Segment Reporting

12 Months Ended

Dec. 31, 2014

Segment Reporting Information, Revenue for Reportable Segment [Abstract]

Segment Reporting

Segment Reporting

We operate in two reportable segments: Industrial Materials and Engineered Solutions.

Industrial Materials. Our Industrial Materials segment manufactures and delivers high quality graphite electrodes, refractory products and needle coke products. Electrodes are key components of the conductive power systems used to produce steel and other non-ferrous metals. Refractory products are used in blast furnaces and submerged arc furnaces due to their high thermal conductivity and the ease with which they can be machined to large or complex shapes. Needle coke, a crystalline form of carbon derived from decant oil, is the key ingredient in, and is used primarily in, the production of graphite electrodes.

Engineered Solutions. The Engineered Solutions segment includes advanced electronics technologies, advanced graphite materials, advanced composite materials and advanced materials. Advanced electronics technologies products consist of electronic thermal management solutions, and sealing materials. Advanced graphite materials are highly engineered synthetic graphite products used in many areas due to their unique properties and the ability to tailor them to specific solutions. These products are used in transportation, alternative energy, metallurgical, chemical, oil and gas exploration and various other industries. Advanced composite materials are highly engineered carbon products that are woven into various shapes to primarily support the aerospace and defense industries. Advanced materials use carbon and graphite powders as components or additives in a variety of industries, including metallurgical processing, battery and fuel cell components, and polymer additives.

We continue to evaluate the performance of our segments based on segment operating income. Intersegment sales and transfers are not material and the accounting policies of the reportable segments are the same as those for our Consolidated Financial Statements as a whole. Prior to 2014, certain global expenses such as research and development, shared IT and accounting services as well as corporate headquarter’s finance, HR, legal and executive management were allocated to the segments mostly based on each segment’s contribution to consolidated sales. During 2014, as part of our initiative to decentralize the organization and reduce the costs of the global headquarter functions, the performance measure of our existing segments was changed to reflect our new management and operating structure. We currently exclude such expenses from the segment operating income measure and report them under “Corporate, R&D and Other Expenses” in order to reconcile to the consolidated operating income of the Company.

The following tables summarize financial information concerning our reportable segments and all prior periods have been recast to reflect our new methodology:

	For the year Ended December 31,
	2012			2013			2014
	(Dollars in thousands)
Net sales to external customers:
Industrial Materials	$	1,025,571		$	909,448		$	840,103
Engineered Solutions	222,693			257,226			245,201
Total net sales	$	1,248,264		$	1,166,674		$	1,085,304
Segment operating income (loss):
Industrial Materials	$	197,335		$	20,007		$	(50,260	)
Engineered Solutions	22,374			28,392			(138,271		)
Corporate, R&D and Other expenses	$	(63,241	)	$	(50,969	)	$	(67,089	)
Total segment operating income (loss)	$	156,468		$	(2,570	)	$	(255,620	)
Reconciliation of segment operating income to income from continuing operations before provision for income taxes
Other expense (income), net	(1,005		)	1,698			2,445
Interest expense	23,247			36,037			37,057
Interest income	(261		)	(203		)	(330		)
Income (loss) before provision for income taxes	$	134,487		$	(40,102	)	$	(294,792	)

Operating income (loss) for the year ended December 31, 2014 also includes for Industrial Materials $75.7 million of goodwill impairment charge and for Engineered Solutions $121.6 million of impairment charge for long-lived assets. Operating income (loss) noted above for the year ended December 31, 2014 includes rationalization related charges of $34.5 million in Industrial materials, $22.0 million in Engineered Solutions, and $6.3 million in Corporate, R&D and Other expenses as well as a pension mark-to-market loss of $3.5 million in Industrial materials, $9.2 million in Engineered solutions and $6.3 million in Corporate, R&D and Other expenses. We incurred a $4.8 million charge for losses related to the bankruptcy of a major customer in the Advanced Graphite Materials business. Corporate, R&D and Other expenses include $2.4 million of fees associated with proxy contest costs in 2014.

Operating income (loss) for the year ended December 31, 2013 includes rationalization-related charges of $60.3 million for Industrial materials, $3.6 million for Engineered solutions and $1.8 million for Corporate, R&D and Other as well as Pension mark-to-market gain of $4.2 million in Industrial Materials, $5.9 million in Engineered Solutions and $4.2 million in All Other.

Assets are managed based on geographic location because certain reportable segments share certain facilities. Assets by reportable segment are estimated based on the value of long-lived assets at each location and the activities performed at the location.

	At December 31,
	2013		2014
	(Dollars in thousands)
Long-lived assets (a):
Industrial Materials.	$	601,322	$	552,155
Engineered Solutions	219,663		101,885
Total long-lived assets	$	820,985	$	654,040

The following tables summarize information as to our operations in different geographic areas.

	For the year Ended December 31,
	2012		2013		2014
	(Dollars in thousands)
Net sales:
U.S.	$	372,014	$	289,866	$	284,209
Americas	195,748		177,602		180,070
Asia Pacific	235,658		220,945		192,230
Europe, Middle East, Africa	444,844		478,261		428,795
Total	$	1,248,264	$	1,166,674	$	1,085,304

	At December 31,
	2013		2014
	(Dollars in thousands)
Long-lived assets (a):
U.S. and Canada	$	540,274	$	431,601
Mexico	83,428		89,731
Brazil	26,008		9,492
France	61,264		49,602
Spain	82,051		70,648
South Africa	16,408		2,064
Switzerland	4,618		287
Other countries	6,934		615
Total	$	820,985	$	654,040

(a) Long-lived assets represent fixed assets, net of accumulated depreciation.