The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to TimkenSteel’s Audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2014.2015.

Certain items previously reportedTimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. TimkenSteel’s portfolio includes special bar quality steel (SBQ), seamless mechanical tubes (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

The SBQ bars and tube production process occurs out of the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production process occurs out of three downstream manufacturing facilities: the TimkenSteel Material Services, Tryon Peak, and St. Clair facilities. Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific financial statement captions have been reclassified to conformaspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the fourth quarter of 2015, in addition to the fiscal 2015 presentation.integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the two segment operating structure. The Company is now organized in a centralized manner based on functionality. As a result, TimkenSteel is conducting its business activities and reporting financial results in one business segment.

In August 2015, the Financial Accounting Standards Board (FASB)FASB issued Accounting Standards Update (ASU)ASU 2015-15, "Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". This ASU provides additional guidance to ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-3), which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. This guidance explains that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The adoption of ASU 2015-15 did not affect the results of operations and financial position of TimkenSteel.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory (Topic 330),” which provides guidance that simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in, first-out (LIFO) and therefore applies only to the approximately 35% of inventory that TimkenSteel values by first-in, first-out (FIFO), average cost or specific identification methods. It is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date". This ASU defers the effective date of ASU 2014-09 for all entities by one year. Early application is permitted but not before the original effective date of annual periods beginning after December 15, 2016. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

Inventories are valued at the lower of cost or market, with approximately 65%63% valued by the LIFO method and the remaining inventories, including manufacturing supplies inventory as well as international (outside the United States) inventories, valued by FIFO, average cost or specific identification methods.

An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.

The LIFO reserve as of September 30, 2015March 31, 2016 and December 31, 20142015 was $62.9$48.9 million and $86.7$51.4 million, respectively. TimkenSteel projects that its LIFO reserve will decrease for the year ending December 31, 2015 based on2016 due primarily to lower anticipated costs, particularly scrap steel costs, and anticipated lower inventory quantities, slightly offset by higher manufacturing costs.

Total depreciation expense was $49.7$17.1 million and $39.9$15.9 million for the ninethree months ended September 30,March 31, 2016 and 2015, and 2014, respectively. TimkenSteel recorded capitalized interest of $1.2 million for the nine months ended September 30, 2015. TimkenSteel capitalized interest related to construction projects of $5.7$0.2 million and $1.0 million for the ninethree months ended September 30, 2014.March 31, 2016 and 2015, respectively. TimkenSteel recorded impairment charges of $0.9$0.4 million related to the discontinued use of certain assets during the ninethree months ended September 30,March 31, 2015.

Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives, with useful lives ranging from 3 to 15 years.lives. Amortization expense for intangible assets for the ninethree months ended September 30,March 31, 2016 and 2015 and 2014 was $4.9$1.6 million and $3.0$1.7 million, respectively.

On June 30, 2014, TimkenSteelFebruary 26, 2016, the Company, as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into a credit facilityAmendment No. 1 to the Amended and Restated Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, PNC Bank, National Association, as syndication agent, Bank of America, N.A. and HSBC Bank USA, National Association, as co-documentation agents, and the other lenders and arrangers party thereto.

The credit facility has a term of five years through June 30, 2019 andAmended Credit Agreement provides for a committed$265.0 million asset-based revolving credit line of up to $300.0 million. The credit facility, includes an expansion option allowing TimkenSteel to request additional commitments of up to $150.0 million in term loans or revolving credit commitments, subject to certain conditions and approvals as set forth in the credit agreement. The credit facility providesincluding a $50.0$13.3 million sublimit for multicurrency loans, a $50.0 million sublimit forthe issuance of commercial and standby letters of credit and a $30.0$26.5 million sublimit for swing lineswingline loans. The availability of borrowings under the Amended Credit Agreement is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of TimkenSteel and the subsidiaries of TimkenSteel guaranteeing TimkenSteel’s obligations thereunder, each multiplied by an applicable advance rate. The Amended Credit Agreement includes a block on availability equal to the greater $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing the Company’s borrowing base by the availability block.

The credit facility may be used for working capital and asset renewal and acquisition and is secured by a first priority lien on substantially all ofAmended Credit Agreement contains certain customary covenants, including covenants that limit the assetsability of TimkenSteel and its subsidiaries.

Borrowings under the credit facilityAmended Credit Agreement bear interest based on the daily balance outstanding at LIBOR (with no rate floor), plus an applicable margin (varying from 1.25%3.00% to 2.25%3.50%) and an additional 0.75% on the machinery and equipment component or, in certain cases, an alternate base rate (based on certain lending institutions’ Prime Rate or as otherwise specified in the credit agreement,Amended and Restated Credit Agreement, with no rate floor), plus an applicable margin (varying from 0.25%2.00% to 1.25%2.50%). The credit facilityAmended Credit Agreement also carries a commitment fee equal to the unused borrowings multiplied by an applicable margin (varying from 0.20% to 0.40%)0.50%. The applicable margins are calculated quarterly and vary based on TimkenSteel’s consolidated capitalization ratioaverage quarterly availability as set forth in the credit agreement.Amended Credit Agreement. The interest rate under the revolving credit facilityAmended Credit Agreement was 1.75%4.22% as of September 30, 2015.March 31, 2016. The amount available under the credit facilityAmended Credit Agreement as of September 30, 2015March 31, 2016 was $124.3$17.1 million net, after reducing for the block on availability of $33.1 million.

In the second quarter of 2015, TimkenSteel entered into a capital lease arrangement with the Stark County Port Authority in connection with the construction of a new advanced quench-and-temper facility in Perry Township, Ohio and the issuance of an Industrial Revenue Bond. The bond is held 100% by TimkenSteel Material Services, LLC (a wholly-owned subsidiary of TimkenSteel) and, accordingly, the obligation under the lease agreement and investment in the Industrial Revenue Bond, as well as the related interest income and expense, are eliminated in the Unaudited Consolidated Financial Statements. As of September 30, 2015, $19.8March 31, 2016, $34.6 million has been spent on the new advanced quench-and-temper facility and is reported in property, plant and equipment, net in the Unaudited Consolidated Balance Sheets. Of this amount, $3.7$7.2 million has been financed through the capital lease arrangement described above.

On June 1, 2014, Timken purchased, in lieu of redemption, the State of Ohio Water Development Revenue Refunding Bonds (Water Bonds), State of Ohio Air Quality Development Revenue Refunding Bonds (Air Quality Bonds) and State of Ohio Pollution Control Revenue Refunding Bonds (Pollution Control Bonds) (collectively, Bonds). Pursuant to an Assignment and Assumption Agreement dated June 24, 2014 (Assignment) between Timken and TimkenSteel, Timken assigned all of its right, title and interest in and to the loan agreements and the notes associated with the Bonds to, and these obligations were assumed by, TimkenSteel. Additionally, replacement letters of credit were issued for the Water Bonds and the Pollution Control Bonds. The Bonds were remarketed on June 24, 2014 (Remarketing Date) in connection with the conversion of the interest rate mode for the

All of TimkenSteel’s long-term debt is variable-rate debt and, as a result, the carrying value of this debt is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates, which is considered a Level 2 fair

The reclassification of the pension and postretirement liability adjustment was included in costs of products sold and selling, general and administrative expenses in the Unaudited Consolidated Statements of Operations. These components are included in the computation of net periodic benefit cost.

On June 30, 2014, 45.4 million TimkenSteel common shares were distributed to Timken shareholders in conjunction with the spinoff. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this amount was assumed to be outstanding as of the beginning of each period prior to the spinoff presented in the calculation of weighted-average shares. In addition, for the dilutive weighted average share calculations, the dilutive securities outstanding at June 30, 2014 were assumed to also be outstanding as of the beginning of each period prior to the spinoff. For the three and nine months ended September 30,March 31, 2015, and 2014, 2.0 million and 0.12.4 million of equity-based awards respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. In periods in which a net loss has occurred, as is the case for the three and nine months ended September 30, 2015,March 31, 2016, the dilutive effect of stock-based awards is not recognized and thus is not utilized in the calculation of diluted earnings per share.

The effective tax rate for the three months ended September 30, 2015March 31, 2016 was higher than the U.S. federal statutory rate of 35% due primarily to U.S. state and local taxes and certain discrete tax items.

The effective tax rate for the three months ended September 30, 2014March 31, 2015 was higher than the U.S. federal statutory rate of 35% primarily due to U.S. state and local taxes and other permanent differences. These were partially offset by the U.S. manufacturing deduction.

TimkenSteel has a number of loss exposures that are incurred in the ordinary course of business such as environmental claims, product liability claims, product warranty claims, litigation and accounts receivable reserves. Establishing loss reserves for these matters requires management’s estimate and judgment regarding risk exposure and ultimate liability or realization. These loss reserves are reviewed periodically and adjustments are made to reflect the most recent facts and circumstances.

DuringTimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. TimkenSteel’s portfolio includes special bar quality steel (SBQ), seamless mechanical tubes (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the secondCompany’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the fourth quarter of 2015, TimkenSteel approvedin addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and began implementingeliminated the two segment operating structure. The Company is now organized in a cost reduction plan that resulted in the reduction of TimkenSteel’s salaried and hourly headcount.centralized manner based on functionality. As a result, TimkenSteel recognized restructuring charges consistingis conducting its business activities and reporting financial results in one business segment.

The presentation of severance, benefitsfinancial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and other associated expenses of $1.6 millionis consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and $0.3 millionmakes resource and operating decisions for the second and third quarter of 2015, respectively. TimkenSteel recorded reserves for such restructuring chargesbusiness as other current liabilitiesdescribed above. Furthermore the Company notes that monitoring financial results as one reportable segment will help the CODM manage costs on a consolidated basis, consistent with the Unaudited Consolidated Balance Sheets. Of the $1.9 million charge, $1.2 million related to the Industrial & Mobile segment and $0.7 million related to the Energy & Distribution segment. The following is a rollforwardintegrated nature of the consolidated restructuring accrualoperations. The Company’s Consolidated Financial Statements will reflect the realignment of the reportable segments for the nine months ended September 30, 2015:periods beginning after January 1, 2016 and for all comparable periods presented.

TimkenSteel traces its roots back toCorporation (we, us, our, the Company or TimkenSteel) was incorporated in Ohio on October 24, 2013, and became an independent, publicly traded company as the result of a spinoff (spinoff) from The Timken Roller Bearing Company which was founded in 1899 by carriage-maker/inventor Henry Timken and his two sons. By 1913, the company launched its first formal research facility, centered(Timken) on improving the quality of the raw materials used to make its bearings. Early research demonstrated the superiority of bearing steel made in electric-arc furnaces (rather than existing Bessemer and open hearth processes), and that finding, coupled with a desire to ensure a dependable supply of premium steel in the years leading into World War I, led to the decision to competitively produce steel in-house. When The Timken Roller Bearing Company’s Canton, Ohio steel plant became operational in 1917, it included one of the largest electric arc-furnace facilities in the country.June 30, 2014.

We manufacture alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately two million tons. Our portfolio includes special bar quality steel (SBQ) bars,, seamless mechanical tubingtubes (tubes) and value-add solutions, such as precision steel components. In addition, we supply machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for our melt operations. We focus on researchOur products and development to devise solutions to our customers’ toughest engineering challenges and then leverage those answers into new product offerings. Based on our internal estimates, we have historically supplied, on average, approximately 30%services are used in a diverse range of the seamless mechanical tube demanddemanding applications in the United States.following market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

Based on our knowledge of the steel industry, we believe we are the only focused SBQ steel producer in North America and have the largest SBQ steel large bar (6-inch diameter and greater) production capacity among the North American steel producers. In addition, we are the only steel manufacturer with capabilities of developing SBQ steel large bars up to 16-inches in diameter. SBQ steel is made to restrictive chemical compositions and high internal purity levels and is used in critical mechanical applications. We make these products from nearly 100% recycled steel, using our expertise in raw materials to create custom steel products with a competitive cost structure similar to that of a high-volume producer. We focus on creating tailored products and services for our customers’ most demanding applications. Our engineers are experts in both materials and applications, so we can work closely with each customer to deliver flexible solutions related to our products as well as to their applications and supply chains. We believe our unique operating model and production assets give us a competitive advantage in our industry.

We operate inThe SBQ bars and report financial results for two segments: 1) Industrial & Mobile and 2) Energy & Distribution. Our customers include companies in the following market sectors: oil and gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation. A significant portiontube production process occurs out of our Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes we produce and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. Our value-add solutions production process occurs out of three downstream manufacturing facilities: the TimkenSteel Material Services, Tryon Peak, and St. Clair facilities. Many of the production processes are integrated, and the manufacturing facilities servicesproduce products that are sold in all of our end markets across both reportable segments.market sectors. As a result, investments in our facilities and resource allocation decisions affecting our operations are designed to benefit the overall business, not any specific aspect of the business.

Effective January 1, 2016, we eliminated our segment reporting as a result of organizational changes made in the second half of 2015, in addition to the integrated nature of our business. These organizational change were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, we have centralized our customer-facing activities under one leadership role and eliminated the two segment operating structure. We are now organized in a centralized manner based on functionality. As a result, we allocate certainare conducting its business activities and reporting financial results in one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore we note that monitoring financial results as one reportable segment will help the CODM manage costs based on a consolidated basis, consistent with the segments’ useintegrated nature of these shared resources.the operations. We have conformed Management’s Discussion and Analysis of Financial Condition and Results of Operations to reflect this change in reportable segments.

Our recent investments are expectedWe investment in capital projects to significantly strengthen our position of offering what we believe to be the broadest range of SBQ bars and seamless mechanical tubing steel capabilities, enhance our position as a leader in providinglarge bar capabilities in North America, provide differentiated solutions for the energy, industrial and automotive market sectors, while enhancingand improve our operational performance and customer service capabilities.

On July 17, 2014, we announced plans to invest in additional advanced quench-and-temper heat-treat capacity. The $40 million facility will perform quench-and-temper heat-treat operations and, we believe, will have capacity for up to 50,000 process-tons annually of 4-inch to 13-inch bars and tubes. This facility will be located in Perry Township, Ohio on the site of our Gambrinus Steel Plant near three existing thermal treatment facilities. This facility will be larger than each of our three existing thermal

In October 2014,the ordinary course of business, we cast our first heat on the world’s largest jumbo bloom vertical caster, which cost approximately $200 million, excluding capitalized interest. We expect, once fully ramped, the new caster will improve yield by approximately 15%, increase annual finished ton capacity by up to 125,000 tons and expand our product range servicing the energy and industrial market sectors by providing large bar capabilities unique in the United States.

We value certain of our inventory utilizing the LIFO inventory valuation method. Changes in the thirdcost of raw materials and production activities are recognized in cost of products sold in the current period even though these materials and other costs may have been incurred in different periods at significantly different values due to the length of time of our production cycle. In a period of rising raw material prices, cost of products sold expense recognized under LIFO is generally higher than the cash costs incurred to acquire the inventory sold. Conversely, in a period of declining raw material prices, cost of products sold recognized under LIFO is generally lower than cash costs incurred to acquire the inventory sold. In periods of rising inventories and deflating raw material prices, the likely result will be a positive impact to net income. Conversely, in periods of rising inventories and increasing raw materials prices, the likely result will be a negative impact to net income.

Net sales for the first quarter of 2016 were $217.9 million, a decrease of $170.8 million compared to the first quarter of 2015. Excluding surcharges, net sales decreased $111.2 million, or 35.5%. The decrease was driven primarily by lower volume of approximately $102 million due to lower ship tons of approximately 86.9% in the energy end market and 38.1% in the industrial end market. Lower shipments for the first quarter of 2016 in the energy end market were driven primarily by a decrease in the U.S. rig count of over 65% compared to the first quarter of 2015. Lower shipments for the first quarter of 2016 in the industrial end market as compared to the first quarter of 2015 were due primarily to the ancillary impact of the decline in oil and gas markets.

Gross profit for the nine months ended September 30, 2015first quarter of 2016 was $15.0$3.4 million, a decrease of $202.4$38.2 million, or 93.1%91.8%, compared to gross profit of $217.4$41.6 million for the nine months ended September 30, 2014.first quarter of 2015. The decrease was driven primarily by lower volume of approximately $27 million, higher manufacturing costs of approximately $99$10 million, lower volumeprice/mix of approximately $58$7 million and lower LIFO income of approximately $4 million, partially offset by favorable raw material spread of approximately $48$10 million. Raw material spread is a results of the timing difference between the cost of scrap and the surcharge recovery, as discussed above.

We have 2 million price/mixtons of annual melt capacity. The amount of actual melt produced as a percentage of the capacity defines our melt utilization. Melt utilization is a key performance indicator for our business and is influenced by customer demand and inventory levels. We believe that production levels of approximately $18 million50% melt utilization will generate breakeven Earnings

Melt utilization for the first quarter of approximately $7 million, partially offset by higher LIFO income of $30 million. As discussed previously, ship tons decreased in the nine months ended September 30, 20152016 was 47% compared to the same period in 2014 as a result of lower customer demand. Manufacturing costs were unfavorable due primarily to melt utilization declining from approximately 72%of 66% for the nine months ended September 30, 2014first quarter of 2015. Weakness in commodity markets, declining rig counts and high inventory levels in the distribution supply chain, resulted in lower customer demand and therefore lower production volumes. In order to approximately 51% foralign our cost structure with market demand and continue to manage our breakeven levels to offset potential headwinds from product mix and price, in the nine months ended September 30, 2015. The unfavorable raw material spread was driven by timing associated withsecond half of 2015 we implemented a $75 million cost reduction initiative. These actions, which included reducing headcount, lowering operating costs and minimizing capital expenditures, were necessary to support our customer surcharge mechanism as discussed above.ability to generate EBITDA breakeven financial performance at 50% melt utilization.

Selling, general and administrative (SG&A) expenses for the thirdfirst quarter of 20152016 decreased $4.5$6.2 million, or 14.5%21.3%, compared to the thirdfirst quarter of 20142015 due primarily to lower variable pay. SG&A expenses increased $3.9 million, or 4.8%, for the nine months ended September 30, 2015 compared to the same period in 2014 due primarily to additional costs to operate as a stand-alone independent organization, partially offset by lower variable pay.

The increasedecrease in the effective tax rate for both the thirdfirst quarter of 2015 and the nine months ended September 30, 20152016 compared to the comparable periods in 2014first quarter of 2015 was due primarily to discrete items recognized during the loss of a tax benefit associated with the U.S. manufacturing deduction, which is not expected to be available in 2015.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes discussions ofThe table below presents net sales by end market sector, adjusted to exclude raw material surcharges which represents a financial measure that has not been determined in accordance with U.S. GAAP. Generally, as we experience fluctuations in our costs, we reflect them as increases or decreases through our customer surcharge mechanism with the goal of being essentially cost neutral. We believe presenting net sales by end market sector to exclude raw material surcharges provides a more consistent basis for comparing our core operating results.additional insight into key drivers of net sales such as base price and product mix.