-year agreements with periodic price adjustments. We typically purchase coal under annual fixed-price agreements. Additionally, we may hedge portions of our energy and raw materials purchases to reduce volatility.

We also attempt to reduce the risk of future supply shortages and price volatility in other ways. If multi-year contracts are available in the marketplace, we may use these contracts to secure enough supply to satisfy our key raw material needs. When multi-year contracts are not available, or are not available on acceptable terms, we enter into annual contracts or make spot purchases to meet the remainder of our raw materials needs. We also regularly evaluate using alternative sources and substitute materials.

We believe that we have secured, or will be able to secure, adequate supply sources for our raw materials and energy requirements for 2016 and for at least the next three to five years. However, our raw material suppliers may experience production disruptions, which could create shortages of raw materials in 2016 or beyond.

Research and Development

We conduct a broad range of research and development activities aimed at improving existing products and manufacturing processes and developing new products and processes. In recent years, we have increased our focus and spending on new product innovation, with particular focus on advanced high-strength steels ("AHSS") for the automotive market. We produce virtually every grade of AHSS that our customers currently need, but our goal is to develop the next generation of AHSS with even greater strength and formability. We have developed many new steel products and steel processes during our history and have recently reinvigorated our focus on research and innovation. For example, we are implementing new process technology to produce both coated and cold-rolled Next-Generation AHSS on the hot-dip galvanizing line at Dearborn Works, which we expect to complete by late 2016. Our goal is to ship Next-Generation AHSS to our customers by early 2017. We have doubled our investment in research and innovation during the past three years from $13.2 in 2013 to $27.6 in 2015 . To accelerate innovation, we are building a new research and innovation center in Middletown, Ohio with completion planned for late 2016. The facility will include pilot lines and feature new operational simulators that replicate critical steel manufacturing operations to allow our researchers, scientists and engineers to continue their leading-edge research, applications engineering, advanced engineering, product development and customer technical services.

Employees

At December 31, 2015 , we employed approximately 8,500 people, of which approximately 6,300 are represented by labor unions. The labor contracts covering these represented employees expire between 2016 and 2019 . See the discussion under Labor Agreements in Item 7 for additional information on these agreements.

Competition

We compete with domestic and foreign flat-rolled carbon, stainless and electrical steel and tubular product producers (both integrated steel producers and mini-mill producers) and producers of plastics, aluminum and other materials that may be used as a substitute for flat-rolled steels in manufactured products. Mini-mills generally offer a narrower range of products than integrated steel mills, but can have some competitive cost advantages as a result of their different production processes and lower labor costs associated with what are often non-union workforces. Price, quality, on-time delivery, customer service and product innovation are the primary competitive factors in the steel industry and vary in relative importance according to the product category and customer requirements.

Steel producers that sell to the automotive market are facing increasing competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that will enable them to satisfy more stringent government-imposed fuel efficiency standards. To address automotive manufacturers' lightweighting needs that the aluminum industry is targeting, we and others in the steel industry continue to develop grades of AHSS that we believe are stronger, less costly, more sustainable, easier to repair and more environmentally friendly than aluminum.

Domestic steel producers, including us, face significant competition from foreign producers. For many reasons, these foreign producers often are able to sell products in the United States at prices substantially lower than domestic producers. Depending on the country of production, these reasons may include generous government subsidies; lower labor, raw material, energy and regulatory costs; less stringent environmental regulations; the maintenance of artificially low exchange rates against the U.S. dollar; and preferential trade practices in their home countries. In recent years, the annual level of imports of foreign steel into the United States also has been increasing and is affected to varying degrees by the relative level of overcapacity of steel production in those countries, the strength of demand for steel outside the United States and the relative strength or weakness of the U.S. dollar against various foreign currencies. In 2014 and 2015, and through the first half of 2015 in particular, the combination of overcapacity and slowing domestic demand in countries such as China resulted in imports of low-priced foreign steel into the United States at levels significantly higher than recent historical periods, resulting in increased downward pressure on the price of flat-rolled steels in the American marketplace. Imports of finished steel into the United States accounted for approximately 29% , 28% and 23% of domestic steel market sales in 2015 , 2014 and 2013 . We believe that a large amount of the carbon flat-rolled steel imports into the United States are unfairly traded and we have initiated four trade cases in 2015 and 2016 against a number of importers of carbon and stainless steel. See Trade Cases in Note  10 to the consolidated financial statements for more information.

We continue to provide pension and healthcare benefits to a great number of our retirees, resulting in a competitive disadvantage compared to certain other domestic integrated steel companies and mini-mills that do not provide such benefits to any or most of their retirees. However, we have taken a number of actions to reduce pension and healthcare benefits costs, including negotiating

progressive labor agreements that have significantly reduced total employment costs at all of our union-represented facilities, transferring all responsibility for healthcare benefits for various groups of retirees to Voluntary Employee Benefits Association trusts, offering voluntary lump-sum settlements to pension plan participants and lowering retiree benefit costs for salaried employees. These actions have increased our ability to compete in the highly competitive global steel market and we continue to seek opportunities to reduce pension and healthcare benefits costs.

Environmental

Information about our environmental compliance, remediation and proceedings is included in Note 10 to the consolidated financial statements in Item 8 and is incorporated herein by reference.

Executive Officers of the Registrant

The following table provides the name, age and principal position of each of our executive officers as of February 17, 2016 :

Roger K. Newport has served as Chief Executive Officer since January 2016. Prior to that Mr. Newport served as Executive Vice President, Finance and Chief Financial Officer since May 2015. Prior to that, Mr. Newport served as Senior Vice President, Finance and Chief Financial Officer since May 2014, as Vice President, Finance and Chief Financial Officer since May 2012 and as Vice President, Business Planning and Development since June 2010. Mr. Newport was named Controller and Chief Accounting Officer in July 2004 and Controller in September 2001. Prior to that, Mr. Newport served in a variety of other capacities since joining us in 1985, including Assistant Treasurer, Investor Relations, Manager-Financial Planning and Analysis, Product Manager, Senior Product Specialist and Senior Auditor.

Kirk W. Reich has served as President and Chief Operating Officer since January 2016. Prior to that Mr. Reich served as Executive Vice President, Manufacturing since May 2015. Before assuming that role, Mr. Reich served as Senior Vice President, Manufacturing since May 2014, as Vice President, Procurement and Supply Chain Management since May 2012 and as Vice President, Specialty Steel Operations since June 2010. Mr. Reich was named General Manager, Middletown Works in October 2006. Prior to that, Mr. Reich served in a variety of other capacities since joining us in 1989, including Manager-Mobile Maintenance/Maintenance Technology, General Manager-Mansfield Works, Manager-Processing and Shipping, Technical Manager, Process Manager and Civil Engineer.

Joseph C. Alter has served as Vice President, General Counsel and Corporate Secretary since May 2015. Prior to that, Mr. Alter served as Vice President, General Counsel and Chief Compliance Officer since May 2014 and Assistant General Counsel, Corporate and Chief Compliance Officer since December 2012. Mr. Alter became Corporate Counsel and Chief Compliance Officer in May 2011. Before joining us as Corporate Counsel in August 2009, Mr. Alter was Corporate Counsel at Convergys Corporation and, before that, an attorney with the law firm of Keating Muething & Klekamp PLL.

Stephanie S. Bisselberg has served as Vice President, Human Resources since April 2013. Prior to that, Ms. Bisselberg served as Assistant General Counsel, Labor from October 2010. She also served as Labor Counsel from January 2005 and Assistant Labor Counsel upon joining us in 2004. Prior to joining us, Ms. Bisselberg was an attorney in the Labor and Employment department of the Cincinnati law firm of Taft, Stettinius and Hollister LLP.

Renee S. Filiatraut has served as Vice President, Litigation, Labor and External Affairs since May 2014. Prior to that, Ms. Filiatraut served as Assistant General Counsel, Litigation since December 2012. Before joining us as Litigation Counsel in March 2011, Ms. Filiatraut was a Partner with Thompson Hine LLP from January 1998.

Gregory A. Hoffbauer has served as Vice President, Controller and Chief Accounting Officer since January 2016. Prior to that, Mr. Hoffbauer served as Controller and Chief Accounting Officer since February 2013. Before joining us as Assistant Controller in January 2011, Mr. Hoffbauer was Director of Accounting with NewPage Corporation. Mr. Hoffbauer also was Controller for Day International, Inc. and served in a number of increasingly responsible accounting and auditing positions for Deloitte & Touche LLP, including Audit Senior Manager.

Scott Lauschke has served as Vice President, Sales and Customer Service since February 2015. Before joining us, Mr. Lauschke was Vice President and General Manager of AFGlobal Corporation from July 2013 through November 2014. Before that, Mr. Lauschke served in various roles of increasing responsibility at The Timken Company from May 2000, including General Sales Manager from May 2009 through April 2013.

Eric S. Petersen has served as Vice President, Research and Innovation since February 2015. Prior to that, Mr. Petersen was Vice President, Sales and Customer Service since July 2013 as Director, Specialty and International Sales since November 2012 and Director, Research and Innovation since June 2010. He was named Director, Customer Technical Services and Research in March 2007. Prior to that, Mr. Petersen served in a variety of other capacities since joining us in 1991, including General Manager, Quality Assurance; General Manager, Carbon Steel Technology; General Manager, Rockport Works; Manager of various departments at Rockport Works and Middletown Works; Quality Control and Operations Management positions and Associate Process Engineer, Associate Metallurgist and Assistant Metallurgist at Middletown Works.

Maurice A. Reed has served as Vice President, Engineering, Raw Materials and Energy since May 2012. Prior to that, Mr. Reed was Director, Engineering and Raw Materials from March 2011. Prior to that, Mr. Reed served in a variety of other capacities since joining us in 1996, including Director of Engineering and Energy from June 2010, General Manager-Engineering, Operations Support and Primary Process Research from March 2009 and General Manager-Engineering from May 2006. Before joining us, Mr. Reed held a number of increasingly responsible engineering technology positions for National Steel Corporation.

Jaime Vasquez has served as Vice President, Finance and Chief Financial Officer since January 2016. Before joining us in September 2014 as Director, Finance, Mr. Vasquez held several positions with Carpenter Technology Corporation, including Vice President, Chief Financial Officer for the Performance Engineered Products Group from October 2013; Vice President, Corporate Development from July 2011; President, Asia Pacific from May 2008; and Vice President, Treasurer, and Investor Relations from March 2001.

Available Information

We maintain a website at www.aksteel.com. Information about us is available on the website free of charge, including the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. Such information is posted to the website as soon as reasonably practicable after submission to the Securities and Exchange Commission. Information on our website is not incorporated by reference into this report.

We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those we currently expect. While the items listed below represent the most significant risks to us, we regularly monitor and report risks to the Board of Directors through a formal Total Enterprise Risk Management program.

Risk of reduced selling prices, shipments and profits associated with a highly competitive and cyclical industry . The competitive landscape in the steel industry reflects an improving, but uneven, domestic economy; uncertain, and in some cases, slowing foreign economies; an uneven recovery within certain sectors of the domestic and global economies; continued intense competition from domestic steel competitors; and increased competition from foreign steel competitors, much of which we believe is unfair. These conditions directly impact our pricing. It is impossible to predict whether the domestic and/or global economies or industry sectors of those economies that are key to our sales will continue to improve and generate enough demand to take up more of the existing excess capacity in the steel industry. Also, we cannot know how customers or competitors will react to these and other factors and how their actions could affect market dynamics and sales of, and prices for, our products. Market price and demand for steel are very hard to predict and we could be hurt by decreases in either. In addition, our direct sales to the automotive industry generate approximately 60% of our revenue and we make additional sales to distributors and converters whom, we believe, ultimately resell some of that volume to the automotive market. If automotive demand should decline substantially or we lose market share to competitors, our sales, financial results and cash flows could be severely impacted.

Risk of increased global steel production and imports .  An increase in global capacity and new or expanded production capacity in the United States in recent years has caused and continues to cause capacity to exceed demand globally, as well as in our primary

markets in North America, which has and may continue to result in lower prices and shipments of our products. In fact, significant increases in production capacity in the United States by our competitors already have occurred in recent years as new carbon and stainless steelmaking and finishing facilities have begun production. In addition, foreign competitors have substantially increased their production capacity in the last few years, and in some instances appear to have targeted the U.S. market for imports. Also, some foreign economies, such as China, are slowing relative to recent historical norms, resulting in an increased volume of steel products that cannot be consumed by industries in those foreign steel producers' own countries. These and other factors have contributed to a high and growing level of imports of foreign steel into the United States in recent years and create a risk of even greater levels of imports, depending upon foreign market and economic conditions, the value of the U.S. dollar relative to other currencies, and other variables beyond our control. A significant further increase in domestic capacity or foreign imports could adversely affect our sales, financial results and cash flows.

Risk of changes in the cost of raw materials and energy .  The price that we pay for energy and key raw materials, such as electricity, natural gas, industrial gases, iron ore, coal and scrap, can fluctuate significantly based on market factors. The prices at which we sell steel will not necessarily change in tandem with changes in our raw material and energy costs. A portion of our shipments are in the spot market, and pricing for these products fluctuates based on prevailing market conditions. The remainder of our shipments are under contracts typically spanning one year or less. Most of those contracts contain fixed prices that do not allow us to pass through changes if there are increases or decreases in raw material and energy costs. Some of our shipments to contract customers are under contracts with variable-pricing mechanisms allowing us to adjust the total sales price based upon changes in specified raw material and energy costs. Those adjustments, however, do not always reflect all of our underlying raw material and energy cost changes. The scope of the adjustment may be limited by the terms of the negotiated language including limitations on when the adjustment occurs. Even under our contracts that contain variable-pricing mechanisms, we typically do not recover all of our underlying raw material and energy cost increases. For shipments made to the spot market, market conditions or timing of sales may not allow us to recover the full amount of an increase in raw material or energy costs. In such circumstances, a significant increase in raw material or energy costs likely would adversely impact our financial results and cash flows. Conversely, in certain circumstances, our financial results and cash flows may suffer when raw material prices decline. This can occur when we lock in the price of a raw material over a set period and the spot market price for the material declines during that period. Because there often is a correlation between the price of finished steel and the raw materials used to make it, a decline in raw material prices may coincide with lower steel prices, compressing our margins. Our need to consume existing inventories may also delay the impact of a change in raw materials prices. New inventory may not be purchased until some portion of the existing inventory is consumed. The impact of this risk is particularly significant for iron ore, coke and scrap because of the volume used. We manage our exposure to the risk of iron ore price increases by hedging a portion of our annual iron ore supply and by entering supply agreements where the IODEX, the global iron ore price index, is only one factor affecting our price of iron ore pellets. Our investment in and development of AK Coal has reduced the risk to us from price increases for metallurgical coal. Although AK Coal is only expected to supply approximately 13% of our coal needs in 2016, we could expand its production relatively quickly if coal prices increase significantly. However, there is a risk that the volume of coal supplied to us by our mining operations will be insufficient if there are delays in development or otherwise, or if the cost of raw materials from these operations are higher than expected or above market prices. If we must acquire iron ore and coal at market prices, these prices are sensitive to global demand and have been volatile in recent years. Future cost increases could be significant for iron ore and coal, as well as certain other raw materials, such as scrap. The impact of significant fluctuations in the price we pay for raw materials can be increased by our "last in, first out" ("LIFO") accounting method for valuing inventories. Using the LIFO method means that we treat the last coil of steel completed as the first one sold, which means that our inventory value can reflect earlier input costs that do not reflect current input costs. The impact of LIFO accounting may be particularly significant in period-to-period comparisons.

Risk from our significant amount of debt and other obligations.   On December 31, 2015 , we had $2,405.5 of indebtedness (excluding unamortized discount and debt issuance costs) and additional obligations outstanding. We also had pension and other postretirement benefit obligations totaling $1,224.6 . No contributions to the master pension trust are required for 2016 . Based on current funding projections, contributions to the master pension trust of approximately $50.0 and $75.0 are required for 2017 and 2018 , though funding projections in 2017 and beyond could be affected by differences between expected and actual returns on plan assets, actuarial data and assumptions relating to plan participants, the interest rate used to measure the pension obligations and changes to regulatory funding requirements. We can borrow additional amounts under our $1,500.0 revolving credit facility. At December 31, 2015 , we had outstanding borrowings of $550.0 from this credit facility and outstanding letters of credit of $72.9 , resulting in maximum remaining availability of $877.1 under the credit facility (subject to customary borrowing conditions, including a borrowing base). Borrowing capacity under the credit facility is determined by the value of eligible collateral less outstanding borrowings and letters of credit. At December 31, 2015 , borrowing availability under the credit facility was $652.3 based on eligible collateral at that time. Our debt and pension obligations, along with other financial obligations, could have important consequences. For example, it could increase our vulnerability to general adverse economic and industry conditions; require a substantial portion of our cash flows to be dedicated to interest payments, reducing the amount of cash flows available for other purposes, such as working capital, capital expenditures, acquisitions, joint ventures or general corporate purposes; limit our ability to obtain future additional financing; reduce our planning flexibility for, or ability to react to, changes in the our business and the industry; and place us at a competitive disadvantage with competitors who may have less indebtedness and other obligations or greater access to financing.

Risk of severe financial hardship or bankruptcy of one or more of our major customers or key suppliers.   Sales and operations of a majority of our customers are sensitive to general economic conditions, especially as they affect the North American automotive and housing industries. If there is a significant weakening of current economic conditions, whether because of secular or cyclical issues, it could lead to financial difficulties or even bankruptcy filings by our customers. The concentration of customers in a specific industry, such as the automotive industry, may increase our risk because of the likelihood that circumstances may affect multiple customers at the same time. Such financial hardships or bankruptcies will likely harm us. The nature of that impact would likely include lost sales or losses associated with the potential inability to collect all outstanding accounts receivables. Such an event could negatively impact our financial results and cash flows. In addition, many of our key suppliers, particularly those who supply us with critical raw materials for the steelmaking process, have recently faced severe financial challenges or bankruptcy and other suppliers may face such circumstances in the future. For example, the significant decline in commodity prices during 2015 led to increased economic distress and even bankruptcy filings for several of our principal sources of metallurgical coal, as well as one of our key iron ore suppliers, Magnetation LLC. These suppliers facing financial hardship or operating in bankruptcy could experience operational disruption or even face liquidation, which could result in our inability to secure replacement raw materials on a timely basis, or at all, or cause us to incur increased costs to do so. Such events could adversely impact our operations, financial results and cash flows.

Risk of reduced demand in key product markets due to competition from aluminum or other alternatives to steel .  The automotive market is an important element of our business. Automotive manufacturers are under pressure to meet increasing government-mandated fuel economy standards through 2025. One major automotive company recently elected to substitute aluminum for carbon steel in the body of one of its vehicles, and may increase the use of aluminum in others. Other automotive manufacturers are currently investigating the potential use of aluminum and other alternatives to steels. If demand from one or more of our major automotive customers were to significantly decline because of increased use of aluminum or other competing materials in substitution for steel, it likely would negatively affect our sales, financial results and cash flows.

Risks of excess inventory of raw materials.   We have certain raw material supply contracts which include minimum annual purchases, subject to exceptions for force majeure and other circumstances. If our need for a particular raw material is reduced for an extended period significantly below what we projected at the contract's inception, or what we projected at the time an annual nomination was made under that contract, we could be required to purchase quantities of raw materials that exceed our anticipated annual needs. Our decision to temporarily idle the Ashland Works Hot End increases this risk, as those operations are a major consumer of several key raw materials for which we have take-or-pay obligations, including iron ore and coke. If our existing supply contracts require us to purchase raw materials in quantities beyond our needs, and if we do not succeed in reaching an agreement with a particular raw material supplier to reduce the quantity of raw materials we purchase from that supplier, then we would likely be required to purchase more of a particular raw material in a given year than we need, negatively affecting our financial results, liquidity and cash flows. Changes in our raw material, finished and semi-finished inventory levels and our LIFO method for valuing inventories could increase the negative impact on our financial results.

Risk of supply chain disruptions or poor quality of raw materials. Our sales, financial results and cash flows could be adversely affected by transportation, raw material or energy supply disruptions, or poor quality of raw materials, particularly scrap, coal, coke, iron ore and alloys. For example, extreme cold weather conditions in the United States and Canada can impact shipping on the Great Lakes and could disrupt the delivery of iron ore to us and/or increase our costs for iron ore. Such disruptions or quality issues, whether the result of severe financial hardships or bankruptcies of suppliers, natural or man-made disasters, other adverse weather events, or other unforeseen events, could reduce production or increase costs at one or more of our plants and potentially adversely affect customers or markets to which we sell our products. Any such significant disruption or quality issue would adversely affect our sales, financial results and cash flows.

Risk of production disruption or reduced production levels .  When business conditions permit, we attempt to operate our facilities at production levels at or near capacity. High production levels are important to our financial results because they enable us to spread fixed costs over a greater number of production tons. During 2015, we began to implement a strategy to target markets for our products that deliver higher margins, where possible, and reduce amounts sold into the lower margin spot markets. This strategy relies on our ability to sell higher margin products that overcome the effects of lower production volumes on our fixed costs. If we are unable to implement this strategy successfully, it would adversely affect our sales, financial results and cash flows. Production disruptions could be caused by unanticipated plant outages or equipment failures, particularly under circumstances where we lack adequate redundant facilities, such as our Middletown Works hot mill. In addition, the occurrence of natural or man-made disasters, adverse weather conditions, or similar events could significantly disrupt our operations, negatively impact the operations of other companies or contractors we depend upon, or adversely affect customers or markets who buy our products. Any such significant disruption or reduced level of production would adversely affect our sales, financial results and cash flows.

Risks associated with our healthcare obligations .  We provide healthcare coverage to our active employees and to a significant portion of our retirees, as well as certain members of their families. We are self-insured for substantially all of our healthcare coverage. While we have substantially reduced our exposure to rising healthcare costs through cost sharing, cost caps and VEBA trusts, the cost

of providing such healthcare coverage may be greater on a relative basis for us than for our competitors because they either provide a lesser level of benefits, require that their participants pay more for their benefits, or do not provide coverage to as broad a group of participants (e.g., they do not provide retiree healthcare benefits). In addition, our costs for retiree healthcare obligations could be affected by fluctuations in interest rates or by federal healthcare legislation.

Risks associated with our pension obligations .  We have a substantial pension obligation that, along with the related pension expense (income) and funding requirements, is directly affected by various changes in assumptions, including the selection of appropriate mortality assumptions and discount rates. These items also are affected by the rate and timing of employee retirements, actual experience compared to actuarial projections and asset returns in the securities markets. Such changes could increase the cost to us of those obligations, which could have a material adverse effect on our results and ability to meet those obligations. In addition, changes in the law for pension funding could also materially adversely affect our costs and ability to meet our pension obligations. Also, under the method of accounting we use for pension obligation reporting, we recognize into our results of operations, as a "corridor" adjustment, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets. These corridor adjustments are driven mainly by changes in assumptions and by events and circumstances beyond our control, primarily changes in interest rates, performance of the financial markets, and mortality and retirement projections. A corridor adjustment, if required after a re-measurement of our pension obligations, historically has been recorded in the fourth quarter of the fiscal year. Corridor adjustments can have a significant negative impact on our financial statements in the year a charge is recorded, although the immediate recognition of the charge in that year has the beneficial effect of reducing the impact of unrealized gains or losses on future years. The recognition of a corridor charge does not have any immediate impact on our cash flows. We also contribute to multiemployer pension plans according to collective bargaining agreements that cover certain union-represented employees. Participating in these multiemployer plans exposes us to potential liabilities if the multiemployer plan is unable to pay its unfunded obligations or we choose to stop participating in the plan.

Risk of not reaching new labor agreements on a timely basis .  Most of our hourly employees are represented by various labor unions and are covered by collective bargaining agreements with expiration dates between March 2016 and May 2019 . Two of those contracts are scheduled to expire in 2016 . The labor contract with the United Auto Workers, Local 3462 , which represents approximately 330 hourly employees at our Coshocton Works located in Coshocton, Ohio, expires on March 31, 2016 . An agreement with the United Auto Workers, Local 3303 , which represents approximately 1,240 employees at our Butler Works located in Butler, Pennsylvania, is scheduled to expire on October 1, 2016 . We intend to negotiate with these unions to reach new, competitive labor agreements in advance of the current expiration dates. We cannot predict, however, when new, competitive labor agreements with the unions will be reached or what the impact of such agreements will be on our operating costs, operating income and cash flows. There is the potential of work stoppages at these locations in 2016 if we cannot reach timely agreements in contract negotiations before the contract expirations. If work stoppages occur, they could have a material impact on our operations, financial results and cash flows. For labor contracts we have with unions at other locations which expire after 2016 , a similar risk applies.

Risks associated with major litigation, arbitrations, environmental issues and other contingencies .  We have described several significant legal and environmental proceedings in Note 10 to the consolidated financial statements in Item 8. For environmental issues, changes in application or scope of regulations applicable to us could have significant adverse impacts, including requiring capital expenditures to ensure compliance with the regulations, increased difficulty in obtaining future permits or meeting future permit requirements, incurring costs for emission allowances, restriction of production, and higher prices for certain raw materials. One or more of these adverse developments could negatively impact our operations, financial results and cash flows. For litigation, arbitrations and other legal proceedings, it is not possible to predict with certainty the outcome of such matters and we could incur future judgments, fines or penalties or enter into settlements of lawsuits, arbitrations and claims that could have an adverse effect on our business, results of operations and financial condition. In addition, while we maintain insurance coverage for certain claims, we may not be able to obtain insurance on acceptable terms in the future and, if we obtain such insurance, it may not provide adequate coverage against all claims. We establish reserves based on our assessment of contingencies, including contingencies for claims asserted against us in connection with litigation, arbitrations and environmental issues. Adverse developments in litigation, arbitrations, environmental issues or other legal proceedings may affect our assessment and estimates of the loss contingency recorded as a reserve and require us to make payments in excess of our reserves, which could negatively affect our operations, financial results and cash flows.

Risk associated with regulatory compliance and changes. Our business and the businesses of our customers and suppliers are subject to a wide variety of government oversight and regulation, including those relating to environmental permitting requirements. The regulations promulgated or adopted by various government agencies, and the interpretations and application of such regulations, are dynamic and constantly evolving. If new regulations arise, the application of existing regulations expands, or the interpretation of applicable regulations changes, we may incur additional costs for compliance, including capital expenditures. For example, the United States Environmental Protection Agency ("EPA") is required to routinely reassess the National Ambient Air Quality Standards ("NAAQS") for criteria pollutants like nitrogen dioxide, sulfur dioxide, lead, ozone and particulate matter. These standards are frequently subject to litigation and revision. Revisions to the NAAQS could require us to make significant capital expenditures to ensure compliance and could make it more difficult for us to obtain required permits in the future. These risks are higher for our

facilities that are located in non-attainment areas. For AK Coal, the coal mining industry is subject to numerous and extensive federal, state and local environmental laws and regulations, including laws and regulations related to permitting and licensing requirements, air quality standards, plant and wildlife protection, reclamation and restoration of mining properties, the discharge of materials into the environment, the storage, treatment and disposal of wastes, surface subsidence from underground mining and the effects of mining on groundwater quality and availability. We may also be indirectly affected through regulatory changes that impact our customers or suppliers. Regulatory changes that impact our customers could reduce the quantity of our products they demand or the price of our products that they are willing to pay. Regulatory changes that impact our suppliers could decrease the supply of products or availability of services they sell to us or could increase the price they demand for products or services they sell to us.

Risks associated with climate change and greenhouse gas emission limitations . Our operations may become subject to legislation intended to limit climate change or greenhouse gas emissions. It is possible that limitations on greenhouse gas emissions may be imposed in the United States through federally-enacted legislation or regulation. For example, the EPA has issued and/or proposed regulations addressing greenhouse gas emissions, including regulations that will require large sources and suppliers in the United States to report greenhouse gas emissions. In addition, the United States Congress has introduced from time to time legislation aimed at limiting carbon emissions from carbon-intensive business operations. Among other potential material items, such bills could include a system of carbon emission credits issued to certain companies, similar to the European Union's existing "cap and trade" system. It is impossible, however, to forecast the terms of the final regulations and legislation, if any, and the resulting effects on us. Depending upon the terms of any such regulations or legislation, however, we could suffer negative financial impacts because of increased energy, environmental and other costs to comply with the limitations that would be imposed on greenhouse gas emissions. In addition, depending upon whether similar limitations are imposed globally, the regulations and/or legislation could negatively impact our ability to compete with foreign steel companies situated in areas not subject to such limitations. Unless and until all of the terms of such regulation and legislation are known, however, we cannot reasonably or reliably estimate their impact on our financial condition, operating performance or ability to compete.

Risks associated with financial, credit, capital and banking markets .  In the ordinary course of business, we seek to access financial, credit, capital and/or banking markets at competitive rates. Currently, we believe we have adequate access to these markets to meet our reasonably anticipated business needs. We both provide to our customers and receive from our suppliers normal trade financing. If access to competitive financial, credit, capital and/or banking markets by us, or our customers or suppliers, is impaired, our operations, financial results and cash flows could be adversely impacted.

Risk associated with derivative contracts to hedge commodity pricing volatility . We use cash-settled commodity price swaps and options to reduce pricing volatility for (1) a portion of our raw material and energy purchases and (2) the sale of certain of our commodity steel products (hot roll carbon steel coils). We employ a systematic approach in order to mitigate the risk of potential volatile movements in the price of certain raw materials. This approach is intended to protect us against a sharp rise in the price of raw materials. However, engaging in the use of swaps, options and similar agreements for hedging entails a variety of risks. For example, if the price of an underlying commodity falls below the price at which we hedged the commodity, we will benefit from the lower market price for the commodity purchased, but may not realize the full benefit of the lower commodity price because of the hedged transaction. In certain circumstances we also could be required to provide collateral for a potential derivative liability or close our hedging transaction for the commodity. Additionally, there may be a timing lag (particularly for iron ore) between a decline in the price of a commodity underlying a derivative contract, which could require us to make payments in the short-term to provide collateral or settle the relevant hedging transaction, and the period when we experience the benefits of the lower cost input through physical purchases of the commodity the hedge covers. Further, for derivatives designated as cash-flow hedges, we initially record the effective gains and losses in accumulated other comprehensive income (loss) and reclassify them to earnings in the same period we recognize the effect of the associated hedged transaction. We record all gains or losses from derivatives for which hedge accounting treatment has not been elected or from hedge ineffectiveness to earnings in the period the gain or loss occurs. Changes in the fair value of derivatives for which hedge accounting treatment has not been elected or greater hedge ineffectiveness than we anticipated on cash-flow hedges may result in increased volatility in our reported earnings. Each of these risks related to our hedging transactions could adversely affect our financial results and cash flows.

Risks related to the potential permanent idling of facilities. We have embarked on a strategic review of our business, which includes evaluating each of our plants and operating units to assess their viability and strategic benefits. As part of this review, we may idle-whether temporarily or permanently-certain of our existing facilities in order to exit participation in markets where we determine that our returns are not acceptable. For example, in December 2015 we temporarily idled the Ashland Works Hot End in order to mitigate our exposure to the carbon steel spot market. If we decide to permanently idle the Ashland Works Hot End or any other facility, we are likely to incur significant cash expenses, including those relating to labor benefit obligations, take-or-pay supply agreements and accelerated environmental remediation costs, as well as substantial non-cash charges for impairment of those assets and the effects on pension and OPEB liabilities. If we elect to permanently idle material facilities or assets, it could adversely affect our operations, financial results and cash flows.

Risk of inability to fully realize benefits of margin enhancement initiatives. In recent years we have undertaken several significant projects in an effort to lower costs and enhance margins. In addition, we have identified and implemented many initiatives to achieve synergies in connection with our acquisition and integration of Dearborn. These projects and initiatives include efforts to focus production and sales on higher margin products, increase our operating rates and lower our costs. We identified a number of areas for enhancing profitability, including increasing our percentage of contract sales, producing and selling a higher-margin mix of products (including lowering our sales to the carbon steel spot market, which drove our decision to temporarily idle the Ashland Works Hot End) and developing new products that can command higher prices from customers. If one or more of these key cost-savings or margin enhancement projects are unsuccessful, or are significantly less effective in achieving the level and timing of combined cost savings or margin enhancement than we anticipated, or that we do not achieve results as quickly as anticipated, our financial results and cash flows could be adversely impacted.

Risk of information technology ("IT") security threats and cybercrime. We rely on IT systems and networks in almost every aspect of our business activities. In addition, we and certain of our third-party data processing providers collect and store sensitive data. We have taken, and intend to continue to take, what we believe are appropriate and reasonable steps to prevent security breaches in our systems and networks. In recent years, however, both the number and sophistication of IT security threats and cybercrimes have increased. These IT security threats and increasingly sophisticated cybercrimes, including advanced persistent attacks, pose a risk to system security and the confidentiality, availability and integrity of our data. A breach in security could expose us to risks of production downtimes and operations disruptions, misuse of information or systems, or the compromising of confidential information, which in turn could adversely affect our reputation, competitive position, business and financial results.

None.

We lease a building in West Chester, Ohio, that we use as our corporate headquarters. The initial term of the building lease expires in 2019 and there are two five-year options to extend the lease. We own a research building located in Middletown, Ohio, and are currently constructing a new research and innovation center in Middletown to replace the existing building. We also lease administration buildings located in Dearborn, Michigan.

Our operations consist primarily of eight steelmaking and finishing plants, two coke plants and two tube manufacturing plants across six states-Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. We own all of these facilities.

Ashland Works is located in Ashland, Kentucky, and produces carbon steel. It consists of a blast furnace, basic oxygen furnaces and continuous caster for the production of carbon steel and a coating line that helps to complete the finishing operation of material processed at Middletown Works. In December 2015, we temporarily idled the blast furnace, basic oxygen furnaces and continuous caster in response to excess global supply and the increase in low-priced imports into the United States. We elected not to idle the coating line at Ashland Works, which principally finishes steel for the automotive market.

Butler Works is located in Butler, Pennsylvania, and produces stainless, electrical and carbon steel. Melting takes place in a highly-efficient electric arc furnace that feeds an argon-oxygen decarburization unit for the specialty steels. A ladle metallurgy furnace feeds two double-strand continuous casters. Butler Works also includes a hot rolling mill, annealing and pickling units and two fully automated tandem cold rolling mills. It also has various intermediate and finishing operations for both stainless and electrical steels.

Coshocton Works is located in Coshocton, Ohio, and consists of a stainless steel finishing plant containing two Sendzimer mills and two Z-high mills for cold reduction, four annealing and pickling lines, nine bell annealing furnaces, four hydrogen annealing furnaces, two bright annealing lines and other processing equipment, including temper rolling, slitting and packaging facilities.

Dearborn Works is located in Dearborn, Michigan, and was acquired in 2014. The operations include carbon steel melting, casting, hot and cold rolling and finishing operations for carbon steel. It consists of a blast furnace, basic oxygen furnaces, two ladle metallurgy furnaces, a vacuum degasser and two slab casters. Dearborn Works also has a hot rolling mill, a pickle line/tandem cold mill, batch anneal shops, a temper mill and a hot-dip galvanizing line for finishing products.

Mansfield Works is located in Mansfield, Ohio, and produces stainless steel. Operations include a melt shop with two electric arc furnaces, a ladle metallurgy furnace, an argon-oxygen decarburization unit, a thin-slab continuous caster and a hot rolling mill.

Middletown Works is located in Middletown, Ohio. It melts carbon and processes carbon and stainless steel. It consists of a coke facility, blast furnace, basic oxygen furnaces and continuous caster for the production of carbon steel. Middletown Works also has a hot rolling mill, cold rolling mill, two pickling lines, four annealing facilities, two temper mills and three coating lines for finishing products.

Rockport Works is located near Rockport, Indiana, and consists of a continuous cold rolling mill, a continuous hot-dip galvanizing and galvannealing line, a continuous carbon and stainless steel pickling line, a continuous stainless steel annealing and pickling line, hydrogen annealing facilities and a temper mill.

Zanesville Works is located in Zanesville, Ohio, and consists of a finishing plant for some of the stainless and electrical steel produced at Butler Works and Mansfield Works and has a Sendzimer cold rolling mill, annealing and pickling lines, high temperature box anneal and other decarburization and coating units.

AK Tube LLC, a subsidiary, has a plant in Walbridge, Ohio, which operates six electric resistance welder tube mills and a slitter. AK Tube also has a plant in Columbus, Indiana, which operates eight electric resistance welder and two laser welder tube mills.

AK Coal, another subsidiary, produces metallurgical coal from reserves in Somerset County, Pennsylvania.

Mountain State Carbon, LLC, a subsidiary, is located in Follansbee, West Virginia. It is a cokemaking facility acquired in 2014 and consists of four batteries with total permitted cokemaking capacity of approximately 700,000 tons per year.

Information for this item may be found in Note  10 to the consolidated financial statements in Item 8, which is incorporated herein by reference.

The operation of AK Coal's North Fork Mine and Coal Innovations, LLC coal wash plant (collectively, the "AK Coal Operations") are subject to regulation by the Mine Safety and Health Administration ("MSHA") under the Federal Mine Safety and Health Act of 1977, as amended ("Mine Act"). MSHA inspects mining and processing operations, such as the AK Coal Operations, on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Exhibit 95.1 to this Annual Report presents citations and orders from MSHA and other regulatory matters required to be disclosed by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise under this Item 4.

PART II

AK Holding's common stock has been listed on the New York Stock Exchange since April 5, 1995 (symbol: AKS). The reported high and low sales prices of the common stock for each quarter are presented below:

As of February 17, 2016 , there were 178,344,667 shares of common stock outstanding and held of record by 3,920 stockholders. The closing stock price on February 17, 2016 , was $2.57 per share. Because depositories, brokers and other nominees held many of these shares, the number of record holders is not representative of the number of beneficial holders. There were no unregistered sales of equity securities in the quarter or year ended December 31, 2015 .

Although we have elected to suspend our dividend program, no covenant restrictions currently would restrict our ability to declare and pay a dividend to our stockholders. Our $1,500.0 asset-backed revolving credit facility (the "Credit Facility") contains certain restrictive covenants which could, under certain circumstances, restrict the dividend payments, but none of those circumstances currently apply. Under these covenants, dividends are permitted as long as (i) availability exceeds $337.5 or (ii) availability exceeds $262.5 and we meet a fixed charge coverage ratio of one to one as of the most recently ended fiscal quarter. If we cannot meet either of these thresholds, dividend payments would be limited to $12.0 annually. At December 31, 2015 , the availability under the Credit Facility significantly exceeded $337.5 .

The following graph compares cumulative total stockholder return on AK Holding's common stock for the five-year period from January 1, 2011 through December 31, 2015 , with the cumulative total return for the same period of (i) the Standard & Poor's Small Cap 600 Stock Index, and (ii) the New York Stock Exchange Arca Steel Index. These comparisons assume an investment of $100 at the beginning of the period and reinvestment of dividends.

The following selected historical consolidated financial data for each of the five years in the period ended December 31, 2015 are from the audited consolidated financial statements. This data should be read along with the consolidated financial statements presented in Item 8 and Management's Discussion and Analysis of Financial Condition and Results of Operations presented in Item 7.

Operations Overview

We operate eight steelmaking and finishing plants, two coke plants and two tube manufacturing plants across six states-Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. These operations produce flat-rolled carbon steels, including premium-quality coated, cold-rolled and hot-rolled carbon steel products, and specialty stainless and electrical steels that we sell in sheet and strip form, as well as carbon and stainless steel that we finish into welded steel tubing. We sell these products to our customers in three markets: (i) automotive; (ii) infrastructure and manufacturing; and (iii) distributors and converters markets. We sell carbon steel products principally to domestic customers and electrical and stainless steel products both domestically and internationally. We also produce carbon and stainless steel that we finish into welded steel tubing used in the automotive, large truck, industrial and construction markets. In addition, we operate Mexican and European trading companies that buy and sell steel and steel products and other materials.

Safety, quality, innovation and productivity are key factors in our business and hallmarks of our success. In 2015 , we experienced another year of outstanding safety performance and continued to lead the steel industry in OSHA-recordable safety performance by a wide margin. Our quality focus also continued, establishing several all-time company best records for internal quality performances. We have redoubled our efforts to develop new products and processes, including next-generation Advanced High Strength Steels for the automotive market, new types of corrosion-resistant stainless steels and improved electrical steels to help customers around the world meet higher energy efficiency standards. Finally, our relentless concentration on productivity gains and initiatives to lower operating costs generated enhanced margins in 2015 .

2015 Financial Results Overview

Our focus on what we can control produced solid operational improvements during a challenging year in the domestic steel industry. As demand from China slowed, global steelmaking overcapacity increased and led steel producers in countries with excess steel production-most notably, China itself-to flood the U.S. market with what we believe are unfairly-traded imports. The imports into the United States caused sharp declines in carbon steel spot market prices during the year. As part of our strategic focus on enhancing margins, we targeted sales of higher-margin value-added carbon, stainless and electrical steel products and intentionally reduced shipments to the carbon steel spot market. Also as part of our margin enhancement efforts, we relentlessly concentrated on reducing operating costs and positioned the blast furnaces and steelmaking operations at our Middletown Works and Dearborn Works for higher operating rates by temporarily idling our blast furnace and steelmaking operations at our Ashland Works at the end of 2015. A charge of $28.1 , or $0.16 per diluted share, was recorded in the fourth quarter of 2015 as a result of this temporary facility idling.

Our customer markets improved in 2015. North American light vehicle production was approximately 17.5 million units, a 3% increase from 2014. In addition, housing starts in the United States reached levels not achieved since 2007. These market recoveries improved our sales of carbon and stainless steels into the automotive market and increased selling prices for our electrical steels. However, the global steelmaking overcapacity and the resulting impact from the significant rise in imports in our primary markets in North America had a negative impact on our financial performance in 2015. Thus, despite the strength of our customer markets, our average capacity utilization across all plants decreased to approximately 79% in 2015 compared to approximately 82% in 2014 . While we continue to focus our capacity on producing higher-margin value-added steels, our September 2014 acquisition of Dearborn increased the proportion of sales of hot rolled coils and decreased the proportion of sales from value-added shipments from 82% in 2014 to 79% in 2015 . We made strides in 2015 to increase the amount of value-added carbon steel shipments from Dearborn Works, but concentrating on higher-margin value-added carbon steels at the Dearborn plant-particularly for automotive customers-continues to be a focus for our business.

Net sales for 2015 increased 3% and shipments increased 16% from 2014 , due primarily to the September 2014 acquisition of Dearborn and higher demand from the automotive market. The average selling price for 2015 was $942 per ton, an 11% decrease from the 2014 average selling price of $1,058 per ton resulting primarily from the adverse market effects of a higher level of low-priced imports during 2015. Our per ton cost of products sold for 2015 declined 13% from 2014, principally due to a sharp decline in raw material input costs and our persistent focus on operating costs.

As a result of these business conditions, we reported a net loss of $509.0 , or $2.86 per diluted share of common stock, in 2015 . These results included charges (i) to write off our investments in Magnetation LLC ("Magnetation") and AFSG Holdings, Inc. ("AFSG"), (ii) for a pension and OPEB net corridor charge, and (iii) for the temporary idling of the Ashland Works Hot End. Excluding these charges, we reported an adjusted net loss of $51.8 , or $0.29 per diluted share. We also reported adjusted EBITDA of $393.4 , or $55 per ton, representing a 40% increase from 2014 adjusted EBITDA of $280.2 , or $46 per ton. Reconciliations for the non-GAAP financial measures are in the Non-GAAP Financial Measures section.

During 2015 we also focused on our cash and liquidity, ending the year with $700.2 of total liquidity. Although our overall liquidity declined from the end of 2014, this resulted principally from a decrease in the borrowing base under our asset-backed revolving credit facility. The decrease resulted from lower collateral values related to declines in raw material and steel prices, as well as lower levels of accounts receivable. We reduced borrowings under our credit facility by $55.0 in 2015. In addition, we further lowered our long-term debt by repurchasing a principal amount of $23.8 of our senior unsecured notes for $14.1 . Our pension and other postretirement obligations declined by $56.3 , primarily as a result of an increase in the discount rates used to determine the present value of the obligations and favorable actuarial experience, partially offset by unfavorable returns on our plan assets.

Dearborn Acquisition

On September 16, 2014 , we acquired Dearborn for a cash purchase price of $690.3 , net of cash acquired. The acquisition included integrated steelmaking assets located in Dearborn, Michigan ("Dearborn Works"), the Mountain State Carbon cokemaking facility located in Follansbee, West Virginia, and interests in joint ventures that process flat-rolled steel products.

Similar to our pre-existing carbon steel operations, Dearborn Works produces hot- and cold-rolled sheet and hot-dip galvanized products, as well as other flat-rolled steel products. Dearborn Works is strategically located in close proximity to many of our customers, and the assets at the steel plant and the other acquired facilities complement our pre-existing carbon steel operations with production capacity that exceeds 2.5 million tons of finished steel per year.

We believe that this transaction enhances and complements our business and operational strategies by positioning our carbon steelmaking operations close to our major northern automotive and other customers, expanding our platform to meet the increasing light-weighting demands of our automotive customers, and enhancing our operational flexibility. In addition to current and expected significant operational and productivity improvements, the acquisition is creating significant purchasing, transportation and overhead cost savings. We originally anticipated annual cost-based synergies in excess of $50.0 , with approximately $25.0 expected to be realized in 2015. We achieved synergies of $59.0 in 2015.

Our financial results include the effects of the acquisition and Dearborn's operations for periods after September 16, 2014, affecting comparability to prior periods.

2015 Compared to 2014

Steel Shipments

Steel shipments in 2015 were 7,089,200 tons, a 16% increase from 2014 shipments of 6,132,700 tons. The increase in overall shipments in 2015 compared to 2014 was principally from the addition of shipments from Dearborn Works following the September 2014 acquisition. As a result of the high level of imports in 2015, we targeted shipments to the automotive market and elected to reduce shipments to the carbon steel spot market. Primarily as a result of a relatively higher proportion of carbon spot market shipments in the Dearborn Works product mix compared to our historical mix, our higher-margin value-added shipments as a percent of total volume shipped decreased from 82.1% in 2014 to 79.3% in 2015 . Tons shipped by product category for 2015 and 2014 , and as a percent of total shipments, were as follows:

Net Sales

Net sales in 2015 were $6,692.9 , a 3% increase from 2014 net sales of $6,505.7 . The increase in net sales is primarily due to the addition of net sales from Dearborn Works following the September 2014 acquisition. However, net sales did not increase as much as shipments did from 2014 to 2015 , primarily due to sharply reduced market prices driven by global overcapacity and what we believe are unfairly-traded, lower-priced foreign steel imports that flooded the domestic market in 2015 . Our average selling price was $942 per net ton in 2015 , an 11% decrease from the 2014 average selling price of $1,058 per net ton. Net sales to customers outside the United States were $855.7 , or 13% of total sales, for 2015 , compared to $755.4 , or 12% of total sales, for 2014 .

The following table shows the percentage of our net sales to each of our markets:

Cost of Products Sold

Cost of products sold in 2015 was $6,032.0 and remained flat compared to 2014 cost of products sold of $6,007.7 . Shipments from Dearborn Works following the September 2014 acquisition increased cost of products sold in 2015 . These costs were largely offset by:

Selling and Administrative Expense

Selling and administrative expense increased to $261.9 in 2015 from $247.2 in 2014 . The increase was primarily from Dearborn Works selling and administrative costs after the September 2014 acquisition.

Depreciation Expense

Depreciation expense increased to $216.0 in 2015 from $201.9 in 2014 , primarily because of the additional Dearborn Works depreciation.

Pension and Other Postretirement Employee Benefit ("OPEB") Expense (Income)

Pension and OPEB income of $63.0 in 2015 decreased from income of $92.5 in 2014 . The decrease in income in 2015 was largely from an increase in the amount of amortization from unrealized actuarial losses.

We incurred a pension corridor charge of $144.3 and an OPEB corridor credit of $13.1 in 2015 , and a pension corridor charge of $2.0 in 2014 . Although the corridor charge reduces reported operating and net income, it does not affect our cash flows in the current period. However, we expect to ultimately settle the pension obligation in cash. See Critical Accounting Estimates for information on our policy for measurement and recognition of corridor charges (credits).

Charge for Facility Idling

In the fourth quarter of 2015, we temporarily idled the Ashland Works Hot End. We incurred a $28.1 charge during the quarter, which included $22.2 for supplemental unemployment and other employee benefit costs that we expect to pay in 2016, and $5.9 for equipment idling costs and other costs. Beginning in the first quarter of 2016, we estimate we will incur ongoing costs of approximately $2.0 to $3.0 per month for employees needed to maintain the equipment, utilities and supplier obligations related to the idled Ashland Works operations. We expect that benefits from focused cost reduction measures, higher operating rates at our blast furnaces at the Middletown Works and Dearborn Works, and a better product mix from lower shipments to the carbon steel spot market will more than offset the on-going fixed costs for the idled facility.

Operating Profit

Operating profit for 2015 of $86.7 was lower than 2014 operating profit of $139.4 . Included in the 2015 operating profit was a $28.1 charge to temporarily idle the Ashland Works Hot End and the net pension/OPEB corridor charge of $131.2 . Also included was operating profit from SunCoke Middletown of $62.6 and $63.0 for 2015 and 2014 .

Interest Expense

Interest expense for 2015 increased to $173.0 from $144.7 in 2014 . The year-over-year increase was primarily for indebtedness to finance a portion of the Dearborn purchase price and higher average Credit Facility borrowings outstanding during 2015 as compared to 2014 .

Impairment of Magnetation Investment

We recognized a non-cash impairment charge of $256.3 for 2015 related to our investment in Magnetation. For further discussion, see the Magnetation section below and Note 4 to the consolidated financial statements.

Impairment of AFSG Investment

As part of our ongoing strategic review of our business and operations, in the fourth quarter of 2015 we reevaluated our investment in AFSG Holdings, Inc. ("AFSG"), the holding company of our former insurance operations. During the fourth quarter of 2015, AK Steel received a cash distribution of $14.0 from AFSG. After this distribution, we determined that our remaining investment in AFSG is impaired and we recognized a non-cash charge of $41.6 to write off the remaining investment in AFSG.

Other Income (Expense)

Other income (expense) was $1.4 of income for 2015 and other expense of $21.1 for 2014 . Other income (expense) included our share of Magnetation losses of $16.3 for 2015 and $15.2 for 2014 . The Magnetation loss shown is our share of its results of operations for the first quarter of 2015. The results of operations for periods after March 31, 2015, do not include any losses of Magnetation as the basis in the Magnetation investment had been reduced to zero as of March 31, 2015 and we have no further investment commitments to Magnetation. During 2015, we repurchased an aggregate principal amount of $23.8 of the 2021 Notes in private, open market transactions and recognized gains on the repurchases of $9.4 . Also affecting the year-to-year change in other income (expense) was $12.6 of costs we incurred in 2014 for committed bridge financing that we arranged but did not use for the Dearborn acquisition.

Income Taxes

Income tax expense in 2015 was $63.4 compared to $7.7 in 2014 . We adjust our tax valuation allowance on our deferred tax assets for changes in our LIFO reserve, significantly affecting our income tax expense. Therefore, income tax expense increased from 2015 to 2014 principally due to LIFO credit s of $195.3 in 2015 as compared to LIFO credit s of $21.0 in 2014 . In addition, 2015 income tax expense included a non-cash income tax benefit of $13.2 from allocating income tax expense to other comprehensive income.

Net Income (Loss) and Adjusted Net Income (Loss)

Net loss attributable to AK Holding in 2015 was $509.0 , or $2.86 per diluted share. The net loss in 2015 included a pension corridor charge of $144.3 and an OPEB corridor credit of $13.1 , netting to $131.2 , or $0.74 per diluted share. Additionally, the net loss in 2015 included an impairment charge for the Magnetation investment of $256.3 , or $1.44 per diluted share, and an impairment charge for the AFSG investment of $41.6 , or $0.23 per diluted share, and a charge to temporarily idle the Ashland Works Hot End of $28.1 , or $0.16 per diluted share. Excluding the above charges, we had an adjusted net loss of $51.8 , or $0.29 per diluted share, for 2015 .

Net loss attributable to AK Holding in 2014 was $96.9 , or $0.65 per diluted share. The net loss in 2014 included a pension corridor charge and OPEB charge of $5.5 , or $0.04 per diluted share, and net-of-tax acquisition-related expenses for the Dearborn acquisition of $31.7 , or $0.21 per diluted share. Excluding these charges, we had an adjusted net loss of $59.7 , or $0.40 per diluted share, for 2014.

Adjusted EBITDA

Adjusted EBITDA (as defined below under Non-GAAP Financial Measures ) was $393.4 , or $55 per ton, for 2015 , and $280.2 , or $46 per ton, for 2014 .

2014 Compared to 2013

Steel Shipments

Steel shipments in 2014 were 6,132,700 tons, up approximately 16% from shipments of 5,275,900 tons in 2013 . The increase in overall shipments in 2014 compared to 2013 was principally attributable to the addition of shipments from Dearborn Works and higher shipments of carbon steel to the automotive and infrastructure and manufacturing markets. The benefit of these positive developments was partly offset by a reduction in shipments to the spot market caused by production issues at the Ashland Works blast furnace in 2014 . Primarily as a result of a relatively higher proportion of carbon spot market shipments in the Dearborn product mix compared to our historical mix, our higher-margin value-added shipments decreased as a percent of total volume shipped to 82.1% in 2014 compared to 85.9% in 2013 . The following table shows tons shipped by product category for 2014 and 2013 , and as a percent of total shipments:

Net Sales

Net sales in 2014 were $6,505.7 , up 17% from net sales of $5,570.4 in 2013 . The increase in net sales is primarily due to an increase in shipments year over year. That increase in shipments was primarily due to the addition of shipments from Dearborn Works following the acquisition of Dearborn in September 2014 and higher shipments of carbon steel to the automotive and infrastructure and manufacturing markets. The average selling price was $1,058 per net ton in 2014 , about the same as in 2013 . Net sales to customers outside the United States were $755.4 , or 12% of total sales, for 2014 , compared to $708.0 , or 13% of total sales, for 2013 .    

The following table sets forth the percentage of net sales attributable to each market:

Cost of Products Sold

Cost of products sold in 2014 and 2013 was $6,007.7 and $5,107.8 . Cost of products sold for 2014 was higher primarily as a result of the Dearborn acquisition and higher shipments. We benefited from lower raw material costs for iron ore, coal and coke in 2014. However, the benefit of these lower raw materials costs was partially offset by the effects of extreme winter weather conditions early in the year and the effect of mark-to-market losses on iron ore derivative contracts. The extreme winter weather conditions caused higher energy costs, primarily for electricity and natural gas, and affected the delivery of iron ore pellets in the second quarter, with additional costs incurred for transportation and operations. We also incurred higher outage and operating costs associated with the planned and unplanned Ashland Works blast furnace outages. The results for 2014 included expenses of $41.2 for costs from the unplanned blast furnace outages that occurred at Ashland Works during the year. The results for 2013 include $22.3 for costs from the unplanned blast furnace outage at Middletown Works. Expenses for planned outages were $74.9 and $28.3 in 2014 and 2013 , including $31.0 for the planned outage at Ashland Works in the fourth quarter of 2014 . Also, we recorded a LIFO credit of $21.0 in 2014 compared to a LIFO credit of $38.5 in 2013 .

Selling and Administrative Expense

Selling and administrative expenses increased to $247.2 in 2014 from $205.3 in 2013 . The increase was primarily the result of the inclusion of Dearborn selling and administrative costs after the acquisition, transaction expenses of $8.1 for the Dearborn acquisition and $2.6 for severance costs for certain employees of Dearborn.

Depreciation Expense

Depreciation expense was $201.9 in 2014 and $190.1 in 2013 . The increase was primarily the result of depreciation of $7.1 for the assets acquired in the Dearborn purchase.

Pension and Other Postretirement Employee Benefit ("OPEB") Expense (Income)

We recorded pension and OPEB income of $92.5 in 2014 compared to income of $68.6 in 2013 . The increase in income in 2014 was largely a result of a decrease in the interest cost on our pension and OPEB obligations, partially offset by an OPEB settlement loss of $3.5 for the Butler Works retirees class action. In addition, we incurred a pre-tax pension corridor charge of $2.0 in 2014 , but did not incur a corridor charge in 2013 . Under our method of accounting for pension and OPEB plans, we recognize as of the measurement date any unrecognized actuarial gains and losses that exceed 10% of the larger of projected benefit obligations or plan assets (the "corridor"). The corridor charge in 2014 was caused primarily by decreases in the discount rate and changes in mortality assumptions. As a result of new mortality tables issued in October 2014 by the Society of Actuaries, we adopted mortality assumptions in 2014 that significantly increased our pension and postemployment benefit obligations. Our revised mortality assumptions increased the assumed life expectancy of participants in our benefit plans, thereby increasing the total expected benefit payments over a longer time horizon. The adoption of these new mortality assumptions currently has no significant effect on our expected pension contributions over the next several years.

Operating Profit

Operating profit for 2014 was $139.4 , compared to $135.8 for 2013 . Included in 2014 were planned and unplanned outage costs of $72.2 for Ashland Works blast furnace incidents, a pre-tax pension corridor charge of $2.0 and an OPEB settlement loss of $3.5 . Also included was operating profit for SunCoke Middletown of $63.0 and $64.3 for 2014 and 2013 .

Interest Expense

Interest expense for 2014 and 2013 was $144.7 and $127.4 . The year-over-year increase was primarily from the issuance of indebtedness to finance a portion of the Dearborn purchase price and higher revolver borrowings outstanding during 2014 as compared to 2013.

Other Income (Expense)

Other expense was $21.1 and $1.4 for 2014 and 2013 . Other expense includes our share of loss from Magnetation of $15.2 and $4.9 for 2014 and 2013 . The increase in our share of loss from Magnetation from the prior year period was due primarily to lower selling prices for concentrate sales, higher costs for energy, and costs from the start-up of the pellet plant and third concentrate plant in 2014. In addition, we incurred $12.6 of costs in the year ended December 31, 2014 for committed bridge financing that was arranged in connection with the acquisition of Dearborn, but which was unused because of our successful financing of the acquisition through debt and common stock offerings.

Income Taxes

In 2014 , we recorded an income tax expense of $7.7 compared to an income tax benefit of $10.4 in 2013 . Included in the income tax expenses for 2014 are non-cash charges of $8.4 for acquisition-related changes in the value of deferred tax assets.

Net Income (Loss) and Adjusted Net Income (Loss)

Our net loss attributable to AK Holding in 2014 was $96.9 , or $0.65 per diluted share, compared to $46.8 , or $0.34 per diluted share, in 2013 . The net loss in 2014 included a pension corridor charge and an OPEB settlement loss that totaled $5.5 , or $0.04 per diluted share. The net loss in 2014 also included total Dearborn acquisition-related costs of $31.7 , or $0.21 per diluted share. Excluding the pension corridor charge, the OPEB settlement loss and acquisition-related expenses, we had an adjusted net loss of $59.7 , or $0.40 per diluted share, for 2014 .

Adjusted EBITDA

Adjusted EBITDA (as defined below under Non-GAAP Financial Measures ) was $280.2 , or $46 per ton, and $255.0 , or $48 per ton, for 2014 and 2013 .

Non-GAAP Financial Measures

In certain of our disclosures, we have reported adjusted EBITDA and adjusted net income (loss) that exclude the effects of noncontrolling interests, pension and OPEB net corridor charge, impairment charges for our investments in Magnetation and AFSG, charges for temporarily idling facilities and acquisition-related expenses of Dearborn. We believe that reporting adjusted net income (loss) attributable to AK Holding (as a total and on a per share basis) with these items excluded more clearly reflects our current operating results and provides investors with a better understanding of our overall financial performance.

EBITDA is an acronym for earnings before interest, taxes, depreciation and amortization. It is a metric that is sometimes used to compare the results of different companies by removing the effects of different factors that might otherwise make comparisons inaccurate or inappropriate. For purposes of this report, we have made adjustments to EBITDA to exclude the effect of noncontrolling interests, pension and OPEB net corridor charges, impairment charges for our investments in Magnetation and AFSG, charges for temporarily idling facilities and the acquisition-related expenses of Dearborn. The adjusted results, although not financial measures under generally accepted accounting principles in the United States ("GAAP") and not identically applied by other companies, facilitate the ability to analyze our financial results in relation to those of our competitors and to our prior financial performance by excluding items that otherwise would distort the comparison. Adjusted EBITDA and adjusted net income (loss) are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with GAAP and are not necessarily comparable to similarly titled measures used by other companies.

We recognize in our results of operations, as a corridor adjustment, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets. Amounts inside this 10% corridor are amortized over the plan participants' life expectancy. The need for a corridor charge is considered at any remeasurement date, but has historically only been recorded in the fourth quarter at the time of the annual remeasurement. After excluding the corridor charge, the remaining pension and OPEB expenses included in the non-GAAP measure are comparable to the accounting for pension and OPEB expenses on a GAAP basis in the first three quarters of the year and we believe this is useful to investors in analyzing our results on a quarter-to-quarter basis, as well as analyzing our results on a year-to-year basis. As a result of the corridor method of accounting, our subsequent financial results on both a GAAP and a non-GAAP basis do not contain any amortization of prior period actuarial gains or losses that exceeded the corridor threshold because those amounts were immediately recognized as a corridor adjustment in the period incurred. Actuarial net gains and losses occur when actual experience differs from any of the many assumptions used to value the benefit plans, or when the assumptions change, as they may each year when we perform a valuation. The two most significant of those assumptions are the discount rate we use to value projected plan obligations and the rate of return on plan assets. In addition, changes in other actuarial assumptions and the degree by which the unrealized gains or losses are within the corridor threshold before remeasurement will affect the corridor adjustment calculation. The effect of prevailing interest rates on the discount rate as of the December 31 measurement date and actual return on plan assets compared to the expected return will have a significant impact on our year-end liability, corridor adjustment and following year's expense for these benefit plans. For example, the pension/OPEB net corridor charge for 2015 was driven by actuarial losses caused primarily by (i) the net effect of the difference between the expected return on assets of 7.25% ( $198.4 ) and the actual loss on assets of 3.4% ( $93.6 ) (netting to a loss of $292.0 ), partially offset by (ii) an increase in the discount rate assumption used to determine the current year pension liabilities from 3.82% at December 31, 2014 to 4.15% at December 31, 2015 (an actuarial gain of approximately $96.0 ) and (iii) changes in mortality assumptions (an actuarial gain of approximately $65.0 ). Also for example, the pension corridor charge for 2014 was driven by actuarial losses caused primarily by (i) a decrease in the discount rate assumption used to determine the current year pension liabilities from 4.53% at December 31, 2013 to 3.82% at December 31, 2014 (an actuarial loss of approximately $219.0 ) and (ii) changes in mortality assumptions (an actuarial loss of

approximately $245.5 ), partially offset by (iii) the net effect of the difference between the expected return on assets of 7.25% ( $202.8 ) and the actual return on assets of 9.3% ( $257.8 ) (netting to a gain of $55.0 ). We believe that the corridor method of accounting for pension and other postretirement obligations is rarely used by other publicly traded companies. However, because other companies use different approaches to recognize actuarial gains and losses, our resulting pension expense on a GAAP basis or a non-GAAP basis may not be comparable to other companies' pension expense on a GAAP basis. Although the corridor charge reduces reported operating and net income, it does not affect our cash flows in the current period. However, we expect to ultimately settle the pension obligation in cash.

Neither current shareholders nor potential investors in our securities should rely on adjusted EBITDA or adjusted net income (loss) as a substitute for any GAAP financial measure and we encourage investors and potential investors to review the following reconciliations of net income (loss) attributable to AK Holding to adjusted EBITDA and adjusted net income (loss).

Reconciliation of Adjusted Net Income (Loss)

Reconciliation of Adjusted EBITDA

Liquidity and Capital Resources

AK Steel has a $1,500.0 asset-backed revolving credit facility (the "Credit Facility") that expires in March 2019 and is guaranteed by AK Steel's parent company, AK Holding, and by AK Tube LLC and AK Steel Properties, Inc., two 100%-owned subsidiaries of AK Steel. The Credit Facility contains common restrictions, including limitations on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliate transactions. Availability is calculated as the lesser of the total commitments under the Credit Facility or eligible collateral after advance rates, less outstanding revolver borrowings and letters of credit. The Credit Facility requires us to maintain a minimum fixed charge coverage ratio of one to one if availability under the Credit Facility is less than $150.0 . Our obligations under our Credit Facility are secured by our inventory and accounts receivable, and availability under the Credit Facility fluctuates monthly based on the varying levels of eligible collateral. The Credit Facility provides us with enhanced liquidity and financial and strategic flexibility.

At December 31, 2015 , we had total liquidity of $700.2 , consisting of $47.9 of cash and cash equivalents and $652.3 of availability under the Credit Facility. At December 31, 2015 , our eligible collateral, after application of applicable advance rates, was $1,275.2 . At December 31, 2015 , we had outstanding borrowings of $550.0 from the Credit Facility, and $72.9 of outstanding letters of credit that further reduced availability. During the year ended December 31, 2015 , our borrowings from the Credit Facility ranged from $535.0 to $785.0 , with outstanding borrowings averaging $662.9 per day. We expect to use the Credit Facility as necessary to fund requirements for working capital, capital investments and other general corporate purposes. Consolidated cash and cash equivalents of $56.6 at December 31, 2015 , includes $8.7 of cash and cash equivalents of consolidated variable interest entities which are not available for our use.

Cash from operations totaled $200.3 for the year ended December 31, 2015 . This total included cash generated by SunCoke Middletown of $87.4 , which can only be used by SunCoke Middletown for its operations or for distribution to its equity owners. Significant uses of cash included pension contributions of $24.1 and pension and OPEB benefit payments of $61.0 . For a more detailed discussion of pension and OPEB benefit payments, see Employee Benefit Obligations . Working capital was flat for the year with decreases in accounts receivable mostly offset by an increase in inventory and a decrease in accounts payable. The remaining cash from operations were from normal business activities for the year.

Investing and Financing Activities

Cash used by investing activities in 2015 totaled $47.5 . This total included $99.0 of capital investments, partially offset from proceeds from the $25.0 sale of our investment in Double Eagle and a $14.0 distribution from AFSG.

Cash used for financing activities in 2015 totaled $166.4 . During 2015, we repaid $55.0 of borrowings on the Credit Facility and we repurchased senior unsecured notes with a principal amount of $23.8 for $14.1 resulting in gains of $9.4 . We may, from time to time, repurchase additional outstanding notes in the open market on an unsolicited basis, by tender offer, through privately negotiated transactions or otherwise. The total cash used for financing activities also includes $96.3 of payments from SunCoke Middletown to SunCoke.

Our Credit Facility expiring in March 2019 is secured by inventory and accounts receivable and contains restrictions on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliated transactions. The Credit Facility requires us to maintain a minimum fixed charge coverage ratio of one to one if availability under the Credit Facility falls below $150.0 . Currently, the availability under the Credit Facility significantly exceeds $150.0 . We are in compliance with the Credit Facility covenants and, as long as no unexpected adverse events occur, expect that we will remain in compliance for the foreseeable future.

We believe that our current sources of liquidity will be enough to meet our obligations for the foreseeable future. We expect to fund future liquidity requirements for employee benefit plan contributions, scheduled debt maturities, debt redemptions and capital investments with internally-generated cash and other financing sources. If we are unable to fund any of our working capital or planned capital investments with internally-generated cash, we have available our Credit Facility. We also could seek to access the capital markets if we perceive conditions are favorable. The Credit Facility currently is scheduled to expire in March 2019 and any amounts outstanding under it at the time of expiration would need to be repaid or refinanced. Otherwise, we have no scheduled debt maturities until December 2018 , when our Secured Notes are due. At December 31, 2015 , our eligible collateral, after application of applicable advance rates, was $1,275.2 . At December 31, 2015 , we had $550.0 of outstanding borrowings from the Credit Facility and $72.9 of outstanding letters of credit further reduced availability. Our forward-looking statements on liquidity are based on currently available information and expectations and, if the information or expectations are inaccurate or conditions deteriorate, there could be a material adverse effect on our liquidity.

For longer-term obligations, we have significant debt maturities and other obligations that will be due in future periods, including possible required cash contributions to our qualified pension plan. For further information, see the Contractual Obligations section.

Restrictions Under Debt Agreements

The Credit Facility and indentures governing our senior indebtedness and tax-exempt fixed-rate IRBs (collectively, the "Notes") contain restrictions and covenants that may limit our operating flexibility.

The indentures governing the Notes (other than the 5.00% Senior Notes due November 2019 (the "Exchangeable Notes")) include customary restrictions on (a) the incurrence of additional debt by certain of our subsidiaries, (b) the incurrence of certain liens , (c) the amount of sale/leaseback transactions, and (d) our ability to merge or consolidate with other entities or to sell, lease or transfer all or substantially all of our assets to another entity. They also contain customary events of default. In addition, the indenture governing the Secured Notes includes covenants with customary restrictions on the use of proceeds from the sale of collateral. The indenture governing the Exchangeable Notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us.

The Credit Facility contains customary restrictions, including limitations on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliate transactions. In addition, the Credit Facility requires us to maintain a minimum fixed charge coverage ratio of one to one if availability under the Credit Facility is less than $150.0 . We do not expect any of these restrictions to affect or limit our ability to conduct our business in the ordinary course.

During the period, we were in compliance with all the terms and conditions of our debt agreements.

Capital Investments

We anticipate 2016 capital investments of $125.0 to $140.0 , with approximately $45.0 of those investments targeted to growth, innovation and margin enhancement initiatives. In the near-term, we expect to fund these investments from cash generated from operations or from borrowings from our Credit Facility. In addition to the above amounts, we expect to complete our new $36.0 research and innovation center in 2016, for which most of the cost will be financed through a capital lease. We currently anticipate that our normal, ongoing maintenance capital investments (i.e., excluding strategic investments and non-routine maintenance investments, such as blast furnace re-lines) will be at a similar level over the next few years.

Employee Benefit Obligations

We made pension contributions of $24.1 during 2015 to satisfy our required annual pension contributions. Pension benefits under our major pension plan are frozen, but the plan is still significantly underfunded. As a result, we will be required to make contributions to the plan's pension trusts of varying amounts until they are fully funded, and some of these contributions could be substantial. We have no required annual pension contribution for 2016 . Based on current actuarial assumptions, we estimate that our required annual pension contributions will be approximately $50.0 and $75.0 for 2017 and 2018 . The amount and timing of future required contributions to the pension trust depend on assumptions about future events. The most significant of these assumptions are the future investment performance of the pension funds, actuarial data about plan participants and the interest rate we use to discount benefits to their present value. Required contribution payments are more dependent on plan asset returns than in the past. Because of the variability of factors underlying these assumptions, including the possibility of future pension legislation or increased pension insurance premiums, the reliability of estimated future pension contributions decreases as the length of time until we must make the contribution increases.

We provide healthcare benefits to a significant portion of our employees and retirees. OPEB benefits have been eliminated for new employees and are subject to caps on the share of benefits we pay. Based on the assumptions used to value other postretirement benefits, primarily retiree healthcare and life insurance benefits, annual cash payments for these benefits are expected to be in a range that trends down from  $46.5 in 2016 to $12.9 over the next 30 years.

In addition to actions taken in prior years to reduce the growth of benefit obligations, we continue to seek other ways to de-risk our pension and OPEB obligations. During 2014, we provided a voluntary lump-sum settlement offer to terminated vested participants in the pension plan and as a result reduced a portion of the pension obligation. The pension plan paid approximately $105.0 in December 2014 out of the pension trust assets to participants and recognized an actuarial gain of $20.0 . Further, we amended the pension plan as of January 1, 2016, to allow new retirees to select a lump-sum payment option.

Off-Balance Sheet Arrangements

See discussion under Magnetation for information about this equity investee. There were no other material off-balance sheet arrangements as of December 31, 2015 .

Selected Factors that Affect Our Operating Results

Iron Ore Pricing

Iron ore is one of the principal raw materials required for our steel manufacturing operations. We purchased approximately 8.9 million tons of iron ore pellets in 2015 and expect to purchase less in 2016 as a result of the temporary idling of the Ashland Works Hot End. We make most of our purchases of iron ore at negotiated prices under multi-year agreements. For 2016, we expect to purchase most of our iron ore from two suppliers, including Magnetation. Our iron ore agreements have a variable-price mechanism that adjusts the price we pay for iron ore quarterly based on reference to a historical iron ore index referred to as the "IODEX". One of these agreements uses what is commonly referred to in the steel industry as "Vale model" pricing, which is based on the average IODEX for a three-month period ending one month before the start of the quarter to which the price is applied. For example, utilizing the Vale model for the fourth quarter of 2015, we determined the price of iron ore from the IODEX price for the preceding June, July and August period. Other iron ore supply agreements reference both the IODEX and certain other indices to determine the contractual price.

Under our contracts, a change in the IODEX typically affects to varying degrees the price we pay for iron ore. However, there are other factors that also affect the price we pay for iron ore under certain contracts, such as measures of general industrial inflation and steel prices. Thus, the actual impact to us of a change in the IODEX will vary depending on the percentage of the total iron ore we purchase under each contract and how much the IODEX is weighted as a factor for pricing under each contract. The prices we pay for iron ore are less dependent on the IODEX than in prior years as a result of the pricing terms of our current iron ore supply agreements. In addition, the total net price we pay for iron ore is affected by our hedging activities, which are described below.

When raw material costs increase, we attempt to price our own products to reflect these costs and use variable pricing with some of our contract customers that may allow us to adjust selling prices to reflect changes in the cost of certain raw materials and energy. Many of these customer contracts, however, do not permit an adjustment (upwards or downwards) until the relevant raw material or energy price is outside pre-agreed parameters. In recent contracts over the last few years, the frequency and overall impact of such adjustments have generally decreased. Thus, we are typically unable to recover 100% of our costs in the case of raw material or energy price increases and due to other factors may not be able to benefit to the full extent if input prices decline. For iron ore prices, there are a variety of factors that affect the ultimate impact on us from any increase or decrease. These include the amount of the price change for iron ore, the terms of our agreements with our contract customers, and the extent to which competitive pressures may influence the price of steel we sell into the spot market.

In addition to using other integrated risk strategies, we use derivative contracts to manage price risk because of the inability to control or fully pass through our iron ore costs to customers. We use derivative contracts to reduce our exposure if iron ore costs increase, but these contracts can also reduce the amount of benefit that we receive if iron ore costs decline. Our hedging strategy for our iron ore exposure employs a systematic approach. We hedge a higher proportion of our near-term iron ore exposure and a lower proportion for our longer-term exposure through a combination of swaps and options. As of December 31, 2015, we have hedged 1,950,000 tons and 1,275,000 tons of iron ore purchases for 2016 and 2017 . Our hedging activities further reduce our exposure to changes in the IODEX on the total cost we pay for iron ore.

Automotive Market

We sell a significant portion of our flat-rolled carbon steel products and stainless steel products to automotive manufacturers, as well as selling to distributors, service centers and converters who in some cases resell the products to the automotive industry. We concentrate our automotive and stainless sales on the automotive market because these customers demand steels that are difficult to make and require the highest quality standards, just-in-time delivery, collaborative technical and customer support, and innovative products. In addition, certain competitors do not have the capability to supply all of the products that we make for our automotive customers, such as steel for exposed automotive applications. As such, these exacting conditions for servicing the automotive market generally enable us to capture greater margins than sales of more commodity types of carbon and stainless steels to other markets. Because the automotive market is an important element of our business and growth strategy, North American light vehicle production has a significant impact on our total sales and shipments. In 2015, the North American automotive industry continued to show improvement over 2014, as light vehicle production topped 17.5 million units, a 3% increase from 2014. The improvement in the automotive market and our increased share of that market boosted our sales and shipments in 2015. A further increase in light vehicle production volumes is projected for 2016 and our goal is to capture higher automotive market share.

There are, however, some potential challenges to increased sales to the automotive industry even if it continues to grow as currently projected. Automotive manufacturers are under pressure to achieve heightened federally mandated fuel economy standards through 2025 (the Corporate Average Fuel Economy, or so-called "CAFE," standards), and they are currently evaluating alternatives to traditional carbon steels, including aluminum and other materials. This could reduce the aggregate volume of steel sold to the automotive industry, and impact our share of that volume. To address this threat, we and the rest of the steel industry have been

working to create new advanced high-strength steels for vehicle structures, which will enable automotive manufacturers to achieve their desired light-weighting goals without the need to convert to aluminum or other alternatives for the body of the vehicle. We currently produce virtually every grade of coated advanced high-strength steel used today and are developing the next generation of advanced high-strength steels to provide even greater strength and formability.

Carbon Steel Spot Market

As a strategic initiative, we have taken actions to reduce our sales and shipments of lower-margin carbon steel to the spot market. In recent years, including most of 2015, a significant amount of our sales and shipments of carbon steel were made into the domestic spot market. Generally, sales into the carbon steel spot market are sold at prevailing market prices, which can be highly volatile. Fluctuations in spot market prices have a direct effect on our results and are driven by factors mostly outside our control. In addition, the spot market price fluctuations do not always directly correlate with our raw material and energy costs and consequently we have limited ability to pass through increases in costs to customers absent increases in the market price.

In 2015, pricing for hot-rolled steel dropped over 42% during the year. We believe that this dramatic price decline was principally the result of a large increase in unfairly-traded imports of carbon steel that entered the U.S. supply chain during the second half of 2014 and much of 2015. In addition, we believe that weakness in the oil and gas markets due to the substantial decline in energy prices has caused our competitors to re-direct their production capacity to the carbon steel spot market. In response to the challenges facing the carbon steel spot market, in late 2015 we implemented a strategy to reduce our exposure to that market. The most important action to launch this strategy was our decision to temporarily idle the Ashland Works Hot End, which allowed us to reduce our exposure to lower-margin, commodity steel products.

Specialty Stainless Steel Market

We focus our stainless steel sales on higher-margin value-added chrome products, particularly for the automotive industry. We have become the premier stainless steel supplier to the automotive market by producing many of the most challenging stainless products at the highest quality levels while supplying customers with collaborative technical support and innovative new offerings. During 2015, the commodity stainless steel market saw a large surge in what we believe are unfairly traded chrome nickel products, causing excess inventories and a decline in pricing. In addition, the commodity chrome nickel market suffered from a precipitous fall in nickel prices. Because of the resulting excess supply and decline in pricing, we lowered our shipments and exposure to this market in 2015 and in 2016 initiated a trade case against Chinese imports of stainless steel.

Electrical Steel Market

We sell our electrical steel products, which are iron-silicon alloys with unique magnetic properties, primarily to manufacturers of power transmission and distribution transformers and electrical motors and generators in the infrastructure and manufacturing markets. We sell our electrical steel products both domestically and internationally. We focus on the high-end of the electrical steel market, as grain-oriented electrical steel ("GOES") typically allows us to gain a higher margin than grades of non-oriented electrical steel.

Due to increasing European efficiency standards for distribution transformers, international demand for high-permeability grades of GOES improved in 2015. We believe the superior efficiency of our GOES products, particularly TRAN-COR® H DR®, positions us to increase our shipments into international markets that have increased energy efficiency expectations.

The domestic demand for power generation and distribution transformers is affected by construction, specifically housing starts, and in-service replacements that are at the end of their useful lives. Although housing starts in the United States continued to improve in 2015, exceeding 1.1 million units, the demand increases for our GOES products in NAFTA markets were modest. In addition, in January 2016 new higher efficiency standards for distribution transformers went into effect in the United States, which we expect will strengthen domestic demand for our high-permeability grades of GOES products. We continue to be harmed by a high level of imports into the United States that we believe are in violation of United States trade laws. In an effort to address the effects of these unfairly traded imports, we filed antidumping and countervailing duty petitions with the United States Department of Commerce and the United States International Trade Commission in 2013 for GOES products. For a description of ongoing trade cases, see Note 10 to the consolidated financial statements.

Innovation and Product Development

Our mission is to be a steel industry leader developing a broad range of product and process technologies. Our customers are already incorporating our automotive advanced high-strength steel grades, such as Dual Phase 780 and 980, which have very high tensile strength with formability for both stamped and roll-formed parts, into their products. Additionally, we have been accelerating introductions and enhancements of innovative new products such as CHROMESHIELD® 22 Stainless Steel, THERMAK® 17 Stainless Steel and ULTRALUME® Press Hardenable Steel. Our CHROMESHIELD 22 is a nickel-free stainless steel that combines exceptional corrosion performance with superior ductility that our customers use principally in appliance and food service equipment, tubing, cookware and heat exchangers. Our THERMAK 17 is a stainless steel product with increased formability, high temperature strength and other benefits that improve automotive exhaust systems' lightweighting. Our ULTRALUME Press Hardenable Steel is an aluminum-silicon alloy coated steel our customers depend on when they require high strength parts with complex geometries. These steels, part of our advanced high-strength steel portfolio, enable automotive manufacturers to reduce vehicle weight while continuing to keep pace with critical safety requirements.

In addition, we continue to develop new and improved electrical steel products for our customers to use for electricity transmission and distribution, as well as stainless steel and other specialty products for automotive and other markets. We believe these strategic initiatives and commitments will enhance our competitive advantage and position in growing customer markets.

Next-Generation Advanced High Strength Steels ("AHSS")

We continue to strive to develop new and improved products that exceed our customers' exacting standards, focusing on Next-Generation AHSS to serve future automotive industry needs. Our goal is to ensure that advanced high strength carbon steels reduce the weight of automobile structural body components, while maintaining the strength characteristics that customers value. We want our automotive customers to use our innovative steel products to help achieve vehicle weight savings for ambitious fuel efficiency standards while avoiding the significant capital costs to re-design production facilities that alternative materials require.

Looking ahead, we are focused on introducing one of the first commercially available families of Next-Generation AHSS in the world. We have made significant strides in developing technologies for the next generation of AHSS for the automotive industry. Our planned new technologies will produce significantly improved formability at higher ultimate tensile strength levels, which will provide greater lightweighting opportunities to our automotive customers. We are implementing new process technology to produce both coated and cold-rolled Next-Generation AHSS on the hot-dip galvanizing line at Dearborn Works, which we expect to complete by late 2016. Our goal is to ship Next-Generation AHSS to our customers by early 2017.

New Research and Innovation Center

To accelerate innovation, we are building a research and innovation center in Middletown, Ohio. The construction of the 135,000 square foot facility is in progress on a 16-acre site located in the Cincinnati-Dayton growth corridor and will replace our existing research facility. We are designing our new facility to motivate and inspire our approximately 140 researchers, scientists and engineers who will continue their leading-edge research, applications engineering, advanced engineering, product development and customer technical services. The facility will include pilot lines and feature new operational simulators that replicate critical steel manufacturing operations. We are financing the estimated $36.0 project principally through a long-term capital lease and government incentives, allowing us to minimize our upfront project costs and ensure we have the tools to pursue our innovation initiatives.

Energy and Commodity Hedging

We enter into derivative transactions in the ordinary course of business to hedge the cost of natural gas, electricity and certain raw materials, including iron ore and zinc, and, to a lesser extent, the market risk associated with the sale of certain of our commodity steel products (hot roll carbon steel coils). We expect changes in the prices paid or received for the related commodities to offset the effect on cash of settling these amounts. In some cases, we may decide not to apply hedge accounting treatment to the derivative transaction. In these cases, we recognize any changes in the value of the derivative instrument in earnings each quarter during the life of the instrument. Thus, while over time we expect the earnings effects of the derivative instrument to offset the change in the price for the related commodity, we may recognize the timing of the change in the value of the derivative transaction before the timing of the related commodity, affecting period comparisons.

Margin Enhancement Initiatives

In recent years we have undertaken several significant projects in an effort to lower costs and enhance margins. In addition, we have identified many initiatives to achieve synergies in connection with our acquisition of Dearborn. These projects and initiatives include efforts to increase our operating rates, lower our costs and increase control over certain key raw materials. Other projects and strategic initiatives to increase operating rates and lower our costs include increasing the utilization, yield, efficiency and productivity of facilities, implementing strategic purchasing procurement improvements, controlling maintenance and capital investment spending, producing lower cost metallic burdens and reducing transportation costs. We also identified several other areas for enhancing profitability, including increasing our percentage of contract sales, selling a higher-margin mix of products and developing new products that can command higher prices from customers. As part of our move toward selling a higher-margin mix of products, we have reduced our sales to the carbon steel spot market, which drove our decision to temporarily idle the Ashland Works Hot End.

Potential Impact of Climate Change Legislation

In 2010, the U.S. Environmental Protection Agency ("EPA") issued a final "tailoring rule" providing new regulations governing major stationary sources of greenhouse gas emissions under the Clean Air Act. Generally, the tailoring rule requires that new or modified sources of high volumes of greenhouse gases must follow heightened permit standards and lower emissions thresholds. The EPA continues to work on further rules on greenhouse gas emissions that would apply more broadly and to lower levels of emission sources. On June 23, 2014, the U.S. Supreme Court partially upheld and partially invalidated the tailoring rule. The decision's impact will often require us to conduct a best available control technology analysis for greenhouse gases for new major projects. However, the tailoring rule will not materially adversely affect us in the near term and we cannot reliably estimate the regulation's long-term impact. However, there are a number of factors that may affect us, including EPA's tailoring rule and other similar regulations, such as the EPA's Clean Power Plant Rule established on August 3, 2015, implications from the proposed "Paris Agreement" arising from the 2015 United Nations Climate Change Conference (which remains subject to Congressional ratification) or similar accords relating to climate change. These and other factors will likely cause us to suffer negative financial impacts over time from increased energy, environmental and other costs needed to comply with the limitations that would be imposed on us directly or indirectly through our suppliers.

In addition, the possibility exists that further limitations on greenhouse gas emissions may be imposed in the United States in the future through some form of federally-enacted legislation or by additional regulations. Bills have been introduced in the United States Congress in recent years that aim to limit carbon emissions over long periods from facilities that emit significant amounts of greenhouse gases. Such bills, if enacted, would apply to the steel industry, in general, and to us, in particular, because producing steel from elemental iron creates carbon dioxide, one of the targeted greenhouse gases. Although we and other steel producers in the United States are actively participating in research and development to develop breakthrough technology for lower-emission steelmaking processes, developing these technologies will take time and nobody can determine their success. To address this need for developin

g new technologies, not just in the steel industry but elsewhere, some of the proposed legislative bills include a system of carbon emission credits, which would be available to certain companies for a period, similar to the European Union's existing "cap and trade" system. Each of these bills is likely to be altered substantially if it moves through the legislative process, making it virtually impossible to forecast the provisions of any final legislation and its effects on us.

If regulation or legislation regulating carbon emissions is enacted, however, it is reasonable to assume that the net financial impact on us will be negative, despite some potential beneficial aspects discussed below. On balance, such regulation or legislation likely would cause us to incur increased energy, environmental and other costs to comply with the limitations that would be imposed on greenhouse gas emissions. For example, additional costs could take the form of new or retrofitted equipment, or the development of new technologies (e.g., sequestration), to try to control or reduce greenhouse gas emissions.

The enactment of climate control legislation or regulation also could have some beneficial impact on us, which may somewhat reduce the adverse effects noted above.  For example, to the extent that climate change legislation provides incentives for energy efficiency, up to certain levels, we could benefit from increased sales of our GOES products, which are among the most energy efficient in the world.  We sell our electrical steels, which are iron-silicon alloys with unique magnetic properties, primarily to manufacturers of power transmission and distribution transformers and electrical motors and generators. Climate control legislation may enhance our sales of these products in different ways. For instance, if the legislation may promote the use of renewable energy technology, such as wind or solar technology, it could increase demand for our high-efficiency electrical steel products used in power transformers, which are needed to connect these new sources to the electricity grid.

Any effect on us would depend on the final terms of any climate control legislation or regulation enacted. Presently, we are unable to predict with any reasonable degree of accuracy when or even if climate control legislation or regulation will be enacted, or if it is, what its terms and applicability to us will be. As a result, we currently have no reasonable basis on which we can reliably predict or estimate the specific effects any eventually enacted laws may have on us or how we may be able to reduce any negative impacts on our business and operations. In the meantime, the items described above provide some indication of the potential impact on us of climate control legislation or regulation generally. We will continue to monitor the progress of such legislation and/or regulation closely.

Labor Agreements

At December 31, 2015 , we employed approximately 8,500 people, of which approximately 6,300 are represented by labor unions under various contracts that expire between 2016 and 2019 .

On February 5, 2015, members of the United Steelworkers, Local 1190 , ratified a four-year labor agreement covering approximately 215 production and maintenance employees at Mountain State Carbon. The new agreement took effect on March 1, 2015 , and will expire on March 1, 2019 . This is the initial labor agreement with the union at Mountain State Carbon.

On May 8, 2015, members of the United Auto Workers, Local 4104 , ratified a four-year labor agreement covering approximately 140 production and maintenance employees at Zanesville Works. The new agreement took effect on May 20, 2015 , and will expire on May 31, 2019 .

An agreement with the United Auto Workers, Local 3462 , which represents approximately 330 employees at Coshocton Works, is scheduled to expire on March 31, 2016 . An agreement with the United Auto Workers, Local 3303 , which represents approximately 1,240 employees at Butler Works, is scheduled to expire on October 1, 2016 .

Critical Accounting Estimates

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. These principles permit choices among alternatives and require numerous estimates of financial matters. Accounting estimates are based on historical experience and information that is available to us about current events and actions we may take in the future. We believe the accounting principles chosen are appropriate under the circumstances, and that the estimates, judgments and assumptions involved in financial reporting are reasonable. There can be no assurance that actual results will not differ from these estimates. We believe the accounting estimates discussed below represent those accounting estimates requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results.

Inventory Costing

We value inventories at the lower of cost or market, and we measure the cost of the majority of inventories on the last in, first out ("LIFO") method. The LIFO method allocates the most recent costs to cost of products sold and, therefore, recognizes into operating results fluctuations in raw material, energy and other inventoriable costs more quickly than other methods. Other inventories, consisting mostly of foreign inventories and certain raw materials, are measured principally at average cost. We can only make an actual valuation of the inventory under the LIFO method at the end of the year based on inventory levels and costs at that time.

Therefore, interim LIFO calculations are based on our estimates of expected year-end inventory levels and costs. Because these are affected by many factors beyond our control, annual LIFO expense or income may significantly differ from the estimated amounts calculated at interim dates.

Environmental and Legal Contingencies

We are involved in a number of environmental and other legal proceedings. We record a liability when we determine that litigation has commenced or a claim or assessment has been asserted and, based on available information, it is probable that the outcome of the litigation, claim or assessment, whether by decision or settlement, will be unfavorable and the amount of the liability is reasonably estimable. We measure the liability using available information, including the extent of damage, similar historical situations, our allocable share of the liability and, in the case of environmental liabilities, the need to provide site investigation, remediation and future monitoring and maintenance. We record accruals for probable costs based on a combination of litigation and settlement strategies on a case-by-case basis and, where appropriate, supplement those with incurred-but-not-reported development reserves. However, amounts we record in the financial statements in accordance with accounting principles generally accepted in the United States exclude costs that are not probable or that may not be currently estimable. The ultimate costs of these environmental and legal proceedings may, therefore, be higher than those we have recorded on our financial statements. In addition, changes in assumptions or the effectiveness of our strategies can materially affect results of operations in any future period.

Pension and OPEB Plans

Accounting for retiree healthcare benefits requires the use of actuarial methods and assumptions, including assumptions about current employees' future retirement dates, the anticipated mortality rate of retirees, the benchmark interest rate used to discount benefits to their present value, anticipated future increases in healthcare costs and our obligations under collective bargaining agreements with respect to healthcare benefits for retirees. Changing any of these assumptions could have a material effect on the calculation of our total obligation for future healthcare benefits.

Actuarial net gains and losses occur when actual experience differs from any of the many assumptions used to value the benefit plans or when the assumptions change, as they may each year when a valuation is performed. The major factors contributing to our actuarial gains and losses are changes in the discount rate used to value plan liabilities as of the measurement date and changes in the expected lives of plan participants. We believe the mortality assumptions selected for determining the expected lives of plan participants are most closely associated with the expected lives of our plan participants. However, selecting other available assumptions would likely increase the plan obligations. In addition, a major factor contributing to actuarial gains and losses for pension plans is the difference between expected and actual returns on plan assets. For OPEB plans, differences in estimated versus actual healthcare costs and changes in assumed healthcare cost trend rates are additional factors generally contributing to actuarial gains and losses. However, we do not expect changes in these OPEB assumptions to have a material effect on us since most of the plans have caps on the share of benefits we pay. In addition to their effect on the funded status of the plans and their potential for corridor adjustments, these factors affect future net periodic benefit expenses. Changes in key assumptions can have a material effect on the amount of benefit obligation and annual expense we record. For example, a 25 basis point decrease in the discount rate would decrease the interest cost component of pension income in 2016 by $4.9 . A 25 basis point decrease in the discount rate would have increased the pension obligation at December 31, 2015 , by approximately $73.0 and the OPEB obligation by approximately $12.0 . A 100 basis point decrease in the expected rate of return on pension plan assets would decrease the projected 2016 pension income by approximately $23.6 .

Under our method of accounting for pension and OPEB plans, we recognize into income, as of the measurement date, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets, defined as the corridor. Amounts inside the corridor are amortized over the plan participants' life expectancy. Our method results in faster recognition of actuarial net gains and losses than the minimum amortization method permitted by prevailing accounting standards and used by the vast majority of companies in the United States. Faster recognition under this method also results in the potential for highly volatile and difficult to forecast corridor adjustments.

Asset Impairment

We have various assets that are subject to impairment testing, including investments, property, plant and equipment and goodwill. If circumstances indicate that an asset has lost value below its carrying amount, we may review the asset for impairment. We evaluate the effect of changes in operations and estimate future cash flows to measure fair value. We use assumptions, such as forecasted growth rates and cost of capital, as part of these analyses and, based on our judgment, can result in different conclusions. We believe using this data is appropriate and consistent with internal projections. The most recent annual goodwill impairment test indicated that the fair value of its relevant reporting unit was in excess of its carrying value. However, our businesses operate in highly cyclical industries and the valuation of these businesses can fluctuate, which may lead to impairment charges in future periods. Fair value is determined using quoted market prices, estimates based on prices of similar assets, or anticipated cash flows discounted at a rate commensurate with risk.

We consider the need to evaluate long-lived assets for indicators of impairment at least quarterly to determine if events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. We evaluate long-lived assets for impairment based on a collective asset grouping that includes the operations of all facilities. We manage our operations as part of an "integrated process" that allows us to route production to various facilities so that we can maximize financial results and cash flows. As a result of the integrated process and our organization, cash flows are not identifiable to asset groups at a level lower than the consolidated results. If the carrying value of a long-lived asset exceeds its fair value, we determine that an impairment has occurred and we recognize a loss based on the amount that the carrying value exceeds the fair value, less cost to dispose, for assets we plan to sell or abandon. As a result of the temporary idling of the Ashland Works blast furnace and steelmaking operation in 2015, we considered the need for an impairment of the long-lived assets and determined that no impairment was indicated based on the expected temporary nature of the idling.

During the first quarter of 2015, we concluded that our equity interest in Magnetation was impaired and recorded a non-cash impairment charge of $256.3 for the first quarter of 2015 to fully impair the amount of our remaining investment in Magnetation. Magnetation's outstanding indebtedness is non-recourse to AK Steel. We are not required to make any additional capital contributions or other future investments in Magnetation and have not guaranteed any obligations of Magnetation.

As part of the ongoing strategic review of our business and operations, in the fourth quarter of 2015 we reevaluated our investment in AFSG and received a $14.0 cash distribution from AFSG. Following the distribution, we concluded that our investment in AFSG was permanently impaired, and recorded a non-cash impairment charge of $41.6 . The activities of these companies were classified as a "runoff". We are under no obligation to support the operations or liabilities of these companies.

Outlook

All of the statements in this Outlook section are subject to, and qualified by, the information in the Forward-Looking Statements section.

Below are certain factors relevant to our first quarter and full-year 2016 outlook. Those factors include the following:

The foregoing factors are based on our current estimates and may change based on business conditions and other factors. There are many other factors that could significantly affect our 2016 results, including developments in the domestic and global economies, in our business, and in the businesses of our customers and suppliers. Therefore, our outlook may change as a result of those and other factors.

Contractual Obligations

In the ordinary course of business, we enter into agreements that obligate us to make legally enforceable future payments. These agreements include those for borrowing money, leasing equipment and purchasing goods and services. The following table summarizes by category expected future cash outflows associated with contractual obligations we have as of December 31, 2015 .

In calculating the amounts for purchase obligations, we identified contracts where we have a legally enforceable obligation to purchase products or services from the vendor or make payments to the vendor for an identifiable period. For each identified contract, we determined our best estimate of payments to be made under the contract assuming (1) the continued operation of existing production facilities, (2) normal business levels, (3) the contract would be adhered to in good faith by both parties throughout its term, (4) prices in the contract and (5) the effect of the Ashland Works temporary idling on these assumptions. Because of changes in the markets we serve, changes in business decisions regarding production levels or unforeseen events, the actual amounts paid under these contracts could differ significantly from the numbers presented above. For example, circumstances could arise which create exceptions to minimum purchase obligations in the contracts. We calculated the purchase obligations in the table above without considering such exceptions.

A number of our purchase contracts specify a minimum volume or price for the products or services covered by the contract. If we were to purchase only the minimums specified, the payments in the table would be reduced. Under "requirements contracts" the quantities of goods or services we are required to purchase may vary depending on our needs, which are dependent on production levels and market conditions at the time. If our business deteriorates or increases, the amount we are required to purchase under such a contract would likely change. Many of our agreements for the purchase of goods and services allow us to terminate the contract without penalty as long as we give 30 to 90 days' notice. Any such termination could reduce the projected payments.

Our consolidated balance sheets contain liabilities for pension and OPEB and other long-term obligations. We calculate the benefit plan liabilities using actuarial assumptions that we believe are reasonable under the circumstances. However, because changes in circumstances can have a significant effect on the liabilities and expenses associated with these plans including, in the case of pensions, pending or future legislation, we cannot reasonably and accurately project payments into the future. While we do include information about these plans in the above table, we also discuss these benefits elsewhere in this Management's Discussion and Analysis of Financial Condition and Results of Operations and in the notes to the consolidated financial statements.

The other long-term liabilities on our consolidated balance sheets include accruals for environmental and legal issues, employment-related benefits and insurance, liabilities established with regard to uncertain tax positions, and other accruals. These amounts generally do not arise from contractual negotiations with the parties receiving payment in exchange for goods and services. The ultimate amount and timing of payments are uncertain and, in many cases, depend on future events occurring, such as the filing of a claim or completion of due diligence investigations, settlement negotiations, audit and examinations by taxing authorities, documentation or legal proceedings.

Magnetation

We currently have a 49.9% interest in the Magnetation joint venture, which operates iron ore concentrate plants located in Minnesota and an iron ore pelletizing plant in Reynolds, Indiana. Through an offtake agreement, we have the right to purchase, based on a formula that includes a discount to the IODEX, all the pellets the pellet plant produces and an obligation to purchase a portion of those pellets. As discussed below, Magnetation and its subsidiaries remain in bankruptcy after it filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Minnesota (the "Bankruptcy Court") on May 5, 2015.

Starting in the third quarter of 2014, Magnetation experienced tight liquidity during several challenges to its business and operations. The significant decline in the IODEX that began in 2014 accelerated in the first quarter of 2015, with substantial declines in the daily IODEX index and futures pricing toward the end of the first quarter of 2015. These iron ore price declines further strained Magnetation's liquidity when it was also experiencing weak sales because of a slower-than-expected ramp-up of its pellet plant operations. Despite Magnetation's efforts to enhance its liquidity, including attempts to raise additional capital from third parties or the equity holders and to reduce costs in late 2014 and early 2015, Magnetation could not overcome its material liquidity challenges.

Beginning in March 2015, Magnetation engaged in confidential discussions with us and certain holders of its debt to consider potentially restructuring Magnetation's capital structure and/or possibly amending the offtake agreement. Ultimately, these parties were unable to reach a mutually-acceptable resolution and, in May 2015, Magnetation and its subsidiaries filed for bankruptcy. Shortly after its filing, Magnetation received debtor-in-possession financing from a group of its secured debtholders and has continued to operate the business. We expect Magnetation will continue to supply us with pellets, at least in the near term. We are unlikely to retain a substantial portion, if any, of our equity interest in Magnetation following Magnetation's bankruptcy, from which it currently expects to emerge in 2016. In September 2015, Magnetation filed under seal a motion with the Bankruptcy Court seeking to assume its offtake agreement with us. Despite the objection that we filed in October 2015, on December 23, 2015, the Bankruptcy Court authorized Magnetation to assume the offtake agreement. Shortly thereafter we appealed the Bankruptcy Court's decision to the U.S. District Court in Minneapolis, Minnesota. Those proceedings are ongoing and are also being conducted under a court seal.

During the first quarter of 2015, we concluded that our equity interest in Magnetation was permanently impaired and recorded a non-cash impairment charge of $256.3 to fully impair our investment carrying value in Magnetation. Magnetation's outstanding indebtedness is non-recourse to us, we are not required to make any additional capital contributions or other future investments in Magnetation and we have not guaranteed any obligations of Magnetation. We do not expect to record any further impact in our financial statements from our equity investment in Magnetation since it is unlikely that we will retain our equity interest following Magnetation's bankruptcy.

We believe that Magnetation intends to continue to supply us with pellets for the immediate future and we expect to continue to purchase pellets from Magnetation according to the offtake agreement. However, it is possible that, during the bankruptcy process, circumstances could develop that would cause Magnetation to request the Bankruptcy Court to terminate the offtake agreement or materially modify it in a way that is unacceptable to us. It also is possible that the bankruptcy process or operational issues could cause Magnetation to experience a disruption in its operations that affects its ability to supply iron ore pellets to us. Any of these circumstances, if they occur, could disrupt the iron ore pellet supply and/or increase costs to us. We purchase pellets from other third-party suppliers and we have discussed the terms of purchasing replacement supply with several third parties. Therefore, we believe that we could replace the Magnetation pellet volume with supply from existing or new third-party suppliers or, if necessary, we also could produce carbon slabs at our Butler Works electric arc furnace if we have a shortage of iron ore pellets. There is a risk, however, that we would be unable to obtain enough replacement pellets or produce an adequate volume of slabs. Such a circumstance could limit our ability to produce steel at desired volumes and/or increase our costs. In any case, we do not expect Magnetation's bankruptcy to disrupt production or otherwise affect steel shipments to our customers.

New Accounting Pronouncements

The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) , during the second quarter of 2014. Topic 606, as further amended by subsequent Accounting Standard Updates, affects virtually all aspects of an entity's revenue recognition, including determining the measurement of revenue and the timing of when it is recognized for the transfer of goods or services to customers. In July 2015, the Financial Accounting Standards Board approved a one-year deferral of the effective date, which would make Topic 606 effective for annual reporting periods beginning after December 15, 2017. We are currently evaluating the effect of the adoption of Topic 606 on our financial position and results of operations.

The Financial Accounting Standards Board issued Accounting Standards Update No. 2015-02, Amendments to the Consolidation Analysis ("ASU 2015-02"), during the first quarter of 2015. ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. ASU 2015-02 is effective for annual reporting periods

beginning after December 15, 2015, unless early adoption is elected. We are currently evaluating the effect of the adoption of ASU 2015-02 on our financial position and results of operations, but we do not expect the adoption to have a material effect on our consolidated financial statements.

In April 2015 and August 2015, the Financial Accounting Standards Board issued accounting guidance to simplify the presentation of debt issuance costs by requiring that debt issuance costs for a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We elected to adopt this guidance for debt issuance costs during 2015 on a retrospective basis. As a result, $24.8 was presented as a reduction of long-term debt as of December 31, 2015, and we reclassified $30.5 from other noncurrent assets to long-term debt as of December 31, 2014 within the consolidated balance sheets.

In November 2015, the Financial Accounting Standards Board issued accounting guidance to simplify the presentation of deferred tax assets and liabilities by requiring that all amounts be presented in the balance sheet as noncurrent assets or liabilities. We elected to adopt this guidance for deferred taxes during 2015 on a retrospective basis. As a result, we reclassified $67.7 from other current assets to noncurrent assets as of December 31, 2014, within the consolidated balance sheets.

Forward-Looking Statements

Certain statements we make or incorporate by reference in this Form 10-K, or make in other documents we furnished to or file with the Securities Exchange Commission, as well as in press releases or in oral presentations made by our employees, reflect our estimates and beliefs and are intended to be, and are hereby identified as "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "believes," "intends," "plans," "estimates" and other similar references to future periods typically identify such forward-looking statements. These forward-looking statements reflect our current beliefs and judgments, but are not guarantees of future performance or outcomes. They are

based on a number of assumptions and estimates that are inherently affected by economic, competitive, regulatory, and operational risks, uncertainties and contingencies that are beyond our control, and upon assumptions with respect to future business decisions and conditions that may change. In particular, these include, but are not limited to, statements in the Outlook and Liquidity and Capital Resources sections and Item 7A, Quantitative and Qualitative Disclosure about Market Risk .

We caution readers that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently expected. See Item 1A, Risk Factors for more information on certain of these risks and uncertainties.

Any forward-looking statement made in this document speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Our primary areas of market risk include changes in (a) interest rates, (b) the prices of raw materials and energy sources and the selling price of certain commodity steel, and (c) foreign currency exchange rates.

Interest Rate Risk

We manage interest rate risk in our capital structure by issuing variable- and fixed-rate debt and by utilizing our Credit Facility, which is affected by variable interest rates. Our outstanding long-term indebtedness (excluding unamortized debt discount and premium and debt issuance costs) was $2,405.5 and $2,484.3 at December 31, 2015 and 2014 . The amount outstanding at December 31, 2015 , consisted of $1,829.5 of fixed-rate debt, $26.0 of variable-rate Industrial Revenue Bonds and $550.0 of borrowings from our Credit Facility that bears interest at variable interest rates. An increase in prevailing interest rates would increase interest expense and interest paid for the variable-rate debt, including any outstanding borrowings from the Credit Facility. For example, a 1% increase in interest rates would increase annual interest expense by approximately $5.8 on our outstanding debt at December 31, 2015 .

Commodity Risk

Costs for raw materials and energy have been volatile over the course of the last several years, with iron ore, natural gas and scrap especially volatile. Some customer contracts have a variable-pricing mechanism that allows us to adjust selling prices in response to changes in the cost of certain raw materials and energy. The possible impact of these price adjustments within a contract has generally decreased over the last few years. In the case of stainless steel, changes in costs for nickel, chrome and molybdenum are usually offset by established price surcharges. Therefore, fluctuations in the price of energy (particularly natural gas and electricity), raw materials (such as scrap, purchased slabs, coal, iron ore, zinc and nickel) or other commodities will be, in part, passed on to customers rather than absorbed solely by us.

We have multi-year purchase agreements for certain raw materials with variable-price mechanisms, as well as some annual, fixed price agreements for other raw materials. In some cases, our raw materials contracts enable us to reduce our exposure to fluctuations in raw material costs, but in other instances we may have sales contracts that expose us to an element of market risk. After we negotiate new contracts with customers, our sales prices could increase or decrease. The prices at which we sell steel will not necessarily change in tandem with changes in our raw material costs that follow the variable pricing terms in our raw material purchase contracts. Conversely, our raw material purchase contracts with fixed-price terms may prevent us from reducing our raw material costs to fully offset changes in the prices at which we sell steel. In addition, some of our existing multi-year supply contracts have required minimum purchase quantities. Under adverse economic conditions, those minimums may exceed our needs. Following exceptions for force majeure and other circumstances affecting the legal enforceability of the contracts, these minimum purchase requirements could require us to purchase quantities of raw materials that could significantly exceed our anticipated needs. In these circumstances, we would attempt to negotiate agreements for new purchase quantities. There is a risk, however, that we would not be successful in reducing purchase quantities, either through negotiation or litigation. If that occurred, we would likely be required to purchase more of a particular raw material in a particular year than we need, negatively affecting our results of operations and cash flows.

We use cash-settled commodity price swaps and options to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements and the market risk associated with the sale of certain of our commodity steel (hot roll carbon steel coils). We routinely use these hedges for a portion of our natural gas and iron ore requirements and for our zinc, nickel, and electricity requirements. Our hedging strategy is designed to protect us from excessive pricing volatility. However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.

For derivatives designated in cash flow hedging relationships, we record the effective portion of the gains and losses from the use of these instruments in accumulated other comprehensive income (loss) on the consolidated balance sheets and recognize the earnings of the associated underlying transaction into net sales or cost of products sold in the same period. At December 31, 2015 , accumulated other comprehensive income (loss) included 50.8 in unrealized pre-tax losses for these derivative instruments. All other commodity price swaps and options are marked to market and recognized into net sales or cost of products sold with the offset recognized as an asset or accrued liability. At December 31, 2015 , other current assets of $0.5 , other noncurrent assets of $0.3 , accrued liabilities of $41.2 and other noncurrent liabilities of $9.5 were included on the consolidated balance sheets for the fair value of commodity derivatives. At December 31, 2014 , other current assets of $3.6 , other noncurrent assets of $1.8 , accrued liabilities of $36.2 and other noncurrent liabilities of $5.7 were included on the consolidated balance sheets for the fair value of commodity derivatives.

The following table presents the negative effect on pre-tax income of a hypothetical change in the fair value of derivative instruments outstanding at December 31, 2015 , due to an assumed 10% and 25% decrease in the market price of each of the indicated commodities.

Because we structure and use these instruments as hedges, the benefit of lower prices paid for the physical commodity used in the normal production cycle or higher prices received on the sale of product would offset these hypothetical losses. We do not enter into swap or option contracts for trading purposes.

Foreign Currency Exchange Rate Risk

A portion of our intercompany receivables that are denominated in foreign currencies are exposed to risks from exchange rate fluctuations. We use forward currency contracts to manage exposures to certain of these currency price fluctuations. At December 31, 2015 and 2014 , we had outstanding forward currency contracts with a total contract value of $60.3 and $28.6 for the sale of euros. At December 31, 2015 and 2014 , current assets of $1.1 and $1.2 were included on the consolidated balance sheets for the fair value of these contracts. Based on the contracts outstanding at December 31, 2015 , a 10% change in the dollar-to-euro exchange rate would result in a pre-tax impact of $6.0 on the value of these contracts on a mark-to-market basis, which would offset the effect of a change in the exchange rate on the underlying receivable.

AK Steel Holding Corporation and Subsidiaries

Index to Consolidated Financial Statements

MANAGEMENT'S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. These principles permit choices among alternatives and require numerous estimates of financial matters. We believe the accounting principles chosen are appropriate under the circumstances, and that the estimates, judgments and assumptions involved in our financial reporting are reasonable.

We are responsible for the integrity and objectivity of the financial information presented in our consolidated financial statements. We maintain a system of internal accounting controls designed to provide reasonable assurance that employees comply with stated policies and procedures, that assets are safeguarded and that financial reports are fairly presented. On a regular basis, financial management discusses internal accounting controls and financial reporting matters with our independent registered public accounting firm and our Audit Committee, composed solely of independent outside directors. The independent registered public accounting firm and the Audit Committee also meet privately to discuss and assess our accounting controls and financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

AK Steel Holding Corporation

We have audited the accompanying consolidated balance sheets of AK Steel Holding Corporation (the "Company") as of December 31, 2015 and 2014 , and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2015 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of AK Steel Holding Corporation at December 31, 2015 and 2014 , and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015 , in conformity with U. S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AK Steel Holding Corporation's internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 19, 2016 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Cincinnati, Ohio

February 19, 2016

See notes to consolidated financial statements.

See notes to consolidated financial statements.

The consolidated balance sheets as of December 31, 2015 and 2014 , include the following amounts for consolidated variable interest entities, before intercompany eliminations. See Note 15 for more information concerning variable interest entities.