10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number 1-5828

CARPENTER TECHNOLOGY CORPORATION

(Exact name of Registrant as specified in its Charter)

Delaware	23-0458500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
P.O. Box 14662 Reading, Pennsylvania	19610
(Address of principal executive offices)	(Zip Code)

610-208-2000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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.  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer:	x		Accelerated filer:	o
Non-accelerated filer:	o	(Do not check if a smaller reporting company)	Smaller reporting company:	o

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

The number of shares outstanding of the issuer’s common stock as of April 29, 2015 was 50,403,963.

CARPENTER TECHNOLOGY CORPORATION

FORM 10-Q

INDEX

			Page
PART I	FINANCIAL INFORMATION
	Item 1	Financial Statements
		Consolidated Balance Sheets (unaudited) as of March 31, 2015 and June 30, 2014	3
		Consolidated Statements of Operations (unaudited) for the Three Months and Nine Months Ended March 31, 2015 and 2014	4
		Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the Three Months and Nine Months Ended March 31, 2015 and 2014	5
		Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended March 31, 2015 and 2014	6
		Consolidated Statements of Changes in Equity (unaudited) for the Nine Months Ended March 31, 2015 and 2014	7
		Notes to Consolidated Financial Statements (unaudited)	8
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4	Controls and Procedures	45
PART II	OTHER INFORMATION
	Item 1	Legal Proceedings	45
	Item 1A	Risk Factors	45
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 6	Exhibits	47
		Signature	48

2

PART I

Item 1. Financial Statements

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except share data)

	March 31, 2015			June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	29.4		$	120.0
Accounts receivable, net	318.9			339.6
Inventories	710.7			699.2
Deferred income taxes	16.7			—
Other current assets	43.0			35.7
Total current assets	1,118.7			1,194.5
Property, plant and equipment, net	1,403.6			1,407.0
Goodwill	257.3			257.7
Other intangibles, net	73.5			80.6
Other assets	114.3			117.7
Total assets	$	2,967.4		$	3,057.5
LIABILITIES
Current liabilities:
Accounts payable	$	178.3		$	278.1
Accrued liabilities	144.3			148.0
Deferred income taxes	—			4.5
Total current liabilities	322.6			430.6
Long-term debt	609.8			604.3
Accrued pension liabilities	228.9			203.4
Accrued postretirement benefits	160.2			163.2
Deferred income taxes	182.8			110.7
Other liabilities	63.3			41.0
Total liabilities	1,567.6			1,553.2
Contingencies and commitments (see Note 8)
STOCKHOLDERS’ EQUITY
Common stock — authorized 100,000,000 shares; issued 55,233,807 shares at March 31, 2015 and 55,161,875 shares at June 30, 2014; outstanding 51,886,740 shares at March 31, 2015 and 53,137,144 shares at June 30, 2014	276.2			275.8
Capital in excess of par value	265.1			263.5
Reinvested earnings	1,319.0			1,311.6
Common stock in treasury (3,347,067 shares and 2,024,731 shares at March 31, 2015 and June 30, 2014, respectively), at cost	(157.6		)	(101.4		)
Accumulated other comprehensive loss	(302.9		)	(245.2		)
Total equity	1,399.8			1,504.3
Total liabilities and equity	$	2,967.4		$	3,057.5

See accompanying notes to consolidated financial statements.

3

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions, except per share data)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2015			2014			2015			2014
NET SALES	$	570.6		$	566.3		$	1,668.8		$	1,568.4
Cost of sales	494.8			471.8			1,438.9			1,275.2
Gross profit	75.8			94.5			229.9			293.2
Selling, general and administrative expenses	45.7			45.0			132.7			140.4
Restructuring charges	25.3			—			25.3			—
Operating income	4.8			49.5			71.9			152.8
Interest expense, net	(7.1		)	(2.7		)	(20.9		)	(10.8		)
Other (expense) income, net	—			(0.6		)	4.8			0.1
(Loss) income before income taxes	(2.3		)	46.2			55.8			142.1
Income tax (benefit) expense	(0.9		)	15.6			19.6			47.4
Net (loss) income	$	(1.4	)	$	30.6		$	36.2		$	94.7
(LOSS) EARNINGS PER COMMON SHARE:
Basic	$	(0.03	)	$	0.57		$	0.68		$	1.77
Diluted	$	(0.03	)	$	0.57		$	0.68		$	1.76
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	52.6			53.3			53.2			53.2
Diluted	52.6			53.7			53.3			53.6
Cash dividends per common share	$	0.18		$	0.18		$	0.54		$	0.54

See accompanying notes to consolidated financial statements.

4

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

($ in millions)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2015			2014			2015			2014
Net (loss) income	$	(1.4	)	$	30.6		$	36.2		$	94.7
Other comprehensive (loss) income, net of tax
Pension and postretirement benefits, net of tax of $(1.8), $(2.2), $(5.5) and $(6.4), respectively	3.0			3.7			8.9			11.2
Net (loss) gain on derivative instruments, net of tax of $8.0, $(12.3), $23.4 and $(15.9), respectively	(13.2		)	20.5			(38.7		)	26.5
Unrealized gain on marketable securities, net of tax of $0.0, $0.0, $0.0 and $0.0, respectively	—			—			—			0.1
Foreign currency translation	(9.9		)	(1.0		)	(27.9		)	3.9
Other comprehensive (loss) income	(20.1		)	23.2			(57.7		)	41.7
Comprehensive (loss) income	$	(21.5	)	$	53.8		$	(21.5	)	$	136.4

See accompanying notes to consolidated financial statements.

5

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ in millions)

	Nine Months Ended March 31,
	2015			2014
OPERATING ACTIVITIES
Net income	$	36.2		$	94.7
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	91.2			80.9
Non-cash restructuring and asset impairment charges	6.3			—
Deferred income taxes	68.4			2.0
Net pension expense	34.6			43.0
Payments from qualified pension plan associated with restructuring charges	7.6			—
Stock-based compensation expense	6.8			9.0
Net loss on disposal of property and equipment	0.8			0.5
Changes in working capital and other:
Accounts receivable	6.6			30.0
Inventories	(18.4		)	(60.6		)
Other current assets	(12.0		)	(6.4		)
Accounts payable	(42.3		)	0.5
Accrued liabilities	(22.7		)	(31.4		)
Pension plan contributions	(5.5		)	(4.6		)
Other postretirement plan contributions	(10.2		)	(9.8		)
Other, net	1.0			(3.8		)
Net cash provided from operating activities	148.4			144.0
INVESTING ACTIVITIES
Purchases of property, equipment and software	(152.3		)	(298.2		)
Proceeds from disposals of property and equipment	0.2			0.3
Net cash used for investing activities	(152.1		)	(297.9		)
FINANCING ACTIVITIES
Dividends paid	(28.8		)	(28.8		)
Purchase of treasury stock	(60.3		)	—
Tax benefits on share-based compensation	0.6			2.2
Proceeds from stock options exercised	2.3			6.8
Net cash used for financing activities	(86.2		)	(19.8		)
Effect of exchange rate changes on cash and cash equivalents	(0.7		)	1.5
DECREASE IN CASH AND CASH EQUIVALENTS	(90.6		)	(172.2		)
Cash and cash equivalents at beginning of period	120.0			257.5
Cash and cash equivalents at end of period	$	29.4		$	85.3
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash investing activities:
Acquisition of property, equipment and software	$	9.3		$	41.2
Non-cash financing activities:
Seller-financed debt related to the purchase of software	$	4.9		$	—

See accompanying notes to consolidated financial statements.

6

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDEDMARCH 31, 2015 AND 2014

(Unaudited)

($ in millions, except per share data)

	Common Stock					Reinvested Earnings			Common Stock in Treasury			Accumulated Other Comprehensive Income (Loss)			Total Equity
	Par Value Of $5		Capital in Excess of Par Value
Balances at June 30, 2014	$	275.8	$	263.5		$	1,311.6		$	(101.4	)	$	(245.2	)	$	1,504.3
Net income						36.2									36.2
Pension and postretirement benefits gain, net of tax												8.9			8.9
Net loss on derivative instruments, net of tax												(38.7		)	(38.7		)
Foreign currency translation												(27.9		)	(27.9		)
Cash Dividends:
Common @ $0.54 per share						(28.8		)							(28.8		)
Purchase of treasury stock									(60.3		)				(60.3		)
Share-based compensation plans			(0.9		)				4.1						3.2
Stock options exercised	0.4		1.9												2.3
Tax windfall on share-based compensation			0.6												0.6
Balances at March 31, 2015	$	276.2	$	265.1		$	1,319.0		$	(157.6	)	$	(302.9	)	$	1,399.8

	Common Stock				Reinvested Earnings			Common Stock in Treasury			Accumulated Other Comprehensive Income (Loss)			Total Equity
	Par Value Of $5		Capital in Excess of Par Value
Balances at June 30, 2013	$	274.6	$	254.4	$	1,217.3		$	(107.5	)	$	(335.7	)	$	1,303.1
Net income					94.7									94.7
Pension and postretirement benefits gain, net of tax											11.2			11.2
Net gain on derivative instruments, net of tax											26.5			26.5
Unrealized gain on marketable securities, net of tax											0.1			0.1
Foreign currency translation											3.9			3.9
Cash Dividends:
Common @ $0.54 per share					(28.8		)							(28.8		)
Share-based compensation plans			1.2					4.4						5.6
Stock options exercised	1.2		5.6											6.8
Tax windfall on share-based compensation			2.2											2.2
Balances at March 31, 2014	$	275.8	$	263.4	$	1,283.2		$	(103.1	)	$	(294.0	)	$	1,425.3

See accompanying notes to consolidated financial statements.

7

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair statement of the results are reflected in the interim periods presented. The June 30, 2014 consolidated balance sheet data was derived from audited financial statements, but does not include all the disclosures required by U.S. generally accepted accounting principles. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter’s annual report on Form 10-K for the year ended June 30, 2014 (the “2014 Form 10-K”). Operating results for the three and nine months ended March 31, 2015 are not necessarily indicative of the operating results for any future period.

Certain amounts in the consolidated financial statements and notes to the consolidated financial statements for prior year periods have been reclassified to conform to the fiscal year 2015 presentation.

As used throughout this report, unless the context requires otherwise, the terms “Carpenter”, the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation.

2. Restructuring Charges

In March 2015, the Company approved restructuring actions to reduce overhead costs and position the Company to drive long-term, profitable growth. Activities undertaken in connection with the restructuring plan are expected to be substantially completed by the end of the first quarter of fiscal year 2016. The restructuring charges for the three and nine months ended March 31, 2015 amounted to $25.3 million before taxes. The components of the restructuring charges are indicated below.

The Company recorded a pre-tax charge of $10.6 million during the three and nine months ended March 31, 2015 consisting primarily of various personnel-related costs for severance payments, medical coverage and related items. Of this charge, $3.4 million will be paid by the Company and $7.6 million will be paid from the Company's qualified pension plan. The charge also includes $0.4 million of non-cash forfeiture income related to stock-based compensation.

The Company recorded a pre-tax charge of $13.4 million during the three and nine months ended March 31, 2015 to exit a material development program. This includes an $8.0 million cash payment during the three and nine months ended March 31, 2015 to exit a licensing agreement and non-cash asset impairment charges totaling $5.4 million.

The Company recorded a pre-tax charge of $1.3 million during the three and nine months ended March 31, 2015 to reflect the accelerated depreciation of the property and equipment at a facility that will close in the fourth quarter of fiscal year 2015.

3. Earnings Per Common Share

The Company calculates basic and diluted earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities (nonvested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. For the three months ended March 31, 2015, the Company incurred a net loss and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. 

8

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The calculations of basic and diluted (loss) earnings per common share for the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions, except per share data)	2015			2014			2015		2014
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of basic earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Basic (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.77
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of diluted earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Effect of shares issuable under share-based compensation plans	—			0.4			0.1		0.4
Weighted average number of common shares outstanding, diluted	52.6			53.7			53.3		53.6
Diluted (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.76

The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings per share because their effects were anti-dilutive:

	Three Months Ended March 31,		Nine Months Ended March 31,
(in millions)	2015	2014	2015	2014
Stock options	1.1	0.1	0.7	0.1

4. Inventories

Inventories consisted of the following components as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Raw materials and supplies	$	143.0	$	122.3
Work in process	368.2		393.9
Finished and purchased products	199.5		183.0
Total inventory	$	710.7	$	699.2

Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out (“LIFO”) method.

9

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. Accrued Liabilities

Accrued liabilities consisted of the following as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Accrued compensation and benefits	$	46.5	$	49.8
Derivative financial instruments	35.2		4.7
Accrued postretirement benefits	15.5		15.5
Accrued pension liabilities	6.5		19.3
Accrued interest expense	5.6		11.2
Accrued income taxes	—		8.4
Other	35.0		39.1
Total accrued liabilities	$	144.3	$	148.0

6. Pension and Other Postretirement Benefits

The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three and nine months ended March 31, 2015 and 2014 were as follows:

Three months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	8.0		$	8.0		$	1.1		$	1.0
Interest cost	13.5			14.3			3.0			3.1
Expected return on plan assets	(17.2		)	(15.7		)	(1.7		)	(1.6		)
Amortization of net loss	4.2			5.5			0.5			0.3
Amortization of prior service cost	0.1			0.1			—			—
	$	8.6		$	12.2		$	2.9		$	2.8

Nine months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	24.0		$	24.2		$	3.3		$	3.0
Interest cost	40.5			43.0			9.0			9.3
Expected return on plan assets	(51.6		)	(47.1		)	(5.0		)	(4.8		)
Amortization of net loss	12.6			16.3			1.5			0.9
Amortization of prior service cost	0.3			0.4			—			—
	$	25.8		$	36.8		$	8.8		$	8.4

Historically, the Company capitalized in inventory only the service cost portion of periodic benefit costs associated with manufacturing employees. During the three months ended December 31, 2013, the Company began to capitalize the portion of periodic benefit costs related to the interest cost, expected return on assets and amortization of net actuarial loss and prior service cost (benefit), which the Company refers to as pension earnings, interest and deferrals (“pension EID”), related to current manufacturing employees in inventory. The impact of this change resulted in an increase in the amount of capitalized periodic benefit costs of $2.2 million during the nine months ended March 31, 2014. This change did not have a material impact on any previously reported amounts.

10

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the nine months ended March 31, 2015 and 2014, the Company made $5.5 million and $4.6 million, respectively, of contributions to its qualified defined benefit pension plans. The Company currently expects to make approximately $1.7 million of contributions to its qualified defined benefit pension plans during the remainder of fiscal year 2015.

7. Debt

The Company has a $500.0 million syndicated credit agreement (“Credit Agreement”) that extends to June 2018. Interest on the borrowings under the Credit Agreement accrue at variable rates, based upon LIBOR or a defined “Base Rate,” both determined based upon the rating of the Company’s senior unsecured long-term debt (the “Debt Rating”). The applicable margin to be added to LIBOR ranges from 0.75% to 1.90% (1.25% as of March 31, 2015), and for Base Rate-determined loans, from 0.00% to 0.90% (0.25% as of March 31, 2015). The Company also pays a quarterly commitment fee ranging from 0.075% to 0.375% (0.150% as of March 31, 2015), determined based upon the Debt Rating, of the unused portion of the $500.0 million commitment under the Credit Agreement. In addition, the Company must pay certain letter of credit fees, ranging from 0.75% to 1.90% (1.25% as of March 31, 2015), with respect to letters of credit issued under the Credit Agreement. The Company has the right to voluntarily prepay and reborrow loans and to terminate or reduce the commitments under the facility. As of March 31, 2015, the Company had $8.2 million of issued letters of credit under the Credit Agreement, with the balance of $491.8 million available to the Company.

The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio of 3.50 to 1.00. The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization and non-cash net pension expense (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. As of March 31, 2015 and June 30, 2014, the Company was in compliance with all of the covenants of the Credit Agreement.

Long-term debt outstanding as of March 31, 2015 and June 30, 2014 consisted of the following:

($ in millions)	March 31, 2015		June 30, 2014
Medium-term notes, Series B at 6.97% to 7.10% due from April 2018 to May 2018 (face value of $55.0 million at March 31, 2015 and June 30, 2014)	$	55.0	$	55.0
Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at March 31, 2015 and June 30, 2014)	255.2		249.7
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at March 31, 2015 and June 30, 2014)	299.6		299.6
Total	609.8		604.3
Less: amounts due within one year	—		—
Long-term debt, net of current portion	$	609.8	$	604.3

For the three months ended March 31, 2015 and 2014, interest costs totaled $7.7 million and $8.1 million, respectively, of which $0.6 million and $5.4 million, respectively, were capitalized as part of the cost of property, plant, equipment and software. For the nine months ended March 31, 2015 and 2014, interest costs totaled $22.9 million and $24.1 million, respectively, of which $2.0 million and $13.3 million, respectively, were capitalized as part of the cost of property, plant, equipment and software.

11

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. Contingencies and Commitments

Environmental

The Company is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. Although compliance with these laws and regulations may affect the costs of the Company’s operations, compliance costs to date have not been material. The Company has environmental remediation liabilities at some of its owned operating facilities and has been designated as a potentially responsible party (“PRP”) with respect to certain third party Superfund waste-disposal sites and other third party-owned sites. Additionally, the Company has been notified that it may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against the Company. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites have been determined. The liability for future environmental remediation costs is evaluated by management on a quarterly basis. The Company accrues amounts for environmental remediation costs that represent management’s best estimate of the probable and reasonably estimable undiscounted future costs related to environmental remediation. During the nine months ended March 31, 2015, the Company increased the liability for a company-owned former operating site by $0.2 million. The liabilities recorded for environmental remediation costs at Superfund sites, other third party-owned sites and Carpenter-owned current or former operating facilities remaining at March 31, 2015 and June 30, 2014 were $15.7 million and $15.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s. Based upon information currently available, such future costs are not expected to have a material effect on Carpenter’s financial position, results of operations or cash flows over the long-term. However, such costs could be material to Carpenter’s financial position, results of operations or cash flows in a particular future quarter or year.

Other

The Company is defending various routine claims and legal actions that are incidental to its business and common to its operations, including those pertaining to product claims, commercial disputes, patent infringement, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims and tax issues. Like many other manufacturing companies in recent years, the Company, from time to time, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace. The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable. The effect of the outcome of these matters on the Company’s future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company’s financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company’s financial position, results of operations or cash flows in a particular future quarter or year.

9.    Share Repurchase Program

In October 2014, the Company’s Board of Directors authorized a share repurchase program. The program authorizes the purchase of up to $500.0 million of the Company’s outstanding common stock over two years. The shares may be repurchased from time to time at the Company's discretion based on capital needs of the business, general market conditions and market price of the stock. The share repurchase program may be discontinued at any time. During the nine months ended March 31, 2015, the Company purchased 1,411,772 of its common stock on the open market for an aggregate of $60.3 million.

12

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. Fair Value Measurements

The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Currently, the Company does not use Level 1 and 3 inputs.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

March 31, 2015	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.3
Derivative financial instruments	8.4
Total assets	$	13.7
Liabilities:
Derivative financial instruments	$	59.1

June 30, 2014	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.2
Derivative financial instruments	20.4
Total assets	$	25.6
Liabilities:
Derivative financial instruments	$	10.9

The Company’s derivative financial instruments consist of commodity forward contracts, foreign currency forward contracts, interest rate swaps and forward interest rate swaps. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest rates published by third party leading financial news and data providers. This is observable data; however, the valuation of these instruments is not based on actual transactions for the same instruments and, as such, they are classified as Level 2. The Company’s use of derivatives and hedging policies are more fully discussed in Note 12.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

13

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The carrying amounts of other financial instruments not listed in the table below approximate fair value due to the short-term nature of these items. The carrying amounts and estimated fair values of the Company’s financial instruments not recorded at fair value in the financial statements were as follows:

	March 31, 2015				June 30, 2014
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	609.8	$	639.8	$	604.3	$	638.7
Company-owned life insurance	$	16.7	$	16.7	$	16.2	$	16.2

The carrying amount for company-owned life insurance reflects cash surrender values based upon the market values of underlying securities, using Level 2 inputs, net of any outstanding policy loans. The carrying value associated with the cash surrender value of these policies is recorded in other assets in the accompanying consolidated balance sheets.

The fair values of long-term debt as of March 31, 2015 and June 30, 2014 were determined by using current interest rates for debt with terms and maturities similar to the Company’s existing debt arrangements and accordingly would be classified as Level 2 inputs in the fair value hierarchy.

11. Other (Expense) Income, Net

Other (expense) income, net consisted of the following:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Legal settlement	$	—		$	—		$	4.4		$	—
Foreign exchange	(0.1		)	(0.8		)	0.3			(2.0		)
Equity in earnings (losses) of unconsolidated subsidiaries	0.1			—			(0.4		)	0.4
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts	—			0.1			0.5			1.6
Other	—			0.1			—			0.1
Total other (expense) income, net	$	—		$	(0.6	)	$	4.8		$	0.1

12. Derivatives and Hedging Activities

The Company uses commodity forwards, interest rate swaps, forward interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a recap about the impact the derivative instruments had on the Company’s financial position, results of operations and cash flows.

Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income (loss) (“AOCI”) to the extent effective, and reclassified to cost of sales in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur. As of March 31, 2015, the Company had forward contracts to purchase 26.6 million pounds of certain raw materials with settlement dates through June 2019.

14

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Cash Flow Hedging — Forward interest rate swaps: Historically, the Company has entered into forward interest rate swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. The forward interest rate swaps were designated as cash flow hedges. The qualifying hedge contracts were marked-to-market at each reporting date and any unrealized gains or losses were included in accumulated other comprehensive income (loss) to the extent effective, and reclassified to interest expense in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.  For the three months ended March 31, 2015 and 2014, net gains of $0.1 million and $0.1 million, respectively, were recorded as a reduction to interest expense. For the nine months ended March 31, 2015 and 2014, net gains of $0.3 million and $0.3 million, respectively, were recorded as a reduction to interest expense. These amounts represent the impact of previously terminated swaps which are being amortized over the remaining term of the underlying debt.

Cash Flow Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income (loss) to the extent effective, and reclassified to net sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

The Company also uses foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currency against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other income and expense. As of March 31, 2015 and June 30, 2014, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts were not material.

Fair Value Hedging - Interest rate swaps: The Company uses interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges. Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of operations. As of March 31, 2015 and June 30, 2014, the total notional amount of floating interest rate contracts was $150.0 million and $0.0 million, respectively. For the three months ended March 31, 2015 and 2014, net gains of $0.8 million and $0.0 million, respectively, were recorded as a reduction to interest expense. For the nine months ended March 31, 2015 and 2014, net gains of $2.1 million and $0.0 million, respectively, were recorded as a reduction to interest expense.

15

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of March 31, 2015 and June 30, 2014:

March 31, 2015	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.7	$	2.3	$	—	$	3.0
Other assets	5.4		—		—		5.4
Total asset derivatives	$	6.1	$	2.3	$	—	$	8.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	—	$	35.2	$	35.2
Other liabilities	—		—		23.9		23.9
Total liability derivatives	$	—	$	—	$	59.1	$	59.1

June 30, 2014	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	—	$	11.3	$	11.3
Other assets	—		—		9.1		9.1
Total asset derivatives	$	—	$	—	$	20.4	$	20.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	4.3	$	4.7
Other liabilities	—		0.2		6.0		6.2
Total liability derivatives	$	—	$	0.6	$	10.3	$	10.9

16

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings or it becomes probable the forecasted transactions will not occur. The following is a summary of the (losses) gains related to cash flow hedges recognized during the three and nine months ended March 31, 2015 and 2014:

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(28.6	)	$	27.5		$	(71.8	)	$	23.0
Foreign exchange contracts	1.3			(0.3		)	3.4			(1.0		)
Total	$	(27.3	)	$	27.2		$	(68.4	)	$	22.0

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Three Months Ended March 31,						Three Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(2.0	)	$	0.2
Foreign exchange contracts	Net sales	0.9			(0.3		)	—			—
Forward interest rate swaps	Interest expense	0.1			0.1			—			—
Total		$	(5.9	)	$	(5.6	)	$	(2.0	)	$	0.2

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Nine Months Ended March 31,						Nine Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(8.4	)	$	(19.9	)	$	(2.2	)	$	(0.1	)
Foreign exchange contracts	Net sales	1.9			(0.8		)	—			—
Forward interest rate swaps	Interest expense	0.3			0.3			—			—
Total		$	(6.2	)	$	(20.4	)	$	(2.2	)	$	(0.1	)

The Company estimates that $18.1 million of net derivative losses included in AOCI as of March 31, 2015 will be reclassified into earnings within the next 12 months.

17

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The changes in AOCI associated with derivative hedging activities during the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Balance, beginning	$	(17.9	)	$	(35.5	)	$	7.6		$	(41.5	)
Current period changes in fair value, net of tax	(16.9		)	17.0			(42.6		)	13.7
Reclassification to earnings, net of tax	3.7			3.5			3.9			12.8
Balance, ending	$	(31.1	)	$	(15.0	)	$	(31.1	)	$	(15.0	)

According to the provisions of the Company’s derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. The Company’s contracts with these counterparties allow for netting of derivative instrument positions executed under each contract. As of March 31, 2015 and June 30, 2014, the Company had no cash collateral held by counterparties.

The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition, various master netting arrangements are in place with counterparties to facilitate settlements of gains and losses on these contracts.

13. Income Taxes

The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income taxes for the three months ended March 31, 2015 were a benefit of $0.9 million, or 39.1 percent of pre-tax loss as compared with expense of $15.6 million, or 33.8 percent of pre-tax income for the three months ended March 31, 2014. Income tax expense for the nine months ended March 31, 2015 was $19.6 million, or 35.1 percent of pre-tax income as compared with $47.4 million, or 33.4 percent of pre-tax income for the nine months ended March 31, 2014. The increase in the effective tax rate for the three months ended March 31, 2015 was primarily due to the disproportionate effect of a $0.1 million discrete tax item recorded during the three months ended March 31, 2015. Tax expense for the nine months endedMarch 31, 2015 includes net tax charges of $1.6 million for the unfavorable impact of bonus depreciation on domestic manufacturing benefits recorded in the prior year, net of additional research and development credits as a result of the December 2014 enactment of the Tax Increase and Prevention Act.

As of June 30, 2014, we had $128.4 million of indefinitely reinvested foreign earnings for which we had not provided deferred income taxes.  Due to the recent announcement of the $500.0 million share repurchase program, we have changed our intent with regard to the indefinite reinvestment of a portion of the foreign earnings of one of our foreign subsidiaries for 2014 and prior years.  As a result of this change, we repatriated approximately $38.0 million during this quarter with a minimal tax cost.  The remaining balance, approximately $90.0 million, of undistributed foreign earnings continues to be indefinitely reinvested.

18

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14. Superalloy Powders Technical Assistance and Powder Supply Agreements

On September 30, 2013, the Company entered into a multi-level agreement with United Technologies Corporation (“UTC”) through its Pratt & Whitney Division, which includes a technical assistance agreement and a long-term powder supply agreement. The technical assistance agreement provides for the licensing of technology associated with the production of superalloy powders. As a result of the agreements, the Company began construction of a superalloy powder facility which is expected to take approximately 18 months to construct at an estimated cost of $30 million. Once the facility is qualified by UTC, the Company will supply UTC with superalloy powder for up to 20 years. The powder supply agreement provides for minimum guaranteed purchase quantities of specified materials for a period of 12 years.

According to the terms of the technology licensing agreement, the Company paid a $13.0 million up-front license fee in equal quarterly installments beginning on December 15, 2013. This amount has been capitalized and will be amortized as a reduction to revenue over the term of the minimum guarantee period of 12 years. As of March 31, 2015 and June 30, 2014, the $13.0 million upfront license fee is included in other assets.

15. Business Segments

The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”).

The SAO segment is comprised of the Company’s major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe and surrounding areas in Pennsylvania, South Carolina and Alabama. The combined assets of the SAO operations are being managed in an integrated manner to optimize efficiency and profitability across the total system.

The PEP segment is comprised of the Company’s differentiated operations. This segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business, the Latrobe Special Metals Distribution business and Aceros Fortuna based in Mexico. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. 

The Company’s executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that management considers not representative of ongoing operations, such as restructuring related charges, transaction costs associated with acquisitions and other specifically-identified income or expense items.

The service cost component of the Company’s net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments. The residual net pension expense, which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest and deferrals”.

On a consolidated basis, one customer, Alcoa Inc., accounted for approximately 12 percent of the net sales for the three months ended March 31, 2015, and no significant individual customers accounted for 10 percent or more of the Company's net sales for the three months ended March 31, 2014. On a consolidated basis, there were no significant individual customers that accounted for 10 percent or more of the Company’s net sales for the nine months ended March 31, 2015 and 2014.

19

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Net Sales:
Specialty Alloys Operations	$	469.8		$	452.0		$	1,344.0		$	1,254.5
Performance Engineered Products	120.4			130.1			384.1			362.3
Intersegment	(19.6		)	(15.8		)	(59.3		)	(48.4		)
Consolidated net sales	$	570.6		$	566.3		$	1,668.8		$	1,568.4
Operating Income:
Specialty Alloys Operations	$	37.9		$	51.6		$	106.0		$	169.7
Performance Engineered Products	8.5			13.1			30.8			33.3
Corporate costs (including restructuring charges)	(38.6		)	(9.5		)	(55.9		)	(33.7		)
Pension earnings, interest and deferrals	(2.4		)	(6.0		)	(7.1		)	(15.8		)
Intersegment	(0.6		)	0.3			(1.9		)	(0.7		)
Consolidated operating income	$	4.8		$	49.5		$	71.9		$	152.8
Depreciation and Amortization:
Specialty Alloys Operations	$	23.9		$	20.3		$	70.7		$	59.4
Performance Engineered Products	5.7			5.9			17.7			17.7
Corporate	1.0			1.4			3.3			4.3
Intersegment	0.1			(0.1		)	(0.5		)	(0.5		)
Consolidated depreciation and amortization	$	30.7		$	27.5		$	91.2		$	80.9
Capital Expenditures:
Specialty Alloys Operations	$	15.2		$	89.3		$	119.5		$	279.1
Performance Engineered Products	8.1			4.3			31.0			16.4
Corporate	1.5			0.3			2.8			3.4
Intersegment	—			(0.3		)	(1.0		)	(0.7		)
Consolidated capital expenditures	$	24.8		$	93.6		$	152.3		$	298.2

	March 31, 2015			June 30, 2014
Total Assets:
Specialty Alloys Operations	$	2,387.6		$	2,454.8
Performance Engineered Products	515.7			491.7
Corporate	103.7			144.9
Intersegment	(39.6		)	(33.9		)
Consolidated total assets	$	2,967.4		$	3,057.5

20

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

16. Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in ASU 2014-09 requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The FASB voted on April 1, 2015 to propose a deferral of the effective date of this guidance by one year. Under the proposal, the Company would be required to adopt this standard for its interim and annual periods beginning after December 15, 2017. Early adoption is permitted for interim and annual periods beginning after December 15, 2016. The Company is evaluating the impact of the adoption of ASU 2014-09 on the Consolidated Financial Statements.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs. The guidance in ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The guidance in ASU 2015-03 is required for annual reporting periods beginning after December 15, 2015, including interim periods within the reporting period. Early adoption is permitted for financial statements that have not been previously issued. The Company is considering early adoption of the new standard and expects the impact on the Company's Consolidated Balance Sheets to be a reclassification of approximately $5.0 million from other assets to long-term debt as of June 30, 2015.

21

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

17. Reclassifications from Accumulated Other Comprehensive Income (Loss)

The changes in AOCI by component, net of tax, for the three months ended March 31, 2015 and 2014 were as follows:

Three Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2014	$	(17.9	)	$	(230.8	)	$	(0.4	)	$	(33.7	)	$	(282.8	)
Other comprehensive loss before reclassifications	(16.9		)	—			—			(9.9		)	(26.8		)
Amounts reclassified from AOCI (b)	3.7			3.0			—			—			6.7
Net current-period other comprehensive (loss) income	(13.2		)	3.0			—			(9.9		)	(20.1		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Three Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2013	$	(35.5	)	$	(266.1	)	$	(0.3	)	$	(15.3	)	$	(317.2	)
Other comprehensive income (loss) before reclassifications	17.0			—			—			(1.0		)	16.0
Amounts reclassified from AOCI (b)	3.5			3.7			—			—			7.2
Net current-period other comprehensive income (loss)	20.5			3.7			—			(1.0		)	23.2
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

22

CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The changes in AOCI by component, net of tax, for the nine months ended March 31, 2015 and 2014 were as follows:

Nine Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2014	$	7.6		$	(236.7	)	$	(0.4	)	$	(15.7	)	$	(245.2	)
Other comprehensive loss before reclassifications	(42.6		)	—			—			(27.9		)	(70.5		)
Amounts reclassified from AOCI (b)	3.9			8.9			—			—			12.8
Net current-period other comprehensive (loss) income	(38.7		)	8.9			—			(27.9		)	(57.7		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Nine Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2013	$	(41.5	)	$	(273.6	)	$	(0.4	)	$	(20.2	)	$	(335.7	)
Other comprehensive income before reclassifications	13.7			—			0.1			3.9			17.7
Amounts reclassified from AOCI (b)	12.8			11.2			—			—			24.0
Net current-period other comprehensive income	26.5			11.2			0.1			3.9			41.7
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

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CARPENTER TECHNOLOGY CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following is a summary of amounts reclassified from AOCI for the three and nine months ended March 31, 2015 and 2014:

($ in millions) (a)	Location of (loss) gain	Amount Reclassified from AOCI Three Months Ended March 31,						Amount Reclassified from AOCI Nine Months Ended March 31,
Details about AOCI Components		2015			2014			2015			2014
Cash flow hedging items:
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(8.4	)	$	(19.9	)
Foreign exchange contracts	Net sales	0.9			(0.3		)	1.9			(0.8		)
Forward interest rate swaps	Interest expense	0.1			0.1			0.3			0.3
	Total before tax	(5.9		)	(5.6		)	(6.2		)	(20.4		)
	Tax benefit	2.2			2.1			2.3			7.6
	Net of tax	$	(3.7	)	$	(3.5	)	$	(3.9	)	$	(12.8	)
Amortization of pension and other postretirement benefit plan items:
Net actuarial loss	(b)	$	(4.7	)	$	(5.8	)	$	(14.1	)	$	(17.2	)
Prior service cost	(b)	(0.1		)	(0.1		)	(0.3		)	(0.4		)
	Total before tax	(4.8		)	(5.9		)	(14.4		)	(17.6		)
	Tax benefit	1.8			2.2			5.5			6.4
	Net of tax	$	(3.0	)	$	(3.7	)	$	(8.9	)	$	(11.2	)

(a) Amounts in parentheses indicate debits to income/loss.

(b) These AOCI components are included in the computation of net periodic benefit cost (see Note 6 for additional details).

During the three months ended December 31, 2014, the Company identified an error related to the accounting for an equity method investment.  Since the investee’s financial statements are prepared using a functional currency other than the US dollar, the Company should be translating the Company’s investment balance into a US dollar equivalent at the end of each period. The impact of correcting this error was a $4.9 million reduction in other assets with an offsetting adjustment to accumulated other comprehensive loss in the Company’s consolidated balance sheet as of December 31, 2014. This adjustment is included in foreign currency translation in the consolidated statements of comprehensive (loss) income for the nine months ended March 31, 2015. The Company determined that neither the prior period error nor the current period adjustment were material to the periods presented.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Background and General

We are engaged in the manufacturing, fabrication and distribution of specialty metals. We primarily process basic raw materials such as nickel, cobalt, titanium, manganese, chromium, molybdenum, iron scrap and other metal alloying elements through various melting, hot forming and cold working facilities to produce finished products in the form of billet, bar, rod, wire and narrow strip in many sizes and finishes. We also produce certain metal powders. Our sales are distributed directly from our production plants and distribution network as well as through independent distributors. Unlike many other specialty steel producers, we operate our own worldwide network of service and distribution centers. These service centers, located in the United States, Canada, Mexico, Europe and Asia allow us to work more closely with customers and to offer various just-in-time stocking programs. We also manufacture and rent down-hole drilling tools and components used in the oil and gas industry.

As part of our overall business strategy, we have sought out and considered opportunities related to strategic acquisitions, divestitures and joint collaborations as well as possible business unit dispositions aimed at broadening our offering to the marketplace. We have participated with other companies to explore potential terms and structures of such opportunities and expect that we will continue to evaluate these opportunities.

Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in Item 7 of our 2014 Form 10-K. Our discussions here focus on our results during or as of the three and nine month periods ended March 31, 2015 and the comparable periods of fiscal year 2014, and to the extent applicable, on material changes from information discussed in the 2014 Form 10-K and other important intervening developments or information that we have reported on Form 8-K. These discussions should be read in conjunction with the 2014 Form 10-K for detailed background information and with any such intervening Form 8-K.

Impact of Raw Material Prices and Product Mix

We value most of our inventory utilizing the last-in, first-out (“LIFO”) inventory costing methodology. Under the LIFO inventory costing method, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period even though these materials may have been acquired at potentially significantly different values due to the length of time from the acquisition of the raw materials to the sale of the processed finished goods to the customers. In a period of rising raw material costs, the LIFO inventory valuation normally results in higher cost of sales. Conversely, in a period of decreasing raw material costs, the LIFO inventory valuation normally results in lower cost of sales.

The volatility of the costs of raw materials has impacted our operations over the past several years. We, and others in our industry, generally have been able to pass cost increases on major raw materials through to our customers using surcharges that are structured to recover increases in raw material costs. Generally, the formula used to calculate a surcharge is based on published prices of the respective raw materials for the previous month which correlates to the prices we pay for our raw material purchases. However, a portion of our surcharges to customers may be calculated using a different surcharge formula or may be based on the raw material prices at the time of order, which creates a lag between surcharge revenue and corresponding raw material costs recognized in cost of sales. The surcharge mechanism protects our net income on such sales except for the lag effect discussed above. However, surcharges have had a dilutive effect on our gross margin and operating margin percentages as described later in this report.

Approximately 25 percent of our net sales are sales to customers under firm price sales arrangements. Firm price sales arrangements involve a risk of profit margin fluctuations, particularly when raw material prices are volatile. In order to reduce the risk of fluctuating profit margins on these sales, we enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the related products sold. Firm price sales arrangements generally include certain annual purchasing commitments and consumption schedules agreed to by the customers at selling prices based on raw material prices at the time the arrangements are established. If a customer fails to meet the volume commitments (or the consumption schedule deviates from the agreed-upon terms of the firm price sales arrangements), the Company may need to absorb the gains or losses associated with the commodity forward contracts on a temporary basis. Gains or losses associated with commodity forward contracts are reclassified to earnings/loss when earnings are impacted by the hedged transaction. Because we value most of our inventory under the LIFO costing methodology, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period attempting to match the most recently incurred costs with revenues. Gains or losses on the commodity forward contracts are reclassified from other comprehensive (loss) income together with the actual purchase price of the underlying commodities when the underlying commodities are purchased and recorded in inventory. To the extent that the total purchase price of the commodities, inclusive of the gains or losses on the commodity forward contracts, are higher or

25

lower relative to the beginning of year costs, our cost of goods sold reflects such amounts. Accordingly, the gains and/or losses associated with commodity forward contracts may not impact the same period that the firm price sales arrangements revenue is recognized, and comparisons of gross profit from period to period may be impacted. These firm price sales arrangements are expected to continue as we look to strengthen our long-term customer relationships by expanding, renewing and in certain cases extending to a longer-term, our customer long-term arrangements.

We produce hundreds of grades of materials with a wide range of pricing and profit levels depending on the grade. In addition, our product mix within a period is subject to the fluctuating order patterns of our customers as well as decisions we may make on participation in certain products based on available capacity, including the impacts of capacity commitments we may have under existing customer agreements. While we expect to see positive contribution from a more favorable product mix in our margin performance over time, the impact by period may fluctuate and period-to-period comparisons may vary.

Net Pension Expense

Net pension expense, as we define it below, includes the net periodic benefit costs related to both our pension and other postretirement plans. The net periodic benefit costs are determined annually based on beginning of year balances and are recorded ratably throughout the fiscal year, unless a significant re-measurement event occurs. We currently expect that the total net periodic benefit costs for fiscal year 2015 will be $45.9 million as compared with $60.1 million in fiscal year 2014.  The following is the pension expense for the three and nine months ended March 31, 2015 and 2014:

	Three Months Ended March 31,				Nine Months Ended March 31,
($ in millions)	2015		2014		2015		2014
Pension plans	$	8.6	$	12.2	$	25.8	$	36.8
Other postretirement plans	2.9		2.8		8.8		8.4
Net periodic benefit costs	$	11.5	$	15.0	$	34.6	$	45.2

The service cost component of net pension expense represents the estimated cost of future pension liabilities earned associated with active employees. The pension earnings, interest and deferrals (“pension EID”) is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs.

Net pension expense is recorded in accounts that are included in both the cost of sales and selling, general and administrative expenses based on the function of the associated employees. The following is a summary of the classification of net pension expense for the three and nine months ended March 31, 2015 and 2014:

	Three Months Ended March 31,				Nine Months Ended March 31,
($ in millions)	2015		2014		2015		2014
Cost of sales
Service cost	$	7.3	$	7.1	$	22.0	$	21.2
Pension earnings, interest and deferrals	1.3		4.1		3.7		10.1
	$	8.6	$	11.2	$	25.7	$	31.3
Selling, general and administrative expenses
Service cost	$	1.8	$	1.9	$	5.5	$	6.0
Pension earnings, interest and deferrals	1.1		1.9		3.4		5.7
	$	2.9	$	3.8	$	8.9	$	11.7
Net pension expense	$	11.5	$	15.0	$	34.6	$	43.0

Historically, we capitalized only the service cost component of net pension expense related to manufacturing employees. Beginning with the quarter ended December 31, 2013, we began to capitalize the portion of pension EID related to current manufacturing employees in inventory. The impact of this change resulted in a reduction of pension EID of $2.2 million

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during the quarter ended December 31, 2013. The tables above include the impact of making this change during the quarter ended December 31, 2013 and as such pension EID expense included in cost of sales was reduced by $2.2 million. We will continue to expense the portion of pension EID related to inactive manufacturing employees as a period cost in cost of sales. For the three months ended March 31, 2015 and 2014, the amount of pension EID included in cost of sales related to inactive manufacturing employees was $0.7 million and $2.4 million, respectively. For the nine months ended March 31, 2015 and 2014, the amount of pension EID included in cost of sales related to inactive manufacturing employees was $2.1 million and $7.1 million, respectively. As of March 31, 2015 and June 30, 2014, amounts capitalized in gross inventory were $9.0 million and $9.2 million, respectively.

Operating Performance Overview

For the quarter ended March 31, 2015, we reported a net loss of $1.4 million, or $0.03 per diluted share. Excluding restructuring charges and special items, earnings per share would have been $0.32 per diluted share. This compares with net income for the same period a year earlier of $30.6 million, or $0.57 per diluted share, which included approximately $8.0 million, or $0.10 per diluted share of weather-related costs. Our operating results for the third quarter of fiscal year 2015 reflect an improving SAO product sales mix which was more than offset by the unfavorable impacts of operating cost increases, the current weakness in oil and gas businesses and unfavorable cost absorption as a result of reducing inventory.

We have taken various actions aimed at improving our operating performance and driving long-term growth and stockholder value, including:

- In March 2015, we initiated a restructuring plan expected to yield approximately $30.0 million of annual overhead cost savings.

- As a result of a focused effort in the third quarter of fiscal year 2015, we reduced inventory by approximately $46.0 million with further reductions planned in the fourth quarter of fiscal year 2015 as well as fiscal year 2016.

- We repurchased 1.2 million shares for approximately $50.0 million in the third quarter of fiscal year 2015.

- We strengthened our “continuous improvement process” in January 2015, with the introduction of the Business Management Office (BMO). This in-depth improvement effort is led by the CEO and CFO with support provided by external management consultants. The BMO is focused on profit optimization, operating cost improvement and inventory reduction.

We will continue to evaluate possible restructuring opportunities aimed at productivity improvements to optimize our infrastructure and drive cost savings both in the near-term and longer term.

Results of Operations — Three Months Ended March 31, 2015 vs. Three Months Ended March 31, 2014

Net Sales

Net sales for the three months ended March 31, 2015 were $570.6 million, which was a 1 percent increase over the same period a year ago. Excluding surcharge revenue, sales decreased1 percent on an 11 percent decrease in shipment volume from the same period a year ago reflecting a strengthening product mix.

Geographically, sales outside the United States increased 4 percent from the same period a year ago to $172.1 million for the three months ended March 31, 2015. The increase is due to additional sales to Asia and Europe in the aerospace and defense market partially offset by a decrease in sales to the energy market. International sales represented 30 percent and 29 percent of total net sales in this quarter and in prior year same quarter, respectively.

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Sales by End-Use Markets

We sell to customers across diversified end-use markets. The following table includes comparative information for our net sales, which includes surcharge revenue by principal end-use markets.  We believe this is helpful supplemental information in analyzing the performance of the business from period to period:

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015		2014
Aerospace and defense	$	275.5	$	255.3	$	20.2		8	%
Industrial and consumer	114.7		122.6		(7.9		)	(6	)
Energy	71.7		84.1		(12.4		)	(15	)
Transportation	43.0		38.2		4.8			13
Medical	31.6		30.4		1.2			4
Distribution	34.1		35.7		(1.6		)	(4	)
Total net sales	$	570.6	$	566.3	$	4.3		1	%

The following table includes comparative information for our net sales by the same principal end-use markets, but excluding surcharge revenue:

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2014		2014
Aerospace and defense	$	213.9	$	202.5	$	11.4		6	%
Industrial and consumer	92.0		98.0		(6.0		)	(6	)
Energy	60.8		72.5		(11.7		)	(16	)
Transportation	33.4		30.6		2.8			9
Medical	29.0		28.2		0.8			3
Distribution	33.8		35.4		(1.6		)	(5	)
Total net sales excluding surcharge revenue	$	462.9	$	467.2	$	(4.3	)	(1	)%

Sales to the aerospace and defense market increased8 percent from the third quarter a year ago to $275.5 million. Excluding surcharge revenue, sales increased6 percent from the third quarter a year ago on a 4 percent increase in shipment volume. The results reflect an increase in sales of engine materials and a stronger demand for fastener materials, partially offset by lower demand of structural and distribution activity.

Industrial and consumer market sales decreased6 percent from the third quarter a year ago to $114.7 million. Excluding surcharge revenue, sales decreased6 percent on a 27 percent decrease in shipment volume. The results reflect a decrease in revenue driven by reduced sales of commodity industrial and infrastructure materials partially offset by continued demand growth in materials used in high-end applications for consumer electronics.

Sales to the energy market of $71.7 million reflect a 15 percent decrease from the third quarter a year ago. Excluding surcharge revenue, sales decreased16 percent from a year ago on lower shipment volume of 22 percent. The decline in sales was driven by a decrease in materials for power generation applications which are subject to highly variable demand patterns. Also, the North American quarterly average directional rig count decreased 20 percent from the third quarter a year ago.

Transportation market sales increased13 percent from the third quarter a year ago to $43.0 million. Excluding surcharge revenue, sales increased9 percent on 5 percent higher shipment volume from the third quarter a year ago. The results reflect an improvement in product mix of materials supporting advancements in engine technologies. In addition, low fuel prices and lower interest rates drove up sales for vehicle platforms with higher Carpenter material content as sales of light vehicles increased 6 percent from the year ago period.

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Medical market sales increased4 percent from the third quarter a year ago to $31.6 million. Excluding surcharge revenue, sales increased3 percent on 7 percent higher shipment volume from the third quarter a year ago. The results reflect an increased demand for orthopedic implant and surgical instrument materials. Original Equipment Manufacturers (OEMs) appear to have resumed stabilized buying patterns, however the medical market pricing environment remains extremely competitive.

Sales by Product Class

The following table includes comparative information for our net sales by major product class:

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015		2014
Special alloys	$	261.9	$	237.9	$	24.0		10	%
Stainless steel	157.0		167.7		(10.7		)	(6	)
Alloy and tool steel	54.2		64.3		(10.1		)	(16	)
Titanium products	39.7		42.9		(3.2		)	(7	)
Powder metals	15.2		11.3		3.9			35
Distribution and other	42.6		42.2		0.4			1
Total net sales	$	570.6	$	566.3	$	4.3		1	%

The following table includes comparative information for our net sales by the same major product class, but excluding surcharge revenue:

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015		2014
Special alloys	$	188.6	$	175.0	$	13.6		8	%
Stainless steel	132.7		143.1		(10.4		)	(7	)
Alloy and tool steel	45.0		53.3		(8.3		)	(16	)
Titanium products	39.7		42.9		(3.2		)	(7	)
Powder metals	15.2		11.3		3.9			35
Distribution and other	41.7		41.6		0.1			—
Total net sales excluding surcharge revenue	$	462.9	$	467.2	$	(4.3	)	(1	)%

Sales of special alloys products increased10 percent from a year ago to $261.9 million. Excluding surcharge revenue, sales increased8 percent on a 7 percent increase in shipment volume.

Sales of stainless steel decreased6 percent from a year ago to $157.0 million. Excluding surcharge revenue, sales decreased7 percent on 21 percent lower shipment volume.

Sales of alloy and tool steel decreased16 percent from a year ago to $54.2 million. Excluding surcharge revenue, sales decreased16 percent on 13 percent lower shipment volume.

Sales of titanium products decreased7 percent from a year ago to $39.7 million on 6 percent lower volume.

Sales of powder metals increased35 percent from a year ago to $15.2 million on a 15 percent increase in shipment volume.

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Gross Profit

Our gross profit in the third quarter decreased20 percent to $75.8 million, or 13.3 percent of net sales (16.4 percent of net sales excluding surcharge), as compared with $94.5 million, or 16.7 percent of net sales (20.2 percent of net sales excluding surcharge), in the same quarter a year ago. The current quarter results reflect the impact of a stronger mix more than offset by higher operating costs, unfavorable cost absorption as a result of reducing inventory and incremental depreciation expense.

Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharge on gross margin for the comparative three month periods. See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

	Three Months Ended March 31,
($ in millions)	2015			2014
Net sales	$	570.6		$	566.3
Less: surcharge revenue	107.7			99.1
Net sales excluding surcharge revenue	$	462.9		$	467.2
Gross profit	$	75.8		$	94.5
Gross margin	13.3		%	16.7		%
Gross margin excluding dilutive effect of surcharge revenue	16.4		%	20.2		%

Selling, General and Administrative Expenses

Selling, general and administrative expenses of $45.7 million were 8.0 percent of net sales (9.9 percent of net sales excluding surcharge) as compared with $45.0 million and 7.9 percent of net sales (9.6 percent of net sales excluding surcharge) in the same quarter a year ago. Selling, general and administrative expenses increased due to consulting costs of $2.6 million related to the BMO and strategic business review partially offset by lower depreciation and amortization expense of $1.5 million relative to prior year levels.

Restructuring Charges

During the recent third quarter, we incurred $25.3 million of restructuring charges. We implemented a reduction in our workforce by approximately 200, or 10 percent, of the total salaried positions resulting in a charge of $10.6 million consisting primarily of various personnel-related costs to cover severance payments, medical coverage and related items. Also, we exited the ultra-fine grain materials development program resulting in a charge of $13.4 million during the recent third quarter. In addition, we announced the closure of a facility resulting in a charge of $1.3 million to reflect the write-down of certain property and equipment.

Operating Income

Our operating income in the recent third quarter was $4.8 million as compared with $49.5 million in the same period a year ago. Excluding surcharge revenue, pension EID, restructuring charges and special items, operating margin was 7.6 percent for the current quarter as compared with 13.6 percent a year ago. The results reflect the impact of a stronger mix that was more than offset by higher operating costs, unfavorable cost absorption as a result of reducing inventory and incremental depreciation expense.

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Operating income has been significantly impacted by our pension EID, which may be volatile based on conditions in the financial markets, as well as restructuring charges and special items. The following presents our operating income and operating margin, in each case excluding the impact of surcharge revenue on net sales, pension EID, restructuring charges and special items. We present and discuss these financial measures because management believes removing these items provides a more consistent and meaningful basis for comparing ongoing results of operations from period to period. See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

	Three Months Ended March 31,
($ in millions)	2015			2014
Net sales	$	570.6		$	566.3
Less: surcharge revenue	107.7			99.1
Net sales excluding surcharge revenue	$	462.9		$	467.2
Operating income	$	4.8		$	49.5
Pension EID	2.4			6.0
Operating income excluding pension EID	7.2			55.5
Restructuring charges and special items:
Restructuring charges	25.3			—
Consulting costs	2.6			—
Weather-related costs	—			8.0
Operating income excluding pension EID, restructuring charges and special items	$	35.1		$	63.5
Operating margin	0.8		%	8.7		%
Operating margin excluding surcharge revenue, pension EID, restructuring charges and special items	7.6		%	13.6		%

In addition to the impacts of the surcharge mechanism and pension EID, fluctuations in raw material prices (combined with fluctuations in inventory levels) and the lag effect of the surcharge mechanism have impacted our operating income from quarter to quarter. We estimate that the effect of such combined fluctuations positively impacted our operating margin, excluding surcharge revenue, by 90 basis points during the recent third quarter and positively impacted our operating margin by 10 basis points, during the prior year’s third quarter.

Interest Expense

Interest expense for the quarter was $7.1 million compared with $2.7 million in the third quarter a year ago. Included in these amounts is capitalized interest of $0.6 million in the current quarter compared to $5.4 million in the same quarter a year ago which reflects the impact of placing a significant amount of the assets, attributable to the construction project at our Athens manufacturing plant, in service late in fiscal year 2014. 

Income Taxes

Income tax in the recent third quarter was a benefit of $0.9 million, or 39.1 percent of pre-tax loss versus expense of$15.6 million, or 33.8 percent of pre-tax income in the same quarter a year ago. Due to the loss before income taxes for the three months ended March 31, 2015, the increase in the effective tax rate was primarily due to a discrete item recorded in the current third quarter having a disproportionate impact on the reported effective tax rate.

As of June 30, 2014, we had $128.4 million of indefinitely reinvested foreign earnings for which we had not provided deferred income taxes.  Due to the recent announcement of the $500.0 million share repurchase program, we have changed our intent with regard to the indefinite reinvestment of a portion of the foreign earnings of one of our foreign subsidiaries for 2014 and prior years.  As a result of this change, we repatriated approximately $38.0 million during this quarter with a minimal tax cost.  The remaining balance, approximately $90.0 million, of undistributed foreign earnings continues to be indefinitely reinvested.

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Business Segment Results

We have two reportable business segments: Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”).

The following table includes comparative information for volumes by business segment:

	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)
(Pounds sold, in thousands)	2015		2014
Specialty Alloys Operations	67,232		74,836		(7,604	)	(10	)%
Performance Engineered Products	3,806		3,108		698		22
Intersegment	(1,986	)	(364	)	(1,622	)	(446	)
Consolidated pounds sold	69,052		77,580		(8,528	)	(11	)%

The following table includes comparative information for net sales by business segment:

	Three Months Ended March 31,						$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015			2014
Specialty Alloys Operations	$	469.8		$	452.0		$	17.8		4	%
Performance Engineered Products	120.4			130.1			(9.7		)	(7	)
Intersegment	(19.6		)	(15.8		)	(3.8		)	(24	)
Total net sales	$	570.6		$	566.3		$	4.3		1	%

The following table includes comparative information for our net sales by business segment, but excluding surcharge revenue:

	Three Months Ended March 31,						$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015			2014
Specialty Alloys Operations	$	360.0		$	351.4		$	8.6		2	%
Performance Engineered Products	120.1			129.8			(9.7		)	(7	)
Intersegment	(17.2		)	(14.0		)	(3.2		)	(23	)
Total net sales excluding surcharge revenue	$	462.9		$	467.2		$	(4.3	)	(1	)%

Specialty Alloys Operations Segment

Net sales for the quarter ended March 31, 2015 for the SAO segment increased4 percent to $469.8 million, as compared with $452.0 million in the same quarter a year ago. Excluding surcharge revenue, net sales increased2 percent on 10 percent lower shipment volume from a year ago.  The results reflect strengthening product mix particularly in the aerospace and defense market compared to the prior year quarter.

Operating income for the SAO segment was $37.9 million or 8.1 percent of net sales (10.5 percent of net sales excluding surcharge revenue) in the recent third quarter, as compared with $51.6 million or 11.4 percent of net sales (14.7 percent of net sales excluding surcharge revenue) in the same quarter a year ago. The decrease in operating income reflects a stronger mix more than offset by higher operating costs, unfavorable cost absorption as a result of reducing inventory and incremental depreciation expense.

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Performance Engineered Products Segment

Net sales for the quarter ended March 31, 2015 for the PEP segment decreased7 percent to $120.4 million, as compared with $130.1 million in the same quarter a year ago. Excluding surcharge revenue, net sales of $120.1 milliondecreased7 percent from a year ago. The results reflect decreased net sales in rentals and down-hole drilling tools due to the current weakness in the oil and gas businesses partially offset by increased shipment volume of powder products.

Operating income for the PEP segment was $8.5 million or 7.1 percent of net sales in the recent third quarter, compared with $13.1 million or 10.1 percent of net sales in the same quarter a year ago. The results reflect the impacts of decreased sales in the oil and gas businesses due to the current economic conditions partially offset by improved operating performance in the powder products business.

Results of Operations — Nine Months EndedMarch 31, 2015 vs. Nine Months EndedMarch 31, 2014

Net Sales

Net sales for the nine months ended March 31, 2015 were $1,668.8 million, which was a 6 percent increase over the same period a year ago. Excluding surcharge revenue, sales increased4 percent on 1 percent lower shipment volume from the same period a year ago. The results reflect sales increasing in all of our end-use markets and a strengthening product mix.

Geographically, sales outside the United States increased 6 percent from the same period a year ago to $484.6 million for the nine months ended March 31, 2015. The increase is due to additional sales to Asia and Europe in all the end-use markets except for the energy market. International sales represented 29 percent of total net sales for the nine months ended March 31, 2015 and 2014.

Sales by End-Use Markets

We sell to customers across diversified end-use markets. The following table includes comparative information for our net sales, which includes surcharge revenue by principal end-use markets.  We believe this is helpful supplemental information in analyzing the performance of the business from period to period:

	Nine Months Ended March 31,				$ Increase		% Increase
($ in millions)	2015		2014
Aerospace and defense	$	753.5	$	709.6	$	43.9	6	%
Industrial and consumer	365.6		344.1		21.5		6
Energy	231.0		224.3		6.7		3
Transportation	126.5		106.0		20.5		19
Medical	89.2		81.8		7.4		9
Distribution	103.0		102.6		0.4		—
Total net sales	$	1,668.8	$	1,568.4	$	100.4	6	%

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The following table includes comparative information for our net sales by the same principal end-use markets, but excluding surcharge revenue:

	Nine Months Ended March 31,				$ Increase		% Increase
($ in millions)	2015		2014
Aerospace and defense	$	583.7	$	563.2	$	20.5	4	%
Industrial and consumer	287.2		272.7		14.5		5
Energy	198.9		196.4		2.5		1
Transportation	95.4		84.5		10.9		13
Medical	81.4		75.5		5.9		8
Distribution	102.1		101.6		0.5		—
Total net sales excluding surcharge revenue	$	1,348.7	$	1,293.9	$	54.8	4	%

Sales to the aerospace and defense market increased6 percent from the same period a year ago to $753.5 million. Excluding surcharge revenue, sales increased4 percent from the same period a year ago on a 4 percent increase in shipment volume. The results reflect an increase in sales of fastener materials and a stronger demand for engine materials, partially offset by lower demand for structural and defense activity. 

Industrial and consumer market sales increased6 percent from the same period a year ago to $365.6 million. Excluding surcharge revenue, sales increased5 percent on a 9 percent decrease in shipment volume. The results reflect a favorable shift in product mix related to high-end consumer electronics and industrial capital goods.

Sales to the energy market of $231.0 million reflect a 3 percent increase from the same period a year ago. Excluding surcharge revenue, sales increased1 percent from a year ago on higher shipment volume of 4 percent. The results reflect demand growth in the oil and gas sector in the first half of fiscal year 2015 partially offset by decreased sales in the power generation sector. Depressed oil prices impacted business activity in the current third quarter. 

Transportation market sales increased19 percent from the same period a year ago to $126.5 million. Excluding surcharge revenue, sales increased13 percent on 9 percent higher shipment volume from the same period a year ago. The results reflect strengthening mix related to engine systems. North American sales of vehicles increased from the year ago period. In addition, low fuel prices drove up sales for vehicle platforms with higher Carpenter material content.

Medical market sales increased9 percent from the same period a year ago to $89.2 million. Excluding surcharge revenue, sales increased8 percent on 13 percent higher shipment volume from the same period a year ago. Higher sales reflect a continuing increased demand for orthopedic and surgical instrument materials. In addition, Original Equipment Manufacturers (OEMs) appear to have resumed stabilized buying patterns. However, the medical market pricing environment remains extremely competitive.

Sales by Product Class

The following table includes comparative information for our net sales by major product class:

	Nine Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015		2014
Special alloys	$	731.5	$	659.9	$	71.6		11	%
Stainless steel	481.9		462.3		19.6			4
Alloy and tool steel	162.3		175.6		(13.3		)	(8	)
Titanium products	119.6		113.6		6.0			5
Powder metals	46.0		33.5		12.5			37
Distribution and other	127.5		123.5		4.0			3
Total net sales	$	1,668.8	$	1,568.4	$	100.4		6	%

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The following table includes comparative information for our net sales by the same major product class, but excluding surcharge revenue:

	Nine Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015		2014
Special alloys	$	519.8	$	483.7	$	36.1		7	%
Stainless steel	406.2		395.8		10.4			3
Alloy and tool steel	132.0		145.8		(13.8		)	(9	)
Titanium products	119.6		113.6		6.0			5
Powder metals	46.0		33.5		12.5			37
Distribution and other	125.1		121.5		3.6			3
Total net sales excluding surcharge revenue	$	1,348.7	$	1,293.9	$	54.8		4	%

Sales of special alloys products increased11 percent from a year ago to $731.5 million. Excluding surcharge revenue, sales increased7 percent on a 9 percent increase in shipment volume.

Sales of stainless steel increased4 percent from a year ago to $481.9 million. Excluding surcharge revenue, sales increased3 percent on a 4 percent lower shipment volume.

Sales of alloy and tool steel decreased8 percent from a year ago to $162.3 million. Excluding surcharge revenue, sales decreased9 percent on a 7 percent lower shipment volume.

Sales of titanium products increased5 percent from a year ago to $119.6 million on an 8 percent higher shipment volume.

Sales of powder metals increased37 percent from a year ago to $46.0 million on a 16 percent increase in shipment volume.

Gross Profit

Our gross profit in the nine months endedMarch 31, 2015decreased22 percent to $229.9 million, or 13.8 percent of net sales (17.0 percent of net sales excluding surcharge), as compared with $293.2 million, or 18.7 percent of net sales (22.7 percent of net sales excluding surcharge), in the same period a year ago. The results reflect sales increasing in all of our end-use markets and a strengthening product mix more than offset by higher operating costs and incremental depreciation expense.

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Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharge on gross margin for the comparative nine month periods. See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

	Nine Months Ended March 31,
($ in millions)	2015			2014
Net sales	$	1,668.8		$	1,568.4
Less: surcharge revenue	320.1			274.5
Net sales excluding surcharge revenue	$	1,348.7		$	1,293.9
Gross profit	$	229.9		$	293.2
Gross margin	13.8		%	18.7		%
Gross margin excluding dilutive effect of surcharge revenue	17.0		%	22.7		%

Selling, General and Administrative Expenses

Selling, general and administrative expenses of $132.7 million were 8.0 percent of net sales (9.8 percent of net sales excluding surcharge) for the nine months ended March 31, 2015 as compared with $140.4 million or 9.0 percent of net sales (10.9 percent of net sales excluding surcharge) in the same period a year ago. Selling, general and administrative expenses decreased primarily due to lower variable compensation expense of $5.5 million and lower depreciation and amortization expense of $3.4 million compared to the same period a year ago partially offset by consulting costs of $2.6 million related to the BMO and strategic business review.

Restructuring Charges

During the nine months ended March 31, 2015, we incurred $25.3 million of restructuring charges. We implemented a reduction in our workforce of approximately 200, or 10 percent, of the total salaried positions resulting in a charge of $10.6 million consisting primarily of various personnel-related costs to cover severance payments, medical coverage and related items. Also, we exited the ultra-fine grain materials development program resulting in a charge of $13.4 million during the nine months ended March 31, 2015. In addition, we announced the closure of a facility resulting in a charge of $1.3 million to reflect the write-down of certain property and equipment.

Operating Income

Our operating income in the nine months ended March 31, 2015 was $71.9 million as compared with $152.8 million in the same period a year ago. Excluding surcharge revenue, pension EID, restructuring charges and special items, operating margin was 7.9 percent for the nine months ended March 31, 2015 as compared with 13.6 percent a year ago. The results reflect sales increasing in all end-use markets, strengthening product mix and lower variable compensation expense more than offset by higher operating costs and incremental depreciation expense.

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Operating income has been significantly impacted by our pension EID, which may be volatile based on conditions in the financial markets, as well as restructuring charges and special items. The following presents our operating income and operating margin, in each case excluding the impact of surcharge on net sales, pension EID, restructuring charges and special items. We present and discuss these financial measures because management believes removing the impact of these items provides a more consistent and meaningful basis for comparing results of operations from period to period. See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

	Nine Months Ended March 31,
($ in millions)	2015			2014
Net sales	$	1,668.8		$	1,568.4
Less: surcharge revenue	320.1			274.5
Net sales excluding surcharge revenue	$	1,348.7		$	1,293.9
Operating income	$	71.9		$	152.8
Pension EID	7.1			15.8
Operating income excluding pension EID	79.0			168.6
Restructuring charges and special items:
Restructuring charges	25.3			—
Consulting costs	2.6			—
Weather-related costs	—			8.0
Operating income excluding pension EID, restructuring charges and special items	$	106.9		$	176.6
Operating margin	4.3		%	9.7		%
Operating margin excluding surcharge revenue, pension EID, restructuring charges and special items	7.9		%	13.6		%

In addition to the impacts of the surcharge mechanism and pension EID, fluctuations in raw material prices (combined with fluctuations in inventory levels) and the lag effect of the surcharge mechanism have impacted our operating income from period to period. We estimate that the effect of such combined fluctuations positively impacted our operating margin, excluding surcharge revenue, by 10 basis points during the nine months ended March 31, 2015 and positively impacted our operating margin, excluding surcharge revenue, by 30 basis points during the nine months ended March 31, 2014.

Interest Expense

Interest expense for the nine months endedMarch 31, 2015 was $20.9 million compared with $10.8 million in the year ago period. Included in these amounts is capitalized interest of $2.0 million during the nine months ended March 31, 2015 compared to $13.3 million the same period a year ago which reflects the impact of placing a significant amount of the assets, attributable to the construction project at our Athens manufacturing plant, in service late in fiscal year 2014.

Other Income, Net

Other income was $4.8 million for the recent nine months endedMarch 31, 2015 compared to other income of $0.1 million in the year ago period. The nine months endedMarch 31, 2015 includes a $4.4 million favorable legal settlement.

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Income Taxes

Income taxes in the nine months endedMarch 31, 2015 were $19.6 million, or 35.1 percent of pre-tax income versus $47.4 million, or 33.4 percent of pre-tax income in the nine months endedMarch 31, 2014. On December 19, 2014, the Tax Increase Prevention Act of 2014 was enacted which retroactively extended the research and development credit as well as bonus depreciation.  As a result of the enactment, we recorded a net tax charge of $1.6 million in the nine months endedMarch 31, 2015 for the unfavorable impact of bonus depreciation on domestic manufacturing benefits offset by additional research and development credits.

Business Segment Results

We have two reportable business segments: SAO and PEP.

The following table includes comparative information for volumes by business segment:

	Nine Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)
(Pounds sold, in thousands)	2015		2014
Specialty Alloys Operations	202,952		204,982		(2,030	)	(1	)%
Performance Engineered Products	11,064		8,458		2,606		31
Intersegment	(5,506	)	(3,590	)	(1,916	)	(53	)
Consolidated pounds sold	208,510		209,850		(1,340	)	(1	)%

The following table includes comparative information for net sales by business segment:

	Nine Months Ended March 31,						$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015			2014
Specialty Alloys Operations	$	1,344.0		$	1,254.5		$	89.5		7	%
Performance Engineered Products	384.1			362.3			21.8			6
Intersegment	(59.3		)	(48.4		)	(10.9		)	(23	)
Total net sales	$	1,668.8		$	1,568.4		$	100.4		6	%

The following table includes comparative information for our net sales by business segment, but excluding surcharge revenue:

	Nine Months Ended March 31,						$ Increase (Decrease)			% Increase (Decrease)
($ in millions)	2015			2014
Specialty Alloys Operations	$	1,016.4		$	975.5		$	40.9		4	%
Performance Engineered Products	383.1			360.7			22.4			6
Intersegment	(50.8		)	(42.3		)	(8.5		)	(20	)
Total net sales excluding surcharge revenue	$	1,348.7		$	1,293.9		$	54.8		4	%

Specialty Alloys Operations Segment

Net sales for the nine months endedMarch 31, 2015 for the SAO segment increased7 percent to $1,344.0 million, as compared with $1,254.5 million in the same period a year ago. Excluding surcharge revenue, net sales increased4 percent on 1 percent lower shipment volume from a year ago.  The results reflect an increase in sales in all end-use markets and strengthening product mix compared to the prior year same period.

Operating income for the SAO segment was $106.0 million or 7.9 percent of net sales (10.4 percent of net sales excluding surcharge revenue) in the recent nine months endedMarch 31, 2015 as compared with $169.7 million or 13.5 percent of net sales (17.4 percent of net sales excluding surcharge revenue) in the same period a year ago. The decrease in operating

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income reflects strengthening mix more than offset by higher operating costs and incremental depreciation expense related to our Athens facility.

Performance Engineered Products Segment

Net sales for the nine months endedMarch 31, 2015 for the PEP segment increased6 percent to $384.1 million, as compared with $362.3 million in the same period a year ago. Excluding surcharge revenue net sales increased6 percent from a year ago. The results reflect increased net sales in all the PEP businesses primarily driven by rentals and sales of down-hole drilling tools during the first half of fiscal year 2015, sales of powder products and sales of titanium bar and wire products.

Operating income for the PEP segment was $30.8 million or 8.0 percent of net sales in the recent nine months endedMarch 31, 2015, compared with $33.3 million or 9.2 percent of net sales in the same period a year ago. The results reflect the impacts of the weak market conditions in the oil and gas businesses experienced during the third quarter of the current year partially offset by improved performance in the powder products business.

Liquidity and Financial Resources

During the nine months ended March 31, 2015, we generated cash flows from operations of $148.4 million, as compared with $144.0 million in the same period a year ago. The results reflect a decrease in net income of $58.5 million offset primarily by realization of a cash tax benefit of approximately $63.0 million in the third quarter of fiscal year 2015 as a result of the tax enactment of the extenders legislation. We continue to actively manage working capital levels and currently expect the inventory reduction initiatives that we began to execute against in the third quarter of fiscal year 2015 will have continued benefits on our cash flows from operations in future periods.

Our free cash flow, which we define under “Non-GAAP Financial Measures” below, was negative $32.5 million as compared to negative $182.7 million for the same period a year ago. The increase in free cash flow reflects significantly lower capital spending levels largely related to the winding down in capital expenditures associated with the construction of our Athens facility.  Capital expenditures for plant, equipment and software were $152.3 million, which included $73.5 million related to the construction of the Athens facility, for the nine months ended March 31, 2015, as compared with $298.2 million, which included $236.3 million related to Athens for the same period a year ago.

Dividends during the nine months ended March 31, 2015 and 2014 were $28.8 million and $28.8 million, respectively, and were paid at the same quarterly rate of $0.18 per share of common stock in both periods.

We generally target minimum liquidity, consisting of cash and cash equivalents added to available borrowing capacity under our credit agreement, of $150.0 million. Our syndicated revolving credit agreement (“Credit Agreement”) contains a revolving credit commitment of $500.0 million and expires in June 2018. As of March 31, 2015, we had $8.2 million of issued letters of credit. The balance of the Credit Agreement ($491.8 million) remains available to us. As of March 31, 2015, we had total liquidity of approximately $521.2 million, including $29.4 million of cash and cash equivalents.

We have demonstrated the ability to generate cash to meet our needs through cash flows from operations, management of working capital and the availability of outside sources of financing to supplement internally generated funds. We believe that our cash and cash equivalents of $29.4 million as of March 31, 2015, together with cash generated from operations and available borrowing capacity of approximately $491.8 million under our credit facilities will be sufficient to fund our cash needs over the foreseeable future. From time to time during the nine months ended March 31, 2015 we have borrowed under our Credit Agreement. The weighted average daily borrowing under the Credit Agreement during the nine months ended March 31, 2015 was approximately $60.0 million with daily outstanding borrowings ranging from $0.0 million to $144.7 million during the period.

During the nine months ended March 31, 2015, we made $5.5 million in cash contributions to our qualified pension plans, and expect to make approximately $1.7 million of cash contributions to our qualified pension plans for the remainder of fiscal year 2015.

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As of March 31, 2015, we had cash and cash equivalents of approximately $26.7 million held at various foreign subsidiaries. Our global cash deployment considers, among other things, the geographic location of our subsidiaries’ cash balances, the locations of our anticipated liquidity needs, and the cost to access international cash balances, as necessary. The repatriation of cash from certain foreign subsidiaries could have adverse tax consequences as we may be required to pay and record U.S. income taxes and foreign withholding taxes in various tax jurisdictions on these funds to the extent they were previously considered permanently reinvested. During the three and nine months ended March 31, 2015 we repatriated cash of approximately $30.0 million from foreign jurisdictions that resulted in minimal tax cost.

During the nine months ended March 31, 2015, we used $60.3 million to purchase 1,411,772 shares of common stock pursuant to the terms of the share repurchase program authorized by our Board of Directors in October 2014. As of March 31, 2015, $439.7 million remains available for future purchases.

We are subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio (3.50 to 1.00 as of March 31, 2015). The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization and non-cash net pension expense (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. As of March 31, 2015, the Company was in compliance with all of the covenants of the Credit Agreement.

The following table shows our actual ratio performance with respect to the financial covenants, as of March 31, 2015:

	Covenant Requirement	Actual Ratio
Consolidated interest coverage	3.50 to 1.00 (minimum)	11.5 to 1.00
Consolidated debt to capital	55% (maximum)	31%

We continue to believe that we will maintain compliance with the financial and restrictive covenants in future periods. To the extent that we do not comply with the covenants under the Credit Agreement, this could reduce our liquidity and flexibility due to potential restrictions on borrowings available to us unless we are able to obtain waivers or modifications of the covenants.

Non-GAAP Financial Measures

The following provides additional information regarding certain non-GAAP financial measures that we use in this report. Our definitions and calculations of these items may not necessarily be the same as those used by other companies.

Net Sales and Gross Margin Excluding Surcharge Revenue

This report includes discussions of net sales and gross margin as adjusted to exclude the impact of raw material surcharge, which represent financial measures that have not been determined in accordance with U.S. GAAP. We present and discuss these financial measures because management believes removing the impact of raw material surcharge from net sales and gross margin provides a more consistent basis for comparing results of operations from period to period for the reasons discussed earlier in this report. See our earlier discussion of “Gross Profit” for a reconciliation of net sales and gross margin, excluding surcharge revenue, to net sales as determined in accordance with U.S. GAAP. Net sales and gross margin excluding surcharge revenue is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, net sales and gross margin calculated in accordance with U.S. GAAP.

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Operating Income and Operating Margin Excluding Surcharge Revenue, Pension EID, Restructuring Charges and Special Items

This report includes discussions of operating income and operating margin as adjusted to exclude the impact of raw material surcharge, pension EID, restructuring charges and special items which represent financial measures that have not been determined in accordance with U.S. GAAP. We present and discuss these financial measures because management believes removing the impact of raw material surcharge from net sales provides a more consistent and meaningful basis for comparing results of operations from period to period for the reasons discussed earlier in this report. In addition, management believes that excluding pension earnings, interest and deferrals expense, restructuring charges and special items from operating income and operating margin is helpful in analyzing our operating performance particularly as pension EID may be volatile due to changes in the financial markets and restructuring charges and special items are not indicative of ongoing operating performance. See our earlier discussion of operating income for a reconciliation of operating income and operating margin excluding pension EID, restructuring charges and special items to operating income and operating margin determined in accordance with U.S. GAAP. Operating income and operating margin excluding surcharge revenue, pension EID, restructuring charges and special items is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, operating income and operating margin calculated in accordance with U.S. GAAP.

Adjusted Earnings Per Share

The following provides a reconciliation of adjusted earnings per share, to its most directly comparable U.S. GAAP financial measures:

(in millions, except per share amounts)	(Loss) Income Before Income Taxes			Income Tax (Benefit) Expense			Net (Loss) Income			(Loss) Earnings Per Diluted Share*
Three months ended March 31, 2015, as reported	$	(2.3	)	$	(0.9	)	$	(1.4	)	$	(0.03	)
Restructuring charges	25.3			8.7			16.6			0.32
Consulting costs	2.6			0.9			1.7			0.03
Total impact of restructuring charges and special items	27.9			9.6			18.3			0.35
Three months ended March 31, 2015, as adjusted	$	25.6		$	8.7		$	16.9		$	0.32
* Impact per diluted share calculated using weighted average common shares outstanding of 52.6 million.

Management believes that the presentation of earnings per share adjusted to exclude the impacts of restructuring charges and special items is helpful in analyzing the operating performance of the Company, as these costs are not indicative of ongoing operating performance. Our definitions and calculations of these items may not necessarily be the same as those used by other companies. Adjusted earnings per share is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, earnings per share calculated in accordance with U.S. GAAP.

Free Cash Flow

The following provides a reconciliation of free cash flow, as used in this report, to its most directly comparable U.S. GAAP financial measures:

	Nine Months Ended March 31,
($ in millions)	2015			2014
Net cash provided from operating activities	$	148.4		$	144.0
Purchases of property, equipment and software	(152.3		)	(298.2		)
Proceeds from disposals of property and equipment	0.2			0.3
Dividends paid	(28.8		)	(28.8		)
Free cash flow	$	(32.5	)	$	(182.7	)

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Management believes that the presentation of free cash flow provides useful information to investors regarding our financial condition because it is a measure of cash generated which management evaluates for alternative uses. It is management’s current intention to use excess cash to fund investments in capital equipment, acquisition opportunities, treasury stock purchases and consistent dividend payments. Free cash flow is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, cash flows calculated in accordance with U.S. GAAP.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

The following provides a reconciliation of adjusted EBITDA, to its most directly comparable U.S. GAAP financial measures:

	Three Months Ended March 31,					Nine Months Ended March 31,
($ in millions)	2015			2014		2015			2014
Net (loss) income	$	(1.4	)	$	30.6	$	36.2		$	94.7
Interest expense, net	7.1			2.7		20.9			10.8
Income tax (benefit) expense	(0.9		)	15.6		19.6			47.4
Depreciation and amortization	30.7			27.5		91.2			80.9
Other expense (income), net	—			0.6		(4.8		)	(0.1		)
EBITDA	$	35.5		$	77.0	$	163.1		$	233.7
Net pension expense	11.5			15.0		34.6			43.0
Adjusted EBITDA	$	47.0		$	92.0	$	197.7		$	276.7

Management believes that adjusted EBITDA is helpful in analyzing the operating performance of the Company. Our definitions and calculations of these items may not necessarily be the same as those used by other companies. Adjusted EBITDA is not a measure of liquidity or profitability and should not be considered as an alternative to net (loss) income, operating income, net cash provided from operating activities or any other measure determined in accordance with U.S. GAAP.

Contingencies

Environmental

We are subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. Although compliance with these laws and regulations may affect the costs of our operations, compliance costs to date have not been material. We have environmental remediation liabilities at some of our owned operating facilities and have been designated as a potentially responsible party (“PRP”) with respect to certain third party Superfund waste-disposal sites and other third party-owned sites. Additionally, we have been notified that we may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against us. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites have been determined. The liability for future environmental remediation costs is evaluated on a quarterly basis. We accrue amounts for environmental remediation costs that represent our best estimate of the probable and reasonably estimable undiscounted future costs related to environmental remediation. During the nine months ended March 31, 2015, we increased the liability for a company-owned former operating site by $0.2 million. The liabilities recorded for environmental remediation costs at Superfund sites, other third party-owned sites and Carpenter-owned current or former operating facilities remaining at March 31, 2015 and June 30, 2014 were $15.7 million and $15.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s. Based upon information currently available, such future costs are not expected to have a material effect on our financial position, results of operations or cash flows over the long-term.  However, such costs could be material to our financial position, results of operations or cash flows in a particular future quarter or year.

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Other

 We are defending various routine claims and legal actions that are incidental to our business, and that are common to our operations, including those pertaining to product claims, commercial disputes, patent infringement, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims and tax issues. Like many other manufacturing companies in recent years we, from time to time, have been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace. We provide for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable. The effect of the outcome of these matters on our future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, we believe that the total liability from these matters will not have a material effect on our financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to our financial position, results of operations or cash flows in a particular future quarter or year.

Critical Accounting Policies and Estimates

A summary of other significant accounting policies is discussed in our 2014 Form 10-K Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and in Note 1, Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 thereto.

Forward-Looking Statements

This Quarterly Report on Form 10Q contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertainties are described in Carpenter’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended June 30, 2014. They include but are not limited to: (1) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace, defense, industrial, transportation, consumer, medical and energy, or other influences on Carpenter’s business such as new competitors, the consolidation of competitors, customers and suppliers, or the transfer of manufacturing capacity from the United States to foreign countries; (2) the ability of Carpenter to achieve cash generation, growth, earnings, profitability, cost savings and reductions, productivity improvements or process changes; (3) the ability to recoup increases in the cost of energy, raw materials, freight or other factors; (4) domestic and foreign excess manufacturing capacity for certain metals; (5) fluctuations in currency exchange rates; (6) the degree of success of government trade actions; (7) the valuation of the assets and liabilities in Carpenter’s pension trusts and the accounting for pension plans; (8) possible labor disputes or work stoppages; (9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; (10) the ability to successfully acquire and integrate acquisitions; (11) the availability of credit facilities to Carpenter, its customers or other members of the supply chain; (12) the ability to obtain energy or raw materials, especially from suppliers located in countries that may be subject to unstable political or economic conditions; (13) Carpenter’s manufacturing processes are dependent upon highly specialized equipment located primarily in facilities in Reading, Latrobe and Athens for which there may be limited alternatives if there are significant equipment failures or a catastrophic event; (14) the ability to hire and retain key personnel, including members of the executive management team, management, metallurgists and other skilled personnel; (15) fluctuations in oil and gas prices and production; (16) the success of restructuring actions; and (17) share repurchases are at Carpenter’s discretion and could be affected by changes in Carpenter’s share price, operating results, capital spending, cash flows, inventory, acquisitions, investments, tax laws and general market conditions. Any of these factors could have an adverse and/or fluctuating effect on Carpenter’s results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We use derivative financial instruments to reduce certain types of financial risk. Firm price sales arrangements involve a risk of profit margin fluctuations particularly as raw material prices have been volatile. As discussed in Note 12 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, “Financial Statements”, in order to reduce the risk of fluctuating profit margins on these sales, we enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the products sold under the firm price sales arrangements. If a customer fails to perform its obligations under the firm price sales arrangements, we may realize losses as a result of the related commodity forward contracts. As of March 31, 2015, we had approximately $55.5 million of net deferred losses related to commodity forward contracts to purchase certain raw materials. A large portion of this balance is related to commodity forward contracts to support firm price sales arrangements associated with many customers. However, approximately 62 percent of these deferred losses relate to commodity forward contracts entered into to support sales under firm price sales arrangements with one customer in addition to the credit already extended to this customer in connection with outstanding trade receivables. Our customers have historically performed under these arrangements, and we believe that they will honor such obligations in the future.

We are actively involved in managing risks associated with energy resources. Risk containment strategies include interaction with primary and secondary energy suppliers as well as obtaining adequate insurance coverage to compensate us for potential business interruption related to lack of availability of energy resources. In addition, we have used forwards and options to fix the price of a portion of our anticipated future purchases of certain energy requirements to protect against the impact of significant increases in energy costs. We also use surcharge mechanisms to offset a portion of these charges where appropriate.

Fluctuations in foreign currency exchange rates could subject us to risk of losses on anticipated future cash flows from our international operations or customers. Foreign currency forward contracts are used to hedge certain foreign exchange risk.

We use interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate.  We enter into forward interest rate swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued.

All hedging strategies are reviewed and approved by senior financial management before being implemented. Senior financial management has established policies regarding the use of derivative instruments that prohibit the use of speculative or leveraged derivatives. Market valuations are performed at least quarterly to monitor the effectiveness of our risk management programs.

Based on the current funding level, the allocation policy for pension plan assets is to have approximately 60% in return seeking assets and 40% in liability matching assets. Return seeking assets include domestic and international equities and high yield bond funds. Liability matching assets include long duration bond funds. As the funding level of the plans improves in increments of 5%, assets will be shifted from return seeking to liability matching in increments of 4% as a de-risking strategy.

The status of our financial instruments as of March 31, 2015 is provided in Note 12  to the consolidated financial statements included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. Assuming either of the following occurred on March 31, 2015, (a) an instantaneous 10 percent decrease in the price of raw materials and energy for which we have commodity forward contracts, or (b) a 10 percent strengthening of the U.S. dollar versus foreign currencies for which foreign exchange forward contracts existed, our results of operations would not have been materially affected in either scenario.

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Item 4. Controls and Procedures

(a) Evaluation of Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a—15(e) and 15d—15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2015. Based on that evaluation, our management, including the President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures as of March 31, 2015 were effective in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required under the Securities and Exchange Commission’s rules and forms, including a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to the Company’s management, including the Company’s President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2015 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Pending legal proceedings involve ordinary routine litigation incidental to our business, which we do not believe would have a material adverse effect on our business regardless of their outcome. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contingencies.”

Item 1A. Risk Factors

We have evaluated the risks associated with our business and operations and determined that those risk factors included in Part 1, Item 1A of our 2014 Annual Report on Form 10-K adequately disclose the material risks that we face.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In October 2014, the Company’s Board of Directors authorized a share repurchase program of up to $500.0 million of the Company's shares over two years. The shares may be repurchased from time to time at our discretion based on capital needs of the business, general market conditions and market price of the stock. The timing or amount of the shares to be repurchased cannot be assured. The share repurchase program may be discontinued at any time. As of March 31, 2015, $439.7 million of the $500.0 million remained available for future purchases. During the quarter ended March 31, 2015, the Company purchased 1,211,372 shares pursuant to the terms of the share repurchase program.

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The following table contains information about purchases by us of our common stock during the quarter ended March 31, 2015:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
January 1-31, 2015	464,572	$	43.02	464,572	$	470.0
February 1-28, 2015	338,800	38.72		338,800	456.9
March 1-31, 2015	408,000	42.15		408,000	439.7
Quarter ended March 31, 2015	1,211,372	$	41.52	1,211,372	$	439.7

In addition to the share repurchase program, for the three months ended March 31, 2015, 1,436 shares, at an average purchase price of $43.32, were surrendered by employees to the Company for the payment of the minimum tax liability withholding obligations upon the vesting of shares of restricted stock and the exercise of options. We do not consider this a share buyback program.

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Item 6. Exhibits

Exhibit No.	Description
10.1	Form of Indemnification Agreement for Directors and Officers (filed herewith)
31 (A)	Certification of President and Chief Executive Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith)
31 (B)	Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith)
32	Certification of President and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
101	The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive (Loss) Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized officer.

	Carpenter Technology Corporation
	(Registrant)
Date: May 7, 2015	/s/ Tony R. Thene
	Tony R. Thene
	Senior Vice President and
	Chief Financial Officer
	(duly authorized officer and principal accounting officer)

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Exhibit Index

Exhibit No.	Description
10.1	Form of Indemnification Agreement for Directors and Officers
31 (A)	Certification of President and Chief Executive Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended.
31 (B)	Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended.
32	Certification of President and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive (Loss) Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements.

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EX-10.1

Exhibit 10.1

INDEMNITY AGREEMENT

This Indemnification Agreement (this “Agreement”) is made as of by and between Carpenter Technology Corporation a Delaware corporation, and (“Indemnitee”).

RECITALS

WHEREAS, highly competent persons have become more reluctant to serve publicly‑held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation.

WHEREAS, the Restated Certificate of Incorporation and Bylaws of the Company require indemnification of the officers and directors of the Company, and Indemnitee may also be entitled to indemnification pursuant to the Delaware General Corporation Law (the “DGCL”).

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons.

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future.

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

WHEREAS, this Agreement is a supplement to and in furtherance of the Restated Certificate of Incorporation and Bylaws of the Company and any resolutions adopted pursuant thereto and any

liability insurance, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

WHEREAS, Indemnitee does not regard the protection available under the Company’s Restated Certificate of Incorporation, Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified.

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

1.    Services to the Company. Indemnitee will serve or continue to serve, at the will of the Company, as an officer, director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation; however, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments or the parties, if any.

2.    Definitions. As used in this Agreement:

(a)    A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i) Acquisition of Stock by Third Party. Any Person (as defined below) or group (within the meaning of Section 13(d)(3) and Section 14(d)(2) of the Exchange Act (as defined below), or any successor provision) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities;

(ii) Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in substantially the same proportions as their current ownership of stock, more than 51% of the combined voting power of the voting securities of the surviving entity

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outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets other than such a sale or disposition to an entity in which the Company or its shareholders continue to own after such a sale at least 51% of the total voting power represented by the voting securities of such entity in substantially the same proportions as their then current ownership of stock of the Company and have the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and

(v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(a), the following terms shall have the following meanings:

(A)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(B)    “Person” means an individual, entity, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, unincorporated organization, and a governmental entity or any department agency or political subdivision thereof; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(C)    “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act.

(b)    “Company” shall mean Carpenter Technology Corporation, and shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents, trustees or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent, trustee or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent, trustee or fiduciary of another corporation, partnership, joint venture, trust employee benefit program or other enterprise, Indemnitee

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shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(c)    “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent, trustee or fiduciary of the Company or of any other corporation, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

(d)    “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(e)    “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent, trustee or fiduciary.

(f)    “Expenses” shall mean all retainers, court costs, transcript costs, fees of experts, witness fees, private investigators, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, fax transmission charges, secretarial services, delivery service fees, reasonable attorneys’ fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding or in connection with seeking indemnification under this Agreement. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee

(g)    “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of relevant corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses and Losses arising out of or relating to this Agreement or its engagement pursuant hereto.    

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(h) “Losses” shall mean all loss, liability, judgments, damages, amounts paid in settlement, fines, penalties, interest, assessments, other charges or, with respect to an employee benefit plan, excise taxes or penalties assessed with respect thereto.

(i)    Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent, trustee or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent, trustee or fiduciary with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to under applicable law.

(j)    The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, including any and all appeals, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature and whether formal or informal, in which Indemnitee was, is or will be involved as a party or otherwise by reason of or relating to the fact that Indemnitee is or was a director, officer, employee, agent, trustee or fiduciary of the Company, by reason of or relating to any action taken by him or of any action on his part while acting as director, officer, employee, agent, trustee or fiduciary of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent, trustee or fiduciary of another Enterprise, in each case whether or not serving in such capacity at the time any Loss or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement, including one initiated by an Indemnitee to enforce his rights under this Agreement.

(k)    For purposes of Sections 3 and 4, the meaning of the phrase “to the fullest extent permitted by law” shall include, but not be limited to:

to the fullest extent permitted by Section 145 of the DGCL or any section that replaces or succeeds Section 145 with respect to such matters of the DGCL, and

to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers, directors, employees, agents, trustees, fiduciaries and other persons acting or serving at the Company’s request.

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3.    Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was or is, or was or is threatened to be made, a party to or a witness or participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses and Losses to the fullest extent permitted under law.

4.Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was or is, or was or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses and Losses actually and reasonably incurred or suffered by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein to the fullest extent permitted under law. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

5.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee was or is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter and any claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

6.Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

7.Exclusions.Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a)    for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

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(b)    for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or

(c)    in connection with any Proceeding (or any part of any Proceeding) initiated or brought voluntarily by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee prior to a Change of Control against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce his or her rights under this Agreement or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

8.Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding for which indemnification is or may be available pursuant to this Agreement within twenty (20) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking executed by Indemnitee providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined pursuant to Section 12(a) that Indemnitee is not entitled to be indemnified by the Company in respect thereof. For the avoidance of doubt, advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. Advances shall be unsecured and interest free.

9.Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the Restated Certificate of Incorporation and Bylaws of the Company, the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement.

10.Selection of Counsel. In the event the Company is obligated under Section 8 hereof to pay, and pays the Expenses of any Proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ his counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel

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by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel approved by the Indemnitee to assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

11.    Procedure for Notification and Defense of Claim.

(a)    Indemnitee shall, as a condition precedent to his right to be indemnified (including, but not limited to, the advancement of expenses and contribution by the Company) under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notwithstanding the foregoing, any failure of Indemnitee to provide such a notice to the Company, or to provide such a notice in a timely fashion will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Agreement unless, and then only to the extent that, such delay is materially prejudicial to the defense of such claim. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b)    The Company will be entitled to participate in any Proceeding at its own expense.

12.Procedure Upon Application for Indemnification.

(a)    Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 11(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, or (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to

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indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(b)    In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2(g) of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

13.Presumptions and Effect of Certain Proceedings.

(a)    In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an

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actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b)    If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law;provided, however, that such sixty (60)-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.

(c)    The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolocontendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet any applicable standard of conduct under applicable law (or did or did not hold any particular state of knowledge referred to under applicable law).

(d)Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e)Actions of Others. The knowledge and/or actions, or failure to act, of any director, officer, employee, agent, trustee or fiduciary of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

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14.    Remedies of Indemnitee.

(a)    In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within 30 days after receipt by the Company of the request for indemnification, or (iv) payment of indemnification is not made pursuant to Section 3, 4 or 5 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, or , if a determination is required by law, within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication (or, in the case of clause (i), to seek an adjudication) by the Delaware Court or by any court in the State of Pennsylvania of his entitlement to such indemnification or advancement of Expenses; provided, that nothing contained in this Section 14 shall be deemed to limit Indemnitee’s rights under Section 13(b). Alternatively, Indemnitee, at his option, may seek an award in binding arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)    In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a denovo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c)    If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)    The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under

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this Agreement, under the Company’s certificate of incorporation or bylaws as in effect from time to time or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

15.    Non-exclusivity; Survival of Rights; Insurance; Subrogation.

(a)    The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Restated Certificate of Incorporation, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Restated Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)    The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors, officers, employees, agents, trustees and fiduciaries of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents, trustees and fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee, agent, trustee or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers

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to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)    In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)    The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise (except to the extent that Indemnitee is required (by court order or otherwise) to return such payment or to surrender it to the Company and does so return or surrender such payment to the Company).

(e)    The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee, agent, trustee or fiduciary of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

16.    Settlement.

(a) The Company shall have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding by the Indemnitee effected without the Company’s prior written consent.

(b) The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, any non-monetary remedy affecting or obligation of Indemnitee, or Monetary Loss for which Indemnitee is not indemnified hereunder or (ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a party, witness or participant or may be or is otherwise entitled to seek indemnification hereunder, does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee.

(c)    Neither the Company nor Indemnitee shall unreasonably withhold their consent to any proposed settlement.

17.    Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, officer, employee, agent, trustee or fiduciary of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which

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Indemnitee served at the request of the Company; or (b) one (1) year after the final termination of any Proceeding, including any and all appeals, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto.

18.    Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

19.    Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

20.    Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

21.Enforcement.

(a)    The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

(b)    This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

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22.    Effectiveness of Agreement. This Agreement shall be effective as of the date set forth on the first page and may apply to acts or omissions of Indemnitee which occurred prior to such date if Indemnitee was an officer, director, employee, trustee, fiduciary or other agent of the Company, or was serving at the request of the Company as a director, officer, employee, agent, trustee or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, at the time such act or omission occurred.

23.    Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar) nor shall any such waiver constitute a continuing waiver.

24.    Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless, and then only to the extent that, such delay is materially prejudicial to the defense of such claim.

25.    Notices.All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a)    If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

(b)    If to the Company to

Carpenter Technology Corp

101 W. Bern Street

P.O. Box 14662Reading, PA 19601

Attention: General Counsel

or to any other address as may have been furnished to Indemnitee by the Company.

26.    Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for Losses and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors,

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officers, employees, agents, trustees and fiduciaries) and Indemnitee in connection with such event(s) and/or transaction(s).

27.    Applicable Law and Consent to Jurisdiction.This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration or proceeding commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

28.    Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

29.Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. The term “including” shall mean including without limitation.

* * * * *

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

CARPENTER TECHNOLOGY

CORPORATION INDEMNITEE

By:

President & CEO            

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EX-31.(A)

Exhibit 31 (A)

CERTIFICATIONS OF PERIODIC REPORTS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory A. Pratt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the Carpenter Technology Corporation (the “Registrant”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 7, 2015	/s/ Gregory A. Pratt
	Gregory A. Pratt, Chairman, President and
	Chief Executive Officer

EX-31.(B)

Exhibit 31 (B)

CERTIFICATIONS OF PERIODIC REPORTS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tony R. Thene, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the Carpenter Technology Corporation (the “Registrant”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 7, 2015	/s/ Tony R. Thene
	Tony R. Thene
	Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Carpenter Technology Corporation (the “Issuer”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Gregory A. Pratt, and I, Tony R. Thene, each hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Periodic Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date: May 7, 2015
/s/ Gregory A. Pratt	/s/ Tony R. Thene
Gregory A. Pratt	Tony R. Thene
Chairman, President and	Senior Vice President and
Chief Executive Officer	Chief Financial Officer

XML

Earnings Per Common Share (Details 2) (Stock options) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Stock options
Awards issued under share-based compensation plans that were excluded from calculations of diluted earnings per share because their effects were anti-dilutive
Anti-dilutive securities excluded from computation of earnings per share (in shares)	1.1	0.1	0.7	0.1

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Business Segments (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Segment Data
Net sales	$ 570.6	$ 566.3	$ 1,668.8	$ 1,568.4
Operating income	4.8	49.5	71.9	152.8
Depreciation and Amortization	30.7	27.5	91.2	80.9
Capital Expenditures	24.8	93.6	152.3	298.2
Total Assets	2,967.4		2,967.4		3,057.5
Operating
Segment Data
Pension earnings, interest and deferrals	(2.4)	(6.0)	(7.1)	(15.8)
Corporate
Segment Data
Operating income	(38.6)	(9.5)	(55.9)	(33.7)
Depreciation and Amortization	1.0	1.4	3.3	4.3
Capital Expenditures	1.5	0.3	2.8	3.4
Total Assets	103.7		103.7		144.9
Intersegment
Segment Data
Net sales	(19.6)	(15.8)	(59.3)	(48.4)
Operating income	(0.6)	0.3	(1.9)	(0.7)
Depreciation and Amortization	0.1	(0.1)	(0.5)	(0.5)
Capital Expenditures		(0.3)	(1.0)	(0.7)
Total Assets	(39.6)		(39.6)		(33.9)
Specialty Alloys Operations | Operating
Segment Data
Net sales	469.8	452.0	1,344.0	1,254.5
Operating income	37.9	51.6	106.0	169.7
Depreciation and Amortization	23.9	20.3	70.7	59.4
Capital Expenditures	15.2	89.3	119.5	279.1
Total Assets	2,387.6		2,387.6		2,454.8
Performance Engineered Products | Operating
Segment Data
Net sales	120.4	130.1	384.1	362.3
Operating income	8.5	13.1	30.8	33.3
Depreciation and Amortization	5.7	5.9	17.7	17.7
Capital Expenditures	8.1	4.3	31.0	16.4
Total Assets	$ 515.7		$ 515.7		$ 491.7

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Other (Expense) Income, Net (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Other Income and Expenses [Abstract]
Legal settlement	$ 0	$ 0	$ 4.4	$ 0
Foreign exchange	(0.1)	(0.8)	0.3	(2.0)
Equity in earnings (losses) of unconsolidated subsidiaries	0.1	0	(0.4)	0.4
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts	0	0.1	0.5	1.6
Other	0	0.1	0	0.1
Total other (expense) income, net	$ 0	$ (0.6)	$ 4.8	$ 0.1

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Recent Accounting Pronouncements f (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Early adoption, reclassifications from other assets to long-term debt effect	$ 5.0

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Fair Value Measurements (Details) (Measured on a recurring basis, Level 2, USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Assets and liabilities measured at fair value on a recurring basis
Derivative financial instruments, Assets	$ 8.4	$ 20.4
Total assets	13.7	25.6
Derivative financial instruments, Liabilities	59.1	10.9
Municipal auction rate securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	$ 5.3	$ 5.2

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Other (Expense) Income, Net (Tables)

9 Months Ended

Mar. 31, 2015

Other Income and Expenses [Abstract]

Schedule of other income, net

Other (expense) income, net consisted of the following:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Legal settlement	$	—		$	—		$	4.4		$	—
Foreign exchange	(0.1		)	(0.8		)	0.3			(2.0		)
Equity in earnings (losses) of unconsolidated subsidiaries	0.1			—			(0.4		)	0.4
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts	—			0.1			0.5			1.6
Other	—			0.1			—			0.1
Total other (expense) income, net	$	—		$	(0.6	)	$	4.8		$	0.1

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Reclassifications from Accumulated Other Comprehensive Income (AOCI) (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Amount reclassified from AOCI
Cost of sales	$ (494.8)	$ (471.8)	$ (1,438.9)	$ (1,275.2)
Net sales	570.6	566.3	1,668.8	1,568.4
Interest expense, net	(7.1)	(2.7)	(20.9)	(10.8)
(Loss) income before income taxes	(2.3)	46.2	55.8	142.1
Income tax (benefit) expense	0.9	(15.6)	(19.6)	(47.4)
Net (loss) income	(1.4)	30.6	36.2	94.7
Cash flow hedging items | Amount Reclassified from AOCI
Amount reclassified from AOCI
(Loss) income before income taxes	(5.9)	(5.6)	(6.2)	(20.4)
Income tax (benefit) expense	2.2	2.1	2.3	7.6
Net (loss) income	(3.7)	(3.5)	(3.9)	(12.8)
Cash flow hedging items | Amount Reclassified from AOCI | Commodity Contracts
Amount reclassified from AOCI
Cost of sales	(6.9)	(5.4)	(8.4)	(19.9)
Cash flow hedging items | Amount Reclassified from AOCI | Foreign Currency Contracts
Amount reclassified from AOCI
Net sales	0.9	(0.3)	1.9	(0.8)
Cash flow hedging items | Amount Reclassified from AOCI | Interest Rate Swaps
Amount reclassified from AOCI
Interest expense, net	0.1	0.1	0.3	0.3
Pension and other postretirement benefit plan items | Amount Reclassified from AOCI
Amount reclassified from AOCI
Net actuarial loss	(4.7)	(5.8)	(14.1)	(17.2)
Prior service cost	(0.1)	(0.1)	(0.3)	(0.4)
(Loss) income before income taxes	(4.8)	(5.9)	(14.4)	(17.6)
Income tax (benefit) expense	1.8	2.2	5.5	6.4
Net (loss) income	$ (3.0)	$ (3.7)	$ (8.9)	$ (11.2)

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Recent Accounting Pronouncements

9 Months Ended

Mar. 31, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in ASU 2014-09 requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The FASB voted on April 1, 2015 to propose a deferral of the effective date of this guidance by one year. Under the proposal, the Company would be required to adopt this standard for its interim and annual periods beginning after December 15, 2017. Early adoption is permitted for interim and annual periods beginning after December 15, 2016. The Company is evaluating the impact of the adoption of ASU 2014-09 on the Consolidated Financial Statements.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs. The guidance in ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The guidance in ASU 2015-03 is required for annual reporting periods beginning after December 15, 2015, including interim periods within the reporting period. Early adoption is permitted for financial statements that have not been previously issued. The Company is considering early adoption of the new standard and expects the impact on the Company's Consolidated Balance Sheets to be a reclassification of approximately $5.0 million from other assets to long-term debt as of June 30, 2015.

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Derivatives and Hedging Activities (Details 2) (USD $)	9 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2014	Jun. 30, 2014
(Losses) gains related to cash flow hedges
Net derivative losses included in AOCI expected to be reclassified into earnings	$ 18,100,000
Changes in AOCI associated with derivative hedging activities
Cash collateral held by counterparties	0	0			0
Cash flow hedges
(Losses) gains related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	(6,200,000)	(5,900,000)	(5,600,000)	(20,400,000)
Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)	(2,200,000)	(2,000,000)	200,000	(100,000)
Changes in AOCI associated with derivative hedging activities
Balance, beginning	7,600,000	(17,900,000)	(35,500,000)	(41,500,000)
Current period changes in fair value, net of tax	(42,600,000)	(16,900,000)	17,000,000	13,700,000
Reclassification to earnings, net of tax	3,900,000	3,700,000	3,500,000	12,800,000
Balance, ending	(31,100,000)	(31,100,000)	(15,000,000)	(15,000,000)
Cash flow hedges | Interest Rate Swaps | Interest expenses
(Losses) gains related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)		100,000	100,000
Cash flow hedges | Foreign Currency Contracts | Revenue
(Losses) gains related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	1,900,000	900,000	(300,000)	(800,000)
Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)	0	0	0	0
Cash flow hedges | Commodity Contracts | Cost of Sales
(Losses) gains related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	(8,400,000)	(6,900,000)	(5,400,000)	(19,900,000)
Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)	(2,200,000)	(2,000,000)	200,000	(100,000)
Fair Value Hedging [Member] | Interest Rate Swaps
(Losses) gains related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	300,000			300,000
Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)	$ 0	$ 0	$ 0	$ 0

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Pension and Other Postretirement Benefits (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2015	Mar. 31, 2014
Pension Plans
Pension and Other Postretirement Benefit Disclosures
Service cost	$ 8.0	$ 8.0		$ 24.0	$ 24.2
Interest cost	13.5	14.3		40.5	43.0
Expected return on plan assets	(17.2)	(15.7)		(51.6)	(47.1)
Amortization of net loss	4.2	5.5		12.6	16.3
Amortization of prior service cost	0.1	0.1		0.3	0.4
Net periodic benefit costs	8.6	12.2		25.8	36.8
Capitalized periodic benefit costs			2.2		2.2
Contributions				5.5	4.6
Defined benefit pension plan, expected contributions during the remainder of fiscal year 2015				1.7
Other Postretirement Plans
Pension and Other Postretirement Benefit Disclosures
Service cost	1.1	1.0		3.3	3.0
Interest cost	3.0	3.1		9.0	9.3
Expected return on plan assets	(1.7)	(1.6)		(5.0)	(4.8)
Amortization of net loss	0.5	0.3		1.5	0.9
Amortization of prior service cost	0	0		0	0
Net periodic benefit costs	$ 2.9	$ 2.8		$ 8.8	$ 8.4

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Restructuring Charges (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 25.3	$ 0	$ 25.3	$ 0
Various personnel-related costs to cover severance payments, medical coverage and related items
Restructuring Cost and Reserve [Line Items]
Restructuring charges	10.6		10.6
Various personnel-related costs to cover severance payments, medical coverage and related items | Non-cash forfeiture income
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0.4
Various personnel-related costs to cover severance payments, medical coverage and related items | Non-cash asset impairment charges
Restructuring Cost and Reserve [Line Items]
Restructuring charges	5.4		5.4
Various personnel-related costs to cover severance payments, medical coverage and related items | Corporate assets
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	3.4		3.4
Various personnel-related costs to cover severance payments, medical coverage and related items | Pension liability
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	7.6		7.6
Ultra-fine grain materials development program
Restructuring Cost and Reserve [Line Items]
Restructuring charges	13.4		13.4
Exit licensing agreement
Restructuring Cost and Reserve [Line Items]
Restructuring charges	8.0		8.0
Facility closure
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 1.3		$ 1.3

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Superalloy Powders Technical Assistance and Powder Supply Agreements (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Sep. 30, 2013	Mar. 31, 2015	Jun. 30, 2014
Superalloy powders technical assistance and powder supply agreements
Up-front license fee asset	$ 13.0
Other assets
Superalloy powders technical assistance and powder supply agreements
Up-front license fee asset		13.0	13.0
Technical assistance agreement and a long-term powder supply agreement | UTC
Superalloy powders technical assistance and powder supply agreements
Superalloy powder facility construction period	18 months
Superalloy powder facility construction costs	$ 30
Term for minimum guaranteed purchase quantities of specified materials	12 years
Technical assistance agreement and a long-term powder supply agreement | UTC | Maximum
Superalloy powders technical assistance and powder supply agreements
Superalloy powder supply term	20 years

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Fair Value Measurements (Details 2) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Carrying Value
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Long-term debt	$ 609.8	$ 604.3
Carrying Value | Level 2
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Company-owned life insurance	16.7	16.2
Fair Value
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Company-owned life insurance	16.7	16.2
Fair Value | Level 2
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Long-term debt	$ 639.8	$ 638.7

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Stockholders' Equity [Abstract]
Cash dividends per common share (in dollars per share)	$ 0.18	$ 0.18	$ 0.54	$ 0.54
Common stock, par value (in dollars per share)	$ 5	$ 5	$ 5	$ 5

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Debt (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Debt Instrument [Line Items]
Total	$ 609.8		$ 609.8		$ 604.3
Less: amounts due within one year	0		0		0
Long-term debt, net of current portion	609.8		609.8		604.3
Interest costs	7.7	8.1	22.9	24.1
Interest costs, capitalized	0.6	5.4	2.0	13.3
4.45% Senior Unsecured Notes due 2023
Debt Instrument [Line Items]
Face amount	300.0		300.0		300.0
Interest rate (as a percent)	4.45%		4.45%		4.45%
Total	299.6		299.6		299.6
Credit Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity	500.0		500.0
Letters of credit issued	8.2		8.2
Credit Agreement available for future borrowings	491.8		491.8
Credit Agreement | LIBOR
Debt Instrument [Line Items]
Variable rate basis			LIBOR
Interest rate margin (as a percent)			1.25%
Credit Agreement | LIBOR | Minimum
Debt Instrument [Line Items]
Interest rate margin (as a percent)			0.75%
Credit Agreement | LIBOR | Maximum
Debt Instrument [Line Items]
Interest rate margin (as a percent)			1.90%
Credit Agreement | Base Rate
Debt Instrument [Line Items]
Variable rate basis			Base Rate
Interest rate margin (as a percent)			0.25%
Credit Agreement | Base Rate | Minimum
Debt Instrument [Line Items]
Interest rate margin (as a percent)			0.00%
Credit Agreement | Base Rate | Maximum
Debt Instrument [Line Items]
Interest rate margin (as a percent)			0.90%
Letters of credit
Debt Instrument [Line Items]
Commitment fee rate (as a percent)			0.15%
Letter of credit fees (as a percent)			1.25%
Required interest coverage ratio			3.50
Letters of credit | Minimum
Debt Instrument [Line Items]
Commitment fee rate (as a percent)			0.075%
Letter of credit fees (as a percent)			0.75%
Letters of credit | Maximum
Debt Instrument [Line Items]
Commitment fee rate (as a percent)			0.375%
Letter of credit fees (as a percent)			1.90%
Required debt to capital ratio (less than 55%)	0.55		0.55
Senior unsecured notes, 5.20% due July 2021
Debt Instrument [Line Items]
Face amount	250.0		250.0		250.0
Interest rate (as a percent)	5.20%		5.20%		5.20%
Total	255.2		255.2		249.7
Medium-term notes, Series B 6.97% to 7.10% due April 2018 To May 2018 Member
Debt Instrument [Line Items]
Face amount	55.0		55.0		55.0
Total	$ 55.0		$ 55.0		$ 55.0
Medium-term notes, Series B 6.97% to 7.10% due April 2018 To May 2018 Member | Minimum
Debt Instrument [Line Items]
Interest rate (as a percent)	6.97%		6.97%		6.97%
Medium-term notes, Series B 6.97% to 7.10% due April 2018 To May 2018 Member | Maximum
Debt Instrument [Line Items]
Interest rate (as a percent)	7.10%		7.10%		7.10%

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Accrued Liabilities (Tables)

9 Months Ended

Mar. 31, 2015

Accrued Liabilities, Current [Abstract]

Schedule of accrued liabilities

Accrued liabilities consisted of the following as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Accrued compensation and benefits	$	46.5	$	49.8
Derivative financial instruments	35.2		4.7
Accrued postretirement benefits	15.5		15.5
Accrued pension liabilities	6.5		19.3
Accrued interest expense	5.6		11.2
Accrued income taxes	—		8.4
Other	35.0		39.1
Total accrued liabilities	$	144.3	$	148.0

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Inventories (Tables)

9 Months Ended

Mar. 31, 2015

Inventory, Net [Abstract]

Schedule of inventories

Inventories consisted of the following components as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Raw materials and supplies	$	143.0	$	122.3
Work in process	368.2		393.9
Finished and purchased products	199.5		183.0
Total inventory	$	710.7	$	699.2

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Reclassifications from Accumulated Other Comprehensive Income (AOCI) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period	$ (282.8)	$ (317.2)	$ (245.2)	$ (335.7)
Other comprehensive income (loss) before reclassifications	(26.8)	16.0	(70.5)	17.7
Amounts reclassified from AOCI	6.7	7.2	12.8	24.0
Other comprehensive (loss) income	(20.1)	23.2	(57.7)	41.7
Balance at the end of the period	(302.9)	(294.0)	(302.9)	(294.0)
Cash flow hedging items
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period	(17.9)	(35.5)	7.6	(41.5)
Other comprehensive income (loss) before reclassifications	(16.9)	17.0	(42.6)	13.7
Amounts reclassified from AOCI	3.7	3.5	3.9	12.8
Other comprehensive (loss) income	(13.2)	20.5	(38.7)	26.5
Balance at the end of the period	(31.1)	(15.0)	(31.1)	(15.0)
Pension and other postretirement benefit plan items
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period	(230.8)	(266.1)	(236.7)	(273.6)
Other comprehensive income (loss) before reclassifications	0	0	0	0
Amounts reclassified from AOCI	3.0	3.7	8.9	11.2
Other comprehensive (loss) income	3.0	3.7	8.9	11.2
Balance at the end of the period	(227.8)	(262.4)	(227.8)	(262.4)
Unrealized losses on available-for-sale securities
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period	(0.4)	(0.3)	(0.4)	(0.4)
Other comprehensive income (loss) before reclassifications	0	0	0	0.1
Amounts reclassified from AOCI	0	0	0	0
Other comprehensive (loss) income	0	0	0	0.1
Balance at the end of the period	(0.4)	(0.3)	(0.4)	(0.3)
Foreign currency items
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period	(33.7)	(15.3)	(15.7)	(20.2)
Other comprehensive income (loss) before reclassifications	(9.9)	(1.0)	(27.9)	3.9
Amounts reclassified from AOCI	0	0	0	0
Other comprehensive (loss) income	(9.9)	(1.0)	(27.9)	3.9
Balance at the end of the period	(43.6)	(16.3)	(43.6)	(16.3)
Foreign currency items | Kalyani Carpenter Special Steels Ltd.
Changes in the balance of Accumulated Other Comprehensive Income
Balance at the beginning of the period					4.9
Balance at the end of the period					$ 4.9

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Contingencies and Commitments (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Mar. 31, 2015	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Increase made by the company in the liabilities of environmental remediation costs	$ 0.2
Environmental remediation liability	$ 15.7	$ 15.5

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Pension and Other Postretirement Benefits (Tables)

9 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Schedule of components of the net periodic benefit cost

The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three and nine months ended March 31, 2015 and 2014 were as follows:

Three months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	8.0		$	8.0		$	1.1		$	1.0
Interest cost	13.5			14.3			3.0			3.1
Expected return on plan assets	(17.2		)	(15.7		)	(1.7		)	(1.6		)
Amortization of net loss	4.2			5.5			0.5			0.3
Amortization of prior service cost	0.1			0.1			—			—
	$	8.6		$	12.2		$	2.9		$	2.8

Nine months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	24.0		$	24.2		$	3.3		$	3.0
Interest cost	40.5			43.0			9.0			9.3
Expected return on plan assets	(51.6		)	(47.1		)	(5.0		)	(4.8		)
Amortization of net loss	12.6			16.3			1.5			0.9
Amortization of prior service cost	0.3			0.4			—			—
	$	25.8		$	36.8		$	8.8		$	8.4

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Debt (Tables)

9 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of long-term debt outstanding

Long-term debt outstanding as of March 31, 2015 and June 30, 2014 consisted of the following:

($ in millions)	March 31, 2015		June 30, 2014
Medium-term notes, Series B at 6.97% to 7.10% due from April 2018 to May 2018 (face value of $55.0 million at March 31, 2015 and June 30, 2014)	$	55.0	$	55.0
Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at March 31, 2015 and June 30, 2014)	255.2		249.7
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at March 31, 2015 and June 30, 2014)	299.6		299.6
Total	609.8		604.3
Less: amounts due within one year	—		—
Long-term debt, net of current portion	$	609.8	$	604.3

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (USD $) In Millions, unless otherwise specified	Total	Common Stock	Capital in Excess of Par Value	Reinvested Earnings	Common Stock in Treasury	Accumulated Other Comprehensive Income (Loss)
Balances at Jun. 30, 2013	$ 1,303.1	$ 274.6	$ 254.4	$ 1,217.3	$ (107.5)	$ (335.7)
Increase (Decrease) in Stockholders' Equity
Net (loss) income	94.7			94.7
Pension and postretirement benefits gain, net of tax	11.2					11.2
Net gain (loss) on derivative instruments, net of tax	26.5					26.5
Unrealized gain on marketable securities, net of tax	0.1					0.1
Foreign currency translation	3.9					3.9
Cash Dividends:
Common @ $0.54 per share	(28.8)			(28.8)
Share-based compensation plans	5.6		1.2		4.4
Stock options exercised	6.8	1.2	5.6
Tax windfall on share-based compensation	2.2		2.2
Balances at Mar. 31, 2014	1,425.3	275.8	263.4	1,283.2	(103.1)	(294.0)
Balances at Jun. 30, 2014	1,504.3	275.8	263.5	1,311.6	(101.4)	(245.2)
Increase (Decrease) in Stockholders' Equity
Net (loss) income	36.2			36.2
Pension and postretirement benefits gain, net of tax	8.9					8.9
Net gain (loss) on derivative instruments, net of tax	(38.7)					(38.7)
Unrealized gain on marketable securities, net of tax	0
Foreign currency translation	(27.9)					(27.9)
Cash Dividends:
Common @ $0.54 per share	(28.8)			(28.8)
Purchase of treasury stock	(60.3)				(60.3)
Share-based compensation plans	3.2		(0.9)		4.1
Stock options exercised	2.3	0.4	1.9
Tax windfall on share-based compensation	0.6		0.6
Balances at Mar. 31, 2015	$ 1,399.8	$ 276.2	$ 265.1	$ 1,319.0	$ (157.6)	$ (302.9)

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Fair Value Measurements (Tables)

9 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of fair value of assets and liabilities measured on a recurring basis

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

March 31, 2015	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.3
Derivative financial instruments	8.4
Total assets	$	13.7
Liabilities:
Derivative financial instruments	$	59.1

June 30, 2014	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.2
Derivative financial instruments	20.4
Total assets	$	25.6
Liabilities:
Derivative financial instruments	$	10.9

Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value in the financial statements

The carrying amounts and estimated fair values of the Company’s financial instruments not recorded at fair value in the financial statements were as follows:

	March 31, 2015				June 30, 2014
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	609.8	$	639.8	$	604.3	$	638.7
Company-owned life insurance	$	16.7	$	16.7	$	16.2	$	16.2

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Inventory, Net [Abstract]
Raw materials and supplies	$ 143.0	$ 122.3
Work in process	368.2	393.9
Finished and purchased products	199.5	183.0
Total inventory	$ 710.7	$ 699.2

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Business Segments (Details)	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended
	Mar. 31, 2015 segment	Mar. 31, 2014 customer	Mar. 31, 2014 customer	Mar. 31, 2015
Segment Reporting [Abstract]
Number of reportable segments	2
Customer Concentration Risk [Member] | Net sales
Concentration Risk [Line Items]
Number of customers accounted for 10% or more of the sales	0	0	0
Customer Concentration Risk [Member] | Net sales | Alcoa [Member]
Concentration Risk [Line Items]
Concentration risk				12.00%

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 29.4	$ 120.0
Accounts receivable, net	318.9	339.6
Inventories	710.7	699.2
Deferred income taxes	16.7	0
Other current assets	43.0	35.7
Total current assets	1,118.7	1,194.5
Property, plant and equipment, net	1,403.6	1,407.0
Goodwill	257.3	257.7
Other intangibles, net	73.5	80.6
Other assets	114.3	117.7
Total assets	2,967.4	3,057.5
Current liabilities:
Accounts payable	178.3	278.1
Accrued liabilities	144.3	148.0
Deferred income taxes	0	4.5
Total current liabilities	322.6	430.6
Long-term debt	609.8	604.3
Accrued pension liabilities	228.9	203.4
Accrued postretirement benefits	160.2	163.2
Deferred income taxes	182.8	110.7
Other liabilities	63.3	41.0
Total liabilities	1,567.6	1,553.2
Contingencies and commitments (see Note 8)
STOCKHOLDERS’ EQUITY
Common stock — authorized 100,000,000 shares; issued 55,233,807 shares at March 31, 2015 and 55,161,875 shares at June 30, 2014; outstanding 51,886,740 shares at March 31, 2015 and 53,137,144 shares at June 30, 2014	276.2	275.8
Capital in excess of par value	265.1	263.5
Reinvested earnings	1,319.0	1,311.6
Common stock in treasury (3,347,067 shares and 2,024,731 shares at March 31, 2015 and June 30, 2014, respectively), at cost	(157.6)	(101.4)
Accumulated other comprehensive loss	(302.9)	(245.2)
Total equity	1,399.8	1,504.3
Total liabilities and equity	$ 2,967.4	$ 3,057.5

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Share Repurchase Program (Details) (USD $)	1 Months Ended	9 Months Ended
	Oct. 31, 2014	Mar. 31, 2015
Equity [Abstract]
Authorized amount	$ 500,000,000
Stock repurchase program term	2 years
Shares purchased (in shares)		1,411,772
Purchase of treasury stock		$ 60,300,000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Pension and post-retirement benefits, tax	$ (1.8)	$ (2.2)	$ (5.5)	$ (6.4)
Net (loss) gain on derivative instruments, tax	4.3	(1.4)	15.3	(3.6)
Unrealized loss on marketable securities, tax	$ 0	$ 0	$ 0	$ 0

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Business Segments (Tables)

9 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Net Sales:
Specialty Alloys Operations	$	469.8		$	452.0		$	1,344.0		$	1,254.5
Performance Engineered Products	120.4			130.1			384.1			362.3
Intersegment	(19.6		)	(15.8		)	(59.3		)	(48.4		)
Consolidated net sales	$	570.6		$	566.3		$	1,668.8		$	1,568.4
Operating Income:
Specialty Alloys Operations	$	37.9		$	51.6		$	106.0		$	169.7
Performance Engineered Products	8.5			13.1			30.8			33.3
Corporate costs (including restructuring charges)	(38.6		)	(9.5		)	(55.9		)	(33.7		)
Pension earnings, interest and deferrals	(2.4		)	(6.0		)	(7.1		)	(15.8		)
Intersegment	(0.6		)	0.3			(1.9		)	(0.7		)
Consolidated operating income	$	4.8		$	49.5		$	71.9		$	152.8
Depreciation and Amortization:
Specialty Alloys Operations	$	23.9		$	20.3		$	70.7		$	59.4
Performance Engineered Products	5.7			5.9			17.7			17.7
Corporate	1.0			1.4			3.3			4.3
Intersegment	0.1			(0.1		)	(0.5		)	(0.5		)
Consolidated depreciation and amortization	$	30.7		$	27.5		$	91.2		$	80.9
Capital Expenditures:
Specialty Alloys Operations	$	15.2		$	89.3		$	119.5		$	279.1
Performance Engineered Products	8.1			4.3			31.0			16.4
Corporate	1.5			0.3			2.8			3.4
Intersegment	—			(0.3		)	(1.0		)	(0.7		)
Consolidated capital expenditures	$	24.8		$	93.6		$	152.3		$	298.2

	March 31, 2015			June 30, 2014
Total Assets:
Specialty Alloys Operations	$	2,387.6		$	2,454.8
Performance Engineered Products	515.7			491.7
Corporate	103.7			144.9
Intersegment	(39.6		)	(33.9		)
Consolidated total assets	$	2,967.4		$	3,057.5

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Income Taxes

9 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income taxes for the three months ended March 31, 2015 were a benefit of $0.9 million, or 39.1 percent of pre-tax loss as compared with expense of $15.6 million, or 33.8 percent of pre-tax income for the three months ended March 31, 2014. Income tax expense for the nine months ended March 31, 2015 was $19.6 million, or 35.1 percent of pre-tax income as compared with $47.4 million, or 33.4 percent of pre-tax income for the nine months ended March 31, 2014. The increase in the effective tax rate for the three months ended March 31, 2015 was primarily due to the disproportionate effect of a $0.1 million discrete tax item recorded during the three months ended March 31, 2015. Tax expense for the nine months endedMarch 31, 2015 includes net tax charges of $1.6 million for the unfavorable impact of bonus depreciation on domestic manufacturing benefits recorded in the prior year, net of additional research and development credits as a result of the December 2014 enactment of the Tax Increase and Prevention Act.

As of June 30, 2014, we had $128.4 million of indefinitely reinvested foreign earnings for which we had not provided deferred income taxes.  Due to the recent announcement of the $500.0 million share repurchase program, we have changed our intent with regard to the indefinite reinvestment of a portion of the foreign earnings of one of our foreign subsidiaries for 2014 and prior years.  As a result of this change, we repatriated approximately $38.0 million during this quarter with a minimal tax cost.  The remaining balance, approximately $90.0 million, of undistributed foreign earnings continues to be indefinitely reinvested.

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Reclassifications from Accumulated Other Comprehensive Income (AOCI) (Tables)

9 Months Ended

Mar. 31, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of changes in AOCI by component, net of tax

The changes in AOCI by component, net of tax, for the three months ended March 31, 2015 and 2014 were as follows:

Three Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2014	$	(17.9	)	$	(230.8	)	$	(0.4	)	$	(33.7	)	$	(282.8	)
Other comprehensive loss before reclassifications	(16.9		)	—			—			(9.9		)	(26.8		)
Amounts reclassified from AOCI (b)	3.7			3.0			—			—			6.7
Net current-period other comprehensive (loss) income	(13.2		)	3.0			—			(9.9		)	(20.1		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Three Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2013	$	(35.5	)	$	(266.1	)	$	(0.3	)	$	(15.3	)	$	(317.2	)
Other comprehensive income (loss) before reclassifications	17.0			—			—			(1.0		)	16.0
Amounts reclassified from AOCI (b)	3.5			3.7			—			—			7.2
Net current-period other comprehensive income (loss)	20.5			3.7			—			(1.0		)	23.2
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

The changes in AOCI by component, net of tax, for the nine months ended March 31, 2015 and 2014 were as follows:

Nine Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2014	$	7.6		$	(236.7	)	$	(0.4	)	$	(15.7	)	$	(245.2	)
Other comprehensive loss before reclassifications	(42.6		)	—			—			(27.9		)	(70.5		)
Amounts reclassified from AOCI (b)	3.9			8.9			—			—			12.8
Net current-period other comprehensive (loss) income	(38.7		)	8.9			—			(27.9		)	(57.7		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Nine Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2013	$	(41.5	)	$	(273.6	)	$	(0.4	)	$	(20.2	)	$	(335.7	)
Other comprehensive income before reclassifications	13.7			—			0.1			3.9			17.7
Amounts reclassified from AOCI (b)	12.8			11.2			—			—			24.0
Net current-period other comprehensive income	26.5			11.2			0.1			3.9			41.7
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

Schedule of amounts reclassified from AOCI

The following is a summary of amounts reclassified from AOCI for the three and nine months ended March 31, 2015 and 2014:

($ in millions) (a)	Location of (loss) gain	Amount Reclassified from AOCI Three Months Ended March 31,						Amount Reclassified from AOCI Nine Months Ended March 31,
Details about AOCI Components		2015			2014			2015			2014
Cash flow hedging items:
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(8.4	)	$	(19.9	)
Foreign exchange contracts	Net sales	0.9			(0.3		)	1.9			(0.8		)
Forward interest rate swaps	Interest expense	0.1			0.1			0.3			0.3
	Total before tax	(5.9		)	(5.6		)	(6.2		)	(20.4		)
	Tax benefit	2.2			2.1			2.3			7.6
	Net of tax	$	(3.7	)	$	(3.5	)	$	(3.9	)	$	(12.8	)
Amortization of pension and other postretirement benefit plan items:
Net actuarial loss	(b)	$	(4.7	)	$	(5.8	)	$	(14.1	)	$	(17.2	)
Prior service cost	(b)	(0.1		)	(0.1		)	(0.3		)	(0.4		)
	Total before tax	(4.8		)	(5.9		)	(14.4		)	(17.6		)
	Tax benefit	1.8			2.2			5.5			6.4
	Net of tax	$	(3.0	)	$	(3.7	)	$	(8.9	)	$	(11.2	)

(a) Amounts in parentheses indicate debits to income/loss.

(b) These AOCI components are included in the computation of net periodic benefit cost (see Note 6 for additional details).

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Business Segments

9 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”).

The SAO segment is comprised of the Company’s major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe and surrounding areas in Pennsylvania, South Carolina and Alabama. The combined assets of the SAO operations are being managed in an integrated manner to optimize efficiency and profitability across the total system.

The PEP segment is comprised of the Company’s differentiated operations. This segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business, the Latrobe Special Metals Distribution business and Aceros Fortuna based in Mexico. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. 

The Company’s executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that management considers not representative of ongoing operations, such as restructuring related charges, transaction costs associated with acquisitions and other specifically-identified income or expense items.

The service cost component of the Company’s net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments. The residual net pension expense, which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest and deferrals”.

On a consolidated basis, one customer, Alcoa Inc., accounted for approximately 12 percent of the net sales for the three months ended March 31, 2015, and no significant individual customers accounted for 10 percent or more of the Company's net sales for the three months ended March 31, 2014. On a consolidated basis, there were no significant individual customers that accounted for 10 percent or more of the Company’s net sales for the nine months ended March 31, 2015 and 2014.

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Net Sales:
Specialty Alloys Operations	$	469.8		$	452.0		$	1,344.0		$	1,254.5
Performance Engineered Products	120.4			130.1			384.1			362.3
Intersegment	(19.6		)	(15.8		)	(59.3		)	(48.4		)
Consolidated net sales	$	570.6		$	566.3		$	1,668.8		$	1,568.4
Operating Income:
Specialty Alloys Operations	$	37.9		$	51.6		$	106.0		$	169.7
Performance Engineered Products	8.5			13.1			30.8			33.3
Corporate costs (including restructuring charges)	(38.6		)	(9.5		)	(55.9		)	(33.7		)
Pension earnings, interest and deferrals	(2.4		)	(6.0		)	(7.1		)	(15.8		)
Intersegment	(0.6		)	0.3			(1.9		)	(0.7		)
Consolidated operating income	$	4.8		$	49.5		$	71.9		$	152.8
Depreciation and Amortization:
Specialty Alloys Operations	$	23.9		$	20.3		$	70.7		$	59.4
Performance Engineered Products	5.7			5.9			17.7			17.7
Corporate	1.0			1.4			3.3			4.3
Intersegment	0.1			(0.1		)	(0.5		)	(0.5		)
Consolidated depreciation and amortization	$	30.7		$	27.5		$	91.2		$	80.9
Capital Expenditures:
Specialty Alloys Operations	$	15.2		$	89.3		$	119.5		$	279.1
Performance Engineered Products	8.1			4.3			31.0			16.4
Corporate	1.5			0.3			2.8			3.4
Intersegment	—			(0.3		)	(1.0		)	(0.7		)
Consolidated capital expenditures	$	24.8		$	93.6		$	152.3		$	298.2

	March 31, 2015			June 30, 2014
Total Assets:
Specialty Alloys Operations	$	2,387.6		$	2,454.8
Performance Engineered Products	515.7			491.7
Corporate	103.7			144.9
Intersegment	(39.6		)	(33.9		)
Consolidated total assets	$	2,967.4		$	3,057.5

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
OPERATING ACTIVITIES
Net (loss) income	$ 36.2	$ 94.7
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	91.2	80.9
Non-cash restructuring and asset impairment charges	6.3	0
Deferred income taxes	68.4	2.0
Net pension expense	34.6	43.0
Payments from qualified pension plan associated with restructuring charges	7.6	0
Stock-based compensation expense	6.8	9.0
Net loss on disposal of property and equipment	0.8	0.5
Changes in working capital and other:
Accounts receivable	6.6	30.0
Inventories	(18.4)	(60.6)
Other current assets	(12.0)	(6.4)
Accounts payable	(42.3)	0.5
Accrued liabilities	(22.7)	(31.4)
Pension plan contributions	(5.5)	(4.6)
Other postretirement plan contributions	(10.2)	(9.8)
Other, net	1.0	(3.8)
Net cash provided from operating activities	148.4	144.0
INVESTING ACTIVITIES
Purchases of property, equipment and software	(152.3)	(298.2)
Proceeds from disposals of property and equipment	0.2	0.3
Net cash used for investing activities	(152.1)	(297.9)
FINANCING ACTIVITIES
Dividends paid	(28.8)	(28.8)
Purchase of treasury stock	(60.3)	0
Tax benefits on share-based compensation	0.6	2.2
Proceeds from stock options exercised	2.3	6.8
Net cash used for financing activities	(86.2)	(19.8)
Effect of exchange rate changes on cash and cash equivalents	(0.7)	1.5
DECREASE IN CASH AND CASH EQUIVALENTS	(90.6)	(172.2)
Cash and cash equivalents at beginning of period	120.0	257.5
Cash and cash equivalents at end of period	29.4	85.3
Non-cash investing activities:
Acquisition of property, equipment and software	9.3	41.2
Non-cash financing activities:
Seller-financed debt related to the purchase of software	$ 4.9	$ 0

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CONSOLIDATED BALANCE SHEETS (Parenthetical)	Mar. 31, 2015	Jun. 30, 2014
Statement of Financial Position [Abstract]
Common stock authorized (in shares)	100,000,000	100,000,000
Common stock issued (in shares)	55,233,807	55,161,875
Common stock outstanding (in shares)	51,886,740	53,137,144
Common stock in treasury (in shares)	2,139,455	2,024,731

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Contingencies and Commitments

9 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

Environmental

The Company is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. Although compliance with these laws and regulations may affect the costs of the Company’s operations, compliance costs to date have not been material. The Company has environmental remediation liabilities at some of its owned operating facilities and has been designated as a potentially responsible party (“PRP”) with respect to certain third party Superfund waste-disposal sites and other third party-owned sites. Additionally, the Company has been notified that it may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against the Company. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites have been determined. The liability for future environmental remediation costs is evaluated by management on a quarterly basis. The Company accrues amounts for environmental remediation costs that represent management’s best estimate of the probable and reasonably estimable undiscounted future costs related to environmental remediation. During the nine months ended March 31, 2015, the Company increased the liability for a company-owned former operating site by $0.2 million. The liabilities recorded for environmental remediation costs at Superfund sites, other third party-owned sites and Carpenter-owned current or former operating facilities remaining at March 31, 2015 and June 30, 2014 were $15.7 million and $15.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s. Based upon information currently available, such future costs are not expected to have a material effect on Carpenter’s financial position, results of operations or cash flows over the long-term. However, such costs could be material to Carpenter’s financial position, results of operations or cash flows in a particular future quarter or year.

Other

The Company is defending various routine claims and legal actions that are incidental to its business and common to its operations, including those pertaining to product claims, commercial disputes, patent infringement, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims and tax issues. Like many other manufacturing companies in recent years, the Company, from time to time, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace. The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable. The effect of the outcome of these matters on the Company’s future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company’s financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company’s financial position, results of operations or cash flows in a particular future quarter or year.

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Document and Entity Information	9 Months Ended
	Mar. 31, 2015	Apr. 29, 2015
Document and Entity Information
Entity Registrant Name	CARPENTER TECHNOLOGY CORP
Entity Central Index Key	0000017843
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		50,403,963
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Share Repurchase Program

9 Months Ended

Mar. 31, 2015

Equity [Abstract]

Share Repurchase Program

Share Repurchase Program

In October 2014, the Company’s Board of Directors authorized a share repurchase program. The program authorizes the purchase of up to $500.0 million of the Company’s outstanding common stock over two years. The shares may be repurchased from time to time at the Company's discretion based on capital needs of the business, general market conditions and market price of the stock. The share repurchase program may be discontinued at any time. During the nine months ended March 31, 2015, the Company purchased 1,411,772 of its common stock on the open market for an aggregate of $60.3 million.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
NET SALES	$ 570.6	$ 566.3	$ 1,668.8	$ 1,568.4
Cost of sales	494.8	471.8	1,438.9	1,275.2
Gross profit	75.8	94.5	229.9	293.2
Selling, general and administrative expenses	45.7	45.0	132.7	140.4
Restructuring charges	25.3	0	25.3	0
Operating income	4.8	49.5	71.9	152.8
Interest expense, net	(7.1)	(2.7)	(20.9)	(10.8)
Other (expense) income, net	0	(0.6)	4.8	0.1
(Loss) income before income taxes	(2.3)	46.2	55.8	142.1
Income tax (benefit) expense	(0.9)	15.6	19.6	47.4
Net (loss) income	$ (1.4)	$ 30.6	$ 36.2	$ 94.7
(LOSS) EARNINGS PER COMMON SHARE:
Basic (in dollars per share)	$ (0.03)	$ 0.57	$ 0.68	$ 1.77
Diluted (in dollars per share)	$ (0.03)	$ 0.57	$ 0.68	$ 1.76
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic (in shares)	52.6	53.3	53.2	53.2
Diluted (in shares)	52.6	53.7	53.3	53.6
Cash dividends per common share (in dollars per share)	$ 0.18	$ 0.18	$ 0.54	$ 0.54

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Restructuring Charges

9 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring Charges

In March 2015, the Company approved restructuring actions to reduce overhead costs and position the Company to drive long-term, profitable growth. Activities undertaken in connection with the restructuring plan are expected to be substantially completed by the end of the first quarter of fiscal year 2016. The restructuring charges for the three and nine months ended March 31, 2015 amounted to $25.3 million before taxes. The components of the restructuring charges are indicated below.

The Company recorded a pre-tax charge of $10.6 million during the three and nine months ended March 31, 2015 consisting primarily of various personnel-related costs for severance payments, medical coverage and related items. Of this charge, $3.4 million will be paid by the Company and $7.6 million will be paid from the Company's qualified pension plan. The charge also includes $0.4 million of non-cash forfeiture income related to stock-based compensation.

The Company recorded a pre-tax charge of $13.4 million during the three and nine months ended March 31, 2015 to exit a material development program. This includes an $8.0 million cash payment during the three and nine months ended March 31, 2015 to exit a licensing agreement and non-cash asset impairment charges totaling $5.4 million.

The Company recorded a pre-tax charge of $1.3 million during the three and nine months ended March 31, 2015 to reflect the accelerated depreciation of the property and equipment at a facility that will close in the fourth quarter of fiscal year 2015.

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Earnings per Common Share

9 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings per Common Share

Earnings Per Common Share

The Company calculates basic and diluted earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities (nonvested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. For the three months ended March 31, 2015, the Company incurred a net loss and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. 

The calculations of basic and diluted (loss) earnings per common share for the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions, except per share data)	2015			2014			2015		2014
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of basic earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Basic (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.77
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of diluted earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Effect of shares issuable under share-based compensation plans	—			0.4			0.1		0.4
Weighted average number of common shares outstanding, diluted	52.6			53.7			53.3		53.6
Diluted (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.76

The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings per share because their effects were anti-dilutive:

	Three Months Ended March 31,		Nine Months Ended March 31,
(in millions)	2015	2014	2015	2014
Stock options	1.1	0.1	0.7	0.1

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Superalloy Powders Technical Assistance and Powder Supply Agreements

9 Months Ended

Mar. 31, 2015

Superalloy Powders Technical Assistance and Powder Supply Agreements

Superalloy Powders Technical Assistance and Powder Supply Agreements

Superalloy Powders Technical Assistance and Powder Supply Agreements

On September 30, 2013, the Company entered into a multi-level agreement with United Technologies Corporation (“UTC”) through its Pratt & Whitney Division, which includes a technical assistance agreement and a long-term powder supply agreement. The technical assistance agreement provides for the licensing of technology associated with the production of superalloy powders. As a result of the agreements, the Company began construction of a superalloy powder facility which is expected to take approximately 18 months to construct at an estimated cost of $30 million. Once the facility is qualified by UTC, the Company will supply UTC with superalloy powder for up to 20 years. The powder supply agreement provides for minimum guaranteed purchase quantities of specified materials for a period of 12 years.

According to the terms of the technology licensing agreement, the Company paid a $13.0 million up-front license fee in equal quarterly installments beginning on December 15, 2013. This amount has been capitalized and will be amortized as a reduction to revenue over the term of the minimum guarantee period of 12 years. As of March 31, 2015 and June 30, 2014, the $13.0 million upfront license fee is included in other assets.

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Fair Value Measurements

9 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Currently, the Company does not use Level 1 and 3 inputs.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

March 31, 2015	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.3
Derivative financial instruments	8.4
Total assets	$	13.7
Liabilities:
Derivative financial instruments	$	59.1

June 30, 2014	Fair Value Measurements Using Input Type
($ in millions)	Level 2
Assets:
Marketable securities
Municipal auction rate securities	$	5.2
Derivative financial instruments	20.4
Total assets	$	25.6
Liabilities:
Derivative financial instruments	$	10.9

The Company’s derivative financial instruments consist of commodity forward contracts, foreign currency forward contracts, interest rate swaps and forward interest rate swaps. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest rates published by third party leading financial news and data providers. This is observable data; however, the valuation of these instruments is not based on actual transactions for the same instruments and, as such, they are classified as Level 2. The Company’s use of derivatives and hedging policies are more fully discussed in Note 12.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

The carrying amounts of other financial instruments not listed in the table below approximate fair value due to the short-term nature of these items. The carrying amounts and estimated fair values of the Company’s financial instruments not recorded at fair value in the financial statements were as follows:

	March 31, 2015				June 30, 2014
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	609.8	$	639.8	$	604.3	$	638.7
Company-owned life insurance	$	16.7	$	16.7	$	16.2	$	16.2

The carrying amount for company-owned life insurance reflects cash surrender values based upon the market values of underlying securities, using Level 2 inputs, net of any outstanding policy loans. The carrying value associated with the cash surrender value of these policies is recorded in other assets in the accompanying consolidated balance sheets.

The fair values of long-term debt as of March 31, 2015 and June 30, 2014 were determined by using current interest rates for debt with terms and maturities similar to the Company’s existing debt arrangements and accordingly would be classified as Level 2 inputs in the fair value hierarchy.

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Pension and Other Postretirement Benefits

9 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three and nine months ended March 31, 2015 and 2014 were as follows:

Three months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	8.0		$	8.0		$	1.1		$	1.0
Interest cost	13.5			14.3			3.0			3.1
Expected return on plan assets	(17.2		)	(15.7		)	(1.7		)	(1.6		)
Amortization of net loss	4.2			5.5			0.5			0.3
Amortization of prior service cost	0.1			0.1			—			—
	$	8.6		$	12.2		$	2.9		$	2.8

Nine months ended March 31,	Pension Plans						Other Postretirement Plans
($ in millions)	2015			2014			2015			2014
Service cost	$	24.0		$	24.2		$	3.3		$	3.0
Interest cost	40.5			43.0			9.0			9.3
Expected return on plan assets	(51.6		)	(47.1		)	(5.0		)	(4.8		)
Amortization of net loss	12.6			16.3			1.5			0.9
Amortization of prior service cost	0.3			0.4			—			—
	$	25.8		$	36.8		$	8.8		$	8.4

Historically, the Company capitalized in inventory only the service cost portion of periodic benefit costs associated with manufacturing employees. During the three months ended December 31, 2013, the Company began to capitalize the portion of periodic benefit costs related to the interest cost, expected return on assets and amortization of net actuarial loss and prior service cost (benefit), which the Company refers to as pension earnings, interest and deferrals (“pension EID”), related to current manufacturing employees in inventory. The impact of this change resulted in an increase in the amount of capitalized periodic benefit costs of $2.2 million during the nine months ended March 31, 2014. This change did not have a material impact on any previously reported amounts.

During the nine months ended March 31, 2015 and 2014, the Company made $5.5 million and $4.6 million, respectively, of contributions to its qualified defined benefit pension plans. The Company currently expects to make approximately $1.7 million of contributions to its qualified defined benefit pension plans during the remainder of fiscal year 2015.

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Inventories

9 Months Ended

Mar. 31, 2015

Inventory, Net [Abstract]

Inventories

Inventories

Inventories consisted of the following components as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Raw materials and supplies	$	143.0	$	122.3
Work in process	368.2		393.9
Finished and purchased products	199.5		183.0
Total inventory	$	710.7	$	699.2

Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out (“LIFO”) method.

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Accrued Liabilities

9 Months Ended

Mar. 31, 2015

Accrued Liabilities, Current [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities consisted of the following as of March 31, 2015 and June 30, 2014:

($ in millions)	March 31, 2015		June 30, 2014
Accrued compensation and benefits	$	46.5	$	49.8
Derivative financial instruments	35.2		4.7
Accrued postretirement benefits	15.5		15.5
Accrued pension liabilities	6.5		19.3
Accrued interest expense	5.6		11.2
Accrued income taxes	—		8.4
Other	35.0		39.1
Total accrued liabilities	$	144.3	$	148.0

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Debt

9 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Debt

The Company has a $500.0 million syndicated credit agreement (“Credit Agreement”) that extends to June 2018. Interest on the borrowings under the Credit Agreement accrue at variable rates, based upon LIBOR or a defined “Base Rate,” both determined based upon the rating of the Company’s senior unsecured long-term debt (the “Debt Rating”). The applicable margin to be added to LIBOR ranges from 0.75% to 1.90% (1.25% as of March 31, 2015), and for Base Rate-determined loans, from 0.00% to 0.90% (0.25% as of March 31, 2015). The Company also pays a quarterly commitment fee ranging from 0.075% to 0.375% (0.150% as of March 31, 2015), determined based upon the Debt Rating, of the unused portion of the $500.0 million commitment under the Credit Agreement. In addition, the Company must pay certain letter of credit fees, ranging from 0.75% to 1.90% (1.25% as of March 31, 2015), with respect to letters of credit issued under the Credit Agreement. The Company has the right to voluntarily prepay and reborrow loans and to terminate or reduce the commitments under the facility. As of March 31, 2015, the Company had $8.2 million of issued letters of credit under the Credit Agreement, with the balance of $491.8 million available to the Company.

The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio of 3.50 to 1.00. The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization and non-cash net pension expense (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. As of March 31, 2015 and June 30, 2014, the Company was in compliance with all of the covenants of the Credit Agreement.

Long-term debt outstanding as of March 31, 2015 and June 30, 2014 consisted of the following:

($ in millions)	March 31, 2015		June 30, 2014
Medium-term notes, Series B at 6.97% to 7.10% due from April 2018 to May 2018 (face value of $55.0 million at March 31, 2015 and June 30, 2014)	$	55.0	$	55.0
Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at March 31, 2015 and June 30, 2014)	255.2		249.7
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at March 31, 2015 and June 30, 2014)	299.6		299.6
Total	609.8		604.3
Less: amounts due within one year	—		—
Long-term debt, net of current portion	$	609.8	$	604.3

For the three months ended March 31, 2015 and 2014, interest costs totaled $7.7 million and $8.1 million, respectively, of which $0.6 million and $5.4 million, respectively, were capitalized as part of the cost of property, plant, equipment and software. For the nine months ended March 31, 2015 and 2014, interest costs totaled $22.9 million and $24.1 million, respectively, of which $2.0 million and $13.3 million, respectively, were capitalized as part of the cost of property, plant, equipment and software.

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Derivatives and Hedging Activities (Tables)

9 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value and location of outstanding derivative contracts recorded in consolidated balance sheets

The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of March 31, 2015 and June 30, 2014:

March 31, 2015	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.7	$	2.3	$	—	$	3.0
Other assets	5.4		—		—		5.4
Total asset derivatives	$	6.1	$	2.3	$	—	$	8.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	—	$	35.2	$	35.2
Other liabilities	—		—		23.9		23.9
Total liability derivatives	$	—	$	—	$	59.1	$	59.1

June 30, 2014	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	—	$	11.3	$	11.3
Other assets	—		—		9.1		9.1
Total asset derivatives	$	—	$	—	$	20.4	$	20.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	4.3	$	4.7
Other liabilities	—		0.2		6.0		6.2
Total liability derivatives	$	—	$	0.6	$	10.3	$	10.9

Summary of the (losses) gains related to cash flow hedges

The following is a summary of the (losses) gains related to cash flow hedges recognized during the three and nine months ended March 31, 2015 and 2014:

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(28.6	)	$	27.5		$	(71.8	)	$	23.0
Foreign exchange contracts	1.3			(0.3		)	3.4			(1.0		)
Total	$	(27.3	)	$	27.2		$	(68.4	)	$	22.0

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Three Months Ended March 31,						Three Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(2.0	)	$	0.2
Foreign exchange contracts	Net sales	0.9			(0.3		)	—			—
Forward interest rate swaps	Interest expense	0.1			0.1			—			—
Total		$	(5.9	)	$	(5.6	)	$	(2.0	)	$	0.2

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Nine Months Ended March 31,						Nine Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(8.4	)	$	(19.9	)	$	(2.2	)	$	(0.1	)
Foreign exchange contracts	Net sales	1.9			(0.8		)	—			—
Forward interest rate swaps	Interest expense	0.3			0.3			—			—
Total		$	(6.2	)	$	(20.4	)	$	(2.2	)	$	(0.1	)

Schedule of changes in AOCI associated with derivative hedging activities

The changes in AOCI associated with derivative hedging activities during the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Balance, beginning	$	(17.9	)	$	(35.5	)	$	7.6		$	(41.5	)
Current period changes in fair value, net of tax	(16.9		)	17.0			(42.6		)	13.7
Reclassification to earnings, net of tax	3.7			3.5			3.9			12.8
Balance, ending	$	(31.1	)	$	(15.0	)	$	(31.1	)	$	(15.0	)

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Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Oct. 31, 2014	Jun. 30, 2014
Provision (benefit) for income taxes from continuing operations
Income tax (benefit) expense	$ 900,000	$ (15,600,000)	$ (19,600,000)	$ (47,400,000)
Income tax expense as a percent of pre-tax income	39.10%	33.80%	35.10%	33.40%
Discrete tax item and unfavorable impact of bonus depreciation	100,000		1,600,000
Indefinitely reinvested foreign earnings	90,000,000		90,000,000			128,400,000
Share repurchase program, authorized amount					500,000,000
Foreign earnings repatriated	$ 38,000,000

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Derivatives and Hedging Activities

9 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

The Company uses commodity forwards, interest rate swaps, forward interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a recap about the impact the derivative instruments had on the Company’s financial position, results of operations and cash flows.

Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income (loss) (“AOCI”) to the extent effective, and reclassified to cost of sales in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur. As of March 31, 2015, the Company had forward contracts to purchase 26.6 million pounds of certain raw materials with settlement dates through June 2019.

Cash Flow Hedging — Forward interest rate swaps: Historically, the Company has entered into forward interest rate swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. The forward interest rate swaps were designated as cash flow hedges. The qualifying hedge contracts were marked-to-market at each reporting date and any unrealized gains or losses were included in accumulated other comprehensive income (loss) to the extent effective, and reclassified to interest expense in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.  For the three months ended March 31, 2015 and 2014, net gains of $0.1 million and $0.1 million, respectively, were recorded as a reduction to interest expense. For the nine months ended March 31, 2015 and 2014, net gains of $0.3 million and $0.3 million, respectively, were recorded as a reduction to interest expense. These amounts represent the impact of previously terminated swaps which are being amortized over the remaining term of the underlying debt.

Cash Flow Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income (loss) to the extent effective, and reclassified to net sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

The Company also uses foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currency against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other income and expense. As of March 31, 2015 and June 30, 2014, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts were not material.

Fair Value Hedging - Interest rate swaps: The Company uses interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges. Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of operations. As of March 31, 2015 and June 30, 2014, the total notional amount of floating interest rate contracts was $150.0 million and $0.0 million, respectively. For the three months ended March 31, 2015 and 2014, net gains of $0.8 million and $0.0 million, respectively, were recorded as a reduction to interest expense. For the nine months ended March 31, 2015 and 2014, net gains of $2.1 million and $0.0 million, respectively, were recorded as a reduction to interest expense.

The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of March 31, 2015 and June 30, 2014:

March 31, 2015	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.7	$	2.3	$	—	$	3.0
Other assets	5.4		—		—		5.4
Total asset derivatives	$	6.1	$	2.3	$	—	$	8.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	—	$	35.2	$	35.2
Other liabilities	—		—		23.9		23.9
Total liability derivatives	$	—	$	—	$	59.1	$	59.1

June 30, 2014	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	—	$	11.3	$	11.3
Other assets	—		—		9.1		9.1
Total asset derivatives	$	—	$	—	$	20.4	$	20.4
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	4.3	$	4.7
Other liabilities	—		0.2		6.0		6.2
Total liability derivatives	$	—	$	0.6	$	10.3	$	10.9

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings or it becomes probable the forecasted transactions will not occur. The following is a summary of the (losses) gains related to cash flow hedges recognized during the three and nine months ended March 31, 2015 and 2014:

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(28.6	)	$	27.5		$	(71.8	)	$	23.0
Foreign exchange contracts	1.3			(0.3		)	3.4			(1.0		)
Total	$	(27.3	)	$	27.2		$	(68.4	)	$	22.0

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Three Months Ended March 31,						Three Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(2.0	)	$	0.2
Foreign exchange contracts	Net sales	0.9			(0.3		)	—			—
Forward interest rate swaps	Interest expense	0.1			0.1			—			—
Total		$	(5.9	)	$	(5.6	)	$	(2.0	)	$	0.2

($ in millions) Derivatives in Cash Flow Hedging Relationship:	Location of (Loss) Gain Reclassified from AOCI into Income	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)						Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion)
		Nine Months Ended March 31,						Nine Months Ended March 31,
		2015			2014			2015			2014
Commodity contracts	Cost of sales	$	(8.4	)	$	(19.9	)	$	(2.2	)	$	(0.1	)
Foreign exchange contracts	Net sales	1.9			(0.8		)	—			—
Forward interest rate swaps	Interest expense	0.3			0.3			—			—
Total		$	(6.2	)	$	(20.4	)	$	(2.2	)	$	(0.1	)

The Company estimates that $18.1 million of net derivative losses included in AOCI as of March 31, 2015 will be reclassified into earnings within the next 12 months.

The changes in AOCI associated with derivative hedging activities during the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Balance, beginning	$	(17.9	)	$	(35.5	)	$	7.6		$	(41.5	)
Current period changes in fair value, net of tax	(16.9		)	17.0			(42.6		)	13.7
Reclassification to earnings, net of tax	3.7			3.5			3.9			12.8
Balance, ending	$	(31.1	)	$	(15.0	)	$	(31.1	)	$	(15.0	)

According to the provisions of the Company’s derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. The Company’s contracts with these counterparties allow for netting of derivative instrument positions executed under each contract. As of March 31, 2015 and June 30, 2014, the Company had no cash collateral held by counterparties.

The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition, various master netting arrangements are in place with counterparties to facilitate settlements of gains and losses on these contracts.

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Reclassifications from Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Mar. 31, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Reclassifications from Accumulated Other Comprehensive Income (AOCI)

Reclassifications from Accumulated Other Comprehensive Income (Loss)

The changes in AOCI by component, net of tax, for the three months ended March 31, 2015 and 2014 were as follows:

Three Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2014	$	(17.9	)	$	(230.8	)	$	(0.4	)	$	(33.7	)	$	(282.8	)
Other comprehensive loss before reclassifications	(16.9		)	—			—			(9.9		)	(26.8		)
Amounts reclassified from AOCI (b)	3.7			3.0			—			—			6.7
Net current-period other comprehensive (loss) income	(13.2		)	3.0			—			(9.9		)	(20.1		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Three Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at December 31, 2013	$	(35.5	)	$	(266.1	)	$	(0.3	)	$	(15.3	)	$	(317.2	)
Other comprehensive income (loss) before reclassifications	17.0			—			—			(1.0		)	16.0
Amounts reclassified from AOCI (b)	3.5			3.7			—			—			7.2
Net current-period other comprehensive income (loss)	20.5			3.7			—			(1.0		)	23.2
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

The changes in AOCI by component, net of tax, for the nine months ended March 31, 2015 and 2014 were as follows:

Nine Months Ended March 31, 2015 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2014	$	7.6		$	(236.7	)	$	(0.4	)	$	(15.7	)	$	(245.2	)
Other comprehensive loss before reclassifications	(42.6		)	—			—			(27.9		)	(70.5		)
Amounts reclassified from AOCI (b)	3.9			8.9			—			—			12.8
Net current-period other comprehensive (loss) income	(38.7		)	8.9			—			(27.9		)	(57.7		)
Balance at March 31, 2015	$	(31.1	)	$	(227.8	)	$	(0.4	)	$	(43.6	)	$	(302.9	)

Nine Months Ended March 31, 2014 ($ in millions) (a)	Cash flow hedging items			Pension and other postretirement benefit plan items			Unrealized losses on available-for- sale securities			Foreign currency items			Total
Balance at June 30, 2013	$	(41.5	)	$	(273.6	)	$	(0.4	)	$	(20.2	)	$	(335.7	)
Other comprehensive income before reclassifications	13.7			—			0.1			3.9			17.7
Amounts reclassified from AOCI (b)	12.8			11.2			—			—			24.0
Net current-period other comprehensive income	26.5			11.2			0.1			3.9			41.7
Balance at March 31, 2014	$	(15.0	)	$	(262.4	)	$	(0.3	)	$	(16.3	)	$	(294.0	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) See separate table below for further details.

The following is a summary of amounts reclassified from AOCI for the three and nine months ended March 31, 2015 and 2014:

($ in millions) (a)	Location of (loss) gain	Amount Reclassified from AOCI Three Months Ended March 31,						Amount Reclassified from AOCI Nine Months Ended March 31,
Details about AOCI Components		2015			2014			2015			2014
Cash flow hedging items:
Commodity contracts	Cost of sales	$	(6.9	)	$	(5.4	)	$	(8.4	)	$	(19.9	)
Foreign exchange contracts	Net sales	0.9			(0.3		)	1.9			(0.8		)
Forward interest rate swaps	Interest expense	0.1			0.1			0.3			0.3
	Total before tax	(5.9		)	(5.6		)	(6.2		)	(20.4		)
	Tax benefit	2.2			2.1			2.3			7.6
	Net of tax	$	(3.7	)	$	(3.5	)	$	(3.9	)	$	(12.8	)
Amortization of pension and other postretirement benefit plan items:
Net actuarial loss	(b)	$	(4.7	)	$	(5.8	)	$	(14.1	)	$	(17.2	)
Prior service cost	(b)	(0.1		)	(0.1		)	(0.3		)	(0.4		)
	Total before tax	(4.8		)	(5.9		)	(14.4		)	(17.6		)
	Tax benefit	1.8			2.2			5.5			6.4
	Net of tax	$	(3.0	)	$	(3.7	)	$	(8.9	)	$	(11.2	)

(a) Amounts in parentheses indicate debits to income/loss.

(b) These AOCI components are included in the computation of net periodic benefit cost (see Note 6 for additional details).

During the three months ended December 31, 2014, the Company identified an error related to the accounting for an equity method investment.  Since the investee’s financial statements are prepared using a functional currency other than the US dollar, the Company should be translating the Company’s investment balance into a US dollar equivalent at the end of each period. The impact of correcting this error was a $4.9 million reduction in other assets with an offsetting adjustment to accumulated other comprehensive loss in the Company’s consolidated balance sheet as of December 31, 2014. This adjustment is included in foreign currency translation in the consolidated statements of comprehensive (loss) income for the nine months ended March 31, 2015. The Company determined that neither the prior period error nor the current period adjustment were material to the periods presented.

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Derivatives and Hedging Activities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	$ 8.4		$ 8.4		$ 20.4
Derivatives designated as hedging instruments, Liability	59.1		59.1		10.9
Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	6.1		6.1		0
Derivatives designated as hedging instruments, Liability	0		0		0
Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	2.3		2.3		0
Derivatives designated as hedging instruments, Liability	0		0		0.6
Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0		0		20.4
Derivatives designated as hedging instruments, Liability	59.1		59.1		10.3
Other current assets
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	3.0		3.0		11.3
Other current assets | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0.7		0.7		0
Other current assets | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	2.3		2.3		0
Other current assets | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0		0		11.3
Other assets
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	5.4		5.4		9.1
Other assets | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	5.4		5.4		0
Other assets | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0		0		0
Other assets | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0		0		9.1
Accrued liability
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	35.2		35.2		4.7
Accrued liability | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	0		0		0
Accrued liability | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	0		0		0.4
Accrued liability | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	35.2		35.2		4.3
Other liabilities
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	23.9		23.9		6.2
Other liabilities | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	0		0		0
Other liabilities | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	0		0		0.2
Other liabilities | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	23.9		23.9		6.0
Fair Value Hedging | Interest Rate Swaps
Fair value of derivatives
Total notional amounts of interest rate contracts	150.0		150.0		0
Net gains recorded as a reduction to interest expense	0.8	0	2.1	0
Cash flow hedges
Fair value of derivatives
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	(27.3)	27.2	(68.4)	22.0
Cash flow hedges | Forward Interest Rate Swaps
Fair value of derivatives
Net gains recorded as a reduction to interest expense	0.1	0.1	0.3	0.3
Cash flow hedges | Foreign Currency Contracts
Fair value of derivatives
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	1.3	(0.3)	3.4	(1.0)
Cash flow hedges | Commodity Contracts
Fair value of derivatives
Amounts of raw materials to be purchased from forward contracts	26,600,000		26,600,000
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	$ (28.6)	$ 27.5	$ (71.8)	$ 23.0

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Accrued Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Accrued Liabilities, Current [Abstract]
Accrued compensation and benefits	$ 46.5	$ 49.8
Derivative financial instruments	35.2	4.7
Accrued postretirement benefits	15.5	15.5
Accrued pension liabilities	6.5	19.3
Accrued interest expense	5.6	11.2
Accrued income taxes	0	8.4
Other	35.0	39.1
Total accrued liabilities	$ 144.3	$ 148.0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (1.4)	$ 30.6	$ 36.2	$ 94.7
Other comprehensive (loss) income, net of tax
Pension and postretirement benefits, net of tax of $(1.8), $(2.2), $(5.5) and $(6.4), respectively	3.0	3.7	8.9	11.2
Net (loss) gain on derivative instruments, net of tax of $8.0, $(12.3), $23.4 and $(15.9), respectively	(13.2)	20.5	(38.7)	26.5
Unrealized gain on marketable securities, net of tax of $0.0, $0.0, $0.0 and $0.0, respectively	0	0	0	0.1
Foreign currency translation	(9.9)	(1.0)	(27.9)	3.9
Other comprehensive (loss) income	(20.1)	23.2	(57.7)	41.7
Comprehensive (loss) income	$ (21.5)	$ 53.8	$ (21.5)	$ 136.4

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Basis of Presentation

9 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair statement of the results are reflected in the interim periods presented. The June 30, 2014 consolidated balance sheet data was derived from audited financial statements, but does not include all the disclosures required by U.S. generally accepted accounting principles. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter’s annual report on Form 10-K for the year ended June 30, 2014 (the “2014 Form 10-K”). Operating results for the three and nine months ended March 31, 2015 are not necessarily indicative of the operating results for any future period.

Certain amounts in the consolidated financial statements and notes to the consolidated financial statements for prior year periods have been reclassified to conform to the fiscal year 2015 presentation.

As used throughout this report, unless the context requires otherwise, the terms “Carpenter”, the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation.

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Earnings Per Common Share (Tables)

9 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of calculations of basic and diluted earnings per common share

The calculations of basic and diluted (loss) earnings per common share for the three and nine months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions, except per share data)	2015			2014			2015		2014
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of basic earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Basic (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.77
Net (loss) income	$	(1.4	)	$	30.6		$	36.2	$	94.7
Less: earnings and dividends allocated to participating securities	—			(0.1		)	—		(0.3		)
(Loss) earnings available for Carpenter common stockholders used in calculation of diluted earnings per share	$	(1.4	)	$	30.5		$	36.2	$	94.4
Weighted average number of common shares outstanding, basic	52.6			53.3			53.2		53.2
Effect of shares issuable under share-based compensation plans	—			0.4			0.1		0.4
Weighted average number of common shares outstanding, diluted	52.6			53.7			53.3		53.6
Diluted (loss) earnings per common share	$	(0.03	)	$	0.57		$	0.68	$	1.76

Schedule of awards issued under share-based compensation plans excluded from the calculations of diluted earnings per share

The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings per share because their effects were anti-dilutive:

	Three Months Ended March 31,		Nine Months Ended March 31,
(in millions)	2015	2014	2015	2014
Stock options	1.1	0.1	0.7	0.1

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Earnings Per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net (loss) income	$ (1.4)	$ 30.6	$ 36.2	$ 94.7
Less: earnings and dividends allocated to participating securities	0	(0.1)	0	(0.3)
(Loss) earnings available for Carpenter common stockholders used in calculation of basic earnings per share	(1.4)	30.5	36.2	94.4
Weighted average number of common shares outstanding, basic (in shares)	52.6	53.3	53.2	53.2
Basic (loss) earnings per common share (in dollars per share)	$ (0.03)	$ 0.57	$ 0.68	$ 1.77
(Loss) earnings available for Carpenter common stockholders used in calculation of diluted earnings per share	$ (1.4)	$ 30.5	$ 36.2	$ 94.4
Effect of shares issuable under share-based compensation plans (in shares)	0	0.4	0.1	0.4
Weighted average number of common shares outstanding, diluted (in shares)	52.6	53.7	53.3	53.6
Diluted (loss) earnings per common share (in dollars per share)	$ (0.03)	$ 0.57	$ 0.68	$ 1.76

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Other (Expense) Income, Net

9 Months Ended

Mar. 31, 2015

Other Income and Expenses [Abstract]

Other Income, Net

Other (Expense) Income, Net

Other (expense) income, net consisted of the following:

	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2015			2014			2015			2014
Legal settlement	$	—		$	—		$	4.4		$	—
Foreign exchange	(0.1		)	(0.8		)	0.3			(2.0		)
Equity in earnings (losses) of unconsolidated subsidiaries	0.1			—			(0.4		)	0.4
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts	—			0.1			0.5			1.6
Other	—			0.1			—			0.1
Total other (expense) income, net	$	—		$	(0.6	)	$	4.8		$	0.1