Divestitures

3 Months Ended

Mar. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

As announced on March 3, 2022, ATI’s Board of Directors approved the divestiture of the Sheffield, UK operations, which includes facilities for melting and re-melting, machining and bar mill operations, and is part of the Specialty Materials business in the HPMC segment. As a result, the Company’s Sheffield, UK operations are classified as held for sale at March 31, 2022, and the terms of sale resulted in indicators of impairment in the long-lived assets of this disposal group. A $22.3 million long-lived asset impairment charge was recorded as part of the $25.1 million partial loss on sale of this business recorded in the first quarter 2022, which remains subject to UK government approval under the National Security and Investment Act 2021. This long-lived asset impairment charge was determined using the held for sale framework and represents Level 1 information in the fair value hierarchy. The loss on sale is reported in loss (gain) on asset sales and sales of businesses, net, on the consolidated statement of operations and is excluded from HPMC segment results.

The following are the assets and liabilities of the Sheffield, UK operations, subsequent to the impairment loss discussed above, classified as held for sale and reported as separate amounts on the consolidated balance sheet as of March 31, 2022.


(in millions)	March 31, 2022
Assets
Accounts receivable, net	$	20.2
Inventories, net	38.6
Prepaid expenses and other current assets	0.1
Total current assets	58.9
Other assets	26.2
Total long-term assets	26.2
Total Assets	85.1

Liabilities
Accounts payable	17.6
Total current liabilities	17.6
Other long-term liabilities	1.5
Total Liabilities	19.1

Net assets held for sale	$	66.0

ATI expects to recognize an additional pre-tax loss of approximately $110 million upon the completion of this sale, which is projected to be completed in the second quarter 2022. The expected loss includes approximately $55 million related to the UK defined benefit pension plan, of which $25 million is reported as a net pension asset but which is in a deficit funding position for UK statutory reporting purposes, and $30 million in accumulated other comprehensive loss on the consolidated ATI balance sheet. The expected loss also includes approximately $15 million of cumulative translation adjustment foreign exchange losses since ATI’s acquisition of these operations in 1998. In 2021, the Sheffield operations had external sales of $36 million, with over 80% of its sales to energy markets, primarily oil & gas, and had a net loss before tax of $9 million.

During the first quarter of 2022, the Company completed the sale of the small Pico Rivera, CA operations as part of the strategy to exit standard stainless products. The Company received cash proceeds of $6.2 million on the sale of these assets, which was primarily reported within operating activities on the consolidated statement of cash flows. The Company recognized a $6.8 million pretax gain on sale, including de-recognizing certain lease liabilities, in the first quarter of 2022, which is reported in loss (gain) on asset sales and sales of businesses, net, on the consolidated statement of operations and is excluded from AA&S segment results.