Segment Information

9 Months Ended

Sep. 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 September 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 September 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						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net sales:
Fabricated Products	$	320.6		$	336.4		$	998.7		$	1,075.3
Segment operating income (loss):
Fabricated Products1	$	42.1		$	47.3		$	172.1		$	142.8
All Other2	(12.3		)	(6.8		)	(39.6		)	(523.9		)
Total operating income (loss)	$	29.8		$	40.5		$	132.5		$	(381.1	)
Interest expense	(5.5		)	(4.9		)	(14.7		)	(19.9		)
Other expense, net	—			(0.9		)	(10.4		)	(0.1		)
Income (loss) before income taxes	$	24.3		$	34.7		$	107.4		$	(401.1	)
Depreciation and amortization:
Fabricated Products	$	8.8		$	7.9		$	26.2		$	23.8
All Other	0.2			0.2			0.5			0.4
Total depreciation and amortization	$	9.0		$	8.1		$	26.7		$	24.2
Capital expenditures:
Fabricated Products	$	15.0		$	15.1		$	57.1		$	37.8
All Other	0.1			0.4			0.3			0.6
Total capital expenditures	$	15.1		$	15.5		$	57.4		$	38.4

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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 $2.0 million and 16.9 million for the quarter and nine months endedSeptember 30, 2016, respectively. Non-cash mark-to-market loss on primary aluminum, natural gas, electricity and foreign currency hedging activities totaled $1.7 million and $7.7 million for the quarter and nine months endedSeptember 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 $2.9 million and $490.9 million for the quarter and nine months endedSeptember 30, 2015, respectively. See Note 5 for further details.

	September 30, 2016		December 31, 2015
Assets:
Fabricated Products	$	962.3	$	904.7
All Other1	471.1		342.9
Total assets	$	1,433.4	$	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				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net sales:
Aero/HS products	$	156.1	$	170.0	$	500.7	$	531.4
Automotive Extrusions	46.5		49.5		143.6		153.3
GE products	105.6		100.4		318.3		331.5
Other products	12.4		16.5		36.1		59.1
Total net sales	$	320.6	$	336.4	$	998.7	$	1,075.3

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

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Income taxes paid:
Fabricated Products –
United States	$	0.1	$	0.1	$	0.4	$	0.4
Canada	—		0.2		0.5		1.5
Total income taxes paid	$	0.1	$	0.3	$	0.9	$	1.9

The aggregate foreign currency transaction gain (loss) included in Net income (loss) was immaterial for the quarters and nine months endedSeptember 30, 2016 and September 30, 2015.

For the quarter ended September 30, 2016, one customer represented 25% and another represented 11% of Fabricated Products Net sales. For the nine months endedSeptember 30, 2016, one customer represented 26% and another represented 10% of Fabricated Products Net sales. For both the quarter and nine months endedSeptember 30, 2015, one customer represented 25% of Fabricated Products Net Sales. No other individual customer accounted for more than 10% of Fabricated Products Net sales during the quarter and nine months endedSeptember 30, 2015.

At September 30, 2016, one customer represented 16%, a second customer represented 12% and a third customer represented 10% of the trade receivables balance. Two individual 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				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Percentage of total primary aluminum supply (lbs):
Supply from our top five major suppliers	84	%	84	%	84	%	86	%
Supply from our largest supplier	28	%	28	%	32	%	28	%
Supply from our second and third largest suppliers	33	%	45	%	31	%	36	%