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Business Segments
 12 Months Ended
Dec. 31, 2011
Segment Reporting Disclosure [Abstract]  
Business Segments

Note 14. Business Segments

 

The Company operates in three business segments: High Performance Metals, Flat-Rolled Products and Engineered Products. The High Performance Metals segment produces, converts and distributes a wide range of high performance alloys, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, exotic alloys such as zirconium, hafnium, niobium, nickel-titanium, and their related alloys, advanced powder alloys, and other specialty metals, in long product forms such as ingot, billet, bar, shapes and rectangles, rod, wire, and seamless tubes, plus precision forgings and castings, and machined parts. The companies in this segment include ATI Allvac, ATI Allvac Ltd (U.K.), ATI Wah Chang, ATI Ladish, and ATI Powder Metals.

 

The Flat-Rolled Products segment produces, converts and distributes stainless steel, nickel-based alloys, specialty alloys, and titanium and titanium-based alloys in a variety of product forms, including plate, sheet, engineered strip and Precision Rolled Strip® products as well as grain-oriented electrical steel sheet. The companies in this segment include ATI Allegheny Ludlum, STAL, in which the Company has a 60% ownership interest, and ATI's 50% interest in Uniti, which is accounted for under the equity method. Sales to Uniti, which are included in ATI's consolidated statements of income, were $149.1 million in 2011, $98.3 million in 2010, and $80.5 million in 2009. ATI's share of Uniti's income (loss) was $7.4 million in 2011, $2.5 million in 2010, and $(2.7) million in 2009, which is included in the Flat-Rolled Products segment's operating profit, and within cost of sales in the consolidated statements of income. The remaining 50% interest in Uniti is held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products.

 

The Engineered Products segment's principal business produces tungsten powder, tungsten heavy alloys, tungsten carbide materials and carbide cutting tools. This segment also produces carbon alloy steel impression die forgings and large grey and ductile iron castings, and performs precision metals processing services. The companies in this segment are ATI Tungsten Materials, ATI Portland Forge, ATI Casting Service and ATI Precision Finishing.

 

Intersegment sales are generally recorded at full cost or market. Common services are allocated on the basis of estimated utilization.

(in millions)2011 2010 2009
Total sales:        
 High Performance Metals$ 2,061.0 $ 1,410.5 $ 1,357.4
 Flat-Rolled Products  2,759.0   2,360.2   1,564.9
 Engineered Products  545.4   411.7   268.8
 Total sales  5,365.4   4,182.4   3,191.1
Intersegment sales:        
 High Performance Metals  105.1   73.0   57.4
 Flat-Rolled Products  33.0   21.7   48.8
 Engineered Products  44.3   39.9   30.0
 Total intersegment sales  182.4   134.6   136.2
Sales to external customers:        
 High Performance Metals  1,955.9   1,337.5   1,300.0
 Flat-Rolled Products  2,726.0   2,338.5   1,516.1
 Engineered Products  501.1   371.8   238.8
 Total sales to external customers$ 5,183.0 $ 4,047.8 $ 3,054.9

Total direct international sales were $1,814.1 million in 2011, $1,283.8 million in 2010, and $950.4 million in 2009. Of these amounts, sales by operations in the United States to customers in other countries were $1,356.3 million in 2011, $950.4 million in 2010, and $678.6 million in 2009.

(in millions)2011 2010 2009
Operating profit (loss):        
 High Performance Metals$ 364.5 $ 257.8 $ 234.7
 Flat-Rolled Products  213.4   85.9   71.3
 Engineered Products  34.1   12.8   (23.8)
Total operating profit  612.0   356.5   282.2
Corporate expenses  (92.5)   (64.1)   (53.1)
Interest expense, net  (92.3)   (62.7)   (19.3)
Other expenses, net of gains on asset sales  (9.9)   (13.9)   (13.8)
Debt extinguishment costs  -   -   (9.2)
Retirement benefit expense  (77.9)   (90.1)   (121.9)
Income before income taxes$ 339.4 $ 125.7 $ 64.9

Business segment operating profit excludes costs for restructuring charges, retirement benefit income or expense, corporate expenses, interest expenses, debt extinguishment costs, and costs associated with closed operations. These costs are excluded for segment reporting to provide a profit measure based on what management considers to be controllable costs at the segment level. Retirement benefit expense includes both pension expense and other postretirement benefit expenses. In April 2008, the Company entered into a new five-year labor agreement with United Steelworkers represented employees at the Wah Chang operation and agreed to establish a Voluntary Employee Benefit Association (VEBA) trust for certain postretirement benefits. The Company recognized $0.2 million and $2.2 million of expense for the years ended December 31, 2010 and 2009, respectively, for this VEBA, which is included in retirement benefit expense as reported above in business segments.

 

Other expenses, net of gains on asset sales, includes charges incurred in connection with closed operations, pre-tax gains and losses on the sale of surplus real estate, non-strategic investments, and other assets, and other non-operating income or expense, which are primarily included in selling and administrative expenses, and in other income (expense) in the consolidated statement of income. In 2011, the Company recorded $9.9 million in other charges primarily related to closed companies, including $4.9 million for environmental costs and $5.0 million for other expenses including legal matters and foreign exchange losses. In 2010, the Company recorded $13.9 million in other charges primarily related to closed companies, including $2.1 million for environmental costs, $2.8 million for real estate costs at closed companies, and $9.0 million for other expenses including legal matters and foreign exchange losses. In 2009, the Company recorded $13.8 million in other charges primarily related to closed companies, including $2.8 million for environmental costs, $3.7 million for real estate costs at closed companies, and $7.3 million for other expenses including legal matters.

 

Certain additional information regarding the Company's business segments is presented below:

 

 

(in millions)2011 2010 2009
Depreciation and amortization:        
 High Performance Metals$ 110.4 $ 77.7 $ 65.3
 Flat-Rolled Products  48.3   48.1   47.6
 Engineered Products  14.5   14.3   16.1
 Corporate  1.2   1.4   3.6
Total depreciation and amortization  174.4   141.5   132.6
Capital expenditures:        
 High Performance Metals  83.5   113.7   298.0
 Flat-Rolled Products  175.0   95.8   104.8
 Engineered Products  16.0   9.1   9.6
 Corporate  3.7   0.5   3.0
Total capital expenditures  278.2   219.1   415.4
Identifiable assets:        
 High Performance Metals  3,659.8   2,283.4   2,106.3
 Flat-Rolled Products  1,577.6   1,362.0   1,117.0
 Engineered Products  315.2   295.5   259.0
 Corporate:        
  Prepaid pension cost  -   8.7   -
  Deferred taxes  -   -   63.1
  Cash and cash equivalents and other  494.3   544.0   800.6
Total assets$ 6,046.9 $ 4,493.6 $ 4,346.0

Geographic information for external sales based on country of origin, and assets, are as follows:
                  
($ in millions)2011 Percent of total 2010 Percent of total 2009 Percent of total
External sales:                 
United States$ 3,368.9  65% $ 2,764.0  68% $ 2,104.4  69%
China  265.5  5%   234.5  6%   185.2  6%
Germany  258.5  5%   183.7  5%   123.2  4%
United Kingdom  257.3  5%   118.1  3%   118.5  4%
France  180.2  3%   94.3  2%   91.9  3%
Japan  169.8  3%   28.2  1%   33.1  1%
Italy  142.6  3%   175.7  4%   53.8  2%
Canada  131.8  3%   109.0  3%   114.2  4%
Mexico  64.5  1%   56.6  1%   17.6  1%
Other  343.9  7%   283.7  7%   213.0  6%
Total External Sales$ 5,183.0  100% $ 4,047.8  100% $ 3,054.9  100%

($ in millions)2011 Percent of total 2010 Percent of total 2009 Percent of total
Total assets:                 
United States$ 5,271.7  87% $ 3,853.9  86% $ 3,759.4  87%
China  266.6  5%   250.4  6%   224.0  5%
United Kingdom  233.0  4%   200.4  4%   175.4  4%
Luxembourg (a)  86.3  1%   97.3  2%   105.1  2%
Other  189.3  3%   91.6  2%   82.1  2%
Total Assets$ 6,046.9  100% $ 4,493.6  100% $ 4,346.0  100%
                  
(a) Comprises assets held by the Company's European Treasury Center operation.