Business Segments

9 Months Ended

Mar. 31, 2013

Business Segments

Business Segments

15. Business Segments

The Company has three reportable segments, Specialty Alloys Operations (“SAO”), Latrobe, and Performance Engineered Products (“PEP”).  During the first quarter of fiscal year 2013, the Company moved the Specialty Steel Supply (“SSS”) business acquired in connection with the Latrobe Acquisition from the Latrobe segment to the Performance Engineered Products segment.

The SAO segment is comprised of the Company's major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading, Pennsylvania and the surrounding area, South Carolina, and the new premium products manufacturing facility being built in Limestone County, Alabama.  The combined assets of the SAO operations are managed in an integrated manner to optimize efficiency and profitability across the total system.

The Latrobe segment is comprised of the operations of the Latrobe business acquired effective February 29, 2012. The Latrobe segment provides management with the focus and visibility into the business performance of these newly acquired operations. The Latrobe segment also includes the results of Carpenter’s distribution business in Mexico. As the Latrobe business becomes integrated with Carpenter, its results will likely be combined and reported together with the SAO business segment sometime in the future.

The PEP segment is comprised of the Company's differentiated operations.  This includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business and the SSS distribution business that was acquired in connection with the Latrobe Acquisition.  The businesses in the PEP segment are managed with an entrepreneurial structure to promote speed and flexibility and drive overall revenue and profit growth.

The service cost component of the Company’s net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments.  The residual net pension expense, which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans, and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest & deferrals.”

On a consolidated basis, there were no significant individual customers that accounted for more than 10 percent of the total net sales during the three months and nine months ended March 31, 2013 and 2012, respectively.

The historical segment information for the three months and nine months ended March 31, 2012, which is set forth below, was recast to conform to the fiscal year 2013 presentation.

	Three Months Ended				Nine Months Ended
Segment Data	March 31,				March 31,
($ in millions)	2013		2012		2013		2012
Net Sales:
Specialty Alloys Operations	$	392.8	$	426.0	$	1,122.8	$	1,122.2
Latrobe	129.5		51.5		365.3		71.1
Performance Engineered Products	90.4		90.8		282.0		257.4
Intersegment	(31.3)		(28.4)		(110.2)		(65.6)
Consolidated net sales	$	581.4	$	539.9	$	1,659.9	$	1,385.1
Operating Income:
Specialty Alloys Operations	$	48.8	$	66.7	$	152.9	$	163.9
Latrobe	12.3		2.1		41.2		3.4
Performance Engineered Products	10.0		10.6		30.4		32.8
Corporate costs	(10.3)		(18.5)		(31.3)		(41.3)
Pension earnings, interest & deferrals	(8.0)		(3.8)		(23.9)		(11.1)
Intersegment	0.2		(1.4)		(2.0)		(4.1)
Consolidated operating income	$	53.0	$	55.7	$	167.3	$	143.6
Depreciation and Amortization:
Specialty Alloys Operations	$	14.2	$	13.4	$	41.6	$	39.5
Latrobe	5.7		2.0		17.1		2.2
Performance Engineered Products	5.0		4.5		14.3		13.0
Corporate	1.4		1.4		4.5		4.0
Intersegment	(0.2)		-		(0.4)		(0.2)
Consolidated depreciation and amortization	$	26.1	$	21.3	$	77.1	$	58.5
Capital Expenditures:
Specialty Alloys Operations	$	76.2	$	34.9	$	183.0	$	74.5
Latrobe	4.6		1.9		19.9		1.9
Performance Engineered Products	5.4		7.9		18.0		26.7
Corporate	0.9		2.7		4.0		6.0
Intersegment	(0.5)		(0.4)		(1.4)		(1.8)
Consolidated capital expenditures	$	86.6	$	47.0	$	223.5	$	107.3

	March 31, 2013	June 30, 2012
Total Assets:
Specialty Alloys Operations	$1,461.5	$1,293.3
Latrobe	794.3	807.5
Performance Engineered Products	401.6	394.7
Corporate	286.4	151.0
Intersegment	(27.5)	(18.7)
Consolidated total assets	$2,916.3	$2,627.8