Segment Information, Geographic and Product Data

12 Months Ended

Jun. 30, 2014

Segment Information, Geographic and Product Data

Segment Information, Geographic and Product Data

19. Segment Information, Geographic and Product Data

The Company changed its reportable segments beginning with fiscal year 2014 first quarter results.  The change reflects the completion of the integration of the Latrobe Specialty Metals, Inc. (“Latrobe”) businesses acquired by the Company in February 2012.  Prior to this change, the Latrobe businesses were reported as a separate segment to provide management with the focus and visibility into the business of the acquired operations. The previously reported Latrobe segment also included the results of the Company’s distribution business in Mexico.  Since the Latrobe businesses are now fully integrated, the previously reported Latrobe segment has been merged into the Company’s operating model, in which the Company’s integrated steel mill operations are managed distinctly from the collection of other differentiated operations. Beginning the first quarter of fiscal year 2014, 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 the new premium products manufacturing facility in Limestone County, 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 and the Latrobe and Mexico distribution businesses. The businesses in the PEP segment are managed with an entrepreneurial structure to promote speed and flexibility, and drive overall revenue and profit growth.

Our 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 accounting policies of our reportable segments are the same as those described in the Summary of Significant Accounting Policies.

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 & deferrals.”

On a consolidated basis, no single customer accounted for 10 percent or more of the Company’s sales for the years ended June 30, 2014, June 30, 2013 and June 30, 2012.

Segment Data		Years Ended June 30,
($ in millions)		2014			2013			2012
Net Sales:
Specialty Alloys Operations		$	1,741.6		$	1,823.5		$	1,672.0
Performance Engineered Products		498.6			520.1			444.9
Intersegment		(67.2		)	(71.9		)	(88.2		)
Consolidated net sales		$	2,173.0		$	2,271.7		$	2,028.7
		Years Ended June 30,
($ in millions)		2014			2013			2012
Operating Income:
Specialty Alloys Operations		$	232.7		$	268.5		$	236.3
Performance Engineered Products		45.5			45.2			48.2
Corporate costs		(43.8		)	(47.7		)	(53.2		)
Pension earnings, interest & deferrals		(21.8		)	(31.9		)	(15.3		)
Intersegment		(0.6		)	(1.4		)	(5.9		)
Consolidated operating income		$	212.0		$	232.7		$	210.1
		Years Ended June 30,
($ in millions)		2014			2013			2012
Depreciation and Amortization:
Specialty Alloys Operations		$	83.4		$	76.7		$	59.7
Performance Engineered Products		23.8			22.1			18.8
Corporate		5.5			5.9			5.6
Intersegment		(0.8		)	(0.6		)	(0.3		)
Consolidated depreciation and amortization		$	111.9		$	104.1		$	83.8
		Years Ended June 30,
($ in millions)		2014			2013			2012
Capital Expenditures:
Specialty Alloys Operations		$	319.9		$	283.5		$	114.3
Performance Engineered Products		24.7			24.1			40.2
Corporate		5.4			4.1			5.4
Intersegment		(0.8		)	(1.5		)	(2.1		)
Consolidated capital expenditures		$	349.2		$	310.2		$	157.8
		June 30,
	($ in millions)	2014			2013
	Total Assets:
	Specialty Alloys Operations	$	2,454.8		$	2,192.7
	Performance Engineered Products	491.7			498.5
	Corporate	144.9			233.7
	Intersegment	(33.9		)	(42.0		)
	Consolidated total assets	$	3,057.5		$	2,882.9

Geographic Data		Years Ended June 30,
($ in millions)		2014		2013		2012
Net Sales:(a)
United States		$	1,537.9	$	1,575.3	$	1,364.2
Europe		349.5		382.1		375.9
Asia Pacific		137.1		153.6		142.1
Canada		65.3		59.8		52.1
Mexico		59.2		66.6		68.8
Other		24.0		34.3		25.6
Consolidated net sales		$	2,173.0	$	2,271.7	$	2,028.7
(a) Net sales were attributed to countries based on the location of the customer.
		June 30,
	($ in millions)	2014		2013
	Long-lived assets:
	United States	$	1,379.5	$	1,142.5
	Asia Pacific	11.6		9.1
	Canada	8.4		9.1
	Europe	6.1		6.1
	Mexico	1.4		1.6
	Consolidated long-lived assets	$	1,407.0	$	1,168.4
		Years Ended June 30,
($ in millions)		2014		2013		2012
Product Data
Special alloys		$	917.0	$	989.9	$	931.4
Stainless steel		643.6		638.8		637.3
Alloy and tool steel		240.4		255.7		108.6
Titanium products		157.7		155.0		156.6
Powder metals		48.6		60.4		64.3
Distribution and other		165.7		171.9		130.5
Total net sales		$	2,173.0	$	2,271.7	$	2,028.7