Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment and Geographical Area Information

Segment and Geographical Area Information

Our primary line of business is the production of semi-fabricated specialty aluminum products, such as aluminum plate and sheet and extruded and drawn products, primarily used in aerospace/high strength ("Aero/HS products"), automotive ("Automotive Extrusions"), general engineering ("GE products") and other industrial end market applications ("Other products"). We operate 11 focused production facilities in the United States and one in Canada. Consistent with the manner in which our chief operating decision maker reviews and evaluates our business, the Fabricated Products business is treated as a single operating segment. At June 30, 2016, approximately 63% of our employees were covered by collective bargaining agreements and approximately 6% of our employees were covered by collective bargaining agreements with expiration dates occurring within one year from June 30, 2016.

In addition to the Fabricated Products segment, we have a business unit, All Other, which provides general and administrative support for our operations. For purposes of segment reporting under GAAP, we treat the Fabricated Products segment as a reportable segment. All Other is not considered a reportable segment.

The accounting policies of the Fabricated Products segment are the same as those described in Note 1. Segment results are evaluated internally by management before any allocation of corporate overhead and without any charge for income taxes, interest expense, or other net operating charges.

The following tables provide financial information by reporting segment and business unit for each period or as of each period-end, as applicable (in millions of dollars):

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net sales:
Fabricated Products	$	334.9		$	367.2		$	678.1		$	738.9
Segment operating income (loss):
Fabricated Products1	$	72.1		$	50.6		$	130.0		$	95.5
All Other2	(14.2		)	(13.6		)	(27.3		)	(517.1		)
Total operating income (loss)	$	57.9		$	37.0		$	102.7		$	(421.6	)
Interest expense	(5.5		)	(5.2		)	(9.2		)	(15.0		)
Other (expense) income, net	(10.7		)	0.4			(10.4		)	0.8
Income (loss) before income taxes	$	41.7		$	32.2		$	83.1		$	(435.8	)
Depreciation and amortization:
Fabricated Products	$	8.8		$	8.0		$	17.4		$	15.9
All Other	0.2			0.1			0.3			0.2
Total depreciation and amortization	$	9.0		$	8.1		$	17.7		$	16.1
Capital expenditures:
Fabricated Products	$	16.3		$	11.5		$	42.1		$	22.7
All Other	0.1			0.1			0.2			0.2
Total capital expenditures	$	16.4		$	11.6		$	42.3		$	22.9

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¹  Fabricated Products segment operating income included non-cash mark-to-market gain on primary aluminum, natural gas and foreign currency hedging activities, which totaled $10.9 million and 14.9 million for the quarter and six months endedJune 30, 2016, respectively. Non-cash mark-to-market (loss) on primary aluminum, natural gas, electricity and foreign currency hedging activities totaled $(1.5) million and $(6.0) million for the quarter and six months endedJune 30, 2015, respectively. For further discussion regarding mark-to-market matters, see Note 8.

²  Operating loss in All Other included loss on removal of Union VEBA net assets of $1.6 million and $493.8 million for the quarter and six months ended June 30, 2015, respectively. See Note 5 for further details.

	June 30, 2016		December 31, 2015
Assets:
Fabricated Products	$	947.0	$	904.7
All Other1	474.6		342.9
Total assets	$	1,421.6	$	1,247.6

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¹  Assets in All Other represent primarily all of our cash and cash equivalents, short-term investments, financial derivative assets (see Note 9) and net deferred income tax assets.

Net sales by product categories based on end market applications for the Fabricated Products segment were as follows (in millions of dollars):

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Net sales:
Aero/HS products	$	167.7	$	181.1	$	344.6	$	361.4
Automotive Extrusions	48.8		53.7		97.1		103.8
GE products	107.3		112.0		212.7		231.1
Other products	11.1		20.4		23.7		42.6
Total net sales	$	334.9	$	367.2	$	678.1	$	738.9

Geographic information for income taxes paid were as follows (in millions of dollars):

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Income taxes paid:
Fabricated Products –
United States	$	0.2	$	0.2	$	0.3	$	0.3
Canada	0.3		0.4		0.5		1.3
Total income taxes paid	$	0.5	$	0.6	$	0.8	$	1.6

The aggregate foreign currency transaction gain (loss) included in determining net income were immaterial for the quarters and six months endedJune 30, 2016 and June 30, 2015.

For the quarter ended June 30, 2016, one customer represented 27% and another represented 10% of Fabricated Products Net sales. For the quarter ended June 30, 2015, one customer represented 25% and another represented 10% of Fabricated Products Net Sales. For the six months endedJune 30, 2016, one customer represented 26% and another represented 10% of Fabricated Products Net sales. For the six months endedJune 30, 2015, one customer represented 26% and another represented 10% of Fabricated Products Net sales.

At June 30, 2016, one customer represented 19% and another customer represented 13% of the trade receivables balance. Two customers each accounted for 17% of the trade receivables balance at December 31, 2015. 

Information for delivery of our primary aluminum supply from our major suppliers were as follows:

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Percentage of total primary aluminum supply (lbs):
Supply from our top five major suppliers	86	%	86	%	84	%	87	%
Supply from our largest supplier	36	%	27	%	33	%	28	%
Supply from our second and third largest suppliers	30	%	36	%	32	%	35	%