HAYNES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

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

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

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 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. ý Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. (See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act). (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes ý No

As of March 31, 2013, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $571,693,391 based on the closing sale price as reported on the NASDAQ Global Market. Shares of common stock held by each executive officer and director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

12,332,592 shares of Haynes International, Inc. common stock were outstanding as of November 20, 2013.

Portions of the registrant's Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held February 24, 2014 have been incorporated by reference into Part III of this report.

This Annual Report on Form 10-K contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. All statements other than statements of historical fact, including statements regarding market and industry prospects and future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. In many cases, you can identify forward-looking statements by terminology, such as "may", "should", "expects", "intends", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of such terms and other comparable terminology. The forward-looking information may include, among other information, statements concerning the Company's outlook for fiscal year 2014 and beyond, overall volume and pricing trends, cost reduction strategies and their anticipated results, market and industry trends, capital expenditures and dividends. There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, without limitation, those risk factors set forth in Item 1A of this Annual Report on Form 10-K. Actual results may differ materially from those in the forward-looking statements as a result of various factors, many of which are beyond the Company's control.

The Company has based these forward-looking statements on its current expectations and projections about future events. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate. As a result, the forward-looking statements based upon those assumptions also could be incorrect. Risks and uncertainties may affect the accuracy of forward-looking statements.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Haynes International, Inc. ("Haynes" or "the Company") is one of the world's largest producers of high-performance nickel- and cobalt-based alloys in sheet, coil and plate forms. The Company is focused on developing, manufacturing, marketing and distributing technologically advanced, high-performance alloys, which are sold primarily in the aerospace, chemical processing and land-based gas turbine industries. The Company's products consist of high-temperature resistant alloys, or HTA products, and corrosion-resistant alloys, or CRA products. HTA products are used by manufacturers of equipment that is subjected to extremely high temperatures, such as jet engines for the aerospace market, gas turbine engines used for power generation and waste incineration, and industrial heating equipment. CRA products are used in applications that require resistance to very corrosive media found in chemical processing, power plant emissions control and hazardous waste treatment. Management believes Haynes is one of the principal producers of high-performance alloy flat products in sheet, coil and plate forms, and sales of these forms, in the aggregate, represented approximately 61% of net product revenues in fiscal 2013. The Company also produces its products as seamless and welded tubulars, and in slab, bar, billet and wire forms.

The Company has manufacturing facilities in Kokomo, Indiana; Arcadia, Louisiana; and Mountain Home, North Carolina. The Kokomo facility specializes in flat products, the Arcadia facility specializes in tubular products, and the Mountain Home facility specializes in wire products. The Company's products are sold primarily through its direct sales organization, which includes 13 service and/or sales centers in the United States, Europe and Asia. All of these centers are Company-operated. In fiscal 2013, approximately 77% of the Company's net revenue was generated by its direct sales organization, and the remaining 23% was generated by a network of independent distributors and sales agents who supplement its direct sales

efforts primarily in the United States, Europe and Asia, some of whom have been associated with the Company for over 30 years.

The address of the Company's website is www.haynesintl.com. The Company provides a link to its reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 on its website as soon as reasonably practicable after filing with the U.S. Securities and Exchange Commission. The filings available on the Company's website date back to February 3, 2011. For all filings made prior to that date, the Company's website includes a link to the website of the U.S. Securities and Exchange Commission, where such filings are available. Information contained or referenced on the Company's website is not incorporated by reference and does not form a part of this Annual Report on Form 10-K. For a statement of the Company's profits and losses and total assets, please see the financial statements of the Company included in Item 8 of this Annual Report on Form 10-K.

The Company's goal is to grow its business and increase revenues and profitability while continuing to be its customers' provider of choice for high-performance alloys. The Company pursues this goal by taking advantage of its diverse product offerings and service capabilities to penetrate end markets, provide value-added services, deliver innovative products and applications and lowering costs through strategic investment in manufacturing facilities.

The Company began operations in 1912 as the Haynes Stellite Works, which was purchased by Union Carbide and Carbon Corporation in 1920. In 1972, the operations were sold to Cabot Corporation. In 1987, Haynes was incorporated as a stand-alone corporation in Delaware, and in 1989 Haynes was sold by Cabot Corporation to Morgan Lewis Githens & Ahn Inc., a private investment firm. The Blackstone Group, a private investment firm, purchased Haynes from Morgan Lewis Githens & Ahn Inc. in 1997. On March 29, 2004, Haynes and its U.S. subsidiaries and affiliates as of that date filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code. On August 31, 2004, Haynes emerged from bankruptcy pursuant to a court-approved plan of reorganization.

In November 2005, Haynes acquired certain assets of the Branford Wire Company, including a facility that manufactured both stainless steel wire and high-performance alloy wire. The Company primarily produces high-performance alloy wire at the Haynes Wire Company, in Mountain Home, North Carolina.

On March 23, 2007, the Company completed an equity offering, which resulted in the issuance of 1,200,000 shares of its common stock. Simultaneously the Company listed its common stock on the NASDAQ Global Market. The Company began paying a dividend in fiscal 2010.

The global specialty alloy market consists of three primary sectors: stainless steel, general purpose nickel alloys and high-performance nickel- and cobalt-based alloys. The Company believes that the high-performance alloy sector represents less than 10% of the total alloy market. The Company competes primarily in the high-performance nickel- and cobalt-based alloy sectors, which includes HTA products and CRA products. In fiscal 2011, 2012 and 2013, HTA products accounted for approximately 76%, 73% and 74% of the Company's net revenues, respectively; and sales of the Company's CRA products accounted for approximately 24%, 27% and 26% of the Company's net revenues, respectively. These percentages are based on data which include revenue associated with sales by the Company to its foreign subsidiaries, but exclude revenue associated with sales by foreign subsidiaries to their customers. Management believes,

however, that the effect of including revenue data associated with sales by its foreign subsidiaries would not materially change the percentages presented in this section.

High-temperature Resistant Alloys. HTA products are used primarily in manufacturing components for the hot sections of gas turbine engines. Stringent safety and performance standards in the aerospace industry result in development lead times typically as long as eight to ten years in the introduction of new aerospace-related market applications for HTA products. However, once a particular new alloy is shown to possess the properties required for a specific application in the aerospace market, it tends to remain in use for extended periods. HTA products are also used in gas turbine engines produced for use in applications such as naval and commercial vessels, electric power generation, power sources for offshore drilling platforms, gas pipeline booster stations and emergency standby power generators. The following table sets forth information with respect to the Company's significant high-temperature resistant alloys, applications and features (new HTA development is discussed below under "Patents and Trademarks"):

Alloy and Year Introduced	End Markets and Applications⁽¹⁾	Features

HAYNES^® HR-160^® alloy (1990)⁽²⁾	Waste incineration/CPI-boiler tube shields	Good resistance to sulfidation at high temperatures
HAYNES 242^® alloy (1990)⁽²⁾	Aero-seal rings	High strength, low expansion and good fabricability
HAYNES HR-120^® alloy (1990)⁽²⁾	LBGT-cooling shrouds	Good strength-to-cost ratio as compared to competing alloys
HAYNES 230^® alloy (1984)⁽²⁾	Aero/LBGT-ducting, combustors	Excellent combination of strength, stability, oxidation resistance and fabricability
HAYNES 214^® alloy (1981)⁽²⁾	Aero-honeycomb seals	Excellent combination of oxidation resistance and fabricating among nickel-based alloys
HAYNES 188 alloy (1968)⁽²⁾	Aero-burner cans, after-burner components	High strength, oxidation resistant cobalt-based alloy
HAYNES 625 alloy (1964)	Aero/CPI-ducting, tanks, vessels, weld overlays	Good fabricability and general corrosion resistance
HAYNES 617 alloy (1999)	Aero/LBGT—ducting, combustors	Good combination of strength, stability, oxidation resistance and fabricability
HAYNES 263 alloy (1960)	Aero/LBGT-components for gas turbine hot gas exhaust pan	Good ductility and high strength at temperatures up to 1600°F
HAYNES 718 alloy (1955)	Aero-ducting, vanes, nozzles	Weldable high strength alloy with good fabricability
HASTELLOY^® X alloy (1954)	Aero/LBGT-burner cans, transition ducts	Good high temperature strength at relatively low cost
HAYNES 25 alloy (1950)⁽²⁾	Aero-gas turbine parts, bearings, and various industrial applications	Excellent strength, good oxidation, resistance to 1800°F
HAYNES 282^® alloy (2004)⁽³⁾	Aero /LBGT components	Excellent high temperature strength, weldability, fabricability

Corrosion-resistant Alloys. CRA products are used in a variety of applications, such as chemical processing, power plant emissions control, hazardous waste treatment, sour gas production and pharmaceutical vessels. Historically, the chemical processing market has represented the largest end-user

sector for CRA products. Due to maintenance, safety and environmental considerations, the Company believes this market continues to represent an area of potential long-term growth. Unlike aerospace applications within the HTA product market, the development of new market applications for CRA products generally does not require long lead times. The following table sets forth information with respect to certain of the Company's significant corrosion-resistant alloys, applications and features (new CRA development is discussed below under "Patents and Trademarks"):

Alloy and Year Introduced	End Markets and Applications⁽¹⁾	Features

HASTELLOY C-2000^® alloy (1995)⁽²⁾	CPI-tanks, mixers, piping	Versatile alloy with good resistance to uniform corrosion
HASTELLOY B-3^® alloy (1994)⁽²⁾	CPI-acetic acid plants	Better fabrication characteristics compared to other nickel-molybdenum alloys
HASTELLOY D-205^® alloy (1993)⁽²⁾	CPI-plate heat exchangers	Corrosion resistance to hot sulfuric acid
ULTIMET^® alloy (1990)⁽²⁾	CPI-pumps, valves	Wear and corrosion resistant nickel-based alloy
HASTELLOY C-22^® alloy (1985)	CPI/FGD-tanks, mixers, piping	Resistance to localized corrosion and pitting
HASTELLOY G-30^® alloy (1985)⁽²⁾	CPI-tanks, mixers, piping	Lower cost alloy with good corrosion resistance in phosphoric acid
HASTELLOY G-35^® alloy (2004)⁽²⁾	CPI-tanks, heat exchangers, piping	Improved corrosion resistance to phosphoric acid with excellent resistance to corrosion in highly oxidizing media
HASTELLOY C-276 alloy (1968)	CPI/FGD/oil and gas tanks, mixers, piping	Broad resistance to many environments
HASTELLOY C-22HS^® alloy (2003)⁽³⁾	Oil & Gas/Marine tubular, shafts, fasteners	Combines very high strength with excellent corrosion resistance and toughness

The Company currently maintains a total of approximately 17 U.S. patents and applications and approximately 195 foreign counterpart patents and applications targeted at countries with significant or potential markets for the patented products and continues to develop, manufacture and test high-performance nickel- and cobalt-based alloys. Since fiscal 2000, the Company's technical programs have yielded eight new proprietary alloys, four of which are currently commercially available and four of which are being scaled-up to be brought to market. The alloys being commercialized saw significant further advancement in the process during fiscal 2013. HAYNES 282 alloy, which management believes will have significant commercial potential for the Company in the long term, is the subject of a U.S. patent issued in 2011. HAYNES 282 alloy has excellent formability, fabricability and forgeability. The commercial launch of HAYNES 282 alloy occurred in October 2005 and, since that time, there have been a significant number of customer tests and evaluations of this product for the hot sections of gas turbines in the aerospace and land-based gas turbine markets, as well as for automotive and other high-temperature applications. The alloy has also been specified into a major aerospace engine component. The Company will continue to actively promote HAYNES 282 alloy through customer engineering visits and technical presentations and papers.

For the chemical processing industry, HASTELLOY G-35 alloy has found extensive applications, particularly in wet phosphoric acid production. Management expects demand for this alloy will continue to grow. Commercialization of HASTELLOY C-22HS alloy also continued in fiscal 2013. The Company continues to provide customers with samples of this alloy and making technical presentations. Testing and evaluation of the alloy is ongoing with special emphasis on applications for the oil and gas market. Two major orders were received and shipped for HASTELLOY C-22HS alloy for oil and gas applications. One of those orders was shipped in fiscal 2011, and the second shipped in fiscal 2012. The Company believes that the alloys (particularly HAYNES 282 alloy) are being commercialized rapidly when compared to historical trends for other proprietary alloys introduced by the Company. In addition to HAYNES 282 alloy, HASTELLOY G-35 alloy and HASTELLOY C-22HS alloy, commercialization is also ongoing for HASTELLOY HYBRID-BC1^® alloy. This alloy is a CRA product with potential applications in the chemical processing industry that has demonstrated resistance to hydrochloric and sulfuric acid.

In addition to the commercialization of the above alloys, the Company continues to develop applications for new alloys not yet ready to begin the commercialization process. Two new high-temperature alloys, HAYNES NS-163 alloy (U.S. patent granted in 2011) and HAYNES HR-224^® alloy (U.S. patent application filed in 2008 and granted in 2013), are in the scale-up phase. Both of these new materials are believed to have significant, medium to long-term commercial potential. HAYNES NS-163 alloy is a new alloy with extraordinary high-temperature strength in sheet form, which has applications in the aerospace, land-based gas turbine and automotive markets. Data generation and fabrication trials continued through 2013, with test marketing initiated in early 2009. HAYNES HR-224 alloy is an HTA product with superior resistance to oxidation. Scale up of this alloy is continuing and test marketing was initiated in fiscal 2010. A U.S. patent application was filed in fiscal 2012 and granted in 2013 for HAYNES 244 alloy. This alloy has potential in aerospace and land-based gas turbines. It combines high strength to 1400 degrees Fahrenheit with a low coefficient of thermal expansion. Scale-up of this alloy began in fiscal 2011 and is ongoing. Most recently, HAYNES HR-235^TM was introduced in fiscal 2013. This alloy has excellent resistance to metal dusting in carbonaceous high temperature environments. Potential uses include applications in petrochemical production and syngas plants. Scale up of this alloy is well underway and material is currently being evaluated by certain key customers.

Patents or other proprietary rights are an important element of the Company's business. The Company's strategy is to file patent applications in the U.S. and any other country that represents an important potential commercial market to the Company. In addition, the Company seeks to protect technology which is important to the development of the Company's business. The Company also relies upon trade secret rights to protect its technologies and its development of new applications and alloys. The Company protects its trade secrets in part through confidentiality and proprietary information agreements with its customers. Trademarks on the names of many of the Company's alloys have also been applied for or granted in the U.S. and certain foreign countries.

While the Company believes its patents are important to its competitive position, significant barriers to entry continue to exist beyond the expiration of any patent period. These barriers to entry include the unique equipment required to produce this material and the exacting process required to achieve the desired metallurgical properties. These processing requirements include such items as specific annealing temperature, processing speeds and reduction per rolling pass. Management believes that the current alloy development program and these barriers to entry reduce the impact of patent expirations on the Company.

The global specialty alloy market consists of stainless steels, general purpose nickel alloys and high-performance nickel- and cobalt-based alloys. Of this total market, the Company competes in the high-performance nickel- and cobalt-based alloy sector. The high-performance alloy market demands diverse specialty alloys suitable for use in precision manufacturing. Given the technologically advanced nature of the products, strict requirements of the end users and higher-growth end markets, the Company

believes the high-performance alloy sector provides greater growth potential, higher profit margins and greater opportunities for service, product and price differentiation than stainless steels and general purpose nickel alloys. While stainless steel and general purpose nickel alloy is generally sold in bulk through third-party distributors, the Company's products are sold in smaller-sized orders which are customized and typically handled on a direct-to-customer basis.

Aerospace. The Company has manufactured HTA products for the aerospace market since the late 1930s, and has developed numerous proprietary alloys for this market. Customers in the aerospace market tend to be the most demanding with respect to meeting specifications within very precise tolerances and achieving new product performance standards. Stringent safety standards and continuous efforts to reduce equipment weight and develop more fuel efficient designs require close coordination between the Company and its customers in the selection and development of HTA products. As a result, sales to aerospace customers tend to be made through the Company's direct sales force. Demand for the Company's products in the aerospace market is based on the new and replacement market for jet engines and the maintenance needs of operators of commercial and military aircraft. The Company specializes in the static parts included in the hot sections of the jet engine. The hot sections are subjected to substantial wear and tear and accordingly require periodic maintenance, repair and overhaul. The Company views the maintenance, repair and overhaul (MRO) business as an area of continuing long-term growth.

Chemical Processing. The chemical processing market represents a large base of customers with diverse CRA applications driven by demand for key end use markets such as automobiles, housing, health care, agriculture and metals production. CRA products supplied by the Company have been used in the chemical processing market since the early 1930s. Demand for the Company's products in this market is driven by the level of MRO and expansion requirements of existing chemical processing facilities, as well as the construction of new facilities. The North America expansion of manufacturing of natural gas liquids will be a driver of demand in this market. The Company believes the extensive worldwide network of Company-owned service and sales centers, as well as its network of independent distributors and sales agents who supplement the Company's direct sales efforts outside of the U.S., provide a competitive advantage in marketing its CRA products in the chemical processing market.

Land-based Gas Turbines. Demand for the Company's products in this market is driven by the construction of cogeneration facilities such as base load for electric utilities or as backup sources to fossil fuel-fired utilities during times of peak demand. Demand for the Company's alloys in the land-based gas turbine markets has also been driven by concerns regarding lowering emissions from generating facilities powered by fossil fuels. Land-based gas turbine generating facilities have gained acceptance as clean, low-cost alternatives to fossil fuel-fired electric generating facilities. Land-based gas turbines are also used in power barges with mobility and as temporary base-load-generating units for countries that have numerous islands and a large coastline. Demand is also generated by mechanical drive units used for oil and gas production and pipeline transportation, as well as microturbines that are used as back up sources of power generation for hospitals and shopping malls.

Other Markets. Other markets to which the Company sells its HTA products and CRA products include flue-gas desulphurization (FGD), oil and gas, waste incineration, industrial heat treating, automotive, instrumentation, biopharmaceuticals, solar and nuclear fuel. The FGD market has been driven by both legislated and self-imposed standards for lowering emissions from fossil fuel-fired electric generating facilities. This market is expected to soften if the trend to switch from coal to natural gas for power plants continues. The Company also sells its products for use in the oil and gas market, primarily in connection with sour gas production. In addition, incineration of municipal, biological, industrial and hazardous waste products typically produces very corrosive conditions that demand high-performance alloys. The Company continues to look for opportunities to introduce and expand the use of its alloys in emerging technologies such as solar and nuclear fuel applications. Markets capable of providing growth are

being driven by increasing performance, reliability and service life requirements for products used in these markets which could provide further applications for the Company's products.

The Company sells its products primarily through its direct sales organization, which operates from 16 total locations in the U.S., Europe and Asia, 13 of which are service and/or sales centers. All of the Company's service and/or sales centers are operated either directly by the Company or through its wholly-owned subsidiaries. Approximately 77% of the Company's net revenues in fiscal 2013 were generated by the Company's direct sales organization. The remaining 23% of the Company's fiscal 2013 net revenues was generated by a network of independent distributors and sales agents who supplement the Company's direct sales in the U.S., Europe and Asia, some of whom have been associated with the Company for over 30 years. Going forward, the Company expects its direct sales force to continue to generate approximately 80% of its total net revenues.

Providing technical assistance to customers is an important part of the Company's marketing strategy. The Company provides performance analyses of its products and those of its competitors for its customers. These analyses enable the Company to evaluate the performance of its products and to make recommendations as to the use of those products in appropriate applications, enabling the products to be included as part of the technical specifications used in the production of customers' products. The Company's market development professionals are assisted by its engineering and technology staff in directing the sales force to new opportunities. Management believes the Company's combination of direct sales, technical marketing, engineering and customer support provides an advantage over other manufacturers in the high-performance alloy industry. This activity allows the Company to obtain direct insight into customers' alloy needs and to develop proprietary alloys that provide solutions to customers' problems.

The Company continues to focus on growing its business in foreign markets. In recent years, the Company opened a service and sales center in China and sales centers in Singapore, India, Italy and Japan.

While the Company is making concentrated efforts to expand foreign sales, the majority of its revenue continues to be provided by sales to U.S. customers. The Company's domestic expansion effort includes, but is not limited to, the continued expansion of ancillary product forms, the continued development of new high-performance alloys, the addition of equipment in U.S. service and sales centers to improve the Company's ability to provide a product closer to the form required by the customer and the continued effort through the technical expertise of the Company to find solutions to customer challenges.

The following table sets forth the approximate percentage of the Company's fiscal 2013 net revenues generated through each of the Company's distribution channels.

The Company's top twenty customers accounted for approximately 38%, 36% and 34% of the Company's net revenues in fiscal 2011, 2012 and 2013, respectively. No customer or group of affiliated customers of the Company accounted for more than 10% of the Company's net revenues in fiscal 2011, 2012 or 2013.

Net revenues and net income in fiscal 2011, 2012 and 2013 were generated primarily by the Company's U.S. operations. Sales to domestic customers comprised approximately 64%, 60% and 56% of

the Company's net revenues in fiscal 2011, 2012 and 2013, respectively. In addition, the majority of the Company's operating costs are incurred in the U.S., as all of its manufacturing facilities are located in the U.S. It is expected that net revenues and net income will continue to be highly dependent on the Company's domestic sales and manufacturing facilities in the U.S.

The Company's foreign and export sales were approximately $198.0 million, $233.0 million, and $214.7 million for fiscal 2011, 2012 and 2013, respectively. Additional information concerning foreign operations and export sales is set forth in Note 13 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

High-performance alloys require a lengthier, more complex production process and are more difficult to manufacture than lower-performance alloys, such as stainless steel. The alloying elements in high-performance alloys must be highly refined during melting, and the manufacturing process must be tightly controlled to produce precise chemical properties. The resulting alloyed material is more difficult to process because, by design, it is more resistant to deformation. Consequently, high-performance alloys require that a greater force be applied when hot or cold working and are less susceptible to reduction or thinning when rolling or forging. This results in more cycles of rolling, annealing and pickling compared to a lower-performance alloy to achieve proper dimensions. Certain alloys may undergo 40 or more distinct stages of melting, remelting, annealing, hot reduction, cold reduction, pickling and testing before they achieve the specifications required by a customer. This longer production cycle contributes to slower inventory turns. The Company manufactures its high-performance alloys in various forms, including sheet, plate, billet/ingot, tubular, wire and other forms. The Company also preforms value-added cutting services to supply certain customers with product cut to their specification.

At the Kokomo, Indiana facility, the manufacturing process begins with raw materials being combined, melted and refined in a precise manner to produce the chemical composition specified for each high-performance alloy. The Company's primary melt facility utilizes two different melting processes. The argon oxygen decarburization process utilizes gas controls to remove carbon and other undesirable elements, thereby allowing more tightly-controlled chemistries, which in turn produce more consistent properties in the high-performance alloys. The other primary melt method utilizes vacuum induction melting which involves the melting of raw materials through electromagnetic induction while under vacuum conditions to produce the desired tightly-controlled chemistry. The control systems allow for statistical process control monitoring in real-time to improve product quality. For most high-performance alloys, this molten material is cast into electrodes and additionally refined through electroslag remelting. The resulting ingots are then forged or rolled to an intermediate shape and size depending upon the intended final product form. Intermediate shapes destined for flat products are then sent through a series of hot and cold rolling, annealing and pickling operations before being cut to final size.

The Company has a four-high Steckel rolling mill for use in hot rolling high-performance alloys, created specifically for that purpose. The four-high Steckel rolling mill was installed in 1982 and is one of the most powerful four-high Steckel rolling mills in the world. The mill is capable of generating approximately 12.0 million pounds of separating force and rolling a plate up to 72 inches wide. The mill includes integrated computer controls (with automatic gauge control and programmed rolling schedules), two coiling Steckel furnaces and six heating furnaces. Computer-controlled rolling schedules for each of the hundreds of combinations of product shapes and sizes the Company produces allow the mill to roll numerous widths and gauges to exact specifications without stoppages or changeovers.

The Company also operates a three-high hot rolling mill and a two-high hot rolling mill, each of which is capable of custom processing much smaller quantities of material than the four-high Steckel rolling mill. These mills provide the Company with significant flexibility in running smaller batches of varied products in response to customer requirements. The Company believes the flexibility provided by the three-high and

two-high mills provides the Company with an advantage over its major competitors in obtaining smaller specialty orders.

The Arcadia, Louisiana facility uses feedstock produced at the Kokomo facility to fabricate welded and seamless alloy pipe and tubing and purchases extruded tube hollows to produce seamless titanium tubing. The manufacturing processes at Arcadia require cold pilger mills, weld mills, draw benches, annealing furnaces and pickling facilities.

The Mountain Home, North Carolina facility primarily manufactures finished high-performance alloy wire. Finished wire products are also warehoused at this facility.

The Company defines backlog to include firm commitments from customers for delivery of product at established prices. Approximately 30% of the orders in the backlog at any given time include prices that are subject to adjustment based on changes in raw material costs. Historically, approximately 75% of the Company's backlog orders have shipped within six months and approximately 90% have shipped within 12 months. The backlog figures do not typically reflect that portion of the Company's business conducted at its service and sales centers on a spot or "just-in-time" basis. For additional discussion of backlog, see Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations contained in this Annual Report on Form 10-K.

Raw materials represented 50% of cost of sales in fiscal 2013. Nickel, a major component of many of the Company's products, accounted for approximately 60% of raw material costs, or approximately 30% of total cost of sales in fiscal 2013. Other raw materials include cobalt, chromium, molybdenum and tungsten. Melt materials consist of virgin raw material, purchased scrap and internally produced scrap.

The average nickel price per pound for cash buyers for the 30-day period ended on September 30, 2011, 2012 and 2013, as reported by the London Metals Exchange, was $9.25, $7.81 and $6.25, respectively. Prices for other raw materials which are significant in the manufacture of the Company's products, such as molybdenum, cobalt and chromium, were also lower in fiscal 2013 than in fiscal 2012.

Although alternative sources of supply are available, the Company currently purchases nickel through an exclusive arrangement with a single supplier to ensure consistent quality and supply. The Company purchases raw materials through various arrangements including fixed-term contracts and spot purchases, which involve a variety of pricing mechanisms. In cases where the Company prices its products at the time of order placement, the Company attempts to establish selling prices with reference to known costs of materials, thereby reducing the risk associated with changes in the cost of raw materials. However, to the extent that the price of nickel fluctuates rapidly, there may be a favorable or unfavorable effect on the Company's gross profit margins. The Company periodically purchases material forward with certain suppliers. In the event the Company enters into a forward purchase which is not matched to one or more customer contracts with fixed raw material prices or if a customer fails to meet the expected volume levels

or the consumption schedule deviates from the expected schedule, a rapid or prolonged decrease in the price of raw materials could adversely affect the Company's operating results.

The Company values inventory utilizing the first-in, first-out ("FIFO") inventory costing methodology. Under the FIFO inventory costing method, the cost of materials included in cost of sales may be different than the current market price at the time of sale of finished product due to the length of time from the acquisition of the raw material to the sale of the finished product. In a period of decreasing raw material costs, the FIFO inventory valuation method normally results in higher costs of sales as compared to last-in, first out method. Conversely, in a period of rising raw material costs, the FIFO inventory valuation method normally results in lower costs of sales.

The Company's technology facilities are located at the Kokomo headquarters and consist of 19,000 square feet of offices and laboratories, as well as an additional 90,000 square feet of paved storage area. The Company has six fully equipped technology testing laboratories, including a mechanical test lab, a metallographic lab, an electron microscopy lab, a corrosion lab, a high temperature lab and a welding lab. These facilities also contain a reduced scale, fully equipped melt shop and process lab. As of September 30, 2013, the technology, engineering and technological testing staff consisted of 26 persons, 12 of whom have engineering or science degrees, including 6 with doctoral degrees, with the majority of degrees in the field of metallurgical engineering or materials science.

Research and technical support costs primarily relate to efforts to develop new proprietary alloys and new applications for existing alloys. The Company spent approximately $3.3 million, $3.3 million and $3.5 million for research and technical support activities for fiscal 2011, 2012 and 2013, respectively.

During fiscal 2013, research and development projects were focused on new alloy development, new product form development and new alloy concept validation, relating to products for the aerospace, land-based gas turbine, chemical processing and oil and gas industries. In addition, significant projects were conducted to generate technical data in support of major market application opportunities in areas such as renewable energy, fuel cell systems, biotechnology (including toxic waste incineration and pharmaceutical manufacturing), and power generation.

The high-performance alloy market is a highly competitive market in which eight to ten major producers participate in various product forms. The Company's primary competitors in flat rolled products include Special Metals Corporation, a subsidiary of Precision Cast Parts, Allegheny Technologies, Inc. and Outokumpu-VDM. The Company faces strong competition from domestic and foreign manufacturers of both high-performance alloys (similar to those the Company produces) and other competing metals. The Company may face additional competition in the future to the extent new materials are developed, such as plastics or ceramics, that may be substituted for the Company's products. The Company also believes that it will face increased competition from non-U.S. entities in the next five to ten years, especially from competitors located in Eastern Europe and Asia. Additionally, in recent years the Company's domestic business has benefited from a weak U.S. dollar, which makes the goods of foreign competitors more expensive to import into the U.S. In the event that the U.S. dollar continues to strengthen, the Company may face increased competition in the U.S. from foreign competitors.

During fiscal 2013, the Company experienced strong price competition from competitors who produce both stainless steel and high-performance alloys due primarily to weakness in both markets. Increased competition has required the Company to continually price its products competitively, which has contributed to the reduction in the Company's gross profit margin and net income. When demand begins to improve, price competition in the high-performance alloy industry should begin to ease. The Company

continues to respond to this competition by increasing emphasis on service centers, offering value-added services, improving its cost structure and striving to improve delivery-times and reliability.

As of September 30, 2013, the Company employed approximately 1,043 full-time employees worldwide. All eligible hourly employees at the Kokomo, Indiana and Arcadia, Louisiana plants, and the Lebanon, Indiana service center (approximately 593 in the aggregate) are covered by two collective bargaining agreements. Management believes that current relations with the union are satisfactory.

On December 21, 2012, the Company entered into a new collective bargaining agreement with the United Steelworkers of America which covers eligible hourly employees at the Company's Arcadia, Louisiana plant. This agreement will expire in December 2015.

On July 1, 2013, the Company entered into a new collective bargaining agreement with the United Steelworkers of America, which will expire in June 2018. The agreement covers eligible hourly employees at the Kokomo, Indiana plant and the Lebanon, Indiana service center.

The Company's facilities and operations are subject to various foreign, federal, state and local laws and regulations relating to the protection of human health and the environment, including those governing the discharge of pollutants into the environment and the storage, handling, use, treatment and disposal of hazardous substances and wastes. In the U.S., such laws include the Occupational Safety and Health Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act and the Resource Conservation and Recovery Act. As environmental laws and regulations continue to evolve, it is likely the Company will be subject to increasingly stringent environmental standards in the future, particularly under air quality and water quality laws and standards related to climate change issues, such as a reporting of greenhouse gas emissions. Violations of these laws and regulations can result in the imposition of substantial penalties and can require facility improvements. Expenses related to environmental compliance were approximately $2.6 million for fiscal 2013 and are currently expected to be approximately $2.9 million for fiscal 2014. Although there can be no assurance, based upon current information available to the Company, the Company does not currently expect that costs of environmental contingencies, individually or in the aggregate, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. The Company's facilities are subject to periodic inspection by various regulatory authorities, who from time to time have issued findings of violations of governing laws, regulations and permits. In the past five years, the Company has paid administrative fines, none of which have had a material effect on the Company's financial condition, for alleged violations relating to environmental matters, requirements relating to its Title V Air Permit and alleged violations of record keeping and notification requirements relating to industrial waste water discharge. Capital expenditures of approximately $0.5 million were made for pollution control improvements during fiscal 2013, with additional expenditures of approximately $1.0 million for similar improvements planned for fiscal 2014.

The Company has received permits from the Indiana Department of Environmental Management, or IDEM, to close and to provide post-closure monitoring and care for certain areas at the Kokomo facility previously used for the storage and disposal of wastes, some of which are classified as hazardous under applicable regulations. Closure certification was received in fiscal 1988 for the South Landfill at the Kokomo facility and post-closure monitoring and care are permitted and ongoing there. Closure certification was received in fiscal 1999 for the North Landfill at the Kokomo facility, and post-closure monitoring and care are permitted and ongoing there. In fiscal 2007, IDEM issued a single post-closure permit applicable to both the North and South Landfills, which contains monitoring and post-closure care requirements and which was reviewed in fiscal 2012. In addition, IDEM required that a Resource Conservation and Recovery Act, or RCRA, Facility Investigation, or RFI, be conducted in order to further

evaluate one area of concern and one solid waste management unit. The RFI commenced in fiscal 2008 and is ongoing. Based on preliminary results, the Company has determined that additional testing and further source remediation are necessary.

The Company is required to monitor groundwater and to continue post-closure maintenance of the former disposal areas at each site. As a result, the Company is aware of elevated levels of certain contaminants in the groundwater, and additional corrective action by the Company could be required.

The Company is unable to estimate the costs of any further corrective action at these sites, if required. Accordingly, the Company cannot assure that the costs of any future corrective action at these or any other current or former sites would not have a material effect on the Company's financial condition, results of operations or liquidity. Additionally, it is possible that the Company could be required to undertake other corrective action commitments for any other solid waste management unit or other conditions existing or determined to exist at its facilities. As a condition of the post-closure permits, the Company must provide and maintain assurances to IDEM and NCDENR of the Company's capability to satisfy post-closure groundwater monitoring requirements, including possible future corrective action as necessary. The Company provides these required assurances through a statutory financial assurance test as provided by Indiana and North Carolina law.

The Company may also incur liability for alleged environmental damages associated with the off-site transportation and disposal of hazardous substances. The Company's operations generate hazardous substances, and, while a large percentage of these substances are reclaimed or recycled, the Company also accumulates hazardous substances at each of its facilities for subsequent transportation and disposal off-site by third parties. Generators of hazardous substances which are transported to disposal sites where environmental problems are alleged to exist are subject to claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, and state counterparts. CERCLA imposes strict, joint and several liabilities for investigatory and cleanup costs upon hazardous substance generators, site owners and operators and other potentially responsible parties. The Company is currently named as a potentially responsible party at one site. The Company may have generated hazardous substances disposed of at other sites potentially subject to CERCLA or equivalent state law remedial action. Thus, there can be no assurance that the Company will not be named as a potentially responsible party at other sites in the future or that the costs associated with those sites would not have a material adverse effect on the Company's financial condition, results of operations or liquidity.

On August 3, 2012, the Company received an information request from the United States Environmental Protection Agency, or EPA, relating to the Company's compliance with laws relating to air quality. The Company has responded to the request, and there has been no further action by the EPA.

The following table sets forth certain information concerning the persons who served as executive officers as of September 30, 2013. Except as indicated in the following paragraphs, the principal occupations of these persons have not changed during the past five years.

Mr. Comerford was elected President and Chief Executive Officer and a director of the Company in October 2008. Before joining the Company, Mr. Comerford was President of Brush International, Inc. and Brush Engineered Materials Alloys Division, each affiliated with Materion Corporation, formerly known as Brush Engineered Material, Inc., a company that manufactures high performance materials, from 2004 to 2008.

Mr. Maudlin has served as the Vice President-Finance and Chief Financial Officer of the Company since December 2012. Prior to that, he was Controller and Chief Accounting Officer of the Company from September 2004 to December 2012.

Dr. Ishwar has served as Vice President—Marketing & Technology of the Company since January 2010. Dr. Ishwar was Senior Vice President of Forgital USA, a manufacturer of mechanical components, between July 2008 and December 2009. Prior to that, he was Director of Marketing and Business Development at the Company from 2005 to July 2008.

Mr. Losch has served as Vice President—Sales & Distribution of the Company since January 2010. Prior to that, he served as Vice President—North American Sales of the Company beginning in February 2006. Mr. Losch was Midwest Regional Manager of the Company from 2001 to 2006.

Ms. Neel has served as Vice President—Corporate Affairs of the Company since April 2000.

Mr. Pinkham has served as Vice President—Manufacturing of the Company since March 2008. Prior to that, he served as Vice President—Manufacturing Planning of the Company from 2004 to 2008.

Mr. Spalding has served as Vice President—Tube & Wire Products of the Company since May 2009. Prior to that, he served as Vice President, Haynes Wire & Chief Operating Officer from 2006 to May 2009, and Vice President—North American Sales since he joined the Company in July 1999.

Mr. Van Bibber has served as Controller and Chief Accounting Officer of the Company since December 2012. Prior to joining the Company, Mr. Van Bibber was Director of Finance at Belden, Inc. from 2009 to 2012 and Director of Finance at Zimmer, Inc. from 2006 to 2009.

Ms. Wilken has served as Vice President—General Counsel and Corporate Secretary since August 2011. Prior to joining the Company, Ms. Wilken was a partner at Ice Miller LLP from 2005 to 2011.

Mr. Young has served as Vice President & Chief Information Officer since November 2005.

Our revenues may fluctuate widely based upon changes in demand for our customers' products.

Demand for our products is dependent upon and derived from the level of demand for the machinery, parts and equipment produced by our customers, which are principally manufacturers and fabricators of machinery, parts and equipment for highly specialized applications. Historically, certain of the markets in which we compete have experienced unpredictable, wide demand fluctuations. Because of the comparatively high level of fixed costs associated with our manufacturing processes, significant declines in those markets have had a disproportionately adverse impact on our operating results.

Since we became an independent company in 1987, we have, in several instances, experienced substantial year-to-year declines in net revenues, primarily as a result of decreases in demand in the industries to which our products are sold. In fiscal 2002, 2003, 2009, 2010 and 2013, our net revenues, when compared to the immediately preceding year, declined by approximately 10.3%, 21.2%, 31.1%, 13.0% and 16.7%, respectively. We may experience similar fluctuations in our net revenues in the future. Additionally, demand is likely to continue to be subject to substantial year-to-year fluctuations as a consequence of industry cyclicality, as well as other factors such as global economic uncertainty, and such fluctuations may have a material adverse effect on our financial condition or results of operations.

Profitability in the high-performance alloy industry is highly sensitive to changes in sales volumes.

The high-performance alloy industry is characterized by high capital investment and high fixed costs. The cost of raw materials is the primary variable cost in the manufacture of our high-performance alloys and, in fiscal 2013, represented approximately 50.0% of our total cost of sales. Other manufacturing costs, such as labor, energy, maintenance and supplies, often thought of as variable, have a significant fixed element. Profitability is, therefore, very sensitive to changes in volume, and relatively small changes in volume can result in significant variations in earnings. Our ability to effectively utilize our manufacturing assets depends greatly upon continuing demand in our end-markets, successfully increasing our market share and continued acceptance of our new products into the marketplace. Any failure to effectively utilize our manufacturing assets may negatively impact our gross margin and net income.

We are subject to risks associated with global economic and political uncertainties.

We are susceptible to macroeconomic downturns in the United States and abroad that may affect the general economic climate and our performance and the demand of our customers. The continuing turmoil in the global economy has had, and may continue to have, an adverse impact on our business and our financial condition. In addition to the impact that the global financial crisis has already had, we may face significant challenges if conditions in the global economy do not improve or worsen.

In addition, we are subject to various domestic and international risks and uncertainties, including changing social conditions and uncertainties relating to the current and future political climate. Changes in governmental policies (particularly those that would limit or reduce defense spending) could have an adverse effect on our financial condition and results of operations and may reduce our customers' demand for our products and/or depress pricing of those products used in the defense industry or which have other military applications, resulting in a material adverse impact on our business, prospects, results of operations, revenues and cash flows. Furthermore, any actual armed hostilities, and any future terrorist attacks in the U.S. or abroad, could also have an adverse impact on the U.S. economy, global financial markets and our business. The effects may include, among other things, a decrease in demand in the aerospace industry due to reduced air travel, as well as reduced demand in the other industries we serve. Depending upon the severity, scope and duration of these effects, the impact on our financial position, results of operations and cash flows could be material.

A significant portion of our revenues are derived from the highly cyclical aerospace, power generation and chemical processing markets. Our sales to the aerospace industry constituted 40.8% of our total sales in fiscal 2013. Our land-based gas turbine and chemical processing sales constituted 21.2% and 25.7%, respectively, of our total sales in fiscal 2013.

The commercial aerospace industry is historically driven by demand from commercial airlines for new aircraft. The U.S. and international commercial aviation industries continue to face challenges arising from the global economic climate, competitive pressures and fuel costs. Demand for commercial aircraft is influenced by industry profitability, trends in airline passenger traffic, the state of U.S. and world economies, the ability of aircraft purchasers to obtain required financing and numerous other factors, including the effects of terrorism and health and safety concerns. The military aerospace cycle is highly dependent on U.S. and foreign government funding; however, it is also driven by the effects of terrorism, a changing global political environment, U.S. foreign policy, the retirement of older aircraft and technological improvements to new engines that increase reliability. Accordingly, the timing, duration and severity of cyclical upturns and downturns cannot be forecast with certainty. Downturns or reductions in demand for our products sold into the aerospace market could have a material adverse effect on our business.

The land-based gas turbine market is also cyclical in nature. Demand for power generation products is global and is affected by the state of the U.S. and world economies, the availability of financing to power generation project sponsors and the political environments of numerous countries. The availability of fuels and related prices also have a large impact on demand. Reductions in demand for our products sold into the land-based gas turbine industry may have a material adverse effect on our business.

We also sell products into the chemical processing industry, which is also cyclical in nature. Customer demand for our products in this market may fluctuate widely depending on U.S. and world economic conditions, the availability of financing, and the general economic strength of the end use customers in this market. Cyclical declines or sustained weakness in this market could have a material adverse effect on our business.

Reductions in government expenditures or changes in spending priorities could adversely affect our military aerospace business.

The budget for the U.S. Department of Defense may be reduced from current levels. In addition to debt reduction efforts already authorized, it is possible that the U.S. government could reduce or further delay its spending on, or reprioritize its spending away from, the military aerospace industry. On November 23, 2011, the Joint Select Committee on Deficit Reduction (commonly referred to as the "Super Committee" which was established as part of the Budget Control Act of 2011 (the "Budget Act")) failed to recommend legislation that would reduce net U.S. government spending by at least $1.2 trillion over the next 10 years, which failure to act triggered directed automatic across-the-board cuts, known as sequestrations, beginning on January 2, 2013. Then, on January 2, 2013, the American Taxpayer Relief Act of 2012 ("ATRA") was signed into law. ATRA delayed the sequestrations created by the Budget Act for two months, until March 1, 2013. On March 1, 2013, with no deal reached, President Obama signed an order putting the sequestrations into effect. The sequestrations are automatic reductions of discretionary appropriations for U.S. defense programs, which would make up the shortfall necessary to achieve the $1.2 trillion target. On October 1, 2013, as a result of Congress's inability to enact legislation appropriating funds for fiscal year 2014, the U.S. government entered a shutdown. Then, on October 16, 2013, Congress agreed on a proposal to fund the government through January 15, 2014 at sequestration levels and suspend the debt limit until February 7, 2014. Ultimately, the U.S. government may be unable to timely complete its budget process or fully agree upon spending priorities and the U.S. government may be forced to enter another shutdown or further extend the sequestrations. While we are unable to predict the outcome of the

budget deliberations, actions of Congress or the impact of any resulting reductions in defense appropriations, reductions in U.S. defense spending or changes in spending priorities, particularly with respect to the military aerospace industry, could negatively affect our revenues, financial condition and results of operations.

A significant portion of our aerospace products are sold to fabricators and are ultimately used in the production of new commercial aircraft. There are only two primary manufacturers of large commercial aircraft in the world, The Boeing Company and Airbus. A significant portion of our aerospace sales are dependent on the number of new aircraft built by these two manufacturers, which is in turn dependent on a number of factors over which we have little or no control. Those factors include demand for new aircraft from around the globe, success of new commercial and military aircraft programs and factors that impact manufacturing capabilities, such as the availability of raw materials and manufactured components, U.S. and world economic conditions, changes in the regulatory environment and labor relations between the aircraft manufacturers and their work forces. A significant interruption or slow down in the number of new aircraft built by the aircraft manufacturers could have a material adverse effect on our business.

Our principal assets are located at our primary integrated production facility in Kokomo, Indiana and at our production facilities in Arcadia, Louisiana and in Mountain Home, North Carolina. The Arcadia and Mountain Home plants rely to a significant extent upon feedstock produced at the Kokomo facility. Any production failures, shutdowns or other significant problems at the Kokomo facility could have a material adverse effect on our financial condition and results of operations. We maintain property damage insurance to provide for reconstruction of damaged equipment, as well as business interruption insurance to mitigate losses resulting from any production shutdown caused by an insured loss. Although we believe that our insurance is adequate to cover any such losses, that may not be the case. One or more significant uninsured losses at our Kokomo facility may have a material adverse effect on our financial condition.

In addition, from time to time we schedule planned outages on the equipment at our Kokomo facility for maintenance and upgrades. These projects are subject to a variety of risks and uncertainties, including a variety of market, operational and labor related factors, many of which may be beyond our control. Should a planned shut-down on a significant piece of equipment last substantially longer than originally planned, there could be a material adverse effect on our operating results.

A default under our agreements with Titanium Metals Corporation could require us to make significant payments and could disrupt our operations.

We are party to a Conversion Services Agreement and an Access and Security Agreement with Titanium Metals Corporation (TIMET) that provide for the performance of certain titanium conversion services through November 2026. TIMET was acquired by Precision Castparts Corp. which owns Special Metals Corporation, a direct competitor of ours. Events of default under the Conversion Services Agreement include (a) a change in control in which the successor does not assume the agreement, (b) a violation by the Company of certain non-compete obligations relating to the manufacture and conversion of titanium and (c) failure to meet agreed-upon delivery and quality requirements. If an event of default under the Conversion Services Agreement occurs, TIMET could require us to repay the unearned portion of the $50.0 million fee paid to us by TIMET when the agreement was signed, plus liquidated damages of $25.0 million. Our obligations to pay these amounts to TIMET are secured by a security interest in our four-high Steckel rolling mill, through which we process a substantial amount of our products. In addition, the Access and Security Agreement with TIMET includes, among other terms, an access right that would allow TIMET to use certain of our operating assets, including the four-high mill, to perform titanium conversion services in the event of our bankruptcy or the acceleration of our indebtedness. Exercise by

TIMET of its rights under its security interest following a default and non-payment of the amounts provided in the Conversion Services Agreement or exercise of the access rights under the Access and Security Agreement could cause significant disruption in our Kokomo operations which would have a material adverse effect on our financial condition and results of operations.

During periods of lower demand in other alloy markets, some of our competitors may use their available capacity to produce higher volumes of high-performance alloys, which leads to increased competition in the high-performance alloy market.

We have experienced increased competition from competitors who produce both stainless steel and high-performance alloys. Due to continued under-utilization of capacity in the stainless steel market, we believe these competitors increased their production levels and sales activity in high-performance alloys to keep capacity in their mills as full as possible, while offering very competitive prices and delivery times. If the stainless market does not improve, continued competition from stainless steel producers could negatively impact our average selling price and reduce our gross profit margin.

In addition, as a result of the competition in our markets, we have made significant price concessions to our customers from time to time, and we expect customer pressure for further price concessions to continue. Maintenance of our market share will depend, in part, on our ability to sustain a cost structure that enables us to be cost-competitive. If we are unable to adjust our costs relative to our pricing, our profitability will suffer. Our effectiveness in managing our cost structure will be a key determinant of future profitability and competitiveness.

Rapid fluctuations in the price of nickel may materially adversely affect our operating results.

To the extent that we are unable to adjust to rapid fluctuations in the price of nickel, there may be a negative effect on our gross profit margins. In fiscal 2013, nickel, a major component of many of our products, accounted for approximately 60% of our raw material costs, or approximately 30% of our total costs of sales. We enter into several different types of sales contracts with our customers, some of which allow us to pass on increases in nickel prices to our customers. In other cases, we fix the nickel component of our prices for a period of time through the life of a long-term contract. In yet other cases, we price our products at the time of order, which allows us to establish prices with reference to known costs of our nickel inventory, but which does not allow us to offset an unexpected rise in the price of nickel. We may not be able to successfully offset rapid increases in the price of nickel or other raw materials in the future. In the event that raw material price increases occur that we are unable to pass on to our customers, our cash flows or results of operations could be materially adversely affected.

Alternatively, our results of operations may also be negatively impacted if both customer demand and nickel prices rapidly fall at the same time. Because we value most of our inventory utilizing the first-in, first-out inventory costing methodology, a rapid decrease in raw material costs has a negative effect on our operating results. In those circumstances, we recognize higher material cost in cost of sales relative to lower raw material market prices that drive the sales price.

In addition, we periodically enter into forward purchase agreements for our nickel supply. If we enter into a forward purchase agreement which is not matched to one or more customer contracts with fixed nickel prices, a rapid or prolonged decrease in the price of nickel could adversely impact our operating results.

Our business is dependent on a number of raw materials that are subject to volatility in price and availability.

We use a number of raw materials in our products which are found in only a few parts of the world and are available from a limited number of suppliers. The availability and costs of these materials may be influenced by private or government cartels, changes in world politics, labor relations between the materials producers and their work force, unstable governments in exporting nations, inflation, general

economic conditions and export quotas imposed by governments in nations with rare earth element supplies. The ability of key material suppliers to meet quality and delivery requirements or to provide materials on price and other terms acceptable to us can also impact our ability to meet commitments to customers. Future shortages or price fluctuations in raw materials could result in decreased sales as well as margins, or otherwise adversely affect our business. The enactment of new or increased import duties on raw materials imported by us could also increase the costs to us of obtaining the raw materials and might adversely affect our business.

If suppliers increase the price of critical raw materials, we may not have alternative sources of supply. In some cases, we have entered into exclusive supply agreements with respect to raw materials, which could adversely affect our results of operations if the exclusive supplier cannot meet quality and delivery requirements to provide materials on price and other terms acceptable to us. In addition, to the extent that we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing fixed-price contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials.

The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience delays or shortages in the supply of raw materials. If unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions or suffer harm to our reputation.

Failure to successfully develop, commercialize, market and sell new applications and new products could adversely affect our business.

We believe that our proprietary alloys and metallurgical manufacturing expertise provide us with a competitive advantage over other high-performance alloy producers. Our ability to maintain this competitive advantage depends on our ability to continue to offer products that have equal or better performance characteristics than competing products at competitive prices. Our future growth will depend, in part, on our ability to address the increasingly demanding needs of our customers by enhancing the properties of our existing alloys, by timely developing new applications for our existing products, and by timely developing, commercializing, marketing and selling new products. If we are not successful in these efforts, or if our new products and product enhancements do not adequately meet the requirements of the marketplace and achieve market acceptance, our revenues, cash flows and results of operations could be negatively affected.

We have put in place a number of systems, processes and practices designed to protect against intentional or unintentional misappropriation or corruption of our systems and information or disruption of our operations. These include, for example, the appropriate encryption of information. Despite such efforts, we are subject to breaches of security systems which may result in unauthorized access, misappropriation, corruption or disruption of the information we are trying to protect, in which case we could suffer material harm. Access to our proprietary information regarding new alloy formulations would allow our competitors to use that information in the development of competing products. Current employees have, and former employees may have, access to a significant amount of information regarding our operations which could be disclosed to our competitors or otherwise used to harm us. In addition, our systems could be subject to sabotage by employees or third parties, which could slow or stop production or otherwise adversely affect our operations. Any misappropriation or corruption of our systems and information or disruption of our operations could have a material adverse effect on our business.

An interruption in energy services may cause manufacturing curtailments or shutdowns.

We rely upon third parties for our supply of energy resources consumed in the manufacture of our products. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control. Disruptions in the supply of energy resources could temporarily impair our ability to manufacture products for customers. Further, increases in energy costs, or changes in costs relative to energy costs paid by competitors, has and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.

We may be adversely affected by environmental, health and safety laws, regulations, costs and other liabilities.

We are subject to various foreign, federal, state and local environmental, health and safety laws and regulations, including those governing the discharge of pollutants into the environment, the storage, handling, use, treatment and disposal of hazardous substances and wastes and the health and safety of our employees. Under these laws and regulations, we may be held liable for all costs arising out of any release of hazardous substances on, under or from any of our current or former properties or any off-site location to which we sent or arranged to be sent wastes for disposal or treatment, and such costs may be material. We could also be held liable for any and all consequences arising out of human exposure to such substances or other hazardous substances that may be attributable to our products or other environmental damage. In addition, some of these laws and regulations require our facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. Violations of these laws, regulations or permits can also result in the imposition of substantial penalties, permit revocations and/or facility shutdowns.

We have received permits from the environmental regulatory authorities in Indiana and North Carolina to close and to provide post-closure monitoring and care for certain areas of our Kokomo and Mountain Home facilities that were used for the storage and disposal of wastes, some of which are classified as hazardous under applicable regulations. We are required to monitor groundwater and to continue post-closure maintenance of the former disposal areas at each site. As a result, we are aware of elevated levels of certain contaminants in the groundwater and additional corrective action could be required. Additionally, it is possible that we could be required to undertake other corrective action for any other solid waste management unit or other conditions existing or determined to exist at our facilities. We are unable to estimate the costs of any further corrective action, if required. However, the costs of future corrective action at these or any other current or former sites could have a material adverse effect on our financial condition, results of operations or liquidity.

We may also incur liability for alleged environmental damages associated with the off-site transportation and disposal of hazardous substances. Our operations generate hazardous substances, many of which we accumulate at our facilities for subsequent transportation and disposal off-site or recycling by third parties. Generators of hazardous substances which are transported to disposal sites where environmental problems are alleged to exist are subject to liability under CERCLA and state counterparts. In addition, we may have generated hazardous substances disposed of at sites which are subject to CERCLA or equivalent state law remedial action. We have been named as a potentially responsible party at two sites. CERCLA imposes strict, joint and several liabilities for investigatory and cleanup costs upon hazardous substance generators, site owners and operators and other potentially responsible parties regardless of fault. If we are named as a potentially responsible party at other sites in the future, the costs associated with those future sites could have a material adverse effect on our financial condition, results of operations or liquidity.

Environmental laws are complex, change frequently and have tended to become increasingly stringent over time. While we have budgeted for future capital and operating expenditures to comply with environmental laws, changes in any environmental law may increase our costs of compliance and liabilities arising from any past or future releases of, or exposure to, hazardous substances and may materially adversely affect our business, results of operations or financial condition. See "Business—Environmental Matters."

Pending legislation or regulation of greenhouse gases, if enacted or adopted in an onerous form, could have a material adverse impact on our results of operations, financial condition and cash flows.

Political and scientific debates related to the impacts of emissions of greenhouse gases on the global climate are prevalent. Regulation or some form of legislation aimed at reducing greenhouse gas emissions is currently being considered in the United States as well as globally. As a high-performance alloy manufacturer, we will be affected, both directly and indirectly, if proposed climate change legislation, such as use of a "cap and trade" system, is enacted which could have a material adverse impact on our results of operations, financial condition and cash flows.

In recent years, the United States Congress has adopted several significant pieces of legislation that affect our operations. We may be subject to significant fines and penalties if we fail to comply with these laws or their implementing regulations, and the increasingly stringent regulations could require us to make additional unforeseen expenditures. Any such fines, penalties or expenditures could have a material adverse effect on our financial condition and results of operations.

New regulations related to conflict minerals could adversely impact our business.

The SEC has promulgated final rules mandated by the Dodd-Frank Act regarding disclosure of the use of tin, tantalum, tungsten and gold, known as conflict minerals, in products manufactured by public companies. These new rules require due diligence to determine whether such minerals originated from the Democratic Republic of Congo (the "DRC") or an adjoining country and whether such minerals helped finance the armed conflict in the DRC. The first conflict minerals report required by the new rules is due by May 31, 2014 and annually thereafter. There will be costs associated with complying with these disclosure requirements, including costs to determine the origin of conflict minerals used in our products. In addition, the implementation of these rules could adversely affect the sourcing, supply and pricing of materials used in our products. Also, we may face disqualification as a supplier for customers and reputational challenges if the due diligence procedures we implement do not enable us to verify the origins for all conflict minerals or to determine that such minerals are DRC conflict-free.

Our business is affected by federal rules, regulations and orders applicable to government contractors.

A number of our products are manufactured and sold under U.S. government contracts or subcontracts. Consequently, we are directly and indirectly subject to various federal rules, regulations and orders applicable to government contractors. From time to time, we are also subject to government inquiries and investigations of our business practices due to our participation in government programs. These inquiries and investigations are costly and consuming of internal resources. Violations of applicable government rules and regulations could result in civil liability, in cancellation or suspension of existing contracts or in ineligibility for future contracts or subcontracts funded in whole or in part with federal funds, any of which could have a material adverse effect on our business.

We could be required to make additional contributions to our defined benefit pension plans as a result of adverse changes in interest rates and the capital markets.

Our estimates of liabilities and expenses for pension benefits incorporate significant assumptions, including the rate used to discount the future estimated liability, the long-term rate of return on plan assets and several assumptions relating to the employee workforce (salary increases, retirement age and mortality). We currently expect that we will be required to make future minimum contributions to our defined benefit pension plans. A decline in the value of plan investments in the future, an increase in costs or liabilities or unfavorable changes in laws or regulations that govern pension plan funding could materially change the timing and amount of required pension funding. A requirement to fund any deficit created in the future could have a material adverse effect on our operations and financial condition.

If we are unable to recruit, hire and retain skilled and experienced personnel, our ability to effectively manage and expand our business will be harmed.

Our success largely depends on the skills, experience and efforts of our officers and other key employees who may terminate their employment at any time. The loss of any of our senior management team could harm our business. The announcement of the loss of one of our key employees could negatively affect our stock price. Our ability to retain our skilled workforce and our success in attracting and hiring new skilled employees will be a critical factor in determining whether we will be successful in the future. We face challenges in hiring, training, managing and retaining employees in certain areas including metallurgical researchers, equipment technicians, and sales and marketing staff. If we are unable to recruit, hire and retain skilled employees, our new product and alloy development and commercialization could be delayed and our marketing and sales efforts could be hindered, which would adversely impact our competitiveness and financial results.

The risks inherent in our international operations may adversely impact our revenues, results of operations and financial condition.

We anticipate we will continue to derive a significant portion of our revenues from operations in international markets. As we continue to expand internationally, we will need to hire, train and retain qualified personnel for our direct sales efforts and retain distributors and train their personnel in countries where language, cultural or regulatory impediments may exist. Distributors, regulators or other government agencies may not continue to accept our products, services and business practices. In addition, we purchase raw materials on the international market. The sale and shipment of our products and services across international borders, as well as the purchase of raw materials from international sources, subject us to the trade regulations of various jurisdictions. Compliance with such regulations is costly. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments and restrictions on certain business activities. Failure to comply with applicable legal and regulatory obligations could result in the disruption of our shipping, sales and service activities. Our international sales operations expose us and our representatives, agents and distributors to risks inherent in operating in foreign jurisdictions any one or more of which may adversely affect our business and financial results, including:

Any material decrease in our international revenues or inability to expand our international operations as a result of these or other factors would adversely impact our revenues, results of operations and financial condition.

Although a collective bargaining agreement is in place for certain employees, union or labor disputes could still disrupt the manufacturing process.

Our operations rely heavily on our skilled employees. Any labor shortage, disruption or stoppage caused by any deterioration in employee relations or difficulties in the renegotiation of labor contracts could reduce our operating margins and income. Approximately 57% percent of our U.S. employees are affiliated with unions or covered by collective bargaining agreements. In fiscal 2013 the Company entered into new collective bargaining agreements with the United Steel Workers of America which covers eligible hourly employees at the Company's Arcadia, Louisiana, Kokomo, Indiana and Lebanon, Indiana facilities. Failure to negotiate new labor agreements when required could result in a work stoppage at one or more of our facilities. Although we believe that our labor relations have generally been satisfactory, it is possible that we could become subject to additional work rules imposed by agreements with labor unions, or that work stoppages or other labor disturbances could occur in the future, any of which could reduce our operating margins and income and place us at a disadvantage relative to non-union competitors.

Product liability and product warranty risks could adversely affect our operating results.

We produce many critical products for commercial and military aircraft and for land-based gas turbines. Failure of our products could give rise to substantial product liability and other damage claims. We maintain insurance addressing this risk, but there can be no assurance that the insurance coverage will be adequate or will continue to be available on terms acceptable to us.

Additionally, we manufacture our products to strict contractually-established specifications using complex manufacturing processes. If we fail to meet the contractual requirements for a part, we may be subject to warranty costs to repair or replace the product itself and additional costs related to the investigation and inspection of non-complying products. These costs are generally not insured.

Our business subjects us to risk of litigation claims, as a routine matter, and this risk increases the potential for a loss that might not be covered by insurance.

Litigation claims may relate to the conduct of our business, including claims pertaining to product liability, commercial disputes, employment actions, employee benefits, compliance with domestic and federal laws and personal injury. Due to the uncertainties of litigation, we might not prevail on claims made against us in the lawsuits that we currently face and additional claims may be made against us in the future. The outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to us. The resolution in any reporting period of one or more of these matters could have a material adverse effect on our financial condition, liquidity or results of operations for that period.

We depend on our Information Technology (IT) infrastructure to support the current and future information requirements of our operations.

Management relies on IT infrastructure, including hardware, network, software, people and process, to provide useful information to support assessments and conclusions about operating performance. We are in the process of implementing an IT system change. If we do not successfully or timely implement the new system or it does not operate as envisioned, our business could be harmed. Our inability to produce relevant or reliable measures of operating performance in an efficient, cost-effective and well-controlled fashion may have significant negative impacts on our future operations.

Any significant delay or problems in the expansion of our operations could materially adversely affect our business, financial condition and results of operations.

We are in the process of undertaking significant capital projects in order to enhance, expand and/or upgrade our facilities and operational capabilities. Our ability to achieve the anticipated increased revenues or otherwise realize acceptable returns on these investments or other strategic capital projects that we may undertake is subject to a number of risks, many of which are beyond our control, including the ability of management to ensure the necessary resources are in place to properly execute these projects on time and in accordance with planned costs, the ability of key suppliers to deliver the necessary equipment according to schedule and our ability to implement these project with minimal impacts to our existing operations. In addition, the cost to implement any given strategic capital project ultimately may prove to be greater than originally anticipated. If we are not able to achieve the anticipated results from the implementation of any of our strategic capital projects, or if we incur unanticipated implementation costs or delays, our results of operations and financial position may be materially adversely affected.

A global recession or disruption in global financial markets could adversely affect us.

A global recession or disruption in the global financial markets presents risks and uncertainties that we cannot predict. During the recent recession, we saw a decline in demand for our products due to global economic conditions. During recessionary economic conditions or financial market disruptions, we face risks that may include:

Our stock price is subject to fluctuations as a result of being traded on a public exchange which may not be related to our performance.

The stock market can be highly volatile. The market price of our common stock is likely to be similarly volatile, and investors in our common stock may experience a decrease in the value of their stock, including decreases unrelated to our operating performance or prospects. The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those listed elsewhere in this "Risk Factors" section and others such as:

Payment of dividends will depend on our future financial condition and performance.

Although our Board of Directors currently intends to continue the payment of regular quarterly cash dividends on shares of our common stock, the timing and amount of future dividends will depend on the Board's assessment of our operations, financial condition, projected liabilities, our compliance with contractual restrictions in our credit agreement, restrictions imposed by applicable law and other factors. We cannot guarantee that we will continue to declare dividends at the same or similar rates.

Provisions of our certificate of incorporation and by-laws could discourage potential acquisition proposals and could deter or prevent a change in control.

Some provisions in our certificate of incorporation and by-laws, as well as Delaware statutes, may have the effect of delaying, deterring or preventing a change in control. These provisions, including those regulating the nomination of directors, may make it more difficult for other persons, without the approval of our Board of Directors, to launch takeover attempts that a stockholder might consider to be in his or her best interest. These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock.

There are no unresolved comments by the staff of the U.S. Securities and Exchange Commission.

Manufacturing Facilities. The Company owns manufacturing facilities in the following locations:

The Kokomo plant, the Company's primary production facility, is located on approximately 180 acres of industrial property and includes over 1.0 million square feet of building space. There are three sites consisting of (1) a headquarters and research laboratory; (2) primary and secondary melting, annealing furnaces, forge press and several smaller hot mills; and (3) the Company's four-high Steckel rolling mill and sheet product cold working equipment, including two cold strip mills. All alloys and product forms other than tubular and wire goods are produced in Kokomo.

The Arcadia plant is located on approximately 42 acres of land, and includes 202,500 square feet of buildings on a single site. Arcadia uses feedstock produced in Kokomo to fabricate welded and seamless alloy pipe and tubing and purchases extruded tube hollows to produce seamless titanium tubing.

Manufacturing processes at Arcadia require cold pilger mills, weld mills, draw benches, annealing furnaces and pickling facilities.

The Mountain Home plant is located on approximately 29 acres of land, and includes approximately 100,000 square feet of building space. The Mountain Home facility is primarily used to manufacture finished high-performance alloy wire. Finished wire products are also warehoused at this facility.

The owned facilities located in the United States are subject to a mortgage which secures the Company's obligations under its U.S. revolving credit facility with a group of lenders led by Wells Fargo Capital Finance, LLC. For more information see Note 7 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Service and Sales Centers. The service and sales centers, which stock and sell all product forms, contain equipment capable of precision laser and water jet processing services to cut and shape products to customers' precise specifications. The Company owns service and sales centers in the following locations:

The Openshaw plant, located near Manchester, England, consists of approximately 7 acres of land and over 200,000 square feet of buildings on a single site.

In addition, the Company leases service and sales centers, which stock and sell all product forms, in the following locations:

Sales Centers. The Company leases sales centers, which sell all product forms, in the following locations:

All owned and leased service and sales centers not described in detail above are single site locations and are less than 100,000 square feet. The Company is modifying its facilities to meet its current and future business needs. The Company plans to spend approximately $24 million over the course of fiscal 2014 and 2015 to restructure, consolidate and enhance capabilities at its service center operations.

The Company is subject to extensive federal, state and local laws and regulations. Future developments and increasingly stringent regulations could require the Company to make additional unforeseen expenditures for these matters. The Company is regularly involved in litigation, both as a

plaintiff and as a defendant, relating to its business and operations. Such litigation includes federal and state EEOC administrative and judicial actions, litigation of commercial matters and litigation and administrative actions relating to environmental matters. For more information, see "Item 1. Business—Environmental Matters." Litigation and administrative actions may result in substantial costs and may divert management's attention and resources, and the level of future expenditures for legal matters cannot be determined with any degree of certainty. Nonetheless, based on the facts presently known, management does not expect expenditures for pending legal proceedings to have a material effect on the Company's financial position, results of operations or liquidity.

The Company is currently, and has in the past, been subject to claims involving personal injuries allegedly relating to its products. For example, the Company is presently involved in two actions involving welding rod-related injuries, which were filed in California state court against numerous manufacturers, including the Company, in May 2006 and February 2007, respectively, alleging that the welding-related products of the defendant manufacturers harmed the users of such products through the inhalation of welding fumes containing manganese. The Company believes that it has defenses to these allegations and that, if the Company were found liable, the cases would not have a material effect on its financial position, results of operations or liquidity.

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company's common stock is listed on the NASDAQ Global Market ("NASDAQ") and traded under the symbol "HAYN". The following table sets forth, for the periods indicated, the high and low closing prices for the Company's common stock as reported by NASDAQ.

Fiscal year ended September 30, 2013:	High		Low		Dividend

September 30, 2013	$	49.47	$	44.23	$	0.22
June 30, 2013	$	54.95	$	45.93	$	0.22
March 31, 2013	$	55.94	$	50.00	$	0.22
December 31, 2012	$	54.13	$	46.35	$	0.22
Fiscal year ended September 30, 2012:
September 30, 2012	$	57.50	$	45.77	$	0.22
June 30, 2012	$	64.61	$	46.00	$	0.22
March 31, 2012	$	65.47	$	56.16	$	0.22
December 31, 2011	$	63.67	$	39.90	$	0.22

The range of the Company's closing common stock price on NASDAQ from October 1, 2012 to September 30, 2013 was $44.23 to $55.94. The closing price of the common stock was $45.25 on September 30, 2013.

As of November 1, 2013, there were approximately 44 holders of record of the Company's common stock.

Payment of dividends is permitted under the Company's existing financing agreement, although the U.S. revolving credit facility requires (i) prior notice to the agent, (ii) a fixed charge coverage ratio average for the previous twelve months which must be not less than 1.0 to 1.0, (applicable only for dividends greater than $20.0 million in any fiscal year) and (iii) that the Company have at least $18.0 million in availability, after payment, on the date the dividend payment is made. While it is the Company's intention to continue to pay quarterly cash dividends for fiscal 2014 and beyond, any decision to pay future cash dividends will be made by the Company's Board of Directors and will depend upon our earnings, financial condition and other factors.

The following table provides information as of September 30, 2013 regarding shares of the Company's common stock issuable pursuant to its stock option and restricted stock plans:

The graph below compares the cumulative total stockholder return on the Company's common stock to the cumulative total return of the Russell 2000 Index, S&P MidCap 400 Index, and Peer Group for each of the last five fiscal years ended September 30. The cumulative total return assumes an investment of $100 on September 30, 2008 and the reinvestment of any dividends during the period. The Russell 2000 is a broad-based index that includes smaller market capitalization stocks. The S&P MidCap 400 Index is the most widely used index for mid-sized companies. Management believes that the S&P MidCap 400 is representative of companies with similar market and economic characteristics to Haynes. Furthermore, we also believe the Russell 2000 Index is representative of the Company's current market capitalization status and this index is also provided on a comparable basis. The companies included in the Peer Group Index are: Allegheny Technologies, Inc., RTI International Metals, Inc., Universal Stainless & Alloy Products, Inc., A. M. Castle & Co. and Carpenter Technology Corp. Management believes that the companies included in the Peer Group, taken as a whole, provide a meaningful comparison in terms of competition, product offerings and other relevant factors. The total stockholder return for the peer group is weighted according to the respective issuer's stock market capitalization at the beginning of each period.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Haynes, The Russell 2000 Index, The S&P MidCap 400
Index and our Peer Group

This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

Amounts below are in thousands, except backlog, which is in millions, share and per share information and average nickel price.

	Year Ended September 30,

	2009			2010			2011			2012			2013
Statement of Operations Data:
Net revenues	$	438,633		$	381,543		$	542,896		$	579,561		$	482,746
Cost of sales		416,150			327,712			449,116			458,721			409,120
Selling, general and administrative expense		36,207			35,470			41,215			40,661			38,165
Research and technical expense		3,120			2,828			3,259			3,285			3,505
Impairment of goodwill⁽¹⁾		43,737			—			—			—			—
Operating income (loss)		(60,581	)		15,533			49,306			76,894			31,956
Interest expense (income), net		509			(59	)		(92	)		(101	)		(42	)
Provision for (benefit from) income taxes		(8,768	)		6,717			18,270			26,813			10,421

Net income (loss)	$	(52,322	)	$	8,875		$	31,128		$	50,182		$	21,577
Net income (loss) per share:
Basic	$	(4.36	)	$	0.74		$	2.55		$	4.09		$	1.75
Diluted	$	(4.36	)	$	0.73		$	2.54		$	4.07		$	1.74
Dividends declared per common share	$	0.00		$	0.80		$	0.80		$	0.88		$	0.88
Weighted average shares outstanding:
Basic		12,004,498			12,049,779			12,067,555			12,147,179			12,223,838
Diluted		12,004,498			12,159,529			12,149,866			12,216,031			12,265,630

	September 30,

	2009		2010		2011		2012		2013
Balance Sheet Data:
Working capital	$	307,091	$	300,199	$	318,761	$	350,032	$	347,210
Property, plant and equipment, net		105,820		107,043		110,678		124,652		152,764
Total assets		544,150		551,543		596,569		626,926		597,582
Total debt		1,592		1,433		1,348		980		767
Long-term portion of debt		1,482		1,324		1,348		980		767
Accrued pension and postretirement benefits⁽²⁾		181,077		193,560		215,432		236,552		167,177
Stockholders' equity		278,799		265,849		272,853		301,098		355,803
Cash dividends paid		—		9,707		9,758		10,803		10,849

liability. On a prospective basis, if interest rates were to continue to rise, this would cause a decrease in the liability and accumulated other comprehensive loss. Prior to fiscal 2009, many actions were taken to reduce this liability such as: i) effective second quarter of fiscal 2007, capping the Company's contributions to the retiree health care costs at $5,000 annually (resulting in a $46,300 liability reduction), ii) effective first quarter of fiscal 2008, freezing the pension benefit accruals for all non-union employees in the U.S. (resulting in an $8,191 liability reduction), and iii) closing the pension plans to new entrants for both non-union employees (effective 12/31/2005) and union employees (effective 6/30/2007).

⁽³⁾: The Company defines backlog to include firm commitments from customers for delivery of product at established prices. Approximately 30% of the orders in the backlog at any given time include prices that are subject to adjustment based on changes in raw material costs. Historically, approximately 75% of the backlog orders have shipped within six months and approximately 90% have shipped within 12 months. The backlog figures do not typically reflect that portion of the business conducted at service and sales centers on a spot or "just-in-time" basis.
⁽⁴⁾: Represents the average price for a cash buyer as reported by the London Metals Exchange for the 30 days ending on the last day of the period presented.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Please refer to page 1 of this Annual Report on Form 10-K for a cautionary statement regarding forward-looking information.

The Company is one of the world's largest producers of high-performance nickel- and cobalt-based alloys in sheet, coil and plate forms. The Company is focused on developing, manufacturing, marketing and distributing technologically advanced, high-performance alloys, which are used primarily in the aerospace, chemical processing and land-based gas turbine industries. The global specialty alloy market consists of three primary sectors: stainless steel, general purpose nickel alloys and high-performance nickel- and cobalt-based alloys. The Company competes primarily in the high-performance nickel- and cobalt-based alloy sector, which includes high-temperature resistant alloys, or HTA products, and corrosion-resistant alloys, or CRA products. The Company believes it is one of the principal producers of high-performance alloy flat products in sheet, coil and plate forms. The Company also produces its products as seamless and welded tubulars and in bar, billet and wire forms.

The Company has manufacturing facilities in Kokomo, Indiana; Arcadia, Louisiana; and Mountain Home, North Carolina. The Kokomo facility specializes in flat products, the Arcadia facility specializes in tubular products and the Mountain Home facility specializes in high-performance wire products. The Company distributes its products primarily through its direct sales organization, which includes 13 service and/or sales centers in the United States, Europe and Asia. All of these centers are Company-operated.

The following table includes a breakdown of net revenues, shipments and average selling prices to the markets served by the Company for the periods shown.

	Year Ended September 30,

	2009					2010					2011					2012					2013
	Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total
Net Revenues (dollars in millions)
Aerospace	$	160.0		36.5	%	$	138.4		36.3	%	$	203.5		37.5	%	$	229.9		39.7	%	$	197.1		40.8	%
Chemical processing		109.7		25.0			87.7		23.0			150.0		27.6			134.6		23.2			124.1		25.7
Land-based gas turbines		97.7		22.3			74.2		19.4			98.2		18.1			119.2		20.5			102.0		21.2
Other markets		59.4		13.5			68.1		17.8			76.7		14.1			81.6		14.1			48.9		10.1

Total product		426.8		97.3			368.4		96.5			528.4		97.3			565.3		97.5			472.1		97.8
Other revenue⁽¹⁾		11.8		2.7			13.1		3.5			14.5		2.7			14.3		2.5			10.6		2.2

Net revenues	$	438.6		100.0	%	$	381.5		100.0	%	$	542.9		100.0	%	$	579.6		100.0	%	$	482.7		100.0	%

U.S.	$	258.9		59.0	%	$	231.6		60.7	%	$	344.9		63.5	%	$	346.7		59.8	%	$	268.0		55.5	%
Foreign	$	179.7		41.0	%	$	149.9		39.3	%	$	198.0		36.5	%	$	232.9		40.2	%	$	214.7		44.5	%
Shipments by Market (millions of pounds)
Aerospace		5.9		32.2	%		6.0		33.7	%		8.1		34.3	%		8.9		38.1	%		8.1		38.5	%
Chemical processing		4.5		24.5			4.2		23.6			7.0		29.7			5.3		22.6			5.2		24.8
Land-based gas turbines		5.5		29.6			4.6		25.8			5.5		23.3			6.5		27.8			6.1		29.1
Other markets		2.5		13.7			3.0		16.9			3.0		12.7			2.7		11.5			1.6		7.6

Total Shipments		18.5		100.0	%		17.8		100.0	%		23.6		100.0	%		23.4		100.0	%		21.0		100.0	%

Average Selling Price Per Pound
Aerospace	$	26.90				$	23.16				$	25.07				$	25.73				$	24.31
Chemical processing		24.20					20.84					21.53					25.49					23.79
Land-based gas turbines		17.88					16.15					17.71					18.28					16.66
Other markets		23.39					22.37					25.56					30.78					30.69
Total product⁽²⁾		23.09					20.67					22.36					24.17					22.44
Total average selling price		23.73					21.41					22.97					24.78					22.94

Aerospace sales for fiscal 2013 decreased from fiscal 2012, which was the Company's best year for aerospace sales volume. Throughout fiscal 2013, aerospace demand was negatively impacted by customer destocking within the supply-chain and by falling raw material market prices which caused customers to delay ordering. This period of low demand is considered temporary, but is expected to persist through the early portion of fiscal 2014. Demand for aerospace products is expected to begin to increase commensurate with the forecasted increase in commercial aircraft builds. Both Boeing and Airbus have reported sizeable backlog increases along with forecasted increases in production schedules and continued emphasis on accelerating production. Demand for more fuel-efficient engines with fewer emissions is driving new engine builds. Management also anticipates that the maintenance, repair and overhaul business will continue at a steady to increasing pace due to required maintenance schedules for the rising number of engines in use year-over-year.

Sales to the chemical processing industry decreased year-over-year. The project-oriented nature of this market can create inconsistent sales levels. Demand for large project based orders has been at relatively low levels during fiscal 2012 and 2013. The main driver of demand in this market is capital expenditure spending in the chemical processing sector driven by end user demand for housing, automotive and agricultural products. The chemical processing market is sensitive to fiscal policies as well as world economic conditions and GDP growth. Increased sales to the chemical processing industry in fiscal 2014 will be dependent on improvement in global spending in the chemical processing sector. An additional driver of demand in this market is the increase in North American production of natural gas liquids and the further downstream processing of those chemicals that may utilize equipment that requires high-performance alloys.

Sales to the land-based gas turbine market in fiscal 2013 decreased compared to fiscal 2012, which was the Company's best year for land-based gas turbine sales volume. Subject to global economic conditions, management believes that long-term demand in this market will improve due to higher activity in power generation, oil and gas production and alternative power systems. Land-based gas turbines are favored in electric generating facilities due to low capital cost at installation, fewer emissions than the traditional fossil fuel-fired facilities and favorable domestic natural gas prices provided by availability of unconventional (shale) gas supplies. As governmental policy shifts away from coal-fired facilities, demand for land-based gas turbines is expected to increase.

Sales into the other markets category decreased in fiscal 2013 compared to fiscal 2012 partly due to a shipment of an oil and gas project order in fiscal 2012 which did not repeat in fiscal 2013. The industries in this category focus on upgrading overall quality, improving product performance through increased efficiency, prolonging product life and lowering long-term costs. Companies in these industries are looking to achieve these goals through the use of "advanced materials" which supports the increased use of high-performance alloys in an expanding number of applications. In addition to supporting and expanding the traditional businesses of oil and gas, flue-gas desulphurization, automotive and heat treating, the Company expects increased levels of activity overall in non-traditional markets such as fuel cells and silicon feed-stock production applications.

In fiscal 2012, the Company began to increase the amount of capital spending from historical levels in order to increase capacity commensurate with the anticipated expansion of the markets the Company services over the intermediate and long-term and also to improve customer service in the form of accelerated delivery times and expanded value-added products and services. Even though the markets in which the Company participates are currently experiencing a period of lower demand, management continues to believe in the long-term growth potential of the aerospace, land-based gas turbine and chemical processing markets. Therefore, the Company is continuing to implement its strategy regarding the previously announced capital investment projects in line with plans to meet the expected long-term growth requirements of those target markets.

In fiscal 2012, the Company announced plans to invest approximately $61.0 million at two of its U.S. manufacturing facilities. This includes plans to invest approximately $37.0 million to expand by an estimated 60% the specialty titanium and high-performance nickel alloy tubular production capacity of its Arcadia, Louisiana facility. In addition, the Company plans to invest approximately $24.0 million to expand by an estimated 20% its capacity to produce specialty high-performance alloy flat products at the Company's Kokomo, Indiana facility. Both of these projects have commenced, and are expected to be completed by the end of fiscal 2014. These capital investments in Arcadia and Kokomo are expected to improve the Company's ability to service its customers' increasing demand for specialty products and also continue to improve product quality, improve operating efficiencies and enhance working capital management for all of the Company's products produced at these locations.

The Company also previously announced plans to upgrade the Company's information systems so that all the Company's locations will be on a global centralized information technology system. To date, the Company has spent $8.0 million and expects to spend approximately $3.0 million in fiscal 2014 for a total project spend of approximately $11.0 million. The system is currently in use at the European service centers while the Company expects the domestic services centers to be completed during the second quarter of fiscal 2014. The systems upgrade for the manufacturing operating system is expected to be completed during the third quarter of fiscal 2014. In addition to enhanced analysis capability, the Company expects this system to lead to improvements in capacity planning, cost analysis and reduction, inventory management and customer service.

The Company's evaluation of its global service center and distribution function continues. The evaluation has included an analysis of the equipment required, the number and geographic locations of these service centers, the services provided and the cost structure, with the objective of enhancing the distribution organization. The Company is pursuing the purchase of coil processing capability with stretch leveling and cut-to-length capability. The enhanced capabilities are expected to result in increased revenue, enhancement of working capital management and a reduced cost structure, which is expected to improve return on assets at the service centers. Spending on the service and distribution center projects is estimated at approximately $24.0 million throughout fiscal 2014 and 2015 and includes additional cutting equipment such as laser and water jet cutting equipment.

Capital spending in fiscal 2013 was $41.6 million. The forecast for capital spending in fiscal 2014 is approximately $57.0 million. The $57.0 million of planned capital spending includes $19.0 million for the tubular capacity expansion, $14.0 million for the processing and service center upgrades, $7.0 million for the Kokomo flat product project, $3.0 million for the information systems upgrade project and the remaining $14.0 million for additional enhancements and upgrades of the current facilities and equipment. The processing and service center project capital spend are expected to carry over into fiscal 2015 with approximately $10.0 million of spend in that year.

The actual and planned capital investments of approximately $124.0 million over the three year-period of fiscal 2012 through 2014 are expected to allow the Company to increase capacity, enhance product quality, reduce costs and improve working capital management. These significant investments are necessitated by expected intermediate and long-term increasing customer demand for volume and quality improvements.

On November 21, 2013, the Company announced that the Board of Directors declared a regular quarterly cash dividend of $0.22 per outstanding share of the Company's common stock. The dividend is payable December 16, 2013 to stockholders of record at the close of business on December 2, 2013. The aggregate cash payout based on current shares outstanding will be approximately $2.7 million, or approximately $10.8 million on an annualized basis.

The following tables show net revenue, gross profit margin and gross profit margin percentage for fiscal 2012 and fiscal 2013.

The gross profit margin percentage decreased during each quarter of fiscal 2013. The quarter-to-quarter compression is primarily due to lower average selling prices resulting from price competition in the marketplace and the impact of declining raw material prices on demand as well as higher-cost inventory charged to cost of goods sold. Gross profit margin and gross profit margin percentage for fiscal 2013 were also impacted by the effect of a fixed pricing agreement with the Company's nickel supplier pursuant to which the Company agreed to purchase a portion of its nickel supply at a fixed price that has been and may continue to be greater than the market price of nickel. The impact of the contract on the Company's gross profit margin percentage for the fiscal year was 0.4 percentage points. While not material to the fiscal year results, the contract had a greater impact as the market price of nickel continued to drop through the second half of fiscal 2013. In the fourth quarter, the Company entered into an amendment with the supplier that allowed the Company to purchase lower volumes of the higher-priced nickel but extended the duration of the purchase commitment through fiscal 2015 in order to minimize the near term impact and provide a longer period in which the market price of nickel could increase. If the market price of nickel remains low and sales volumes do not increase, the impact on the Company's gross profit margin percentage is expected to be unfavorable in future periods as a result of the fixed price contract, which impact is estimated at approximately 1.0 percentage point, or higher, if the market price of nickel declines further.

The Company continues to experience reduced demand, reduced selling price due to nickel market prices and increased price competition in the marketplace relative to fiscal 2012, particularly in commodity-type alloys in mill-direct project business. The intense competitive environment continues to require the Company to aggressively price orders across all markets, which has unfavorably impacted the Company's gross profit margin and net income. In addition, sales volumes below mill capacities in the industry have reduced mill-direct lead times for our products. The decline in mill-direct lead times has, in turn, resulted in downward pressure on prices for service center transactional business, which typically commands a higher price due to faster product availability.

In addition to the negative effects of price competition, volumes in fiscal 2013 are lower than those in fiscal 2012. Management believes the reduction in volume in the aerospace and land-based gas turbine markets is attributable to destocking in the supply chain as customers consume excess inventory. Volume reductions in the chemical processing market are primarily attributable to lower large project releases. The year-to-year reduction in volume in the "other" markets is due to a large tubular oil and gas project produced and shipped in fiscal 2012 that did not repeat in fiscal 2013. Management believes the decline in the price of nickel and customer uncertainty regarding the strength of the economy have also been contributors to the decline in overall volumes.

Declining nickel prices can cause customers to delay orders for the Company's products because the Company generally passes the cost of nickel on to customers in the price of its products. As nickel prices decline, customers may delay ordering in order to receive a lower price in the future. The reduced volumes processed through the mill have resulted in reduced absorption of fixed costs and additional margin compression. The Company has implemented cost reduction measures and continues to carefully review discretionary spending in order to mitigate the impact of these factors on gross margin.

The Company values inventory utilizing the first-in, first-out ("FIFO") inventory costing methodology. Under the FIFO inventory costing method, the cost of materials included in cost of sales may be different than the current market price at the time of sale of finished product due to the length of time from the acquisition of the raw material to the sale of the finished product. In a period of decreasing raw material costs, the FIFO inventory valuation normally results in higher costs of sales as compared to the last-in, first out method. Conversely, in a period of rising raw material costs, the FIFO inventory valuation normally results in lower costs of sales.

Controllable working capital, which includes accounts receivable, inventory, accounts payable and accrued expenses, was $273.4 million at September 30, 2013, a decrease of $37.8 million or 12.1% from $311.2 million at September 30, 2012. This decrease of $37.8 million includes a reduction of inventory of $31.1 million due to careful attention to reducing melting and production schedules to match customer demand.

First quarter results are typically impacted by lower production days due to holidays and planned maintenance outages. Planned outages related to the capital expansion projects in both Kokomo and Arcadia as well as other extended maintenance-related projects are expected to impact first quarter results. In addition, the Company has continued to see order entry, pricing and backlog decline with lower demand, which resulted in managing inventories down. The Company remains committed to preparing for the anticipated long-term growth opportunities in its core markets. However, in the short term, management expects revenue for the first quarter of fiscal 2014 to be lower than revenue for the fourth quarter of fiscal 2013 and, the Company expects to incur a net loss in the first quarter of fiscal 2014.

Set forth below is selected data relating to the Company's backlog, the 30-day average nickel price per pound as reported by the London Metals Exchange, as well as a breakdown of net revenues, shipments and average selling prices to the markets served by the Company for the periods shown. These data should be read in conjunction with the consolidated financial statements and related notes thereto and the remainder of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report on Form 10-K.

	Quarter Ended								Quarter Ended

	December 31, 2011		March 31, 2012		June 30, 2012		September 30, 2012		December 31, 2012		March 31, 2013		June 30, 2013		September 30, 2013
*Backlog*
Dollars (in thousands)	$	261,811	$	264,245	$	241,151	$	222,870	$	211,726	$	206,994	$	189,628	$	166,589
Pounds (in thousands)		8,547		8,853		7,951		6,866		6,905		7,362		6,185		5,371
Average selling price per pound	$	30.63	$	29.85	$	30.33	$	32.46	$	30.66	$	28.12	$	30.66	$	31.02
*Average nickel price per pound*
London Metals Exchange⁽¹⁾	$	8.23	$	8.49	$	7.50	$	7.81	$	7.90	$	7.59	$	6.47	$	6.25

Backlog was $166.6 million at September 30, 2013, a decrease of approximately $23.0 million, or 12.1%, from $189.6 million at June 30, 2013.

On a year-to-date basis, the backlog has declined by $56.3 million or 25.3% primarily due to a 1.5 million pound reduction in backlog pounds. The reduction in the backlog during the fiscal year resulted from reduced order entry activity, as compared to sales, in each quarter of fiscal 2013. Backlog for aerospace, land-based gas turbine and other markets declined in fiscal 2013. Backlog for the chemical processing market remained flat at a low level.

Management believes that destocking continues in the supply chain causing lower order entry volumes. Management also believes that customers continue to exercise caution in making purchases due to the decreasing cost of nickel. The effect of these factors was greater in the aerospace and land-based gas turbine markets than in its other markets in fiscal 2013. The Company's pounds shipped to the aerospace and land-based gas turbine markets in fiscal 2012 represented a record level of shipments.

	Quarter Ended								Quarter Ended

	December 31, 2011		March 31, 2012		June 30, 2012		September 30, 2012		December 31, 2012		March 31, 2013		June 30, 2013		September 30, 2013
*Net revenues* (in thousands)
Aerospace	$	52,726	$	61,901	$	55,908	$	59,378	$	52,272	$	49,319	$	51,015	$	44,498
Chemical processing		29,688		37,833		32,565		34,553		26,287		33,895		31,824		32,084
Land-based gas turbines		30,104		32,167		27,971		28,940		22,628		30,248		24,199		24,982
Other markets		12,721		23,082		21,280		24,477		10,618		12,034		14,677		11,591

Total product revenue		125,239		154,983		137,724		147,348		111,805		125,496		121,715		113,155
Other revenue		3,612		3,899		3,850		2,906		2,495		3,705		1,872		2,503

Net revenues	$	128,851	$	158,882	$	141,574	$	150,254	$	114,300	$	129,201	$	123,587	$	115,658

*Shipments by markets* (in thousands of pounds)
Aerospace		1,970		2,421		2,175		2,368		2,116		1,981		2,077		1,933
Chemical processing		1,121		1,500		1,304		1,358		986		1,429		1,386		1,414
Land-based gas turbines		1,585		1,771		1,559		1,605		1,261		1,809		1,599		1,458
Other markets		456		782		673		739		322		362		478		432

Total shipments		5,132		6,474		5,711		6,070		4,685		5,581		5,540		5,237

*Average selling price per pound*
Aerospace	$	26.76	$	25.57	$	25.70	$	25.08	$	24.70	$	24.90	$	24,56	$	23.02
Chemical processing		26.48		25.22		24.97		25.44		26.66		23.72		22.96		22.69
Land-based gas turbines		18.99		18.16		17.94		18.03		17.94		16.72		15.13		17.13
Other markets		27.90		29.52		31.62		33.12		32.98		33.24		30.71		26.83
Total average selling price (product only; excluding other revenue)		24.40		23.94		24.12		24.27		23.86		22.49		21.97		21.61
Total average selling price (including other revenue)		25.11		24.54		24.79		24.75		24.40		23.15		22.31		22.08

	Year Ended September 30,										Change

	2012					2013					Amount			%
Net revenues	$	579,561		100.0	%	$	482,746		100.0	%	$	(96,815	)		(16.7	)%
Cost of sales		458,721		79.1	%		409,120		84.7	%		(49,601	)		(10.8	)%

Gross profit		120,840		20.9	%		73,626		15.3	%		(47,214	)		(39.1	)%
Selling, general and administrative expense		40,661		7.0	%		38,165		7.9	%		(2,496	)		(6.1	)%
Research and technical expense		3,285		0.6	%		3,505		0.7	%		220			6.7	%

Operating income		76,894		13.3	%		31,956		6.7	%		(44,938	)		(58.4	)%
Interest income		(188	)	0.0	%		(114	)	0.0	%		74			(39.4	)%
Interest expense		87		0.0	%		72		0.0	%		(15	)		(17.2	)%

Income before income taxes		76,995		13.3	%		31,998		6.7	%		(44,997	)		(58.4	)%
Provision for income taxes		26,813		4.6	%		10,421		2.2	%		(16,392	)		(61.1	)%

Net income	$	50,182		8.7	%	$	21,577		4.5	%	$	(28,605	)		(57.0	)%

Net income per share:
Basic	$	4.09				$	1.75
Diluted	$	4.07				$	1.74
Weighted average shares outstanding:
Basic		12,147,179					12,223,838
Diluted		12,216,031					12,265,630

The following table includes a breakdown of net revenues, shipments and average selling prices to the markets served by the Company for the periods shown.

	Year Ended September 30,				Change

	2012		2013		Amount			%
*Net revenues* (dollars in thousands)
Aerospace	$	229,913	$	197,104	$	(32,809	)		(14.3	)%
Chemical processing		134,639		124,090		(10,549	)		(7.8	)%
Land-based gas turbines		119,182		102,057		(17,125	)		(14.4	)%
Other markets		81,560		48,920		(32,640	)		(40.0	)%

Total product revenue		565,294		472,171		(93,123	)		(16.5	)%
Other revenue		14,267		10,575		(3,692	)		(25.9	)%

Net revenues	$	579,561	$	482,746	$	(96,815	)		(16.7	)%

*Pounds by market* (in thousands)
Aerospace		8,934		8,107		(827	)		(9.3	)%
Chemical processing		5,283		5,215		(68	)		(1.3	)%
Land-based gas turbines		6,520		6,127		(393	)		(6.0	)%
Other markets		2,650		1,594		(1,056	)		(39.8	)%

Total shipments		23,387		21,043		(2,344	)		(10.0	)%

*Average selling price per pound*
Aerospace	$	25.73	$	24.31	$	(1.42	)		(5.5	)%
Chemical processing		25.49		23.79		(1.70	)		(6.7	)%
Land-based gas turbines		18.28		16.66		(1.62	)		(8.9	)%
Other markets		30.78		30.69		(0.09	)		(0.3	)%
Total product (excluding other revenue)		24.17		22.44		(1.73	)		(7.2	)%
Total average selling price (including other revenue)	$	24.78	$	22.94	$	(1.84	)		(7.4	)%

Net Revenues. Net revenues were $482.7 million in fiscal 2013, a decrease of 16.7% from $579.6 million in fiscal 2012, due to a decrease in average selling price per pound combined with lower volume. The total average selling price was $22.94 per pound in fiscal 2013, a decrease of 7.4%, or $1.84, from $24.78 per pound in fiscal 2012. Volume was 21.0 million pounds in fiscal 2013, a decrease of 10.0% from 23.4 million pounds in fiscal 2012. Volume declined primarily due to destocking in the aerospace and land-based gas turbine markets, a decline in activity in the project-oriented other markets, uncertain economic conditions and declining raw material prices causing customers to delay ordering. Average selling price decreased due to lower raw material market prices, which represented approximately $1.01 per pound of the decrease; lower volume of conversion sales, which represented approximately $0.12 per pound of the decrease; a higher level of price competition and reduced customer demand due to supply chain destocking, declining nickel prices and uncertain economic conditions, which forced us to reduce prices in order to be competitive, representing approximately $0.71 per pound of the decrease.

Sales to the aerospace market were $197.1 million in fiscal 2013, a decrease of 14.3% from $229.9 million in fiscal 2012, due to a 9.3% decrease in volume combined with a 5.5%, or $1.42, decrease in the average selling price per pound. The decrease in volume is due to destocking of inventory within the supply chain and customers delaying orders as the price of nickel declined and economic conditions remained uncertain. The average selling price per pound decline primarily reflects the decline in raw material market prices, which represented approximately $0.99 per pound of the decrease and continued price competition, which represented approximately $0.26 of the decrease.

Sales to the chemical processing market were $124.1 million in fiscal 2013, a decrease of 7.8% from $134.6 million in fiscal 2012, due to a 1.3% decrease in volume combined with a 6.7%, or $1.70, decrease in the average selling price per pound. The decrease in the average selling price reflects continued price

competition, which represented approximately $2.05 per pound of the decrease; lower raw material market prices, which represented approximately $1.09 of the decrease; partially offset by a higher value product mix resulting from shipping a higher percentage of sheet and plate products, which increased average selling price by approximately $1.44 per pound.

Sales to the land-based gas turbine market were $102.1 million in fiscal 2013, a decrease of 14.4% from $119.2 million in fiscal 2012, due to a 6.0% decrease in volume combined with a decrease of 8.9%, or $1.62, in the average selling price per pound. The decrease in volume is due primarily to lower activity of new builds by original equipment manufacturers. The decrease in average selling price per pound reflected lower raw material market prices, which represented approximately $0.96 per pound of the decrease. The change in average selling price due to a change in product mix, which represented approximately $0.53 per pound of the decrease, resulted from the increase of sales of lower-value alloys and forms, predominately slab, as a percentage of pounds sold in this market.

Sales to other markets were $48.9 million in fiscal 2013, a decrease of 40.0% from $81.6 million in fiscal 2012, due to a 0.3%, or $0.09, decrease in average selling price per pound combined with a 39.8% decrease in volume. The decrease in volume and average selling price is primarily attributable to one particular tubular oil & gas project from fiscal 2012, representing approximately 0.5 million pounds and $18.5 million of net revenues, which was not repeated in fiscal 2013. The other markets are project-oriented in general, and it is uncertain whether a similar project will repeat itself in the future.

Other Revenue. Other revenue was $10.6 million in fiscal 2013, a decrease of 25.9% from $14.3 million in fiscal 2012. The decrease in other revenue is primarily attributable to approximately $2.6 million of reduced conversion sales.

Cost of Sales. Cost of sales was $409.1 million, or 84.7% of net revenues, in fiscal 2013 compared to $458.7 million, or 79.1% of net revenues, in fiscal 2012. Cost of sales in fiscal 2013 decreased by $49.6 million as compared to fiscal 2012 primarily due to lower volume. When volume decreases, the cost of sales as percentage of net revenues increases due to reduced absorption of manufacturing costs.

Gross Profit. As a result of the above factors, gross margin was $73.6 million for fiscal 2013, a decrease of $47.2 million from $120.8 million in fiscal 2012. Gross margin as a percentage of net revenue decreased to 15.3% in fiscal 2013 as compared to 20.9% in fiscal 2012. Items impacting the gross margin percentage compression include pricing competition, which we estimate impacted gross profit margin percentage by 3.1 points. The remaining 2.5 percentage point compression is the result of other factors, including higher-cost inventory in cost of sales relative to lower raw material market prices that drive the sales price and unfavorable absorption of fixed costs.

Selling, General and Administrative Expense. Selling, general and administrative expense was $38.2 million for fiscal 2013, a decrease of $2.5 million, or 6.1%, from $40.7 million in fiscal 2012. Selling, general and administrative expense reductions were primarily due to reduced costs for incentive compensation programs. Selling, general and administrative expenses as a percentage of net revenues increased to 7.9% for fiscal 2013, compared to 7.0% for fiscal 2012 due to decreased revenues.

Research and Technical Expense. Research and technical expense was $3.5 million, or 0.7% of revenue, for fiscal 2013, an increase of $0.2 million, or 6.7%, from $3.3 million, or 0.6% of net revenues, in fiscal 2012.

Operating Income. As a result of the above factors, operating income in fiscal 2013 was $32.0 million, compared to operating income of $77.0 million in fiscal 2012.

Income Taxes. Income tax expense was $10.4 million in fiscal 2013, a decrease of $16.4 million from an expense of $26.8 million in fiscal 2012, due primarily to lower pretax income generated in fiscal 2013. The effective tax rate for fiscal 2013 was 32.6%, compared to 34.8% in fiscal 2012. During fiscal 2013, the Company's effective tax rate was lower, primarily due to increased proportion of taxable earnings in foreign jurisdictions with a lower tax rate and the reversal of certain tax reserves no longer required.

Net Income. As a result of the above factors, net income in fiscal 2013, was $21.6 million, a decrease of $28.6 million from net income of $50.2 million in fiscal 2012.

	Year Ended September 30,										Change

	2011					2012					Amount			%
Net revenues	$	542,896		100.0	%	$	579,561		100.0	%	$	36,665			6.8	%
Cost of sales		449,116		82.7	%		458,721		79.1	%		9,605			2.1	%

Gross profit		93,780		17.3	%		120,840		20.9	%		27,060			28.9	%
Selling, general and administrative expense		41,215		7.6	%		40,661		7.0	%		(554	)		(1.3	)%
Research and technical expense		3,259		0.6	%		3,285		0.6	%		26			0.8	%

Operating income		49,306		9.1	%		76,894		13.3	%		27,588			56.0	%
Interest income		(248	)	0.0	%		(188	)	0.0	%		60			(24.2	)%
Interest expense		156		0.0	%		87		0.0	%		(69	)		(44.2	)%

Income before income taxes		49,398		9.1	%		76,995		13.3	%		27,597			55.9	%
Provision for income taxes		18,270		3.4	%		26,813		4.6	%		8,543			46.8	%

Net income	$	31,128		5.7	%	$	50,182		8.7	%	$	19,054			61.2	%

Net income per share:
Basic	$	2.55				$	4.09
Diluted	$	2.54				$	4.07
Weighted average shares outstanding:
Basic		12,067,555					12,147,179
Diluted		12,149,866					12,216,031

The following table includes a breakdown of net revenues, shipments and average selling prices to the markets served by Haynes for the periods shown.

	Year Ended September 30,				Change

	2011		2012		Amount			%
*Net revenues* (dollars in thousands)
Aerospace	$	203,561	$	229,913	$	26,352			12.9	%
Chemical processing		149,973		134,639		(15,334	)		(10.2	)%
Land-based gas turbines		98,224		119,182		20,958			21.3	%
Other markets		76,667		81,560		4,893			6.4	%

Total product revenue		528,425		565,294		36,869			7.0	%
Other revenue		14,471		14,267		(204	)		(1.4	)%

Net revenues	$	542,896	$	579,561	$	36,665			6.8	%

*Pounds by market* (in thousands)
Aerospace		8,120		8,934		814			10.0	%
Chemical processing		6,965		5,283		(1,682	)		(24.1	)%
Land-based gas turbines		5,546		6,520		974			17.6	%
Other markets		2,999		2,650		(349	)		(11.6	)%

Total shipments		23,630		23,387		(243	)		(1.0	)%

*Average selling price per pound*
Aerospace	$	25.07	$	25.73	$	0.66			2.6	%
Chemical processing		21.53		25.49		3.96			18.4	%
Land-based gas turbines		17.71		18.28		0.57			3.2	%
Other markets		25.56		30.78		5.22			20.4	%
Total product (excluding other revenue)		22.36		24.17		1.81			8.1	%
Total average selling price (including other revenue)	$	22.97	$	24.78		1.81			7.9	%

Net Revenues. Net revenues were $579.6 million in fiscal 2012, an increase of 6.8% from $542.9 million in fiscal 2011, due to increase in average selling price per pound partially offset by lower volume. The total average selling price was $24.78 per pound in fiscal 2012, an increase of 7.9% from $22.97 per pound in fiscal 2011. Volume was 23.4 million pounds in fiscal 2012, a decrease of 1.0% from 23.6 million pounds in fiscal 2011. Average selling price increased due to improved product mix supported by continued customer demand, while volume remained essentially unchanged year over year. The Company's consolidated backlog was $222.9 million at September 30, 2012, a decrease of 18.5% from $273.4 million at September 30, 2011. This decrease reflects a 24.0% decrease in backlog pounds partially offset by a 7.3% increase in backlog average selling price.

Sales to the aerospace market were $229.9 million in fiscal 2012, an increase of 12.9% from $203.6 million in fiscal 2011, due to a 10.0% increase in volume combined with a 2.6% increase in the average selling price per pound. The increase in volume and average selling price per pound is due to increased customer demand in the aerospace market as evidenced by the production schedules for new commercial aircraft production. The requirement for more fuel-efficient engines in the commercial airline industry continues to drive demand in this market.

Sales to the chemical processing market were $134.6 million in fiscal 2012, a decrease of 10.2% from $150.0 million in fiscal 2011, due to a 24.1% decrease in volume partially offset by an 18.4% increase in the average selling price per pound. The decrease in volume relates to a large project that shipped in fiscal 2011 that was not repeated in fiscal 2012, which represented approximately 1.9 million pounds and $29.4 million. The increase in the average selling price is attributable to a higher value product mix shipped into the chemical processing market, which represented approximately $3.13 of the increase.

Sales to the land-based gas turbine market were $119.2 million in fiscal 2012, an increase of 21.3% from $98.2 million in fiscal 2011, due to a 17.6% increase in volume combined with an increase of 3.2% in the average selling price per pound. The increases in both volume and average selling price are due to increased customer demand in the land-based gas turbine market, especially from the original equipment manufacturers.

Sales to other markets were $81.6 million in fiscal 2012, an increase of 6.4% from $76.7 million in fiscal 2011, due to a 20.4% increase in average selling price per pound partially offset by an 11.6% decrease in volume. The decrease in volume is due to the project-oriented nature of these markets. The increase in average selling price reflects a change to a mix of higher value alloy and forms sold into the other market category, primarily from increased sales of tubular products.

Other Revenue. Other revenue was $14.3 million in fiscal 2012, a decrease of 1.4% from $14.5 million in fiscal 2011.

Cost of Sales. Cost of sales was $458.7 million, or 79.1% of net revenues, in fiscal 2012 compared to $449.1 million, or 82.7% of net revenues, in fiscal 2011. Cost of sales in fiscal 2012 increased by $9.6 million as compared to fiscal 2011 primarily due to a higher cost product mix.

Gross Profit. As a result of the above factors, gross margin was $120.8 million for fiscal 2012, an increase of $27.1 million from $93.8 in fiscal 2011. Gross margin as a percentage of net revenue increased to 20.9% in fiscal 2012 as compared to 17.3% in fiscal 2011. The improvement in gross margin percentage is due to a higher value product mix resulting in increased average selling prices, cost reduction projects and the benefits gained from completed capital expenditure projects.

Selling, General and Administrative Expense. Selling, general and administrative expense was $40.7 million for fiscal 2012, a decrease of $0.6 million, or 1.3%, from $41.2 million in fiscal 2011 due to reduced international sales expenses, primarily from transition of the French service center into a sales office. Selling, general and administrative expenses as a percentage of net revenues decreased to 7.0% for fiscal 2012, compared to 7.6% for fiscal 2011, due to increased revenues and decreased expenses.

Research and Technical Expense. Research and technical expense was $3.3 million, or 0.6% of revenue, for fiscal 2012, flat from the $3.3 million, or 0.6% of net revenues, in fiscal 2011.

Operating Income. As a result of the above factors, operating income in fiscal 2012 was $77.0 million compared to operating income of $49.3 million in fiscal 2011.

Income Taxes. Income tax expense was $26.8 million in fiscal 2012, an increase of $8.5 million from an expense of $18.3 million in fiscal 2011, due primarily to higher pretax income generated in fiscal 2012. The effective tax rate for fiscal 2012 was 34.8%, compared to 37.0% in fiscal 2011. The prior year effective tax rate was higher due to Indiana enacting a corporate income tax rate decrease from 8.5% to 6.5%, causing additional income tax expense of $0.7 million reflecting our estimate of the decrease in the deferred tax asset due to the lower tax rate.

Net Income. As a result of the above factors, net income in fiscal 2012, was $50.2 million, an increase of $19.1 million from net income of $31.1 million in fiscal 2011.

During fiscal 2013, the Company's primary sources of cash were cash on-hand and cash from operations, as detailed below. At September 30, 2013, the Company had cash and cash equivalents of $68.3 million compared to cash and cash equivalents of $46.7 million at September 30, 2012.

As of September 30, 2013 the Company had cash and cash equivalents of $9.0 million that was held by foreign subsidiaries in various currencies. All of this amount is readily convertible to U.S. dollars and can be repatriated to the corporate parent as payment owed for product and/or services. The Company would not need to accrue or pay taxes if repatriated.

Net cash provided by operating activities was $73.4 million in fiscal 2013 compared to $20.8 million in fiscal 2012. Net income of $21.6 million in fiscal 2013 was $28.6 million lower than the $50.2 million reported in fiscal 2012. Cash generated from lower inventories was $31.5 million as compared to fiscal 2012 cash used of $12.3 million, a change of $43.8 million. Additionally, cash generated from lower accounts receivable was $18.6 million compared to cash used by accounts receivable of $12.7 million in fiscal 2012, a change of $31.3 million. Cash used in accounts payable and accrued expenses of $12.2 million was $5.1 million lower than cash used in accounts payable and accrued expenses in fiscal 2012. Net cash used in investing activities was $41.6 million in fiscal 2013 compared to $25.9 million in fiscal 2012 as a result of higher capital expenditures. Net cash used in financing activities in fiscal 2013 of $10.4 million included $10.8 million of dividend payments partially offset by proceeds and excess tax deductions from exercises of stock options.

The Company's sources of liquidity for fiscal 2014 are expected to consist primarily of cash generated from operations, cash on-hand and, if needed, borrowings under the U.S. revolving credit facility. The U.S. revolving credit facility provides for borrowings in a maximum amount of $120.0 million, subject to a borrowing base formula and certain reserves. At September 30, 2013, the Company had cash of $68.3 million, an outstanding balance of zero on the U.S. revolving credit facility and access to a total of approximately $120.0 million under the U.S. revolving credit facility, subject to a borrowing base formula and certain reserves. Management believes that the resources described above will be sufficient to fund planned capital expenditures and working capital requirements over the next twelve months.

The Company and Wells Fargo Capital Finance, LLC ("Wells Fargo"), successor by merger to Wachovia Capital Finance Corporation (Central) ("Wachovia"), entered into a Third Amended and Restated Loan and Security Agreement (the "Amended Agreement") with certain other lenders with an effective date of July 14, 2011. The maximum revolving loan amount under the Amended Agreement is $120.0 million, subject to a borrowing base formula and certain reserves. The Amended Agreement permits an increase in the maximum revolving loan amount from $120.0 million up to an aggregate amount of $170.0 million at the request of the borrowers. Borrowings under the U.S. revolving credit facility bear interest at the Company's option at either Wells Fargo's "prime rate", plus up to 0.75% per annum, or the adjusted Eurodollar rate used by the lender, plus up to 2.0% per annum. As of September 30, 2013, the U.S. revolving credit facility had an outstanding balance of zero. In addition, the Company must pay monthly in arrears a commitment fee of 0.25% per annum on the unused amount of the U.S. revolving credit facility total commitment. For letters of credit, the Company must pay 1.5% per annum on the daily outstanding balance of all issued letters of credit, plus customary fees for issuance, amendments and processing. The Company is subject to certain covenants as to fixed charge coverage ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens and the sale of assets. The Company is permitted to pay dividends and repurchase common stock if certain financial metrics are met (which do not apply in the case of dividends less than $20.0 million in the aggregate in a year and repurchases in connection with the vesting of shares of restricted stock). As of September 30, 2013, the most recent required measurement date under the Amended Agreement, the Company was in compliance with those covenants. The U.S. revolving credit facility matures on July 14, 2016. Borrowings under the U.S. revolving credit facility are collateralized by a pledge of substantially all of the U.S. assets of the Company, including the equity interests in its U.S. subsidiaries, but excluding the

four-high Steckel rolling mill and related assets, which are pledged to Titanium Metals Corporation to secure the performance of the Company's obligations under a Conversion Services Agreement with TIMET (see discussion of TIMET at Note 15 in the Company's to Consolidated Financial Statements in this Annual Report on Form 10-K). The U.S. revolving credit facility is also secured by a pledge of a 65% equity interest in each of the Company's direct foreign subsidiaries.

The Company's primary uses of cash over the next twelve months are expected to consist of expenditures related to:

Capital investment in fiscal 2013 was $41.6 million and the plan for capital spending in fiscal 2014 is $57.0 million. See "Summary of Capital Spending" in this Annual Report on Form 10-K for additional discussion of actual and planned capital spending.

The following table sets forth the Company's contractual obligations for the periods indicated, as of September 30, 2013:

	Payments Due by Period

Contractual Obligations	Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 years
	(in thousands)
Credit facility fees⁽¹⁾	$	947	$	340	$	607	$	—	$	—
Operating lease obligations		9,092		3,119		3,284		2,136		553
Capital lease obligations		192		33		66		66		27
Raw material contracts (primarily nickel)		50,566		31,031		19,535		—		—
Mill supplies contracts		717		717		—		—		—
Capital projects		36,713		36,713		—		—		—
External product conversion source		2,900		600		1,200		1,100		—
Pension plan⁽²⁾		64,214		—		16,340		16,208		31,666
Non-qualified pension plans		825		95		190		190		350
Other postretirement benefits⁽³⁾		49,823		4,823		10,000		10,000		25,000
Environmental post-closure monitoring		1,077		79		169		163		666

Total	$	217,066	$	77,550	$	51,391	$	29,863	$	58,262

While neither inflation nor deflation has had, nor does the Company expect them to have, a material impact on operating results, there can be no assurance that the Company's business will not be affected by inflation or deflation in the future. Historically, the Company has had the ability to pass on to customers both increases in consumable costs and material costs because of the value-added contribution the material makes to the final product. Raw material comprises the most significant portion of the product costs. Nickel, cobalt and molybdenum, the primary raw materials used to manufacture the Company's products, all have experienced significant fluctuations in price. In the future, the Company may not be able to successfully offset rapid increases in the price of nickel or other raw materials. In the event of raw material price declines the Company's customers may delay order patterns resulting in lower volumes. In the event that raw material price increases occur that the Company is unable to pass on to its customers, its cash flows or results of operations could be materially adversely affected.

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to bad debts, inventories, income taxes, asset impairments, retirement benefits, matters related to product liability lawsuits and environmental matters. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, pension asset mix and, in some cases, actuarial techniques, and various other factors that are believed to be reasonable under the circumstances. The results of this process form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company routinely reevaluates these significant factors and makes adjustments where facts and circumstances dictate. Actual results may differ from these estimates under different assumptions or conditions.

The Company's accounting policies are more fully described in Note 2 in the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. The Company has identified certain critical accounting policies, which are described below. The following listing of policies is not intended to be a comprehensive list of all of the Company's accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result.

Revenue is recognized when collectability is reasonably assured and when title passes to the customer which is generally at the time of shipment (F.O.B. shipping point or at a foreign port for certain export customers). Allowances for sales returns are recorded as a component of net revenues in the periods in which the related sales are recognized. Management determines this allowance based on historical experience. Should returns increase above historical experience, additional allowances may be required. Additionally, the Company recognizes revenue attributable to an up-front fee received from Titanium Metals Corporation ("TIMET") as a result of a twenty-year agreement, entered into on November, 17,

2006 to provide conversion services to TIMET. See Note 15 Deferred Revenue for a description of accounting treatment relating to this up-front fee.

The selection of the Plan's assumption for the expected long-term rate of return on plan assets is based upon the Plan's target allocation of 60% equities and 40% bonds, and the expected rate of return for each equity/bond asset class. Based upon the target allocation and each asset class's expected return, the Plan's return on assets assumption of 7.50% is reasonable, and is unchanged from last year's assumption. The Company also realizes that historical performance is no guarantee of future performance.

In the short term, substantial decreases in plan assets will result in higher plan funding contribution levels and higher pension expenses. A decrease of 25 basis points in the expected long-term rate of return on plan assets would result in an increase in annual pension expense of about $473,000. To the extent that the actual return on plan assets during the year exceeds or falls short of the assumed long-term rate of return, an asset gain or loss is created. Gains and losses are generally amortized over a 7-year period. As an example, each $1.0 million in asset loss created by unfavorable investment performance results in seven annual payments (contributions) of approximately $170,000 depending upon the precise effective interest rate in the valuation and the timing of the contribution.

Decreases in discount rates used to value future payment streams will result in higher liabilities for pension and postretirement plans. A decrease of 25 basis points would result in $8.3 million higher liability for the U.S. pension plan and $3.8 million higher liability for the postretirement plan. This increase in liability would also increase the accumulated other comprehensive loss that would be amortized as higher pension and postretirement expense over an amortization period of approximately 8.5 and 10.5 years, respectively.

Salaried employees hired after December 31, 2005 and hourly employees hired after June 30, 2007 are not covered by the pension plan; however, they are eligible for an enhanced matching program of the defined contribution plan (401(k)). Effective December 31, 2007, the U.S. pension plan was amended to freeze benefits for all non-union employees in the U.S. Effective September 30, 2009, the U.K. pension plan was amended to freeze benefits for employees in the plan.

The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. The Company reviews for impairment annually or more frequently if events or circumstances indicated that the carrying amount may be impaired.

On February 23, 2009, the Company adopted a restricted stock plan that reserved 400,000 shares of common stock for issuance. Grants of restricted stock are grants of shares of the Company's common stock subject to transfer restrictions, which vest in accordance with the terms and conditions established by the Compensation Committee. The Compensation Committee may set vesting requirements based on the achievement of specific performance goals or the passage of time.

Restricted shares are subject to forfeiture if employment or service terminates prior to the vesting period or if the performance goal is not met. The Company will assess, on an ongoing basis, the probability of whether the performance criteria will be achieved. The Company will recognize compensation expense over the performance period if it is deemed probable that the goal will be achieved. The fair value of the Company's restricted stock is determined based upon the closing price of the Company's common stock on the grant date. The plan provides for the adjustment of the number of shares covered by an outstanding grant and the maximum number of shares for which restricted stock may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event.

The Company has two stock option plans that authorize the granting of non-qualified stock options to certain key employees and non-employee directors for the purchase of a maximum of 1,500,000 shares of the Company's common stock. The original option plan was adopted in August 2004 pursuant to the plan of reorganization and provides for the grant of options to purchase up to 1,000,000 shares of the Company's common stock. In January 2007, the Company's Board of Directors adopted a second option plan that provides for options to purchase up to 500,000 shares of the Company's common stock. Each plan provides for the adjustment of the maximum number of shares for which options may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Unless the Compensation Committee determines otherwise, options granted under the option plans are exercisable for a period of ten years from the date of grant and vest 33¹/3% per year over three years from the grant date. The amount of compensation cost recognized in the financial statements is measured based upon the grant date fair value. The fair value of the option grants is estimated on the date of grant using the Black-Scholes option pricing model with assumptions on dividend yield, risk-free interest rate, expected volatilities, expected forfeiture rate and expected lives of the options.

On October 1, 2007, the Company adopted guidance prescribing a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in an income tax return. It also provides guidance related to reversal of tax positions, balance sheet classification, interest and penalties, interim period accounting, disclosure and transition.

See Note 2.—Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for information regarding New Accounting Standards.

Market risk is the potential loss arising from adverse changes in market rates and prices. The Company is exposed to various market risks, including changes in interest rates, foreign currency exchange rates and the price of raw material particularly nickel.

Changes in interest rates affect the Company's interest expense on variable rate debt. All of the Company's revolver availability is at a variable rate at September 30, 2012 and 2013. The Company's outstanding variable rate debt was zero at September 30, 2012 and 2013. The Company has not entered into any derivative instruments to hedge the effects of changes in interest rates.

The foreign currency exchange risk exists primarily because the foreign subsidiaries maintain receivables and payables denominated in currencies other than their functional currency. The foreign subsidiaries manage their own foreign currency exchange risk. The U.S. operations transact their foreign sales in U.S. dollars, thereby avoiding fluctuations in foreign exchange rates. Any exposure aggregating more than $500,000 requires approval from the Company's Vice President of Finance. The Company is not currently party to any currency contracts.

Fluctuations in the price of nickel, the Company's most significant raw material, subject the Company to commodity price risk. The Company manages its exposure to this market risk through internally established policies and procedures, including negotiating raw material escalators within product sales agreements and continually monitoring and revising customer quote amounts to reflect the fluctuations in market prices for nickel. The Company does not presently use derivative instruments to manage this market risk but may in the future. The Company monitors its underlying market risk exposure from a rapid change in nickel prices on an ongoing basis and believes that it can modify or adapt its strategies as necessary. The Company periodically purchases raw material forward with certain suppliers. However, there is a risk that the Company may not be able to successfully offset a rapid increase or decrease in the cost of raw material in the future.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Consolidated Financial Statements of Haynes International, Inc. and Subsidiaries as of September 30, 2013 and 2012 and for the years ended September 30, 2013, September 30, 2012 and September 30, 2011

To the Board of Directors and Stockholders of
Haynes International, Inc.
Kokomo, IN

We have audited the accompanying consolidated balance sheets of Haynes International, Inc. and subsidiaries (the "Company") as of September 30, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended September 30, 2013. We also have audited the Company's internal control over financial reporting as of September 30, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting 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 and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Haynes International, Inc. and subsidiaries as of September 30, 2013

and 2012, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2013, based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30, 2012			September 30, 2013

ASSETS
Current assets:
Cash and cash equivalents	$	46,740		$	68,326
Accounts receivable, less allowance for doubtful accounts of $1,249 and $1,199 respectively		100,631			82,562
Inventories		263,236			232,157
Income taxes receivable		4,153			4,433
Deferred income taxes		9,933			6,018
Other current assets		1,532			2,408

Total current assets		426,225			395,904
Property, plant and equipment, net		124,652			152,764
Deferred income taxes—long term portion		68,255			41,301
Prepayments and deferred charges		1,777			2,282
Other intangible assets, net		6,017			5,601

Total assets	$	626,926		$	597,852

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	37,471		$	27,600
Accrued expenses		15,157			13,676
Revolving credit facility		—			—
Accrued pension and postretirement benefits		21,065			4,918
Deferred revenue—current portion		2,500			2,500

Total current liabilities		76,193			48,694
Long-term obligations (less current portion)		980			767
Deferred revenue (less current portion)		32,829			30,329
Non-current income taxes payable		339			—
Accrued pension and postretirement benefits		215,487			162,259

Total liabilities		325,828			242,049
Commitments and contingencies (Notes 9 and 10)		—			—
Stockholders' equity:
Common stock, $0.001 par value (40,000,000 shares authorized, 12,287,790 and 12,342,585 shares issued and 12,287,790 and 12,332,592 outstanding at September 30, 2012 and September 30, 2013, respectively)		12			12
Preferred stock, $0.001 par value (20,000,000 shares authorized, 0 shares issued and outstanding)		—			—
Additional paid-in capital		236,751			238,941
Accumulated earnings		163,426			174,154
Treasury stock, 0 shares at September 30, 2012 and 9,993 shares at September 30, 2013		—			(505	)
Accumulated other comprehensive loss		(99,091	)		(56,799	)

Total stockholders' equity		301,098			355,803

Total liabilities and stockholders' equity	$	626,926		$	597,852

The accompanying notes are an integral part of these consolidated financial statements.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	Year Ended September 30, 2011			Year Ended September 30, 2012			Year Ended September 30, 2013

Net revenues	$	542,896		$	579,561		$	482,746
Cost of sales		449,116			458,721			409,120

Gross profit		93,780			120,840			73,626
Selling, general and administrative expense		41,215			40,661			38,165
Research and technical expense		3,259			3,285			3,505

Operating income		49,306			76,894			31,956
Interest income		(248	)		(188	)		(114	)
Interest expense		156			87			72

Income before income taxes		49,398			76,995			31,998
Provision for income taxes		18,270			26,813			10,421

Net income	$	31,128		$	50,182		$	21,577

Net income per share:
Basic	$	2.55		$	4.09		$	1.75
Diluted	$	2.54		$	4.07		$	1.74
Dividends declared per common share	$	0.80		$	0.88		$	0.88

The accompanying notes are an integral part of these consolidated financial statements.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)

	Common Stock														Accumulated Other Comprehensive Income (Loss)

	Common Stock					Additional Paid-in Capital			Accumulated Earnings			Treasury Stock						Total Stockholders' Equity
	Shares			Par		Additional Paid-in Capital			Accumulated Earnings			Treasury Stock						Total Stockholders' Equity
Balance September 30, 2010		12,144,079		$	12	$	229,197		$	102,677		$	—		$	(66,037	)	$	265,849

Net income										31,128									31,128
Dividends paid ($0.80 per share)										(9,758	)								(9,758	)
Other comprehensive loss																(17,011	)		(17,011	)
Exercise of stock options		28,400					872												872
Tax impact of forfeited vested options							(10	)											(10	)
Tax impact of dividends on restricted stock							31												31
Issue restricted stock (less forfeitures)		31,700
Stock compensation							1,752												1,752

Balance September 30, 2011		12,204,179		$	12	$	231,842		$	124,047		$	—		$	(83,048	)	$	272,853

Net income										50,182									50,182
Dividends paid ($0.88 per share)										(10,803	)								(10,803	)
Other comprehensive loss																(16,043	)		(16,043	)
Exercise of stock options		77,611					2,782												2,782
Tax impact of dividends on restricted stock							48												48
Issue restricted stock (less forfeitures)		6,000
Stock compensation							2,079												2,079

Balance September 30, 2012		12,287,790		$	12	$	236,751		$	163,426		$	—		$	(99,091	)	$	301,098

Net income										21,577									21,577
Dividends paid ($0.88 per share)										(10,849	)								(10,849	)
Other comprehensive income																42,292			42,292
Exercise of stock options		30,545					1,092												1,092
Tax impact of forfeited vested options							(185	)											(185	)
Tax impact of dividends on restricted stock							29												29
Issue restricted stock (less forfeitures)		24,250																	—
Purchase of treasury stock		(9,993	)										(505	)					(505	)
Stock compensation							1,254												1,254

Balance September 30, 2013		12,332,592		$	12	$	238,941		$	174,154		$	(505	)	$	(56,799	)	$	355,803

The accompanying notes are an integral part of these consolidated financial statements.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended September 30, 2011			Year Ended September 30, 2012			Year Ended September 30, 2013

Cash flows from operating activities:
Net income	$	31,128		$	50,182		$	21,577
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		11,528			12,520			13,744
Amortization		561			423			416
Pension and post-retirement expense—U.S. and U.K.		11,936			15,590			16,173
Change in long-term obligations		—			(245	)		(153	)
Stock compensation expense		1,752			2,079			1,254
Excess tax benefit from option exercises		(166	)		(1,147	)		(494	)
Deferred revenue		(2,500	)		(2,500	)		(2,500	)
Deferred income taxes		9,044			5,658			6,171
Loss on disposition of property		145			203			418
Change in assets and liabilities:
Accounts receivable		(24,806	)		(12,700	)		18,630
Inventories		(17,859	)		(12,326	)		31,507
Other assets		805			1,309			(1,324	)
Accounts payable and accrued expenses		17,966			(17,242	)		(12,165	)
Income taxes		(1,540	)		(5	)		341
Accrued pension and postretirement benefits		(18,390	)		(21,018	)		(20,191	)

Net cash provided by operating activities		19,604			20,781			73,404

Cash flows from investing activities:
Additions to property, plant and equipment		(14,445	)		(25,937	)		(41,550	)
Change in restricted cash		110			—			—

Net cash used in investing activities		(14,335	)		(25,937	)		(41,550	)

Cash flows from financing activities:
Dividends paid		(9,758	)		(10,803	)		(10,849	)
Proceeds from exercise of stock options		706			1,635			598
Payment for purchase of treasury stock		—			—			(505	)
Excess tax benefit from option exercises		166			1,147			494
Payment for debt issuance cost		(330	)		—			—
Payments on long-term obligations		(85	)		(123	)		(100	)

Net cash used in financing activities		(9,301	)		(8,144	)		(10,362	)

Effect of exchange rates on cash		126			(22	)		94

Increase (decrease) in cash and cash equivalents:		(3,906	)		(13,322	)		21,586
Cash and cash equivalents:
Beginning of period		63,968			60,062			46,740

End of period	$	60,062		$	46,740		$	68,326

Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest (net of capitalized interest)	$	33		$	22		$	7

Income taxes paid, net	$	10,736		$	21,341		$	3,578

Capital expenditures incurred but not yet paid	$	1,539		$	2,360		$	2,890

The accompanying notes are an integral part of these consolidated financial statements.

HAYNES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data and otherwise noted)

Haynes International, Inc. and its subsidiaries (the "Company" or "Haynes") develops, manufactures, markets and distributes technologically advanced, high-performance alloys primarily for use in the aerospace, land-based gas turbine and chemical processing industries. The Company's products are high-temperature resistant alloys ("HTA") and corrosion-resistant alloys ("CRA"). The Company's HTA products are used by manufacturers of equipment that is subjected to extremely high temperatures, such as jet engines for the aerospace industry, gas turbine engines for power generation, waste incineration and industrial heating equipment. The Company's CRA products are used in applications that require resistance to extreme corrosion, such as chemical processing, power plant emissions control and hazardous waste treatment. The Company produces its high-performance alloys primarily in sheet, coil and plate forms. In addition, the Company produces its products as seamless and welded tubulars, and in slab, bar, billets and wire forms.

High-performance alloys are characterized by highly engineered often proprietary, metallurgical formulations primarily of nickel, cobalt and other metals with complex physical properties. The complexity of the manufacturing process for high-performance alloys is reflected in the Company's relatively high average selling price per pound, compared to the average selling price of other metals, such as carbon steel sheet, stainless steel sheet and aluminum. The high-performance alloy industry has significant barriers to entry such as the combination of (i) demanding end-user specifications, (ii) a multi-stage manufacturing process and (iii) the technical sales, marketing and manufacturing expertise required to develop new applications.

The consolidated financial statements include the accounts of Haynes International, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances are eliminated. The Company has manufacturing facilities in Kokomo, Indiana; Mountain Home, North Carolina; and Arcadia, Louisiana with distribution service centers in Lebanon, Indiana; LaMirada, California; Houston, Texas; Windsor, Connecticut; Openshaw, England; Lenzburg, Switzerland; Shanghai, China; and sales offices in Paris, France; Zurich, Switzerland; Singapore; Milan, Italy; Chennai, India; and Tokyo, Japan.

The Company considers all highly liquid investment instruments, including investments with original maturities of three months or less at acquisition, to be cash equivalents, the carrying value of which approximates fair value due to the short maturity of these investments.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company markets its products to a diverse customer base, both in the United States of America and overseas. Trade credit is extended based upon evaluation of each customer's ability to perform its obligation, which is updated periodically. The Company purchases credit insurance for certain foreign trade receivables.

The Company recognizes revenue when collectability is reasonably assured and when title passes to the customer, which is generally at the time of shipment with freight terms of FOB shipping point or at a foreign port for certain export customers. Allowances for sales returns are recorded as a component of net sales in the periods in which the related sales are recognized. The Company determines this allowance based on historical experience. Additionally, the Company recognizes revenue attributable to an up-front fee received from Titanium Metals Corporation ("TIMET") as a result of a twenty-year agreement, entered into on November, 17, 2006 to provide conversion services to TIMET. See Note 15 Deferred Revenue for a description of accounting treatment relating to this up-front fee.

Inventories are stated at the lower of cost or market. The cost of inventories is determined using the first-in, first-out ("FIFO") method. The Company writes down its inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market or scrap value, if applicable, based upon assumptions about future demand and market conditions.

The Company has patents, trademarks and other intangibles. As the patents have a definite life, they are amortized over lives ranging from two to fourteen years. The Company reviews patents for impairment whenever events or circumstances indicate that the carrying amount of a patent may not be recoverable. Recoverability of the patent asset is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.

As the trademarks have an indefinite life, the Company tests them for impairment at least annually as of August 31 (the annual impairment testing date). If the carrying value exceeds the fair value (determined by calculating a fair value based upon a discounted cash flow of an assumed royalty rate), impairment of the trademark may exist resulting in a charge to earnings to the extent of the impairment. No impairment was recognized in the years ended September 30, 2012 or 2013 because the fair value exceeded the carrying values. The Company has a non-compete agreement with a remaining life of 2 years.

Amortization of the patents, non-competes and other intangibles was $561, $423 and $416 for the years ended September 30, 2011, 2012 and 2013, respectively. The following represents a summary of intangible assets at September 30, 2012 and 2013:

Additions to property, plant and equipment are recorded at cost with depreciation calculated primarily by using the straight-line method based on estimated economic useful lives which are generally as follows:

Expenditures for maintenance and repairs and minor renewals are charged to expense; major renewals are capitalized. Upon retirement or sale of assets, the cost of the disposed assets and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations.

The Company records capitalized interest for long-term construction projects to capture the cost of capital committed prior to the placed in service date as a part of the historical cost of acquiring the asset. Interest is not capitalized when balance on the revolver is zero.

The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. There was no triggering event during the years ended September 30, 2012 or 2013 and thus no impairment was recognized.

When it is probable that a liability has been incurred or an asset of the Company has been impaired, a loss is recognized assuming the amount of the loss can be reasonably estimated. The measurement of environmental liabilities by the Company is based on currently available facts, present laws and regulations and current technology. Such estimates take into consideration the expected costs of post-closure monitoring based on historical experience.

The Company has defined benefit pension and postretirement plans covering most of its current and former employees. Significant elements in determining the assets or liabilities and related income or expense for these plans are the expected return on plan assets, the discount rate used to value future payment streams, expected trends in health care costs, and other actuarial assumptions. Annually, the Company evaluates the significant assumptions to be used to value its pension and postretirement plan assets and liabilities based on current market conditions and expectations of future costs. If actual results are less favorable than those projected by management, additional expense may be required in future periods. Salaried employees hired after December 31, 2005 and hourly employees hired after June 30, 2007 are not covered by the pension plan; however, they are eligible for an enhanced matching program of the defined contribution plan (401(k)). Effective December 31, 2007, the U.S. pension plan was amended to freeze benefits for all non-union employees in the U.S. Effective September 30, 2009, the U.K. pension plan was amended to freeze benefits for employees in the plan. Effective January 1, 2007 a plan amendment of the postretirement medical plan caps the Company's liability related to retiree health care costs at $5,000 annually.

The Company's foreign operating entities' financial statements are denominated in the functional currencies of each respective country, which are the local currencies. All assets and liabilities are translated to U.S. dollars using exchange rates in effect at the end of the year, and revenues and expenses are translated at the weighted average rate for the year. Translation gains or losses are recorded as a separate component of comprehensive income (loss) and transaction gains and losses are reflected in the consolidated statements of operations.

Research and technical costs related to the development of new products and processes are expensed as incurred. Research and technical costs for the years ended September 30, 2011, 2012 and 2013 were $3,259, $3,285 and $3,505, respectively.

The Company accounts for deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. A valuation allowance is required if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The determination of whether or not a valuation allowance is needed is based upon an evaluation of both positive and negative evidence. In its evaluation of the need for a valuation allowance, the Company utilizes prudent and feasible tax planning strategies. The ultimate amount of deferred tax assets realized could be different from those recorded, as influenced by potential changes in enacted tax laws and the availability of future taxable income. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

On February 23, 2009, the Company adopted a restricted stock plan that reserved 400,000 shares of common stock for issuance. Grants of restricted stock are shares of the Company's common stock subject to transfer restrictions, which vest in accordance with the terms and conditions established by the Compensation Committee. The Compensation Committee may set restrictions on certain grants based on the achievement of specific performance goals and vesting of grants to participants will also be time-based.

Restricted stock grants are subject to forfeiture if employment or service terminates prior to the end of the vesting period or if the performance goals are not met, if applicable. The Company will assess, on an ongoing basis, the probability of whether the performance criteria will be achieved. The Company will recognize compensation expense over the performance period if it is deemed probable that the goals will be achieved. The fair value of the Company's restricted stock is determined based upon the closing price of the Company's common stock on the grant date. The plan provides for the adjustment of the number of shares covered by an outstanding grant and the maximum number of shares for which restricted stock may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event.

of reorganization and provides for the grant of options to purchase up to 1,000,000 shares of the Company's common stock. In January 2007, the Company's Board of Directors adopted a second option plan that provides for options to purchase up to 500,000 shares of the Company's common stock. Each plan provides for the adjustment of the maximum number of shares for which options may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Unless the Compensation Committee determines otherwise, options granted under the option plans are exercisable for a period of ten years from the date of grant and vest 33¹/3% per year over three years from the grant date. The amount of compensation cost recognized in the financial statement is measured based upon the grant date fair value. The fair value of the option grants is estimated on the date of grant using the Black-Scholes option pricing model with assumptions on dividend yield, risk-free interest rate, expected volatilities, expected forfeiture rate and expected lives of the options.

The Company may periodically enter into forward currency exchange contracts to minimize the variability in the Company's operating results arising from foreign exchange rate movements. The Company does not engage in foreign currency speculation. At September 30, 2012 and 2013, the Company had no foreign currency exchange contracts outstanding.

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At September 30, 2013, and periodically throughout the year, the Company has maintained cash balances in excess of federally insured limits. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the relatively short maturity of these instruments.

During 2011, 2012 and 2013, the Company did not have sales to any group of affiliated customers that were greater than 10% of net revenues. The Company generally does not require collateral with the exception of letters of credit with certain foreign sales. Credit losses have been within management's expectations. In addition, the Company purchases credit insurance for certain foreign trade receivables. The Company does not believe it is significantly vulnerable to the risk of near-term severe impact from business concentrations with respect to customers, suppliers, products, markets or geographic areas.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to bad debts, inventories, income taxes, asset impairment, retirement benefits, and environmental matters. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, pension asset mix and in some cases, actuarial techniques, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company

routinely reevaluates these significant factors and makes adjustments where facts and circumstances dictate. Actual results may differ from these estimates under different assumptions or conditions.

The Company accounts for earnings per share using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to participation rights in undistributed earnings. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each period. Basic earnings per share is computed by dividing net income available to common stockholders for the period by the weighted average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

	Years ended September 30,

(in thousands, except share and per share data)	2011			2012			2013
Numerator:
Net income	$	31,128		$	50,182		$	21,577
Less amount allocable to participating securities		(320	)		(454	)		(186	)

Net income available for basic shareholders		30,808			49,728			21,391
Adjustment for dilutive potential common shares		(2	)		2			—

Net income available for diluted common shares	$	30,806		$	49,730		$	21,391

Denominator:
Weighted average shares—Basic		12,067,555			12,147,179			12,223,838
Adjustment for dilutive potential common shares		82,311			68,852			41,792

Weighted average shares—Diluted		12,149,866			12,216,031			12,265,630

Basic net income per share	$	2.55		$	4.09		$	1.75
Diluted net income per share	$	2.54		$	4.07		$	1.74
Number of stock option shares excluded as their effect would be anti-dilutive		130,195			98,630			170,623

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The standard revises the guidance for providing information about the amounts reclassified out of accumulated other comprehensive income. It became effective for fiscal years beginning after December 15, 2012. The Company adopted this accounting standard on January 1, 2013, and the impact to the consolidated financial statements was not material. See Note 17 for disclosure of amounts reclassified out of accumulated comprehensive income.

Comprehensive income (loss) includes changes in equity that result from transactions and economic events from non-owner sources. See Note 17 for a breakdown of Comprehensive Income (Loss) and changes in Accumulated Other Comprehensive Loss net of tax effects.

Inventories are stated at the lower of cost or market. The cost of inventories is determined using the first-in, first-out ("FIFO") method. The following is a summary of the major classes of inventories:

The following is a summary of the major classes of property, plant and equipment:

The Company has $903 of assets under a capital lease for equipment related to the service center operation in Shanghai, China.

	Year Ended September 30,

	2011			2012			2013
Income before income taxes:
U.S.	$	44,244		$	67,968		$	23,555
Foreign		5,154			9,027			8,443

Total	$	49,398		$	76,995		$	31,998

Provision for income taxes:
Current:
U.S. Federal	$	5,952		$	15,836		$	2,125
Foreign		2,145			1,712			1,419
State		825			2,079			85

Total		8,922			19,627			3,629

Deferred:
U.S. Federal		7,411			6,314			5,907
Foreign		(685	)		585			623
State		2,308			601			262
Valuation allowance		314			(314	)		0

Total		9,348			7,186			6,792

Total provision for income taxes	$	18,270		$	26,813		$	10,421

The provision for income taxes applicable to results of operations differed from the U.S. federal statutory rate as follows:

	Year Ended September 30,

	2011			2012			2013
Statutory federal tax rate		35	%		35	%		35	%
Tax provision for income taxes at the statutory rate	$	17,289		$	26,949		$	11,199
Foreign tax rate differentials		(342	)		(864	)		(913	)
Provision for state taxes, net of federal taxes		1,289			1,578			473
U.S. tax on distributed and undistributed earnings of foreign subsidiaries		—			335			354
Manufacturer's deduction		(910	)		(1,715	)		(217	)
Tax credits		(713	)		—			(78	)
State tax rate reduction impact on deferred tax asset		1,228			89			(182	)
Change in Valuation Allowance		314			(314	)		—
Other, net		115			755			(215	)

Provision for income taxes at effective tax rate	$	18,270		$	26,813		$	10,421

Effective tax rate		37.0	%		34.8	%		32.6	%

During fiscal 2011, the Company's effective tax rate was higher, primarily due to the revaluation of the Company's deferred tax assets at a lower blended state income tax rate, offset by additional tax credits.

During fiscal 2012, the Company's effective tax rate was lower, primarily due to increased proportion of profitability in foreign jurisdictions and the increased Manufacturer's deduction (due to increased U.S. profitability).

During fiscal 2013, the Company's effective tax rate was lower, primarily due to increased proportion of profitability in foreign jurisdictions and the reversal of certain tax reserves no longer required.

	September 30,

	2012			2013
Deferred tax assets:
Pension and postretirement benefits	$	83,379		$	58,148
TIMET Agreement		13,071			12,167
Inventories		2,996			2,095
Accrued compensation and benefits		4,055			3,076
Accrued expenses and other		1,772			527
Tax attributes		740			946

Total deferred tax assets	$	106,013		$	76,959

Deferred tax liabilities:
Property, plant and equipment, net	$	(25,665	)	$	(26,931	)
Intangible and other		(2,160	)		(2,709	)

	$	(27,825	)	$	(29,640	)
Valuation Allowance		—			—

Net deferred tax assets (liabilities)	$	78,188		$	47,319

Current deferred tax assets	$	9,933		$	6,018

Long-term deferred tax asset	$	68,255		$	41,301

The Company has tax attributes of $740 and $946 for the fiscal years 2012 and 2013, respectively, which include foreign and state operating loss carryforwards. During fiscal year 2012, the Company reversed a valuation allowance against $314 of foreign losses. Some tax attributes expire beginning in 2024 and others have no expiration.

Undistributed earnings of certain of our foreign subsidiaries amounted to approximately $52,343 at September 30, 2013. The Company considers those earnings reinvested indefinitely and, accordingly, no provision for U.S. income taxes has been provided. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	October 1, 2009 To September 30, 2011		October 1, 2010 To September 30, 2012		October 1, 2011 To September 30, 2013

Balance at beginning of period	$	264	$	264	$	264
Gross Increases—current period tax positions		—		—		—
Gross Decreases—current period tax positions		—		—		—
Gross Increases—tax positions in prior periods		—		—		—
Gross Decreases—tax positions in prior periods		—		—		—
Gross Decreases—settlements with taxing authorities		—		—		—
Gross Decreases—lapse of statute of limitations		—		—		(264	)

Balance at end of period	$	264	$	264	$	—

During fiscal year 2013, the Company recognized the tax benefits previously unrecognized due to the statute of limitations. This tax benefit was recorded in income tax expense and affected the income statement by $236. During fiscal 2013, the Company recognized a reversal of accrued interest expense related to the unrecognized tax benefits totaling $75.

As of September 30, 2013, the Company is open to examination in the U.S. federal income tax jurisdiction for the 2010 through 2013 tax years and in various foreign jurisdictions from 2008 through 2013. The Company is also open to examination in various states in the U.S., none of which were individually material.

financial metrics are met (which do not apply in the case of dividends less than $20.0 million in the aggregate in a year and repurchases in connection with the vesting of shares of restricted stock). As of September 30, 2013, the most recent required measurement date under the Amended Agreement, the Company was in compliance with those covenants. The U.S. revolving credit facility matures on July 14, 2016. Borrowings under the U.S. revolving credit facility are collateralized by a pledge of substantially all of the U.S. assets of the Company, including the equity interests in its U.S. subsidiaries, but excluding the four-high Steckel rolling mill and related assets, which are pledged to Titanium Metals Corporation to secure the performance of the Company's obligations under a Conversion Services Agreement with TIMET (see discussion of TIMET at Note 15 in the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K). The U.S. revolving credit facility is also secured by a pledge of a 65% equity interest in each of the Company's direct foreign subsidiaries.

In April 2008, the Company's U.K. subsidiary (Haynes International Ltd.) put in place a facility with a multi-currency overdraft facility. The overdraft facility has a limit of 2,000 pounds sterling ($3,237). Haynes International Ltd. is required to pay interest on overdrafts in an amount equal to the Bank's Sterling Base Rate (in accordance with the terms facility), plus 2.0% per annum. As of September 30, 2013, the overdraft facility had an outstanding balance of zero.

At September 30, 2013, the Company had access to approximately $120,000 under its credit agreement (based on borrowing base and certain reserves). The Company's UK subsidiary (Haynes International Ltd.) has an overdraft facility of 2,000 pounds sterling ($3,237), all of which was available on September 30, 2013. The Company's French subsidiary (Haynes International, S.A.R.L.) has an overdraft banking facility of 1,200 Euro ($1,621), all of which was available on September 30, 2013. The Company's Swiss subsidiary (Haynes International AG) had an overdraft banking facility of 500 Swiss Francs ($553), all of which was available on September 30, 2013.

The Company sponsors a defined contribution plan (401(k)) for substantially all U.S. employees. The Company contributes an amount equal to 50% of an employee's contribution to the plan up to a maximum contribution of 3% of the employee's salary, except for all salaried employees and certain hourly employees (those hired after June 30, 2007 that are not eligible for the U.S. pension plan). The Company contributes an amount equal to 60% of an employee's contribution to the plan up to a maximum contribution of 6% of the employee's salary for these groups. Expenses associated with this plan for the years ended September 30, 2011, 2012 and 2013 totaled $1,237, $1,374 and $1,416, respectively.

The Company sponsors certain profit sharing plans for the benefit of employees meeting certain eligibility requirements. There were no contributions to these plans for the years ended September 30, 2011, 2012 and 2013.

The Company has non-contributory defined benefit pension plans which cover most employees in the U.S. and certain foreign subsidiaries. In the U.S. salaried employees hired after December 31, 2005 and hourly employees hired after June 30, 2007 are not covered by the pension plan; however, they are eligible for an enhanced matching program of the defined contribution plan (401(k)). On October 3, 2007, the U.S. pension plan was amended effective December 31, 2007 to freeze benefit accruals for all non-union employees in the U.S. and effective January 1, 2008, the pension multiplier used to calculate the employee's monthly benefit was increased from 1.4% to 1.6%. In addition, the Company will make enhanced matching contributions to its 401K plan equal to 60% of the non-union and union plan participant's salary deferrals, up to 6% of compensation. As a result of freezing the benefit accruals for all non-union employees in the U.S. in the first quarter of fiscal 2008, the Company recognized a reduction of the projected benefit obligation of $8,191, an increase to other comprehensive income (before tax) of $4,532 and a curtailment gain (before tax) of $3,659. The impact of the multiplier increase will be charged to pension expense over the estimated remaining lives of the participants. Effective September 30, 2009, the U.K. pension plan was amended to freeze benefit accruals for members of its plan. As of September 30, 2009, the company recognized a reduction of the projected benefit obligation of $392, an increase to other comprehensive income (before tax) of $392 and zero impact on the statement of operations.

Benefits provided under the Company's domestic defined benefit pension plan are based on years of service and the employee's final compensation. The Company's funding policy is to contribute annually an amount deductible for federal income tax purposes based upon an actuarial cost method using actuarial and economic assumptions designed to achieve adequate funding of benefit obligations.

The Company has non-qualified pensions for former executives of the Company. Non-qualified pension plan expense (income) for the years ended September 30, 2011, 2012 and 2013 was $84, $110 and $12, respectively. Accrued liabilities in the amount of $909 and $825 for these benefits are included in accrued pension and postretirement benefits liability at September 30, 2012 and 2013, respectively.

In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees. Substantially all domestic employees become eligible for these benefits, if they reach normal retirement age while working for the Company. During March 2006, the Company communicated to employees and plan participants a negative plan amendment that caps the Company's liability related to total retiree health care costs at $5,000 annually effective January 1, 2007. An updated actuarial valuation was performed at March 31, 2006, which reduced the accumulated postretirement benefit liability due to this plan amendment by $46,313 that will be amortized as a reduction to expense over an eight year period. This amortization period began in April 2006 thus reducing the amount of expense recognized for the second half of fiscal 2006 and the respective future periods.

The Company made contributions of $15,900 and $15,000 to fund its domestic Company-sponsored pension plan for the year ended September 30, 2012 and 2013, respectively. The Company's U.K. subsidiary made contributions of $970 for the years ended September 30, 2012 and 2013, respectively, to the U.K. pension plan.

The Company uses a September 30 measurement date for its plans. The status of employee pension benefit plans and other postretirement benefit plans are summarized below:

	Defined Benefit Pension Plans						Postretirement Health Care Benefits

	Year Ended September 30,						Year Ended September 30,
	2012			2013			2012			2013
Change in Benefit Obligation:
Projected benefit obligation at beginning of year	$	261,953		$	303,445		$	101,515		$	114,209
Service cost		4,001			4,881			291			387
Interest cost		11,623			10,839			4,581			4,330
Actuarial losses		38,147			(32,627	)		11,974			(16,018	)
Benefits paid		(12,279	)		(12,845	)		(4,152	)		(4,136	)

Projected benefit obligation at end of year	$	303,445		$	273,693		$	114,209			98,772

Change in Plan Assets:
Fair value of plan assets at beginning of year	$	148,931		$	182,011		$	—		$	—
Actual return on assets		28,489			20,977			—			—
Employer contributions		16,870			15,970			4,152			4,136
Benefits paid		(12,279	)		(12,845	)		(4,152	)		(4,136	)

Fair value of plan assets at end of year	$	182,011		$	206,113		$	—		$	—

Funded Status of Plan:
Unfunded status	$	(121,434	)	$	(67,580	)	$	(114,209	)	$	(98,772	)

	Defined Benefit Pension Plans						Postretirement Health Care Benefits						Non-Qualified Pension Plans						All Plans Combined

	September 30,						September 30,						September 30,						September 30,
	2012			2013			2012			2013			2012			2013			2012			2013
Accrued pension and postretirement benefits:
Current	$	(15,970	)	$	—		$	(5,000	)	$	(4,823	)	$	(95	)	$	(95	)	$	(21,065	)	$	(4,918	)
Non-current		(105,464	)		(67,580	)		(109,209	)		(93,949	)		(814	)		(730	)		(215,487	)		(162,259	)

Accrued pension and postretirement benefits	$	(121,434	)	$	(67,580	)	$	(114,209	)	$	(98,772	)	$	(909	)	$	(825	)	$	(236,552	)	$	(167,177	)
Accumulated other comprehensive loss:
Net (gain) loss		114,542			63,939			48,632			28,897			—			—			163,174			92,836
Prior service cost		6,252			5,444			(8,684	)		(2,895	)		—			—			(2,432	)		2,549

Total accumulated other comprehensive loss	$	120,794		$	69,383		$	39,948		$	26,002		$	—		$	—		$	160,742		$	95,385
Amounts expected to be recognized from AOCI into the statement of operations in the following year:
Amortization of net loss	$	10,189		$	4,612		$	3,717		$	1,996		$	—		$	—		$	13,906		$	6,608
Amortization of prior service cost		808			808			(5,789	)		(2,895	)		—			—			(4,981	)		(2,087	)

	$	10,997		$	5,420		$	(2,072	)	$	(899	)	$	—		$	—		$	8,925		$	4,521

The accumulated benefit obligation for the pension plans was $281,623 and $257,284 at September 30, 2012 and 2013, respectively.

The cost of the Company's postretirement benefits are accrued over the years employees provide service to the date of their full eligibility for such benefits. The Company's policy is to fund the cost of claims on an annual basis.

The components of net periodic pension cost and postretirement health care benefit cost are as follows:

A 6.0% (6.5%-2012) annual rate of increase for the costs of covered health care benefits for ages under 65 and a 5.0% (5.5%-2012) annual rate of increase for ages over 65 were assumed for 2013, gradually decreasing for both age groups to 5.0% (5.0%-2012) by the year 2016. A one percentage point change in assumed health care cost trend rates would have the following effects in 2013:

The effect on total of service and interest cost components and the effect on accumulated postretirement benefit obligation is zero due to the plan amendment that caps the Company costs at $5,000 on an undiscounted basis per year.

The actuarial present value of the projected pension benefit obligation and postretirement health care benefit obligation for the plans at September 30, 2012 and 2013 were determined based on the following assumptions:

The net periodic pension and postretirement health care benefit costs for the plans were determined using the following assumptions:

	Defined Benefit Pension and Postretirement Health Care Plans

	Year Ended September 30,
	2011			2012			2013
Discount rate (postretirement health care plan)		4.875	%		4.625	%		3.875	%
Discount rate (U.S. pension plan)		4.875	%		4.500	%		3.625	%
Discount rate (U.K. pension plan)		5.000	%		5.200	%		4.100	%
Expected return on plan assets (U.S. pension plan)		8.500	%		8.000	%		7.500	%
Expected return on plan assets (U.K. pension plan)		5.900	%		5.900	%		4.200	%
Rate of compensation increase (U.S. pension plan only)		3.500	%		3.500	%		3.500	%

Our pension plan assets by level within the fair value hierarchy at September 30, 2012 and 2013, are presented in the table below. Our pension plan assets were accounted for at fair value. For more information on a description of the fair value hierarchy, see Note 16.

	September 30, 2012

	Level 1 Active Markets for Identical Assets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total
U.S. Pension Plan Assets:
U.S. common stock mutual funds	$	30,238	$	—	$	—	$	30,238
Common /collective funds
Bonds		—		62,554		—		62,554
Short-term money market		—		6,762		—		6,762
U.S. common stock		—		59,678		—		59,678
International equity		—		7,053		—		7,053

Total U.S.	$	30,238	$	136,047	$	—	$	166,285
U.K. Plan Assets:
Equities	$	6,322	$	—	$	—	$	6,322
Bonds		7,297		—		—		7,297
Other		2,107		—		—		2,107

Total U.K.	$	15,726	$	—	$	—	$	15,726

Total pension plan assets	$	45,964	$	136,047	$	—	$	182,011

	September 30, 2013

	Level 1 Active Markets for Identical Assets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total
U.S. Pension Plan Assets:
U.S. common stock mutual funds	$	38,575	$	—	$	—	$	38,575
Common /collective funds
Bonds		—		74,378		—		74,378
Short-term money market		—		2,590		—		2,590
U.S. common stock		—		64,592		—		64,592
International equity		—		8,307		—		8,307

Total U.S.	$	38,575	$	149,867	$	—	$	188,442
U.K. Plan Assets:
Equities	$	—	$	7,695	$	—	$	7,695
Bonds		—		7,111		—		7,111
Other		—		2,865		—		2,865

Total U.K.	$	—	$	17,671	$	—	$	17,671

Total pension plan assets	$	38,575	$	167,538	$	—	$	206,113

The primary financial objectives of the Plan's are to minimize cash contributions over the long term and preserve capital while maintaining a high degree of liquidity. A secondary financial objective is, where possible, to avoid significant downside risk in the short run. The objective is based on a long-term investment horizon so that interim fluctuations should be viewed with appropriate perspective.

The selection of the Plan's assumption for the expected long-term rate of return on plan assets is based upon the Plan's target allocation of 60% equities and 40% bonds, and the expected rate of return for each equity/bond asset class. Based upon the target allocation and each asset class's expected return, the Plan's return on assets assumption of 7.50% is reasonable, and it remains unchanged from last year's assumption. The Company also realizes that historical performance is no guarantee of future performance.

In determining the expected rate of return on plan assets, the Company takes into account the plan's allocation at September 30, 2013 of 59% equities, 40% fixed income and 1% other. The Company assumes an approximately 3.00% to 4.00% equity risk premium above the broad bond market yields of 5.00% to 7.00%. Note that over very long historical periods the realized risk premium has been higher. The Company believes that its assumption of an 7.5% long-term rate of return on plan assets is comparable to other companies, given the target allocation of the plan assets; however, there exists the potential for the use of a lower rate in the future.

It is the policy of the U.S. pension plan to invest assets with an allocation to equities as shown below. The balance of the assets are maintained in fixed income investments, and in cash holdings, to the extent permitted by the plan documents.

The Company has not yet determined the amounts to contribute to its domestic pension plans, domestic other postretirement benefit plans, and the U.K. pension plan in fiscal 2014.

Pension and postretirement health care benefits (which include expected future service) are expected to be paid out of the respective plans as follows:

The Company leases certain transportation vehicles, warehouse facilities, office space and machinery and equipment under cancelable and non-cancelable leases, most of which expire within 10 years and may be renewed by the Company. Rent expense under such arrangements totaled $3,607, $3,347 and $3,693 for the years ended September 30, 2011, 2012 and 2013, respectively. Rent expense does not include income from sub-lease rentals totaling $112, $145 and $129 for the years ended September 30, 2011, 2012 and

2013, respectively. Future minimum rental commitments under non-cancelable operating leases at September 30, 2013, are as follows:

Future minimum rental commitments under non-cancelable operating leases have not been reduced by minimum sub-lease rentals of $67 due in the future.

The Company is regularly involved in litigation, both as a plaintiff and as a defendant, relating to its business and operations, including environmental, employment and in federal and/or state Equal Employment Opportunity Commission (EEOC) administrative actions. Future expenditures for environmental, employment, intellectual property and other legal matters cannot be determined with any degree of certainty; however, based on the facts presently known, management does not believe that such costs will have a material effect on the Company's financial position, results of operations or cash flows.

The Company is currently, and has in the past been, subject to claims involving personal injuries allegedly relating to its products. For example, the Company is presently involved in two actions involving welding rod-related injuries, which were filed in California state court against numerous manufacturers, including the Company, in May 2006 and February 2007, respectively, alleging that the welding-related products of the defendant manufacturers harmed the users of such products through the inhalation of welding fumes containing manganese. The Company believes that it has defenses to these allegations and that, if the Company were to be found liable, the cases would not have a material effect on its financial position, results of operations or liquidity.

The Company has received permits from the Indiana Department of Environmental Management, or IDEM, to close and to provide post-closure monitoring and care for certain areas at the Kokomo facility previously used for the storage and disposal of wastes, some of which are classified as hazardous under applicable regulations. Closure certification was received in fiscal 1988 for the South Landfill at the Kokomo facility, and post-closure monitoring and care is ongoing there. Closure certification was received in fiscal 1999 for the North Landfill at the Kokomo facility, and post-closure monitoring and care are permitted and ongoing there. In fiscal 2007, IDEM issued a single post-closure permit applicable to both the North and South Landfills, which contains monitoring and post-closure care requirements. In addition, IDEM required that a Resource Conservation and Recovery Act, or RCRA, Facility Investigation, or RFI and which was reviewed in 2012, be conducted in order to further evaluate one area of concern and one solid waste management unit. The RFI commenced in fiscal 2008 and is ongoing.

The Company has also received permits from the North Carolina Department of Environment and Natural Resources, or NCDENR, to close and provide post-closure monitoring and care for the hazardous waste lagoon at its Mountain Home, North Carolina facility. The lagoon area has been closed and is currently undergoing post-closure monitoring and care. The Company is required to monitor groundwater and to continue post-closure maintenance of the former disposal areas at each site. As a result, the Company is aware of elevated levels of certain contaminants in the groundwater, and additional corrective action by the Company could be required.

As of September 30, 2013, the Company has accrued $846 for post-closure monitoring and maintenance activities. Accruals for these costs are calculated by estimating the cost to monitor and maintain each post-closure site and multiplying that amount by the number of years remaining in the post-closure monitoring.

Maturities of long-term obligations (discounted) are as follows at September 30, 2013:

On February 23, 2009, the Company adopted a restricted stock plan that reserved 400,000 shares of common stock for issuance. Shares of restricted stock vest in accordance with the terms and conditions established by the Compensation Committee. The Compensation Committee may set restrictions on certain grants based on the achievement of specific performance goals, and vesting of grants to participants will also be time-based.

Restricted stock grants are subject to forfeiture if employment or service terminates prior to the vesting period or if the performance goal is not met, if applicable. The Company will assess, on an ongoing basis, the probability of whether the performance criteria will be achieved. The Company will recognize compensation expense over the performance period if it is deemed probable that the goal will be achieved. The fair value of the Company's restricted stock is determined based upon the closing price of the Company's common stock on the trading day immediately preceding the grant date. The plan provides for the adjustment of the number of shares covered by an outstanding grant and the maximum number of shares for which restricted stock may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Holders of outstanding shares of restricted stock are entitled to receive dividends on, and to vote, shares of common stock.

On November 20, 2012, November 26, 2012 and December 10, 2012, the Company granted 31,950, 3,000 and 1,100 shares, respectively, of restricted stock to certain key employees and non-employee directors. The shares of restricted stock granted to employees will vest on the third anniversary of their grant date, provided that (a) the recipient is still an employee with the Company and (b) the Company has met a three year net income performance goal, if applicable. The shares of restricted stock granted to non-employee directors will vest on the earlier of (a) the third anniversary of the date of grant or (b) the failure of such non-employee director to be re-elected at an annual meeting of the stockholders of the Company as a result of such non-employee director being excluded from the nominations for any reason other than cause. The fair value of the grants were $47.96, $47.62 and $48.39, respectively, the closing price of the Company's common stock on the trading day immediately preceding the day of the applicable grant.

The following table summarizes the activity under the restricted stock plan for the year ended September 30, 2013:

Compensation expense related to restricted stock for the years ended September 30, 2011, 2012 and 2013 was $992, $1,518 and $832, respectively. The remaining unrecognized compensation expense at September 30, 2013 was $1,379, which is to be recognized over a weighted average period of 1.08 years. During fiscal 2013, the Company repurchased 9,993 shares of stock from employees at an average purchase price of $50.51 to satisfy required withholding taxes of restricted stock—based compensation.

The fair value of option grants was estimated as of the date of the grant. The Company has elected to use the Black-Scholes option pricing model, which incorporates various assumptions including volatility, expected life, risk-free interest rates, expected forfeitures and dividend yields. The volatility is based on historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected term of the stock option granted. The Company uses historical volatility because management believes such volatility is representative of prospective trends. The expected term of an award is based on historical exercise data. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the awards. The expected forfeiture rate is based upon historical experience. The dividend yield assumption is based on the Company's history and expectations regarding dividend payouts at the time of the grant. Valuation of future grants under the Black-Scholes model will include a dividend yield. The following assumptions were used for grants in the first quarter of fiscal 2013:

On November 20, 2012 and December 10, 2012, the Company granted 35,600 and 1,800 options, respectively, at an exercise price of $47.96 and $48.39, respectively, the fair market value of the Company's common stock on the day of the grant. During fiscal 2013, 30,545 options were exercised and 33,967 options were forfeited/canceled.

The stock-based employee compensation expense for stock options for years ended September 30, 2011, 2012 and 2013 was $760, $561 and $424, respectively. The remaining unrecognized compensation expense at September 30, 2013 was $522, to be recognized over a weighted average vesting period of 1.12 years.

The following table summarizes the activity under the stock option plans for the year ended September 30, 2013:

Grant Date	Exercise Price Per Share

August 31, 2004	$	12.80	0.92	32,207	32,207
March 31, 2006		31.00	2.50	10,000	10,000
March 30, 2007		72.93	3.50	47,500	47,500
March 31, 2008		54.00	4.50	58,000	58,000
October 1, 2008		46.83	5.00	20,000	20,000
March 31, 2009		17.82	5.50	20,089	20,089
January 8, 2010		34.00	6.25	25,801	25,801
November 24, 2010		40.26	7.17	20,967	13,800
November 25, 2011		55.88	8.17	19,700	6,565
November 20, 2012		47.96	9.17	35,600	—
December 10, 2012		48.39	9.17	1,800	—

				291,664	233,962

The unaudited quarterly results of operations of the Company for years ended September 30, 2012 and 2013 are as follows:

The Company operates in one business segment: the design, manufacture, marketing and distribution of technologically advanced, high-performance alloys for use in the aerospace, land-based gas turbine, chemical processing and other industries. The Company has operations in the United States, Europe and China, which are summarized below. Sales between geographic areas are made at negotiated selling prices.

Revenues from external customers are attributed to the geographic areas presented based on the destination of product shipments.

	Year Ended September 30,

	2011		2012		2013
Net Revenue by Geography:
United States	$	344,983	$	346,750	$	268,054
Europe		105,725		121,781		110,389
China		40,934		48,183		39,475
Other		51,254		62,847		64,828

Net Revenues	$	542,896	$	579,561	$	482,746

Net Revenue by Product Group:
High-temperature resistant alloys	$	412,601	$	423,080	$	357,232
Corrosive-resistant alloys		130,295		156,481		125,514

Net revenues	$	542,896	$	579,561	$	482,746

On November 17, 2006, the Company entered into a twenty-year agreement to provide conversion services to Titanium Metals Corporation ("TIMET") for up to ten million pounds of titanium metal annually. TIMET paid the Company a $50,000 up-front fee and will also pay the Company for its processing services during the term of the agreement (20 years) at prices established by the terms of the

agreement. TIMET may exercise an option to have ten million additional pounds of titanium converted annually, provided that it offers to loan up to $12,000 to the Company for certain capital expenditures which may be required to expand capacity. In addition to the volume commitment, the Company has granted TIMET a first priority security interest in its four-high Steckel rolling mill, along with rights of access if the Company enters into bankruptcy or defaults on any financing arrangements. The Company has agreed not to manufacture titanium products (other than cold reduced titanium tubing). The Company has also agreed not to provide titanium conversion services to any entity other than TIMET for the term of the Conversion Services Agreement. The agreement contains certain default provisions which could result in contract termination and damages, including liquidated damages of $25.0 million and the Company being required to return the unearned portion of the up-front fee. The Company considered each provision and the likelihood of the occurrence of a default that would result in liquidated damages. Based on the nature of the events that could trigger the liquidated damages clause, and the availability of the cure periods set forth in the agreement, the Company determined and continues to believe that none of these circumstances are reasonably likely to occur. Therefore, events resulting in liquidated damages have not been factored in as a reduction to the amount of revenue recognized over the life of the contract. The cash received of $50,000 is recognized in income on a straight-line basis over the 20-year term of the agreement. If an event of default occurred and was not cured within any applicable grace period, the Company would recognize the impact of the liquidated damages in the period of default and re-evaluate revenue recognition under the contract for future periods. The portion of the up-front fee not recognized in income is shown as deferred revenue on the consolidated balance sheet.

The fair value hierarchy has three levels based on the inputs used to determine fair value:

When available, the Company uses unadjusted quoted market prices to measure fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally-developed models that use, where possible, current market-based or independently-sourced market parameters such as interest rates and currency rates. Items valued using internally-generated models are classified according to the lowest level input or value driver that is significant to the valuation. If quoted market prices are not available, the valuation model used depends on the specific asset or liability being valued. A portion of the Company's pension plan assets are in a common collective trust that is considered within Level 2. To determine the fair value of these assets, the Company uses the quoted market prices of the underlying assets of the common collective trust. (See Note 8.)

The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 and 2013:

Note 17. Comprehensive Income (Loss) and Changes in Accumulated Other Comprehensive Income (Loss) by Component

Comprehensive income (loss) includes changes in equity that result from transactions and economic events from non-owner sources. Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss) items, including pension and foreign currency translation adjustments, net of tax when applicable.

Note 17. Comprehensive Income (Loss) and Changes in Accumulated Other Comprehensive Income (Loss) by Component (Continued)

	Year Ended September 30,

	2011									2012									2013
	Pre-tax			Tax			Net			Pre-tax			Tax			Net			Pre-tax			Tax			Net
Net income							$	31,128								$	50,182								$	21,577
Other comprehensive income (loss):
Pension and postretirement:
Net gain (loss) arising during period	$	(24,316	)	$	10,670			(13,646	)	$	(19,688	)	$	7,399			(12,289	)	$	74,282		$	(27,201	)		47,081
Less: amortization of prior service cost		4,981			(1,743	)		3,238			4,981			(1,743	)		3,238			4,981			(1,743	)		3,238
Less: amortization of gain (loss)		(8,991	)		1,743			(7,248	)		(11,830	)		4,140			(7,690	)		(13,906	)		4,867			(9,039	)
Foreign currency translation adjustment		645			—			645			698			—			698			1,012			—			1,012

Other comprehensive income (loss)	$	(27,681	)	$	10,670			(17,011	)	$	(25,839	)	$	9,796			(16,043	)	$	66,369		$	(24,077	)		42,292

Total comprehensive income (loss)							$	14,117								$	34,139								$	63,869

	Twelve Months Ended September 30, 2012

	Pension Plan			Postretirement Plan			Foreign Exchange		Total
Accumulated other comprehensive income (loss) as of September 31, 2011	$	(67,822	)	$	(15,479	)	$	253	$	(83,048	)

Other comprehensive income (loss) before classifications		(13,836	)		(7,356	)		698		(20,494	)
Amounts reclassified from accumulated other comprehensive income (loss)		6,395			(1,944	)		—		4,451

Net current-period other comprehensive income (loss)		(7,441	)		(9,300	)		698		(16,043	)

Accumulated other comprehensive income (loss) as of September 30, 2012	$	(75,263	)	$	(24,779	)	$	951	$	(99,091	)

Note 17. Comprehensive Income (Loss) and Changes in Accumulated Other Comprehensive Income (Loss) by Component (Continued)

	Twelve Months Ended September 30, 2013

	Pension Plan			Postretirement Plan			Foreign Exchange		Total
Accumulated other comprehensive income (loss) as of September 30, 2012	$	(75,263	)	$	(24,779	)	$	951	$	(99,091	)

Other comprehensive income (loss) before classifications		25,317			10,162			1,012		36,491
Amounts reclassified from accumulated other comprehensive income (loss)		7,148			(1,347	)		—		5,801

Net current-period other comprehensive income (loss)		32,465			8,815			1,012		42,292

Accumulated other comprehensive income (loss) as of September 30, 2013	$	(42,798	)	$	(15,964	)	$	1,963	$	(56,799	)

	Twelve Months Ended September 30, 2012									Twelve Months Ended September 30, 2013

	Pension Plan			Post- retirement Plan			Total			Pension Plan			Post- retirement Plan			Total
Amortization of Pension and Postretirement Plan items
Prior Service Costs^(a)	$	(808	)	$	5,789		$	4,981		$	(808	)	$	5,789		$	4,981
Actuarial (losses)^(a)		(9,031	)		(2,799	)		(11,830	)		(10,189	)		(3,717	)		(13,906	)

Total before tax		(9,839	)		2,990			(6,849	)		(10,997	)		2,072			(8,925	)
Tax (expense) or benefit		3,444			(1,046	)		2,398			3,849			(725	)		3,124

Total reclassification for the period	$	(6,395	)	$	1,944		$	(4,451	)	$	(7,148	)	$	1,347		$	(5,801	)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, including to ensure that information required to be disclosed by the Company that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. Pursuant to Rule 13a-15(b) of the Exchange Act the Company has performed, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2013.

During the year ended September 30, 2013, we began a phased implementation of a new global enterprise resource planning system to be used as our accounting system. As of September 30, 2013, legal entities representing approximately 20% of the Company's revenues had been deployed on the new system. The deployment of the system to remaining legal entities is expected to be completed in multiple phases through fiscal year 2014. The transition to the new information system includes a significant effort in the testing of the system prior to deployment, training of associates who will be using the system and updating of the Company's internal control process and procedures that will be impacted by the deployment. During each phase of the deployment, the Company will test the results from the system and perform an appropriate level of monitoring of the system's results. As a result of the deployment of the system, management has updated and continues to update the systems of internal control over the impacted areas.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined by Exchange Act rules 13a-15(f) and 15d-15(f)) for the Company. With the participation of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework and criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of The Treadway Commission (1992). Based on the Company's assessment, management has concluded that, as of September 30, 2013, the Company's internal control over financial reporting is effective based on those criteria.

The internal controls over financial reporting that were assessed for fiscal year 2013 were:

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's effectiveness of internal control over financial reporting as of September 30, 2013 has been audited by Deloitte and Touche LLP, an independent registered public accounting firm, as stated in its attestation report which is included herein.

The information included under the caption "Business—Executive Officers of the Company" in this Annual Report on Form 10-K, and under the captions "Election of Directors", "Section 16(a) Beneficial Ownership Reporting Compliance", "Corporate Governance—Code of Ethics", "Corporate Governance—Corporate Governance Committee and Director Nominations", "Corporate Governance—Board Committee Structure", "Corporate Governance—Family Relationships" and "Corporate Governance—Independence of the Board of Directors and Committee Members" in the Proxy Statement to be issued in connection with the meeting of the Company's stockholders on February 24, 2014 is incorporated herein by reference.

The information included under the captions "Executive Compensation", "Corporate Governance—Compensation Committee Interlocks and Insider Participation" and "Corporate Governance—Director Compensation Program" in the Proxy Statement to be issued in connection with the meeting of the Company's stockholders on February 24, 2014 is incorporated herein by reference in response to this item.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information contained under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" in the Proxy Statement to be issued in connection with the meeting of the Company's stockholders on February 24, 2014 and "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Equity Compensation Plan Information" in this Annual Report on Form 10-K is incorporated herein by reference in response to this item. For additional information regarding the Company's stock option plans, please see Note 11 in the Notes to Consolidated Financial Statements in this report.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The Company's policy is to require that all conflict of interest transactions between the Company and any of its directors, officers or 10% beneficial owners (collectively, "Insiders") and all transactions where any Insider has a direct or indirect financial interest, including related party transactions required to be reported under Item 404(a) of Regulation S-K, must be reviewed and approved or ratified by the Board of Directors. The material terms of any such transaction, including the nature and extent of the Insider's interest therein, must be disclosed to the Board of Directors. The Board will then review the terms of the proposed transaction to determine whether the terms of the proposed transaction are fair to the Company and are no less favorable to the Company than those that would be available from an independent third party. Following the Board's review and discussion, the proposed transaction will be approved or ratified only if it receives the affirmative votes of a majority of the directors who have no direct or indirect financial interest in the proposed transaction, even though the disinterested directors represent less than a quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors which authorizes the contract or transaction.

There are no transactions since the beginning of fiscal 2013, or any currently proposed transaction in which the Company is or was a participant in which any "related person", within the meaning of Section 404(a) of Regulation S-K under the Securities Act of 1933, had or will have a material interest. The information contained under the caption "Corporate Governance—Independence of Board of Directors and Committee Members" in the Proxy Statement to be issued in connection with the meeting of the Company's stockholders on February 24, 2014 is incorporated herein by reference in response to this item.

The information included under the caption "Ratification of the Appointment of Independent Registered Public Accounting Firm" in the Proxy Statement to be issued in connection with the meeting of the Company's stockholders on February 24, 2014 is incorporated herein by reference in response to this item.

Pursuant to the requirements Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

		Exhibit Number		Description

		3.1		Restated Certificate of Incorporation of Haynes International, Inc. (incorporated by reference to Exhibit 3.1 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		3.2		Amended and Restated By-laws of Haynes International, Inc. (incorporated by reference to Exhibit 3.2 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Haynes International, Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2009).
		4.2		Second Restated Certificate of Incorporation of Haynes International, Inc. (incorporated by reference to Exhibit 3.1 hereof).
		4.3		Amended and Restated By-laws of Haynes International, Inc. (incorporated by reference to Exhibit 3.2 hereof).
		10.1		Form of Termination Benefits Agreements by and between Haynes International, Inc. and certain of its employees, conformed to give effect to all amendments thereto (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 2011).
		10.2		Third Amended and Restated Loan and Security Agreement by and among Haynes International, Inc., Haynes Wire Company, the Lenders (as defined therein), Wells Fargo Capital Finance, LLC, as agent for the Lenders, and JPMorgan Chase Bank, N.A., as documentation agent (incorporated by reference to Exhibit 10.1 to Haynes International, Inc. Current Report on Form 8-K filed July 20, 2011).
		10.3		Form of Director Indemnification Agreement between Haynes International, Inc. and certain of its directors named in the schedule to the Exhibit (incorporated by reference to Exhibit 10.21 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		10.4		Conversion Services Agreement by and between the Company and Titanium Metals Corporation, dated November 17, 2006 (incorporated by reference to Exhibit 10.22 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194). Portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.
		10.5		Access and Security Agreement by and between the Company and Titanium Metals Corporation, dated November 17, 2006 (incorporated by reference to Exhibit 10.23 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		10.6		Haynes International, Inc. 2007 Stock Option Plan as adopted by the Board of Directors on January 18, 2007 (incorporated by reference to Exhibit 10.25 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		10.7		Form of Non-Qualified Stock Option Agreement to be used in conjunction with grants made pursuant to the Haynes International, Inc. 2007 Stock Option Plan (incorporated by reference to Exhibit 10.26 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		10.8		Second Amended and Restated Haynes International, Inc. Stock Option Plan as adopted by the Board of Directors on January 22, 2007 (incorporated by reference to Exhibit 10.27 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).

		Exhibit Number		Description

		10.9		Form of Non-Qualified Stock Option Agreements between Haynes International, Inc. and certain of its executive officers and directors named in the schedule to the Exhibit pursuant to the Haynes International, Inc. Second Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 10.28 to the Haynes International, Inc. Registration Statement on Form S-1, Registration No. 333-140194).
		10.10		Executive Employment Agreement by and between Haynes International, Inc. and Mark Comerford dated September 8, 2008 (incorporated by reference to Exhibit 10.21 to Haynes International, Inc. Annual Report on Form 10-K for the fiscal year ended September 30, 2008).
		10.11		Non-Qualified Stock Option Agreement by and between Haynes International, Inc. and Mark Comerford, dated October 1, 2008 (incorporated by reference to Exhibit 10.2 to Haynes International, Inc. Form 8-K filed October 7, 2008).
		10.12		Amendment No. 1 to Executive Employment Agreement by and between Haynes International, Inc. and Mark Comerford, dated August 6, 2009 (incorporated by reference to Exhibit 10.1 to the Haynes International, Inc. Form 8-K filed August 7, 2009).
		10.13		Haynes International, Inc. 2009 Restricted Stock Plan (incorporated by reference to Exhibit 10.02 to the Haynes International, Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009).
		10.14		Summary of 2011 Management Incentive Plan (incorporated by reference to Item 5.02 of the Haynes International, Inc. Form 8-K filed November 24, 2010).
		10.15		Amendment No.1 to the Haynes International, Inc. 2009 Restricted Stock Plan (incorporated by reference to Exhibit 10.02 to the Haynes International, Inc. Form 10-Q for the fiscal quarter ended December 31, 2011).
		10.16		Amendment No. 2 to the Haynes International, Inc. 2009 Restricted Stock Plan (incorporated by reference to Exhibit 10.01 to the Haynes International, Inc. Form 10-Q for the fiscal quarter ended March 31, 2013).
		10.17		Amendment No. 1 to Third Amended and Restated Loan and Security Agreement by and among Haynes International, Inc., Haynes Wire Company, the Lenders (as defined therein), Wells Fargo Capital Finance, LLC, as agent for the Lenders, and JPMorgan Chase Bank, N.A., as documentation agent (incorporated by reference to Exhibit 10.1 to the Haynes International, Inc. Current Report on Form 8-K filed September 20, 2013).
		21.1**		Subsidiaries of the Registrant.
		23.1**		Consent of Deloitte & Touche LLP.
		31.1**		Rule 13a-14(a)/15d-4(a) Certification of Chief Executive Officer
		31.2**		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
		32.1**		Section 1350 Certifications
		101**		The following materials from the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets; (11) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income (Loss); (iv) the Consolidated Statements of Stockholders Equity; (v) the Consolidated Statements of Cash Flows; and (vi) related notes.


(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2013
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Delaware (State or other jurisdiction of incorporation or organization)		06-1185400 (I.R.S. Employer Identification No.)
1020 West Park Avenue, Kokomo, Indiana (Address of principal executive offices)		46904-9013 (Zip Code)

Title of each class		Name of each exchange on which registered

Common Stock, par value $.001 per share		NASDAQ Global Market


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

	2009		2010		2011		2012		2013

			(in millions)
1^st quarter	$	199.7	$	110.4	$	167.0	$	261.8	$	211.7
2^nd quarter		153.0		124.6		241.7		264.2		207.0
3^rd quarter		113.4		130.9		288.6		241.2		189.6
4^th quarter		106.7		148.0		273.4		222.9		166.6



Part I
Item 1.	Business	3
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	28
Item 4.	Mine Safety Disclosures	29
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6.	Selected Financial Data	32
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	92
Item 9A.	Controls and Procedures	92
Item 9B.	Other Information	93
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	94
Item 14.	Principal Accountant Fees and Services	95
Part IV
Item 15.	Exhibits, Financial Statement Schedules	96
Signatures		97
Index to Exhibits		99



Company mill direct/service and sales centers	55	%	22	%	77	%
Independent distributors/sales agents	22	%	1	%	23	%

Total	77	%	23	%	100	%

Name		Position with Haynes International, Inc.

Mark M. Comerford	51	President and Chief Executive Officer; Director
Daniel W. Maudlin	47	Vice President—Finance, Treasurer and Chief Financial Officer
Venkat R. Ishwar	61	Vice President—Marketing & Technology
Marlin C. Losch	53	Vice President—Sales & Distribution
Jean C. Neel	54	Vice President—Corporate Affairs
Scott R. Pinkham	46	Vice President—Manufacturing
Gregory M. Spalding	57	Vice President—Tube & Wire Products
David S. Van Bibber	42	Controller and Chief Accounting Officer
Janice C. Wilken	41	Vice President—General Counsel & Corporate Secretary
Jeffrey L. Young	56	Vice President & Chief Information Officer

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column)

Equity compensation plans approved by security holders⁽¹⁾			291,664		$	45.36			481,228	⁽²⁾



Haynes International, Inc.	100.00	67.95	74.57	94.29	114.98	101.62
Russell 2000	100.00	88.92	100.81	97.24	128.25	166.77
S&P MidCap 400	100.00	95.01	111.91	110.48	141.99	181.29
Peer Group	100.00	95.41	129.27	118.42	118.72	128.02

	2009		2010		2011		2012		2013

Consolidated Backlog at Fiscal Quarter End⁽³⁾:
1^st quarter	$	199.7	$	110.4	$	167.0	$	261.8	$	211.7
2^nd quarter		153.0		124.6		241.7		264.2		207.0
3^rd quarter		113.4		130.9		288.6		241.2		189.6
4^th quarter		106.7		148.0		273.4		222.9		166.6

	Trend of Gross Profit Margin and Gross Profit Margin Percentage for Fiscal 2012

	Quarter Ended
(dollars in thousands)	December 31, 2011			March 31, 2012			June 30, 2012			September 30, 2012
Net Revenues	$	128,851		$	158,882		$	141,574		$	150,254
Gross Profit Margin	$	23,491		$	34,535		$	32,389		$	30,425
Gross Profit Margin %		18.2	%		21.7	%		22.9	%		20.2	%

		Page

Report of Independent Registered Public Accounting Firm			54
Consolidated Balance Sheets			56
Consolidated Statements of Operations			57
Consolidated Statements of Comprehensive Income (Loss)			58
Consolidated Statements of Stockholders' Equity			59
Consolidated Statements of Cash Flows			60
Notes to Consolidated Financial Statements			61

September 30, 2012	Gross Amount		Accumulated Amortization			Carrying Amount

Patents	$	8,667	$	(6,891	)	$	1,776
Trademarks		3,800		—			3,800
Non-compete		1,090		(900	)		190
Other		330		(79	)		251

	$	13,887	$	(7,870	)	$	6,017

September 30, 2013	Gross Amount		Accumulated Amortization			Carrying Amount

Patents	$	4,030	$	(2,533	)	$	1,497
Trademarks		3,800		—			3,800
Non-compete		500		(381	)		119
Other		330		(145	)		185

	$	8,660	$	(3,059	)	$	5,601

Estimate of Aggregate Amortization Expense: Year Ended September 30,

2014			416
2015			393
2016			332
2017			279
2018			279
Thereafter			102

	September 30,

	2012			2013
Land and land improvements	$	6,415		$	6,856
Buildings		17,178			19,034
Machinery and equipment		154,670			179,407
Construction in process		17,355			31,472

		195,618			236,769
Less accumulated depreciation		(70,966	)		(84,005	)

	$	124,652		$	152,764


Building and improvements		40 years
Machinery and equipment		5-14 years
Office equipment and computer software		3-10 years
Land improvements		20 years

	September 30,

	2012		2013
Raw materials	$	27,654	$	25,647
Work-in-process		129,642		108,708
Finished goods		104,875		97,150
Other		1,065		652

	$	263,236	$	232,157

	September 30,

	2012		2013
Employee compensation	$	8,355	$	6,415
Advance payments from customers		1,868		1,094
Taxes, other than income taxes		2,566		3,005
Other		2,368		3,162

	$	15,157	$	13,676

	1-Percentage Point Increase		1-Percentage Point Decrease

Effect on total of service and interest cost components	$	0	$	0
Effect on accumulated postretirement benefit obligation		0		0



Discount rate (postretirement health care)	3.875	%	4.750	%
Discount rate (U.S. pension plan)	3.625	%	4.500	%
Discount rate (U.K. pension plan)	4.100	%	4.300	%
Rate of compensation increase (U.S. pension plan only)	3.500	%	3.500	%

Fiscal Year Ending September 30	Pension		Postretirement Health Care

2014	$	13,355	$	4,823
2015		13,833		5,000
2016		14,108		5,000
2017		14,586		5,000
2018		14,900		5,000
2019-2023 (in total)		83,714		25,000

	September 30,

	2012			2013
Environmental post-closure monitoring and maintenance activities	$	1,071		$	846
Less amounts due within one year		(91	)		(79	)

	$	980		$	767

			Weighted Average Fair Value At Grant Date

Unvested at September 30, 2012	111,000		$	42.32
Granted	36,050		$	47.94
Forfeited / Canceled	(11,800	)	$	42.23
Vested	(38,500	)	$	34.00

Unvested at September 30, 2013	96,750		$	47.74

Expected to vest	77,250		$	46.82

Grant Date	Fair Value								Expected Life

November 20, 2012	$	13.92	1.83	%	0.32	%	47	%	3 years
December 10, 2012	$	14.12	1.82	%	0.33	%	47	%	3 years

			Aggregate Intrinsic Value (000s)		Weighted Average Exercise Prices

Outstanding at September 30, 2012	318,776				$	44.05
Granted	37,400				$	47.98
Exercised	(30,545	)			$	19.57
Canceled	(33,967	)			$	59.11

Outstanding at September 30, 2013	291,664		$	2,134	$	45.36	5.17 yrs.

Vested or expected to vest	283,214		$	2,120	$	45.30	5.08 yrs.
Exercisable at September 30, 2013	233,962		$	2,098	$	44.51	4.30 yrs.

	2012

	Quarter Ended
	December 31		March 31		June 30		September 30
Net revenues	$	128,851	$	158,882	$	141,574	$	150,254
Gross profit		23,491		34,535		32,389		30,425
Net income		8,443		15,151		13,732		12,856
Net income per share:
Basic	$	0.69	$	1.24	$	1.12	$	1.05
Diluted	$	0.68	$	1.23	$	1.11	$	1.04

	September 30,

	2012		2013
Long-lived Assets by Geography:
United States	$	120,218	$	146,940
Europe		3,759		5,221
China		675		603

Total long-lived assets	$	124,652	$	152,764



Allowance for doubtful accounts receivables:
September 30, 2013	1,249	(34	)	(16	)	1,199
September 30, 2012	1,129	235		(115	)	1,249
September 30, 2011	1,116	54		(41	)	1,129

	September 30, 2012 Fair Value Measurements at Reporting Date Using:

	Level 1		Level 2		Level 3		Total
Assets:
Cash and money market funds	$	46,740	$	—	$	—	$	46,740
Pension plan assets		45,964		136,047		—		182,011

Total fair value	$	92,704	$	136,047	$	—	$	228,751


Mark M. Comerford President & Chief Executive Officer November 21, 2013		Daniel W. Maudlin Vice President of Finance and Chief Financial Officer November 21, 2013


		HAYNES INTERNATIONAL, INC.
		By:		/s/ MARK M. COMERFORD Mark M. Comerford President and Chief Executive Officer Date: November 21, 2013

Signature	Title	Date


/s/ MARK M. COMERFORD Mark M. Comerford	President and Chief Executive Officer; Director (Principal Executive Officer)	November 21, 2013
/s/ DANIEL W. MAUDLIN Daniel W. Maudlin	Vice President of Finance and Chief Financial Officer (Principal Financial Officer)	November 21, 2013
/s/ DAVID S. VAN BIBBER David S. Van Bibber	Controller and Chief Accounting Officer (Principal Accounting Officer)	November 21, 2013
/s/ JOHN C. COREY John C. Corey	Chairman of the Board, Director	November 21, 2013
/s/ PAUL J. BOHAN Paul J. Bohan	Director	November 21, 2013
/s/ DONALD C. CAMPION Donald C. Campion	Director	November 21, 2013
/s/ ROBERT H. GETZ Robert H. Getz	Director	November 21, 2013

Signature	Title	Date


/s/ TIMOTHY J. MCCARTHY Timothy J. McCarthy	Director	November 21, 2013
/s/ MICHAEL L. SHOR Michael L. Shor	Director	November 21, 2013
/s/ WILLIAM P. WALL William P. Wall	Director	November 21, 2013