Business Segments

9 Months Ended

Sep. 30, 2013

Segment Reporting Disclosure [Abstract]

Business Segments

Business Segments

In the third quarter of 2013, the Company restructured its Engineered Products segment due to the planned divestitures of its tungsten materials and casting services businesses and the closure of the fabricated components business (see Note 4). Such restructuring included the integration of the previously standalone specialty steel forgings business into ATI Ladish’s forgings operations in the High Performance Metals segment, and the integration of its precision titanium and specialty alloy flat-rolled finishing business into ATI Allegheny Ludlum’s specialty plate business in the Flat-Rolled Products segment. The segment results for High Performance Metals and Flat-Rolled Products below reflect these changes for all periods presented. The other businesses that comprised the Engineered Products segment are classified as discontinued operations, and are not reported within business segment results.

Following is certain financial information with respect to the Company’s business segments for the periods indicated (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Total sales:
High Performance Metals	$	481.2		$	591.8		$	1,561.7		$	1,858.0
Flat-Rolled Products	515.6			573.1			1,644.0			1,892.5
	996.8			1,164.9			3,205.7			3,750.5
Intersegment sales:
High Performance Metals	17.3			21.2			53.6			69.1
Flat-Rolled Products	7.1			12.2			23.9			35.9
	24.4			33.4			77.5			105.0
Sales to external customers:
High Performance Metals	463.9			570.6			1,508.1			1,788.9
Flat-Rolled Products	508.5			560.9			1,620.1			1,856.6
	$	972.4		$	1,131.5		$	3,128.2		$	3,645.5
Operating profit (loss):
High Performance Metals	$	48.0		$	87.4		$	192.0		$	303.8
Flat-Rolled Products	(20.4		)	26.1			(16.7		)	118.4
Total operating profit	27.6			113.5			175.3			422.2
Corporate expenses	(8.1		)	(14.9		)	(32.3		)	(52.4		)
Interest expense, net	(18.2		)	(17.2		)	(46.5		)	(55.7		)
Closed company and other expenses	(2.1		)	(2.7		)	(11.0		)	(14.8		)
Retirement benefit expense	(34.5		)	(30.6		)	(99.5		)	(91.8		)
Income (loss) before income taxes	$	(35.3	)	$	48.1		$	(14.0	)	$	207.5

Retirement benefit expense represents defined benefit plan pension expense, and other postretirement benefit expense for both defined benefit and defined contribution plans. Operating profit with respect to the Company’s business segments excludes any retirement benefit expense. Costs associated with multiemployer pension plans are included in segment operating profit, and costs associated with defined contribution pension plans are included in segment operating profit or corporate expenses, as applicable.

Corporate expenses for the three months ended September 30, 2013 were $8.1 million compared to $14.9 million for the three months ended September 30, 2012. The decrease in corporate expenses was primarily related to lower incentive compensation expenses associated with annual and long-term performance plans, and a favorable litigation settlement.

Interest expense, net of interest income, in the third quarter was $18.2 million, compared to net interest expense of $17.2 million in the third quarter2012. The increase in interest expense was primarily due the 2023 Notes issued on July 12, 2013, partially offset by increased capitalized interest on major strategic projects. Interest expense benefited from the capitalization of interest costs of $12.7 million in the third quarter2013 compared to $6.6 million in the third quarter2012. The increased capitalized interest amounts are primarily related to the Hot-Rolling and Processing Facility.

Closed company and other expenses primarily includes charges incurred in connection with closed operations and other non-operating income or expense. These items are presented primarily in selling and administrative expenses and in other income in the statements of operations. These items resulted in net charges of $2.1 million for the three months ended September 30, 2013 and $2.7 million for the three months ended September 30, 2012.

Retirement benefit expense, which includes pension expense and other postretirement expense, increased to $34.5 million in the third quarter2013, compared to $30.6 million in the third quarter2012. This increase was primarily due to the utilization of a lower discount rate to value retirement benefit obligations and increased expense for defined contribution plan other postretirement benefits.