Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information

8. Segment Information

The Company has two reportable segments: Carbon Materials & Chemicals and Railroad & Utility Products. The Company’s reportable segments are business units that offer different products. The reportable segments are each managed separately because they manufacture and distribute distinct products with different production processes. The business units have been aggregated into two reportable segments since management believes the long-term financial performance of these business units is affected by similar economic conditions.

The Company’s Carbon Materials & Chemicals segment is primarily a manufacturer of carbon pitch, naphthalene, phthalic anhydride, creosote and carbon black feedstock. Carbon pitch is a critical raw material used in the production of aluminum and for the production of steel in electric arc furnaces. Naphthalene is used for the production of phthalic anhydride and as a surfactant in the production of concrete. Phthalic anhydride is used in the production of plasticizers, polyester resins and alkyd paints. Creosote is used in the treatment of wood and carbon black feedstock is used in the production of carbon black.

The Company’s Railroad & Utility Products segment sells treated and untreated wood products, manufactured products and services primarily to the railroad and public utility markets. Railroad products include procuring and treating items such as crossties, switch ties and various types of lumber used for railroad bridges and crossings and the manufacture of rail joint bars. Utility products include transmission and distribution poles and pilings.

The Company evaluates performance and determines resource allocations based on a number of factors, the primary measure being operating profit or loss from operations. Operating profit does not include equity in earnings of affiliates, other income, interest expense or income taxes. Operating profit also excludes the operating costs of Koppers Holdings Inc., the parent company of Koppers Inc. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment transactions are eliminated in consolidation.

The following table sets forth certain sales and operating data, net of all intersegment transactions, for the Company’s segments for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
(Dollars in millions)
Revenues from external customers:
Carbon Materials & Chemicals	$	266.7		$	237.1		$	516.2		$	455.7
Railroad & Utility Products		144.6			137.4			276.0			260.3
Total	$	411.3		$	374.5		$	792.2		$	716.0
Intersegment revenues:
Carbon Materials & Chemicals	$	26.8		$	18.1		$	56.8		$	45.6
Depreciation and amortization expense:
Carbon Materials & Chemicals	$	4.3		$	4.0		$	8.4		$	8.3
Railroad & Utility Products		3.3			2.4			6.0			4.5
Total	$	7.6		$	6.4		$	14.4		$	12.8
Operating profit:
Carbon Materials & Chemicals	$	26.2		$	25.7		$	46.7		$	39.8
Railroad & Utility Products		15.0			12.8			24.1			20.3
Corporate		(0.5	)		(0.2	)		(0.9	)		(0.5	)
Total	$	40.7		$	38.3		$	69.9		$	59.6

The following table sets forth certain tangible and intangible assets allocated to each of the Company’s segments as of the dates indicated:

	June 30, 2012		December 31, 2011
(Dollars in millions)
Segment assets:
Carbon Materials & Chemicals	$	519.1	$	495.2
Railroad & Utility Products		190.8		164.6
All other		55.3		70.9
Total	$	765.2	$	730.7
Goodwill:
Carbon Materials & Chemicals	$	69.0	$	69.4
Railroad & Utility Products		2.7		2.7
Total	$	71.7	$	72.1