10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                  

Commission File Number 1-5828

CARPENTER TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	23-0458500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
P.O. Box 14662 Reading, Pennsylvania	19610
(Address of principal executive offices)	(Zip Code)

610-208-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $5 Par Value	New York Stock Exchange
Title of each class	Name of each exchange on which registered

Securities registered pursuant to 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yesx  No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yeso  Nox

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

Yesx  Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

Yesx  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso  Nox

The aggregate market value of the registrants’ voting common stock held by non-affiliates at December 31, 2012 was $2,582,079,427, based on the closing price per share of the registrant’s common stock on that date of $51.63 as reported on the New York Stock Exchange.

As of August 14, 2013, 52,880,099 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Company’s fiscal year 2013 definitive Proxy Statement are incorporated by reference into Part III of this Report.

TABLE OF CONTENTS

			Page Number
PART I
	Item 1	Business	2 — 7
	Item 1A	Risk Factors	7 — 14
	Item 1B	Unresolved Staff Comments	14
	Item 2	Properties	14 - 15
	Item 3	Legal Proceedings	15
	Item 4	Mine Safety Disclosures	15
	Item 4A	Executive Officers of the Registrant	15 - 16
PART II
	Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17 — 18
	Item 6	Selected Financial Data	19
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20 — 47
	Forward-Looking Statements		47
	Item 7A	Quantitative and Qualitative Disclosures about Market Risk	48
	Item 8	Financial Statements and Supplementary Data	49 — 100
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	101
	Item 9A	Controls and Procedures	101
	Item 9B	Other Information	101
PART III
	Item 10	Directors, Executive Officers and Corporate Governance	102
	Item 11	Executive Compensation	102
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	102 - 103
	Item 13	Certain Relationships, Related Transactions and Director Independence	103
	Item 14	Principal Accounting Fees and Services	103
PART IV	Item 15	Exhibits and Financial Statement Schedules	104 — 109
SIGNATURES			110 — 111
SCHEDULE II		Valuation and Qualifying Accounts	112

PART I

Item 1.  Business

(a)General Development of Business:

Carpenter Technology Corporation, incorporated in 1904, is engaged in the manufacturing, fabrication and distribution of specialty metals.  As used throughout this report, unless the context requires otherwise, the terms “Carpenter”, the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation.

(b)Financial Information About Segments:

We are organized in three reportable business segments: Specialty Alloys Operations, Latrobe, and Performance Engineered Products.  See Note 18 to our consolidated financial statements included in Item 8 “Financial Statements and Supplementary Data” for additional segment reporting information.

(c)Narrative Description of Business:

(1)General:

We develop, manufacture and distribute cast/wrought and powder metal stainless steels and special alloys including high temperature (iron-nickel-cobalt base), stainless, superior corrosion resistant, controlled expansion alloys, ultra high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys.

We provide material solutions to the changing needs of the aerospace and defense, energy, transportation, medical, industrial and consumer industries.  We have continued to increase our global manufacturing capacity as well as expand our operations to provide customers with solutions to today’s changing materials challenges. We acquired Latrobe Specialty Metals, Inc. (“Latrobe”) in February 2012 and Amega West Services, LLC, (“Amega West”) in December 2010. Latrobe manufactures high-performance materials for aerospace and defense, energy, and other applications. Amega West manufactures and rents down hole drilling tools and components for the oil and gas industry.

We have started construction of a new 400,000 square foot state-of-the-art manufacturing facility in response to strong customer demand for premium products primarily in the fast-growing aerospace and defense, and energy industries. We expect that the new facility will ultimately be capable of producing approximately 27,000 tons per year of additional premium product and be operational by April 2014.  The facility is being built on a 230 acre greenfield site located in Athens, Alabama with the total cost expected of approximately $500 million. The new facility will include forge, remelting and associated finishing and testing capabilities and will play a key role in further developing our capabilities in the production of our premium products.

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Reportable Segments

Our reportable segments align with our operating model in which our integrated steel mill operations are managed distinctly from the collection of other differentiated business unit operations. We have three reportable segments, Specialty Alloys Operations (“SAO”), Latrobe and Performance Engineered Products (“PEP”).  For more detailed segment information, including the restatement of corresponding segments for the fiscal years ended June 30 2013 and 2012, please see Note 18 to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data”.

The SAO segment, which we also refer to as our mill operations, 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 Athens, 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 manufacturing and distribution 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 the acquired operations. The Latrobe segment also includes the results of Carpenter’s distribution business in Mexico.

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 Specialty Steel Supply 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.

(2)Classes of Products:

Our major classes of products are:

Special alloys —

Our special alloys are used in critical components such as rings, discs and fasteners and include heat resistant alloys that range from slight modifications of stainless steels to complex nickel and cobalt base alloys as well as alloys for electronic, magnetic and electrical applications with controlled thermal expansion characteristics, or high electrical resistivity or special magnetic characteristics.

Stainless steels —

Our stainless products include a broad range of corrosion resistant alloys including conventional stainless steels and many proprietary grades for special applications.

Titanium products —

Our titanium products include corrosion resistant, highly specialized metal with a combination of high strength and low density.  Most common uses are in aircraft fasteners, medical devices, sporting equipment and chemical and petroleum processing.

Powder metals —

Our powder metals include spherical gas atomized powders produced via air, vacuum, or pressurized melting with Argon or Nitrogen Atomization in fine, medium and coarse powder distributions.

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Alloy and tools steels —

Our alloy and tools steels are sold across a wide range of industries in long forms as well as rounds, plates and sheets.

Distribution and other —

Our distribution sales represent sales of globally sourced corrosion resistant steels, tool steels and powder metals for a wide range of industries.

(3)Raw Materials:

Our business depends on continued delivery of critical raw materials for our day-to-day operations.  These raw materials include nickel, cobalt, chromium, manganese, molybdenum, titanium, iron and scrap containing iron and nickel.  Some of the sources of these raw materials, many of which are international, could be subject to potential interruptions of supply as a result of political events, labor unrest or other reasons.  These potential interruptions could cause material shortages and affect availability and price. We have arrangements with certain vendors to provide consigned materials at our manufacturing facilities available for our consumption as necessary.

We have long-term relationships with major suppliers who provide availability of material at competitive prices.  Purchase prices of certain raw materials have historically been volatile.  We use pricing surcharges, indexing mechanisms, base price adjustments and raw material forward contracts to reduce the impact of increased costs for the most significant of these materials. There can be delays between the time of the increase in the price of raw materials and the realization of the benefits of such mechanisms or actions that could have a short-term impact on our results and could affect the comparability of our results from period to period.

(4)Patents and Licenses:

We own a number of United States and international patents and have granted licenses under some of them.  In addition, certain products that we produce are covered by patents held or owned by other companies from whom licenses have been obtained.  The duration of a patent issued in the United States is between 14 and 20 years from the date of filing a patent application or issuance of the patents.  The duration of patents issued outside of the United States vary from country to country.  Generally, patent licenses are structured to match the duration of the underlying patent.  Although these patents and licenses are believed to be of value, we do not consider our business to be materially dependent upon any single such item or related group of such items.

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(5)Seasonality of Business:

Our sales are normally influenced by seasonal factors. Historically, our sales in the first two fiscal quarters (the respective three months ending September 30 and December 31) are typically the lowest — principally because of annual plant vacation and maintenance shutdowns by us as well as by many of our customers.  However, the timing of major changes in the general economy or the markets for certain products can alter this historical pattern.

The chart below summarizes the percent of net sales by quarter for the past three fiscal years:

Quarter Ended	2013		2012*		2011
September 30,	24	%	20	%	21	%
December 31,	23		21		22
March 31,	26		27		28
June 30,	27		32		29
	100	%	100	%	100	%

* Fiscal year 2012 net sales by quarter reflect the Latrobe acquisition effective February 29, 2012.

(6)Customers:

On a consolidated basis, we are not dependent upon a single customer, or a very few customers, such that the loss of any one or more particular customers would have a materially adverse effect on our consolidated statement of operations.  No customers accounted for 10 percent of net sales during fiscal years 2013 and 2012.  One customer, Precision Castparts Corporation (“Precision Castparts”), accounted for 10 percent of our net sales during fiscal year 2011.  The sales to Precision Castparts represent an aggregation of sales to several independently managed Precision Castparts subsidiaries.  See Note 18 to our consolidated financial statements included in Item 8 “Financial Statements and Supplementary Data” for additional information.

(7)Backlog:

As of June 30, 2013, we had a backlog of orders, believed to be firm, of approximately $524 million, substantially all of which is expected to be shipped within fiscal year 2014.  Our backlog as of June 30, 2012 was approximately $896 million.

(8)Competition:

Our business is highly competitive.  We supply materials to a wide variety of end-use market sectors and compete with various companies depending on end-use market, product or geography. We are leaders in specialty materials for critical applications with over 120 years of metallurgical and manufacturing expertise. A significant portion of the products we produce are highly engineered materials for demanding applications. There are a limited number of companies producing one or more similar products that we consider our major competitors for our high value products used in demanding applications, particularly in our aerospace and defense and energy end-use markets.  These products are generally required to meet complex customer product specifications and often require the materials to be qualified prior to supplying the customer orders. Our experience, technical capabilities, product offerings and research and development efforts that we have in our niche markets represent barriers to existing and potential competitors.

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For other products, there are several dozen smaller producing companies and converting companies that are also competitors as well as several hundred independent distributors of products similar to those distributed by us.  Additionally, numerous foreign companies produce various specialty metal products similar to those produced by us.  Furthermore, a number of different products may, in certain instances, be substituted for our finished products.

(9)Research, Product and Process Development:

Our expenditures for company-sponsored research and development were $19.4 million, $20.5 million and $18.9 million in fiscal years 2013, 2012 and 2011, respectively. We believe that our ability to be an innovator in special material development and manufacturing processes has been and will continue to be an important factor in the success of the Company.  The ability to commercialize radical new technology to drive the next major increment of organic growth is a key element of our strategic path to success.  Our strong commitment to developing continuous streams of new products to meet customers’ needs has been supported by increased research and development resources and investments over the last several years and by actively acquiring game changing technologies. Our worldwide staff of expert metallurgists, research and development scientists, engineers and service professionals work closely with our customers to identify and provide innovative solutions to specific product requirements and has led to the establishment of worldwide partnerships for materials and process development and innovation. We believe that the alloys under development will redefine our business in the future.

(10)Environmental Regulations:

We are subject to various stringent federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.  Management evaluates the liability for future environmental remediation costs on a quarterly basis.  We accrue amounts for environmental remediation costs representing management’s best estimate of the probable and reasonably estimable costs relating to environmental remediation.  For further information on environmental remediation, see the Contingencies section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data”.

Our costs of maintaining and operating environmental control equipment were $13.7 million, $14.1 million and $12.7 million for fiscal years 2013, 2012 and 2011, respectively.  The capital expenditures for environmental control equipment were $1.6 million, $0.4 million and $0.4 million for fiscal years 2013, 2012 and 2011, respectively.  We anticipate spending approximately $3.8 million on major domestic environmental capital projects over the next five fiscal years.  This includes approximately $2.6 million in fiscal year 2014 and fiscal year 2015.  Due to the possibility of future regulatory developments, the amount of future capital expenditures may vary from these estimates.

(11)Employees:

As of June 30, 2013, our total workforce consisted of approximately 4,800 employees, which included approximately 120 production employees in Washington, Pennsylvania who are covered under a collective bargaining agreement which expires on August 31, 2013, and approximately 640 employees in Latrobe, Pennsylvania who are covered under a collective bargaining agreement which expires August 1, 2014.

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(d)Financial information about foreign and domestic operations and export sales:

Sales outside of the United States, including export sales, were $696.4 million, $664.5 million and $511.3 million in fiscal years 2013, 2012 and 2011, respectively. Long lived assets held outside of the United States were $25.9 million, $22.9 million and $16.1 million as of June 30, 2013, 2012 and 2011, respectively.  For further information on domestic and international sales, see Note 18 to our consolidated financial statements included in Item 8 “Financial Statements and Supplementary Data”.

(e)  Available Information:

Our Board of Directors has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers of Carpenter Technology Corporation, which is also applicable to our other executive officers.  There were no waivers of the Code of Ethics in fiscal year 2013.  The Code of Ethics and any information regarding any waivers of the Code of Ethics are disclosed on Carpenter’s website at www.cartech.com.  Our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (“SEC”).  Our website and the content contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also maintains an Internet site that contains reports, proxy and other information regarding issuers that file electronically.  Such information can be accessed through the Internet at www.sec.gov.

Item 1A.  Risk Factors

There are inherent risks and uncertainties associated with all businesses that could adversely affect operating performances or financial conditions. The following discussion outlines the risks and uncertainties that management believes are the most material to our business. However, these are not the only risks or uncertainties that could affect our business. Certain risks are associated specifically with our business, industry or customer base, while others have a broader effect.

The demand for certain products we produce may be cyclical.

Demand in our end-use markets, including companies in the aerospace and defense, energy, transportation, medical, industrial and consumer markets, can be cyclical in nature and sensitive to general economic conditions, competitive influences and fluctuations in inventory levels throughout the supply chain. As a result, our results of operations, financial condition, cash flows and availability of credit could fluctuate significantly from period to period.

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A significant portion of our sales represents products sold to customers in the commercial aerospace and defense and energy markets. The cyclicality of those markets can adversely affect our current business and our expansion objectives.

The commercial aerospace and defense market is historically cyclical due to both external and internal market factors. These factors include general economic conditions, airline profitability, consumer demand for air travel, varying fuel and labor costs, price competition, and international and domestic political conditions such as military conflict and the threat of terrorism. The length and degree of cyclical fluctuation can be influenced by any one or combination of these factors and therefore are difficult to predict with certainty. A downturn in the commercial aerospace and defense industry would adversely affect the demand for our products and/or the prices at which we are able to sell our products, and our results of operations, business and financial condition could be materially adversely affected.

The energy market has also been historically cyclical, principally as a result of volatile oil prices that impact demand for our products. Our future success requires us to, among other things, expand in key international energy markets by successfully adding to our customer base, distribution channels and product portfolio. The volatility of oil prices and other factors that contribute to the cyclicality of the energy market will impact our ability to expand successfully in this area. If we are not able to be successful in this regard, our results of operations, business and financial condition could be adversely affected.

The anticipated benefits of the Latrobe acquisition may not be fully realized and may take longer to realize than expected.

The Latrobe acquisition involved the integration of Latrobe’s operations with our existing operations, and there are uncertainties inherent in such an integration. We have devoted and will continue to devote significant management attention and resources to integrating Latrobe’s operations. Delays, unexpected difficulties in the integration process or failure to retain key management personnel could adversely affect our business, financial results and financial condition. Even if we are able to integrate Latrobe’s operations successfully, this integration may not result in the realization of the full benefits of synergies, cost savings and operational efficiencies that we expect or the achievement of these benefits within a reasonable period of time.

In addition, we may have not discovered during the due diligence process, all known and unknown factors regarding Latrobe that could produce unintended and unexpected consequences for us. Undiscovered factors could cause us to incur potentially material financial liabilities, and prevent us from achieving the expected benefits from the acquisition within our desired time frames, if at all.

Any significant delay or inability to successfully expand our operations in a timely and cost effective manner could materially adversely affect our business, financial condition and results of operations.

We are undertaking projects associated with the next major increment of our premium products capability, including our $500 million state-of-the-art manufacturing facility focused on premium products.  These projects place a significant demand on management and operational resources. Our success in expanding our operations in a cost effective manner will depend upon numerous factors including the ability of management to ensure the necessary resources are in place to properly execute these projects on time and in accordance with planned costs, the ability of key suppliers to deliver the necessary equipment according to schedule and our ability to implement these projects with minimal impacts to our existing operations. If we are not able to achieve the anticipated results from our capital expansion projects, or if we incur unanticipated excess costs, our results of operations and financial position may be materially adversely affected.

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Periods of reduced demand and excess supply as well as the availability of substitute lower cost materials can adversely affect our ability to price and sell our products at the profitability levels we require to be successful.

Additional worldwide capacity and reduced demand for our products could significantly impact future worldwide pricing which would adversely impact our results of operations and financial condition. In addition, continued availability of lower cost, substitute materials may also cause significant fluctuations in future results as our customers opt for a lower cost alternative.

We change prices on our products as we deem necessary. In addition to the above general competitive impact, other market conditions and various economic factors beyond our control can adversely affect the timing of our pricing actions. The effects of any pricing actions may be delayed due to long manufacturing lead times or the terms of existing contracts. There is no guarantee that the pricing actions we implement will be effective in maintaining the Company’s profit margin levels.

We rely on third parties to supply certain raw materials that are critical to the manufacture of our products and we may not be able to access alternative sources of these raw materials if the suppliers are unwilling or unable to meet our demand.

Costs of certain critical raw material, such as nickel, cobalt, chromium, manganese, molybdenum, titanium, iron, and scrap containing iron and nickel have been volatile due to factors beyond our control. We are able to mitigate most of the adverse impact of rising raw material costs through raw material surcharges, indices to customers and raw material forward contracts, but changes in business conditions could adversely affect our ability to recover rapid increases in raw material costs and may adversely affect our results of operations.

In addition, the availability of these critical raw materials is subject to factors that are not in our control. In some cases, these critical raw materials are purchased from suppliers operating in countries that may be subject to unstable political and economic conditions.  At any given time, we may be unable to obtain an adequate supply of these critical raw materials on a timely basis, at prices and other terms acceptable to us, or at all.

If suppliers increase the price of critical raw materials or are unwilling or unable to meet our demand, we may not have alternative sources of supply. In addition, to the extent that we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials to our customers.

The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience delays or shortages in the supply of raw materials. If unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions or suffer harm to our reputation.

9

New regulations related to conflict minerals could adversely impact our business.

The SEC has promulgated final rules mandated by the Dodd-Frank Act regarding disclosure of the use of tin, tantalum, tungsten and gold, known as conflict minerals, in products manufactured by public companies.  These new rules require due diligence to determine whether such minerals originated from the Democratic Republic of Congo (the “DRC”) or an adjoining country and whether such minerals helped finance the armed conflict in the DRC. The first conflict minerals report required by the new rules is due by May 31, 2014 and annually thereafter. There will be costs associated with complying with these disclosure requirements, including costs to determine the origin of conflict minerals used in our products. In addition, the implementation of these rules could adversely affect the sourcing, supply and pricing of materials used in our products.  Also, we may face disqualification as a supplier for customers and reputational challenges if the due diligence procedures we implement do not enable us to verify the origins for all conflict minerals or to determine that such minerals are DRC conflict-free.

We provide benefits to active and retired employees throughout most of our Company, most of which are not covered by insurance; and thus, our financial condition can be adversely affected if our investment returns are insufficient to meet these obligations.

We have obligations to provide substantial benefits to active and current employees, and most of the associated costs are paid by the Company and are not covered by insurance. In addition, certain employees are covered by defined benefit pension plans, with the majority of our plans covering employees in the United States. Many domestic and international competitors do not provide defined benefit plans and/or retiree health care plans, and other international competitors operate in jurisdictions with government sponsored health care plans that may offer them a cost advantage.  A decline in the value of plan investments in the future, an increase in costs or liabilities, unfavorable changes in laws or regulations that govern pension plan funding or the impacts of underfunded plans acquired in connection with the consummation of the Latrobe merger could materially change the timing and amount of required pension funding. A requirement to accelerate or increase pension contributions in the future could have a material adverse effect on our results of operations and financial condition.

The extensive environmental, health and safety regulatory regimes applicable to our manufacturing operations create the potential exposure to significant liabilities.

The nature of our manufacturing business subjects our operations to numerous and varied federal, state, local and international laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. We have used, and currently use and manufacture, substantial quantities of substances that are considered hazardous, extremely hazardous or toxic under worker safety and health laws and regulations. Although we implement controls and procedures designed to reduce continuing risk of adverse impacts and health and safety issues, we could incur substantial cleanup costs, fines and civil or criminal sanctions, third party property damage or personal injury claims as a result of violations, non-compliance or liabilities under these regulatory regimes required at our facilities.

We have environmental remediation liabilities at some of our owned operating facilities and have been designated as a potentially responsible party (“PRP”) with respect to certain third-party Superfund or similar waste disposal sites and other third party owned sites. Additionally, we have been notified that we may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against us. From time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws.

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When our liability is probable and we can reasonably estimate our costs, we record environmental liabilities in our financial statements. However, in many cases, we are not able to determine whether we are liable, or if liability is probable, in order to reasonably estimate the loss or range of loss which could result from such environmental liabilities. Estimates of our liability remain subject to additional uncertainties, including the nature and extent of site contamination, available remediation alternatives, the extent of corrective actions that may be required, and the number and financial condition of other PRP’s, as well as the extent of their responsibility for the remediation. We adjust our accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on our results of operations in a given period, but we cannot reliably predict the amounts of such future adjustments. Future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on our financial condition or results of operations.

Our manufacturing processes, and the manufacturing processes of many of our suppliers and customers, are energy intensive and generate carbon dioxide and other “Greenhouse Gases”, and pending legislation or regulation of Greenhouse Gases, if enacted or adopted in an onerous form, could have a material adverse impact on our results of operations, financial condition and cash flows.

Political and scientific debates related to the impacts of emissions of greenhouse gases on the global climate are prevalent. Regulation or some form of legislation aimed at reducing the greenhouse gas emissions is currently being considered both in the United States and globally.  As a specialty alloy manufacturer, we will be affected, both directly and indirectly, if proposed climate change legislation, such as use of a “cap and trade”, is enacted. Such legislation could have a material adverse impact on our results of operations, financial condition and cash flows.

Product liability and product quality claims could adversely affect our operating results.

We produce ultra high-strength, high temperature and corrosion-resistant alloys designed for our customers’ demanding applications particularly in our aerospace and defense, energy and medical end-use markets. Failure of the materials that are included in our customers’ applications could give rise to substantial product liability claims. There can be no assurance that our insurance coverage will be adequate or continue to be available on terms acceptable to us.  We have a complex manufacturing process necessary to meet our customers’ stringent product specifications. We are also required to adhere to various third party quality certifications and perform sufficient internal quality reviews to ensure compliance with established standards. If we fail to meet the customer specifications for their products, we may be subject to product quality costs and claims. These costs are generally not insured. The impacts of product liability and quality claims could have a material adverse impact on the results of our operations, financial condition and cash flows.

Our business subjects us to risks of litigation claims, as a routine matter, and this risk increases the potential for a loss that might not be covered by insurance.

Litigation claims relate to the conduct of our currently and formerly owned businesses, including claims pertaining to product liability, commercial disputes, employment actions, employee benefits, compliance with domestic and federal laws, personal injury, patent infringement and tax issues. Due to the uncertainties of litigation, we can give no assurance that we will prevail on claims made against us in the lawsuits that we currently face or that additional claims will not be made against us in the future. The outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to us.  The resolution in any reporting period of one or more of these matters could have a material adverse effect on our results of operations for that period. We can give no assurance that any other matters brought in the future will not have a material effect on our financial condition, liquidity or results of operations.

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A portion of our workforce is covered by a collective bargaining agreement and union attempts to organize our other employees may cause work interruptions or stoppages.

Approximately 120 production employees at our Dynamet business unit located in Washington, PA are covered by a collective bargaining agreement.  This agreement expires in August 2013.  Approximately 640 production employees at our Latrobe business unit located in Latrobe, Pennsylvania are covered by a collective bargaining agreement.  This agreement expires in August 2014.  There can be no assurance that we will succeed in concluding collective bargaining agreements with the unions to replace those that expire. From time to time, the employees at our primary manufacturing facility in Reading, Pennsylvania, participate in election campaigns or union organizing attempts. There is no guarantee that future organization attempts will not result in union representation.

Our manufacturing processes are complex and depend upon critical, high cost equipment for which there may be only limited or no production alternatives.

It is possible that we could experience prolonged periods of reduced production due to unplanned equipment failures, and we could incur significant repair or replacement costs in the event of those failures.  It is also possible that operations could be disrupted due to other unforeseen circumstances such as power outages, explosions, fires, floods, accidents and severe weather conditions.  We must make regular, substantial capital investments and changes to our manufacturing processes to lower production costs, improve productivity, manufacture new or improved products and remain competitive. We may not be in a position to take advantage of business opportunities or respond to competitive pressures if we fail to update, replace or make additions to our equipment or our manufacturing processes in a timely manner.  The cost to repair or replace much of our equipment or facilities would be significant.  We cannot be certain that we will have sufficient internally generated cash or acceptable external financing to make necessary capital expenditures in the future.

A significant portion of our manufacturing and production facilities are located in Reading, Pennsylvania, which increases our exposure to significant disruption to our business as a result of unforeseeable developments in a single geographic area.

It is possible that we could experience prolonged periods of reduced production due to unforeseen catastrophic events occurring in or around our manufacturing facilities in Reading, Pennsylvania. As a result, we may be unable to shift manufacturing capabilities to alternate locations, accept materials from suppliers, meet customer shipment needs or address other severe consequences that may be encountered. Our financial condition and results of our operations could be materially adversely affected.

We rely on third parties to supply energy consumed at each of our energy-intensive production facilities.

The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control. Disruptions or lack of availability in the supply of energy resources could temporarily impair the ability to operate our production facilities. Further, increases in energy costs, or changes in costs relative to energy costs paid by competitors, has affected and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.

12

We consider acquisition, joint ventures and other business combination opportunities, as well as possible business unit dispositions, as part of our overall business strategy, which opportunities involve uncertainties and potential risks that we cannot predict or anticipate fully.

From time-to-time, management holds discussions with management of other companies to explore such aforementioned opportunities. As a result, the relative makeup of the businesses comprising our Company is subject to change. Acquisitions, joint ventures and other business combinations involve various inherent risks. Such risks include difficulties in integrating the operations, technologies, products and personnel of the acquired companies, diversion of management’s attention from existing operations, difficulties in entering markets in which we have limited or no direct prior experience, dependence on unfamiliar supply chains, insufficient revenues to offset increased expenses associated with acquisitions, loss of key employees of the acquired companies, inaccurate assessment of undisclosed liabilities, difficulties in realizing projected efficiencies, synergies and cost savings, and increases in our debt or limitation on our ability to access additional capital when needed.

Our business may be impacted by external factors that we may not be able to control.

War, civil conflict, terrorism, natural disasters and public health issues including domestic or international pandemic have caused and could cause damage or disruption to domestic or international commerce by creating economic or political uncertainties. Additionally, the volatility in the financial markets could negatively impact our business. These events could result in a decrease in demand for our products, affect the availability of the credit facilities to us, our customers or other members of the supply chain necessary to transact business, make it difficult or impossible to deliver orders to customers or receive materials from suppliers, affect the availability or pricing of energy sources or result in other severe consequences that may or may not be predictable. As a result, our business, financial condition and results of operations could be materially adversely affected.

We believe that international sales, which are associated with various risks, will continue to account for a significant percentage of our future revenues.

Risks associated with international sales include without limitation: political and economic instability, including weak conditions in the world’s economies; difficulty in collecting accounts receivable;  unstable or unenforced export controls; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in tax laws and tariffs; and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on international sales when converted into dollars). In addition, we will need to invest in building our capabilities and infrastructure to meet our international growth goals. Any of these factors could materially adversely affect our results for the period in which they occur.

We value most of our inventory using the LIFO method, which could be repealed resulting in adverse effects on our cash flows and financial condition.

The cost of our inventories is primarily determined using the Last-In First-Out (“LIFO”) method. Under the LIFO inventory valuation method, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period even though these materials and other costs may have been incurred at significantly different values due to the length of time of our production cycle. Generally in a period of rising prices, LIFO recognizes higher costs of goods sold, which both reduces current income and assigns a lower value to the year-end inventory.  Recent proposals have been initiated aimed at repealing the election to use the LIFO method for income tax purposes. According to these proposals, generally taxpayers that currently use the LIFO method would be required to revalue their LIFO inventory to its first-in, first-out (“FIFO”) value. As of June 30, 2013, if the FIFO method of inventory had been used instead of the LIFO method, our inventories would have been about $222 million higher. This increase in inventory would result in a one-time increase in taxable income which would be taken into account over the following several taxable years. The repeal of LIFO could result in a substantial tax liability which could adversely impact our cash flows and financial condition.

13

We depend on the retention of key personnel.

Much of our future success depends on the continued service and availability of skilled personnel, including members of our executive management team, management, metallurgists and production positions. The loss of key personnel could adversely affect our ability to perform until suitable replacements are found.

We could be adversely impacted if our information technology and computer systems do not perform properly or if we fail to protect the integrity of confidential data.

Management relies on IT infrastructure, including hardware, network, software, people and processes, to provide useful information to conduct our business and support assessments and conclusions about operating performance. Our inability to produce relevant and/or reliable measures of operating performance in an efficient, cost-effective and well-controlled fashion may have significant negative impacts on our future operations. In addition, any material failure, interruption of service, or compromised data security could adversely affect our operations. Security breaches in our information technology could result in theft, destruction, loss, misappropriation or release of confidential data or intellectual property which could adversely impact our future results.

The carrying value of goodwill and other intangible assets may not be recoverable.

Goodwill and other intangible assets are recorded at fair value on the date of acquisition. We review these assets at least annually for impairment. Impairment may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, and a variety of other factors. Any future impairment of goodwill or other intangible assets could have a material adverse effect on our results of operations.

Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

The locations of our primary manufacturing plants are: Reading, Pennsylvania; Hartsville, South Carolina; Washington, Pennsylvania; Orangeburg, South Carolina; Bridgeville, Pennsylvania; Orwigsburg, Pennsylvania; Clearwater, Florida; Elyria, Ohio; Woonsocket, Rhode Island; Latrobe, Pennsylvania; Franklin, Pennsylvania; Wauseon, Ohio and Torshalla, Sweden.  The Reading, Hartsville, Washington, Orangeburg, Bridgeville, Orwigsburg, Elyria, Woonsocket, Latrobe, Franklin, Wauseon and Torshalla plants are owned.  The Clearwater plant is owned, but the land is leased.  Two administrative buildings in Torshalla are leased.

The Amega West operations include leased rental warehouses and service centers located in Houston, Texas; San Antonio, Texas; Oklahoma City, Oklahoma; Casper, Wyoming; Lafayette, Louisiana; West Alexander, Pennsylvania; Nisku Alberta, Canada, and Singapore. The Singapore facility is owned, but the land is leased.  The primary manufacturing facility in Tyler, Texas is owned.

The Latrobe operations include leased warehouses and service centers located in Vienna, Ohio; Chicago, Illinois; Pinehurst, Texas; Prichard, Alabama; Sheffield, United Kingdom; Ludwigshafen, Germany; Blenheim; and Ontario, Canada.  The service centers in White House, Tennessee and Northborough, Massachusetts are owned.

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Our corporate offices, located in Wyomissing, Pennsylvania, are leased.

We also operate regional customer service and distribution centers, most of which are leased, at various locations in several states and foreign countries.

Our plants, customer service centers, and distribution centers were acquired or leased at various times over several years.  There is an active maintenance program to ensure a safe operating environment and to keep facilities in good condition.  In addition, we have had an active capital spending program to replace equipment as needed to keep it technologically competitive on a world-wide basis.  We believe our facilities are in good condition and suitable for our business needs.

Item 3.  Legal Proceedings

From time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws.  We have environmental remediation liabilities at some of our owned operating facilities and have been designated as a potentially responsible party (“PRP”) with respect to certain third-party Superfund or similar waste disposal sites and other third party owned sites. Additionally, we have been notified that we may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against us.  Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s.  Based upon information currently available, such future costs are not expected to have a material effect on our financial position, results of operations or cash flows over the long-term. However, such costs could be material to our financial position, results of operations or cash flows in a particular future quarter or year.

In addition, from time to time, we are a party to certain routine claims and legal actions and other contingent liabilities incident to the normal course of business which pertain to litigation, product claims, commercial disputes, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims, patent infringement and tax issues.  Based on information currently available, the ultimate resolution of our known contingencies, individually or in the aggregate and including the matters described in Note 11 to the consolidated financial statements in this Form 10-K, is not expected to have a material adverse effect on our financial position, liquidity, or results of operations.  However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to our financial position, results of operations or cash flows in a particular future quarter or year.

See the “Contingencies” section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation”, and the “Contingencies and Commitments” section included in Note 11 to our consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data”, included in this Form 10-K, the contents of which are incorporated by reference to this Item 3.

Item 4. Mine Safety Disclosures

Not applicable.

Item 4A.  Executive Officers of the Registrant

Listed below are the names of our corporate executive officers, including those required to be listed as executive officers for Securities and Exchange Commission purposes, each of whom assumes office after the annual organization meeting of the Board of Directors which immediately follows the Annual Meeting of Stockholders.

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William A Wulfsohn was appointed President and Chief Executive Officer effective July 1, 2010. Mr. Wulfsohn has served as a Director for the Company since April 2009. Mr. Wulfsohn most recently served as Senior Vice President, Industrial Coatings at PPG Industries, a Fortune 200 company with more than $12 billion in annual revenues. Prior to joining PPG Industries, Mr. Wulfsohn served as Vice President and General Manager for Honeywell International. Previously, Mr. Wulfsohn worked for Morton International/Rohm & Haas, beginning as a director of marketing and culminating as Vice President and Business Director.

Tony R. Thene was appointed Senior Vice President and Chief Financial Officer effective January 31, 2013.  Mr. Thene joined Carpenter after 23 years with Alcoa Inc., a leading producer of primary and fabricated aluminum. Mostly recently, Mr. Thene was the Chief Financial Officer for Alcoa’s Engineered Products and Solutions business.

David L. Strobel was appointed to Senior Vice President — Global Operations on September 2, 2010. Since joining Carpenter in 1983, Mr. Strobel has held numerous positions of increasing responsibility, including Vice President — Manufacturing and most recently serving as Vice President Technology.

Andrew T. Ziolkowski was appointed Senior Vice President — Commercial, Specialty Alloy Operations (SAO) in January 2013. Mr. Ziolkowski’s promotion follows a special assignment as head of integration and operations of Latrobe Specialty Metals, which was acquired by Carpenter in February 2012. Mr. Ziolkowski joined Carpenter in 1989, most recently serving as Vice President — Bar & Coil Products. Prior to that, Mr. Ziolkowski held several positions at the Company, including Vice President — Strip Products Business and Controller — Specialty Alloys Operations.

Gary Heasley was appointed Senior Vice President — Performance Engineered Products effective July 22, 2013.  Mr. Heasley joined Carpenter after 8 years with Steel Dynamics Inc., an $8 billion company.  Mr. Heasley served as Executive Vice President, Strategic Planning and Business Development, and President of Steel Dynamics’ subsidiary, New Millennium Buildings Systems.  Prior to joining Steel Dynamics as its CFO in 2005, Gary spent three years as Senior Vice President and Manager, Metals Group for KeyBanc Capital Markets, Inc./McDonald Investments.

			Assumed Present
Name	Age	Position	Position
William A. Wulfsohn	51	President and Chief Executive Officer Director	July 2010
Tony R. Thene	52	Senior Vice President and Chief Financial Officer	January 2013
David L. Strobel	52	Senior Vice President — Global Operations	September 2010
Andrew T. Ziolkowski	48	Senior Vice President — Commercial, SAO	January 2013
Gary Heasley	48	Senior Vice President — Performance Engineered Products	July 2013

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PART II

Item 5.  Market for the Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange (“NYSE”) and traded under the symbol “CRS”.  The following table sets forth, for the periods indicated, the high and low closing prices for our common stock as reported by the NYSE.

	Fiscal Year 2013				Fiscal Year 2012
Quarter Ended:	High		Low		High		Low
September 30,	$	55.70	$	44.11	$	58.18	$	43.04
December 31,	$	54.14	$	44.81	$	59.53	$	41.32
March 31,	$	54.00	$	45.69	$	56.65	$	49.46
June 30,	$	49.16	$	43.77	$	56.81	$	42.27
Annual	$	55.70	$	43.77	$	59.53	$	41.32

The range of our common stock price on the NYSE from July 1, 2013 to August 14, 2013 was $45.59 to  $55.40.  The closing price of the common stock was $55.30 on August 14, 2013.

We have paid quarterly cash dividends on our common stock for over 100 consecutive years. We paid a quarterly dividend of $0.18 per common share during each quarter of fiscal years 2013 and 2012.

As of August 14, 2013, there were 2,669 common stockholders of record.

Information regarding Securities Authorized for Issuance under Equity Compensation Plans is set forth Item 12 hereto.

Cumulative Total Stockholder Return

The graph below compares the cumulative total stockholder return on our common stock to the cumulative total return of the S&P MidCap Index, our Peer Group and for each of the last five fiscal years ended June 30, 2013. The cumulative total return assumes an investment of $100 on June 30, 2008 and the reinvestment of any dividends during the period. The S&P MidCap 400 Index is the most widely used index for mid-sized companies. The Companies in our Peer Group are: Allegheny Technologies, Inc., Daido Steel Company Limited, Gloria Material Technology Corp., Haynes International Inc., RTI International Metals Inc., Sandvik AB, Steel Dynamics Inc., The Timken Company, AK Steel Holding Corp., Hexcel Corp., Kennametal Inc., Precision Castparts Corp., Reliance Steel and Aluminum Company, Schmolz + Bickenbach AG, Universal Stainless & Alloy Products, Voestalpine AG and Worthington Industries Inc. We believe the companies included in our Peer Group, taken as a whole, provide a more meaningful comparison in terms of product offerings, markets served, competition and other relevant factors.  The total stockholder return for the peer group is weighted according to the respective issuer’s stock market capitalization at the beginning of each period.

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	6/08		6/09		6/10		6/11		6/12		6/13
Carpenter Technology Corporation	$	100.00	$	49.30	$	79.95	$	143.11	$	120.35	$	115.02
S&P Midcap 400	$	100.00	$	71.98	$	89.92	$	125.33	$	122.41	$	153.24
Peer Group	$	100.00	$	51.80	$	66.85	$	105.05	$	84.10	$	100.53

Recent Sales of Unregistered Securities

On February 29, 2012, in connection with our acquisition of Latrobe, we issued 8.1 million shares of our common stock to Latrobe’s shareholders pursuant to exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereof. 1,235,226 of the shares issued as merger consideration were placed into escrow to secure Latrobe’s indemnification obligations and to account for Latrobe’s pension funding issues. In May, 2012, 300,000 of the shares placed in escrow, representing the portion relating to Latrobe’s pension funding issues, were released to Latrobe’s shareholders pursuant to the Merger Agreement.  In March 2013, 467,613 of the shares placed in escrow to secure Latrobe’s indemnification obligation were released to Latrobe’s shareholders, pursuant to the Merger Agreement.

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Item 6.  Selected Financial Data

Five-Year Financial Summary

$ in millions, except per share data

(Fiscal years ended June 30,)

	2013(a)		2012(a)(b)		2011(c)		2010		2009(d)
Summary of Operations:
Net sales	$	2,271.7	$	2,028.7	$	1,675.1	$	1,198.6	$	1,362.3
Operating income	$	232.7	$	210.1	$	96.4	$	11.7	$	64.0
Net income	$	146.5	$	121.6	$	71.7	$	2.1	$	47.9
Net income attributable to Carpenter	$	146.1	$	121.2	$	71.0	$	2.1	$	47.9
Financial Position at Year-End:
Cash and cash equivalents	$	257.5	$	211.0	$	492.5	$	265.4	$	340.1
Marketable securities, current	$	—	$	—	$	30.5	$	105.2	$	15.0
Total assets	$	2,882.9	$	2,627.8	$	1,991.9	$	1,583.2	$	1,497.4
Long-term obligations, net of current portion	$	604.2	$	305.9	$	407.8	$	259.6	$	258.6
Per Common Share:
Net earnings:
Basic	$	2.75	$	2.55	$	1.59	$	0.04	$	1.08
Diluted	$	2.73	$	2.53	$	1.59	$	0.04	$	1.08
Cash dividend-common	$	0.72	$	0.72	$	0.72	$	0.72	$	0.72
Weighted Average Common Shares Outstanding:
Basic	52.9		47.1		44.1		43.9		43.9
Diluted	53.4		47.8		44.7		44.4		44.2

(a)The weighted average common shares outstanding for fiscal year 2013 and 2012 included an additional 8.1 million and 2.7 million, respectively, shares issued in connection with the Latrobe acquisition.

(b)Fiscal year 2012 included $11.7 million of acquisition-related costs incurred in connection with the Latrobe Acquisition that was consummated on February 29, 2012 and more fully discussed in Note 2 to our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data”.

(c)Fiscal year 2011 included $2.4 million of Latrobe acquisition-related costs and $0.7 million of Amega West acquisition-related costs incurred in connection with the Latrobe Acquisition and Amega West acquisition that more fully discussed in Note 2 to our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data”.

(d)Fiscal year 2009 included $9.4 million of restructuring charges related to the shutdown and closure of our U.K. metal strip manufacturing operations.

See Item 7. - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of factors that affect the comparability of the “Selected Financial Data”.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Background and General

Our discussions below in this Item 7 should be read in conjunction with our consolidated financial statements, including the notes thereto, included in this annual report on Form 10-K.

We are engaged in the manufacturing, fabrication, and distribution of specialty metals.  We primarily process basic raw materials such as nickel, cobalt, titanium, manganese, chromium, molybdenum, iron scrap and other metal alloying elements through various melting, hot forming and cold working facilities to produce finished products in the form of billet, bar, rod, wire and narrow strip in many sizes and finishes.  We also produce certain metal powders.  Our sales are distributed directly from our production plants and distribution network as well as through independent distributors. Unlike many other specialty steel producers, we operate our own worldwide network of service/distribution centers. These service centers, located in the United States, Canada, Mexico, Europe and Asia allow us to work more closely with customers and to offer various just-in-time stocking programs. We also manufacture and rent down hole drilling tools and components used in the oil and gas industry.

On February 29, 2012, following approval by the U.S. Federal Trade Commission (“FTC”), we completed the acquisition of Latrobe Specialty Metals, Inc. (“Latrobe”) through the merger of a wholly-owned subsidiary of the Company with and into Latrobe (the “Latrobe Acquisition”). In connection with the Latrobe Acquisition, former owners of Latrobe received 8.1 million shares of Carpenter stock. In addition, pursuant to the terms of the related merger agreement, Carpenter paid $11.5 million in cash at closing, net of $2.5 million of cash acquired, in addition to a payment of approximately $154 million in order to pay off Latrobe debt.  A key benefit of the Latrobe Acquisition is a substantial increase in production which has increased Carpenter’s capacity to meet customer demand for premium products.  As a condition of the FTC approval, Carpenter entered into a consent decree (the “Consent Decree”) to transfer certain assets and technical knowledge to Eramet S.A and its subsidiaries, Aubert & Duval and Brown Europe (collectively, the “Transferees”), which will allow the Transferees, as a group, to become a second manufacturer of two specific alloys in order to provide customers with a supply alternative in the marketplace. The alloys have minimal sales impact and will cause no material change to the economics of the Latrobe Acquisition.  As part of the Consent Decrees, we agreed to transfer certain assets as well as fund the cost of acquiring assets in an amount up to approximately $5.0 million; we recorded a charge for this liability in the quarter ended March 31, 2012.

We are constructing a new 400,000 square foot state-of-the-art manufacturing facility in response to customer demand for premium products primarily in the fast-growing aerospace and defense and energy industries. We expect that the new facility will ultimately be capable of producing approximately 27,000 tons per year of additional premium product and be operational by April 2014.  The facility is being built on a 230 acre greenfield site located in Athens, Alabama at a total cost of approximately $500 million.  The site selection process included analyzing state, county and local incentives, utility costs, and labor resources.  The state of Alabama and local government entities put together a compelling package, including various tax initiatives, infrastructure grants, and training programs. The new facility will include forge, remelting and associated finishing and testing capabilities and will play a key role in further developing our capabilities in the production of our premium products.

As part of our overall business strategy, we have sought out and considered opportunities related to strategic acquisitions and joint collaborations as well possible business unit dispositions aimed at broadening our offering to the marketplace. We have participated with other companies to explore potential terms and structure of such opportunities and we expect that we will continue to evaluate these opportunities.

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Business Trends

Selected financial results for the past three fiscal years are summarized below:

	Fiscal Year
($ in millions, except per share data)	2013			2012			2011
Net sales	$	2,271.7		$	2,028.7		$	1,675.1
Net sales excluding surcharges (1)	$	1,839.3		$	1,569.6		$	1,231.1
Operating income excluding pension earnings, interest and deferrals (“pension EID”) expense(1)	$	264.6		$	225.4		$	131.6
Net income	$	146.5		$	121.6		$	71.7
Diluted earnings per share	$	2.73		$	2.53		$	1.59
Net pension expense per diluted share (1)	$	0.84		$	0.55		$	0.84
Purchases of property, equipment and software	$	336.9		$	171.9		$	79.6
Free cash flow (1)	$	(159.3	)	$	(58.8	)	$	(88.9	)
Pounds sold (in thousands) (2)	273,724			235,532			216,834

(1)  See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

(2)  Includes specialty and titanium alloys, stainless steel and powder materials

Our sales are across a diversified list of end-use markets.  During fiscal year 2013, we changed the manner in which sales are classified by end-use market so that we could better evaluate our sales results from period to period. In order to make the discussion of sales by end-use market more meaningful, we have reclassified the fiscal years 2012 and 2011 sales by end-use market to the fiscal year 2013 presentation. The table below summarizes our estimated sales by market over the past three fiscal years.

	Fiscal Year
($ in millions)	2013				2012				2011
Aerospace and defense	$	1,067.0	47	%	$	901.2	44	%	$	697.6	42	%
Industrial and consumer	474.3		21		478.1		24		486.6		29
Energy	337.3		15		287.0		14		194.6		12
Transportation	138.8		6		142.2		7		135.5		8
Medical	113.2		5		141.1		7		122.1		7
Distribution	141.1		6		79.1		4		38.7		2
Total net sales	$	2,271.7	100	%	$	2,028.7	100	%	$	1,675.1	100	%

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The table below shows our net sales by major product class for the past three fiscal years:

	Fiscal Year
($ in millions)	2013				2012				2011
Special alloys	$	989.9	43	%	$	931.4	47	%	$	831.8	49	%
Stainless steels	638.8		28		637.3		31		564.9		34
Alloy and tool steel	255.7		11		108.6		5		27.2		2
Titanium products	155.0		7		156.6		8		135.3		8
Powder metals	60.4		3		64.3		3		61.4		4
Distribution and other	171.9		8		130.5		6		54.5		3
Total net sales	$	2,271.7	100	%	$	2,028.7	100	%	$	1,675.1	100	%

Impact of Raw Material Prices and Product Mix

We value most of our inventory utilizing the last-in, first-out (“LIFO”) inventory costing methodology. Under the LIFO inventory costing method, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period even though these materials may have been acquired at potentially significantly different values due to the length of time from the acquisition of the raw materials to the sale of the processed finished goods to the customers. In a period of rising raw material costs, the LIFO inventory valuation normally results in higher costs of sales. Conversely, in a period of decreasing raw material costs, the LIFO inventory valuation normally results in lower costs of sales.

The volatility of the costs of raw materials has impacted our operations over the past several years.  We, and others in our industry, generally have been able to pass cost increases on major raw materials through to our customers using surcharges that are structured to recover increases in raw material costs.  Generally, the formula used to calculate a surcharge is based on published prices of the respective raw materials for the previous month which correlates to the prices we pay for our raw material purchases. However, a portion of our surcharges to customers may be calculated using a different surcharge formula or may be based on the raw material prices at the time of order, which creates a lag between surcharge revenue and corresponding raw material costs recognized in costs of sales.  The surcharge mechanism protects our net income on such sales except for the lag effect discussed above. However, surcharges have had a dilutive effect on our gross margin and operating margin percentages as described later in this report.

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Approximately 25 percent of our net sales are sales to customers under firm price sales arrangements. Firm price sales arrangements involve a risk of profit margin fluctuations, particularly when raw material prices are volatile.  In order to reduce the risk of fluctuating profit margins on these sales, we enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the related products sold.  Firm price sales arrangements generally include certain annual purchasing commitments and consumption schedules agreed to by the customers at selling prices based on raw material prices at the time the arrangements are established. If a customer fails to meet the volume commitments (or the consumption schedule deviates from the agreed-upon terms of the firm price sales arrangements), the Company may need to absorb the gains or losses associated with the commodity forward contracts on a temporary basis. Gains or losses associated with commodity forward contracts are reclassified to earnings/loss when earnings are impacted by the hedged transaction. Because we value most of our inventory under the LIFO costing methodology, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period attempting to match the most recently incurred costs with revenues. Gains or losses on the commodity forward contracts are reclassified from other comprehensive income together with the actual purchase price of the underlying commodities when the underlying commodities are purchased and recorded in inventory. To the extent that the total purchase price of the commodities, inclusive of the gains or losses on the commodity forward contracts, are higher or lower relative to the beginning of year costs, our costs of goods sold reflect such amounts.  Accordingly, the gains and/or losses associated with commodity forward contracts may not impact the same period that the firm price sales arrangements revenue is recognized, and comparisons of gross profit from period to period may be impacted. These firm price sales arrangements are expected to continue as we look to strengthen our long-term customer relationships by expanding, renewing and in certain cases extending to a longer term, our customer long-term arrangements.

We produce hundreds of grades of materials, with a wide range of pricing and profit levels depending on the grade.  In addition, our product mix within a period is subject to the fluctuating order patterns of our customers as well as decisions we may make on participation in certain products based on available capacity including the impacts of capacity commitments we may have under existing customer agreements.  While we expect to see positive contribution from a more favorable product mix in our margin performance over time, the impact by period may fluctuate, and period-to-period comparisons may vary.

Net Pension Expense

Net pension expense, as we define it below, includes the net periodic benefit costs related to both our pension and other postretirement plans.  See further discussion of net pension expense in the “Non-GAAP Financial Measures” below. Net pension expense is recorded in accounts that are included in both the cost of sales and selling, general and administrative expenses lines of our statements of income. The following is a summary of the classification of net pension expense included in our statements of income during fiscal years 2013, 2012 and 2011:

	Fiscal Year
($ in millions)	2013		2012		2011
Cost of sales	$	51.7	$	31.2	$	45.8
Selling, general and administrative expenses	17.1		10.9		15.0
Net pension expense	$	68.8	$	42.1	$	60.8

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Net pension expense is determined annually based on beginning of year balances, and is recorded ratably throughout the fiscal year, unless a significant re-measurement event occurs. The following is a summary of the components of net pension expense during fiscal years 2013, 2012 and 2011:

	Fiscal Year
($ in millions)	2013		2012		2011
Service cost	$	36.9	$	26.8	$	25.6
Pension earnings, interest and deferrals	31.9		15.3		35.2
Net pension expense	$	68.8	$	42.1	$	60.8

The service cost component of net pension expense represents the estimated cost of future pension liabilities earned associated with active employees. The pension earnings, interest and deferrals expense 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. Pension earnings, interest and deferrals expenses is impacted by the financial markets and increased significantly during fiscal year 2013 principally due to the decline in market value of the securities held by the plans as well as lower interest rates as of June 30, 2012.

Operating Performance Overview

Our fiscal year 2013 results reflect record earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $406 million which was up 21% from fiscal year 2012.  From an end-use market perspective our results are mixed.  Aerospace demand continued to grow while our sales to the energy market increased despite a decline in the rig counts and the production of industrial gas turbines.  As for the rest of our markets, we have seen declining demand versus fiscal year 2012.  We believe this trend is largely due to customer destocking.

We have made progress during fiscal year 2013 in the following important areas:

·We improved operational execution  including integrating Latrobe, which resulted in above deal economics, reducing cost per ton at our Specialty Alloys Operations for the fourth consecutive year, signing several strategic contracts with key customers, while the Athens facility continues to be on time and under budget.

·We enhanced liquidity by expanding the revolving credit facility from $350 million to $500 million.

·In the PEP segment we made long-term growth investments that increased titanium wire capacity and expanded oil and gas footprint in the Amega West business.

Results of Operations — Fiscal Year 2013 Compared to Fiscal Year 2012

For fiscal year 2013, we reported net income of $146.1 million, or $2.73 per diluted share, compared with income of $121.2 million, or $2.53 per diluted share, a year earlier.  Our fiscal year 2013 results reflect a trend of improving revenue during the second half of the fiscal year as well as the full year inclusion of the Latrobe business.

Net Sales

Net sales for fiscal year 2013 were $2,271.7 million, which was a 12 percent increase from fiscal year 2012. Excluding surcharge revenues, sales were 17 percent higher than fiscal year 2012 on 16 percent higher volume. The full year inclusion of the Latrobe business in fiscal year 2013 contributed $266.1 million of the year over year increase in net sales.

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Geographically, sales outside the United States increased 5 percent from fiscal year 2012 to $696.4 million. International sales as a percentage of our total net sales represented 31 percent and 33 percent for fiscal year 2013 and fiscal year 2012, respectively.

Sales by End-Use Markets

We sell to customers across diversified end-use markets.  The following table includes comparative information for our net sales, which includes surcharge revenues, by principal end-use markets which we believe is helpful supplemental information in analyzing the performance of the business from period to period:

					$			%
	Fiscal Year				Increase			Increase
($ in millions)	2013		2012		(Decrease)			(Decrease)
Aerospace and defense	$	1,067.0	$	901.2	$	165.8		18	%
Industrial and consumer	474.3		478.1		(3.8		)	(1	)
Energy	337.3		287.0		50.3			18
Transportation	138.8		142.2		(3.4		)	(2	)
Medical	113.2		141.1		(27.9		)	(20	)
Distribution	141.1		79.1		62.0			78
Total net sales	$	2,271.7	$	2,028.7	$	243.0		12	%

The following table includes comparative information for our estimated net sales by the same principal end-use markets, but excluding surcharge revenues:

					$			%
	Fiscal Year				Increase			Increase
($ in millions)	2013		2012		(Decrease)			(Decrease)
Aerospace and defense	$	832.5	$	668.8	$	163.7		24	%
Industrial and consumer	366.4		346.7		19.7			6
Energy	290.9		246.1		44.8			18
Transportation	106.6		104.0		2.6			2
Medical	103.7		125.7		(22.0		)	(18	)
Distribution	139.2		78.3		60.9			78
Total net sales excluding surcharge revenues	$	1,839.3	$	1,569.6	$	269.7		17	%

Sales to the aerospace and defense market increased 18 percent from fiscal year 2012 to $1,067.0  million. Excluding surcharge revenue, sales increased 24 percent on 47 percent higher shipment volume. The aerospace and defense results reflect strength in commercial aerospace as build rates remain high as well as demand growth for proprietary materials for structural application.  The addition of the Latrobe aerospace products contributed $135.6 million to the year-over-year growth in net sales.

Industrial and consumer market sales decreased 1 percent from fiscal year 2012 to $474.3 million. Excluding surcharge revenue, sales increased approximately 6 percent on 2 percent higher shipment.  The market is sensitive to economic conditions which were challenging particularly in the second half of our fiscal year 2013.  Our strategy has been to focus on specialized, high value niche applications with strategically important customers.  The addition of the Latrobe industrial and consumer net sales contributed $27.4 million to the year-over-year growth in net sales.

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Sales to the energy market of $337.3 million reflected an 18 percent increase from fiscal year 2012. Excluding surcharge revenue, sales increased 18 percent on 10 percent higher shipment volume. The sales results reflect the market penetration in certain segments of the oil and gas markets as well as our international expansion in addition to the inclusion of the Specialty Steel Supply business acquired in connection with the Latrobe acquisition. The full year inclusion of the Latrobe business contributed $37.6 million to the year over year growth in net sales.  This growth was partially offset by a decline in drilling alloys, which was impacted by destocking and low growth in North American rig count.

Sales to the medical market decreased 20 percent to $113.2 million from fiscal year 2012. Adjusted for surcharge revenue, sales decreased 18 percent due on 15 percent lower shipment volume. As largely seen in the PEP segment results, continued inventory destocking within the titanium distribution supply chain was influenced by falling titanium prices.  We expect modest resumption of demand as OEM supply chain inventories reach low levels.

Transportation market sales decreased 2 percent from the fiscal year 2012 to $138.8 million. Excluding surcharge revenue, sales increased 2 percent on flat shipment volume. The results reflect North American fuel efficiency standards requiring automobiles to become lighter and engines to operate at higher temperatures offset by continued weakness in Europe and softer demand for materials used in valves, exhaust and other automotive components.

Sales to the distribution market increased 78 percent to $141.1 million from fiscal year 2012.  The increase is primarily attributable to the addition of Latrobe distribution business which globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries. The full year inclusion of the Latrobe distribution business contributed $63.3 million to the year over year growth in net sales.

Sales by Product Class

The following table includes comparative information for our net sales by major product class:

					$			%
	Fiscal Year				Increase			Increase
($ in millions)	2013		2012		(Decrease)			(Decrease)
Special alloys	$	989.9	$	931.4	$	58.5		6	%
Stainless steels	638.8		637.3		1.5			—
Alloy and Tool steel	255.7		108.6		147.1			135
Titanium products	155.0		156.6		(1.6		)	(1	)
Powder metals	60.4		64.3		(3.9		)	(6	)
Distribution and other	171.9		130.5		41.4			32
Total net sales	$	2,271.7	$	2,028.7	$	243.0		12	%

The following table includes comparative information for our net sales by the same major product class, but excluding surcharge revenues:

					$			%
	Fiscal Year				Increase			Increase
($ in millions)	2013		2012		(Decrease)			(Decrease)
Special alloys	$	706.0	$	626.2	$	79.8		13	%
Stainless steels	543.1		512.4		30.7			6
Alloy and Tool steel	210.9		85.7		125.2			146
Titanium products	155.0		156.6		(1.6		)	(1	)
Powder metals	55.9		59.7		(3.8		)	(6	)
Distribution and other	168.4		129.0		39.4			31
Total net sales excluding surcharge revenues	$	1,839.3	$	1,569.6	$	269.7		17	%

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Sales of special alloys products increased 6 percent in fiscal year 2013 as compared with a year ago to $989.9 million. Excluding surcharge revenue, sales increased 13 percent on a 9 percent increase in shipment volume. The sales results principally reflect the increased demand in our higher value alloys used in the aerospace and energy markets. The full year of the Latrobe business contributed $25.9 million of the year over year growth in net sales.

Sales of stainless steels remained flat compared with fiscal year 2012. Excluding surcharge revenues, such sales increased by 6 percent on 1 percent higher shipment volume. The year over year results also reflect the  $54.8 million from the full year inclusion of the  Latrobe business.

Sales of titanium products decreased 1 percent as compared with fiscal year 2012 on 1 percent lower shipment volume. The results reflect lower demand in the titanium distributor channel, including sales to medical market.

Sales of powder metals decreased 6 percent in fiscal year 2013 on 10 percent lower shipment volume. The results reflect unfavorable performance in Europe.

Sales of alloy and tool steel increased 135 percent in fiscal year 2013 on 272 percent higher shipment volume. The results primarily reflect the full year inclusion of the Latrobe business which contributed $139.4 million of the year over year increase in net sales.

Gross Profit

Gross profit in fiscal year 2013 increased to $433.5 million, or 19.1 percent of net sales (23.6 percent of net sales excluding surcharges), from $391.0 million, or 19.3 percent of net sales (24.9 percent of net sales excluding surcharges), for fiscal year 2012. The results reflect the impacts of higher volumes from the addition of the Latrobe business offset by higher net pension expense included in costs of sales during fiscal year 2013.  Fiscal year 2012 results included $11.6 million of costs associated with acquisition inventory fair value cost adjustments in connection with the Latrobe Acquisition.

Our surcharge mechanism is structured to recover increases in raw material costs, although generally with a lag effect. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharges on gross margin for fiscal years 2013 and 2012. See the section “Non-GAAP Financial Measures” below for further discussion of these financial metrics.

	Fiscal Year
($ in millions)	2013			2012
Net sales	$	2,271.7		$	2,028.7
Less: surcharge revenue	432.4			459.1
Net sales excluding surcharges	$	1,839.3		$	1,569.6
Gross profit	$	433.5		$	391.0
Gross margin	19.1		%	19.3		%
Gross margin excluding dilutive effect of surcharges	23.6		%	24.9		%

Selling, General and Administrative Expenses

Selling, general and administrative expenses in fiscal year 2013 were $200.8 million, or 8.8 percent of net sales (10.9 percent of net sales excluding surcharges), compared to $169.2 million, or 8.3 percent of net sales (10.8 percent of net sales excluding surcharges), in fiscal year 2012.  The increase in fiscal year 2013 is due to the additional overhead costs related to the Latrobe businesses, restructuring related costs activities and higher pension expense.

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Acquisition-Related Costs

In connection with the Latrobe Acquisition, we incurred approximately $11.7 million of acquisition-related costs during fiscal year 2012. These costs represent direct incremental legal, accounting and investment banking fees incurred in connection with the Latrobe Acquisition as well as approximately $5.2 million of liability for costs associated with the sale of certain Latrobe assets necessary to obtain FTC approval for the transaction.

Operating Income

Our operating income in fiscal year 2013 increased to $232.7 million as compared with $210.1 million in fiscal year 2012.  Operating income has been significantly impacted by our pension earnings, interest and deferrals (“pension EID”) portion of our net pension expense, which may be volatile based on conditions in the financial markets. The following presents our operating income and operating margin, in each case excluding the impact of surcharges on net sales and excluding the impacts of pension EID expense and acquisition related costs from operating income. We present and discuss these financial measures because management believes removing the impact of volatile and restructuring charges provides a more consistent and meaningful basis for comparing results of operations from period to period.  See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

In fiscal year 2013, we incurred certain restructuring related costs of $5.5 million. These costs consisted of severance costs associated with a reduction in salaried headcount as well as costs associated with respect to manufacturing footprint optimization activities principally as a result of the Latrobe Acquisition and other changes we believe are necessary to manage our business as an integrated steel mill operation.

In connection with the Latrobe Acquisition, we initiated a third party consulting study to identify opportunities to potentially reduce inventory levels across our integrated mill system, including Latrobe. Our inventory turns performance is below average as compared with peers in our industry, with Latrobe at even lower average turns than our SAO business. The consulting study was completed in fiscal year 2013. Specific action plans were developed, and we began to see the benefits of improvements in our inventory performance during the second half our fiscal year 2013. During fiscal year 2013, we incurred $2.5 million costs associated with the inventory reduction initiative which consists of consulting costs associated with the study.

	Fiscal Year
($ in millions)	2013			2012
Net sales	$	2,271.7		$	2,028.7
Less: surcharge revenue	432.4			459.1
Consolidated net sales excluding surcharge	$	1,839.3		$	1,569.6
Operating income	$	232.7		$	210.1
Pension earnings, interest & deferrals	31.9			15.3
Operating income excluding pension earnings, interest and deferrals	$	264.6		$	225.4
Operating margin excluding surcharge and pension earnings, interest and deferrals	14.4		%	14.4		%

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In addition to the impact of the surcharge mechanism and pension EID expense, fluctuations in raw material prices (combined with fluctuations in inventory levels) and the lag effect of the surcharge mechanism have impacted our operating income from year to year. We estimate that the effect of such combined fluctuations positively impacted our operating margin by approximately 10 basis points during fiscal year 2013 and negatively impacted our operating margin by approximately 30 basis points during fiscal year 2012.

Interest Expense

Fiscal year 2013 interest expense of $21.0 million decreased 11.8 percent from $23.8 million in fiscal year 2012. Fiscal year 2013 interest expense includes $6.8 million of capitalized interest compared to $1.2 million in fiscal year 2012 offset by the net impact of a higher debt level albeit at a lower average interest rate.  Interest on substantially all of our debt was at a fixed rate.

Other Income, Net

Other income for fiscal year 2013 was $5.1 million as compared with $2.3 million a year ago.  The increase principally reflected positive impacts in the valuation of assets used to fund certain non-qualified retirement plans and the gain recorded in connection with the dissolution of the strategic partnership with Sandvik Materials Technology.

Income Taxes

Our effective tax rate (income tax expense as a percent of income before taxes) for fiscal year 2013 was 32.4 percent as compared to 35.5 percent in fiscal year 2012.  The fiscal year 2013 tax rate was lower than the statutory rate of 35 percent, primarily due to the benefits associated with the domestic manufacturing deduction and the research and development credit.  The fiscal year 2012 tax rate was higher than the statutory rate of 35 percent, primarily due to non-deductible acquisition expenses associated with the Latrobe Acquisition.

See Note 16 to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” for a full reconciliation of the statutory federal tax rate to the effective tax rates.

Business Segment Results

Summary information about our operating results on a segment basis is set forth below. For more detailed segment information, see Note 18 to the consolidated financial statements included in Item 8. - “Financial Statements and Supplementary Data”.

The following tables include selected information by business segment:

							%
	Fiscal Year				Increase		Increase
(Pounds sold, in thousands)	2013		2012		(Decrease)		(Decrease)
Specialty Alloys Operations	205,246		207,560		(2,314	)	(1	)%
Latrobe	66,132		23,118		43,014		186
Performance Engineered Products	13,452		14,182		(730	)	(5	)
Intersegment	(11,106	)	(9,328	)	(1,778	)	19
Consolidated pounds sold	273,724		235,532		38,192		16	%

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							$			%
	Fiscal Year						Increase			Increase
($ in millions)	2013			2012			(Decrease)			(Decrease)
Specialty Alloys Operations	$	1,547.4		$	1,566.6		$	(19.2	)	(1	)%
Latrobe	491.2			200.8			290.4			145
Performance Engineered Products	378.8			365.7			13.1			4
Intersegment	(145.7		)	(104.4		)	(41.3		)	40
Total net sales	$	2,271.7		$	2,028.7		$	243.0		12	%

							$			%
	Fiscal Year						Increase			Increase
($ in millions)	2013			2012			(Decrease)			(Decrease)
Specialty Alloys Operations	$	1,170.6		$	1,126.8		$	43.8		4	%
Latrobe	433.9			175.9			258.0			147
Performance Engineered Products	374.3			360.8			13.5			4
Intersegment	(139.5		)	(93.9		)	(45.6		)	49
Total net sales excluding surcharge revenues	$	1,839.3		$	1,569.6		$	269.7		17	%

Specialty Alloys Operations Segment

Net sales in fiscal year 2013 for the Specialty Alloys Operations (‘SAO”) segment were $1,547.4 million, as compared with $1,566.6 million in fiscal year 2012. Excluding surcharge revenues, sales increased 4 percent from a year ago. The fiscal year 2013 net sales reflected 1 percent lower shipment volume as compared to fiscal year 2012. The results reflect growth attributable to our premium and ultra-premium products offset by the impact of lower order intake activity.

Operating income for the SAO segment in fiscal year 2013 was $218.9 million, or 14.1 percent of net sales (18.7 percent of net sales excluding surcharge revenues), compared to $229.4 million, or 14.6 percent of net sales (20.4 percent of net sales excluding surcharge revenues), for fiscal year 2012.  The decrease in operating income reflects the negative impacts of an unfavorable shift in product mix as well as increased manufacturing costs related to lower production levels.

Latrobe Segment

The Latrobe segment includes the operations of the manufacturing and distribution operations of the business beginning upon closing of the Latrobe Acquisition in February 2012.  Prior to the Latrobe Acquisition, the Latrobe segment included the result of our distribution business in Mexico.  Net sales for fiscal year 2013 for the Latrobe segment increased 145 percent to $491.2 million as compared with $200.8 million for fiscal year 2012. Excluding surcharge revenues, net sales increased 147 percent.  The sales in the Latrobe segment are concentrated in the aerospace and defense, industrial and consumer, and energy end-use markets as well as distribution sales.

Operating income for the Latrobe segment for fiscal year 2013 was $58.3 million, or 11.9 percent of net sales (13.4 percent of net sales excluding surcharge revenues), as compared with $11.0 million, or 5.5 percent of net sales (6.3 percent of net sales excluding surcharge revenues) for fiscal year 2012.

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Performance Engineered Products Segment

Net sales for fiscal year 2013 for the Performance Engineered Products (“PEP”) segment increased 4 percent to $378.8 million as compared with $365.7 million for fiscal year 2012. Excluding surcharge revenues, net sales increased 4 percent on 5 percent lower shipment volumes.  The results reflects continued softness in demand and net sales offset by the inclusion of the Specialty Steel Supply business acquired in connection with the Latrobe Acquisition for a full year.

Operating income for the PEP segment for fiscal year 2013 was $36.5 million, or 9.6 percent of net sales, as compared with $44.1 million, or 12.1 percent of net sales for fiscal year 2012. The results largely reflect the inclusion of Specialty Steel Supply (“SSS”) more than offset by some weakening of demand in the Titanium distributor channel including medical, continued softness in our European powder tool steel business and higher costs on the Amega West business associated with investments in future growth.

Results of Operations — Fiscal Year 2012 Compared to Fiscal Year 2011

For fiscal year 2012, we reported net income of $121.2 million, or $2.53 per diluted share, compared with income of $71.0 million, or $1.59 per diluted share, a year earlier. Our fiscal year 2012 results reflect a trend of improving revenues and profit throughout the fiscal year.

Net Sales

Net sales for fiscal year 2012 were $2,028.7 million, which was a 21 percent increase from fiscal year 2011. Excluding surcharge revenues, sales were 27 percent higher than fiscal year 2011 on 9 percent higher volume.

Geographically, sales outside the United States increased 30 percent from fiscal year 2011 to $664.5 million. International sales as a percentage of our total net sales, represented 33 percent and 31 percent for fiscal year 2012 and fiscal year 2011, respectively.

Sales by End-Use Markets

We sell to customers across diversified end-use markets.  The following table includes comparative information for our estimated net sales, which includes surcharge revenues, by principal end-use markets which we believe is helpful supplemental information in analyzing the performance of the business from period to period:

					$			%
	Fiscal Year				Increase			Increase
($ in millions)	2012		2011		(Decrease)			(Decrease)
Aerospace and defense	$	901.2	$	697.6	$	203.6		29	%
Industrial and consumer	478.1		486.6		(8.5		)	(2	)
Energy	287.0		194.6		92.4			47
Medical	141.1		122.1		19.0			16
Transportation	142.2		135.5		6.7			5
Distribution	79.1		38.7		40.4			104
Total net sales	$	2,028.7	$	1,675.1	$	353.6		21	%

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The following table includes comparative information for our estimated net sales by the same principal end-use markets, but excluding surcharge revenues:

	Fiscal Year				$		%
($ in millions)	2012		2011		Increase		Increase
Aerospace and defense	$	668.8	$	512.1	$	156.7	31	%
Industrial and consumer	346.7		324.9		21.8		7
Energy	246.1		156.0		90.1		58
Medical	125.7		104.4		21.3		20
Transportation	104.0		95.0		9.0		9
Distribution	78.3		38.7		39.6		102
Total net sales excluding surcharge revenues	$	1,569.6	$	1,231.1	$	338.5	27	%

Sales to the aerospace and defense market increased 29 percent from fiscal year 2011 to $901.2 million. Excluding surcharge revenue, such sales increased 31 percent on 43 percent higher shipment volume. The aerospace and defense results reflect strength in all areas as build rates remain high and mix shifts to larger planes and new platforms that favor higher use of our products as well as the addition of the Latrobe business during fiscal year 2012.

Industrial and consumer market sales decreased 2 percent from fiscal year 2011 to $478.1 million. Adjusted for surcharge revenue, such sales increased approximately 7 percent while volumes decreased 9 percent.  The results reflect the continued impact of mix management and pricing actions.  The percentage of volume in differentiated product applications with strategically important customers continues to increase as a result of these actions.

Sales to the energy market of $287.0 million reflected a 47 percent increase from fiscal year 2011. Excluding surcharge revenue, such sales increased 58 percent on 35 percent higher shipment volume. The sales results reflect the growth led by oil and gas which continues to benefit from the Amega West acquisition which is leading to share gains and international expansion.  Directional rig activity remains high with increased offshore drilling and movement of rigs from gas to oil.

Sales to the medical market increased 16 percent to $141.1 million from fiscal year 2011. Adjusted for surcharge revenue, such sales increased 20 percent, while volumes increased 7 percent. The overall volume growth is consistent with expected long term industry growth rates.  The higher growth is attributable to customer shifts to tighter specification medical grade alloys which creates increased demand for Carpenter premium products.

Transportation market sales increased 5 percent from the fiscal year 2011 to $142.2 million. Excluding surcharge revenue, such sales increased 9 percent on 5 percent lower shipment volume. Revenue growth far exceeded volume growth which reflects Carpenter’s focus on higher value material solutions to increase fuel efficiency and lightweight vehicles.

Sales to the distribution market increased 104 percent to $79.1 million from fiscal year 2011.  The increase is primarily attributable to the addition of Latrobe distribution business which globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries.

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Sales by Product Class

The following table includes comparative information for our net sales by major product class:

	Fiscal Year				$		%
($ in millions)	2012		2011		Increase		Increase
Special alloys	$	931.4	$	831.8	$	99.6	12	%
Stainless steels	637.3		564.9		72.4		13
Titanium products	156.6		135.3		21.3		16
Powder metals	64.3		61.4		2.9		5
Alloy and Tool steel	108.6		27.2		81.4		299
Distribution and other	130.5		54.5		76.0		139
Total net sales	$	2,028.7	$	1,675.1	$	353.6	21	%

The following table includes comparative information for our net sales by the same major product class, but excluding surcharge revenues:

	Fiscal Year				$		%
($ in millions)	2012		2011		Increase		Increase
Special alloys	$	626.2	$	548.0	$	78.2	14	%
Stainless steels	512.4		414.8		97.6		24
Titanium products	156.6		135.3		21.3		16
Powder metals	59.7		56.9		2.8		5
Alloy and Tool steel	85.7		21.6		64.1		297
Distribution and other	129.0		54.5		74.5		137
Total net sales excluding surcharge revenues	$	1,569.6	$	1,231.1	$	338.5	27	%

Sales of special alloys products increased 12 percent in fiscal year 2012 as compared with a year ago to $931.4 million. Excluding surcharge revenue, sales increased 14 percent on a 6 percent increase in shipment volume. The sales results principally reflect the increased demand in our higher value alloys used in the aerospace and energy markets as wells as the positive impacts of our mix management initiatives.

Sales of stainless steels increased 13 percent as compared with fiscal year 2011. Excluding surcharge revenues, such sales increased by 24 percent on a 1 percent lower shipment volume. The results reflect the benefits of strengthening product mix and pricing actions in the energy, medical, industrial, automotive and consumer markets.

Sales of titanium products increased 16 percent as compared with fiscal year 2011 on 5 percent higher shipment volume. The results reflect the benefits of shifts in product mix to higher value materials used in medical applications as well as the impacts of strengthening demand for aerospace fasteners.

Sales of powder metals increased 5 percent in fiscal year 2012 on 2 percent lower shipment volume. The results reflect unfavorable performance in Europe, offset by pricing and mix management efforts.

Sales of alloy and tool steel increased 299 percent in fiscal year 2012 on 221 percent higher shipment volume. The results reflect the addition of the Latrobe business.

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Gross Profit

Gross profit in fiscal year 2012 increased to $391.0 million, or 19.3 percent of net sales (24.9 percent of net sales excluding surcharges), from $249.0 million, or 14.9 percent of net sales (20.2 percent of net sales excluding surcharges), for fiscal year 2011. The results primarily reflect the higher volumes in fiscal year 2012, an improved product mix, price increases and better operating performance.  Fiscal year 2012 results include costs associated with $11.6 million of acquisition inventory fair value cost adjustments in connection with the Latrobe Acquisition.

Our surcharge mechanism is structured to recover increases in raw material costs, although generally with a lag effect. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharges on gross margin for fiscal years 2012 and 2011. See the section “Non-GAAP Financial Measures” below for further discussion of these financial metrics.

	Fiscal Year
($ in millions)	2012			2011
Net sales	$	2,028.7		$	1,675.1
Less: surcharge revenue	459.1			444.0
Net sales excluding surcharges	$	1,569.6		$	1,231.1
Gross profit	$	391.0		$	249.0
Gross margin	19.3		%	14.9		%
Gross margin excluding dilutive effect of surcharges	24.9		%	20.2		%

Selling, General and Administrative Expenses

Selling, general and administrative expenses in fiscal year 2012 were $169.2 million, or 8.3 percent of net sales (10.7 percent of net sales excluding surcharges), compared to $149.5 million, or 8.9 percent of net sales (12.1 percent of net sales excluding surcharges), in fiscal year 2011.  The increase in fiscal year 2012 is due principally to the additional overhead costs related to the Latrobe and Amega businesses and the impact of general inflationary increases in costs.

Acquisition-Related Costs

In connection with the Latrobe Acquisition, we incurred approximately $11.7 million of acquisition-related costs during fiscal year 2012. These costs represent direct incremental legal, accounting and investment banking fees incurred in connection with the Latrobe Acquisition as well as approximately $5.2 million of liability for costs associated with the sale of certain Latrobe assets necessary to obtain FTC approval for the transaction.

During fiscal year 2011, we incurred $3.1 million of acquisition related costs associated with the Latrobe and Amega West acquisitions.  These costs consist primarily of fees paid to financial, legal and other professional advisors in connection with the acquisition activities.

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Operating Income

Our operating income in fiscal year 2012 increased to $210.1 million as compared with $96.4 million in fiscal year 2011.  Operating income has been significantly impacted by our pension earnings, interest and deferrals (“pension EID”) portion of our net pension expense, which may be volatile based on conditions in the financial markets. The following presents our operating income and operating margin, in each case excluding the impact of surcharges on net sales and excluding the impacts of pension EID expense and acquisition related costs from operating income. We present and discuss these financial measures because management believes removing the impact of volatile and restructuring charges provides a more consistent and meaningful basis for comparing results of operations from period to period.  See the section “Non-GAAP Financial Measures” below for further discussion of these financial measures.

	Fiscal Year
($ in millions)	2012			2011
Net sales	$	2,028.7		$	1,675.1
Less: surcharge revenue	459.1			444.0
Net sales excluding surcharges	$	1,569.6		$	1,231.1
Operating income	$	210.1		$	96.4
Add back: Pension EID expense	15.3			35.2
Operating income excluding pension EID expense	$	225.4		$	131.6
Acquisition related costs (from transaction)	11.7			3.1
Operating income excluding pension EID expense and acquisition related costs (from transaction)	$	237.1		$	134.7
Operating margin excluding surcharges and pension EID expense	14.4		%	10.7		%
Operating margin excluding surcharges and pension EID expense and acquisition related costs (from transaction)	15.1		%	10.9		%

In addition to the impact of the surcharge mechanism and pension EID expense, fluctuations in raw material prices (combined with fluctuations in inventory levels) and the lag effect of the surcharge mechanism have impacted our operating income from year to year. We estimate that the effect of such combined fluctuations negatively impacted our operating margin by approximately 30 basis points during fiscal year 2012 and negatively impacted our operating margin by approximately 90 basis points during fiscal year 2011.

Interest Expense

Fiscal year 2012 interest expense of $23.8 million increased 39 percent from $17.1 million in fiscal year 2011. The increase in interest expense, excluding the gains on interest swaps, reflects the net impact of a higher debt level albeit at a lower average interest rate.  Interest on substantially all of our debt was at a fixed rate.  We have used interest rate swaps to achieve a level of floating rate debt to fixed rate debt where appropriate.  Fiscal year 2012 interest expense includes net gains from interest rate swaps of $1.4 million as compared with net gains from the interest rate swaps of $2.8 million in fiscal year 2011.

Other Income, Net

Other income for fiscal year 2012 was $2.3 million as compared with $8.5 million a year ago.  The decrease principally reflected less receipts from the “Continued Dumping and Subsidy Offset Act of 2000”,  unfavorable market return on company owned life insurance and lower equity in earnings of our joint ventures.

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Income Taxes

Our effective tax rate (income tax expense as a percent of income before taxes) for fiscal year 2012 was 35.5 percent as compared to 18.3 percent in fiscal year 2011.  The fiscal year 2012 tax rate was higher than the statutory rate of 35 percent, primarily due to non-deductible acquisition expenses associated with the Latrobe Acquisition.  The fiscal year 2011 tax rate was lower than the statutory rate of 35 percent, primarily due to the benefits associated with the domestic manufacturing deduction and the research and development credit.

See Note 16 to the consolidated financial statements in Item 8. “Financial Statements and Supplementary Data” for a full reconciliation of the statutory federal tax rate to the effective tax rates.

Business Segment Results

Summary information about our operating results on a segment basis is set forth below. For more detailed segment information, see Note 18 to the consolidated financial statements included in Item 8. - “Financial Statements and Supplementary Data”.

The following tables include selected information by business segment:

					$		%
	Fiscal Year				Increase		Increase
(Pounds sold, in thousands)	2012		2011		(Decrease)		(Decrease)
Specialty Alloys Operations	207,560		207,246		314		—	%
Latrobe	23,118		—		23,118		N/A
Performance Engineered Products	14,182		14,134		48		—
Intersegment	(9,328	)	(4,546	)	(4,782	)	105
Consolidated pounds sold	235,532		216,834		18,698		9	%

							$			%
	Fiscal Year						Increase			Increase
($ in millions)	2012			2011			(Decrease)			(Decrease)
Specialty Alloys Operations	$	1,566.6		$	1,431.3		$	135.3		9	%
Latrobe	200.8			38.7			162.1			419
Performance Engineered Products	365.7			248.3			117.4			47
Intersegment	(104.4		)	(43.2		)	(61.2		)	142
Total net sales	$	2,028.7		$	1,675.1		$	353.6		21	%

							$			%
	Fiscal Year						Increase			Increase
($ in millions)	2012			2011			(Decrease)			(Decrease)
Specialty Alloys Operations	$	1,126.8		$	990.4		$	136.4		14	%
Latrobe	175.9			38.7			137.2			355
Performance Engineered Products	360.8			243.2			117.6			48
Intersegment	(93.9		)	(41.2		)	(52.7		)	128
Total net sales excluding surcharge revenues	$	1,569.6		$	1,231.1		$	338.5		27	%

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Specialty Alloys Operations Segment

Net sales in fiscal year 2012 for the Specialty Alloys Operations (“SAO”) segment were $1,566.6 million, as compared with $1,431.3 million in fiscal year 2011. Excluding surcharge revenues, sales increased 14 percent from a year ago. The fiscal year 2012 net sales reflected flat pounds shipped as compared to fiscal year 2011. The results reflect the benefits of shift in our product mix to more premium products through our limited capacity as well as the positive impacts of our pricing actions and mix management efforts.

Operating income for the SAO segment in fiscal year 2012 was $229.4 million, or 14.6 percent of net sales (20.4 percent of net sales excluding surcharge revenues), compared to $139.3 million, or 9.7 percent of net sales (14.1 percent of net sales excluding surcharge revenues), for fiscal year 2011.  The increase in operating income reflects the impacts our pricing actions and a strong product mix as well as the benefits of our operating cost performance improvements.

Performance Engineered Products Segment

Net sales for fiscal year 2012 for the Performance Engineered Products (“PEP”) segment increased 47 percent to $365.7 million as compared with $248.3 million for fiscal year 2011. Excluding surcharge revenues, net sales increased 48 percent on flat shipment volumes.  The increase in net sales is due to the contribution of the Amega West business acquired December 31, 2010 as well as strong demand in high value materials used in aerospace and medical markets in our titanium business.

Operating income for the PEP segment for fiscal year 2012 was $44.1 million, or 12.1 percent of net sales, as compared with $35.0 million, or 14.1 percent of net sales for fiscal year 2011. The operating income performance compared to last year reflects unfavorable manufacturing performance, weakness in powder sales in Europe and the impacts of investments in infrastructure necessary to support growth initiatives.

Latrobe Segment

The Latrobe segment includes the operations of the manufacturing and distribution operations of the business beginning upon closing of the Latrobe Acquisition in February 2012.  Prior to the Latrobe Acquisition, the Latrobe segment included the result of our distribution business in Mexico.  Net sales for fiscal year 2012 for the Latrobe segment increased 419 percent to $200.8 million as compared with $38.7 million for fiscal year 2011. Excluding surcharge revenues, net sales increased 355 percent.  The sales in the Latrobe segment are concentrated in the aerospace and defense, industrial and consumer, and energy end-use markets as well as distribution sales.

Operating income for the Latrobe segment for fiscal year 2012 was $11.0 million, or 5.5 percent of net sales (6.3 percent of net sales excluding surcharge revenues), as compared with $2.2 million, or 5.7 percent of net sales (5.7 percent of net sales excluding surcharge revenues) for fiscal year 2011.  The operating income for fiscal year 2012 includes approximately $11.6 million of inventory fair value adjustments expensed in connection with acquisition accounting.  Excluding these adjustments, segment operating income would have been $22.6 million in fiscal year 2012 or 11.3 percent of net sales (12.8 percent of net sales excluding surcharge revenue).

Liquidity and Capital Resources

During the fiscal year 2013 our cash from operations was $215.2 million as compared with $160.3 million in fiscal year 2012.  Our free cash flow, which we define under “Non-GAAP Financial Measures” below, was negative $159.3 million as compared to negative $58.8 million for the same period a year ago. The decrease in free cash flow in fiscal year 2013 as compared with the prior year principally reflects the strong net income more than offset by higher capital spending, largely related to the Athens, Alabama facility construction, pension contributions and increased working capital levels.

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Purchases of property, plant and equipment and software were $336.9 million for fiscal year 2013 as compared with $171.9 million for the prior year.  The increase in fiscal year 2013 purchases of property, plant and equipment principally reflects the spending associated with our premium products greenfield expansion project in Athens, Alabama.

Dividends for the fiscal year 2013 were $38.3 million, as compared with $33.7 million in the prior year, and were paid at the same quarterly rate of $0.18 per share of common stock in both periods.

For fiscal years 2013, 2012 and 2011, interest cost totaled $27.8 million, $25.0 million, and $17.6 million, respectively, of which $6.8 million, $1.2 million, and $0.5 million, respectively, was capitalized as part of the cost of plant, equipment and software.

During the fiscal year 2013, we made $145 million in cash contributions to our pension plans, including $75 million of discretionary contributions made in the third quarter and expect to contribute another $6 million of cash contributions to our pension plans during fiscal year 2014. Over the next five years, current estimates indicate that we will contribute about $167 million to our pension plans, subject to market returns and interest rate assumptions. We continue to look at options to proactively deal with the pension plan funding impacts as well as the earnings impacts associated with our pension plans.

In February 2013, we issued $300 million of 4.45% senior notes due 2023.  We used the net proceeds from the issuance of the Notes to repay in full $100 million in aggregate principal amount of our senior unsecured notes due May 2013.  We intend to use the remaining net proceeds from the issuance of the Notes for general corporate purposes, which includes discretionary pension contributions, additions to working capital, capital expenditures, the financing of acquisitions, joint ventures and other business combination opportunities or stock repurchases.

We have demonstrated the ability to generate cash to meet our needs through cash flow from operations, management of working capital and the availability of outside sources of financing to supplement internally generated funds.  We generally target minimum liquidity, consisting of cash and cash equivalents added to available borrowing capacity under our credit agreement, of $150 million. Our revolving credit facility (the “Credit Agreement”) contains a revolving credit commitment of $500 million and expires in June 2018.  As of June 30, 2013, we had $7.2 million of issued letters of credit under the Credit Agreement.  The balance of the Credit Agreement ($492.8 million) remains available to us. The available borrowings together with cash on hand of $257.5 million results in total liquidity of approximately $750 million as of June 30, 2013. We evaluate liquidity needs for alternative uses including funding external growth opportunities as well as funding consistent dividend payments to stockholders. Over the last three fiscal years, we declared and paid quarterly cash dividends of $0.18 per share. We have historically authorized share repurchase programs. There are no current authorized share repurchase programs in order to preserve flexibility for our current priority to invest in attractive growth investments.

As of June 30, 2013, we had cash and cash equivalents of approximately $81 million held at various foreign subsidiaries. Our global cash deployment considers, among other things, the geographic location of our subsidiaries’ cash balances, the locations of our anticipated liquidity needs, and the cost to access international cash balances, as necessary. The repatriation of cash from certain foreign subsidiaries could have adverse tax consequences as we may be required to pay and record U.S. income taxes and foreign withholding taxes in various tax jurisdictions on these funds to the extent they were previously considered permanently reinvested. From time to time, we evaluate opportunities to repatriate cash from foreign jurisdictions. Our current plans consider repatriating cash only at levels that would result in minimal or no net adverse tax consequences in the near term.

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We are subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio (3.5 to 1.0 as of June 30, 2013). The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, defined as total long-term debt added to outstanding capital lease obligations and outstanding letters of credit, to consolidated capitalization, defined as consolidated indebtedness added to total equity. As of June 30, 2013, the Company was in compliance with all of the covenants of the Credit Agreement.

The following table shows our actual ratio performance with respect to the financial covenants, as of June 30, 2013:

	Covenant Requirement	Actual Ratio
Consolidated interest coverage	3.5 to 1.00 (minimum)	19.94 to 1.00
Consolidated debt to capital	55% (maximum)	32%

We continue to believe that we will maintain compliance with the financial and restrictive covenants in future periods. To the extent that we do not comply with the covenants under the Credit Agreement, this could reduce our liquidity and flexibility due to potential restrictions on borrowings available to us unless we are able to obtain waivers or modification of the covenants.

Non-GAAP Financial Measures

The following provides additional information regarding certain non-GAAP financial measures. Our definitions and calculations of these items may not necessarily be the same as those used by other companies.

Net Pension Expense Per Diluted Share

	Fiscal Year
($ in millions, except per share data)	2013			2012			2011
Net periodic benefit costs
Pension plans	$	59.5		$	38.5		$	54.0
Other postretirement benefit plans	9.3			3.6			6.8
	68.8			42.1			60.8
Income tax benefit	(24.1		)	(15.9		)	(23.2		)
Net pension expense	$	44.7		$	26.2		$	37.6
Weighted average diluted common shares	53.4			47.8			44.7
Net pension expense per diluted share	$	0.84		$	0.55		$	0.84

Management believes that net pension expense per diluted share is helpful in analyzing the operational performance of the Company from period to period, as net pension expense has been volatile due to changes in the financial markets, which may result in significant fluctuations in operating results from year to year.

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Net Sales and Gross Margin Excluding Surcharges

This report includes discussions of net sales and gross margin as adjusted to exclude the impact of raw material surcharges, which represent financial measures that have not been determined in accordance with U.S. GAAP. We present and discuss these financial measures because management believes removing the impact of raw material surcharges from net sales and gross margin provides a more consistent basis for comparing results of operations from period to period for the reasons discussed earlier in this report. See our earlier discussion of gross profit for a reconciliation of net sales and gross margin excluding surcharges to net sales as determined in accordance with U.S. GAAP.

Operating Income and Operating Margin Excluding Surcharges and Pension EID Expense

This report includes discussions of operating income and operating margin as adjusted to exclude the impact of raw material surcharges, pension EID expense and acquisition related costs, which represent financial measures that have not been determined in accordance with U.S. GAAP. We present and discuss these financial measures because management believes removing the impact of raw material surcharges from net sales provides a more consistent and meaningful basis for comparing results of operations from period to period for the reasons discussed earlier in this report. In addition, management believes that excluding pension EID expense and acquisition costs from operating income and operating margin is helpful in analyzing our operating performance particularly as pension EID expense may be volatile due to changes in the financial markets. See our earlier discussion of operating income for a reconciliation of operating income and operating margin excluding pension EID expense and acquisition costs to operating income and operating margin determined in accordance with U.S. GAAP.

Free Cash Flow

The following provides a reconciliation of free cash flow, as used in this annual report, to its most directly comparable U.S. GAAP financial measures.

	Fiscal Year
($ in millions)	2013			2012			2011
Net cash provided from operating activities	$	215.2		$	160.3		$	64.2
Purchases of property, equipment and software	(336.9		)	(171.9		)	(79.6		)
Dividends paid	(38.3		)	(33.7		)	(32.1		)
Proceeds from disposals of plant and equipment	1.2			1.2			1.1
Proceeds from sale of equity method investment	7.9			—			9.1
Capital contribution to equity method investment	—			(1.8		)	(6.2		)
Purchase of subsidiary shares from noncontrolling interest	(8.4		)	—			—
Acquisition of businesses, net of cash acquired	—			(12.9		)	(45.4		)
Free cash flow	$	(159.3	)	$	(58.8	)	$	(88.9	)

Management believes that the presentation of free cash flow provides useful information to investors regarding our financial condition because it is a measure of cash generated which management evaluates for alternative uses.  It is management’s current intention to use excess cash to fund investments in capital equipment, acquisition opportunities and consistent dividend payments. Free cash flow is not a U.S. GAAP financial measure and should not be considered in isolation of, or as a substitute for, cash flows calculated in accordance with U.S. GAAP.

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Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

The following provides a reconciliation of adjusted EBITDA, to its most directly comparable U.S. GAAP financial measures.

ADJUSTED EARNINGS BEFORE INTEREST, TAXES,	Fiscal Year
DEPRECIATION AND AMORTIZATION (ADJUSTED EBITDA)	2013			2012
Net income	$	146.5		$	121.6
Interest expense	21.0			23.8
Income tax expense	70.3			67.0
Depreciation and amortization	104.1			83.8
Other income, net	(5.1		)	(2.3		)
EBITDA	$	336.8		$	293.9
Net pension expense	68.8			42.1
Adjusted EBITDA	$	405.6		$	336.0

Management believes that adjusted EBITDA is helpful in analyzing the operating performance.  Our definitions and calculations of these items may not necessarily be the same as those used by other companies.  EBITDA is not a measure of liquidity or profitability and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure determined in accordance with GAAP.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  On an on-going basis, we evaluate our estimates, including those related to bad debts, customer claims, inventories, goodwill, intangible assets, income taxes, pensions and other postretirement benefits, contingencies and litigation, environmental liabilities, and derivative instruments and hedging activities.

We believe the following are the critical accounting policies and areas affected by significant judgments and estimates impacting the preparation of our consolidated financial statements.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the failure of our customers to make required payments.  We perform ongoing credit evaluations of our customers and monitor their payment patterns.  Should the financial condition of our customers deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

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Inventories

Inventories are stated at the lower of cost or market. The cost of inventories is primarily determined using the LIFO method. Costs include direct materials, direct labor and applicable manufacturing overhead, and other direct costs. Under the LIFO inventory valuation method, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period even though these materials and other costs may have been incurred at significantly different values due to the length of time of our production cycle. The prices for many of the raw materials we use have been volatile. Since we value most of our inventory utilizing the LIFO inventory costing methodology, rapid changes in raw material costs have an impact on our operating results. In a period of rising prices, cost of sales expense recognized under LIFO is generally higher than the cash costs incurred to acquire the inventory sold. Conversely, in a period of declining raw material prices, cost of sales recognized under LIFO is generally lower than cash costs incurred to acquire the inventory sold.

Since the LIFO inventory valuation methodology is designed for annual determination, interim estimates of the annual LIFO valuation are required. We recognize the effects of the LIFO inventory valuation method on an interim basis by estimating the expected annual LIFO cost based on cost changes to date.  These projections of annual LIFO inventory valuation reserve changes are updated quarterly and are evaluated based upon material, labor and overhead costs.

Pension and Other Postretirement Benefits

The amount of the pension expense, which is determined annually, is based upon the value of the assets in the pension trusts at the beginning of the fiscal year as well as actuarial assumptions, such as the discount rate and the expected long-term rate of return on plan assets.  The assumed long-term rate of return on pension plan assets is reviewed at each year end based on the plan’s investment policies, an analysis of the historical returns of the capital markets, and current interest rates.  The current allocation policy for pension plan assets is to have approximately 60 percent U.S. and international equities and 40 percent fixed income.  The discount rate plan is determined by reference to the Bond:Link interest rate model based upon a portfolio of highly rated U.S. corporate bonds with individual bonds that are theoretically purchased to settle the plan’s anticipated cash outflows.  The fluctuations in stock and bond markets could cause actual investment results to be significantly different from those assumed, and therefore, significantly impact the valuation of the assets in our pension trusts.  Changes in actuarial assumptions could significantly impact the accounting for the pension assets and liabilities.  If the assumed long-term rate of return on plan assets was changed by 0.25 percent, the net pension expense would change by approximately $2.6 million.  If the discount rate was changed by 0.25 percent, the net pension expense would change by approximately $2.4 million.

Long-Lived Assets

Long-lived assets are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable through estimated future undiscounted cash flows.  The amount of the impairment loss is the excess of the carrying amount of the impaired assets over the fair value of the assets based upon estimated future undiscounted cash flows.  We evaluate long-lived assets for impairment by individual business unit.  Changes in estimated cash flows could have a significant impact on whether or not an asset is impaired and the amount of the impairment.

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Goodwill

Goodwill is not amortized, but instead is tested for impairment, at least annually.  Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill.  The fair value is estimated based principally upon discounted cash flow analysis.  If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by comparing the carrying value of the reporting unit’s goodwill to its implied fair value. We tested our goodwill for impairment as of February 28, 2013 for the Latrobe reporting units and June 30, 2013 for all other reporting units and determined that goodwill had not been impaired. If global economic conditions worsen or are prolonged, changes in anticipated discounted cash flows and assumptions used in the analysis could have significant impact on whether or not goodwill is impaired and the amount of impairment.

Environmental Expenditures

Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with Carpenter’s capitalization policy for property, plant and equipment.  Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed.  Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated.  Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable.  Estimated liabilities are not discounted to present value, but estimated assets are measured on a discounted basis.

Income Taxes

Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes, or differences between the fair value of assets acquired in business combinations accounted for as purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax benefits (assets) or costs (liabilities) to be recognized when those temporary differences reverse. We evaluate on a quarterly basis whether, based on all available evidence, we believe that our deferred income tax assets will be realizable. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax assets will not be realized. The evaluation includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. Future realization of deferred income tax assets ultimately depends upon the existence of sufficient taxable income within the carryback, carryforward period available under tax law.

Management determines whether a tax position should be recognized in the financial statements by evaluating whether it is more-likely-than-not that the tax position will be sustained upon examination by the tax authorities based upon the technical merits of the position. For those tax positions which should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Interest and penalties on estimated liabilities for uncertain tax positions are recorded as components of the provision for income taxes.

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Derivative Financial Instruments

Our current risk management strategies include the use of derivative instruments to reduce certain risks.  The critical strategies include:  (1) the use of commodity forward contracts to fix the price of a portion of anticipated future purchases of certain raw materials and energy to offset the effects of changes in the costs of those commodities; and (2) the use of foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates. The commodity forwards and foreign currency forwards have been designated as cash flow hedges and unrealized net gains and losses are recorded in the accumulated other comprehensive loss component of stockholders’ equity.  The unrealized gains or losses are reclassified to the income statement when the hedged transaction affects earnings or if the anticipated transactions are no longer expected to occur. We have used interest rate swaps to maintain a certain level of floating rate debt relative to fixed rate debt.  Interest rate swaps have been designated as fair value hedges. Accordingly, the mark-to-market values of both the interest rate swap and the underlying debt obligations were recorded as equal and offsetting gains and losses in the interest expense component of the consolidated statement of income. We have also used forward interest rate swaps to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. We evaluate all derivative instruments each quarter to determine that they are highly effective.  Any ineffectiveness is recorded in our consolidated statement of income.  We also use foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currency against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other income and expense.

New Accounting Pronouncements

For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 19, Recent Accounting Pronouncements, to Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data”.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during the periods presented.

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Contractual Obligations

At June 30, 2013, we had the following contractual obligations and other commercial commitments and contingencies:

			Fiscal Year										There-
($ in millions)	Total		2014		2015		2016		2017		2018		after
Long-term debt (1)	$	605.0	$	—	$	—	$	—	$	—	$	55.0	$	550.0
Estimated interest payments(2)	251.8		30.2		30.2		30.2		30.2		29.5		101.5
Operating leases	34.3		11.0		7.8		4.2		2.3		1.8		7.2
Pension plan contributions(3)	250.8		6.3		13.9		59.8		42.7		43.9		84.2
Accrued post-retirement benefits(4)	175.9		15.5		16.1		16.7		17.2		17.7		92.7
Purchase obligations (5)	408.6		408.6		—		—		—		—		—
Pension benefits (6)	33.6		3.3		3.5		3.5		3.2		3.1		17.0
Total	$	1,760.0	$	474.9	$	71.5	$	114.4	$	95.6	$	151.0	$	852.6

(1)Refer to Note 8 of Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data”. In addition, we had $7.2 million of outstanding letters of credit as of June 30, 2013.

(2)Estimated interest payments for long-term debt were calculated based on the applicable rates and payment dates. No interest payments are included for any potential borrowings under our revolving credit facility.

(3)Pension plan contributions represent required minimum contributions for the plan year beginning January 1, 2013 and quarterly installment contributions for plan year beginning January 1, 2014. These amounts were calculated based on actuarial valuations as prescribed by pension funding regulations in the United States. Estimated fiscal year contributions have been included through fiscal year 2022. The actual required pension contributions in future periods are dependent on actuarial valuations to be prepared in future periods.

(4)Postretirement benefits for certain plans are paid from corporate assets. There is no guarantee that future payments will be paid from corporate assets rather than plan assets.

(5)We have entered into purchase commitments primarily for various key raw materials and equipment purchases at market related prices, all made in the normal course of business. The commitments include both fixed and variable price provisions.  We used June 30, 2013 raw material prices for commitments with variable pricing.

(6)Pension benefits for certain plans are paid from corporate assets. There is no guarantee that future payments will be paid from corporate assets rather than plan assets.

As of June 30, 2013, the noncurrent portion of our income tax liabilities, including accrued interest and penalties related to unrecognized tax benefits was approximately $2.0 million. The settlement period for these income tax liabilities cannot be determined and were therefore excluded from the table above.

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Market Sensitive Instruments and Risk Management

See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for discussion of market sensitive instruments and associated market risk for Carpenter.

Contingencies

Environmental

We are subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.  Although compliance with these laws and regulations may affect the costs of our operations, compliance costs to date have not been material.  We have environmental remediation liabilities at some of our owned operating facilities and have been designated as a potentially responsible party (“PRP”) with respect to certain third-party Superfund waste disposal sites and other third party owned sites.  Additionally, we have been notified that we may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against us. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites has been determined.  The liability for future environmental remediation costs is evaluated on a quarterly basis.  We accrue amounts for environmental remediation costs that represent our best estimate of the probable and reasonably estimable costs related to environmental remediation. During fiscal years 2013 and 2012, we increased the liability for a company-owned former operating site by $0.3 million and $0.7 million, respectively.   The liabilities recorded for environmental remediation costs at Superfund sites, at other third party-owned sites and at company-owned current or former operating facilities remaining at June 30, 2013 and 2012, were $14.8 million and$14.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s.  Based upon information currently available, such future costs are not expected to have a material effect on our financial position, results of operations or cash flows over the long-term.  However, such costs could be material to our financial position, results of operations or cash flows in a particular future quarter or year.

Export Regulations Violations

In fiscal year 2008, we became aware of potential violations of federal export regulations at a business unit that had been divested.  Upon investigation, we discovered that approximately 40 foreign nationals employed over time at the business unit’s facility may have been exposed to protected technical data related to the production of various products for military applications.  An export license from the Department of State and the Department of Commerce is required prior to the exporting of technical data for military applications. We have applied for and received similar applications for other business units, but did not have such a license for the divested business unit. Violations of federal export regulations can be subject to civil penalties depending upon the severity of the violation. We filed voluntary disclosures with the Department of State and the Department of Commerce before the divestiture of the business unit on March 31, 2008.  The Department of State responded to the voluntary disclosure without assessing civil penalties.  The Department of Commerce has not yet responded to the voluntary disclosure.  The applicable statute of limitations for this matter has expired.  As a result, we have not recorded any liability for potential penalties as of June 30, 2013 and do not expect to incur any liabilities related to this matter.

46

Other

We are defending various routine claims and legal actions that are incidental to our business, and we are subject to contingencies that are common to our operations, including those pertaining to product claims, commercial disputes, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims, patent infringement and tax issues.  Like many other manufacturing companies in recent years, from time to time, we have been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace. We provide for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable.  The effect of the outcome of these matters on our future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, we believe that the total liability from these matters will not have a material effect on our financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to our financial position, results of operations or cash flows in a particular future quarter or year.

Forward Looking Statements

This Annual Report on Form 10-K contains various “Forward-looking Statements” pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  These statements, which represent our expectations or beliefs concerning various future events, include statements concerning future revenues, earnings and liquidity associated with continued growth in various market segments and cost reductions expected from various initiatives.  These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied.  The most significant of these uncertainties are described in this Form 10-K and they include but are not limited to: (1) expectations with respect to the synergies, costs and other anticipated financial impacts of the Latrobe Acquisition could differ from actual synergies realized and financial impacts experienced as a result of the transaction; (2) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace and defense, industrial and consumer, medical, transportation and energy, or other influences on Carpenter’s business such as new competitors, the consolidation of competitors, customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; (3) the ability of Carpenter to achieve cost savings, productivity improvements or process changes; (4) the ability to recoup increases in the cost of energy, raw materials, freight or other factors; (5) domestic and foreign excess manufacturing capacity for certain metals; (6) fluctuations in currency exchange rates; (7) the degree of success of government trade actions; (8) the valuation of the assets and liabilities in Carpenter’s pension trusts and the accounting for pension plans; (9) possible labor disputes or work stoppages; (10) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; (11) the ability to successfully acquire and integrate acquisitions, including the Latrobe Acquisition; (12) the availability of credit facilities to Carpenter, its customers or other members of the supply chain; (13) the ability to obtain energy or raw materials, especially from suppliers located in countries that may be subject to unstable political or economic conditions; (14) Carpenter’s manufacturing processes are dependent upon highly specialized equipment located primarily in one geographic area for which there may be limited alternatives if there are significant equipment failures or catastrophic event; and (15) Carpenter’s future success depends on the continued service and availability of key personnel, including members of our executive management team, management, metallurgists and other skilled personnel and the loss of these key personnel could affect our ability to perform until suitable replacements are found. Any of these factors could have an adverse and/or fluctuating effect on Carpenter’s results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.

47

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

We use derivative financial instruments to reduce certain types of financial risk.  Firm price sales arrangements involve a risk of profit margin fluctuations particularly as raw material prices have been volatile.  Firm price sales arrangements generally include certain annual purchasing commitments and consumption schedules agreed to by the customers at selling prices based on raw material prices at the time the arrangements are established.  As discussed in Note 15 to the consolidated financial statements included in Part I, Item 1, “Financial Statements”, in order to reduce the risk of fluctuating profit margins on these sales, we enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the products sold under the firm price sales arrangements. If a customer fails to perform its obligations under the firm price sales arrangements, we may realize losses as a result of the related commodity forward contracts. As of June 30, 2013, we had approximately $68.6 million of deferred losses related to commodity forward contracts to purchase certain raw materials. A large portion of this balance is related to commodity forward contracts to support firm price sales arrangements associated with many customers. However, approximately 73 percent of these deferred losses relate to commodity forward contracts entered into to support sales under firm price sales arrangements with one customer in addition to the credit already extended to this customer in connection with outstanding trade receivables.  Our customers have historically performed under these arrangements and we believe that they will honor such obligations in the future.

We are actively involved in managing risks associated with energy resources. Risk containment strategies include interaction with primary and secondary energy suppliers as well as obtaining adequate insurance coverage to compensate us for potential business interruption related to lack of availability of energy resources. In addition, we have used forwards and options to fix the price of a portion of our anticipated future purchases of certain energy requirements to protect against the impact of significant increases in energy costs. We also use surcharge mechanisms to offset a portion of these charges where appropriate.

Fluctuations in foreign currency exchange rates could subject us to risk of losses on anticipated future cash flows from our international operations or customers.  Foreign currency forward contracts are used to hedge certain foreign exchange risk.

We have used interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate.  Historically, we have entered into forward swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued.

All hedging strategies are reviewed and approved by senior financial management before being implemented.  Senior financial management has established policies regarding the use of derivative instruments that prohibit the use of speculative or leveraged derivatives.  Market valuations are performed at least quarterly to monitor the effectiveness of our risk management programs.

Our pension plan assets are invested in different asset classes including large-, mid- and small-cap growth and value funds, index and international equity funds, short-term and medium-term duration fixed-income funds and high yield funds. The current allocation policy for pension plan assets is to invest approximately 60 percent of plan assets in U.S. and international equities and 40 percent of plan assets in fixed income securities.

The status of our financial instruments as of June 30, 2013 is provided in Note 15 to the consolidated financial statements included in Item 8.,”Financial Statements and Supplementary Data”.  Assuming on June 30, 2013, (a) an instantaneous 10 percent decrease in the price of raw materials and energy for which we have commodity forward contracts, and (b) a 10 percent strengthening of the U.S. dollar versus foreign currencies for which foreign exchange forward contracts existed, our results of operations would not have been materially affected in either scenario.

48

Item 8.  Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Supplementary Data

	Page
Consolidated Financial Statements:
Management’s Responsibilities for Financial Reporting	50
Management’s Report on Internal Control Over Financial Reporting	50
Report of Independent Registered Public Accounting Firm	51
Consolidated Statements of Income for the Years Ended June 30, 2013, 2012 and 2011	52
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended June 30, 2013, 2012 and 2011	53
Consolidated Statements of Cash Flows for the Years Ended June 30, 2013, 2012 and 2011	54
Consolidated Balance Sheets as of June 30, 2013 and 2012	55
Consolidated Statements of Changes in Equity for the Years Ended June 30, 2013, 2012 and 2011	56 — 57
Notes to Consolidated Financial Statements	58 — 98
Supplementary Data:
Quarterly Financial Data (Unaudited)	99 — 100
Schedule II	112

49

Management’s Responsibilities for Financial Reporting

Management prepared the financial statements included in this Annual Report on Form 10-K and is responsible for their integrity and objectivity.  The statements were prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts based on management’s best judgments and estimates.  Financial information elsewhere in this Annual Report is consistent with that in the financial statements.

Carpenter maintains a system of internal controls, supported by a code of conduct, designed to provide reasonable assurance that assets are safeguarded and transactions are properly executed and recorded for the preparation of financial information.  We believe Carpenter’s system of internal controls provides this appropriate balance.  The system of internal controls and compliance is continually monitored by Carpenter’s internal audit staff.

The Audit/Finance Committee of the Board of Directors, composed of independent directors, meets regularly with management, Carpenter’s internal auditors and our independent registered public accounting firm to consider audit results and to discuss significant internal control, auditing and financial reporting matters.  Both the independent registered public accounting firm and internal auditors have unrestricted access to the Audit/Finance Committee.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Carpenter’s internal control over financial reporting as of June 30, 2013. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.  Based on its assessment, management concluded that, as of June 30, 2013, Carpenter’s internal control over financial reporting is effective based on those criteria.

The effectiveness of Carpenter’s internal control over financial reporting as of June 30, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing herein.

/s/ William A. Wulfsohn

William A. Wulfsohn

President and Chief Executive Officer

/s/ Tony R. Thene

Tony R. Thene

Senior Vice President and Chief Financial Officer

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Shareholders of Carpenter Technology Corporation

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Carpenter Technology Corporation and its subsidiaries at June 30, 2013 and June 30, 2012, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(1) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

August 23, 2013

51

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended June 30, 2013, 2012 and 2011

($ in millions, except per share data)	2013			2012			2011
NET SALES	$	2,271.7		$	2,028.7		$	1,675.1
Cost of sales	1,838.2			1,637.7			1,426.1
Gross profit	433.5			391.0			249.0
Selling, general and administrative expenses	200.8			169.2			149.5
Acquisition-related costs	—			11.7			3.1
Operating income	232.7			210.1			96.4
Interest expense, net	(21.0		)	(23.8		)	(17.1		)
Other income, net	5.1			2.3			8.5
Income before income taxes	216.8			188.6			87.8
Income tax expense	70.3			67.0			16.1
Net income	146.5			121.6			71.7
Less: net income attributable to noncontrolling interest	(0.4		)	(0.4		)	(0.7		)
NET INCOME ATTRIBUTABLE TO CARPENTER	$	146.1		$	121.2		$	71.0
EARNINGS PER COMMON SHARE:
Basic	$	2.75		$	2.55		$	1.59
Diluted	$	2.73		$	2.53		$	1.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	52.9			47.1			44.1
Diluted	53.4			47.8			44.7

See accompanying notes to consolidated financial statements.

52

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Years ended June 30, 2013, 2012 and 2011

($ in millions)	2013			2012			2011
Net income	$	146.5		$	121.6		$	71.7
Other comprehensive income (loss), net of tax
Pension and post-retirement benefits, net of tax of $(48.3), $78.5, and $(71.5), respectively	80.5			(126.4		)	116.8
Net (loss) gain on derivative instruments, net of tax of $5.3, $21.6, and $(3.1), respectively	(8.7		)	(35.4		)	5.0
Unrealized gain (loss) on marketable securities, net of tax of $(0.2), $0.1, and $(0.1) respectively	0.3			(0.2		)	—
Foreign currency translation	5.0			(18.6		)	16.5
Other comprehensive income (loss), net of tax	77.1			(180.6		)	138.3
Comprehensive income (loss), net of tax	223.6			(59.0		)	210.0
Less: Comprehensive income (loss) attributable to the noncontrolling interest	0.7			(1.0		)	1.2
Comprehensive income (loss) attributable to Carpenter	$	222.9		$	(58.0	)	$	208.8

See accompanying notes to consolidated financial statements.

53

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended June 30, 2013, 2012 and 2011

($ in millions)	2013			2012			2011
OPERATING ACTIVITIES
Net income	$	146.5		$	121.6		$	71.7
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	104.1			83.8			66.5
Deferred income taxes	9.4			36.8			(5.0		)
Net pension expense	68.8			42.1			60.8
Net loss on disposal of property and equipment	2.2			2.0			0.8
Changes in working capital and other:
Accounts receivable	12.6			(31.1		)	(56.9		)
Inventories	(14.9		)	(77.3		)	(116.1		)
Other current assets	11.5			1.6			6.4
Accounts payable	16.4			10.2			34.5
Accrued liabilities	9.9			20.1			4.6
Boarhead settlement	—			(21.8		)	—
Pension contributions	(144.9		)	(30.0		)	(3.9		)
Other, net	(6.4		)	2.3			0.8
Net cash provided from operating activities	215.2			160.3			64.2
INVESTING ACTIVITIES
Purchases of property, equipment and software	(336.9		)	(171.9		)	(79.6		)
Proceeds from disposals of property and equipment	1.2			1.2			1.1
Acquisition of businesses, net of cash acquired	—			(12.9		)	(45.4		)
Capital contributions to equity method investment	—			(1.8		)	(6.2		)
Purchases of marketable securities	—			—			(91.3		)
Proceeds received from sale of equity method investment	7.9			—			—
Proceeds from sales and maturities of marketable securities	0.1			30.5			166.0
Net cash used for investing activities	(327.7		)	(154.9		)	(55.4		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net of offering costs	297.0			—			247.4
Payments on long-term debt assumed in acquisition of business	—			(153.7		)	(12.4		)
Payments on long-term debt	(101.0		)	(100.0		)	—
Proceeds received from sale of noncontrolling interest	—			—			9.1
Dividends paid	(38.3		)	(33.7		)	(32.1		)
Purchase of subsidiary shares from noncontrolling interest	(8.4		)	—			—
Payments of debt issue costs	—			—			(1.4		)
Tax benefits on share-based compensation	3.9			2.2			1.7
Proceeds from stock options exercised	2.3			1.8			1.6
Net cash provided from (used for) financing activities	155.5			(283.4		)	213.9
Effect of exchange rate changes on cash and cash equivalents	3.5			(3.5		)	4.4
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	46.5			(281.5		)	227.1
Cash and cash equivalents at beginning of year	211.0			492.5			265.4
Cash and cash equivalents at end of year	$	257.5		$	211.0		$	492.5

See accompanying notes to consolidated financial statements.

54

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

June 30, 2013 and 2012

($ in millions, except share data)	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	257.5		$	211.0
Accounts receivable, net of allowance for doubtful accounts of $4.1 and $4.9 million at June 30, 2013 and 2012	342.0			354.2
Inventories	659.2			642.0
Deferred income taxes	2.7			10.6
Other current assets	20.1			31.9
Total current assets	1,281.5			1,249.7
Property, plant and equipment, net	1,168.4			924.6
Goodwill	257.7			260.5
Other intangibles, net	95.0			109.9
Other assets	80.3			83.1
Total assets	$	2,882.9		$	2,627.8
LIABILITIES
Current liabilities:
Accounts payable	$	252.7		$	236.1
Accrued liabilities	168.5			217.1
Current portion of long-term debt	—			101.0
Total current liabilities	421.2			554.2
Long-term debt, net of current portion	604.2			305.9
Accrued pension liabilities	246.9			377.3
Accrued postretirement benefits	151.2			179.8
Deferred income taxes	73.3			31.4
Other liabilities	83.0			66.1
Total liabilities	1,579.8			1,514.7
Contingencies and commitments (see Note 11)
STOCKHOLDERS’ EQUITY
Common stock — authorized 100,000,000 shares; issued 54,925,335 shares at June 30, 2013 and 54,809,735 shares at June 30, 2012; outstanding 52,773,060 shares at June 30, 2013 and 52,412,967 shares at June 30, 2012	274.6			274.0
Capital in excess of par value	254.4			252.7
Reinvested earnings	1,217.3			1,109.6
Common stock in treasury (2,152,275 shares and 2,396,768 shares at June 30, 2013 and 2012, respectively), at cost	(107.5		)	(120.0		)
Accumulated other comprehensive loss	(335.7		)	(412.5		)
Total Carpenter stockholders’ equity	1,303.1			1,103.8
Noncontrolling interest	—			9.3
Total equity	1,303.1			1,113.1
Total liabilities and equity	$	2,882.9		$	2,627.8

See accompanying notes to consolidated financial statements.

55

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Years Ended June 30, 2013, 2012 and 2011

	Carpenter Stockholders’ Equity
	Common Stock											Accumulated
($ in millions, except per share data)	Par Value Of $5		Capital in Excess of Par Value			Reinvested Earnings			Common Stock in Treasury			Other Comprehensive Loss			Noncontrolling interest			Total Equity
Balances at June 30, 2010	273.2		223.3			983.2			(535.2		)	(371.1		)	—			573.4
Net income						71.0									0.7			71.7
Pension and post-retirement benefits, net of tax												116.8						116.8
Net gain on derivative instruments, net of tax												5.0						5.0
Foreign currency translation												16.0			0.5			16.5
Proceeds received from sale of non-controlling interest															9.1			9.1
Cash Dividends:
Common @ $0.72 per share						(32.1		)										(32.1		)
Share-based compensation plans			8.3						3.0									11.3
Uncertain tax positions adjustments			1.4															1.4
Stock options exercised	0.5		1.1															1.6
Tax windfall on share-based compensation			1.3															1.3
Balances at June 30, 2011	273.7		235.4			1,022.1			(532.2		)	(233.3		)	10.3			776.0
Net income						121.2									0.4			121.6
Pension and post-retirement benefits, net of tax												(126.4		)				(126.4		)
Net loss on derivative instruments, net of tax												(35.4		)				(35.4		)
Unrealized loss on marketable securities, net of tax												(0.2		)				(0.2		)
Foreign currency translation												(17.2		)	(1.4		)	(18.6		)
Cash Dividends:
Common @ $0.72 per share						(33.7		)										(33.7		)
Share-based compensation plans			3.7						6.2									9.9
Uncertain tax positions adjustments			0.4															0.4
Treasury shares issued in connection with acquisition of business			9.6						406.0									415.6
Stock options exercised	0.3		1.5															1.8
Tax windfall on share-based compensation			2.1															2.1
Balances at June 30, 2012	274.0		252.7			1,109.6			(120.0		)	(412.5		)	9.3			1,113.1
Net income						146.1									0.4			146.5
Pension and post-retirement benefits, net of tax												80.5						80.5
Net loss on derivative instruments, net of tax												(8.7		)				(8.7		)
Purchase of subsidiary shares from noncontrolling interest			1.6												(10.0		)	(8.4		)
Unrealized gain on marketable securities, net of taxes												0.3						0.3
Foreign currency translation												4.7			0.3			5.0
Cash Dividends:
Common @ $0.72 per share						(38.3		)										(38.3		)
Share-based compensation plans			(5.5		)				12.5									7.0
Stock options exercised	0.6		1.7															2.3
Tax windfall on share-based compensation			3.9															3.9
Other						(0.1		)										(0.1		)
Balances at June 30, 2013	$	274.6	$	254.4		$	1,217.3		$	(107.5	)	$	(335.7	)	$	—		$	1,303.1

See accompanying notes to consolidated financial statements.

56

CARPENTER TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

For the Years Ended June 30, 2013, 2012 and 2011

	Common Shares
	Issued	Treasury		Net Outstanding
Balances at June 30, 2010	54,644,401	(10,677,317	)	43,967,084
Stock options exercised	85,890	—		85,890
Share-based compensation plans	—	54,406		54,406
Balances at June 30, 2011	54,730,291	(10,622,911	)	44,107,380
Treasury shares issued in connection with acquisition of business		8,100,000		8,100,000
Stock options exercised	79,444	—		79,444
Share-based compensation plans	—	126,143		126,143
Balances at June 30, 2012	54,809,735	(2,396,768	)	52,412,967
Stock options exercised	115,600	—		115,600
Share-based compensation plans	—	244,493		244,493
Balances at June 30, 2013	54,925,335	(2,152,275	)	52,773,060

See accompanying notes to consolidated financial statements.

57

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of Carpenter and all majority-owned subsidiaries.  All significant intercompany accounts and transactions are eliminated.  Investments in companies in which Carpenter exercises significant influence, but which it does not control (generally a 20 to 50 percent ownership interest), are accounted for on the equity method of accounting and Carpenter’s share of their income or loss is included in other income, net in the consolidated statements of income. In November 2012, the Company dissolved its strategic partnership with Sandvik Materials Technology (“Sandvik”). Prior to the dissolution of the strategic partnership, the Company owned a 40 percent interest in Sandvik Powdermet AB, which the Company accounted for as an equity method investment. In addition, Sandvik owned a 40 percent interest in Carpenter Powder Products AB which has historically been reported as a noncontrolling interest.  Prior to November 2012, the financial results of Carpenter Powder Products AB were consolidated into the Company’s operating results and financial position, with the 40 percent interest of the noncontrolling partner recognized in the consolidated statement of income as net income attributable to noncontrolling interests and as equity attributable to the noncontrolling interest within total equity.

Revenue Recognition

Revenue, net of related discounts and allowances, is recognized when title and risk of loss has transferred to the customer, collectability is reasonably assured and pricing is fixed and determinable. This generally occurs when products are shipped.

Freight and Handling Fees and Costs

Freight and handling costs billed separately to customers are included as part of net sales, and freight and handling costs expensed are included as part of cost of sales on the consolidated statements of income.

Research and Development

Research and development expenditures, which amounted to $19.4 million, $20.5 million and $18.9 million in fiscal years 2013, 2012 and 2011, respectively, are expensed as incurred and are generally reported in cost of sales in the consolidated statement of income.  Substantially all development costs are related to developing new products or designing significant improvements to existing products.

Cash Equivalents

Cash equivalents consist of highly liquid instruments with original maturities of three months or less.  Cash equivalents are stated at cost, which approximates market.

Marketable Securities

Purchases and sales of marketable securities are recorded on a trade-date basis. Carpenter has determined that all of its marketable securities are to be classified as available-for-sale.  These securities are carried at market value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss.  Interest and dividends on securities classified as available-for-sale are included in other income, net.

58

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. Trade credit is extended based upon periodic evaluation of each customer’s ability to perform its obligations. The Company determines accounts receivable allowances based on an aging of accounts and a review of specific accounts identified as collection risks. The Company does not require collateral to secure accounts receivable.

Inventories

Inventories are valued at the lower of cost or market.  Cost for inventories is principally determined by the Last-In, First-Out (“LIFO”) method.  Carpenter also uses the First-In, First-Out (“FIFO”) and average cost methods.  As of June 30, 2013 and 2012, $173.3 million and $162.1 million of inventory, respectively, was accounted for using a method other than the LIFO method.

Property, Plant and Equipment and Depreciation

Fixed assets are stated at historical cost less accumulated depreciation.  Depreciation for financial reporting purposes is computed by the straight-line method over the estimated useful lives of the assets.  Depreciation for income tax purposes is computed using accelerated methods.  Upon disposal, assets and related depreciation are removed from the accounts and the differences between the net amounts and proceeds from disposal are included in cost of goods sold in the consolidated statement of income.

Computer Software and Amortization

Computer software is included in other assets on the consolidated balance sheet, and is amortized for financial reporting purposes on a straight-line basis over the respective estimated useful lives, ranging principally from 3 to 7 years. Amortization expense charged to operations related to capitalized software amounted to $6.8 million, $6.1 million and $5.2 million for the years ended June 30, 2013, 2012 and 2011, respectively.

Goodwill

Goodwill, representing the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses, is stated at cost. Goodwill is not amortized but instead is annually tested for impairment, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired.  Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill.  The fair value is estimated using discounted cash flow and the use of market multiples valuation techniques. These valuation techniques require the use of estimates and assumptions related to projected operating results, capital expenditures and working capital levels as well as the cost of capital. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by comparing the carrying value of the reporting unit’s goodwill to its implied fair value.

Intangible assets

The costs of intangible assets, consisting principally of trademarks, trade names, non-compete arrangements, contracts and customer relationships are amortized on a straight-line basis over the estimated useful lives ranging from 2.5 to 30 years.

59

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long-Lived Assets

Long-lived assets, including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable through future undiscounted cash flows.  The amount of the impairment loss is the excess of the carrying amount of the impaired assets over the fair value of the assets based upon undiscounted future cash flows.

Environmental Expenditures

Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with Carpenter’s capitalization policy for property, plant and equipment.  Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed.  Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated.  Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable.  Estimated liabilities are not discounted to present value, but estimated assets are measured on a discounted basis.

Derivative Financial Instruments

All derivative financial instruments are recorded on the balance sheet at their fair value and changes in fair value are recorded each period in current earnings or other comprehensive income.  Carpenter enters into derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies.  The Company has utilized interest rate swaps to convert floating rate debt to fixed rate, or to convert fixed rate debt to floating rate.

Foreign Currency Translation

Assets and liabilities of most international operations are translated into U.S. dollars at exchange rates in effect at year-end, and their income statements are translated at the average monthly exchange rates prevailing during the year.  The resulting translation gains and losses are recorded each period as a component of accumulated other comprehensive income until the international entity is sold or liquidated. Gains and losses from transactions denominated in foreign currencies are reported in other income, net in the consolidated statement of income.

Income Taxes

Deferred income taxes are recognized by applying enacted statutory tax rates, applicable to future years, to temporary differences between the tax bases and financial statement carrying values of Carpenter’s assets and liabilities.  Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized.

60

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant judgments, estimates and assumptions are required in determining tax return reporting positions and in calculating provisions for income tax, which are based on interpretations of tax regulations and accounting pronouncements. Liabilities are established for uncertain tax positions when it is more likely than not that such positions, if challenged would not be sustained upon review by taxing authorities. These liabilities are re-evaluated as tax regulations and facts and circumstances change, such as the closing of a tax audit or the expiration of the statute of limitations for a specific exposure.

Earnings per Share

The Company has certain nonvested restricted shares and units that are considered participating securities because the awards have the right to receive non-forfeitable dividends. Accordingly, the Company calculates basic earnings per share using the two class method.  Under the two class method, earnings are allocated to common stock and participating securities according to their participation rights in dividends and undistributed earnings.  The earnings available to each class of stock are divided by the weighted average number of shares for the period in each class.  Because the participating securities have no obligation to share in net losses, losses are not allocated to the participating securities in this calculation.

Litigation

Periodically, Carpenter and its subsidiaries are parties to lawsuits arising out of the normal course of business.  Carpenter records liabilities when a loss is probable and can be reasonably estimated.  These estimates are based on an analysis made by internal and external legal counsel considering information known at the time.

Share-Based Compensation

The Company has two share-based employee compensation plans, which are more fully described in detail in Note 14. The Company recognizes compensation cost based on the fair value of the awards on the date of grant. The compensation cost is recognized over the requisite service period of the award, which is generally the shorter of the vesting period that the holder is required to provide service, or the period from the grant date to the date on which the employee is eligible to retire. Upon retirement, as defined in the Company’s share-based compensation plans, outstanding awards are subject to certain accelerated vesting terms.

Concentration of Credit Risk

Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and trade receivables. Investment and cash management policies have been implemented that limit deposit concentrations and limit investments to investment grade securities. The risk with respect to trade receivables is mitigated by monitoring payment terms and periodic credit evaluations we perform on our customers, the short duration of our payment terms and by the diversification of our customer base. During fiscal years 2013 and 2012, no customer accounted for 10 percent of total net sales and during fiscal year 2011, one customer accounted for 10 percent of total net sales.

61

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

2.Acquisition and Strategic Partnership

Fiscal Year 2012 Acquisitions

Latrobe Specialty Metals, Inc.

On February 29, 2012, the Company completed its previously announced acquisition of Latrobe Specialty Metals, Inc (“Latrobe”) for a total purchase price of $427.0 million, net of cash acquired (the “Latrobe Acquisition”). The purchase price includes the issuance of 8.1 million shares of the Company’s common stock to former Latrobe stockholders in exchange for their Latrobe capital stock and $11.5 million of cash paid at closing, net of cash acquired of $2.5 million, to satisfy certain costs of the sellers. The fair value of the shares issued as part of the consideration paid for Latrobe was determined based on the closing market price of the Company’s shares on the acquisition date. The Company also assumed $153.7 million of indebtedness which was paid off in cash concurrently with the closing of the acquisition.

Latrobe manufacturers and distributes high-performance specialty metals serving customers across end-use markets including the aerospace and defense, energy and industrial markets. The manufacturing operations of Latrobe are based principally in Latrobe, Pennsylvania.

The following is a summary of the purchase price allocation in connection with the Latrobe Acquisition.

($ in millions)	Preliminary Purchase Price Allocation as of June 30, 2012			Measurement Period Adjustments			Final Purchase Price Allocation
Accounts receivable	$	67.3		$	(0.3	)	$	67.0
Inventory	241.2			1.4			242.6
Property, plant and equipment	172.4			—			172.4
Intangible assets	87.1			—			87.1
Other	10.6			(0.8		)	9.8
Accounts Payable and accrued liabilities	(63.9		)	(0.2		)	(64.1		)
Long-term debt	(153.7		)	—			(153.7		)
Pension and other postretirement liabilities	(100.8		)	—			(100.8		)
Deferred income taxes	(47.7		)	2.7			(45.0		)
Total identifiable net assets	212.5			2.8			215.3
Goodwill	214.5			(2.8		)	211.7
Total purchase price, net of cash acquired	$	427.0		$	—		$	427.0

62

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The goodwill recognized in connection with the Latrobe Acquisition consists of the value associated with the immediate increase in the Company’s premium melt capacity to meet strong customer demand,  improvements in  the Company’s position in attractive end-use markets such as aerospace and defense and energy, the complementary asset capabilities which the Company expects will lead to enriched, higher margin product mix and operating cost synergies as well as the capabilities for commercialization of new Carpenter products under development. None of the goodwill recognized is deductible for income tax purposes.

In connection with the Latrobe Acquisition, the Company incurred approximately $11.7 million and $2.4 million of acquisition-related costs during the fiscal years ended June 30, 2012 and 2011, respectively. These costs are included in the consolidated statements of income and represent incremental legal, accounting and investment banking fees incurred in connection with the transaction as well as approximately $5.2 million of liability for costs associated with the sale of certain Latrobe assets necessary to obtain approval for the transaction from the Federal Trade Commission (“FTC”). As part of the FTC approval, the Company entered into a consent decree to transfer assets and technical knowledge to Eramet S.A. and its subsidiaries, Aubert & Duval and Brown Europe, which will allow them to become a second manufacturer of two specific alloys in order to provide customers with a supply alternative in the marketplace.

The consolidated net sales for the fiscal year ended June 30, 2012 includes approximately $163.2 million of net sales related to the Latrobe business since the Latrobe Acquisition.  The Company’s operating income for the fiscal year ended June 30, 2012 includes approximately $10.5 million related to the operations of the Latrobe business since the Latrobe Acquisition, net of approximately $11.6 million recorded in connection with the fair value cost inventory adjustments.

The unaudited pro forma results presented below include the effects of the Latrobe Acquisition as if it had occurred as of July 1, 2010. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as the depreciation and amortization associated with estimates for the fair value of the property and equipment and acquired intangible assets and the impacts of the elimination of Latrobe debt that was repaid at closing. The supplemental proforma earnings were adjusted to exclude acquisition related costs in the fiscal year 2012 and 2011 periods.

	June 30,
($ in millions)	2012		2011
Revenue	$	2,339.6	$	2,125.3
Earnings	$	160.1	$	93.5
Earnings per Common Share
Basic	$	3.04	$	1.78
Diluted	$	3.01	$	1.77

The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition.  Accordingly, the unaudited pro forma financial information above is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the dates indicated.

63

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Arwin Machining Plus, Ltd.

On December 15, 2011, the Company acquired substantially all of the assets of Arwin Machining Plus, Ltd. (“Arwin”) for a cash purchase price of $1.4 million.  The Arwin assets, consisting principally of machinery and equipment, have been integrated into the Canadian operations of Amega West Services (“Amega West”), a wholly owned subsidiary of the Company.  The Company believes the acquisition enhances Amega West’s machining capabilities by adding the expertise and positions necessary to increase responsiveness to customers and to assist with the development of new directional drilling applications. The purchase price was allocated $0.7 million to machinery and equipment and $0.7 million to goodwill, most of which is expected to be deductible for tax purposes.

Fiscal Year 2011 Acquisitions

Amega West Services

On December 31, 2010, the Company acquired all of the members’ interests in Amega West Services, LLC (“Amega West”), a Houston-based manufacturer and service provider in the directional drilling industry, for a cash purchase price of $41.6 million.  In connection with this acquisition, the Company also assumed $12.4 million of Amega West’s long-term debt, which was paid off in cash concurrently with closing of the purchase. Amega West is a leading manufacturer of high-precision components for measurement while drilling (“MWD”) and logging while drilling (“LWD”) housings, drill collars, stabilizers and other down-hole tools used for directional drilling. MWD and LWD technology is used to ensure critical data is obtained and transmitted to the surface to monitor the progress of any applicable well. The consideration paid has been allocated as follows:

$ in millions
Net working capital, including $4.9 million of accounts payable to Carpenter effectively settled at closing	$	6.5
Property, plant and equipment	25.9
Customer relationships	5.2
Non-compete agreements	5.4
Trademarks and tradenames	1.9
Goodwill	9.7
Deferred tax liabilities	(0.6		)
Long-term debt	(12.4		)
Total purchase price	$	41.6

Of the goodwill recorded related to the Amega West acquisition, $8.3 million is expected to be deductible for tax purposes.

The purchase agreement includes an earn-out opportunity for certain management equity sellers, designed to drive earnings growth at Amega West.  According to the terms of the earn-out, the Company held back approximately $2.8 million of the cash purchase price otherwise payable to the earn-out participants, and provided the participants with the opportunity to receive up to two times the holdback amount if certain earnings targets are achieved over a four and a half year period following the acquisition. $2.2 million of the earnout is guaranteed and is therefore considered as part of the total purchase price. The earnout payments in excess of the guaranteed minimum amount, if any, will be treated as compensation related to post combination services.

64

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The results of operations of Amega West have been included in the consolidated statements of income since the acquisition date and are reported in the Performance Engineered Products segment. The acquisition of Amega West is not considered material to the consolidated financial statements and accordingly the Company will not disclose proforma information.

Oilfield Alloys

On June 27, 2011, the Company acquired Oilfield Alloys Pte. Ltd. (“Oilfield Alloys”) for a purchase price of $4.8 million which consisted of a cash purchase price of $4.1 million, net of cash acquired of $0.3 million, paid at closing. The remaining purchase price of $0.7 million was held back to satisfy the occurrence of certain indemnification obligations, if any, and will be released to the sellers on the third anniversary of the acquisition less any indemnification claims.  Based in Singapore, Oilfield Alloys manufactures and distributes directional drilling equipment in the Asia-Pacific region.  A distributor of several Carpenter non-magnetic products, Oilfield Alloys also has a sales location in Dubai.  Oilfield Alloys has become part of Amega West operations. The purchase price allocation was completed in the first quarter of fiscal year 2012 and resulted in the purchase price being allocated to $1.2 million of working capital, $1.7 million of property and equipment, $1.5 million of identifiable intangible assets and $0.4 million of goodwill.

Strategic Partnership

In the second quarter of fiscal year 2011, the Company established a strategic partnership with Sandvik Materials Technology (“Sandvik”) to further strengthen its leadership position in high-performance powder metal products. As part of the strategic partnership, the Company acquired a 40 percent interest in Sandvik Powdermet AB for a cash purchase price of $6.2 million. The Company treated the acquisition of the 40 percent interest in Sandvik Powdermet AB as an equity method investment. In addition, in connection with the strategic partnership, Sandvik acquired a 40 percent interest in Carpenter Powder Products AB for a cash purchase price of $9.1 million.  Sandvik’s acquired interest in Carpenter Powder Products AB has been reported as a noncontrolling interest.

In November 2012, the Company dissolved its strategic partnership with Sandvik Materials Technology (“Sandvik”).  Under the terms of the dissolution agreement, the Company received $7.9 million of proceeds from the sale of its investment in Sandvik Powdermet AB and paid $8.4 million to repurchase the shares of Carpenter Products AB from Sandvik. The dissolution resulted in a $1.9 million gain related to the sale of the investment in Sandvik Powdermet during the year ended June 30, 2013. No gain or loss was recognized related to the repurchase of the Carpenter Powder Products AB shares.

65

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.Earnings per Common Share

The calculations of basic and diluted earnings from continuing operations per common share for the years ended June 30, 2013, 2012 and 2011 were as follows:

	Years Ended June 30,
($ in millions, except per share data)	2013			2012			2011
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Less: earnings and dividends allocated to participating securities	(0.8		)	(1.1		)	(0.8		)
Earnings available for Carpenter common shareholders	$	145.3		$	120.1		$	70.2
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Basic earnings per common share	$	2.75		$	2.55		$	1.59
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Effect of shares issuable under share based compensation plans	0.5			0.7			0.6
Weighted average number of common shares outstanding, diluted	53.4			47.8			44.7
Diluted earnings per common share	$	2.73		$	2.53		$	1.59

The following awards issued under share-based compensation plans were excluded from the calculations of diluted earnings per share above because their effects were anti-dilutive:

	Years Ended June 30,
(in millions)	2013	2012	2011
Stock options	0.4	—	0.1

66

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.Marketable Securities

The fair value of the Company’s marketable securities was based on quoted market prices or estimates of fair value as of June 30, 2013 and 2012. The following is a summary of marketable securities, all of which were classified as available-for-sale as of June 30, 2013 and 2012:

June 30, 2013			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	5.9	$	(0.5	)	$	5.4

June 30, 2012			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	6.0	$	(1.0	)	$	5.0

For the fiscal years ended June 30, 2013, 2012 and 2011, proceeds from sales and maturities of marketable securities were $0.1 million, $30.5 million and $166.0 million, respectively.

Municipal Auction Rate Securities

As of June 30, 2013 and June 30, 2012, the Company’s marketable securities included municipal auction rate securities with a par value of $5.9 million and $6.0 million, respectively. The municipal auction rate securities are callable at par at the option of the issuer. As of June 30, 2013 and 2012 respectively, the Company recorded $0.5 million and $1.0 million of unrealized losses to reflect the estimated market value of these securities. The Company does not intend to sell the securities and believes that it is more likely than not that the Company will not be required to sell the securities before recovering their costs. The valuation of auction rate securities is subject to uncertainties that are difficult to predict. Factors that impact the valuation of these securities include changes in credit ratings of the securities as well as the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk and the ongoing strength and quality of market credit and liquidity. The municipal auction rate securities owned by the Company are of high credit quality and maintain credit enhancements. The Company does not believe that any of the underlying issuers of our municipal auction rate securities are currently at risk of default. The securities have been classified according to their stated maturity dates, which range from 2019 to 2030. Accordingly, the municipal auction rate securities are included in other assets in the accompanying consolidated balance sheets.

5.Inventories

	June 30,
($ in millions)	2013		2012
Raw materials and supplies	$	111.6	$	114.1
Work in process	325.9		312.4
Finished and purchased products	221.7		215.5
Total inventory	$	659.2	$	642.0

67

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

If the first-in, first-out method of inventory had been used instead of the LIFO method, inventories would have been $222.4 million and $279.8 million higher as of June 30, 2013 and 2012, respectively.  Current cost of LIFO-valued inventories was $708.3 million at June 30, 2013 and $759.7 million at June 30, 2012.  The reductions in LIFO-valued inventories decreased cost of sales by $2.1 million during fiscal year 2013, $0 million during fiscal year 2012, and $1.7 million during fiscal year 2011.

6.Property, Plant and Equipment

	June 30,
($ in millions)	2013		2012
Land	$	20.9	$	16.6
Buildings and building equipment	326.4		301.3
Machinery and equipment	1,555.7		1,454.6
Construction in progress	292.1		97.6
Total at cost	2,195.1		1,870.1
Less: accumulated depreciation and amortization	1,026.7		945.5
Total property, plant, and equipment	$	1,168.4	$	924.6

The estimated useful lives of depreciable assets are as follows:

Asset Category	Useful Life (in Years)
Buildings and building equipment	10 – 45
Machinery and equipment	3 – 30

Depreciation for the years ended June 30, 2013, 2012 and 2011 was $85.1 million, $71.5 million and $59.2 million, respectively.

7.Goodwill and Other Intangible Assets, Net

Goodwill

The Company conducted its annual impairment review as of February 28, 2013 for the Latrobe reporting units and June 30, 2013 and 2012 for all other reporting units. As a result of the impairment review, the Company has determined that there was no goodwill impairment. Based on the impairment testing performed as of June 30, 2013, one of the Company’s reporting units, Carpenter Powder Products, a component of the PEP segment, excess of fair value over carrying value amounted to 4 percent. The goodwill associated with the Carpenter Powder Products reporting unit was $3.4 million as of June 30, 2013.  In addition, based on the goodwill impairment testing performed as of February 28, 2013 for the Latrobe segment, the excess of fair value over carrying value amounted to approximately 8 percent reflecting that there has been no significant change in the fair value of the Latrobe business since acquisition on February 29, 2012.  For all other reporting units with goodwill as of June 30, 2013, the fair value exceeded the carrying value by over 15 percent.

68

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The changes in the carrying amount of goodwill by reportable segment for fiscal year 2013 and 2012 were as follows:

($ in millions)	June 30, 2011			Acquisitions		Other		June 30, 2012			Other			June 30, 2013
Goodwill	$	79.6		$	215.2	$	0.4	$	295.2		$	(2.8	)	$	292.4
Accumulated impairment losses	(34.7		)	—		—		(34.7		)	—			(34.7		)
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7
Performance Engineered Products	$	44.9		$	0.7	$	0.4	$	46.0		$	—		$	46.0
Latrobe	—			214.5		—		214.5			(2.8		)	211.7
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7

The amounts included in “other” in the above table represent amounts recorded in goodwill associated with the fiscal year 2011 Oilfield Alloys acquisition for which the purchase price allocation was completed during fiscal year 2012 and the fiscal year 2012 Latrobe acquisition for which the purchase price allocation was completed during fiscal year 2013.

Other Intangible Assets, Net

		2013							2012
($ in millions)	Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	2.5 - 30	$	42.0	$	(22.1	)	$	19.9	$	42.0	$	(17.3	)	$	24.7
Customer relationships	5 - 15	78.2		(9.4		)	68.8		78.2		(3.4		)	74.8
Non-compete agreements	6.5	5.4		(2.1		)	3.3		5.4		(1.2		)	4.2
Contracts	2.9	3.7		(0.7		)	3.0		6.4		(0.2		)	6.2
Total		$	129.3	$	(34.3	)	$	95.0	$	132.0	$	(22.1	)	$	109.9

Carpenter recorded $12.2 million of amortization expense related to intangible assets during fiscal year 2013, $6.2 million during fiscal year 2012, and $2.0 million during fiscal year 2011. The estimated annual amortization expense related to intangible assets for each of the succeeding five fiscal years is $12.4 million in fiscal year 2014, $9.0 million in fiscal year 2015, $7.6 million in fiscal year 2016, $6.7 million in fiscal year 2017 and $5.9 million in fiscal year 2018.

69

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.Debt

On February 26, 2013, the Company completed an offering and sale of $300 million in aggregate principal amount of its 4.45% Senior Notes due 2023 (the “Notes”). The Notes accrue interest at the rate of 4.45% per annum, with interest payable in cash semi-annually in arrears on each March 1 and September 1, commencing September 1, 2013. The Notes will mature on March 1, 2023. The Notes will be senior unsecured indebtedness of the Company, ranking equally in right of payment with all its existing and future senior unsecured indebtedness and senior to its future subordinated indebtedness.  The Company used a portion of the net proceeds from the issuance of the Notes to repay in full $100 million in aggregate principal amount of its senior unsecured notes due May 2013. The Company intends to use the remaining net proceeds from the issuance of the Notes for general corporate purposes, which may include discretionary pension contributions, additions to working capital, capital expenditures, repayment of debt, the financing of acquisitions, joint ventures and other business combination opportunities or stock repurchases.

On June 28, 2013, the Company entered into $500 million syndicated credit facility (“Credit Agreement”) that extends to June 28, 2018. The Credit Agreement replaced the Company’s previous revolving credit facility, dated as of June 21, 2011, which had been set to expire in June 2016. During the fiscal year ended June 30, 2013, the Company capitalized $0.8 million of debt issue costs paid in connection with the Credit Agreement.

Interest on the borrowings under the Credit Agreement accrue at variable rates, based upon LIBOR or a defined “Base Rate,” that are determined based upon the rating of the Company’s senior unsecured long-term debt (the “Debt Rating”). The applicable margin to be added to LIBOR ranges from 0.75% to 1.90% (1.25% as of June 30, 2013), and for Base Rate-determined loans, from 0.0% to 0.90% (0.25% as of June 30, 2013). The Company also pays a quarterly commitment fee ranging from 0.075% to 0.375% (0.15% as of June 30, 2013), determined based upon the Company’s Debt Rating, of the $500 million commitment under the Credit Agreement. In addition, the Company must pay certain letter of credit fees, ranging from 0.75% to 1.90% (1.25% as of June 30, 2013), with respect to letters of credit issued under the Credit Agreement. The Company has the right to voluntarily prepay and reborrow loans and to terminate or reduce the commitments under the facility. As of June 30, 2013, the Company had $7.2 million of issued letters of credit under the Credit Agreement, with the balance of $492.8 million available for future borrowings.

The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio (of 3.5 to 1.0 for any period of four consecutive fiscal quarters of the Company.). The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined, to consolidated capitalization, as defined. As of June 30, 2013, the Company was in compliance with all of the covenants of the Credit Agreement.

70

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt outstanding as of June 30, 2013 and 2012 consisted of the following:

	June 30,
($ in millions)	2013		2012
Senior unsecured notes, 6.625% due May 2013 (face value of $100.0 million at June 30, 2012)	$	—	$	101.3
Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 (face value of $55.0 and $56.0 million at June 30, 2013 and 2012, respectively)	55.0		56.0
Senior unsecured notes, 5.200% due July 2021 (face value of $250.0 million at June 30, 2013 and 2012)	249.7		249.6
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million and $0.0 at June 30, 2013 and 2012, respectively)	299.5		—
Total	604.2		406.9
Less amounts due within one year	—		101.0
Long-term debt, net of current portion	$	604.2	$	305.9

Aggregate maturities of long-term debt for the five years subsequent to June 30, 2013, are $0 million in fiscal year 2014, 2015, 2016, 2017, $55.0 million in 2018 and $550.0 million thereafter.

For the years ended June 30, 2013, 2012 and 2011, interest costs totaled $27.8 million, $25.0 million and $17.6 million, respectively, of which $6.8 million, $1.2 million and $0.5 million, respectively, were capitalized as part of the cost of property, plant, equipment and software.

9.Accrued Liabilities

Accrued liabilities consisted of the following as of June 30, 2013 and 2012:

	June 30,
($ in millions)	2013		2012
Accrued compensation	$	49.4	$	50.1
Derivative financial instruments	29.1		26.5
Accrued postretirement benefits	15.4		17.2
Accrued pension liabilities	9.7		70.0
Other	64.9		53.3
Total accrued liabilities	$	168.5	$	217.1

71

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.Pension and Other Postretirement Benefits

Carpenter provides several noncontributory defined benefit pension plans to certain employees. The plans provide defined benefits based on years of service and final average salary. Effective January 1, 2012, new employees will not be eligible to participate in the Company’s largest defined benefit pension plan.

Carpenter also provides other postretirement benefit plans to certain of its employees. The postretirement benefit plans consist of health care and life insurance plans. Benefit payments are currently paid from corporate assets.  Plan assets are maintained in a Voluntary Employee Benefit Association Trust (“VEBA”).

The following provides a reconciliation of benefit obligations, plan assets, and funded status of the plans:

							Other
	Pension Plans						Postretirement Plans
($ in millions)	2013			2012			2013			2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	1,218.1		$	929.2		$	282.2		$	204.2
Plan liabilities assumed in connection with Latrobe acquisition	—			116.3			—			57.2
Service cost	32.5			23.0			4.4			3.7
Interest cost	53.0			51.3			12.2			11.8
Benefits paid	(70.6		)	(61.1		)	(13.3		)	(11.4		)
Actuarial (gain) loss	(45.7		)	159.5			(25.9		)	16.3
Plan settlements	(0.6		)	—			—			—
Other	—			(0.1		)	0.2			0.4
Projected benefit obligation at end of year	$	1,186.7		$	1,218.1		$	259.8		$	282.2
Change in plan assets:
Fair value of plan assets at beginning of year	$	770.9		$	710.2		$	85.3		$	80.3
Plan assets acquired in connection with Latrobe acquisition	—			72.8			—			—
Actual return on plan assets	82.3			15.8			8.2			5.3
Benefits paid from plan assets	(70.6		)	(61.1		)	(13.6		)	(11.7		)
Contributions	148.2			33.2			13.3			11.4
Plan settlements	(0.6		)	—			—			—
Fair value of plan assets at end of year	$	930.2		$	770.9		$	93.2		$	85.3
Funded status of the plans	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)
Amounts recognized in the Consolidated Balance Sheets :
Other assets - noncurrent	$	0.1		$	0.1		$	—		$	—
Accrued liabilities - current	(9.7		)	(70.0		)	(15.4		)	(17.1		)
Accrued pension liabilities - noncurrent	(246.9		)	(377.3		)	—			—
Accrued postretirement benefits	—			—			(151.2		)	(179.8		)
	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)

72

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

					Other
	Pension Plans				Postretirement Plans
($ in millions)	2013		2012		2013			2012
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	412.4	$	513.6	$	36.9		$	67.9
Prior service cost (credit)	2.9		3.6		(0.1		)	(4.2		)
Total	$	415.3	$	517.2	$	36.8		$	63.7
Additional information:
Accumulated benefit obligation for all pension plans	$	1,072.3	$	1,112.1	N/A			N/A

The following is additional information related to plans with projected benefit obligations in excess of plan assets as of June 30, 2013 and 2012:

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Projected benefit obligation	$	1,186.6	$	1,217.9	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

The following additional information is for plans with accumulated benefit obligations in excess of plan assets as of June 30, 2013 and 2012:

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Accumulated benefit obligation	$	1,072.2	$	1,112.0	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

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CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the years ended June 30, 2013, 2012 and 2011 are as follows:

	Pension Plans									Other Postretirement Plans
($ in millions)	2013			2012			2011			2013			2012			2011
Service cost	$	32.5		$	23.0		$	22.8		$	4.4		$	3.7		$	2.7
Interest cost	53.0			51.3			46.5			12.2			11.8			10.9
Expected return on plan assets	(54.8		)	(54.2		)	(45.4		)	(6.4		)	(6.4		)	(5.0		)
Amortization of net loss	28.1			17.5			29.1			3.2			2.6			6.0
Amortization of prior service cost (benefit)	0.7			0.7			1.0			(4.1		)	(7.9		)	(7.9		)
Plan settlement expense	—			—			0.1			—			—			—
Net pension expense	$	59.5		$	38.3		$	54.1		$	9.3		$	3.8		$	6.7

The service cost component of Carpenter’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” in the segment data presented in Note 18.

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine benefit obligations at fiscal year end
Discount rate	5.00	%	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%
Rate of compensation increase	3.66	%	3.67	%	3.66	%	N/A		N/A		N/A

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year
Discount rate	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%	5.00	%
Expected long-term rate of return on plan assets	7.00	%	7.50	%	7.50	%	7.50	%	8.00	%	8.00	%
Long-term rate of compensation increase	3.67	%	3.66	%	3.66	%	N/A		N/A		N/A

74

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows the expected health care rate increase and the future rate and time at which it is expected to remain constant.

	June 30,
	2013		2012
Assumed health care cost trend rate	7.5	%	8.0	%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate)	5	%	5	%
Year that the rate reaches the ultimate trend rate	2020		2018

Assumed health care cost trend rates have an effect on the amounts reported for other postretirement benefits. A one percentage point increase in the assumed health care cost trend rate would increase service and interest cost by $0.6 million and increase the postretirement benefit obligation by $9.9 million. A one percentage point decrease in the assumed health care cost trend rate would decrease service and interest cost by $0.5 million and decrease the postretirement benefit obligation by $8.7 million.

Net pension expense, which we define to include the net periodic benefit costs of both the pension and other postretirement plans, is estimated to be $59.7 million for the year ended June 30, 2014, comprised of $48.6 million of net periodic benefit costs for pension plans and $11.1 million of net periodic benefit costs for other post-retirement benefit plans. The discount rate and expected long-term rate of return on plan assets used to calculate the net periodic benefit costs for pension plans for the year ended June 30, 2014 were 5.00 percent and 7.00 percent, respectively.  The discount rate and expected long-term rate of return on plan assets used to calculate the net periodic benefits costs for other post-retirement benefit plans for the year ended June 30, 2014 were 5.00 percent and 7.00 percent, respectively.

Amounts in other comprehensive loss that are expected to be recognized as components of net periodic benefit cost in the year ended June 30, 2014 are:

			Other
	Pension		Postretirement
($ in millions)	Plans		Plans			Total
Amortization of prior service cost (credit)	$	0.5	$	(0.1	)	$	0.4
Amortization of net actuarial loss	21.8		1.2			23.0
Amortization of accumulated other comprehensive loss	$	22.3	$	1.1		$	23.4

Carpenter’s U.S. pension plans’ weighted-average asset allocations at June 30, 2013 and 2012, by asset category are as follows:

	2013		2012
Equity securities	63.5	%	66.0	%
Fixed income securities	34.3		31.3
Cash and cash equivalents	2.2		2.7
Total	100.0	%	100.0	%

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CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carpenter’s policy for developing a pension plan investment strategy includes the periodic development of an asset and liability study by an independent investment consultant. Management considers this study in establishing an asset allocation that is presented to and approved by the Company’s Plan Committee.

Management determines an asset allocation that will provide the highest level of return for an acceptable level of risk.  Accordingly, Carpenter invests in different asset classes including large-, mid- and small-cap growth and value funds, index and international equity funds, short-term and medium-term duration fixed-income funds and high yield funds. The plan’s current allocation policy is to have approximately 60 percent U.S. and international equities and 40 percent fixed income securities. The Company may vary the actual asset mix based on the ratio of the plan assets and liabilities. Management reviews the asset allocation on a quarterly basis and makes revisions as deemed necessary. The assets related to Carpenter’s other postretirement benefit plans were invested approximately 60 percent U.S. and equities and 40 percent fixed income securities of June 30, 2013.  Management establishes the expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan’s asset allocation and risk management objectives. In determining the expected long-term rate of return, the Company considered historical returns for individual asset classes and the impact of active portfolio management.

The fair values of the Company’s pension plan assets as of June 30, 2013 and 2012, by asset category and by the levels of inputs used to determine fair value were as follows:

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Short-term investments	$	—	$	13.7	$	13.7	$	—	$	14.4	$	14.4
Domestic and international equities	281.8		—		281.8		237.9		—		237.9
Commingled funds	52.1		164.4		216.5		40.4		151.0		191.4
Limited partnerships	—		137.9		137.9		—		95.9		95.9
Government agency bonds	7.9		101.9		109.8		6.6		95.8		102.4
Corporate bonds	—		149.8		149.8		—		102.1		102.1
Mutual funds	2.5		—		2.5		10.1		—		10.1
Mortgage/asset backed securities and other	—		18.2		18.2		—		16.7		16.7
	$	344.3	$	585.9	$	930.2	$	295.0	$	475.9	$	770.9

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CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair values of the Company’s other postretirement benefit plans as of June 30, 2013 and 2012, by asset category and by the level of inputs used to determine fair value, were as follows:

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Commingled fund	$	—	$	51.4	$	51.4	$	—	$	44.7	$	44.7
Short-term investments	—		14.2		14.2		—		5.8		5.8
Government agency bonds	—		15.9		15.9		—		15.9		15.9
Corporate bonds and other	—		7.5		7.5		—		7.4		7.4
Mortgage backed securities	—		4.2		4.2		—		11.5		11.5
	$	—	$	93.2	$	93.2	$	—	$	85.3	$	85.3

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in domestic and international equities are generally valued at the closing price reported on the active market on which they are traded. Commingled funds are valued based on the net asset value (“NAV”) established for the fund at each valuation date. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Corporate and government agency bonds and other fixed income securities are valued using closing bid prices on an active market when possible, otherwise using evaluated bid prices.

Cash Flows — Employer Contributions

The Company made contributions of $144.9 million to its US pension plans during fiscal year 2013, a contribution of $30.0 million during fiscal year 2012 and a contribution of $3.9 million during fiscal year 2011. The Company currently expects to make approximately $6.3 million in required contributions to the Company’s pension plans during fiscal year 2014.  During the years ended June 30, 2013, 2012 and 2011, the Company made contributions of $3.3 million, $3.2 million and $3.1 million to other pension plans, respectively.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid.  Pension Benefits are currently paid from plan assets and Other Benefits are currently paid from corporate assets:

	Pension		Other
($ in millions)	Benefits		Benefits
2014	$	73.6	$	15.5
2015	$	76.0	$	16.1
2016	$	77.1	$	16.7
2017	$	78.8	$	17.2
2018	$	81.6	$	17.7
2019-2023	$	438.9	$	92.7

77

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Benefit Plans

Carpenter also maintains defined contribution retirement and savings plans for substantially all domestic employees.  Company contributions to the plan were $8.9 million in fiscal year 2013, $6.8 million in fiscal year 2012 and $5.2 million in fiscal year 2011.

11.Contingencies and Commitments

Environmental

Carpenter is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.  Although compliance with these laws and regulations may affect the costs of Carpenter’s operations, compliance costs to date have not been material.  Carpenter has environmental remediation liabilities at some of its owned operating facilities and has been designated as a potentially responsible party (“PRP”) with respect to certain third-party Superfund waste disposal sites and other third party owned sites.  Additionally, Carpenter has been notified that it may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against Carpenter. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites has been determined.  The liability for future environmental remediation costs is evaluated by management on a quarterly basis.  Carpenter accrues amounts for environmental remediation costs that represent management’s best estimate of the probable and reasonably estimable costs related to environmental remediation. During fiscal years 2013, 2012 and 2011, the Company increased the liabilities recorded for environmental remediation costs by $0.3 million, $0.7 million and $0.3 million, respectively. The liabilities recorded for environmental remediation costs at Superfund sites, at other third party-owned sites and at Carpenter-owned current or former operating facilities remaining at June 30, 2013 and 2012 was $14.8 million and $14.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s.  Based upon information currently available, such future costs are not expected to have a material effect on Carpenter’s financial position, results of operations or cash flows over the long-term.  However, such costs could be material to Carpenter’s financial position, results of operations or cash flows in a particular future quarter or year.

Boarhead Farms

In June 2002, the Company was named as a defendant in a lawsuit filed by a group of plaintiffs in the District Court for the Eastern District of Pennsylvania titled Boarhead Farm Agreement Group v. Advanced Environmental Technology Corporation et al. (since amended to include the individual members).  The suit alleges that the Company and the other named defendants contributed to damages caused at Boarhead Farms, a Superfund site located in Bridgeton, Pennsylvania. The Boarhead Farms site was the home of a now defunct chemical and waste hauling company that the Company and many others engaged to dispose of certain wastes during the 1970’s. The plaintiff group was individually named as PRP’s for the Boarhead site in the EPA’s “Record of Decision” in November 1998. Their June 2002 lawsuit against various defendants, including Carpenter, sought contributions for a portion of costs incurred for various site cleanup activities as well as contributions to future cleanup efforts.  The suit went to trial in June 2008.  Prior to trial, all of the named co-defendants, except for Carpenter, reached an out

78

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of court settlement with the plaintiffs.  Carpenter denied the claims made by the plaintiff group. On August 18, 2008, the Court awarded the plaintiffs judgment against the Company for 80 percent of the plaintiffs’ past costs of remediating the site, including prejudgment interest from June 18, 2002 to January 1, 2008, and held the Company liable for 80 percent of future costs of the cleanup activities at the site. The Company appealed the Court’s decision and oral arguments took place before the United States Court of Appeals for the Third Circuit on December 17, 2009. On April 12, 2010, the Court of Appeals for the Third Circuit vacated the previous judgment by the District Court and remanded the case for further proceedings. As of June 30, 2011, the Company recorded a liability related to this case of $21.8 million. On July 19, 2011, the Company entered into a settlement agreement providing for a dismissal of the lawsuit and a complete release, in the Company’s favor, by all parties to the litigation in exchange for a payment of $21.8 million, which the Company paid in September 2011. The Company expects that no additional liabilities will be incurred related to this matter.

Export Regulations Violations

During fiscal year 2008, the Company became aware of potential violations of federal export regulations at a business unit that had been recently divested.  Upon investigation, the Company discovered that approximately 40 foreign nationals employed over time at the business unit’s facility may have been exposed to protected technical data related to the production of various products for military applications.  An export license from the Department of State and the Department of Commerce is required prior to the exporting of technical data for military applications. The Company has applied for and received similar applications for other business units, but did not have such a license for the divested business unit. Violations of Federal export regulations can be subject to civil penalties depending upon the severity of the violation. The Company filed voluntary disclosures with the Department of State and the Department of Commerce before the divestiture of the business unit on March 31, 2008.  The Department of State responded to the voluntary disclosure without assessing civil penalties.  The Department of Commerce has not yet responded to the voluntary disclosure.  It is not possible to determine the amount, if any, of civil penalties that may be assessed by the Department of Commerce. The statute of limitations for this matter has expired.  As a result, the Company has not recorded any liability for potential penalties as of June 30, 2013 and does not expect to incur any liabilities related to this matter.

Other

The Company is defending various routine claims and legal actions that are incidental to its business, and the Company is subject to contingencies that are common to its operations, including those pertaining to product claims, commercial disputes, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims, patent infringement and tax issues.  The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable.  The effect of the outcome of these matters on the Company’s future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company’s financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company’s financial position, results of operations or cash flows in a particular future quarter or year.

79

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has entered into purchase agreements primarily for various key raw materials at market related prices, all made in the normal course of business.  The commitments include both fixed and variable price provisions.  Raw material prices as of June 30, 213 were used for commitments with variable pricing.  The purchase commitments covered by these agreements aggregate to approximately $408.6 million as of June 30, 2013 all of which relates to fiscal year 2014.

12.Operating Leases

The Company leases certain facilities and equipment under operating leases.  Total rent expense was $12.3 million, $9.8 million and $7.3 million for the fiscal years ended June 30, 2013, 2012 and 2011, respectively.

Future minimum payments for non-cancellable operating leases in effect at June 30, 2013 are:  $11.0 million in fiscal year 2014, $7.8 million in fiscal year 2015, $4.2 million in fiscal year 2016, $2.3 million in fiscal year 2017, $1.8 million in fiscal year 2018 and $7.2 million thereafter.

13. Fair Value Measurements

The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3, which the Company does not currently use, refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

80

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

June 30, 2013	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	$	—	$	5.4	$	5.4
Derivative financial instruments	—		0.9		0.9
Total assets	$	—	$	6.3	$	6.3
Liabilities:
Derivative financial instruments	$	—	$	73.1	$	73.1

June 30, 2012	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	—		5.0		5.0
Derivative financial instruments	—		2.6		2.6
Total assets	$	—	$	7.6	$	7.6
Liabilities:
Derivative financial instruments	$	—	$	56.5	$	56.5

The Company’s derivative financial instruments consist of commodity forward contracts, foreign exchange forward contracts and interest rate swaps. These instruments are measured at fair value using the market method valuation technique.  The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest rates published by third-party leading financial news and data providers.  This is observable data; however, the valuation of these instruments is not based on actual transactions for the same instruments so they are classified as Level 2. The Company’s use of derivatives and hedging policies are more fully discussed in Note 15.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

The carrying amounts of other financial instruments not listed in the table below approximate fair value due to the short-term nature of these items.

81

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts and estimated fair values of Carpenter’s financial instruments not recorded at fair value in the financial statements were as follows:

	June 30, 2013				June 30, 2012
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	604.2	$	602.8	$	406.9	$	427.7
Company-owned life insurance	$	13.6	$	13.6	$	11.0	$	11.0

The carrying amount for company-owned life insurance reflects cash surrender values based upon the market values of underlying securities, net of any outstanding policy loans. The carrying value associated with the cash surrender value of these policies is recorded in other assets in the accompanying consolidated balance sheets.

The fair values of long-term debt as of June 30, 2013 and June 30, 2012 were determined by using current interest rates for debt with terms and maturities similar to the Company’s existing debt arrangements and accordingly would be classified as using Level 2 inputs in the fair value hierarchy.

14.Share-Based Compensation

Carpenter has two share-based compensation plans: the 1993 Plan covering officers and key employees and the Director’s Plan covering non-employee directors.  Awards granted under the share-based compensation plans are generally paid from shares held in treasury and any additional required share payments are made with newly issued shares. The total compensation cost that has been charged against income related to these share-based compensation plans was $13.1 million, $13.3 million, and $14.4 million for the years ended June 30, 2013, 2012 and 2011, respectively.

1993 Plan

The 1993 plan provides that the Board of Directors may grant stock options, restricted stock, and restricted stock units, and determine the terms and conditions of each grant.  The 1993 plan provides the Chief Executive Officer with limited authority to grant awards.  As of June 30, 2013, 2,343,472 shares were available for awards which may be granted under this plan.

Director’s Plan

The Director’s plan provides for the granting of stock options, performance units and stock units to non-employee Directors. As of June 30, 2013, 790,049 shares were reserved for awards which may be granted under this plan.

Stock Options (all plans):

Stock options granted under the plans above are granted with an exercise price equal to at least the fair market value of the Company’s common stock on the date of grant. The options are exercisable after one to three years of service and expire no longer than ten years from the grant date.

82

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of stock options awarded in fiscal years 2013, 2012 and 2011 were estimated on the date of each grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	Years Ended June 30,
	2013		2012		2011
Expected volatility	55	%	54	%	55	%
Dividend yield	1	%	1	%	2	%
Risk-free interest rate	0.7	%	1.4	%	1.6	%
Expected term (in years)	5.0		5.0		5.0

The assumptions are based on multiple factors, including historical exercise patterns of employees in relatively homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same homogeneous groups and the implied volatility of our stock price based on historical performance for the same expected term of the options granted. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant.

	Number of Awards		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Millions)
Outstanding at June 30, 2010	820,655		$	26.53
Granted	227,600		34.78
Exercised	(85,590	)	17.91
Cancelled	(5,858	)	31.31
Outstanding at June 30, 2011	956,807		29.23
Granted	152,450		55.04
Exercised	(79,444	)	23.57
Cancelled	(7,207	)	27.11
Outstanding at June 30, 2012	1,022,606		33.54
Granted	198,904		48.60
Exercised	(115,600	)	19.82
Cancelled	(17,182	)	48.42
Outstanding at June 30, 2013	1,088,728		$	37.51	6.8 Years	$	11.4
Exercisable at June 30, 2013	759,720		$	33.02	6.0 Years	$	10.8

83

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Outstanding and Exercisable Options:

Exercise Price Range	Number Outstanding at June 30, 2013	Weighted Average Remaining Contractual Term (in Years)	Weighted Average Exercise Price		Number Exercisable at June 30, 2013	Weighted Average Exercise Price
$5.00 -$20.00	176,139	5.9	$	17.18	176,139	$	17.18
$20.01 - $30.00	189,624	6.0	22.66		189,624	22.66
$30.01 - $40.00	196,699	7.1	34.64		138,419	34.73
$40.01 - $50.00	294,669	7.5	46.23		127,251	43.93
$50.01 - $63.54	231,597	6.9	56.47		128,287	57.40
	1,088,728		$	37.51	759,720	$	33.02

The weighted average grant date fair value of options awarded during fiscal years 2013, 2012 and 2011 was $20.37, $23.46 and $14.75, respectively. Share based compensation charged against income related to stock options for the years ended June 30, 2013, 2012 and 2011 was $3.4 million, $3.1 million and $3.8 million, respectively. As of June 30, 2013, $2.0 million of compensation cost related to nonvested stock options remains to be recognized over a weighted average remaining life of 1.4 years.

Of the options outstanding at June 30, 2013, 877,477 relate to the 1993 plan and 211,251 relate to the Directors’ Plan.

Nonvested Stock Awards (all plans):

Nonvested stock awards are granted to employees with performance and/or service conditions. Nonvested awards receive non-forfeitable cash dividends during the restriction period. The fair value of the nonvested stock awards is determined based on the Company’s stock price at the grant date.

Performance-based restricted share awards are earned only if Carpenter achieves certain performance goals during a specified performance period according to the terms determined by the Board at the date of the grant. These shares vest from one to two years from the date of the attainment of the specified performance goals. Compensation cost is determined and charged to expense beginning in the performance period through the vesting period.

Time-based restricted share awards typically vest three years from the date of grant. Compensation cost related to time based share awards is recognized over the vesting period of the award.

Amounts charged to compensation expense for nonvested stock awards was $4.8 million, $6.1 million and $7.7 million for the years end June 30, 2013, 2012 and 2011, respectively. As of June 30, 2013, $3.3 million of compensation cost related to nonvested restricted stock awards remains to be recognized over a weighted average remaining life of 1.1 years.

84

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Number of Awards		Weighted- Average Grant Date Fair Value
Nonvested Balance at June 30, 2010	345,027		$	26.63
Time-based granted	171,617			33.10
Performance-based earned	131,644			32.52
Vested	(165,576	)		33.43
Forfeited	(1,971	)		36.64
Nonvested Balance at June 30, 2011	480,741			28.17
Time-based granted	43,408			49.75
Performance-based earned	77,423			55.69
Vested	(171,140	)		28.00
Forfeited	(11,101	)		21.75
Nonvested Balance at June 30, 2012	419,331			35.71
Time-based granted	22,838			50.15
Performance-based earned	41,816			47.85
Vested	(254,967	)		31.39
Forfeited	(13,603	)		51.85
Nonvested Balance at June 30, 2013	215,415		$	43.75

Total Stockholder Return Awards:

The Company granted Total Stockholder Return (“TSR”) awards in fiscal years 2013, 2012 and 2011. The TSR awards are granted at a target number of shares, and vest based on the Company’s total stockholder return compared to the total stockholder returns of a group of peer companies at the end of a three-year period. The actual number of shares awarded may range from a minimum of 50 percent of the target shares to a maximum of two times target. Participants do not have any rights to dividends (or equivalents) during the performance period. The fair value of the TSR awards was estimated using Monte Carlo valuation models. Compensation cost recognized in fiscal years 2013, 2012 and 2011 related to TSR awards was $3.7 million, $3.0 million and $1.9 million, respectively.

Director Stock Units

According to the provisions of the Director’s plan, on the date of each annual stockholders’ meeting or on such other regularly scheduled date as the Board of Directors may determine from time to time in light of the Company’s prevailing practices for the grant of equity awards to employees, each Director shall be granted, in place of cash compensation, a number of stock units determined by dividing 50 percent of the Director’s annual retainer by the fair market value of the Company’s common stock on that date. These stock units vest as to one-quarter of the units for every three months of service following the grant date subject to the Director’s continued service, and are fully vested on the first anniversary of the grant date.   At the Director’s election, the remaining 50 percent of the annual retainer and 100 percent of committee chair fees may be paid in stock units in lieu of cash. These units are immediately vested.

85

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition to the grant of retainer stock units described above, each Director may be granted annually an additional award of stock units as the Board may determine by resolution.  These stock units vest as to one-quarter of the units for every three months of service following the grant date subject to the Director’s continued service, and are fully vested on the first anniversary of the grant date.

Additional units are credited to each Director on a quarterly basis to reflect dividend equivalents on the Company’s common stock.

In the case of separation from service due to death or disability, all stock units shall immediately vest.

Following a Director’s retirement, the Director will be paid the number of the Company’s common stock shares equal to the number of stock units credited to the Director’s account.

	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at June 30, 2010	162,864	$	22.66
Granted	29,822		36.45
Dividend equivalents	3,015		—
Outstanding at June 30, 2011	195,701		25.81
Granted	22,660		47.89
Dividend equivalents	3,049		—
Outstanding at June 30, 2012	221,410		27.10
Granted	21,710		53.53
Dividend equivalents	3,399		—
Outstanding at June 30, 2013	246,519	$	30.06

Compensation cost is determined using the grant-date fair value and charged to expense over the vesting period of one year and amounted to $1.2 million, $1.1 million and $1.0 million for the years ended June 30, 2013, 2012 and 2011, respectively. As of June 30, 2013, $0.3 million of compensation cost related to director stock units remains to be recognized over a weighted average remaining life of 0.3 years.

15.          Derivatives and Hedging Activities

The Company uses commodity forwards, interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a recap about the impact the derivative instruments have had on the Company’s financial position, results of operations, and cash flows.

86

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in other comprehensive income to the extent effective, and reclassified to costs of sales in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

Cash Flow Hedging — Forward interest rate swaps: Historically, the Company has entered into forward swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. The forward interest rate swaps have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income to the extent effective, and reclassified to interest expense in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

Cash Flow Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in other comprehensive income to the extent effective, and reclassified to net sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

The Company also uses foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currency against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other income and expense. As of June 30, 2013, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts was not material.

Fair Value Hedging - Interest rate swaps: The Company has used interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges.  Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings.  The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of income. As of June 30, 2013 and 2012, the total notional amounts of floating interest rate contracts were $0.0 million and $45.0 million, respectively. For the years ended June 30, 2013 and 2012, net gains of $1.4 million and $1.4 million were recorded as a reduction to interest expense, respectively. These amounts include the impact of previously terminated swaps which are being amortized over the remaining term of the underlying debt.

87

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of June 30, 2013 and 2012:

June 30, 2013 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	0.9	$	—	$	0.9
Other assets	—		—		—		—
Total asset derivatives	$	—	$	0.9	$	—	$	0.9
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	28.7	$	29.1
Other liabilities	—		—		44.0		44.0
Total liability derivatives	$	—	$	0.4	$	72.7	$	73.1

June 30, 2012 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.2	$	1.2	$	—	$	1.4
Other assets	1.2		—		—		1.2
Total asset derivatives	$	1.4	$	1.2	$	—	$	2.6
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	1.5	$	25.0	$	26.5
Other liabilities	—		0.4		29.6		30.0
Total liability derivatives	$	—	$	1.9	$	54.6	$	56.5

88

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transactions affects earnings or it becomes probable that the forecasted transaction will not occur.  The following is a summary of the (losses) gains related to cash flow hedges recognized during the years ended June 30, 2013, 2012 and 2011:

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Years Ended June 30,
($ in millions)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(43.2	)	$	(79.0	)	$	15.2
Foreign exchange contracts	1.9			(0.1		)	(2.4		)
Forward interest rate swaps	2.7			—			1.0
Total	$	(38.6	)	$	(79.1	)	$	13.8

	Location of (Loss) Gain	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
	Reclassified from AOCI into	Years Ended June 30,
($ in millions)	Income (Effective Portion)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	Cost of sales	$	(24.9	)	$	(23.4	)	$	7.6
Forward interest rate swaps	Interest expense	0.2			—			—
Foreign exchange contracts	Net sales	0.1			1.2			(1.2		)
Total		$	(24.6	)	$	(22.2	)	$	6.4

The Company estimates that $15.9 million of net derivative losses included in AOCI as of June 30, 2013 will be reclassified into earnings within the next twelve months. No significant cash flow hedges were discontinued during the year ended June 30, 2013. Ineffectiveness was not material during the year ended June 30, 2013.

The changes in AOCI associated with derivative hedging activities during the years ended June 30, 2013, 2012 and 2011 were as follows:

	2013			2012			2011
Balance at July 1	$	(32.8	)	$	2.6		$	(2.4	)
Current period changes in fair value, net of tax	(24.2		)	(49.1		)	8.5
Reclassification to earnings, net of tax	15.5			13.7			(3.5		)
Balance at June 30	$	(41.5	)	$	(32.8	)	$	2.6

89

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

According to the provisions of the Company’s derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. The Company’s contracts with these counterparties allow for netting of derivative instrument positions executed under each contract. As of June 30, 2013 the Company had no cash collateral held by counterparties.

The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts.

16.          Income Taxes

Income from continuing operations before income taxes for the Company’s domestic and foreign operations was as follows:

	Years Ended June 30,
($ in millions)	2013		2012		2011
Domestic	$	198.0	$	168.4	$	64.9
Foreign	18.8		20.2		22.9
Income before income taxes	$	216.8	$	188.6	$	87.8

The provision (benefit) for income taxes from continuing operations consisted of the following:

	Years Ended June 30,
($ in millions)	2013			2012		2011
Current:
Federal	$	49.7		$	21.5	$	9.2
State	5.9			2.9		5.2
Foreign	5.3			5.8		6.7
Total current	60.9			30.2		21.1
Deferred:
Federal	7.8			32.5		(3.6		)
State	2.5			4.1		(1.3		)
Foreign	(0.9		)	0.2		(0.1		)
Total deferred	9.4			36.8		(5.0		)
Total income tax expense	$	70.3		$	67.0	$	16.1

90

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company’s effective income tax rate:

	Years Ended June 30,
(% of pre-tax income)	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.0		2.2		2.9
Domestic manufacturing deduction	(2.7	)	(2.3	)	(3.4	)
Research and development tax credit	(1.3	)	(0.6	)	(3.7	)
Foreign tax rate differential	(0.9	)	(0.6	)	(1.7	)
Nontaxable income	(0.6	)	—		(0.6	)
Foreign source income	—		—		(7.3	)
Increases (decreases) in valuation allowances	0.5		0.1		(0.2	)
Adjustments of prior years’ income taxes	0.3		(0.5	)	(2.6	)
Changes in uncertain tax positions, net	(0.6	)	0.4		(0.4	)
Other, net	0.7		1.8		0.3
Effective income tax rate	32.4	%	35.5	%	18.3	%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases.  The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheet are summarized in the table below. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2013, the Company had state net operating loss carryforwards of $324.5 million expiring between 2014 and 2032.  The valuation allowance increased from fiscal year 2012 by $1.1 million primarily due to a decrease in the amount of future reversals of taxable temporary differences.

	June 30,
($ in millions)	2013			2012
Deferred tax assets:
Pensions	$	96.5		$	132.1
Postretirement provisions	64.6			90.8
Net operating loss carryforwards	21.3			20.7
Environmental	4.6			4.5
Derivatives and hedging activities	25.2			20.0
Other	28.0			24.5
Gross deferred tax assets	240.2			292.6
Valuation allowances	(19.2		)	(18.1		)
Net deferred tax assets	221.0			274.5
Deferred tax liabilities:
Depreciation	(227.4		)	(239.5		)
Intangible assets	(43.0		)	(41.2		)
Inventories	(21.1		)	(12.9		)
Other	—			(1.7		)
Total deferred tax liabilities	(291.5		)	(295.3		)
Deferred tax liabilities	$	(70.5	)	$	(20.8	)

91

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 2013, the Company had undistributed earnings of foreign subsidiaries, amounting to $122.9 million on which deferred income taxes have not been provided because earnings are expected to be reinvested indefinitely outside of the U.S. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and withholding taxes in various foreign tax jurisdictions.  It is not practical to calculate these taxes due to the complex and hypothetical nature of the calculations.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions is as follows:

	Years Ended June 30,
($ in millions)	2013			2012		2011
Balance, beginning	$	2.3		$	1.9	$	3.6
Additions based on tax positions of prior years	0.6			—		0.3
Additions based on tax positions of current years	—			0.4		—
Reductions as a result of a lapse of statute of limitations	(1.3		)	—		(2.0		)
Reductions based on tax positions of prior year	(0.2		)	—		—
Balance, ending	$	1.4		$	2.3	$	1.9

The liability for unrecognized tax benefits as of June 30, 2013 of $1.4 million includes $1.1 million of offsetting tax benefits for reversals of deferred tax items.  The net amount of $0.3 million would, if recognized, favorably impact the Company’s effective tax rate. The net amounts at June 30, 2012 and 2011 were $0.8 million and $0.4 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefits will change within the next 12 months; however, any such changes should not have a significant impact on the Company’s consolidated financial statements.

It is the Company’s policy to classify interest and penalties recognized on uncertain tax positions as a component of income tax expense. The Company’s income tax expense included a benefit of $0.3 million, a charge of $0.4 million and a benefit of $0.3 million related to interest and penalties for the years ended June 30, 2013, 2012 and 2011, respectively.  In addition, $0.6 million and $0.7 million were included in accrued income taxes in the consolidated balance sheet as of June 30, 2013 and 2012, respectively.

All years prior to June 30, 2009 have been settled with the Internal Revenue Service and with most significant state tax jurisdictions. The Company has not extended any statute of limitations period for any significant location in which it operates. Generally, tax years are open to examination for a period of four to six years following the filing of the tax returns.

92

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17.          Other Income, Net

Other income, net consists of the following:

	Years Ended June 30,
($ in millions)	2013		2012			2011
Interest income	$	0.3	$	0.9		$	1.1
Equity in earnings of unconsolidated subsidiaries	1.3		0.6			2.6
Unrealized gains (losses) on company owned life insurance contracts and investments held in rabbi trusts	3.0		(0.4		)	2.5
Continued Dumping and Subsidy Offset Act receipts	0.1		—			2.0
Other	0.4		1.2			0.3
Total other income, net	$	5.1	$	2.3		$	8.5

18.          Segment Information, Geographic and Product Data

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.  All prior year information has been recast to conform to the current year presentation.

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 Athens, 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.

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 Specialty Steel Supply 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.

93

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that management considers not representative of ongoing operations, such as restructuring related charges, transaction costs associated with acquisitions, and other specifically-identified income or expense items.  The accounting policies of our reportable segments are the same as those described in the Summary of Significant Accounting Policies.

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, no single customer accounted for 10 percent or more of the Company’s sales for the years ended June 30, 2013 and June 30, 2012. On a consolidated basis one customer, Precision Castparts Corporation, accounted for 10% ($161.7 million) of the Company’s sales for the year ended June 30, 2011.

Segment Data	Years Ended June 30,
($ in millions)	2013			2012			2011
Net Sales:
Specialty Alloys Operations	$	1,547.4		$	1,566.6		$	1,431.3
Latrobe	491.2			200.8			38.7
Performance Engineered Products	378.8			365.7			248.3
Intersegment	(145.7		)	(104.4		)	(43.2		)
Consolidated net sales	$	2,271.7		$	2,028.7		$	1,675.1

Operating Income:	Years Ended June 30,
($ in millions)	2013			2012			2011
Specialty Alloys Operations	$	218.9		$	229.4		$	139.3
Latrobe	58.3			11.0			2.2
Performance Engineered Products	36.5			44.1			35.0
Corporate costs	(47.7		)	(53.2		)	(42.0		)
Pension earnings, interest & deferrals	(31.9		)	(15.3		)	(35.2		)
Intersegment	(1.4		)	(5.9		)	(2.9		)
Consolidated operating income	$	232.7		$	210.1		$	96.4

94

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Years Ended June 30,
($ in millions)	2013			2012			2011
Depreciation and Amortization:
Specialty Alloys Operations	$	56.7		$	53.2		$	51.1
Latrobe	22.7			7.7			0.4
Performance Engineered Products	19.4			17.7			10.2
Corporate	5.9			5.6			4.9
Intersegment	(0.6		)	(0.4		)	(0.1		)
Consolidated depreciation and amortization	$	104.1		$	83.8		$	66.5

	Years Ended June 30,
($ in millions)	2013			2012			2011
Capital Expenditures:
Specialty Alloys Operations	$	284.8		$	121.1		$	51.6
Latrobe	25.0			7.9			0.4
Performance Engineered Products	24.7			40.0			24.8
Corporate	4.0			5.0			3.9
Intersegment	(1.6		)	(2.1		)	(1.1		)
Consolidated capital expenditures	$	336.9		$	171.9		$	79.6

	June 30,
($ in millions)	2013			2012
Total Assets:
Specialty Alloys Operations	$	1,537.9		$	1,293.4
Latrobe	771.6			807.6
Performance Engineered Products	391.7			394.7
Corporate	233.7			191.4
Intersegment	(52.0		)	(59.3		)
Consolidated total assets	$	2,882.9		$	2,627.8

Geographic Data	Years Ended June 30,
($ in millions)	2013		2012		2011
Net Sales:(a)
United States	$	1,575.3	$	1,364.2	$	1,163.7
Europe	382.1		375.9		277.4
Asia Pacific	153.6		142.1		110.7
Mexico	66.6		68.8		67.1
Canada	59.8		52.1		36.6
Other	34.3		25.6		19.6
Consolidated net sales	$	2,271.7	$	2,028.7	$	1,675.1

(a) Net sales were attributed to countries based on the location of the customer.

95

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-lived assets:	June 30,
($ in millions)	2013		2012
United States	$	1,142.5	$	901.7
Canada	9.1		9.8
Europe	6.1		6.9
Mexico	1.6		1.6
Asia Pacific	9.1		4.6
Consolidated long-lived assets	$	1,168.4	$	924.6

Product Data	Year Ended June 30,
($ in millions)	2013		2012		2011
Special alloys	$	989.9	$	931.4	$	831.8
Stainless steel	638.8		637.3		564.9
Titanium products	155.0		156.6		135.3
Powder metals	60.4		64.3		61.4
Alloy and tool steel	255.7		108.6		27.2
Other materials	171.9		130.5		54.5
Total net sales	$	2,271.7	$	2,028.7	$	1,675.1

19.          Recent Accounting Pronouncements

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles — Goodwill and Other (“ASU 2011-08”).  ASU 2011-08 amends previous guidance on the testing of goodwill for impairment and is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The amended guidance provides entities with the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would still be required. The adoption of ASU 2011-08 did not have a significant impact on the Company’s Consolidated Financial Statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires disclosures to provide information to help reconcile differences in offsetting requirements under U.S. GAAP and International Financial Reporting Standards (“IFRS”).  The new disclosure requirements in ASU 2011-11 mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The guidance in ASU 2011-11 is required to be applied for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is evaluating the impact of the adoption of ASU 2011-11 and does not expect the adoption to have a significant impact on the Company’s Consolidated Financial Statements.

96

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). The guidance in ASU 2012-02 is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment by providing entities with an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. The guidance includes examples of events and circumstances that might indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. The qualitative assessment may be performed on none, some or all of its indefinite-lived intangible assets.  An entity may also choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to the quantitative impairment test and then choose to perform the qualitative assessment in any subsequent period. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 with early adoption permitted. The adoption of ASU 2011-08 is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). The guidance in ASU 2013-02 requires entities to present separately, among other items, the amount of the change that is due to reclassifications, and the amount that is due to current period other comprehensive income. ASU 2013-02 will be effective for the Company beginning in the first quarter of fiscal year 2014.  The adoption of ASU 2013-02 will require additional disclosure and is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

20.          Supplemental Data

The following are additional required disclosures and other material items:

	Years Ended June 30,
($ in millions)	2013		2012		2011
Cost Data:
Repairs and maintenance costs	$	101.9	$	90.3	$	74.8
Cash Flow Data:
Noncash investing and financing activities:
Treasury shares issued in connection with acquisition of business	$	—	$	415.5	$	—
Cash paid during the year for:
Interest payments	$	23.6	$	21.4	$	18.3
Income tax payments, net	$	51.2	$	18.5	$	11.5

97

CARPENTER TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	June 30,
($ in millions)	2013			2012			2011
Accumulated Other Comprehensive Loss:
Foreign currency translation adjustment	$	(20.2	)	$	(24.9	)	$	(7.7	)
Pension and post-retirement benefits, net of tax	(273.6		)	(354.1		)	(227.7		)
Net unrealized losses on derivatives, net of tax	(41.5		)	(32.8		)	2.6
Unrealized losses on marketable securities, net of tax	(0.4		)	(0.7		)	(0.5		)
	$	(335.7	)	$	(412.5	)	$	(233.3	)

98

SUPPLEMENTARY DATA

Quarterly Financial Data (Unaudited)

Quarterly sales and earnings results are normally influenced by seasonal factors.  Historically, the first two fiscal quarters (three months ending September 30 and December 31) are typically the lowest principally because of annual plant vacation and maintenance shutdowns by Carpenter and by many of its customers.  However, the timing of major changes in the general economy or the markets for certain products can alter this pattern.

(dollars and shares in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Results of Operations
Fiscal Year 2013
Net sales	$	544.9	$	533.5	$	581.4	$	611.8
Gross profit	$	109.3	$	102.6	$	101.0	$	120.5
Operating income	$	61.6	$	52.7	$	53.0	$	65.4
Net income	$	39.5	$	33.2	$	32.9	$	40.9
Net income attributable to Carpenter	$	39.2	$	33.0	$	32.9	$	40.9
Fiscal Year 2012
Net sales	$	414.1	$	431.1	$	539.9	$	643.7
Gross profit	$	81.1	$	84.3	$	105.1	$	120.6
Operating income	$	44.0	$	43.9	$	55.7	$	66.5
Net income	$	23.7	$	23.8	$	33.0	$	41.0
Net income attributable to Carpenter	$	23.8	$	23.6	$	33.0	$	40.8

99

Earnings per common share

Fiscal Year 2013	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.74	$	0.62	$	0.62	$	0.77
Diluted earnings	$	0.74	$	0.62	$	0.62	$	0.77

Fiscal Year 2012	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.53	$	0.53	$	0.69	$	0.77
Diluted earnings	$	0.53	$	0.52	$	0.69	$	0.77

Weighted average common shares outstanding

(in millions)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal Year 2013
Basic	52.8	52.9	52.9	52.9
Diluted	53.4	53.5	53.5	53.5
Fiscal Year 2012
Basic	44.3	44.4	47.2	52.6
Diluted	45.1	45.1	47.9	53.3

100

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable

Item 9A.  Controls and Procedures

(a)Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a—15(e) and 15d—15(e) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of June 30, 2013. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of June 30, 2013 were effective in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required under the Securities and Exchange Commission’s rules and forms, including a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Management’s Report on Internal Control over Financial Reporting

Management’s Report on the Company’s internal control over financial reporting is included in Item 8 of this Annual Report on Form 10-K under the caption “Management’s Report on Internal Control Over Financial Reporting” and is incorporated herein by reference.  The Company’s independent registered public accounting firm has issued a report on management’s assessment of the Company’s internal control over financial reporting and is set forth in Item 8 of this Annual Report on Form 10-K under the caption “Report of Independent Registered Public Accounting Firm” and is incorporated herein by reference.

(c)Changes in Internal Controls over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2013 that have materially affected, or are likely to materially affect, our internal control over financial reporting.

Item 9B.  Other Information

As previously disclosed, Mark S. Kamon, the Company’s former Senior Vice President — Commercial Specialty Alloy Operations, announced his resignation from the Company effective on December 31, 2012.  In connection with his resignation, on December 31, 2012 the Company entered into a Non-Competition Agreement (the “Agreement”) with Mr. Kamon extending the term of his existing non-competition covenant from eighteen months to thirty-six months in exchange for a lump sum consideration payment of $115,002.

The foregoing summary of the Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, a copy of which is filed as Exhibit 10(AA) hereto and the terms of which are incorporated herein by reference.

101

PART III

Item 10.  Directors and Executive Officers and Corporate Governance

The information required as to the officers is set forth in Part I hereof.

The information required as to directors and the committees of the Board of Directors is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the captions “Election of Directors” and “Corporate Governance”.

The information concerning compliance with Section 16(a) of the Securities and Exchange Act of 1934, as amended, is incorporate herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “Corporate Governance”.

The information concerning Carpenter’s Code of Ethics and certain additional information relating to the Company’s Corporate Governance is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “Corporate Governance”.

The information concerning the Audit Committee and its financial experts is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “Audit/Finance Committee Report”.

The information concerning material changes to the procedures by which shareholders may recommend nominees to the Board of Directors is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “General Information”.

On October 23, 2012, we filed with the New York Stock Exchange (“NYSE”) the Annual CEO Certification regarding our compliance with the NYSE’s Corporate Governance listing standards as required by Section 303 A-12(a) of the NYSE Listed Company Manual. In addition, we have filed as exhibits to our annual report on Form 10-K for the fiscal year ended June 30, 2013, the applicable certifications of our Chief Executive Officer and our Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002, regarding the quality of Carpenter’s public disclosures.

Item 11.  Executive Compensation

Certain information required by this item is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the captions “Compensation Discussion and Analysis” and “Executive Compensation”.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “Security Ownership of Certain Persons”.

102

Equity Compensation Plan Information

The following table shows the securities authorized for issuance under equity compensation plans as of June 30, 2013:

Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,088,728	$	37.51	3,133,521	(1)
Equity compensation plans not approved by security holders	—	—		—
Total	1,088,728	$	37.51	3,133,521	(1)

(1)Includes 2,343,472 shares available for issuance under the Stock-Based Incentive Compensation Plan for Officers and Key Employees (which provides for the issuance of stock options, restricted stock, and restricted stock units) and 790,049 shares available under the Stock-Based Compensation Plan for Non-Employee Directors (which provides for issuance of stock options, stock units and performance units.)

(2)There were no reportable purchases during the quarter ended June 30, 2013, provided however that 33,170 shares, at an average purchase price of $45.07, were surrendered by employees to the Company during such quarter for the payment of the minimum tax liability withholding obligations upon the vesting of shares of restricted stock and the exercise of options.

Item 13.  Certain Relationships, Related Transactions and Director Independence

The information required by this item is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the captions “Corporate Governance” and “Executive Compensation”.

Item 14.  Principal Accounting Fees and Services

The information required by this item is incorporated herein by reference to the Company’s fiscal year 2013 definitive Proxy Statement under the caption “Approval of Appointment of Independent Registered Public Accounting Firm”.

103

PART IV

Item 15.  Exhibits, Financial Statement Schedules

(a)Financial Statement Schedule:

(1)The following consolidated financial statement schedule should be read in conjunction with the consolidated financial statements (see Item 8. “Financial Statements and Supplementary Data:”):

Schedule II — Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is contained in the consolidated financial statements or notes thereto.

(b)Exhibits

Exhibits required to be filed by Item 601 of Regulation S-K are listed below.  Documents not designated as being incorporated herein by reference are filed herewith.  The exhibit numbers correspond to the paragraph numbers designated in Item 601 of Regulation S-K.

Exhibit No.	Description
3(A)	Restated Certificate of Incorporation, dated October 26, 1998, is incorporated herein by reference to Exhibit 3(A) of Carpenter’s 2005 Annual Report on Form 10-K filed on September 9, 2005.
3(B)	By-Laws, amended as of April 19, 2011, incorporated by reference to Exhibit 3.2 of Carpenter’s Current Report on Form 8-K filed April 21, 2011.
4(A)	Restated Certificate of Incorporation and By-Laws set forth in Exhibit Nos. 3(A) and 3(B), above.
4(B)	Carpenter’s Registration Statement No. 333-44757, as filed on Form S-3 on January 22, 1998, and amended on February 13, 1998, with respect to issuance of Common Stock and unsecured debt is incorporated herein by reference.
4(C)	Prospectus, dated February 13, 1998, and Prospectus Supplement, dated March 31, 1998, File No. 333-44757, with respect to issuance of $198,000,000 of Medium Term Notes are incorporated by reference.
4(D)	Indenture, dated January 6, 1994, between Carpenter and U.S. Bank Trust National Association, formerly known as First Trust of New York, National Association, as successor Trustee to Morgan Guaranty Trust Company of New York, related to Carpenter’s (i) $100,000,000 of unsecured medium term notes registered on Registration Statement No. 33-51613 and (ii) $198,000,000 of unsecured medium term notes registered on Registration Statement No. 333-44757 is incorporated by reference to Exhibit 4(C) to Carpenter’s Registration Statement No. 33-51613, as filed on January 12, 1994.
4(E)	Forms of Fixed Rate and Floating Rate Medium-Term Note, Series B are incorporated by reference to Exhibit 4(F) of Carpenter’s 2004 Annual Report on Form 10-K filed September 3, 2004.
4(F)	Pricing Supplements No. 1 through 25 dated and filed from April 2, 1998 to June 12, 1998, supplements to Prospectus dated February 13, 1998 and Prospectus Supplement dated March 31, 1998, File No. 333-44757, with respect to issuance of $198,000,000 of Medium Term Notes are incorporated herein by reference.

104

Exhibit No.	Description
4(G)	Carpenter’s Registration Statement No. 333-71518 as filed on Form S-4 on October 12, 2001, and amended on November 29, 2001, with respect to an offer to exchange $100,000,000 of Medium Term Notes is incorporated herein by reference.
4(H)	First Supplemental Indenture, dated May 22, 2003, between Carpenter and U.S. Bank National Trust Association (formerly known as First Trust of New York, as successor Trustee to Morgan Guaranty Trust Company of New York) related to Carpenter’s issuance of $100,000,000 principal amount of its 6.625% Senior Notes due 2013 is incorporated herein by reference to Exhibit 4(I) of Carpenter’s 2003 Annual Report on Form 10-K filed September 12, 2003.
4(I)	Second Supplemental Indenture, dated as of June 30, 2011, between Carpenter and U.S. Bank National Association related to Carpenter’s issuance of $250,000,000 principal amount of its 5.20% Senior Notes due 2012 is incorporated herein by reference to Exhibit 4.1 of Carpenter’s Current Report on Form 8-K filed June 30, 2011.
4(J)	Exchange and Registration Rights Agreement dated May 22, 2003, between Carpenter and Wachovia Securities as the initial purchaser of $100,000,000 principal amount of Carpenter’s 6.625% Senior Notes due 2013 is incorporated herein by reference to Exhibit 4(J) of Carpenter’s 2003 Annual Report on Form 10-K filed September 12, 2003.
4(K)	Form of Global Security with respect to the issuance by Carpenter and purchase by Wachovia Securities of $100,000,000 principal amount of Carpenter’s 6.625% Senior Notes due 2013 is incorporated herein by reference to Exhibit 4(K) of Carpenter’s 2003 Annual Report on Form 10-K filed September 12, 2003.
4(L)	Form of 5.20% Senior Notes Due 2012 related to Carpenter’s issuance of $250,000,000 principal amount of its 5.20% Senior Notes due 2012 is incorporated herein by reference to Exhibit 4.2 of Carpenter’s Current Report on Form 8-K filed June 30, 2011.
4(M)	Stockholders Agreement, dated February 29, 2012, by and among Carpenter, Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P., Watermill-Toolrock Enterprises, LLC and HHEP-Latrobe, L.P. is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed March 1, 2012.
4(N)	Registration Rights Agreement, dated February 29, 2012, by and among Carpenter, Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P., Watermill-Toolrock Enterprises, LLC and HHEP-Latrobe, L.P. is incorporated herein by reference to Exhibit 10.2 of Carpenter’s Current Report on Form 8-K filed March 1, 2012.
4(O)	Third Supplemental Indenture, dated as of February 26, 2013, between Carpenter and U.S. Bank National Association related to Carpenter’s issuance of $300,000,000 in aggregate principal amount of its 4.450% Senior Notes due 2023 is incorporated by reference to Exhibit 4.1 of Carpenter’s Current Report on Form 8-K filed on February 26, 2013.
4(P)	Form of 4.450% Senior Notes Due 2023 related to Carpenter’s issuance of $300,000,000 principal amount of its 4.450% Senior Notes due 2023 is incorporated herein by reference to Exhibit 4.2 of Carpenter’s Current Report on Form 8-K filed on February 26, 2013.
4(Q)	Form of Note related to the Credit Agreement dated as of June 28, 2013 among Carpenter Technology Corporation, as borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A., as Syndication Agent, PNC Bank, National Association, The Bank Of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Sovereign Bank, each, as a Documentation Agent and Merrill Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Managers (filed herewith).
† 10(A)	Supplemental Retirement Plan for Executives of Carpenter Technology Corporation as amended on June 29, 2010 is incorporated by reference to Exhibit 10(A) to Carpenter’s 2010 Annual Report on Form 10-K filed August 20, 2010.

105

Exhibit No.	Description
† 10(B)	Deferred Compensation Plan for Non-Management Directors of Carpenter Technology Corporation, amended as of August 16, 2011, is incorporated by reference to Exhibit 10(B) to Carpenter’s 2011 Annual Report on Form 10-K filed August 24, 2011.
† 10(C)	Deferred Compensation Plan for Officers and Key Employees of Carpenter Technology Corporation, as amended and restated effective January 1, 2008, is incorporated herein by reference to Exhibit 10(C) of Carpenter’s Form 10-Q for the quarter ended December 31, 2009 filed February 3, 2010.
† 10(D)	Executive Bonus Compensation Plan, amended and restated July 1, 2011 is incorporated by reference to Exhibit 10(D) to Carpenter’s 2011 Annual Report on Form 10-K filed August 24, 2011.
† 10(E)	Stock-Based Compensation Plan For Non-Employee Directors, as amended as of August 16, 2011, is incorporated by reference to Exhibit 10(E) to Carpenter’s 2011 Annual Report on Form 10-K filed August 24, 2011.
† 10(F)	Officers’ and Key Employees Supplemental Retirement Plan of Carpenter Technology Corporation restated as of August 20, 2007 and amended as of June 29, 2010 is incorporated by reference to Exhibit 10(F) to Carpenter’s 2012 Annual Report on Form 10-K filed August 22, 2012.
† 10(G)	Trust Agreement between Carpenter and the Chase Manhattan Bank, N.A., dated September 11, 1990 as restated on May 1, 1997 and amended October 28, 2002 and January 23, 2003, relating in part to the Supplemental Retirement Plan for Executive Officers, Deferred Compensation Plan for Corporate and Division Officers and the Officers’ Supplemental Retirement Plan of Carpenter Technology Corporation is incorporated by reference to Exhibit 10(J) of Carpenter’s 2002 Annual Report on Form 10-K filed September 23, 2002 and the amendments thereof are incorporated herein by reference to Exhibit 10(I) of Carpenter’s 2005 Annual Report on Form 10-K filed September 9, 2005.
† 10(H)	Indemnification Agreement dated as of July 1, 2010 by and between the Company and William A. Wulfsohn (pursuant to Instruction 2 to Item 601 of Regulation S-K, the Indemnification Agreements, which are substantially identical in all material respects, except as to the parties thereto and the dates, between the Company and the following individuals, were not filed: Sanjay Guglani, Gary E. Heasley, Mark S. Kamon, K. Douglas Ralph, David L. Strobel, Tony R. Thene and Andrew T. Ziolkowski,) is incorporated by reference to Exhibit 10(H) to Carpenter’s 2011 Annual Report on Form 10-K filed August 24, 2011.
† 10(I)	Stock-Based Incentive Compensation Plan for Officers and Key Employees, as amended effective July 1, 2011 is incorporated by reference to Exhibit 10(I) to Carpenter’s 2011 Annual Report on Form 10-K filed August 24, 2011.
† 10(J)	Second Amendment to the Stock-Based Incentive Compensation Plan for Officers and Key Employees, as amended effective April 30, 2013, together with the First Amendment to the Stock-Based Incentive Compensation Plan for Officers and Key Employees, as amended January 17, 2012 is incorporated herein by reference to Exhibit 10(A) of Carpenter’s Current Report on Form 8-K filed on May 2, 2013.

106

Exhibit No.	Description
† 10(K)	Third Amendment to the Stock-Based Incentive Compensation Plan for Officers and Key Employees, as amended effective August 13, 2013 (filed herewith).
† 10(L)	Form of Restricted Stock Option Award Agreement (pursuant to Carpenter’s Stock-Based Incentive Plan for Officers and Key Employees) is incorporated by reference to Exhibit 10(W) to Carpenter’s 2012 Annual Report on Form 10-K filed August 22, 2012.
† 10(M)	Form of Restricted Unit Award Agreement (pursuant to Carpenter’s Stock-Based Incentive Plan for Officers and Key Employees) is incorporated by reference to Exhibit 10(X) to Carpenter’s 2012 Annual Report on Form 10-K filed August 22, 2012.
† 10(N)	Form of Performance Stock Unit Award Agreement (pursuant to Carpenter’s Stock-Based Incentive Compensation Plan for Officers and Key Employees) is incorporated herein by reference to Exhibit 10(B) of Carpenter’s Current Report on Form 8-K filed on May 2, 2013.
† 10(O)	Form of One-Year Performance Stock Unit Award Agreement (pursuant to Carpenter’s Stock-Based Incentive Compensation Plan for Officers and Key Employees) (filed herewith).
† 10(P)	Form of Three-Year Performance Stock Unit Award Agreement (pursuant to Carpenter’s Stock-Based Incentive Compensation Plan for Officers and Key Employees) (filed herewith).
† 10(Q)	Amended and Restated Carpenter Technology Corporation Change of Control Severance Plan, effective September 1, 2010, is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed September 3, 2010.
† 10(R)	Earnings Adjustment Plan of Carpenter Technology Corporation, restated as of August 20, 2007, is incorporated herein by reference to Exhibit 10(M) of Carpenter’s 2007 Annual Report on Form 10-K filed August 29, 2007.
† 10(S)	Benefit Equalization Plan of Carpenter Technology Corporation, restated as of August 20, 2007, is incorporated herein by reference to Exhibit 10(N) of Carpenter’s 2007 Annual Report on Form 10-K filed August 29, 2007.
† 10(T)	Trust Agreement between Carpenter and the Chase Manhattan Bank, N.A., dated December 7, 1990 as restated on May 1, 1997 and amended October 28, 2002 and January 23, 2003, relating in part to the Directors’ Retirement Plan and the Deferred Compensation Plan for Non-Management Directors, is incorporated by reference to Exhibit 10(P) of Carpenter’s 2002 Annual Report on Form 10-K filed September 23, 2002 and the amendments thereof are incorporated herein by reference to Exhibit 10(O) of Carpenter’s 2005 Annual Report on Form 10-K filed September 9, 2005.
† 10(U)	Employment Letter Agreement of K. Douglas Ralph, dated July 6, 2007, is incorporated herein by reference to Exhibit 99.2 of Carpenter’s Current Report on Form 8-K filed July 11, 2007.

107

Exhibit No.	Description
† 10(V)	Transition Agreement, dated September 6, 2012, by and between Carpenter Technology Corporation and K. Douglas Ralph is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed on September 7, 2012.
† 10(W)	Employment Letter Agreement of William A. Wulfsohn with Special Severance Agreement, dated June 3, 2010, incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed on June 7, 2010.
† 10(X)	Employment Letter Agreement of David Strobel, dated September 2, 2010, is incorporated herein by reference to Exhibit 10(C) of Carpenter’s Form 10-Q for the quarter ended September 30, 2010 filed November 5, 2010.
† 10(Y)	Employment Letter Agreement of Tony Thene, dated December 10, 2012, is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed on January 9, 2013.
† 10(Z)	Employment Letter Agreement of Gary E. Heasley, dated July 11, 2013, is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed on July 15, 2013.
† 10(AA)	Non-Competition Agreement, dated December 31, 2012, by and between the Company and Mark S. Kamon (filed herewith).
† 10(AB)	Special Severance Agreement, dated October 22, 2007, by and between the Company and Sanjay Guglani (filed herewith).
† 10(AC)	Severance Pay Plan for Executives of Carpenter Technology Corporation, as adopted July 1, 2010, incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed on July 2, 2010.
10(AD)	Revolving Credit Agreement, dated as of November 30, 2009, among Carpenter and certain of its subsidiaries as Borrowers and with JPMorgan Chase Bank NA, The Bank of Tokyo-Mitsubishi UFJ Trust Company, PNC Bank National Association and Keybank, National Association as Lenders is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed November 25, 2009.
10(AE)	Credit Agreement dated as of June 28, 2013 among Carpenter Technology Corporation, as borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A., as Syndication Agent, PNC Bank, National Association, The Bank Of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Sovereign Bank, each, as a Documentation Agent and Merrill Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Managers is incorporated herein by reference to Exhibit 10.1 of Carpenter’s Current Report on Form 8-K filed July 1, 2013.
10(AF)	Agreement and Plan of Merger, dated as of June 20, 2011, by and among Carpenter, Hawke Acquisition Corp., HHEP-Latrobe, L.P. and Watermill-Toolrock Partners, L.P. is incorporated herein by reference to Exhibit 2.1 of Carpenter’s Current Report on Form 8-K filed June 21, 2011.

108

Exhibit No.	Description
10(AG)	Amendment to Agreement and Plan of Merger, dated as of January 13, 2012, by and among Carpenter, Hawke Acquisition Corp., HHEP-Latrobe, L.P. and Watermill-Toolrock Partners L.P. is incorporated herein by reference to Exhibit 2.1 of Carpenter’s Current Report on Form 8-K filed January 18, 2012.
10(AH)	Amendment to Agreement and Plan of Merger, dated February 29, 2012, by and among Carpenter, Hawke Acquisition Corp., Latrobe Specialty Metals, Inc., HHEP-Latrobe, L.P., and Watermill-Toolrock Partners, L.P. is incorporated herein by reference to Exhibit 2.1 of Carpenter’s Form 8-K filed March 1, 2012.
12	Computations of Ratios of Earnings to Fixed Charges (Unaudited) (filed herewith).
21	Subsidiaries of the Registrant (filed herewith).
23	Consent of PricewaterhouseCoopers LLP (filed herewith).
24	Powers of Attorney in favor of James D. Dee or Tony R. Thene (filed herewith).
31 (A)	Certification of Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14(a)/15d-14(a) (filed herewith).
31(B)	Certification of Chief Financial Officer required by Securities and Exchange Commission Rule 13a-14(a)/15d-14(a) (filed herewith).
32	Certification pursuant to 18 U.S.C Section 1350 (filed herewith).
101	The following financial information from this Annual Report on Form 10-K for the fiscal year ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income (Loss); (iv) the Consolidated Statements of Cash Flows (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements.

† Management contract or compensatory plan or arrangement

109

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

CARPENTER TECHNOLOGY CORPORATION
By	/s/ Tony R. Thene
	Tony R. Thene
	Senior Vice President and
	Chief Financial Officer

Date: August 23, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

/s/ William A. Wulfsohn	President and Chief Executive Officer	August 23, 2013
William A. Wulfsohn	and Director
	(Principal Executive Officer)
/s/ Tony R. Thene	Senior Vice President and	August 23, 2013
Tony R. Thene	Chief Financial Officer
	(Principal Financial Officer)
/s/ Timothy Lain	Vice President — Controller and	August 23, 2013
Timothy Lain	Chief Accounting Officer (Principal
	Accounting Officer)
*	Chairman and Director	August 23, 2013
Gregory A. Pratt
*	Director	August 23, 2013
Carl G. Anderson, Jr.
*	Director	August 23, 2013
Robert R. McMaster
*	Director	August 23, 2013
I. Martin Inglis
*	Director	August 23, 2013
Peter N. Stephans
*	Director	August 23, 2013
Kathryn C. Turner

110

*	Director	August 23, 2013
Jeffrey Wadsworth
*	Director	August 23, 2013
Stephen M. Ward, Jr.
*	Director	August 23, 2013
Dr. Phillip M. Anderson
*	Director	August 23, 2013
Thomas O. Hicks
*	Director	August 23, 2013
Steven E. Karol

Original Powers of Attorney authorizing James D. Dee or Tony R. Thene to sign this Report on behalf of:  Carl G. Anderson, Jr., Robert R. McMaster, Martin Inglis, Gregory A. Pratt, Peter N. Stephans, Kathryn C. Turner, Jeffrey Wadsworth, Stephen M. Ward, Jr., Dr. Phillip M. Anderson, Thomas O. Hicks, and Steven E. Karol are being filed with the Securities and Exchange Commission.

*By	/s/ James D. Dee
	James D. Dee
	Attorney-in-fact

111

CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

($ in millions)

Column A	Column B		Column C						Column D			Column E
			Additions
	Balance at		Charged			Charged
	Beginning		to			to						Balance at
	of		Costs &			Other						End of
Description	Period		Expenses			Accounts			Deductions			Period
Year ended June 30, 2013
Allowance for doubtful accounts receivable	$	4.9	$	0.6		$	—		$	(1.4	)	$	4.1
Deferred tax valuation allowance	$	18.1	$	1.1		$	—		$	—		$	19.2
Inventory reserves	$	18.2	$	2.9		$	2.0		$	—		$	23.1
Year ended June 30, 2012
Allowance for doubtful accounts receivable	$	2.7	$	0.7		$	1.7	*	$	(0.2	)	$	4.9
Deferred tax valuation allowance	$	17.5	$	0.6		$	—		$	—		$	18.1
Inventory reserves	$	12.0	$	1.2		$	5.2	*	$	(0.2	)	$	18.2
Year ended June 30, 2011
Allowance for doubtful accounts receivable	$	2.7	$	(0.2	)	$	—		$	0.2		$	2.7
Deferred tax valuation allowance	$	17.6	$	(0.2	)	$	—		$	0.1		$	17.5
Inventory reserves	$	15.2	$	(3.5	)	$	—		$	0.3		$	12.0

*Amount represents balance acquired through the Latrobe acquisition

112

EX-4.(Q)

Exhibit 4(Q)

[FORM OF]

NOTE

FOR VALUE RECEIVED, each of the Borrowers hereby promises to pay to                                            or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrowers under that certain Credit Agreement, dated as of June 28, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”; the terms defined therein being used herein as therein defined), among Carpenter, the Subsidiary Borrowers from time to time party thereto, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

Each Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement.  Except as otherwise provided in Section 2.05(f) of the Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in the currency in which such Committed Loan was denominated and in Same Day Funds at the Administrative Agent’s Office for such currency.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid and reborrowed in whole or in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of the Continuing Guaranty of Carpenter under Article X of the Agreement.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement.  Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount, currency and maturity of its Loans and payments with respect thereto.

Each Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

[Signature Page Follows]

THIS NOTE AND ANY CLAIMS, CONTROVERSIES, DISPUTES OR CAUSES OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF ANOTHER STATE’S LAW).

CARPENTER TECHNOLOGY CORPORATION

By:

Name:

Title:

[ADDITIONAL SUBSIDIARY BORROWERS](1)

By:

Name:

Title:

(1)  If any added pursuant to Section 2.15 of the Agreement.

LOANS AND PAYMENTS WITH RESPECT THERETO

Date Type of
Loan
Made Currency
and
Amount
of Loan
Made End of
Interest
Period Amount
of
Principal
or
Interest
Paid This
Date Outstanding
Principal
Balance
This Date Notation
Made By

EX-10.(K)

Exhibit 10(K)

THIRD AMENDMENT TO THE

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED INCENTIVE COMPENSATION PLAN

FOR OFFICERS AND KEY EMPLOYEES

THIS THIRD AMENDMENT is made on this 13th day of August 2013, by Carpenter Technology Corporation, a corporation duly organized under the laws of the state of Delaware (the “Company”).

INTRODUCTION

The Company maintains the Carpenter Technology Corporation Stock-Based Incentive Compensation Plan for Officers and Key Employees (the “Plan”) pursuant to an amended and restated document effective as of July 1, 2011, as further amended on January 17, 2012 and April 30, 2013,  for the benefit of certain of the Company’s officers and key employees.  The Company now wishes to amend the Plan to clarify that shareholder approval is required for any buy back of an Award granted under the Plan if the exercise price of the Award is greater than the Fair Market Value of the shares subject to the Award.

Therefore, in order to fulfill the immediately preceding purpose, the Company hereby amends the Plan, effective as of the date first above written, by amending and restating Clause (ii) of Section 10.1 in its entirety to read as follows:

“(ii)         constitute a repricing or exchange of any Awards issued hereunder or involve the buy out by the Company of any previously granted Award with an exercise price that is greater than Fair Market Value, or”

Except as specifically amended hereby, the Plan shall remain in full force and effect prior to this Third Amendment.

IN WITNESS WHEREOF, the Company has caused this Third Amendment to be executed on the day and year first above written.

CARPENTER TECHNOLOGY CORPORATION

By:

Title:

EX-10.(O)

Exhibit 10(O)

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED INCENTIVE COMPENSATION PLAN

FOR OFFICERS AND KEY EMPLOYEES

ONE-YEAR PERFORMANCE

STOCK UNIT AWARD AGREEMENT

AGREEMENT, effective as of [DATE] (the “Award Date”) by and between CARPENTER TECHNOLOGY CORPORATION (the “Company”) and [                                ] (the “Participant”). Capitalized terms that are not defined in this Agreement have the same meaning as defined in the CARPENTER TECHNOLOGY CORPORATION STOCK-BASED INCENTIVE COMPENSATION PLAN FOR OFFICERS AND KEY EMPLOYEES (the “Plan”), a copy of which is attached. The terms, conditions and provisions of the Plan are   applicable to this Award Agreement and are incorporated by reference.

1.  Grant of Award. Participant has been granted an Award of Performance Stock Units under the Plan comprised of an aggregate of the number of Performance Stock Units set forth below (collectively, the “Units”).

2.  Performance Goal.  Performance Stock Units awarded hereunder shall become Earned Units based on the attainment of the Performance Goals during the Performance Period, both as  set forth on Schedule A, provided that the Participant remains continuously employed by the Company or a Subsidiary throughout the Performance Period, except as otherwise provided in Section 5 hereof. Any Performance Stock Units which do not become Earned Units shall be forfeited.

3.  Duration of Restriction Period.  Earned Units are subject to forfeiture if the Participant does not remain continuously employed by the Company or its Subsidiaries throughout the Restriction Period, except as provided in Section 5 hereof.  The Restriction Period with respect to the Earned Units will commence on the first day of the Performance Period and shall lapse on                        , 20      for 50% of the Earned Units and                     , 20          for the remainder of the Earned Units.

4.  Conditions of Forfeiture. Subject to the provisions of Section 5 hereof, the Units are subject to forfeiture by Participant at any time during the applicable Restriction Period immediately upon termination of Participant’s employment with the Company and its Subsidiaries.  Upon any such forfeiture, all rights of Participant with respect to the forfeited Units shall terminate and Participant shall have no further interest of any kind therein.

5.  Lapse of Restrictions on Death, Disability or Retirement.

(a).  During the Performance Period.  Notwithstanding any provision hereof to the contrary, in the event of termination of Participant’s employment prior to the end of the Performance Period by reason of (i) death, (ii) Disability or (iii) unless otherwise determined by the Committee, Retirement, the Units shall not be forfeited and the Participant shall be vested in not less than a pro rata portion of the Units that become Earned Units at the expiration of the Performance Period, based on the number of days during the applicable Restriction Period during which the Participant was employed.  Upon a Participant’s Retirement all unvested Earned Units shall be forfeited; provided however, that the Committee reserves the right to vest unvested Earned Units.

(b).  Following the Performance Period.   Notwithstanding any provision hereof to the contrary, in the event of termination of Participant’s employment after the expiration of the Performance Period but prior to the end of the Restriction Period by reason of (i) death, or (ii) Disability the Earned Units will not be forfeited and the Participant shall become vested with respect to the Earned Units on the same date as such death or Disability.  Unless otherwise determined by the Committee, in the event of a Participant’s Retirement after the expiration of the Performance Period  but prior to the end of the Restriction Period, the Participant shall be vested in not less than a pro rata portion of the Earned Units subject to such Restriction Period based on the number of days during the applicable Restriction Period during which the Participant was employed.  Upon a Participant’s Retirement all unvested Earned Units shall be forfeited; provided however, that the Committee reserves the right to vest unvested Earned Units.

6.  Time and Form of Payment. Payment of vested Earned Units shall be made as soon as practicable (but not later than 30 days) following the close of a Restriction Period or, if earlier, within 30 days following the earlier of the Participant’s death, Disability or Retirement that constitutes a “Separation from Service” within the meaning of Code Section 409A; provided that if such death, Disability or Retirement occurs during the Performance Period, payment of the vested Earned Units shall be made within ninety (90) days following the end of the Performance Period. Notwithstanding the foregoing, a Participant may, on or before the date which is at least six (6) months prior to the expiration of the Performance Period, make an election to defer receipt of any payment with respect to the Earned Units in accordance with the provisions of Section 6.4 of the Plan.  Unless otherwise elected by a Participant in accordance with the immediately following sentence, payment shall be in the form of a number of shares of Common Stock equal to the number of Earned Units subject hereto.   A Participant may elect, in the form and manner specified by the Company and on or before the earlier of the last day of the fiscal year of the Company in which this Award is granted to the Participant and the date which is at least six (6) months prior to the expiration of the Performance Period, to receive payment in the form of cash in an amount equal to the Fair Market Value of a share of Common Stock as of the date of payment, multiplied by the number of Earned Units subject hereto.  To be eligible to make a cash election, the Participant must at the time of the election meet the minimum applicable holding requirement under the Company’s equity ownership guidelines. Any such elections will be made in the form and manner specified by the Company and consistent with the Plan.

Notwithstanding anything herein to the contrary, if the Participant’s Award is subject to the application of Code Section 409A and if the Participant is a “Specified Employee” within the meaning of Code Section 409A and the Treasury regulations and other guidance thereunder, the Participant may not receive payment with respect to any Earned Units that are payable as a result of the Participant’s separation from service, earlier than 6 months following the Participant’s separation from service, except that in the event of the Participant’s earlier death, such Earned Units shall be paid within 30 days after the Company receives notice of the Participant’s death.

7. Voting Rights. The Participant will not have the right to vote with respect to the Units prior to payment of Common Stock in satisfaction of the Earned Units.

8. Dividend Equivalencies. Upon the payment of dividends on Common Stock prior to payment of Common Stock in satisfaction of the Earned Units, the Company will, within 30 days following the date the dividend was paid to the holders of the Company’s Common Stock, pay to the Participant a dividend equivalent provided that the Participant was employed  by the Company on the date the dividend was paid to holders of the Company’s Common Stock.

9. Change in Control. Upon the occurrence of a Change in Control, any remaining conditions on forfeiture with respect to the Units shall immediately lapse and the Performance Goals will be deemed satisfied at the target level of performance pursuant to Section 8 of the Plan.

10. Tax Withholding. Participant authorizes the Company to deduct, to the extent required by statute or regulation, from payments of any kind due to Participant or anyone claiming through Participant, the aggregate amount of any federal, state, local or other taxes required to be withheld in respect of any present or future Award under the Plan.

11. Non-competition Covenant. This Section 11 shall be and become effective upon the Participant’s termination of Company employment or otherwise at the Committee’s (as defined in the Plan) discretion.

(a). Participant’s Promises. Participant shall not for a period of eighteen (18) months after termination of Company employment, either himself/herself or together with other persons, directly or indirectly, (i) own, manage, operate, join, control or participate in the ownership, management, operation or control of or become the employee, consultant or independent contractor of any business engaged in the research, development, manufacture, sale, marketing or distribution of stainless steel, titanium, specialty alloys, or metal fabricated parts or components similar to or competitive with those manufactured by the Company as of the date the Participant’s Company employment ends; (ii) offer services to any business that is or has been at any time during a period of three (3) years prior to the Participant’s termination of Company employment a customer, vendor or contractor of the Company; or (iii) solicit any employee of the Company to terminate his or her employment with the Company for purposes of hiring such employee or hire any person who is an employee of the Company.

(b).  Remedies. Participant acknowledges and agrees that in the event that Participant breaches any of the covenants in this Section 11, the Company will suffer immediate and irreparable harm and injury for which the Company will have no adequate remedy at law. Accordingly, in the event that Participant breaches any of the covenants in Section 11, the Company shall be absolutely entitled to obtain equitable relief, including without limitation temporary restraining orders, preliminary injunctions, permanent injunctions, and specific performance. The foregoing remedies and relief shall be cumulative and in addition to any other remedies available to the Company. In addition to the other remedies in this Section to which the Company may be entitled, the Company shall receive attorneys’ fees and any other expenses incident to its maintenance of any action to enforce its rights under this Agreement.

12. Severability. The covenants in this Agreement are severable, and if any covenant or portion thereof is held to be invalid or unenforceable for any reason, such covenant or portion thereof shall be modified to the extent necessary to cure such invalidity or unenforceability and all other covenants and provisions shall remain valid and enforceable.

13. Notices to Participant. Any notices or deliveries to Participant hereunder or under the Plan shall be directed to Participant at the address reflected for Participant on the Company’s payroll records or at such other address as Participant may designate in writing to the Company.

14. Binding Effect. Subject to the terms of the Plan, this Agreement shall be binding upon and inure to the benefit of the Company and its assigns, and Participant, his/her heirs and personal representatives.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date(s) set forth below.

CARPENTER TECHNOLOGY CORPORATION
By:		Date:
	William A. Wulfsohn
	President and Chief Executive Officer
PARTICIPANT
		Date:

Number of Award Units:

[UP TO [MAX NUMBER] AS DETERMINED PURSUANT TO SCHEDULE A]

SCHEDULE A

PERFORMANCE GOALS AND PERFORMANCE PERIOD

Performance PeriodFiscal Year 20

Performance GoalsThe number of Performance Stock Units that become Earned Units is determined based on the level of achievement during the Performance Period based on the following metric(s):

		Earned Units
Metric	Threshold (25%)	Target (50%)	Maximum (100%)

EX-10.(P)

Exhibit 10(P)

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED INCENTIVE COMPENSATION PLAN

FOR OFFICERS AND KEY EMPLOYEES

THREE-YEAR PERFORMANCE STOCK UNIT

AWARD AGREEMENT

AGREEMENT, effective as of [DATE] (the “Award Date”) by and between CARPENTER TECHNOLOGY CORPORATION (the “Company”) and [                                ] (the “Participant”). Capitalized terms that are not defined in this Agreement have the same meaning as defined in the CARPENTER TECHNOLOGY CORPORATION STOCK-BASED INCENTIVE COMPENSATION PLAN FOR OFFICERS AND KEY EMPLOYEES (the “Plan”), a copy of which is attached. The terms, conditions and provisions of the Plan are   applicable to this Award Agreement and are incorporated by reference.

1.  Grant of Award. Participant has been granted an Award of Performance Stock Units under the Plan comprised of an aggregate of the number of Performance Stock Units set forth below (collectively, the “Units”).

2.  Performance Goal.  Performance Stock Units awarded hereunder shall become Earned Units based on the attainment of the Performance Goals during the Performance Period, both as  set forth on Schedule A, provided that the Participant remains continuously employed by the Company or a Subsidiary throughout the Performance Period, except as otherwise provided in Section 4 hereof. Any Performance Stock Units which do not become Earned Units shall be forfeited.

3.  Conditions of Forfeiture. Subject to the provisions of Section 4 hereof, the Units are subject to forfeiture by Participant at any time during the Performance Period immediately upon termination of Participant’s employment with the Company and its Subsidiaries.  Upon any such forfeiture, all rights of Participant with respect to the forfeited Units shall terminate and Participant shall have no further interest of any kind therein.

4.  Lapse of Restrictions on Death, Disability or Retirement. Notwithstanding any provision hereof to the contrary, in the event of termination of Participant’s employment prior to the end of the Performance Period by reason of (i) death, (ii) Disability or (iii) unless otherwise determined by the Committee, Retirement, the Units shall not be forfeited and the Participant shall be vested in not less than a pro rata portion of the Units that become Earned Units at the expiration of the Performance Period, based on the number of days during the applicable Performance Period during which the Participant was employed.  Upon a Participant’s Retirement all unvested Earned Units shall be forfeited; provided however, that the Committee reserves the right to vest unvested Earned Units.

5.  Time and Form of Payment. Payment of vested Earned Units shall be made as soon as practicable (but not later than 30 days) following the close of the Performance Period; provided, however, that in the event of a Participant’s death, Disability or Retirement that constitutes a

“Separation from Service” within the meaning of Code Section 409A during the Performance Period, payment of the vested Earned Units shall be made within ninety (90) days following the end of the Performance Period. Payment shall be in the form of a number of shares of Common Stock equal to the number of Earned Units subject hereto.

Notwithstanding anything herein to the contrary, if the Participant’s Award is subject to the application of Code Section 409A and if the Participant is a “Specified Employee” within the meaning of Code Section 409A and the Treasury regulations and other guidance thereunder, the Participant may not receive payment with respect to any Earned Units that are payable as a result of the Participant’s separation from service, earlier than 6 months following the Participant’s separation from service, except that in the event of the Participant’s earlier death, such Earned Units shall be paid within 30 days after the Company receives notice of the Participant’s death.

6.  Voting Rights. The Participant will not have the right to vote with respect to the Units prior to payment of Common Stock in satisfaction of the Earned Units.

7. Change in Control. Upon the occurrence of a Change in Control, any remaining conditions on forfeiture with respect to the Units shall immediately lapse and the Performance Goals will be deemed satisfied at the target level of performance pursuant to Section 8 of the Plan.

8.  Tax Withholding. Participant authorizes the Company to deduct, to the extent required by statute or regulation, from payments of any kind due to Participant or anyone claiming through Participant, the aggregate amount of any federal, state, local or other taxes required to be withheld in respect of any present or future Award under the Plan.

9.  Non-competition Covenant. This Section 9 shall be and become effective upon the Participant’s termination of Company employment or otherwise at the Committee’s (as defined in the Plan) discretion.

(a). Participant’s Promises. Participant shall not for a period of eighteen (18) months after termination of Company employment, either himself/herself or together with other persons, directly or indirectly, (i) own, manage, operate, join, control or participate in the ownership, management, operation or control of or become the employee, consultant or independent contractor of any business engaged in the research, development, manufacture, sale, marketing or distribution of stainless steel, titanium, specialty alloys, or metal fabricated parts or components similar to or competitive with those manufactured by the Company as of the date the Participant’s Company employment ends; (ii) offer services to any business that is or has been at any time during a period of three (3) years prior to the Participant’s termination of Company employment a customer, vendor or contractor of the Company; or (iii) solicit any employee of the Company to terminate his or her employment with the Company for purposes of hiring such employee or hire any person who is an employee of the Company.

(b). Remedies. Participant acknowledges and agrees that in the event that Participant breaches any of the covenants in this Section 9, the Company will suffer immediate and irreparable harm and injury for which the Company will have no adequate remedy at law.

Accordingly, in the event that Participant breaches any of the covenants in this Section 9, the Company shall be absolutely entitled to obtain equitable relief, including without limitation temporary restraining orders, preliminary injunctions, permanent injunctions, and specific performance. The foregoing remedies and relief shall be cumulative and in addition to any other remedies available to the Company. In addition to the other remedies in this Section to which the Company may be entitled, the Company shall receive attorneys’ fees and any other expenses incident to its maintenance of any action to enforce its rights under this Agreement.

10. Severability. The covenants in this Agreement are severable, and if any covenant or portion thereof is held to be invalid or unenforceable for any reason, such covenant or portion thereof shall be modified to the extent necessary to cure such invalidity or unenforceability and all other covenants and provisions shall remain valid and enforceable.

11. Notices to Participant. Any notices or deliveries to Participant hereunder or under the Plan shall be directed to Participant at the address reflected for Participant on the Company’s payroll records or at such other address as Participant may designate in writing to the Company.

12. Binding Effect. Subject to the terms of the Plan, this Agreement shall be binding upon and inure to the benefit of the Company and its assigns, and Participant, his/her heirs and personal representatives.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date(s) set forth below.

CARPENTER TECHNOLOGY CORPORATION

By:		Date:
	William A. Wulfsohn
	President and Chief Executive Officer
PARTICIPANT
		Date:

Number of Award Units:

[UP TO [MAX NUMBER] AS DETERMINED PURSUANT TO SCHEDULE A]

SCHEDULE A

PERFORMANCE GOALS AND PERFORMANCE PERIOD

Performance Period            Fiscal Year 20

Performance Goals             The number of Performance Stock Units that become Earned Units is determined based on the level of achievement during the Performance Period based on the following metric(s):

		Earned Units
Metric	Threshold (25%)	Target (50%)	Maximum (100%)

EX-10.(AA)

Exhibit 10(AA)

NON-COMPETITION AGREEMENT

This Non-Competition Agreement, made this 31st day of December, 2012 (“Agreement”), is by and between Carpenter Technology Corporation (the “Company”), and Mark S. Kamon (hereinafter the “Employee”).

WHEREAS, the relationship between the Company and the Employee is one in which the Company reposes special trust and confidence in the Employee and the Employee is exposed to confidential and proprietary information not previously known to Employee; and

WHEREAS, Employee already is subject to an eighteen (18) month Non-competition Covenant as a result of entering into Restricted Stock Award Agreements with the Company in 2009, 2010, 2011 and 2012; and

WHEREAS, the parties wish to extend the term of the Non-competition Covenant for an additional period of time.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties, intending to be legally bound, hereby agree as follows:

1.             Non-Competition. In consideration of the acceptance of the terms and conditions set forth in this Agreement, Employee’ existing eighteen (18) month Non-competition Covenant shall be extended for an additional eighteen (18) months for a total of thirty-six (36) months from the date the Employee’s employment with the Company terminates.

2.             Employee’s Promises. During this thirty-six (36) month period after the date the Employee’s employment with the Company terminates, Employee shall not either himself or together with other persons, directly or indirectly, (i) own, manage, operate, join, control or participate in the ownership, management, operation or control of or become the employee, consultant or independent contractor of any business engaged in the research, development, manufacture, sale, marketing or distribution of stainless steel, titanium, specialty alloys, or metal fabricated parts or components similar to or competitive with those manufactured by the Company as of the date the Employee’s Company employment ends; (ii) offer services to any business that is or has been at any time during a period of three (3) years prior to the Employee’s termination of Company employment a customer, vendor or contractor of the Company; or (iii) solicit any employee of the Company to terminate his or her employment with the Company for purposes of hiring such employee or hire any person who is an employee of the Company.

3.             Remedies. Employee acknowledges and agrees that in the event that Employee breaches any of the covenants in this Agreement, the Company will suffer immediate and irreparable harm and injury for which the Company will have no adequate remedy at law. Accordingly, in the event that Employee breaches any of the covenants in this Agreement, the Company shall be absolutely entitled to obtain equitable relief, including without limitation temporary restraining orders, preliminary injunctions, permanent injunctions, and specific performance. The foregoing remedies and relief shall be cumulative and in addition to any other remedies available to the Company. In addition to the other remedies in this Section to which the Company may be entitled, the Company shall receive attorneys’ fees and any other expenses incident to its maintenance of any action to enforce its rights under this Agreement.

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In the event that any of the provisions of this Section 1 should be adjudicated to exceed the time, geographic, product or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, product or other limitations permitted by applicable law.

4.             Consideration and Survival. As consideration for extending the Non-competition Covenant for an additional eighteen (18) months, Employee shall receive a lump sum payment of $115,002.00, to be paid within sixty (60) days of Employee’s voluntary termination of employment but in no event later than June 30, 2013.

5.             Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof; such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof, and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, as determined by a court of competent jurisdiction. It is the intent of the parties that the covenants contained in Section 1 of this Agreement be enforced to the fullest extent permitted by applicable law.

6.             Choice of Forum. In light of the parties substantial contacts with the Commonwealth of Pennsylvania, each of the parties hereto consents to the in personam jurisdiction of any state court in the County of Berks, Pennsylvania and in any federal court in the Eastern District of Pennsylvania and waives any objection to the venue of any such suit, action or proceeding. In the event that any party hereto (the “Instituting Party”) institutes a proceeding involving this Agreement in a jurisdiction outside those designated, the Instituting Party will indemnify any other party hereto for any losses and expenses incurred by such other party that may result from the fact that the Instituting Party instituted such proceeding in a court outside those designated including without limitation any additional expenses incurred as a result of litigating in such other jurisdiction, such as reasonable fees and expenses of local counsel and travel and lodging expenses for parties, witnesses, experts and support personnel. However, an Instituting Party instituting a proceeding in a court outside the designated places will not be required to indemnify the other parties pursuant to the provisions of this Section 6 if the Instituting Party is determined to be the prevailing party.

7.             Notice. Any notice or communication hereunder must be in writing and given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested or by delivering the same in person. Such notice will be deemed received on the date on which it is hand-delivered or on the third business day following the date on which it is so mailed. For purposes of notice, the addresses and numbers of the parties will be:

If to the Company:	Carpenter Technology Corporation
	P.O. Box 14662
	Reading, PA 19612-4662

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	Attn:	General Counsel
If to Kamon:		Mark S. Kamon
		14015 RIVERVIEW LN KENNEDYVILLE, MD 21645

Any party may change its address for notice by written notice given to the other parties in accordance with this Section

8.             Service of Process. Service of any and all process that may be served on any party hereto in any suit, action or proceeding arising out of this Agreement may be made in the manner and to the address set forth in Section 7 and service thus made will be taken and held to be valid personal service upon such party by any party hereto on whose behalf such service is made.

9.             Governing Law. This Agreement and the rights and obligations of the parties hereto will be governed by and construed and enforced in accordance with the substantive laws (but not the rules governing conflicts of laws) of the Commonwealth of Pennsylvania.

Employee acknowledges that the Company has given Employee, and Employee has received, full and adequate consideration for the promises made and the restrictions contained herein. The promises and restrictions contained in this section shall run in favor of the Company and its successors and assigns, subsidiaries and affiliates, and shall survive the expiration, termination and/or non-renewal of this Agreement and/or the termination of Employee’s employment with the Company. Employee further agrees that any breach of the non-competition obligations set forth in Section 1 of this Agreement will extend the term of the non-compete obligation by the amount of time that Employee has breached this agreement so that Employee honors the non-competition provision for thirty-six (36) full and continuous months.

I have read, understand and accept the terms of the Covenant Not To Compete extended to me by Carpenter Technology Corporation.

/s/ Mark S. Kamon	12/20/2012
Mark S. Kamon	Date

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EX-10.(AB)

Exhibit 10(AB)

SPECIAL SEVERANCE AGREEMENT [2x]

AGREEMENT, dated as of the 22nd day of October 2007, (this “Agreement”), by and between Carpenter Technology Corporation, a Delaware corporation (the “Company”), and (the “Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein).  The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the current Company and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that are competitive with those of other corporations.  Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

Section 1.              Certain Definitions.  (a) “Effective Date” means the first date during the Change of Control Period (as defined herein) on which a Change of Control occurs.  Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then “Effective Date” means the date immediately prior to the date of such termination of employment.

(b)           “Change of Control Period” means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the “Renewal Date”), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

(c)           “Affiliated Company” means any company controlled by, controlling or under common control with the Company.

(d)           “Change of Control” means:

(1)           The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated

under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 1(d), the following acquisitions shall not constitute a Change of Control:  (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

(2)           Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

(3)           Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or stock of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

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(4)           Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Section 2.              Employment Period.  The Company hereby agrees to continue the Executive in its employ, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (the “Employment Period”).  The Employment Period shall terminate upon the Executive’s termination of employment for any reason.

Section 3.              Terms of Employment.  (a)  Position and Duties.  (1)  During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date, (B) the Executive’s services shall be performed at the office where the Executive was employed immediately preceding the Effective Date or at any other location less than 35 miles from such office.

(2)           During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.  It is expressly understood and agreed that, to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

(b)           Compensation.  (1)  Base Salary.  During the Employment Period, the Executive shall receive an annual base salary (the “Annual Base Salary”) at an annual rate at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to the Executive by the Company and the Affiliated Companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs.  The Annual Base Salary shall be paid at such intervals as the Company pays executive salaries generally.  During the Employment Period, the Annual Base Salary shall be reviewed at least annually, beginning no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date.  Any increase in the Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. 

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The Annual Base Salary shall not be reduced after any such increase and the term “Annual Base Salary” shall refer to the Annual Base Salary as so increased.

(2)           Annual Bonus.  In addition to the Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the Annual Target Bonus, where the “Annual Target Bonus” is an amount equal to the Annual Base Salary times the Executive Annual Compensation Plan Total Target Percentage (as most recently approved by the Company’s Board of Directors or Human Resources Committee for the year in which the Effective Date occurs), or any comparable bonus under any predecessor or successor plan.  Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

(3)           Incentive, Savings and Retirement Plans.  During the Employment Period, the Executive shall be entitled to participate in all cash incentive, equity incentive, savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and the Affiliated Companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

(4)           Welfare Benefit Plans.  During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and the Affiliated Companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits that are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

(5)           Expenses.  During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period

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immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

(6)           Fringe Benefits.  During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

(7)           Office and Support Staff.  During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and the Affiliated Companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

(8)           Vacation.  During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and the Affiliated Companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

Section 4.              Termination of Employment.  (a)  Death or Disability.  The Executive’s employment shall terminate automatically if the Executive dies during the Employment Period.  If the Company determines in good faith that the Disability (as defined herein) of the Executive has occurred during the Employment Period (pursuant to the definition of “Disability”), it may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.  “Disability” means the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

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(b)           Cause.  The Company may terminate the Executive’s employment during the Employment Period for Cause.  “Cause” means:

(1)           the willful and continued failure of the Executive to perform substantially the Executive’s duties (as contemplated by Section 3(a)(1)(A)) with the Company or any Affiliated Company (other than any such failure resulting from incapacity due to physical or mental illness or following the Executive’s delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive Officer of the Company believes that the Executive has not substantially performed the Executive’s duties, or

(2)           the willful engaging by the Executive in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, or upon instructions of the Chief Executive Officer of the Company or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.  The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding the Executive, if the Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board), finding that, in the good faith opinion of the board, the Executive is guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

(c)           Good Reason.  The Executive’s employment may be terminated by the Executive for Good Reason or by the Executive voluntarily without Good Reason.  “Good Reason” means:

(1)           the assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a), or any other diminution in such position, authority, duties or responsibilities (whether or not occurring solely as a result of the Company’s ceasing to be a publicly traded entity), excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

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(2)           any failure by the Company to comply with any of the provisions of Section 3(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(3)           the Company’s requiring the Executive (i) to be based at any office or location other than as provided in Section 3(a)(1)(B), or (ii) to be based at a location other than the principal executive offices of the Company if the Executive was employed at such location immediately preceding the Effective Date, or (iii) to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

(4)           any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

(5)           any failure by the Company to comply with and satisfy Section 10(c).

For purposes of this Section 4(c), any good faith determination of Good Reason made by the Executive shall be conclusive.  Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason pursuant to a Notice of Termination given during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement. The Executive’s mental or physical incapacity following the occurrence of an event described above in clauses (1) through (5) shall not affect the Executive’s ability to terminate employment for Good Reason.

(d)           Notice of Termination.  Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b).  “Notice of Termination” means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice).  The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s respective rights hereunder.

(e)           Date of Termination.  “Date of Termination” means (1) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified in the Notice of Termination, (which date shall not be more than 30 days after the giving of such notice), as the case may be, (2) if the Executive’s employment is terminated by the Company other than for

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Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (3) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

Section 5.Obligations of the Company upon Termination.  (a)  Good Reason; Other Than for Cause, Death or Disability.  If, during the Employment Period, the Company terminates the Executive’s employment other than for Cause or Disability or the Executive terminates employment for Good Reason:

(1)The Company shall pay to the Executive, in a lump sum in cash within 10 days after the Date of Termination, the aggregate of the following amounts:

(A)the sum of (i) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (ii) the Annual Target Bonus times a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination and the denominator of which is 365, and (iii) any compensation previously deferred by the Executive (together with any accrued interest and earnings thereon) and any accrued vacation pay, in each case, to the extent no theretofore paid (the sum of the amounts described in subclauses (i), (ii) and (iii), the “Accrued Obligations”);

(B)the amount equal to two times the sum of (x) the Executive’s Annual Base Salary and (y) the Annual Target Bonus, reduced by any lump sum severance amount payable to the Executive pursuant to the General Retirement Plan for Employees of Carpenter Technology Corporation or any successor thereto (the “GRP”); and

(C)an amount equal to the excess of (i) the actuarial equivalent of the benefit under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Retirement Plan immediately prior to the Effective Date), any excess plan, and any supplemental retirement plan in which the Executive participates (collectively, the “SERP”) that the Executive would receive if the Executive’s employment continued for three years after the Date of Termination, assuming for this purpose that all accrued benefits are fully vested and assuming that the Executive’s compensation in each of the three years is  that required by Sections 3(b)(1) and 3(b)(2), over (ii) the actuarial equivalent of the Executive’s actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Date of Termination.

(2)For three years after the Executive’s Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive’s

8

family at least equal to those that would have been provided to them in accordance with the plans, programs, practices and policies described in Section 3(b)(4) or 3(b)(6) (including, without limitation, tax and financial planning services to the extent the Executive was entitled to such services under Section 3(b)(6)) if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies and their families, provided, however, that, if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility.  For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree medical and life insurance benefits, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period.

(3)To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or that the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and the Affiliated Companies (such other amounts and benefits, the “Other Benefits”)

(4)The Company shall at its sole expense provide the Executive with reasonable outplacement services, at a cost not to exceed $20,000, during the one-year period following the Executive’s Date of Termination. The Executive shall not, however, be entitled to any payment in lieu of accepting outplacement assistance services.

(b)Death.  If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, the Company shall provide the Executive’s estate or beneficiaries with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 10 days of the Date of Termination.  With respect to the provision of the Other Benefits, the term “Other Benefits” as utilized in this Section 5(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Companies to the estates and beneficiaries of peer executives of the Company and the Affiliated Companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and the Affiliated Companies and their beneficiaries.

9

(c)Disability.  If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, the Company shall provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination.  With respect to the provision of the Other Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and the Affiliated Companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and the Affiliated Companies and their families.

(d)Cause; Other Than for Good Reason.  If the Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide to the Executive (1) the Executive’s Annual Base Salary through the Date of Termination, (2) the amount of any compensation previously deferred by the Executive, and (3) the Other Benefits, in each case, to the extent theretofore unpaid, and shall have no other severance obligations under this Agreement.  If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, the Company shall provide to the Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement.  In such case, all the Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination.

Section 6.Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or the Affiliated Companies and for which the Executive may qualify, nor, subject to Section 11(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement with the Company or the Affiliated Companies.  Amounts that are vested benefits or that the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or the Affiliated Companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or any other contract or agreement, except as explicitly modified by this Agreement.  Notwithstanding the foregoing, if the Executive receives payments and benefits pursuant to Section 5(a) of this Agreement, the Executive shall not be entitled to other severance pay or benefits under any severance plan, program or policy of the Company and the Affiliated Companies, unless otherwise specifically provided therein in a specific reference to this Agreement, or provided under the GRP.

Section 7.Full Settlement.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be

10

affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment except as set forth in Section 5(a)(2).  The Company agrees to pay as incurred (within 10 days following the Company’s receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”).

Section 8.Certain Additional Payments by the Company.

(a)Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  The Company’s obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive’s termination of employment.

(b)Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP, or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within 5 days of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is

11

possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder.  In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

(c)The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable, but no later than 30 business days after the Executive is informed in writing of such claim.  The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:

(1)give the Company any information reasonably requested by the Company relating to such claim,

(2)take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(3)cooperate with the Company in good faith in order effectively to contest such claim, and

(4)permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company

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directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d)If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 8(c), if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).  If, after receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e)Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of the Gross-Up Payment, and the Executive hereby consents to such withholding.

(f)Definitions.  The following terms shall have the following meanings for purposes of this Section 8.

(i)“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii)A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

Section 9.Confidential Information.  The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or the Affiliated Companies, and their respective businesses, which information, knowledge or data shall have been obtained by the Executive during the Executive’s employment by the Company or the Affiliated Companies and which

13

information, knowledge or data shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement).  After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those persons designated by the Company.  In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

Section 10.Successors.  (a)  This Agreement is personal to the Executive, and, without the prior written consent of the Company, shall not be assignable by the Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b)This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.  Except as provided in Section 10(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

(c)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

Section 11.Miscellaneous.  (a)  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b)All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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if to the Executive:

to the last address listed for the Executive in the Company’s books and records.

if to the Company:

Carpenter Technology Corporation

P. O. Box 14662

Reading, PA  19612-4662

Attention:  General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

(c)The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d)The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e)The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, subject to Section 1(a), prior to the Effective Date, the Executive’s employment may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement.  From and after the Effective Date, except as specifically provided herein, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

EXECUTIVE
/s/ Sanjay Guglani
Sanjay Guglani
CARPENTER TECHNOLOGY CORPORATION
By	/s/ Anne L. Stevens
	Name: Anne L. Stevens
	Title: Chairman, President &
	Chief Executive Officer

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EX-12

Exhibit 12

Carpenter Technology Corporation

Computation of Ratios of Earnings to Fixed Charges — unaudited

Five Years Ended June 30, 2013

(dollars in millions)

	Year Ended June 30,
	2013			2012			2011			2010			2009
Fixed charges:
Interest costs(a)	$	27.8		$	25.0		$	17.6		$	18.8		$	20.1
Interest component of non-capitalized lease rental expense (b)	4.1			3.3			2.4			2.3			2.1
Total fixed charges	$	31.9		$	28.3		$	20.0		$	21.1		$	22.2
Earnings as defined:
Income before income taxes	$	216.8		$	188.6		$	87.8		$	4.7		$	63.0
Less income from less-than-fifty-percent owned entities, and loss on sale of partial interest in less-than-fifty percent owned enities	(1.3		)	(0.6		)	(2.6		)	(1.0		)	0.1
Noncontrolling interst in the income of subsidiary with fixed charges	(0.4		)	(0.4		)	(0.7		)	—			—
Fixed charges less interest capitalized	25.1			27.1			19.5			20.1			18.2
Amortization of capitalized interest	1.5			1.8			2.6			2.8			2.5
Earnings as defined	$	241.7		$	216.5		$	106.6		$	26.6		$	83.8
Ratio of earnings to fixed charges	7.6x			7.7x			5.3x			1.3x			3.8x

(a)  Includes interest capitalized relating to significant construction projects, and amortization of debt discount and debt issue costs.

(b)  One-third of rental expense which approximates the interest component of non-capitalized leases.

EX-21

Exhibit 21

SUBSIDIARY LIST

Doing Business As	State of Incorporation
Carpenter Investments, Inc.	Delaware
CRS Holdings, Inc.	Delaware
Dynamet Incorporated	Delaware
Talley Industries, Inc.	Delaware
Latrobe Specialty Metals, Inc.	Delaware
Latrobe Specialty Metals Company	Pennsylvania

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 2-83780, 2-81019, 2-60469, 33-42536, 33-42997, 33-65077, 33-54045, 333-40991, 333-55667, 333-55669, 333-57774, 333-147057, 333-147059, 333-173830, 333-182155, 333-182156 and 333-186361) of Carpenter Technology Corporation of our report dated August 23, 2013 relating to the consolidated financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

August 23, 2013

EX-24

Exhibit 24

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Carl G. Anderson, Jr.

Carl G. Anderson, Jr.

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Philip M. Anderson

Philip M. Anderson

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Thomas O. Hicks

Thomas O. Hicks

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ I. Martin Inglis

I. Martin Inglis

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Steven E. Karol

Steven E. Karol

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form l0-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Robert R. McMaster

Robert R. McMaster

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Gregory A. Pratt

Gregory A. Pratt

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Peter N. Stephans

Peter N. Stephans

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Kathryn C. Turner

Kathryn C. Turner

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2013, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Jeffrey Wadsworth

Jeffrey Wadsworth

Director

CARPENTER TECHNOLOGY CORPORATION

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her capacity as a Director of Carpenter Technology Corporation, hereby appoints James D. Dee and Tony R. Thene, or either of them, his or her true and lawful attorneys to execute in his name, place and stead, in his or her capacity as Director of the Company, the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K, for the year ended June 30, 2012, of said Company, and any and all amendments to said Annual Report and all instruments necessary or incidental in connection therewith and to file them with the Securities and Exchange Commission. The attorneys shall individually have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever requisite or desirable to be done in the exercise of any of the rights and powers herein granted, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys.

IN TESTIMONY WHEREOF, the undersigned has voluntarily executed this instrument this 12th day of August, 2013.

/s/ Stephen M. Ward, Jr.

Stephen M. Ward, Jr.

Director

EX-31.(A)

Exhibit 31(A)

CERTIFICATIONS OF PERIODIC REPORTS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William A. Wulfsohn, certify that:

1.I have reviewed this Annual Report on Form 10-K (the “Report”) of the Registrant;

2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4.The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d)Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: August 23, 2013	/s/ William A. Wulfsohn
	William A. Wulfsohn, President and
	Chief Executive Officer

EX-31.(B)

Exhibit 31(B)

CERTIFICATIONS OF PERIODIC REPORTS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tony R. Thene, certify that:

1.I have reviewed this Annual Report on Form 10-K (the “Report”) of the Registrant;

2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4.The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d)Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated:  August 23, 2013	/s/ Tony R. Thene
	Tony R. Thene, Senior Vice President
	and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Carpenter Technology Corporation (the “Issuer”) on Form 10-K for the year ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, William A. Wulfsohn, and I, Tony R. Thene, each hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Periodic Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date: August 23, 2013
/s/ William A. Wulfsohn	/s/ Tony R. Thene
William A. Wulfsohn	Tony R. Thene
President and	Senior Vice President
Chief Executive Officer	and Chief Financial Officer

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Share-Based Compensation (Details 8) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Additional disclosures
Compensation cost	$ 13.1	$ 13.3	$ 14.4
Director's Plan
Share-based compensation disclosures
Percentage of Director's annual retainer paid in stock instead of cash	50.00%
Percentage of units vests following the grant date	25.00%
Stock vesting period with reference to service term	3 months
Percentage of Director's committee chair fees paid in stock instead of cash	100.00%
Number of Units
Balance at the beginning of the period (in shares)	221,410	195,701	162,864
Granted (in shares)	21,710	22,660	29,822
Dividend equivalents (in shares)	3,399	3,049	3,015
Balance at the end of the period (in shares)	246,519	221,410	195,701
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 27.10	$ 25.81	$ 22.66
Granted (in dollars per share)	$ 53.53	$ 47.89	$ 36.45
Balance at the end of the period (in dollars per share)	$ 30.06	$ 27.10	$ 25.81
Additional disclosures
Shares vesting period	1 year
Compensation cost	1.2	1.1	1.0
Unvested stock option cost	$ 0.3
Unvested stock option weighted average remaining life	3 months 18 days
Director's Plan | Minimum
Share-based compensation disclosures
Percentage of Director's annual retainer paid in stock instead of cash	50.00%

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Operating Leases (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Operating Leases
Rent expense total	$ 12.3	$ 9.8	$ 7.3
Future minimum payments for non-cancellable operating leases, 2014	11.0
Future minimum payments for non-cancellable operating leases, 2015	7.8
Future minimum payments for non-cancellable operating leases, 2016	4.2
Future minimum payments for non-cancellable operating leases, 2017	2.3
Future minimum payments for non-cancellable operating leases, 2018	1.8
Future minimum payments for non-cancellable operating leases, thereafter	$ 7.2

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Fair Value Measurements (Details 2) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Carrying Value
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Long-term debt, including current portion	$ 604.2	$ 406.9
Company-owned life insurance	13.6	11.0
Fair Value
Carrying amounts and estimated fair values of financial instruments not recorded at fair value
Long-term debt, including current portion	602.8	427.7
Company-owned life insurance	$ 13.6	$ 11.0

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Income Taxes (Details 4) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Income Taxes
Deferred tax assets, pensions	$ 96.5	$ 132.1
Deferred tax assets, postretirement provisions	64.6	90.8
Deferred tax assets, net operating loss carryforwards	21.3	20.7
Deferred tax assets, environmental	4.6	4.5
Derivatives and hedging activities	25.2	20.0
Deferred tax assets, other	28.0	24.5
Gross deferred tax assets	240.2	292.6
Deferred tax assets, valuation allowances	(19.2)	(18.1)
Net deferred tax assets	221.0	274.5
Deferred tax liabilities, depreciation	(227.4)	(239.5)
Deferred tax liabilities, intangible assets	(43.0)	(41.2)
Deferred tax liabilities, inventories	(21.1)	(12.9)
Deferred tax liabilities, Other		(1.7)
Total deferred tax liabilities	(291.5)	(295.3)
Deferred tax liabilities	(70.5)	(20.8)
Undistributed earnings of foreign subsidiaries	$ 122.9

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Supplemental Data (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Supplemental Data
Repairs and maintenance costs	$ 101.9	$ 90.3	$ 74.8
Noncash investing and financing activities:
Treasury shares issued in connection with acquisition of business		415.5
Interest payments	23.6	21.4	18.3
Income tax payments, net	51.2	18.5	11.5
Foreign currency translation adjustment	(20.2)	(24.9)	(7.7)
Pension and post-retirement benefits, net of tax	(273.6)	(354.1)	(227.7)
Net unrealized losses on derivatives, net of tax	(41.5)	(32.8)	2.6
Unrealized losses on marketable securities, net of tax	(0.4)	(0.7)	(0.5)
Total accumulated other comprehensive Loss, net of tax	$ (335.7)	$ (412.5)	$ (233.3)

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Debt

12 Months Ended

Jun. 30, 2013

Debt

Debt

8. Debt

On February 26, 2013, the Company completed an offering and sale of $300 million in aggregate principal amount of its 4.45% Senior Notes due 2023 (the “Notes”). The Notes accrue interest at the rate of 4.45% per annum, with interest payable in cash semi-annually in arrears on each March 1 and September 1, commencing September 1, 2013. The Notes will mature on March 1, 2023. The Notes will be senior unsecured indebtedness of the Company, ranking equally in right of payment with all its existing and future senior unsecured indebtedness and senior to its future subordinated indebtedness.  The Company used a portion of the net proceeds from the issuance of the Notes to repay in full $100 million in aggregate principal amount of its senior unsecured notes due May 2013. The Company intends to use the remaining net proceeds from the issuance of the Notes for general corporate purposes, which may include discretionary pension contributions, additions to working capital, capital expenditures, repayment of debt, the financing of acquisitions, joint ventures and other business combination opportunities or stock repurchases.

On June 28, 2013, the Company entered into $500 million syndicated credit facility (“Credit Agreement”) that extends to June 28, 2018. The Credit Agreement replaced the Company’s previous revolving credit facility, dated as of June 21, 2011, which had been set to expire in June 2016. During the fiscal year ended June 30, 2013, the Company capitalized $0.8 million of debt issue costs paid in connection with the Credit Agreement.

Interest on the borrowings under the Credit Agreement accrue at variable rates, based upon LIBOR or a defined “Base Rate,” that are determined based upon the rating of the Company’s senior unsecured long-term debt (the “Debt Rating”). The applicable margin to be added to LIBOR ranges from 0.75% to 1.90% (1.25% as of June 30, 2013), and for Base Rate-determined loans, from 0.0% to 0.90% (0.25% as of June 30, 2013). The Company also pays a quarterly commitment fee ranging from 0.075% to 0.375% (0.15% as of June 30, 2013), determined based upon the Company’s Debt Rating, of the $500 million commitment under the Credit Agreement. In addition, the Company must pay certain letter of credit fees, ranging from 0.75% to 1.90% (1.25% as of June 30, 2013), with respect to letters of credit issued under the Credit Agreement. The Company has the right to voluntarily prepay and reborrow loans and to terminate or reduce the commitments under the facility. As of June 30, 2013, the Company had $7.2 million of issued letters of credit under the Credit Agreement, with the balance of $492.8 million available for future borrowings.

The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio (of 3.5 to 1.0 for any period of four consecutive fiscal quarters of the Company.). The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55%. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined, to consolidated capitalization, as defined. As of June 30, 2013, the Company was in compliance with all of the covenants of the Credit Agreement.

Long-term debt outstanding as of June 30, 2013 and 2012 consisted of the following:

	June 30,
($ in millions)	2013		2012
Senior unsecured notes, 6.625% due May 2013 (face value of $100.0 million at June 30, 2012)	$	—	$	101.3
Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 (face value of $55.0 and $56.0 million at June 30, 2013 and 2012, respectively)	55.0		56.0
Senior unsecured notes, 5.200% due July 2021 (face value of $250.0 million at June 30, 2013 and 2012)	249.7		249.6
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million and $0.0 at June 30, 2013 and 2012, respectively)	299.5		—
Total	604.2		406.9
Less amounts due within one year	—		101.0
Long-term debt, net of current portion	$	604.2	$	305.9

Aggregate maturities of long-term debt for the five years subsequent to June 30, 2013, are $0 million in fiscal year 2014, 2015, 2016, 2017, $55.0 million in 2018 and $550.0 million thereafter.

For the years ended June 30, 2013, 2012 and 2011, interest costs totaled $27.8 million, $25.0 million and $17.6 million, respectively, of which $6.8 million, $1.2 million and $0.5 million, respectively, were capitalized as part of the cost of property, plant, equipment and software.

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Acquisition and Strategic Partnership (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended		1 Months Ended		1 Months Ended		12 Months Ended		3 Months Ended
	Jun. 30, 2013	Jun. 30, 2011	Nov. 30, 2012 Carpenter Powder Products AB	Jun. 30, 2013 Carpenter Powder Products AB	Nov. 30, 2012 Carpenter Powder Products AB Sandvik	Nov. 30, 2012 Sandvik Powdermet AB	Jun. 30, 2013 Sandvik Powdermet AB	Dec. 31, 2010 Sandvik Powdermet AB	Dec. 31, 2010 Sandvik Powdermet AB Carpenter Powder Products AB
Strategic Partnership
Ownership interest held by parent (as a percent)			40.00%			40.00%		40.00%
Purchase price of acquired entity								$ 6.2
Ownership interest held by noncontrolling owners (as a percent)				40.00%					40.00%
Purchase price of noncontrolling interest		9.1							9.1
Proceeds from the sale of investment	7.9					7.9
Payment to repurchase the shares	8.4				8.4
Gain related to the sale of the investment							1.9
Gain (loss) recognized related to repurchase of minority interest			$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Pension and post-retirement benefits, tax	$ (48.3)	$ 78.5	$ (71.5)
Net (loss) gain on derivative instruments, tax	5.3	21.6	(3.1)
Unrealized gain (loss) on marketable securities, tax	$ (0.2)	$ 0.1	$ (0.1)

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Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of Carpenter and all majority-owned subsidiaries.  All significant intercompany accounts and transactions are eliminated.  Investments in companies in which Carpenter exercises significant influence, but which it does not control (generally a 20 to 50 percent ownership interest), are accounted for on the equity method of accounting and Carpenter’s share of their income or loss is included in other income, net in the consolidated statements of income. In November 2012, the Company dissolved its strategic partnership with Sandvik Materials Technology (“Sandvik”). Prior to the dissolution of the strategic partnership, the Company owned a 40 percent interest in Sandvik Powdermet AB, which the Company accounted for as an equity method investment. In addition, Sandvik owned a 40 percent interest in Carpenter Powder Products AB which has historically been reported as a noncontrolling interest.  Prior to November 2012, the financial results of Carpenter Powder Products AB were consolidated into the Company’s operating results and financial position, with the 40 percent interest of the noncontrolling partner recognized in the consolidated statement of income as net income attributable to noncontrolling interests and as equity attributable to the noncontrolling interest within total equity.

Revenue Recognition

Revenue, net of related discounts and allowances, is recognized when title and risk of loss has transferred to the customer, collectability is reasonably assured and pricing is fixed and determinable. This generally occurs when products are shipped.

Freight and Handling Fees and Costs

Freight and handling costs billed separately to customers are included as part of net sales, and freight and handling costs expensed are included as part of cost of sales on the consolidated statements of income.

Research and Development

Research and development expenditures, which amounted to $19.4 million, $20.5 million and $18.9 million in fiscal years 2013, 2012 and 2011, respectively, are expensed as incurred and are generally reported in cost of sales in the consolidated statement of income.  Substantially all development costs are related to developing new products or designing significant improvements to existing products.

Cash Equivalents

Cash equivalents consist of highly liquid instruments with original maturities of three months or less.  Cash equivalents are stated at cost, which approximates market.

Marketable Securities

Purchases and sales of marketable securities are recorded on a trade-date basis. Carpenter has determined that all of its marketable securities are to be classified as available-for-sale.  These securities are carried at market value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss.  Interest and dividends on securities classified as available-for-sale are included in other income, net.

Accounts Receivable

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. Trade credit is extended based upon periodic evaluation of each customer’s ability to perform its obligations. The Company determines accounts receivable allowances based on an aging of accounts and a review of specific accounts identified as collection risks. The Company does not require collateral to secure accounts receivable.

Inventories

Inventories are valued at the lower of cost or market.  Cost for inventories is principally determined by the Last-In, First-Out (“LIFO”) method.  Carpenter also uses the First-In, First-Out (“FIFO”) and average cost methods.  As of June 30, 2013 and 2012, $173.3 million and $162.1 million of inventory, respectively, was accounted for using a method other than the LIFO method.

Property, Plant and Equipment and Depreciation

Fixed assets are stated at historical cost less accumulated depreciation.  Depreciation for financial reporting purposes is computed by the straight-line method over the estimated useful lives of the assets.  Depreciation for income tax purposes is computed using accelerated methods.  Upon disposal, assets and related depreciation are removed from the accounts and the differences between the net amounts and proceeds from disposal are included in cost of goods sold in the consolidated statement of income.

Computer Software and Amortization

Computer software is included in other assets on the consolidated balance sheet, and is amortized for financial reporting purposes on a straight-line basis over the respective estimated useful lives, ranging principally from 3 to 7 years. Amortization expense charged to operations related to capitalized software amounted to $6.8 million, $6.1 million and $5.2 million for the years ended June 30, 2013, 2012 and 2011, respectively.

Goodwill

Goodwill, representing the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses, is stated at cost. Goodwill is not amortized but instead is annually tested for impairment, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired.  Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill.  The fair value is estimated using discounted cash flow and the use of market multiples valuation techniques. These valuation techniques require the use of estimates and assumptions related to projected operating results, capital expenditures and working capital levels as well as the cost of capital. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by comparing the carrying value of the reporting unit’s goodwill to its implied fair value.

Intangible assets

The costs of intangible assets, consisting principally of trademarks, trade names, non-compete arrangements, contracts and customer relationships are amortized on a straight-line basis over the estimated useful lives ranging from 2.5 to 30 years.

Impairment of Long-Lived Assets

Long-lived assets, including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable through future undiscounted cash flows.  The amount of the impairment loss is the excess of the carrying amount of the impaired assets over the fair value of the assets based upon undiscounted future cash flows.

Environmental Expenditures

Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with Carpenter’s capitalization policy for property, plant and equipment.  Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed.  Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated.  Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable.  Estimated liabilities are not discounted to present value, but estimated assets are measured on a discounted basis.

Derivative Financial Instruments

All derivative financial instruments are recorded on the balance sheet at their fair value and changes in fair value are recorded each period in current earnings or other comprehensive income.  Carpenter enters into derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies.  The Company has utilized interest rate swaps to convert floating rate debt to fixed rate, or to convert fixed rate debt to floating rate.

Foreign Currency Translation

Assets and liabilities of most international operations are translated into U.S. dollars at exchange rates in effect at year-end, and their income statements are translated at the average monthly exchange rates prevailing during the year.  The resulting translation gains and losses are recorded each period as a component of accumulated other comprehensive income until the international entity is sold or liquidated. Gains and losses from transactions denominated in foreign currencies are reported in other income, net in the consolidated statement of income.

Income Taxes

Deferred income taxes are recognized by applying enacted statutory tax rates, applicable to future years, to temporary differences between the tax bases and financial statement carrying values of Carpenter’s assets and liabilities.  Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized.

Significant judgments, estimates and assumptions are required in determining tax return reporting positions and in calculating provisions for income tax, which are based on interpretations of tax regulations and accounting pronouncements. Liabilities are established for uncertain tax positions when it is more likely than not that such positions, if challenged would not be sustained upon review by taxing authorities. These liabilities are re-evaluated as tax regulations and facts and circumstances change, such as the closing of a tax audit or the expiration of the statute of limitations for a specific exposure.

Earnings per Share

The Company has certain nonvested restricted shares and units that are considered participating securities because the awards have the right to receive non-forfeitable dividends. Accordingly, the Company calculates basic earnings per share using the two class method.  Under the two class method, earnings are allocated to common stock and participating securities according to their participation rights in dividends and undistributed earnings.  The earnings available to each class of stock are divided by the weighted average number of shares for the period in each class.  Because the participating securities have no obligation to share in net losses, losses are not allocated to the participating securities in this calculation.

Litigation

Periodically, Carpenter and its subsidiaries are parties to lawsuits arising out of the normal course of business.  Carpenter records liabilities when a loss is probable and can be reasonably estimated.  These estimates are based on an analysis made by internal and external legal counsel considering information known at the time.

Share-Based Compensation

The Company has two share-based employee compensation plans, which are more fully described in detail in Note 14. The Company recognizes compensation cost based on the fair value of the awards on the date of grant. The compensation cost is recognized over the requisite service period of the award, which is generally the shorter of the vesting period that the holder is required to provide service, or the period from the grant date to the date on which the employee is eligible to retire. Upon retirement, as defined in the Company’s share-based compensation plans, outstanding awards are subject to certain accelerated vesting terms.

Concentration of Credit Risk

Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and trade receivables. Investment and cash management policies have been implemented that limit deposit concentrations and limit investments to investment grade securities. The risk with respect to trade receivables is mitigated by monitoring payment terms and periodic credit evaluations we perform on our customers, the short duration of our payment terms and by the diversification of our customer base. During fiscal years 2013 and 2012, no customer accounted for 10 percent of total net sales and during fiscal year 2011, one customer accounted for 10 percent of total net sales.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

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Derivatives and Hedging Activities

12 Months Ended

Jun. 30, 2013

Derivatives and Hedging Activities

Derivatives and Hedging Activities

15.          Derivatives and Hedging Activities

The Company uses commodity forwards, interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a recap about the impact the derivative instruments have had on the Company’s financial position, results of operations, and cash flows.

Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in other comprehensive income to the extent effective, and reclassified to costs of sales in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

Cash Flow Hedging — Forward interest rate swaps: Historically, the Company has entered into forward swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. The forward interest rate swaps have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income to the extent effective, and reclassified to interest expense in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

Cash Flow Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in other comprehensive income to the extent effective, and reclassified to net sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

The Company also uses foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currency against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other income and expense. As of June 30, 2013, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts was not material.

Fair Value Hedging - Interest rate swaps: The Company has used interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges.  Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings.  The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of income. As of June 30, 2013 and 2012, the total notional amounts of floating interest rate contracts were $0.0 million and $45.0 million, respectively. For the years ended June 30, 2013 and 2012, net gains of $1.4 million and $1.4 million were recorded as a reduction to interest expense, respectively. These amounts include the impact of previously terminated swaps which are being amortized over the remaining term of the underlying debt.

The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of June 30, 2013 and 2012:

June 30, 2013 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	0.9	$	—	$	0.9
Other assets	—		—		—		—
Total asset derivatives	$	—	$	0.9	$	—	$	0.9
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	28.7	$	29.1
Other liabilities	—		—		44.0		44.0
Total liability derivatives	$	—	$	0.4	$	72.7	$	73.1

June 30, 2012 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.2	$	1.2	$	—	$	1.4
Other assets	1.2		—		—		1.2
Total asset derivatives	$	1.4	$	1.2	$	—	$	2.6
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	1.5	$	25.0	$	26.5
Other liabilities	—		0.4		29.6		30.0
Total liability derivatives	$	—	$	1.9	$	54.6	$	56.5

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transactions affects earnings or it becomes probable that the forecasted transaction will not occur.  The following is a summary of the (losses) gains related to cash flow hedges recognized during the years ended June 30, 2013, 2012 and 2011:

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Years Ended June 30,
($ in millions)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(43.2	)	$	(79.0	)	$	15.2
Foreign exchange contracts	1.9			(0.1		)	(2.4		)
Forward interest rate swaps	2.7			—			1.0
Total	$	(38.6	)	$	(79.1	)	$	13.8

	Location of (Loss) Gain	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
	Reclassified from AOCI into	Years Ended June 30,
($ in millions)	Income (Effective Portion)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	Cost of sales	$	(24.9	)	$	(23.4	)	$	7.6
Forward interest rate swaps	Interest expense	0.2			—			—
Foreign exchange contracts	Net sales	0.1			1.2			(1.2		)
Total		$	(24.6	)	$	(22.2	)	$	6.4

The Company estimates that $15.9 million of net derivative losses included in AOCI as of June 30, 2013 will be reclassified into earnings within the next twelve months. No significant cash flow hedges were discontinued during the year ended June 30, 2013. Ineffectiveness was not material during the year ended June 30, 2013.

The changes in AOCI associated with derivative hedging activities during the years ended June 30, 2013, 2012 and 2011 were as follows:

	2013			2012			2011
Balance at July 1	$	(32.8	)	$	2.6		$	(2.4	)
Current period changes in fair value, net of tax	(24.2		)	(49.1		)	8.5
Reclassification to earnings, net of tax	15.5			13.7			(3.5		)
Balance at June 30	$	(41.5	)	$	(32.8	)	$	2.6

According to the provisions of the Company’s derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. The Company’s contracts with these counterparties allow for netting of derivative instrument positions executed under each contract. As of June 30, 2013 the Company had no cash collateral held by counterparties.

The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts.

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Pension and Other Postretirement Benefits (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Pension Plans
Pension and Other Postretirement Benefit Disclosures
Service cost	$ 32.5	$ 23.0	$ 22.8
Interest cost	53.0	51.3	46.5
Expected return on plan assets	(54.8)	(54.2)	(45.4)
Amortization of net loss	28.1	17.5	29.1
Amortization of prior service cost (benefit)	0.7	0.7	1.0
Plan settlement expense			0.1
Net pension expense	59.5	38.3	54.1
Other Postretirement Plans
Pension and Other Postretirement Benefit Disclosures
Service cost	4.4	3.7	2.7
Interest cost	12.2	11.8	10.9
Expected return on plan assets	(6.4)	(6.4)	(5.0)
Amortization of net loss	3.2	2.6	6.0
Amortization of prior service cost (benefit)	(4.1)	(7.9)	(7.9)
Net pension expense	$ 9.3	$ 3.8	$ 6.7

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Marketable Securities (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Summary of marketable securities
Proceeds from sales and maturities of marketable securities	$ 0.1	$ 30.5	$ 166.0
Municipal auction rate securities
Summary of marketable securities
Available-for-sale securities, Cost	5.9	6.0
Available-for-sale securities, Unrealized Losses	(0.5)	(1.0)
Available-for-sale securities, Estimated Fair Value - Non-current	$ 5.4	$ 5.0

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Accrued Liabilities

12 Months Ended

Jun. 30, 2013

Accrued Liabilities

Accrued Liabilities

9. Accrued Liabilities

Accrued liabilities consisted of the following as of June 30, 2013 and 2012:

	June 30,
($ in millions)	2013		2012
Accrued compensation	$	49.4	$	50.1
Derivative financial instruments	29.1		26.5
Accrued postretirement benefits	15.4		17.2
Accrued pension liabilities	9.7		70.0
Other	64.9		53.3
Total accrued liabilities	$	168.5	$	217.1

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Derivatives and Hedging Activities (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	$ 0.9	$ 2.6
Derivatives designated as hedging instruments, Liability	73.1	56.5
Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset		1.4
Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0.9	1.2
Derivatives designated as hedging instruments, Liability	0.4	1.9
Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	72.7	54.6
Other current assets
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0.9	1.4
Other current assets | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset		0.2
Other current assets | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Asset	0.9	1.2
Other assets
Fair value of derivatives
Derivatives designated as hedging instruments, Asset		1.2
Other assets | Interest Rate Swaps
Fair value of derivatives
Derivatives designated as hedging instruments, Asset		1.2
Accrued liabilities
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	29.1	26.5
Accrued liabilities | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	0.4	1.5
Accrued liabilities | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	28.7	25.0
Other liabilities
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	44.0	30.0
Other liabilities | Foreign Currency Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability		0.4
Other liabilities | Commodity Contracts
Fair value of derivatives
Derivatives designated as hedging instruments, Liability	44.0	29.6
Fair Value Hedging | Interest Rate Swaps
Fair value of derivatives
Total notional amounts of interest rate contracts	0	45.0
Net gains recorded as a reduction to interest expense	$ 1.4	$ 1.4

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Supplemental Data (Tables)

12 Months Ended

Jun. 30, 2013

Supplemental Data

Additional supplemental disclosures

	Years Ended June 30,
($ in millions)	2013		2012		2011
Cost Data:
Repairs and maintenance costs	$	101.9	$	90.3	$	74.8
Cash Flow Data:
Noncash investing and financing activities:
Treasury shares issued in connection with acquisition of business	$	—	$	415.5	$	—
Cash paid during the year for:
Interest payments	$	23.6	$	21.4	$	18.3
Income tax payments, net	$	51.2	$	18.5	$	11.5

	June 30,
($ in millions)	2013			2012			2011
Accumulated Other Comprehensive Loss:
Foreign currency translation adjustment	$	(20.2	)	$	(24.9	)	$	(7.7	)
Pension and post-retirement benefits, net of tax	(273.6		)	(354.1		)	(227.7		)
Net unrealized losses on derivatives, net of tax	(41.5		)	(32.8		)	2.6
Unrealized losses on marketable securities, net of tax	(0.4		)	(0.7		)	(0.5		)
	$	(335.7	)	$	(412.5	)	$	(233.3	)

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Share-Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Number of Awards
Exercised (in shares)	(115,600)	(79,444)	(85,890)
Stock options
Number of Awards
Balance at the beginning of the period (in shares)	1,022,606	956,807	820,655
Granted (in shares)	198,904	152,450	227,600
Exercised (in shares)	(115,600)	(79,444)	(85,590)
Cancelled (in shares)	(17,182)	(7,207)	(5,858)
Balance at the end of the period (in shares)	1,088,728	1,022,606	956,807
Weighted Average Exercise Price
Balance at the beginning of the period (in dollars per share)	$ 33.54	$ 29.23	$ 26.53
Granted (in dollars per share)	$ 48.60	$ 55.04	$ 34.78
Exercised (in dollars per share)	$ 19.82	$ 23.57	$ 17.91
Cancelled (in dollars per share)	$ 48.42	$ 27.11	$ 31.31
Balance at the end of the period (in dollars per share)	$ 37.51	$ 33.54	$ 29.23
Additional disclosures
Weighted Average Remaining Contractual Term	6 years 9 months 18 days
Aggregate Intrinsic Value	$ 11.4
Number of Awards, Exercisable (in shares)	759,720
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 33.02
Weighted Average Remaining Contractual Term, Exercisable	6 years
Aggregate Intrinsic Value, Exercisable	$ 10.8

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Inventories (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Inventories
Raw materials and supplies	$ 111.6	$ 114.1
Work in process	325.9	312.4
Finished and purchased products	221.7	215.5
Total inventory	659.2	642.0
Inventory LIFO reserve	222.4	279.8
Current cost of LIFO inventory	708.3	759.7
Decrease in cost of sales	$ 2.1	$ 0	$ 1.7

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Goodwill and Other Intangible Assets, Net (Tables)

12 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets, Net

Schedule of changes in carrying amount of goodwill by reportable segment

($ in millions)	June 30, 2011			Acquisitions		Other		June 30, 2012			Other			June 30, 2013
Goodwill	$	79.6		$	215.2	$	0.4	$	295.2		$	(2.8	)	$	292.4
Accumulated impairment losses	(34.7		)	—		—		(34.7		)	—			(34.7		)
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7
Performance Engineered Products	$	44.9		$	0.7	$	0.4	$	46.0		$	—		$	46.0
Latrobe	—			214.5		—		214.5			(2.8		)	211.7
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7

Schedule of other intangible assets, net

		2013							2012
($ in millions)	Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	2.5 - 30	$	42.0	$	(22.1	)	$	19.9	$	42.0	$	(17.3	)	$	24.7
Customer relationships	5 - 15	78.2		(9.4		)	68.8		78.2		(3.4		)	74.8
Non-compete agreements	6.5	5.4		(2.1		)	3.3		5.4		(1.2		)	4.2
Contracts	2.9	3.7		(0.7		)	3.0		6.4		(0.2		)	6.2
Total		$	129.3	$	(34.3	)	$	95.0	$	132.0	$	(22.1	)	$	109.9

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Segment Information, Geographic and Product Data

12 Months Ended

Jun. 30, 2013

Segment Information, Geographic and Product Data

Segment Information, Geographic and Product Data

18.          Segment Information, Geographic and Product Data

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.  All prior year information has been recast to conform to the current year presentation.

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 Athens, 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.

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 Specialty Steel Supply 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.

Our executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that management considers not representative of ongoing operations, such as restructuring related charges, transaction costs associated with acquisitions, and other specifically-identified income or expense items.  The accounting policies of our reportable segments are the same as those described in the Summary of Significant Accounting Policies.

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, no single customer accounted for 10 percent or more of the Company’s sales for the years ended June 30, 2013 and June 30, 2012. On a consolidated basis one customer, Precision Castparts Corporation, accounted for 10% ($161.7 million) of the Company’s sales for the year ended June 30, 2011.

Segment Data	Years Ended June 30,
($ in millions)	2013			2012			2011
Net Sales:
Specialty Alloys Operations	$	1,547.4		$	1,566.6		$	1,431.3
Latrobe	491.2			200.8			38.7
Performance Engineered Products	378.8			365.7			248.3
Intersegment	(145.7		)	(104.4		)	(43.2		)
Consolidated net sales	$	2,271.7		$	2,028.7		$	1,675.1

Operating Income:	Years Ended June 30,
($ in millions)	2013			2012			2011
Specialty Alloys Operations	$	218.9		$	229.4		$	139.3
Latrobe	58.3			11.0			2.2
Performance Engineered Products	36.5			44.1			35.0
Corporate costs	(47.7		)	(53.2		)	(42.0		)
Pension earnings, interest & deferrals	(31.9		)	(15.3		)	(35.2		)
Intersegment	(1.4		)	(5.9		)	(2.9		)
Consolidated operating income	$	232.7		$	210.1		$	96.4

	Years Ended June 30,
($ in millions)	2013			2012			2011
Depreciation and Amortization:
Specialty Alloys Operations	$	56.7		$	53.2		$	51.1
Latrobe	22.7			7.7			0.4
Performance Engineered Products	19.4			17.7			10.2
Corporate	5.9			5.6			4.9
Intersegment	(0.6		)	(0.4		)	(0.1		)
Consolidated depreciation and amortization	$	104.1		$	83.8		$	66.5

	Years Ended June 30,
($ in millions)	2013			2012			2011
Capital Expenditures:
Specialty Alloys Operations	$	284.8		$	121.1		$	51.6
Latrobe	25.0			7.9			0.4
Performance Engineered Products	24.7			40.0			24.8
Corporate	4.0			5.0			3.9
Intersegment	(1.6		)	(2.1		)	(1.1		)
Consolidated capital expenditures	$	336.9		$	171.9		$	79.6

	June 30,
($ in millions)	2013			2012
Total Assets:
Specialty Alloys Operations	$	1,537.9		$	1,293.4
Latrobe	771.6			807.6
Performance Engineered Products	391.7			394.7
Corporate	233.7			191.4
Intersegment	(52.0		)	(59.3		)
Consolidated total assets	$	2,882.9		$	2,627.8

Geographic Data	Years Ended June 30,
($ in millions)	2013		2012		2011
Net Sales:(a)
United States	$	1,575.3	$	1,364.2	$	1,163.7
Europe	382.1		375.9		277.4
Asia Pacific	153.6		142.1		110.7
Mexico	66.6		68.8		67.1
Canada	59.8		52.1		36.6
Other	34.3		25.6		19.6
Consolidated net sales	$	2,271.7	$	2,028.7	$	1,675.1

(a) Net sales were attributed to countries based on the location of the customer.

Long-lived assets:	June 30,
($ in millions)	2013		2012
United States	$	1,142.5	$	901.7
Canada	9.1		9.8
Europe	6.1		6.9
Mexico	1.6		1.6
Asia Pacific	9.1		4.6
Consolidated long-lived assets	$	1,168.4	$	924.6

Product Data	Year Ended June 30,
($ in millions)	2013		2012		2011
Special alloys	$	989.9	$	931.4	$	831.8
Stainless steel	638.8		637.3		564.9
Titanium products	155.0		156.6		135.3
Powder metals	60.4		64.3		61.4
Alloy and tool steel	255.7		108.6		27.2
Other materials	171.9		130.5		54.5
Total net sales	$	2,271.7	$	2,028.7	$	1,675.1

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Other Income, Net

12 Months Ended

Jun. 30, 2013

Other Income, Net

Other Income, Net

17.          Other Income, Net

Other income, net consists of the following:

	Years Ended June 30,
($ in millions)	2013		2012			2011
Interest income	$	0.3	$	0.9		$	1.1
Equity in earnings of unconsolidated subsidiaries	1.3		0.6			2.6
Unrealized gains (losses) on company owned life insurance contracts and investments held in rabbi trusts	3.0		(0.4		)	2.5
Continued Dumping and Subsidy Offset Act receipts	0.1		—			2.0
Other	0.4		1.2			0.3
Total other income, net	$	5.1	$	2.3		$	8.5

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Segment Information, Geographic and Product Data (Details 4) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Product Data
Net sales	$ 611.8	$ 581.4	$ 533.5	$ 544.9	$ 643.7	$ 539.9	$ 431.1	$ 414.1	$ 2,271.7	$ 2,028.7	$ 1,675.1
Special alloys
Product Data
Net sales									989.9	931.4	831.8
Stainless steel
Product Data
Net sales									638.8	637.3	564.9
Titanium products
Product Data
Net sales									155.0	156.6	135.3
Powder metals
Product Data
Net sales									60.4	64.3	61.4
Alloy and tool steel
Product Data
Net sales									255.7	108.6	27.2
Other materials
Product Data
Net sales									$ 171.9	$ 130.5	$ 54.5

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Other Income, Net (Tables)

12 Months Ended

Jun. 30, 2013

Other Income, Net

Schedule of other income, net

	Years Ended June 30,
($ in millions)	2013		2012			2011
Interest income	$	0.3	$	0.9		$	1.1
Equity in earnings of unconsolidated subsidiaries	1.3		0.6			2.6
Unrealized gains (losses) on company owned life insurance contracts and investments held in rabbi trusts	3.0		(0.4		)	2.5
Continued Dumping and Subsidy Offset Act receipts	0.1		—			2.0
Other	0.4		1.2			0.3
Total other income, net	$	5.1	$	2.3		$	8.5

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Earnings per Common Share (Tables)

12 Months Ended

Jun. 30, 2013

Earnings per Common Share

Schedule of calculations of basic and diluted earnings per common share

	Years Ended June 30,
($ in millions, except per share data)	2013			2012			2011
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Less: earnings and dividends allocated to participating securities	(0.8		)	(1.1		)	(0.8		)
Earnings available for Carpenter common shareholders	$	145.3		$	120.1		$	70.2
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Basic earnings per common share	$	2.75		$	2.55		$	1.59
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Effect of shares issuable under share based compensation plans	0.5			0.7			0.6
Weighted average number of common shares outstanding, diluted	53.4			47.8			44.7
Diluted earnings per common share	$	2.73		$	2.53		$	1.59

Schedule of awards issued under share-based compensation plans excluded from the calculations of diluted earnings per share

	Years Ended June 30,
(in millions)	2013	2012	2011
Stock options	0.4	—	0.1

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Accrued Liabilities (Tables)

12 Months Ended

Jun. 30, 2013

Accrued Liabilities

Schedule of accrued liabilities

	June 30,
($ in millions)	2013		2012
Accrued compensation	$	49.4	$	50.1
Derivative financial instruments	29.1		26.5
Accrued postretirement benefits	15.4		17.2
Accrued pension liabilities	9.7		70.0
Other	64.9		53.3
Total accrued liabilities	$	168.5	$	217.1

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Jun. 30, 2013

Quarterly Financial Data (Unaudited)

Quarterly financial data by results of operations

(dollars and shares in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Results of Operations
Fiscal Year 2013
Net sales	$	544.9	$	533.5	$	581.4	$	611.8
Gross profit	$	109.3	$	102.6	$	101.0	$	120.5
Operating income	$	61.6	$	52.7	$	53.0	$	65.4
Net income	$	39.5	$	33.2	$	32.9	$	40.9
Net income attributable to Carpenter	$	39.2	$	33.0	$	32.9	$	40.9
Fiscal Year 2012
Net sales	$	414.1	$	431.1	$	539.9	$	643.7
Gross profit	$	81.1	$	84.3	$	105.1	$	120.6
Operating income	$	44.0	$	43.9	$	55.7	$	66.5
Net income	$	23.7	$	23.8	$	33.0	$	41.0
Net income attributable to Carpenter	$	23.8	$	23.6	$	33.0	$	40.8

Earnings per common share

Fiscal Year 2013	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.74	$	0.62	$	0.62	$	0.77
Diluted earnings	$	0.74	$	0.62	$	0.62	$	0.77

Fiscal Year 2012	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.53	$	0.53	$	0.69	$	0.77
Diluted earnings	$	0.53	$	0.52	$	0.69	$	0.77

Weighted average common shares outstanding

(in millions)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal Year 2013
Basic	52.8	52.9	52.9	52.9
Diluted	53.4	53.5	53.5	53.5
Fiscal Year 2012
Basic	44.3	44.4	47.2	52.6
Diluted	45.1	45.1	47.9	53.3

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SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Jun. 30, 2013

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

CARPENTER TECHNOLOGY CORPORATION AND SUBSIDIARIES

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

($ in millions)

Column A	Column B		Column C						Column D			Column E
			Additions
	Balance at		Charged			Charged
	Beginning		to			to						Balance at
	of		Costs &			Other						End of
Description	Period		Expenses			Accounts			Deductions			Period
Year ended June 30, 2013
Allowance for doubtful accounts receivable	$	4.9	$	0.6		$	—		$	(1.4	)	$	4.1
Deferred tax valuation allowance	$	18.1	$	1.1		$	—		$	—		$	19.2
Inventory reserves	$	18.2	$	2.9		$	2.0		$	—		$	23.1
Year ended June 30, 2012
Allowance for doubtful accounts receivable	$	2.7	$	0.7		$	1.7	*	$	(0.2	)	$	4.9
Deferred tax valuation allowance	$	17.5	$	0.6		$	—		$	—		$	18.1
Inventory reserves	$	12.0	$	1.2		$	5.2	*	$	(0.2	)	$	18.2
Year ended June 30, 2011
Allowance for doubtful accounts receivable	$	2.7	$	(0.2	)	$	—		$	0.2		$	2.7
Deferred tax valuation allowance	$	17.6	$	(0.2	)	$	—		$	0.1		$	17.5
Inventory reserves	$	15.2	$	(3.5	)	$	—		$	0.3		$	12.0

*Amount represents balance acquired through the Latrobe acquisition

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Pension and Other Postretirement Benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Pension Plans
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$ 1,218.1	$ 929.2
Plan liabilities assumed in connection with Latrobe acquisition		116.3
Service cost	32.5	23.0	22.8
Interest cost	53.0	51.3	46.5
Benefits paid	(70.6)	(61.1)
Actuarial (gain) loss	(45.7)	159.5
Plan settlements	(0.6)
Other		(0.1)
Projected benefit obligation at end of year	1,186.7	1,218.1	929.2
Change in plan assets:
Fair value of plan assets at beginning of year	770.9	710.2
Plan assets acquired in connection with Latrobe acquisition		72.8
Actual return on plan assets	82.3	15.8
Benefits paid from plan assets	(70.6)	(61.1)
Contributions	148.2	33.2
Plan settlements	(0.6)
Fair value of plan assets at end of year	930.2	770.9	710.2
Funded status of the plans
Funded status of the plans	(256.5)	(447.2)
Other Postretirement Plans
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	282.2	204.2
Plan liabilities assumed in connection with Latrobe acquisition		57.2
Service cost	4.4	3.7	2.7
Interest cost	12.2	11.8	10.9
Benefits paid	(13.6)	(11.7)
Actuarial (gain) loss	(25.9)	16.3
Other	0.2	0.4
Projected benefit obligation at end of year	259.8	282.2	204.2
Change in plan assets:
Fair value of plan assets at beginning of year	85.3	80.3
Actual return on plan assets	8.2	5.3
Benefits paid from plan assets	(13.6)	(11.7)
Contributions	13.3	11.4
Fair value of plan assets at end of year	93.2	85.3	80.3
Funded status of the plans
Funded status of the plans	$ (166.6)	$ (196.9)

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Pension and Other Postretirement Benefits (Details 9) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Pension Plans
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	$ 930.2	$ 770.9	$ 710.2
Pension Plans | Short-term investments
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	13.7	14.4
Pension Plans | Domestic and international equities
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	281.8	237.9
Pension Plans | Commingled funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	216.5	191.4
Pension Plans | Limited partnerships
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	137.9	95.9
Pension Plans | Government agency bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	109.8	102.4
Pension Plans | Corporate bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	149.8	102.1
Pension Plans | Mutual funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	2.5	10.1
Pension Plans | Mortgage/ asset backed securities and other
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	18.2	16.7
Pension Plans | Level 1
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	344.3	295.0
Pension Plans | Level 1 | Domestic and international equities
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	281.8	237.9
Pension Plans | Level 1 | Commingled funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	52.1	40.4
Pension Plans | Level 1 | Government agency bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	7.9	6.6
Pension Plans | Level 1 | Mutual funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	2.5	10.1
Pension Plans | Level 2
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	585.9	475.9
Pension Plans | Level 2 | Short-term investments
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	13.7	14.4
Pension Plans | Level 2 | Commingled funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	164.4	151.0
Pension Plans | Level 2 | Limited partnerships
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	137.9	95.9
Pension Plans | Level 2 | Government agency bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	101.9	95.8
Pension Plans | Level 2 | Corporate bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	149.8	102.1
Pension Plans | Level 2 | Mortgage/ asset backed securities and other
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	18.2	16.7
Other Postretirement Plans
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	93.2	85.3	80.3
Other Postretirement Plans | Short-term investments
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	14.2	5.8
Other Postretirement Plans | Commingled funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	51.4	44.7
Other Postretirement Plans | Government agency bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	15.9	15.9
Other Postretirement Plans | Corporate bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	7.5	7.4
Other Postretirement Plans | Mortgage/ asset backed securities and other
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	4.2	11.5
Other Postretirement Plans | Level 2
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	93.2	85.3
Other Postretirement Plans | Level 2 | Short-term investments
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	14.2	5.8
Other Postretirement Plans | Level 2 | Commingled funds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	51.4	44.7
Other Postretirement Plans | Level 2 | Government agency bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	15.9	15.9
Other Postretirement Plans | Level 2 | Corporate bonds
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	7.5	7.4
Other Postretirement Plans | Level 2 | Mortgage/ asset backed securities and other
Pension and Other Postretirement Benefit Disclosures
Fair value of pension plan assets	$ 4.2	$ 11.5

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Accrued Liabilities (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Accrued Liabilities
Accrued compensation	$ 49.4	$ 50.1
Derivative financial instruments	29.1	26.5
Accrued postretirement benefits	15.4	17.2
Accrued pension liabilities	9.7	70.0
Other	64.9	53.3
Total accrued liabilities	$ 168.5	$ 217.1

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Share-Based Compensation (Tables)

12 Months Ended

Jun. 30, 2013

Share-Based Compensation

Summary of weighted-average assumptions of fair value of stock options

	Years Ended June 30,
	2013		2012		2011
Expected volatility	55	%	54	%	55	%
Dividend yield	1	%	1	%	2	%
Risk-free interest rate	0.7	%	1.4	%	1.6	%
Expected term (in years)	5.0		5.0		5.0

Summary of stock option activity

	Number of Awards		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Millions)
Outstanding at June 30, 2010	820,655		$	26.53
Granted	227,600		34.78
Exercised	(85,590	)	17.91
Cancelled	(5,858	)	31.31
Outstanding at June 30, 2011	956,807		29.23
Granted	152,450		55.04
Exercised	(79,444	)	23.57
Cancelled	(7,207	)	27.11
Outstanding at June 30, 2012	1,022,606		33.54
Granted	198,904		48.60
Exercised	(115,600	)	19.82
Cancelled	(17,182	)	48.42
Outstanding at June 30, 2013	1,088,728		$	37.51	6.8 Years	$	11.4
Exercisable at June 30, 2013	759,720		$	33.02	6.0 Years	$	10.8

Summary of outstanding and exercisable options by exercise price range

Exercise Price Range	Number Outstanding at June 30, 2013	Weighted Average Remaining Contractual Term (in Years)	Weighted Average Exercise Price		Number Exercisable at June 30, 2013	Weighted Average Exercise Price
$5.00 -$20.00	176,139	5.9	$	17.18	176,139	$	17.18
$20.01 - $30.00	189,624	6.0	22.66		189,624	22.66
$30.01 - $40.00	196,699	7.1	34.64		138,419	34.73
$40.01 - $50.00	294,669	7.5	46.23		127,251	43.93
$50.01 - $63.54	231,597	6.9	56.47		128,287	57.40
	1,088,728		$	37.51	759,720	$	33.02

Summary of nonvested stock awards activity

	Number of Awards		Weighted- Average Grant Date Fair Value
Nonvested Balance at June 30, 2010	345,027		$	26.63
Time-based granted	171,617			33.10
Performance-based earned	131,644			32.52
Vested	(165,576	)		33.43
Forfeited	(1,971	)		36.64
Nonvested Balance at June 30, 2011	480,741			28.17
Time-based granted	43,408			49.75
Performance-based earned	77,423			55.69
Vested	(171,140	)		28.00
Forfeited	(11,101	)		21.75
Nonvested Balance at June 30, 2012	419,331			35.71
Time-based granted	22,838			50.15
Performance-based earned	41,816			47.85
Vested	(254,967	)		31.39
Forfeited	(13,603	)		51.85
Nonvested Balance at June 30, 2013	215,415		$	43.75

Summary Of Director stock units activity

	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at June 30, 2010	162,864	$	22.66
Granted	29,822		36.45
Dividend equivalents	3,015		—
Outstanding at June 30, 2011	195,701		25.81
Granted	22,660		47.89
Dividend equivalents	3,049		—
Outstanding at June 30, 2012	221,410		27.10
Granted	21,710		53.53
Dividend equivalents	3,399		—
Outstanding at June 30, 2013	246,519	$	30.06

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Pension and Other Postretirement Benefits (Details 6) (Other Postretirement Plans, USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Other Postretirement Plans
Expected health care cost trend rate
Effect of one percentage point increase in the assumed health care cost trend rate on service and interest cost components	$ 0.6
Effect of one percentage point increase in the assumed health care cost trend rate on postretirement benefit obligation	9.9
Effect of one percentage point decrease in the assumed health care cost trend rate on service and interest cost components	0.5
Effect of one percentage point decrease in the assumed health care cost trend rate on postretirement benefit obligation	$ 8.7

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Income Taxes (Details 5) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Income Taxes
Balance, beginning	$ 2.3	$ 1.9	$ 3.6
Additions based on tax positions of prior years	0.6		0.3
Additions based on tax positions of current years		0.4
Reductions as a result of a lapse of statute of limitations	(1.3)		(2.0)
Reductions based on tax positions of prior year	(0.2)
Balance, ending	1.4	2.3	1.9
Offsetting tax benefits	1.1
Unrecognized tax benefits that, if recognized would affect the entity's effective tax rate	0.3	0.8	0.4
Income tax expense (benefits) related to interest and benefit	(0.3)	0.4	(0.3)
Amount of interest and penalties accrued	$ 0.6	$ 0.7
Statute of limitations period for state tax audits, low end of range	4 years
Statute of limitations period for state tax audits, high end of range	6 years

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Other Income, Net (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Other Income, Net
Interest income	$ 0.3	$ 0.9	$ 1.1
Equity in earnings of unconsolidated subsidiaries	1.3	0.6	2.6
Unrealized gains (losses) on company owned life insurance contracts and investments held in rabbi trusts	3.0	(0.4)	2.5
Continued Dumping and Subsidy Offset Act receipts	0.1		2.0
Other	0.4	1.2	0.3
Total other income, net	$ 5.1	$ 2.3	$ 8.5

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Segment Information, Geographic and Product Data (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Segment Data
Net sales	$ 611.8	$ 581.4	$ 533.5	$ 544.9	$ 643.7	$ 539.9	$ 431.1	$ 414.1	$ 2,271.7	$ 2,028.7	$ 1,675.1
Pension earnings, interest & deferrals									(31.9)	(15.3)	(35.2)
Operating income	65.4	53.0	52.7	61.6	66.5	55.7	43.9	44.0	232.7	210.1	96.4
Depreciation and amortization									104.1	83.8	66.5
Capital Expenditures									336.9	171.9	79.6
Assets	2,882.9				2,627.8				2,882.9	2,627.8
Specialty Alloys Operations
Segment Data
Net sales									1,547.4	1,566.6	1,431.3
Operating income									218.9	229.4	139.3
Depreciation and amortization									56.7	53.2	51.1
Capital Expenditures									284.8	121.1	51.6
Assets	1,537.9				1,293.4				1,537.9	1,293.4
Latrobe
Segment Data
Net sales									491.2	200.8	38.7
Operating income									58.3	11.0	2.2
Depreciation and amortization									22.7	7.7	0.4
Capital Expenditures									25.0	7.9	0.4
Assets	771.6				807.6				771.6	807.6
Performance Engineered Products
Segment Data
Net sales									378.8	365.7	248.3
Operating income									36.5	44.1	35.0
Depreciation and amortization									19.4	17.7	10.2
Capital Expenditures									24.7	40.0	24.8
Assets	391.7				394.7				391.7	394.7
Corporate
Segment Data
Operating income									(47.7)	(53.2)	(42.0)
Depreciation and amortization									5.9	5.6	4.9
Capital Expenditures									4.0	5.0	3.9
Assets	233.7				191.4				233.7	191.4
Intersegment
Segment Data
Net sales									(145.7)	(104.4)	(43.2)
Operating income									(1.4)	(5.9)	(2.9)
Depreciation and amortization									(0.6)	(0.4)	(0.1)
Capital Expenditures									(1.6)	(2.1)	(1.1)
Assets	$ (52.0)				$ (59.3)				$ (52.0)	$ (59.3)

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Income Taxes

12 Months Ended

Jun. 30, 2013

Income Taxes

Income Taxes

16.          Income Taxes

Income from continuing operations before income taxes for the Company’s domestic and foreign operations was as follows:

	Years Ended June 30,
($ in millions)	2013		2012		2011
Domestic	$	198.0	$	168.4	$	64.9
Foreign	18.8		20.2		22.9
Income before income taxes	$	216.8	$	188.6	$	87.8

The provision (benefit) for income taxes from continuing operations consisted of the following:

	Years Ended June 30,
($ in millions)	2013			2012		2011
Current:
Federal	$	49.7		$	21.5	$	9.2
State	5.9			2.9		5.2
Foreign	5.3			5.8		6.7
Total current	60.9			30.2		21.1
Deferred:
Federal	7.8			32.5		(3.6		)
State	2.5			4.1		(1.3		)
Foreign	(0.9		)	0.2		(0.1		)
Total deferred	9.4			36.8		(5.0		)
Total income tax expense	$	70.3		$	67.0	$	16.1

The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company’s effective income tax rate:

	Years Ended June 30,
(% of pre-tax income)	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.0		2.2		2.9
Domestic manufacturing deduction	(2.7	)	(2.3	)	(3.4	)
Research and development tax credit	(1.3	)	(0.6	)	(3.7	)
Foreign tax rate differential	(0.9	)	(0.6	)	(1.7	)
Nontaxable income	(0.6	)	—		(0.6	)
Foreign source income	—		—		(7.3	)
Increases (decreases) in valuation allowances	0.5		0.1		(0.2	)
Adjustments of prior years’ income taxes	0.3		(0.5	)	(2.6	)
Changes in uncertain tax positions, net	(0.6	)	0.4		(0.4	)
Other, net	0.7		1.8		0.3
Effective income tax rate	32.4	%	35.5	%	18.3	%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases.  The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheet are summarized in the table below. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2013, the Company had state net operating loss carryforwards of $324.5 million expiring between 2014 and 2032.  The valuation allowance increased from fiscal year 2012 by $1.1 million primarily due to a decrease in the amount of future reversals of taxable temporary differences.

	June 30,
($ in millions)	2013			2012
Deferred tax assets:
Pensions	$	96.5		$	132.1
Postretirement provisions	64.6			90.8
Net operating loss carryforwards	21.3			20.7
Environmental	4.6			4.5
Derivatives and hedging activities	25.2			20.0
Other	28.0			24.5
Gross deferred tax assets	240.2			292.6
Valuation allowances	(19.2		)	(18.1		)
Net deferred tax assets	221.0			274.5
Deferred tax liabilities:
Depreciation	(227.4		)	(239.5		)
Intangible assets	(43.0		)	(41.2		)
Inventories	(21.1		)	(12.9		)
Other	—			(1.7		)
Total deferred tax liabilities	(291.5		)	(295.3		)
Deferred tax liabilities	$	(70.5	)	$	(20.8	)

At June 30, 2013, the Company had undistributed earnings of foreign subsidiaries, amounting to $122.9 million on which deferred income taxes have not been provided because earnings are expected to be reinvested indefinitely outside of the U.S. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and withholding taxes in various foreign tax jurisdictions.  It is not practical to calculate these taxes due to the complex and hypothetical nature of the calculations.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions is as follows:

	Years Ended June 30,
($ in millions)	2013			2012		2011
Balance, beginning	$	2.3		$	1.9	$	3.6
Additions based on tax positions of prior years	0.6			—		0.3
Additions based on tax positions of current years	—			0.4		—
Reductions as a result of a lapse of statute of limitations	(1.3		)	—		(2.0		)
Reductions based on tax positions of prior year	(0.2		)	—		—
Balance, ending	$	1.4		$	2.3	$	1.9

The liability for unrecognized tax benefits as of June 30, 2013 of $1.4 million includes $1.1 million of offsetting tax benefits for reversals of deferred tax items.  The net amount of $0.3 million would, if recognized, favorably impact the Company’s effective tax rate. The net amounts at June 30, 2012 and 2011 were $0.8 million and $0.4 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefits will change within the next 12 months; however, any such changes should not have a significant impact on the Company’s consolidated financial statements.

It is the Company’s policy to classify interest and penalties recognized on uncertain tax positions as a component of income tax expense. The Company’s income tax expense included a benefit of $0.3 million, a charge of $0.4 million and a benefit of $0.3 million related to interest and penalties for the years ended June 30, 2013, 2012 and 2011, respectively.  In addition, $0.6 million and $0.7 million were included in accrued income taxes in the consolidated balance sheet as of June 30, 2013 and 2012, respectively.

All years prior to June 30, 2009 have been settled with the Internal Revenue Service and with most significant state tax jurisdictions. The Company has not extended any statute of limitations period for any significant location in which it operates. Generally, tax years are open to examination for a period of four to six years following the filing of the tax returns.

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Current assets:
Cash and cash equivalents	$ 257.5	$ 211.0
Accounts receivable, net of allowance for doubtful accounts of $4.1 and $4.9 million at June 30, 2013 and 2012	342.0	354.2
Inventories	659.2	642.0
Deferred income taxes	2.7	10.6
Other current assets	20.1	31.9
Total current assets	1,281.5	1,249.7
Property, plant and equipment, net	1,168.4	924.6
Goodwill	257.7	260.5
Other intangibles, net	95.0	109.9
Other assets	80.3	83.1
Total assets	2,882.9	2,627.8
Current liabilities:
Accounts payable	252.7	236.1
Accrued liabilities	168.5	217.1
Current portion of long-term debt		101.0
Total current liabilities	421.2	554.2
Long-term debt, net of current portion	604.2	305.9
Accrued pension liabilities	246.9	377.3
Accrued postretirement benefits	151.2	179.8
Deferred income taxes	73.3	31.4
Other liabilities	83.0	66.1
Total liabilities	1,579.8	1,514.7
Contingencies and commitments (see Note 11)
STOCKHOLDERS' EQUITY
Common stock - authorized 100,000,000 shares; issued 54,925,335 shares at June 30,2013 and 54,809,735 shares at June 30, 2012; outstanding 52,773,060 shares at June 30, 2013 and 52,412,967 shares at June 30, 2012	274.6	274.0
Capital in excess of par value	254.4	252.7
Reinvested earnings	1,217.3	1,109.6
Common stock in treasury (2,152,275 shares and 2,396,768 shares at June 30, 2013 and 2012, respectively), at cost	(107.5)	(120.0)
Accumulated other comprehensive loss	(335.7)	(412.5)
Total Carpenter stockholders' equity	1,303.1	1,103.8
Noncontrolling interest		9.3
Total equity	1,303.1	1,113.1
Total liabilities and equity	$ 2,882.9	$ 2,627.8

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (USD $) In Millions, except Share data, unless otherwise specified	Total	Common Stock	Capital in Excess of Par Value	Reinvested Earnings	Common Stock in Treasury	Accumulated Other Comprehensive Loss	Noncontrolling interest
Balances at Jun. 30, 2010	$ 573.4	$ 273.2	$ 223.3	$ 983.2	$ (535.2)	$ (371.1)
Balances (in shares) at Jun. 30, 2010	43,967,084	54,644,401			(10,677,317)
Increase (Decrease) in Stockholders' Equity
Net income	71.7			71.0			0.7
Pension and post-retirement benefits, net of tax	116.8					116.8
Net gain (loss) on derivative instruments, net of tax	5.0					5.0
Foreign currency translation	16.5					16.0	0.5
Proceeds received from sale of non-controlling interest	9.1						9.1
Cash Dividends: Common @ $0.72 per share	(32.1)			(32.1)
Share-based compensation plans	11.3		8.3		3.0
Share-based compensation plans (in shares)	54,406				54,406
Uncertain tax positions adjustments	1.4		1.4
Stock options exercised	1.6	0.5	1.1
Stock options exercised (in shares)	85,890	85,890
Tax windfall on share-based compensation	1.3		1.3
Balances at Jun. 30, 2011	776.0	273.7	235.4	1,022.1	(532.2)	(233.3)	10.3
Balances (in shares) at Jun. 30, 2011	44,107,380	54,730,291			(10,622,911)
Increase (Decrease) in Stockholders' Equity
Net income	121.6			121.2			0.4
Pension and post-retirement benefits, net of tax	(126.4)					(126.4)
Net gain (loss) on derivative instruments, net of tax	(35.4)					(35.4)
Unrealized gain (loss) on marketable securities, net of taxes	(0.2)					(0.2)
Foreign currency translation	(18.6)					(17.2)	(1.4)
Cash Dividends: Common @ $0.72 per share	(33.7)			(33.7)
Share-based compensation plans	9.9		3.7		6.2
Share-based compensation plans (in shares)	126,143				126,143
Uncertain tax positions adjustments	0.4		0.4
Treasury shares issued in connection with acquisition of business	415.6		9.6		406.0
Treasury shares issued in connection with acquisition of business (in shares)	8,100,000				8,100,000
Stock options exercised	1.8	0.3	1.5
Stock options exercised (in shares)	79,444	79,444
Tax windfall on share-based compensation	2.1		2.1
Balances at Jun. 30, 2012	1,113.1	274.0	252.7	1,109.6	(120.0)	(412.5)	9.3
Balances (in shares) at Jun. 30, 2012	52,412,967	54,809,735			(2,396,768)
Increase (Decrease) in Stockholders' Equity
Net income	146.5			146.1			0.4
Pension and post-retirement benefits, net of tax	80.5					80.5
Net gain (loss) on derivative instruments, net of tax	(8.7)					(8.7)
Purchase of subsidiary shares from noncontrolling interest	(8.4)		1.6				(10.0)
Unrealized gain (loss) on marketable securities, net of taxes	0.3					0.3
Foreign currency translation	5.0					4.7	0.3
Cash Dividends: Common @ $0.72 per share	(38.3)			(38.3)
Share-based compensation plans	7.0		(5.5)		12.5
Share-based compensation plans (in shares)	244,493				244,493
Stock options exercised	2.3	0.6	1.7
Stock options exercised (in shares)	115,600	115,600
Tax windfall on share-based compensation	3.9		3.9
Other	(0.1)			(0.1)
Balances at Jun. 30, 2013	$ 1,303.1	$ 274.6	$ 254.4	$ 1,217.3	$ (107.5)	$ (335.7)
Balances (in shares) at Jun. 30, 2013	52,773,060	54,925,335			(2,152,275)

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Acquisition and Strategic Partnership

12 Months Ended

Jun. 30, 2013

Acquisition and Strategic Partnership

Acquisition and Strategic Partnership

2. Acquisition and Strategic Partnership

Fiscal Year 2012 Acquisitions

Latrobe Specialty Metals, Inc.

On February 29, 2012, the Company completed its previously announced acquisition of Latrobe Specialty Metals, Inc (“Latrobe”) for a total purchase price of $427.0 million, net of cash acquired (the “Latrobe Acquisition”). The purchase price includes the issuance of 8.1 million shares of the Company’s common stock to former Latrobe stockholders in exchange for their Latrobe capital stock and $11.5 million of cash paid at closing, net of cash acquired of $2.5 million, to satisfy certain costs of the sellers. The fair value of the shares issued as part of the consideration paid for Latrobe was determined based on the closing market price of the Company’s shares on the acquisition date. The Company also assumed $153.7 million of indebtedness which was paid off in cash concurrently with the closing of the acquisition.

Latrobe manufacturers and distributes high-performance specialty metals serving customers across end-use markets including the aerospace and defense, energy and industrial markets. The manufacturing operations of Latrobe are based principally in Latrobe, Pennsylvania.

The following is a summary of the purchase price allocation in connection with the Latrobe Acquisition.

($ in millions)	Preliminary Purchase Price Allocation as of June 30, 2012			Measurement Period Adjustments			Final Purchase Price Allocation
Accounts receivable	$	67.3		$	(0.3	)	$	67.0
Inventory	241.2			1.4			242.6
Property, plant and equipment	172.4			—			172.4
Intangible assets	87.1			—			87.1
Other	10.6			(0.8		)	9.8
Accounts Payable and accrued liabilities	(63.9		)	(0.2		)	(64.1		)
Long-term debt	(153.7		)	—			(153.7		)
Pension and other postretirement liabilities	(100.8		)	—			(100.8		)
Deferred income taxes	(47.7		)	2.7			(45.0		)
Total identifiable net assets	212.5			2.8			215.3
Goodwill	214.5			(2.8		)	211.7
Total purchase price, net of cash acquired	$	427.0		$	—		$	427.0

The goodwill recognized in connection with the Latrobe Acquisition consists of the value associated with the immediate increase in the Company’s premium melt capacity to meet strong customer demand,  improvements in  the Company’s position in attractive end-use markets such as aerospace and defense and energy, the complementary asset capabilities which the Company expects will lead to enriched, higher margin product mix and operating cost synergies as well as the capabilities for commercialization of new Carpenter products under development. None of the goodwill recognized is deductible for income tax purposes.

In connection with the Latrobe Acquisition, the Company incurred approximately $11.7 million and $2.4 million of acquisition-related costs during the fiscal years ended June 30, 2012 and 2011, respectively. These costs are included in the consolidated statements of income and represent incremental legal, accounting and investment banking fees incurred in connection with the transaction as well as approximately $5.2 million of liability for costs associated with the sale of certain Latrobe assets necessary to obtain approval for the transaction from the Federal Trade Commission (“FTC”). As part of the FTC approval, the Company entered into a consent decree to transfer assets and technical knowledge to Eramet S.A. and its subsidiaries, Aubert & Duval and Brown Europe, which will allow them to become a second manufacturer of two specific alloys in order to provide customers with a supply alternative in the marketplace.

The consolidated net sales for the fiscal year ended June 30, 2012 includes approximately $163.2 million of net sales related to the Latrobe business since the Latrobe Acquisition.  The Company’s operating income for the fiscal year ended June 30, 2012 includes approximately $10.5 million related to the operations of the Latrobe business since the Latrobe Acquisition, net of approximately $11.6 million recorded in connection with the fair value cost inventory adjustments.

The unaudited pro forma results presented below include the effects of the Latrobe Acquisition as if it had occurred as of July 1, 2010. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as the depreciation and amortization associated with estimates for the fair value of the property and equipment and acquired intangible assets and the impacts of the elimination of Latrobe debt that was repaid at closing. The supplemental proforma earnings were adjusted to exclude acquisition related costs in the fiscal year 2012 and 2011 periods.

	June 30,
($ in millions)	2012		2011
Revenue	$	2,339.6	$	2,125.3
Earnings	$	160.1	$	93.5
Earnings per Common Share
Basic	$	3.04	$	1.78
Diluted	$	3.01	$	1.77

The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition.  Accordingly, the unaudited pro forma financial information above is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the dates indicated.

Arwin Machining Plus, Ltd.

On December 15, 2011, the Company acquired substantially all of the assets of Arwin Machining Plus, Ltd. (“Arwin”) for a cash purchase price of $1.4 million.  The Arwin assets, consisting principally of machinery and equipment, have been integrated into the Canadian operations of Amega West Services (“Amega West”), a wholly owned subsidiary of the Company.  The Company believes the acquisition enhances Amega West’s machining capabilities by adding the expertise and positions necessary to increase responsiveness to customers and to assist with the development of new directional drilling applications. The purchase price was allocated $0.7 million to machinery and equipment and $0.7 million to goodwill, most of which is expected to be deductible for tax purposes.

Fiscal Year 2011 Acquisitions

Amega West Services

On December 31, 2010, the Company acquired all of the members’ interests in Amega West Services, LLC (“Amega West”), a Houston-based manufacturer and service provider in the directional drilling industry, for a cash purchase price of $41.6 million.  In connection with this acquisition, the Company also assumed $12.4 million of Amega West’s long-term debt, which was paid off in cash concurrently with closing of the purchase. Amega West is a leading manufacturer of high-precision components for measurement while drilling (“MWD”) and logging while drilling (“LWD”) housings, drill collars, stabilizers and other down-hole tools used for directional drilling. MWD and LWD technology is used to ensure critical data is obtained and transmitted to the surface to monitor the progress of any applicable well. The consideration paid has been allocated as follows:

$ in millions
Net working capital, including $4.9 million of accounts payable to Carpenter effectively settled at closing	$	6.5
Property, plant and equipment	25.9
Customer relationships	5.2
Non-compete agreements	5.4
Trademarks and tradenames	1.9
Goodwill	9.7
Deferred tax liabilities	(0.6		)
Long-term debt	(12.4		)
Total purchase price	$	41.6

Of the goodwill recorded related to the Amega West acquisition, $8.3 million is expected to be deductible for tax purposes.

The purchase agreement includes an earn-out opportunity for certain management equity sellers, designed to drive earnings growth at Amega West.  According to the terms of the earn-out, the Company held back approximately $2.8 million of the cash purchase price otherwise payable to the earn-out participants, and provided the participants with the opportunity to receive up to two times the holdback amount if certain earnings targets are achieved over a four and a half year period following the acquisition. $2.2 million of the earnout is guaranteed and is therefore considered as part of the total purchase price. The earnout payments in excess of the guaranteed minimum amount, if any, will be treated as compensation related to post combination services.

The results of operations of Amega West have been included in the consolidated statements of income since the acquisition date and are reported in the Performance Engineered Products segment. The acquisition of Amega West is not considered material to the consolidated financial statements and accordingly the Company will not disclose proforma information.

Oilfield Alloys

On June 27, 2011, the Company acquired Oilfield Alloys Pte. Ltd. (“Oilfield Alloys”) for a purchase price of $4.8 million which consisted of a cash purchase price of $4.1 million, net of cash acquired of $0.3 million, paid at closing. The remaining purchase price of $0.7 million was held back to satisfy the occurrence of certain indemnification obligations, if any, and will be released to the sellers on the third anniversary of the acquisition less any indemnification claims.  Based in Singapore, Oilfield Alloys manufactures and distributes directional drilling equipment in the Asia-Pacific region.  A distributor of several Carpenter non-magnetic products, Oilfield Alloys also has a sales location in Dubai.  Oilfield Alloys has become part of Amega West operations. The purchase price allocation was completed in the first quarter of fiscal year 2012 and resulted in the purchase price being allocated to $1.2 million of working capital, $1.7 million of property and equipment, $1.5 million of identifiable intangible assets and $0.4 million of goodwill.

Strategic Partnership

In the second quarter of fiscal year 2011, the Company established a strategic partnership with Sandvik Materials Technology (“Sandvik”) to further strengthen its leadership position in high-performance powder metal products. As part of the strategic partnership, the Company acquired a 40 percent interest in Sandvik Powdermet AB for a cash purchase price of $6.2 million. The Company treated the acquisition of the 40 percent interest in Sandvik Powdermet AB as an equity method investment. In addition, in connection with the strategic partnership, Sandvik acquired a 40 percent interest in Carpenter Powder Products AB for a cash purchase price of $9.1 million.  Sandvik’s acquired interest in Carpenter Powder Products AB has been reported as a noncontrolling interest.

In November 2012, the Company dissolved its strategic partnership with Sandvik Materials Technology (“Sandvik”).  Under the terms of the dissolution agreement, the Company received $7.9 million of proceeds from the sale of its investment in Sandvik Powdermet AB and paid $8.4 million to repurchase the shares of Carpenter Products AB from Sandvik. The dissolution resulted in a $1.9 million gain related to the sale of the investment in Sandvik Powdermet during the year ended June 30, 2013. No gain or loss was recognized related to the repurchase of the Carpenter Powder Products AB shares.

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Pension and Other Postretirement Benefits (Details 10) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Pension and Other Postretirement Benefit Disclosures
Pension contributions	$ 144.9	$ 30.0	$ 3.9
Pension Plans
Pension and Other Postretirement Benefit Disclosures
Expected contributions for next fiscal year	6.3
Estimated future benefit payments
2014	73.6
2015	76.0
2016	77.1
2017	78.8
2018	81.6
2019-2023	438.9
U.S. Pension Plans
Pension and Other Postretirement Benefit Disclosures
Pension contributions	144.9	30.0	3.9
Other pension plans
Pension and Other Postretirement Benefit Disclosures
Pension contributions	3.3	3.2	3.1
Other Postretirement Plans
Estimated future benefit payments
2014	15.5
2015	16.1
2016	16.7
2017	17.2
2018	17.7
2019-2023	92.7
Other Benefit Plans
Contributions to defined contribution retirement and savings plans	$ 8.9	$ 6.8	$ 5.2

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Cash dividends per common share (in dollars per share)	$ 0.72	$ 0.72	$ 0.72

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Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Jun. 30, 2013

Pension and Other Postretirement Benefits

Schedule of reconciliation of benefit obligations, plan assets, and funded status of the plans

							Other
	Pension Plans						Postretirement Plans
($ in millions)	2013			2012			2013			2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	1,218.1		$	929.2		$	282.2		$	204.2
Plan liabilities assumed in connection with Latrobe acquisition	—			116.3			—			57.2
Service cost	32.5			23.0			4.4			3.7
Interest cost	53.0			51.3			12.2			11.8
Benefits paid	(70.6		)	(61.1		)	(13.3		)	(11.4		)
Actuarial (gain) loss	(45.7		)	159.5			(25.9		)	16.3
Plan settlements	(0.6		)	—			—			—
Other	—			(0.1		)	0.2			0.4
Projected benefit obligation at end of year	$	1,186.7		$	1,218.1		$	259.8		$	282.2
Change in plan assets:
Fair value of plan assets at beginning of year	$	770.9		$	710.2		$	85.3		$	80.3
Plan assets acquired in connection with Latrobe acquisition	—			72.8			—			—
Actual return on plan assets	82.3			15.8			8.2			5.3
Benefits paid from plan assets	(70.6		)	(61.1		)	(13.6		)	(11.7		)
Contributions	148.2			33.2			13.3			11.4
Plan settlements	(0.6		)	—			—			—
Fair value of plan assets at end of year	$	930.2		$	770.9		$	93.2		$	85.3
Funded status of the plans	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)

Schedule of amounts recognized in the consolidated balance sheets

Amounts recognized in the Consolidated Balance Sheets :
Other assets - noncurrent	$	0.1		$	0.1		$	—		$	—
Accrued liabilities - current	(9.7		)	(70.0		)	(15.4		)	(17.1		)
Accrued pension liabilities - noncurrent	(246.9		)	(377.3		)	—			—
Accrued postretirement benefits	—			—			(151.2		)	(179.8		)
	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)

Schedule of amounts recognized in the accumulated other comprehensive loss

					Other
	Pension Plans				Postretirement Plans
($ in millions)	2013		2012		2013			2012
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	412.4	$	513.6	$	36.9		$	67.9
Prior service cost (credit)	2.9		3.6		(0.1		)	(4.2		)
Total	$	415.3	$	517.2	$	36.8		$	63.7
Additional information:
Accumulated benefit obligation for all pension plans	$	1,072.3	$	1,112.1	N/A			N/A

Schedule of projected benefit obligations in excess of plan assets

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Projected benefit obligation	$	1,186.6	$	1,217.9	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

Schedule of accumulated benefit obligations in excess of plan assets

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Accumulated benefit obligation	$	1,072.2	$	1,112.0	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

Schedule of components of the net periodic benefit cost

	Pension Plans									Other Postretirement Plans
($ in millions)	2013			2012			2011			2013			2012			2011
Service cost	$	32.5		$	23.0		$	22.8		$	4.4		$	3.7		$	2.7
Interest cost	53.0			51.3			46.5			12.2			11.8			10.9
Expected return on plan assets	(54.8		)	(54.2		)	(45.4		)	(6.4		)	(6.4		)	(5.0		)
Amortization of net loss	28.1			17.5			29.1			3.2			2.6			6.0
Amortization of prior service cost (benefit)	0.7			0.7			1.0			(4.1		)	(7.9		)	(7.9		)
Plan settlement expense	—			—			0.1			—			—			—
Net pension expense	$	59.5		$	38.3		$	54.1		$	9.3		$	3.8		$	6.7

Schedule of weighted-average assumptions used to determine benefit obligations and net periodic benefit cost

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine benefit obligations at fiscal year end
Discount rate	5.00	%	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%
Rate of compensation increase	3.66	%	3.67	%	3.66	%	N/A		N/A		N/A

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year
Discount rate	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%	5.00	%
Expected long-term rate of return on plan assets	7.00	%	7.50	%	7.50	%	7.50	%	8.00	%	8.00	%
Long-term rate of compensation increase	3.67	%	3.66	%	3.66	%	N/A		N/A		N/A

Schedule of expected health care cost trend rates

	June 30,
	2013		2012
Assumed health care cost trend rate	7.5	%	8.0	%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate)	5	%	5	%
Year that the rate reaches the ultimate trend rate	2020		2018

Schedule of amounts in other comprehensive loss that are expected to be recognized as components of net periodic benefit cost

			Other
	Pension		Postretirement
($ in millions)	Plans		Plans			Total
Amortization of prior service cost (credit)	$	0.5	$	(0.1	)	$	0.4
Amortization of net actuarial loss	21.8		1.2			23.0
Amortization of accumulated other comprehensive loss	$	22.3	$	1.1		$	23.4

Schedule of weighted-average asset allocations by asset category

	2013		2012
Equity securities	63.5	%	66.0	%
Fixed income securities	34.3		31.3
Cash and cash equivalents	2.2		2.7
Total	100.0	%	100.0	%

Schedule of fair values of pension plan by assets category

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Short-term investments	$	—	$	13.7	$	13.7	$	—	$	14.4	$	14.4
Domestic and international equities	281.8		—		281.8		237.9		—		237.9
Commingled funds	52.1		164.4		216.5		40.4		151.0		191.4
Limited partnerships	—		137.9		137.9		—		95.9		95.9
Government agency bonds	7.9		101.9		109.8		6.6		95.8		102.4
Corporate bonds	—		149.8		149.8		—		102.1		102.1
Mutual funds	2.5		—		2.5		10.1		—		10.1
Mortgage/asset backed securities and other	—		18.2		18.2		—		16.7		16.7
	$	344.3	$	585.9	$	930.2	$	295.0	$	475.9	$	770.9

Schedule of fair values of other postretirement benefit plans by asset category

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Commingled fund	$	—	$	51.4	$	51.4	$	—	$	44.7	$	44.7
Short-term investments	—		14.2		14.2		—		5.8		5.8
Government agency bonds	—		15.9		15.9		—		15.9		15.9
Corporate bonds and other	—		7.5		7.5		—		7.4		7.4
Mortgage backed securities	—		4.2		4.2		—		11.5		11.5
	$	—	$	93.2	$	93.2	$	—	$	85.3	$	85.3

Schedule of estimated future benefit payments

	Pension		Other
($ in millions)	Benefits		Benefits
2014	$	73.6	$	15.5
2015	$	76.0	$	16.1
2016	$	77.1	$	16.7
2017	$	78.8	$	17.2
2018	$	81.6	$	17.7
2019-2023	$	438.9	$	92.7

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Recent Accounting Pronouncements

12 Months Ended

Jun. 30, 2013

Recent Accounting Pronouncements

Recent Accounting Pronouncements

19.          Recent Accounting Pronouncements

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles — Goodwill and Other (“ASU 2011-08”).  ASU 2011-08 amends previous guidance on the testing of goodwill for impairment and is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The amended guidance provides entities with the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would still be required. The adoption of ASU 2011-08 did not have a significant impact on the Company’s Consolidated Financial Statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires disclosures to provide information to help reconcile differences in offsetting requirements under U.S. GAAP and International Financial Reporting Standards (“IFRS”).  The new disclosure requirements in ASU 2011-11 mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The guidance in ASU 2011-11 is required to be applied for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is evaluating the impact of the adoption of ASU 2011-11 and does not expect the adoption to have a significant impact on the Company’s Consolidated Financial Statements.

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). The guidance in ASU 2012-02 is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment by providing entities with an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. The guidance includes examples of events and circumstances that might indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. The qualitative assessment may be performed on none, some or all of its indefinite-lived intangible assets.  An entity may also choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to the quantitative impairment test and then choose to perform the qualitative assessment in any subsequent period. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 with early adoption permitted. The adoption of ASU 2011-08 is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). The guidance in ASU 2013-02 requires entities to present separately, among other items, the amount of the change that is due to reclassifications, and the amount that is due to current period other comprehensive income. ASU 2013-02 will be effective for the Company beginning in the first quarter of fiscal year 2014.  The adoption of ASU 2013-02 will require additional disclosure and is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include the accounts of Carpenter and all majority-owned subsidiaries.  All significant intercompany accounts and transactions are eliminated.  Investments in companies in which Carpenter exercises significant influence, but which it does not control (generally a 20 to 50 percent ownership interest), are accounted for on the equity method of accounting and Carpenter’s share of their income or loss is included in other income, net in the consolidated statements of income. In November 2012, the Company dissolved its strategic partnership with Sandvik Materials Technology (“Sandvik”). Prior to the dissolution of the strategic partnership, the Company owned a 40 percent interest in Sandvik Powdermet AB, which the Company accounted for as an equity method investment. In addition, Sandvik owned a 40 percent interest in Carpenter Powder Products AB which has historically been reported as a noncontrolling interest.  Prior to November 2012, the financial results of Carpenter Powder Products AB were consolidated into the Company’s operating results and financial position, with the 40 percent interest of the noncontrolling partner recognized in the consolidated statement of income as net income attributable to noncontrolling interests and as equity attributable to the noncontrolling interest within total equity.

Revenue Recognition

Revenue Recognition

Revenue, net of related discounts and allowances, is recognized when title and risk of loss has transferred to the customer, collectability is reasonably assured and pricing is fixed and determinable. This generally occurs when products are shipped.

Freight and Handling Fees and Costs

Freight and Handling Fees and Costs

Freight and handling costs billed separately to customers are included as part of net sales, and freight and handling costs expensed are included as part of cost of sales on the consolidated statements of income.

Research and Development

Research and Development

Research and development expenditures, which amounted to $19.4 million, $20.5 million and $18.9 million in fiscal years 2013, 2012 and 2011, respectively, are expensed as incurred and are generally reported in cost of sales in the consolidated statement of income.  Substantially all development costs are related to developing new products or designing significant improvements to existing products.

Cash Equivalents

Cash Equivalents

Cash equivalents consist of highly liquid instruments with original maturities of three months or less.  Cash equivalents are stated at cost, which approximates market.

Marketable Securities

Marketable Securities

Purchases and sales of marketable securities are recorded on a trade-date basis. Carpenter has determined that all of its marketable securities are to be classified as available-for-sale.  These securities are carried at market value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss.  Interest and dividends on securities classified as available-for-sale are included in other income, net.

Accounts Receivable

Accounts Receivable

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. Trade credit is extended based upon periodic evaluation of each customer’s ability to perform its obligations. The Company determines accounts receivable allowances based on an aging of accounts and a review of specific accounts identified as collection risks. The Company does not require collateral to secure accounts receivable.

Inventories

Inventories

Inventories are valued at the lower of cost or market.  Cost for inventories is principally determined by the Last-In, First-Out (“LIFO”) method.  Carpenter also uses the First-In, First-Out (“FIFO”) and average cost methods.  As of June 30, 2013 and 2012, $173.3 million and $162.1 million of inventory, respectively, was accounted for using a method other than the LIFO method.

Property, Plant and Equipment and Depreciation

Property, Plant and Equipment and Depreciation

Fixed assets are stated at historical cost less accumulated depreciation.  Depreciation for financial reporting purposes is computed by the straight-line method over the estimated useful lives of the assets.  Depreciation for income tax purposes is computed using accelerated methods.  Upon disposal, assets and related depreciation are removed from the accounts and the differences between the net amounts and proceeds from disposal are included in cost of goods sold in the consolidated statement of income.

Computer Software and Amortization

Computer Software and Amortization

Computer software is included in other assets on the consolidated balance sheet, and is amortized for financial reporting purposes on a straight-line basis over the respective estimated useful lives, ranging principally from 3 to 7 years. Amortization expense charged to operations related to capitalized software amounted to $6.8 million, $6.1 million and $5.2 million for the years ended June 30, 2013, 2012 and 2011, respectively.

Goodwill

Goodwill

Goodwill, representing the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses, is stated at cost. Goodwill is not amortized but instead is annually tested for impairment, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired.  Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill.  The fair value is estimated using discounted cash flow and the use of market multiples valuation techniques. These valuation techniques require the use of estimates and assumptions related to projected operating results, capital expenditures and working capital levels as well as the cost of capital. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by comparing the carrying value of the reporting unit’s goodwill to its implied fair value.

Intangible assets

Intangible assets

The costs of intangible assets, consisting principally of trademarks, trade names, non-compete arrangements, contracts and customer relationships are amortized on a straight-line basis over the estimated useful lives ranging from 2.5 to 30 years.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets, including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable through future undiscounted cash flows.  The amount of the impairment loss is the excess of the carrying amount of the impaired assets over the fair value of the assets based upon undiscounted future cash flows.

Environmental Expenditures

Environmental Expenditures

Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with Carpenter’s capitalization policy for property, plant and equipment.  Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed.  Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated.  Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable.  Estimated liabilities are not discounted to present value, but estimated assets are measured on a discounted basis.

Derivative Financial Instruments

Derivative Financial Instruments

All derivative financial instruments are recorded on the balance sheet at their fair value and changes in fair value are recorded each period in current earnings or other comprehensive income.  Carpenter enters into derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies.  The Company has utilized interest rate swaps to convert floating rate debt to fixed rate, or to convert fixed rate debt to floating rate.

Foreign Currency Translation

Foreign Currency Translation

Assets and liabilities of most international operations are translated into U.S. dollars at exchange rates in effect at year-end, and their income statements are translated at the average monthly exchange rates prevailing during the year.  The resulting translation gains and losses are recorded each period as a component of accumulated other comprehensive income until the international entity is sold or liquidated. Gains and losses from transactions denominated in foreign currencies are reported in other income, net in the consolidated statement of income.

Income Taxes

Income Taxes

Deferred income taxes are recognized by applying enacted statutory tax rates, applicable to future years, to temporary differences between the tax bases and financial statement carrying values of Carpenter’s assets and liabilities.  Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized.

Significant judgments, estimates and assumptions are required in determining tax return reporting positions and in calculating provisions for income tax, which are based on interpretations of tax regulations and accounting pronouncements. Liabilities are established for uncertain tax positions when it is more likely than not that such positions, if challenged would not be sustained upon review by taxing authorities. These liabilities are re-evaluated as tax regulations and facts and circumstances change, such as the closing of a tax audit or the expiration of the statute of limitations for a specific exposure.

Earnings per Share

Earnings per Share

The Company has certain nonvested restricted shares and units that are considered participating securities because the awards have the right to receive non-forfeitable dividends. Accordingly, the Company calculates basic earnings per share using the two class method.  Under the two class method, earnings are allocated to common stock and participating securities according to their participation rights in dividends and undistributed earnings.  The earnings available to each class of stock are divided by the weighted average number of shares for the period in each class.  Because the participating securities have no obligation to share in net losses, losses are not allocated to the participating securities in this calculation.

Litigation

Litigation

Periodically, Carpenter and its subsidiaries are parties to lawsuits arising out of the normal course of business.  Carpenter records liabilities when a loss is probable and can be reasonably estimated.  These estimates are based on an analysis made by internal and external legal counsel considering information known at the time.

Share-Based Compensation

Share-Based Compensation

The Company has two share-based employee compensation plans, which are more fully described in detail in Note 14. The Company recognizes compensation cost based on the fair value of the awards on the date of grant. The compensation cost is recognized over the requisite service period of the award, which is generally the shorter of the vesting period that the holder is required to provide service, or the period from the grant date to the date on which the employee is eligible to retire. Upon retirement, as defined in the Company’s share-based compensation plans, outstanding awards are subject to certain accelerated vesting terms.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and trade receivables. Investment and cash management policies have been implemented that limit deposit concentrations and limit investments to investment grade securities. The risk with respect to trade receivables is mitigated by monitoring payment terms and periodic credit evaluations we perform on our customers, the short duration of our payment terms and by the diversification of our customer base. During fiscal years 2013 and 2012, no customer accounted for 10 percent of total net sales and during fiscal year 2011, one customer accounted for 10 percent of total net sales.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

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Pension and Other Postretirement Benefits (Details 8)									12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Equity securities	Jun. 30, 2012 Equity securities	Jun. 30, 2013 Fixed income securities	Jun. 30, 2012 Fixed income securities	Jun. 30, 2013 Cash and cash equivalents	Jun. 30, 2012 Cash and cash equivalents	Jun. 30, 2013 U.S. Pension Plans Equity securities	Jun. 30, 2013 U.S. Pension Plans Fixed income securities	Jun. 30, 2013 Other Postretirement Plans Equity securities	Jun. 30, 2013 Other Postretirement Plans Fixed income securities
Pension and Other Postretirement Benefit Disclosures
Weighted-average asset allocation (as a percent)	100.00%	100.00%	63.50%	66.00%	34.30%	31.30%	2.20%	2.70%
Plan's current allocation policy (as a percent)									60.00%	40.00%	60.00%	40.00%

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SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Allowance for doubtful accounts receivable
Valuation accounts activity
Balance at Beginning of Period	$ 4.9	$ 2.7	$ 2.7
Charged to Costs and Expenses	0.6	0.7	(0.2)
Charged to Other Accounts		1.7
Deductions	(1.4)	(0.2)	0.2
Balance at End of Period	4.1	4.9	2.7
Deferred tax valuation allowance
Valuation accounts activity
Balance at Beginning of Period	18.1	17.5	17.6
Charged to Costs and Expenses	1.1	0.6	(0.2)
Deductions			0.1
Balance at End of Period	19.2	18.1	17.5
Inventory reserves
Valuation accounts activity
Balance at Beginning of Period	18.2	12.0	15.2
Charged to Costs and Expenses	2.9	1.2	(3.5)
Charged to Other Accounts	2.0	5.2
Deductions		(0.2)	0.3
Balance at End of Period	$ 23.1	$ 18.2	$ 12.0

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Property, Plant and Equipment (Tables)

12 Months Ended

Jun. 30, 2013

Property, Plant and Equipment

Summary of property, plant and equipment

	June 30,
($ in millions)	2013		2012
Land	$	20.9	$	16.6
Buildings and building equipment	326.4		301.3
Machinery and equipment	1,555.7		1,454.6
Construction in progress	292.1		97.6
Total at cost	2,195.1		1,870.1
Less: accumulated depreciation and amortization	1,026.7		945.5
Total property, plant, and equipment	$	1,168.4	$	924.6

Schedule of estimated useful lives of depreciable assets

Asset Category	Useful Life (in Years)
Buildings and building equipment	10 – 45
Machinery and equipment	3 – 30

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Pension and Other Postretirement Benefits (Details 7) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Pension and Other Postretirement Benefit Disclosures
Estimated net pension expense	$ 59.7
Amounts in other comprehensive loss that are expected to recognized as components of net periodic benefit cost in the next fiscal year
Amortization of prior service cost (credit)	0.4
Amortization of net actuarial loss	23.0
Amortization of accumulated other comprehensive loss	23.4
Pension Plans
Pension and Other Postretirement Benefit Disclosures
Estimated net pension expense	48.6
Discount rate used to calculate the net periodic benefit costs for June 30, 2014 (as a percent)	5.00%
Expected long-term rate of return on plan assets used to calculate the net periodic benefit costs (as a percent)	7.00%
Amounts in other comprehensive loss that are expected to recognized as components of net periodic benefit cost in the next fiscal year
Amortization of prior service cost (credit)	0.5
Amortization of net actuarial loss	21.8
Amortization of accumulated other comprehensive loss	22.3
Other Postretirement Plans
Pension and Other Postretirement Benefit Disclosures
Estimated net pension expense	11.1
Discount rate used to calculate the net periodic benefit costs for June 30, 2014 (as a percent)	5.00%
Expected long-term rate of return on plan assets used to calculate the net periodic benefit costs (as a percent)	7.00%
Amounts in other comprehensive loss that are expected to recognized as components of net periodic benefit cost in the next fiscal year
Amortization of prior service cost (credit)	(0.1)
Amortization of net actuarial loss	1.2
Amortization of accumulated other comprehensive loss	$ 1.1

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Segment Information, Geographic and Product Data (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012 item	Jun. 30, 2011 item
Major customer disclosure
Number of reportable segments	3
Number of customers accounted for 10% or more of the sales	0	0	1
Precision Castparts Corporation
Major customer disclosure
Number of customers accounted for 10% or more of the sales			1
Sales accounted from Precision Castparts as a percentage of company's sales			10.00%
Sales from major customer accounted for 10% or more			$ 161.7

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Earnings per Common Share (Details 2) (Stock options) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2011
Stock options
Awards issued under share-based compensation plans that were excluded from calculations of diluted earnings per share because their effects were anti-dilutive
Anti-dilutive securities excluded from computation of earnings per share	0.4	0.1

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Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended					12 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012 item	Jun. 30, 2011 item	Nov. 30, 2012 Sandvik Powdermet AB	Dec. 31, 2010 Sandvik Powdermet AB	Jun. 30, 2013 Computer software Minimum	Jun. 30, 2013 Computer software Maximum	Jun. 30, 2013 Intangible Assets Minimum	Jun. 30, 2013 Intangible Assets Maximum	Jun. 30, 2013 Carpenter Powder Products AB	Nov. 30, 2012 Carpenter Powder Products AB	Dec. 31, 2010 Carpenter Powder Products AB Sandvik Powdermet AB
Summary of significant accounting policies
Ownership interest (as a percent)				40.00%	40.00%						40.00%
Ownership interest of noncontrolling partner (as a percent)										40.00%		40.00%
Research and development expenditures	$ 19.4	$ 20.5	$ 18.9
Inventory under FIFO method or average cost methods	173.3	162.1
Estimated useful life						3 years	7 years	2 years 6 months	30 years
Capitalized software amortization expense	$ 6.8	$ 6.1	$ 5.2
Number of share-based employee compensation plans	2
Number of customers accounted for 10% or more of the sales	0	0	1

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2013

Income Taxes

Schedule of income from continuing operations before income taxes for the Company's domestic and foreign operations

	Years Ended June 30,
($ in millions)	2013		2012		2011
Domestic	$	198.0	$	168.4	$	64.9
Foreign	18.8		20.2		22.9
Income before income taxes	$	216.8	$	188.6	$	87.8

Schedule of provision (benefit) for income taxes from continuing operations

	Years Ended June 30,
($ in millions)	2013			2012		2011
Current:
Federal	$	49.7		$	21.5	$	9.2
State	5.9			2.9		5.2
Foreign	5.3			5.8		6.7
Total current	60.9			30.2		21.1
Deferred:
Federal	7.8			32.5		(3.6		)
State	2.5			4.1		(1.3		)
Foreign	(0.9		)	0.2		(0.1		)
Total deferred	9.4			36.8		(5.0		)
Total income tax expense	$	70.3		$	67.0	$	16.1

Schedule of reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company's effective income tax rate

	Years Ended June 30,
(% of pre-tax income)	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.0		2.2		2.9
Domestic manufacturing deduction	(2.7	)	(2.3	)	(3.4	)
Research and development tax credit	(1.3	)	(0.6	)	(3.7	)
Foreign tax rate differential	(0.9	)	(0.6	)	(1.7	)
Nontaxable income	(0.6	)	—		(0.6	)
Foreign source income	—		—		(7.3	)
Increases (decreases) in valuation allowances	0.5		0.1		(0.2	)
Adjustments of prior years’ income taxes	0.3		(0.5	)	(2.6	)
Changes in uncertain tax positions, net	(0.6	)	0.4		(0.4	)
Other, net	0.7		1.8		0.3
Effective income tax rate	32.4	%	35.5	%	18.3	%

Summary of components of deferred tax assets and liabilities

	June 30,
($ in millions)	2013			2012
Deferred tax assets:
Pensions	$	96.5		$	132.1
Postretirement provisions	64.6			90.8
Net operating loss carryforwards	21.3			20.7
Environmental	4.6			4.5
Derivatives and hedging activities	25.2			20.0
Other	28.0			24.5
Gross deferred tax assets	240.2			292.6
Valuation allowances	(19.2		)	(18.1		)
Net deferred tax assets	221.0			274.5
Deferred tax liabilities:
Depreciation	(227.4		)	(239.5		)
Intangible assets	(43.0		)	(41.2		)
Inventories	(21.1		)	(12.9		)
Other	—			(1.7		)
Total deferred tax liabilities	(291.5		)	(295.3		)
Deferred tax liabilities	$	(70.5	)	$	(20.8	)

Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions

	Years Ended June 30,
($ in millions)	2013			2012		2011
Balance, beginning	$	2.3		$	1.9	$	3.6
Additions based on tax positions of prior years	0.6			—		0.3
Additions based on tax positions of current years	—			0.4		—
Reductions as a result of a lapse of statute of limitations	(1.3		)	—		(2.0		)
Reductions based on tax positions of prior year	(0.2		)	—		—
Balance, ending	$	1.4		$	2.3	$	1.9

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$ 146.5	$ 121.6	$ 71.7
Other comprehensive income (loss), net of tax
Pension and post-retirement benefits, net of tax of $(48.3), $78.5, and $(71.5), respectively	80.5	(126.4)	116.8
Net (loss) gain on derivative instruments, net of tax of $5.3, $21.6, and $(3.1), respectively	(8.7)	(35.4)	5.0
Unrealized gain (loss) on marketable securities, net of tax of $(0.2), $0.1, and $(0.1) respectively	0.3	(0.2)
Foreign currency translation	5.0	(18.6)	16.5
Other comprehensive income (loss), net of tax	77.1	(180.6)	138.3
Comprehensive income (loss), net of tax	223.6	(59.0)	210.0
Less: Comprehensive income (loss) attributable to the noncontrolling interest	0.7	(1.0)	1.2
Comprehensive income (loss) attributable to Carpenter	$ 222.9	$ (58.0)	$ 208.8

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Inventories

12 Months Ended

Jun. 30, 2013

Inventories

Inventories

5. Inventories

	June 30,
($ in millions)	2013		2012
Raw materials and supplies	$	111.6	$	114.1
Work in process	325.9		312.4
Finished and purchased products	221.7		215.5
Total inventory	$	659.2	$	642.0

If the first-in, first-out method of inventory had been used instead of the LIFO method, inventories would have been $222.4 million and $279.8 million higher as of June 30, 2013 and 2012, respectively.  Current cost of LIFO-valued inventories was $708.3 million at June 30, 2013 and $759.7 million at June 30, 2012.  The reductions in LIFO-valued inventories decreased cost of sales by $2.1 million during fiscal year 2013, $0 million during fiscal year 2012, and $1.7 million during fiscal year 2011.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
OPERATING ACTIVITIES
Net income	$ 146.5	$ 121.6	$ 71.7
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	104.1	83.8	66.5
Deferred income taxes	9.4	36.8	(5.0)
Net pension expense	68.8	42.1	60.8
Net loss on disposal of property and equipment	2.2	2.0	0.8
Changes in working capital and other:
Accounts receivable	12.6	(31.1)	(56.9)
Inventories	(14.9)	(77.3)	(116.1)
Other current assets	11.5	1.6	6.4
Accounts payable	16.4	10.2	34.5
Accrued liabilities	9.9	20.1	4.6
Boarhead settlement		(21.8)
Pension contributions	(144.9)	(30.0)	(3.9)
Other, net	(6.4)	2.3	0.8
Net cash provided from operating activities	215.2	160.3	64.2
INVESTING ACTIVITIES
Purchases of property, equipment and software	(336.9)	(171.9)	(79.6)
Proceeds from disposals of property and equipment	1.2	1.2	1.1
Acquisition of businesses, net of cash acquired		(12.9)	(45.4)
Capital contributions to equity method investment		(1.8)	(6.2)
Purchases of marketable securities			(91.3)
Proceeds received from sale of equity method investment	7.9
Proceeds from sales and maturities of marketable securities	0.1	30.5	166.0
Net cash used for investing activities	(327.7)	(154.9)	(55.4)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net of offering costs	297.0		247.4
Payments on long-term debt assumed in acquisition of business		(153.7)	(12.4)
Payments on long-term debt	(101.0)	(100.0)
Proceeds received from sale of noncontrolling interest			9.1
Dividends paid	(38.3)	(33.7)	(32.1)
Purchase of subsidiary shares from noncontrolling interest	(8.4)
Payments of debt issue costs			(1.4)
Tax benefits on share-based compensation	3.9	2.2	1.7
Proceeds from stock options exercised	2.3	1.8	1.6
Net cash provided from (used for) financing activities	155.5	(283.4)	213.9
Effect of exchange rate changes on cash and cash equivalents	3.5	(3.5)	4.4
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	46.5	(281.5)	227.1
Cash and cash equivalents at beginning of year	211.0	492.5	265.4
Cash and cash equivalents at end of year	$ 257.5	$ 211.0	$ 492.5

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Property, Plant and Equipment (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Property, plant and equipment
Total at cost	$ 2,195.1	$ 1,870.1
Less: accumulated depreciation and amortization	1,026.7	945.5
Total property, plant, and equipment	1,168.4	924.6
Depreciation	85.1	71.5	59.2
Land
Property, plant and equipment
Total at cost	20.9	16.6
Buildings and building equipment
Property, plant and equipment
Total at cost	326.4	301.3
Buildings and building equipment | Minimum
Property, plant and equipment
Useful Life	10 years
Buildings and building equipment | Maximum
Property, plant and equipment
Useful Life	45 years
Machinery and equipment
Property, plant and equipment
Total at cost	1,555.7	1,454.6
Machinery and equipment | Minimum
Property, plant and equipment
Useful Life	3 years
Machinery and equipment | Maximum
Property, plant and equipment
Useful Life	30 years
Construction in progress
Property, plant and equipment
Total at cost	$ 292.1	$ 97.6

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF INCOME
NET SALES	$ 2,271.7	$ 2,028.7	$ 1,675.1
Cost of sales	1,838.2	1,637.7	1,426.1
Gross profit	433.5	391.0	249.0
Selling, general and administrative expenses	200.8	169.2	149.5
Acquisition-related costs		11.7	3.1
Operating income	232.7	210.1	96.4
Interest expense, net	(21.0)	(23.8)	(17.1)
Other income, net	5.1	2.3	8.5
Income before income taxes	216.8	188.6	87.8
Income tax expense	70.3	67.0	16.1
Net income	146.5	121.6	71.7
Less: net income attributable to noncontrolling interest	(0.4)	(0.4)	(0.7)
NET INCOME ATTRIBUTABLE TO CARPENTER	$ 146.1	$ 121.2	$ 71.0
EARNINGS PER COMMON SHARE:
Basic (in dollars per share)	$ 2.75	$ 2.55	$ 1.59
Diluted (in dollars per share)	$ 2.73	$ 2.53	$ 1.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic (in shares)	52.9	47.1	44.1
Diluted (in shares)	53.4	47.8	44.7

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Acquisition and Strategic Partnership (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended		1 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Feb. 29, 2012 Latrobe Acquisition	Jun. 30, 2012 Latrobe Acquisition	Jun. 30, 2011 Latrobe Acquisition	Jun. 30, 2013 Latrobe Acquisition	Jun. 30, 2012 Latrobe Acquisition Preliminary Purchase Price Allocation	Jun. 30, 2013 Latrobe Acquisition Measurement Period Adjustments	Dec. 15, 2011 Arwin
Acquisition and strategic partnership disclosures
Shares issued through business acquisition			8.1
Cash paid, net of cash acquired	$ 12.9	$ 45.4	$ 11.5
Cash acquired			2.5
Summary of preliminary purchase price allocation
Accounts receivable						67.0	67.3	(0.3)
Inventory						242.6	241.2	1.4
Property, plant and equipment						172.4	172.4		0.7
Intangible assets						87.1	87.1
Other						9.8	10.6	(0.8)
Accounts Payable and accrued liabilities						(64.1)	(63.9)	(0.2)
Long-term debt						(153.7)	(153.7)
Pension and other postretirement liabilities						(100.8)	(100.8)
Deferred income taxes						(45.0)	(47.7)	2.7
Total identifiable net assets						215.3	212.5	2.8
Goodwill						211.7	214.5	(2.8)	0.7
Total purchase price						427.0	427.0		1.4
Additional disclosure
Goodwill recognized deductible for income tax purposes			0
Acquisition-related costs	11.7	3.1		11.7	2.4
Transaction costs						5.2
Net sales				163.2
Operating income since acquisition				10.5
Fair value cost inventory adjustments				11.6
Proforma results
Revenue				2,339.6	2,125.3
Earnings				$ 160.1	$ 93.5
Earnings per Common Share, Basic (in dollars per share)				$ 3.04	$ 1.78
Earnings per Common Share, Diluted (in dollars per share)				$ 3.01	$ 1.77

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Share-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012	Jun. 30, 2011
Share-Based Compensation
Number of share-based compensation plans	2
Compensation cost	$ 13.1	$ 13.3	$ 14.4
Stock options
Share-Based Compensation
Compensation cost	3.4	3.1	3.8
Fair value assumptions
Expected volatility (as a percent)	55.00%	54.00%	55.00%
Dividend yield (as a percent)	1.00%	1.00%	2.00%
Risk-free interest rate (as a percent)	0.70%	1.40%	1.60%
Expected term	5 years	5 years	5 years
Stock options | Minimum
Share-based compensation disclosures
Options exercisable service period	1 year
Stock options | Maximum
Share-based compensation disclosures
Options exercisable service period	3 years
Expiration term	10 years
1993 Plan
Share-based compensation disclosures
Shares available for grant	2,343,472
Director's Plan
Share-Based Compensation
Compensation cost	$ 1.2	$ 1.1	$ 1.0
Share-based compensation disclosures
Shares available for grant	790,049
Options exercisable service period	1 year

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Contingencies and Commitments (Details 2) (Raw materials, USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Raw materials
Purchase agreements
Aggregate purchase commitments relating to fiscal year 2014	$ 408.6

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Supplemental Data

12 Months Ended

Jun. 30, 2013

Supplemental Data

Supplemental Data

20.          Supplemental Data

The following are additional required disclosures and other material items:

	Years Ended June 30,
($ in millions)	2013		2012		2011
Cost Data:
Repairs and maintenance costs	$	101.9	$	90.3	$	74.8
Cash Flow Data:
Noncash investing and financing activities:
Treasury shares issued in connection with acquisition of business	$	—	$	415.5	$	—
Cash paid during the year for:
Interest payments	$	23.6	$	21.4	$	18.3
Income tax payments, net	$	51.2	$	18.5	$	11.5

	June 30,
($ in millions)	2013			2012			2011
Accumulated Other Comprehensive Loss:
Foreign currency translation adjustment	$	(20.2	)	$	(24.9	)	$	(7.7	)
Pension and post-retirement benefits, net of tax	(273.6		)	(354.1		)	(227.7		)
Net unrealized losses on derivatives, net of tax	(41.5		)	(32.8		)	2.6
Unrealized losses on marketable securities, net of tax	(0.4		)	(0.7		)	(0.5		)
	$	(335.7	)	$	(412.5	)	$	(233.3	)

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Share-Based Compensation

12 Months Ended

Jun. 30, 2013

Share-Based Compensation

Share-Based Compensation

14. Share-Based Compensation

Carpenter has two share-based compensation plans: the 1993 Plan covering officers and key employees and the Director’s Plan covering non-employee directors.  Awards granted under the share-based compensation plans are generally paid from shares held in treasury and any additional required share payments are made with newly issued shares. The total compensation cost that has been charged against income related to these share-based compensation plans was $13.1 million, $13.3 million, and $14.4 million for the years ended June 30, 2013, 2012 and 2011, respectively.

1993 Plan

The 1993 plan provides that the Board of Directors may grant stock options, restricted stock, and restricted stock units, and determine the terms and conditions of each grant.  The 1993 plan provides the Chief Executive Officer with limited authority to grant awards.  As of June 30, 2013, 2,343,472 shares were available for awards which may be granted under this plan.

Director’s Plan

The Director’s plan provides for the granting of stock options, performance units and stock units to non-employee Directors. As of June 30, 2013, 790,049 shares were reserved for awards which may be granted under this plan.

Stock Options (all plans):

Stock options granted under the plans above are granted with an exercise price equal to at least the fair market value of the Company’s common stock on the date of grant. The options are exercisable after one to three years of service and expire no longer than ten years from the grant date.

The fair value of stock options awarded in fiscal years 2013, 2012 and 2011 were estimated on the date of each grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	Years Ended June 30,
	2013		2012		2011
Expected volatility	55	%	54	%	55	%
Dividend yield	1	%	1	%	2	%
Risk-free interest rate	0.7	%	1.4	%	1.6	%
Expected term (in years)	5.0		5.0		5.0

The assumptions are based on multiple factors, including historical exercise patterns of employees in relatively homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same homogeneous groups and the implied volatility of our stock price based on historical performance for the same expected term of the options granted. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant.

	Number of Awards		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Millions)
Outstanding at June 30, 2010	820,655		$	26.53
Granted	227,600		34.78
Exercised	(85,590	)	17.91
Cancelled	(5,858	)	31.31
Outstanding at June 30, 2011	956,807		29.23
Granted	152,450		55.04
Exercised	(79,444	)	23.57
Cancelled	(7,207	)	27.11
Outstanding at June 30, 2012	1,022,606		33.54
Granted	198,904		48.60
Exercised	(115,600	)	19.82
Cancelled	(17,182	)	48.42
Outstanding at June 30, 2013	1,088,728		$	37.51	6.8 Years	$	11.4
Exercisable at June 30, 2013	759,720		$	33.02	6.0 Years	$	10.8

Outstanding and Exercisable Options:

Exercise Price Range	Number Outstanding at June 30, 2013	Weighted Average Remaining Contractual Term (in Years)	Weighted Average Exercise Price		Number Exercisable at June 30, 2013	Weighted Average Exercise Price
$5.00 -$20.00	176,139	5.9	$	17.18	176,139	$	17.18
$20.01 - $30.00	189,624	6.0	22.66		189,624	22.66
$30.01 - $40.00	196,699	7.1	34.64		138,419	34.73
$40.01 - $50.00	294,669	7.5	46.23		127,251	43.93
$50.01 - $63.54	231,597	6.9	56.47		128,287	57.40
	1,088,728		$	37.51	759,720	$	33.02

The weighted average grant date fair value of options awarded during fiscal years 2013, 2012 and 2011 was $20.37, $23.46 and $14.75, respectively. Share based compensation charged against income related to stock options for the years ended June 30, 2013, 2012 and 2011 was $3.4 million, $3.1 million and $3.8 million, respectively. As of June 30, 2013, $2.0 million of compensation cost related to nonvested stock options remains to be recognized over a weighted average remaining life of 1.4 years.

Of the options outstanding at June 30, 2013, 877,477 relate to the 1993 plan and 211,251 relate to the Directors’ Plan.

Nonvested Stock Awards (all plans):

Nonvested stock awards are granted to employees with performance and/or service conditions. Nonvested awards receive non-forfeitable cash dividends during the restriction period. The fair value of the nonvested stock awards is determined based on the Company’s stock price at the grant date.

Performance-based restricted share awards are earned only if Carpenter achieves certain performance goals during a specified performance period according to the terms determined by the Board at the date of the grant. These shares vest from one to two years from the date of the attainment of the specified performance goals. Compensation cost is determined and charged to expense beginning in the performance period through the vesting period.

Time-based restricted share awards typically vest three years from the date of grant. Compensation cost related to time based share awards is recognized over the vesting period of the award.

Amounts charged to compensation expense for nonvested stock awards was $4.8 million, $6.1 million and $7.7 million for the years end June 30, 2013, 2012 and 2011, respectively. As of June 30, 2013, $3.3 million of compensation cost related to nonvested restricted stock awards remains to be recognized over a weighted average remaining life of 1.1 years.

	Number of Awards		Weighted- Average Grant Date Fair Value
Nonvested Balance at June 30, 2010	345,027		$	26.63
Time-based granted	171,617			33.10
Performance-based earned	131,644			32.52
Vested	(165,576	)		33.43
Forfeited	(1,971	)		36.64
Nonvested Balance at June 30, 2011	480,741			28.17
Time-based granted	43,408			49.75
Performance-based earned	77,423			55.69
Vested	(171,140	)		28.00
Forfeited	(11,101	)		21.75
Nonvested Balance at June 30, 2012	419,331			35.71
Time-based granted	22,838			50.15
Performance-based earned	41,816			47.85
Vested	(254,967	)		31.39
Forfeited	(13,603	)		51.85
Nonvested Balance at June 30, 2013	215,415		$	43.75

Total Stockholder Return Awards:

The Company granted Total Stockholder Return (“TSR”) awards in fiscal years 2013, 2012 and 2011. The TSR awards are granted at a target number of shares, and vest based on the Company’s total stockholder return compared to the total stockholder returns of a group of peer companies at the end of a three-year period. The actual number of shares awarded may range from a minimum of 50 percent of the target shares to a maximum of two times target. Participants do not have any rights to dividends (or equivalents) during the performance period. The fair value of the TSR awards was estimated using Monte Carlo valuation models. Compensation cost recognized in fiscal years 2013, 2012 and 2011 related to TSR awards was $3.7 million, $3.0 million and $1.9 million, respectively.

Director Stock Units

According to the provisions of the Director’s plan, on the date of each annual stockholders’ meeting or on such other regularly scheduled date as the Board of Directors may determine from time to time in light of the Company’s prevailing practices for the grant of equity awards to employees, each Director shall be granted, in place of cash compensation, a number of stock units determined by dividing 50 percent of the Director’s annual retainer by the fair market value of the Company’s common stock on that date. These stock units vest as to one-quarter of the units for every three months of service following the grant date subject to the Director’s continued service, and are fully vested on the first anniversary of the grant date.   At the Director’s election, the remaining 50 percent of the annual retainer and 100 percent of committee chair fees may be paid in stock units in lieu of cash. These units are immediately vested.

In addition to the grant of retainer stock units described above, each Director may be granted annually an additional award of stock units as the Board may determine by resolution.  These stock units vest as to one-quarter of the units for every three months of service following the grant date subject to the Director’s continued service, and are fully vested on the first anniversary of the grant date.

Additional units are credited to each Director on a quarterly basis to reflect dividend equivalents on the Company’s common stock.

In the case of separation from service due to death or disability, all stock units shall immediately vest.

Following a Director’s retirement, the Director will be paid the number of the Company’s common stock shares equal to the number of stock units credited to the Director’s account.

	Number of Units	Weighted- Average Grant Date Fair Value
Outstanding at June 30, 2010	162,864	$	22.66
Granted	29,822		36.45
Dividend equivalents	3,015		—
Outstanding at June 30, 2011	195,701		25.81
Granted	22,660		47.89
Dividend equivalents	3,049		—
Outstanding at June 30, 2012	221,410		27.10
Granted	21,710		53.53
Dividend equivalents	3,399		—
Outstanding at June 30, 2013	246,519	$	30.06

Compensation cost is determined using the grant-date fair value and charged to expense over the vesting period of one year and amounted to $1.2 million, $1.1 million and $1.0 million for the years ended June 30, 2013, 2012 and 2011, respectively. As of June 30, 2013, $0.3 million of compensation cost related to director stock units remains to be recognized over a weighted average remaining life of 0.3 years.

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Derivatives and Hedging Activities (Tables)

12 Months Ended

Jun. 30, 2013

Derivatives and Hedging Activities

Schedule of fair value of outstanding derivative contracts recorded in balance sheets

June 30, 2013 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	—	$	0.9	$	—	$	0.9
Other assets	—		—		—		—
Total asset derivatives	$	—	$	0.9	$	—	$	0.9
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	0.4	$	28.7	$	29.1
Other liabilities	—		—		44.0		44.0
Total liability derivatives	$	—	$	0.4	$	72.7	$	73.1

June 30, 2012 ($ in millions)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Total Derivatives
Asset Derivatives:
Derivatives designated as hedging instruments:
Other current assets	$	0.2	$	1.2	$	—	$	1.4
Other assets	1.2		—		—		1.2
Total asset derivatives	$	1.4	$	1.2	$	—	$	2.6
Liability Derivatives:
Derivatives designated as hedging instruments:
Accrued liabilities	$	—	$	1.5	$	25.0	$	26.5
Other liabilities	—		0.4		29.6		30.0
Total liability derivatives	$	—	$	1.9	$	54.6	$	56.5

Summary of the (losses) gains related to cash flow hedges

	Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)
	Years Ended June 30,
($ in millions)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	$	(43.2	)	$	(79.0	)	$	15.2
Foreign exchange contracts	1.9			(0.1		)	(2.4		)
Forward interest rate swaps	2.7			—			1.0
Total	$	(38.6	)	$	(79.1	)	$	13.8

	Location of (Loss) Gain	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
	Reclassified from AOCI into	Years Ended June 30,
($ in millions)	Income (Effective Portion)	2013			2012			2011
Derivatives in Cash Flow Hedging Relationship:
Commodity contracts	Cost of sales	$	(24.9	)	$	(23.4	)	$	7.6
Forward interest rate swaps	Interest expense	0.2			—			—
Foreign exchange contracts	Net sales	0.1			1.2			(1.2		)
Total		$	(24.6	)	$	(22.2	)	$	6.4

Schedule of changes in AOCI associated with derivative hedging activities

	2013			2012			2011
Balance at July 1	$	(32.8	)	$	2.6		$	(2.4	)
Current period changes in fair value, net of tax	(24.2		)	(49.1		)	8.5
Reclassification to earnings, net of tax	15.5			13.7			(3.5		)
Balance at June 30	$	(41.5	)	$	(32.8	)	$	2.6

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Fair Value Measurements (Details) (Measured on a recurring basis, USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Assets and liabilities measured at fair value on a recurring basis
Derivative financial instruments, Assets	$ 0.9	$ 2.6
Total assets	6.3	7.6
Derivative financial instruments, Liabilities	73.1	56.5
Level 2
Assets and liabilities measured at fair value on a recurring basis
Derivative financial instruments, Assets	0.9	2.6
Total assets	6.3	7.6
Derivative financial instruments, Liabilities	73.1	56.5
Municipal auction rate securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	5.4	5.0
Municipal auction rate securities | Level 2
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	$ 5.4	$ 5.0

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Earnings per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Earnings per Common Share
Net income attributable to Carpenter	$ 40.9	$ 32.9	$ 33.0	$ 39.2	$ 40.8	$ 33.0	$ 23.6	$ 23.8	$ 146.1	$ 121.2	$ 71.0
Less: earnings and dividends allocated to participating securities									(0.8)	(1.1)	(0.8)
Earnings available to Carpenter common shareholders									$ 145.3	$ 120.1	$ 70.2
Weighted average number of common shares outstanding, basic	52.9	52.9	52.9	52.8	52.6	47.2	44.4	44.3	52.9	47.1	44.1
Basic earnings per common share (in dollars per share)	$ 0.77	$ 0.62	$ 0.62	$ 0.74	$ 0.77	$ 0.69	$ 0.53	$ 0.53	$ 2.75	$ 2.55	$ 1.59
Effect of shares issuable under share based compensation plans									0.5	0.7	0.6
Weighted average number of common shares outstanding, diluted	53.5	53.5	53.5	53.4	53.3	47.9	45.1	45.1	53.4	47.8	44.7
Diluted earnings per common share (in dollars per share)	$ 0.77	$ 0.62	$ 0.62	$ 0.74	$ 0.77	$ 0.69	$ 0.52	$ 0.53	$ 2.73	$ 2.53	$ 1.59

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Pension and Other Postretirement Benefits (Details 2) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Amounts recognized in the Consolidated Balance Sheets:
Accrued liabilities - current	$ (9.7)	$ (70.0)
Accrued liabilities - current	(15.4)	(17.2)
Accrued pension liabilities - noncurrent	(246.9)	(377.3)
Accrued postretirement benefits	(151.2)	(179.8)
Pension Plans
Amounts recognized in the Consolidated Balance Sheets:
Other assets - noncurrent	0.1	0.1
Accrued liabilities - current	(9.7)	(70.0)
Accrued pension liabilities - noncurrent	(246.9)	(377.3)
Amounts recognized in the Consolidated Balance Sheets	(256.5)	(447.2)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	412.4	513.6
Prior service cost (credit)	2.9	3.6
Total	415.3	517.2
Additional information:
Accumulated benefit obligation for all pension plans	1,072.3	1,112.1
Other Postretirement Plans
Amounts recognized in the Consolidated Balance Sheets:
Accrued liabilities - current	(15.4)	(17.1)
Accrued postretirement benefits	(151.2)	(179.8)
Amounts recognized in the Consolidated Balance Sheets	(166.6)	(196.9)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	36.9	67.9
Prior service cost (credit)	(0.1)	(4.2)
Total	$ 36.8	$ 63.7

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Debt (Tables)

12 Months Ended

Jun. 30, 2013

Debt

Schedule of long-term debt outstanding

	June 30,
($ in millions)	2013		2012
Senior unsecured notes, 6.625% due May 2013 (face value of $100.0 million at June 30, 2012)	$	—	$	101.3
Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 (face value of $55.0 and $56.0 million at June 30, 2013 and 2012, respectively)	55.0		56.0
Senior unsecured notes, 5.200% due July 2021 (face value of $250.0 million at June 30, 2013 and 2012)	249.7		249.6
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million and $0.0 at June 30, 2013 and 2012, respectively)	299.5		—
Total	604.2		406.9
Less amounts due within one year	—		101.0
Long-term debt, net of current portion	$	604.2	$	305.9

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Marketable Securities (Tables)

12 Months Ended

Jun. 30, 2013

Marketable Securities

Summary of marketable securities classified as available-for-sale

June 30, 2013			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	5.9	$	(0.5	)	$	5.4

June 30, 2012			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	6.0	$	(1.0	)	$	5.0

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Inventories (Tables)

12 Months Ended

Jun. 30, 2013

Inventories

Schedule of inventories

	June 30,
($ in millions)	2013		2012
Raw materials and supplies	$	111.6	$	114.1
Work in process	325.9		312.4
Finished and purchased products	221.7		215.5
Total inventory	$	659.2	$	642.0

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Marketable Securities

12 Months Ended

Jun. 30, 2013

Marketable Securities

Marketable Securities

4. Marketable Securities

The fair value of the Company’s marketable securities was based on quoted market prices or estimates of fair value as of June 30, 2013 and 2012. The following is a summary of marketable securities, all of which were classified as available-for-sale as of June 30, 2013 and 2012:

June 30, 2013			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	5.9	$	(0.5	)	$	5.4

June 30, 2012			Unrealized			Estimated
($ in millions)	Cost		Losses			Fair Value
Non-current
Municipal auction rate securities	$	6.0	$	(1.0	)	$	5.0

For the fiscal years ended June 30, 2013, 2012 and 2011, proceeds from sales and maturities of marketable securities were $0.1 million, $30.5 million and $166.0 million, respectively.

Municipal Auction Rate Securities

As of June 30, 2013 and June 30, 2012, the Company’s marketable securities included municipal auction rate securities with a par value of $5.9 million and $6.0 million, respectively. The municipal auction rate securities are callable at par at the option of the issuer. As of June 30, 2013 and 2012 respectively, the Company recorded $0.5 million and $1.0 million of unrealized losses to reflect the estimated market value of these securities. The Company does not intend to sell the securities and believes that it is more likely than not that the Company will not be required to sell the securities before recovering their costs. The valuation of auction rate securities is subject to uncertainties that are difficult to predict. Factors that impact the valuation of these securities include changes in credit ratings of the securities as well as the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk and the ongoing strength and quality of market credit and liquidity. The municipal auction rate securities owned by the Company are of high credit quality and maintain credit enhancements. The Company does not believe that any of the underlying issuers of our municipal auction rate securities are currently at risk of default. The securities have been classified according to their stated maturity dates, which range from 2019 to 2030. Accordingly, the municipal auction rate securities are included in other assets in the accompanying consolidated balance sheets.

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Debt (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Senior unsecured notes, 6.625% due May 2013	Jun. 30, 2013 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018	Jun. 30, 2012 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018	Jun. 30, 2013 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 Minimum	Jun. 30, 2012 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 Minimum	Jun. 30, 2013 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 Maximum	Jun. 30, 2012 Medium-term notes, Series B at 6.74% to 7.10% due from April 2018 to May 2018 Maximum	Jun. 30, 2013 Senior unsecured notes, 5.200% due July 2021	Jun. 30, 2012 Senior unsecured notes, 5.200% due July 2021	Jun. 30, 2013 4.45% Senior Notes due 2023	Feb. 26, 2013 4.45% Senior Notes due 2023	Jun. 30, 2012 4.45% Senior Notes due 2023
Long-term debt outstanding
Face amount				$ 100.0	$ 55.0	$ 56.0					$ 250.0	$ 250.0	$ 300.0	$ 300.0	$ 0
Interest rate (as a percent)				6.625%			6.74%	6.74%	7.10%	7.10%	5.20%	5.20%	4.45%	4.45%	4.45%
Total	604.2	406.9		101.3	55.0	56.0					249.7	249.6	299.5
Less amounts due within one year		101.0
Long-term debt, net of current portion	604.2	305.9
Aggregate maturities of long-term debt, 2014	0
Aggregate maturities of long-term debt, 2015	0
Aggregate maturities of long-term debt, 2016	0
Aggregate maturities of long-term debt, 2017	0
Aggregate maturities of long-term debt, 2018	55.0
Aggregate maturities of long-term debt, thereafter	550.0
Interest costs	27.8	25.0	17.6
Interest costs, capitalized	$ 6.8	$ 1.2	$ 0.5

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Income from continuing operations before income taxes for the Company's domestic and foreign operations
Domestic	$ 198.0	$ 168.4	$ 64.9
Foreign	18.8	20.2	22.9
Income before income taxes	216.8	188.6	87.8
Provision (benefit) for income taxes from continuing operations
Federal, current	49.7	21.5	9.2
State, current	5.9	2.9	5.2
Foreign, current	5.3	5.8	6.7
Total current	60.9	30.2	21.1
Federal, deferred	7.8	32.5	(3.6)
State, deferred	2.5	4.1	(1.3)
Foreign, deferred	(0.9)	0.2	(0.1)
Total deferred	9.4	36.8	(5.0)
Total income tax expense	$ 70.3	$ 67.0	$ 16.1

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Quarterly Financial Data (Unaudited)

12 Months Ended

Jun. 30, 2013

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

Quarterly sales and earnings results are normally influenced by seasonal factors.  Historically, the first two fiscal quarters (three months ending September 30 and December 31) are typically the lowest principally because of annual plant vacation and maintenance shutdowns by Carpenter and by many of its customers.  However, the timing of major changes in the general economy or the markets for certain products can alter this pattern.

(dollars and shares in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Results of Operations
Fiscal Year 2013
Net sales	$	544.9	$	533.5	$	581.4	$	611.8
Gross profit	$	109.3	$	102.6	$	101.0	$	120.5
Operating income	$	61.6	$	52.7	$	53.0	$	65.4
Net income	$	39.5	$	33.2	$	32.9	$	40.9
Net income attributable to Carpenter	$	39.2	$	33.0	$	32.9	$	40.9
Fiscal Year 2012
Net sales	$	414.1	$	431.1	$	539.9	$	643.7
Gross profit	$	81.1	$	84.3	$	105.1	$	120.6
Operating income	$	44.0	$	43.9	$	55.7	$	66.5
Net income	$	23.7	$	23.8	$	33.0	$	41.0
Net income attributable to Carpenter	$	23.8	$	23.6	$	33.0	$	40.8

Earnings per common share

Fiscal Year 2013	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.74	$	0.62	$	0.62	$	0.77
Diluted earnings	$	0.74	$	0.62	$	0.62	$	0.77

Fiscal Year 2012	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Basic earnings	$	0.53	$	0.53	$	0.69	$	0.77
Diluted earnings	$	0.53	$	0.52	$	0.69	$	0.77

Weighted average common shares outstanding

(in millions)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal Year 2013
Basic	52.8	52.9	52.9	52.9
Diluted	53.4	53.5	53.5	53.5
Fiscal Year 2012
Basic	44.3	44.4	47.2	52.6
Diluted	45.1	45.1	47.9	53.3

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Fair Value Measurements (Tables)

12 Months Ended

Jun. 30, 2013

Fair Value Measurements

Schedule of fair value of assets and liabilities measured on a recurring basis

June 30, 2013	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	$	—	$	5.4	$	5.4
Derivative financial instruments	—		0.9		0.9
Total assets	$	—	$	6.3	$	6.3
Liabilities:
Derivative financial instruments	$	—	$	73.1	$	73.1

June 30, 2012	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	—		5.0		5.0
Derivative financial instruments	—		2.6		2.6
Total assets	$	—	$	7.6	$	7.6
Liabilities:
Derivative financial instruments	$	—	$	56.5	$	56.5

Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value in the financial statements

	June 30, 2013				June 30, 2012
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	604.2	$	602.8	$	406.9	$	427.7
Company-owned life insurance	$	13.6	$	13.6	$	11.0	$	11.0

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Goodwill and Other Intangible Assets, Net

12 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets, Net

Goodwill and Other Intangible Assets, Net

7. Goodwill and Other Intangible Assets, Net

Goodwill

The Company conducted its annual impairment review as of February 28, 2013 for the Latrobe reporting units and June 30, 2013 and 2012 for all other reporting units. As a result of the impairment review, the Company has determined that there was no goodwill impairment. Based on the impairment testing performed as of June 30, 2013, one of the Company’s reporting units, Carpenter Powder Products, a component of the PEP segment, excess of fair value over carrying value amounted to 4 percent. The goodwill associated with the Carpenter Powder Products reporting unit was $3.4 million as of June 30, 2013. In addition, based on the goodwill impairment testing performed as of February 28, 2013 for the Latrobe segment, the excess of fair value over carrying value amounted to approximately 8 percent reflecting that there has been no significant change in the fair value of the Latrobe business since acquisition on February 29, 2012. For all other reporting units with goodwill as of June 30, 2013, the fair value exceeded the carrying value by over 15 percent.

The changes in the carrying amount of goodwill by reportable segment for fiscal year 2013 and 2012 were as follows:

($ in millions)	June 30, 2011			Acquisitions		Other		June 30, 2012			Other			June 30, 2013
Goodwill	$	79.6		$	215.2	$	0.4	$	295.2		$	(2.8	)	$	292.4
Accumulated impairment losses	(34.7		)	—		—		(34.7		)	—			(34.7		)
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7
Performance Engineered Products	$	44.9		$	0.7	$	0.4	$	46.0		$	—		$	46.0
Latrobe	—			214.5		—		214.5			(2.8		)	211.7
Total goodwill	$	44.9		$	215.2	$	0.4	$	260.5		$	(2.8	)	$	257.7

The amounts included in “other” in the above table represent amounts recorded in goodwill associated with the fiscal year 2011 Oilfield Alloys acquisition for which the purchase price allocation was completed during fiscal year 2012 and the fiscal year 2012 Latrobe acquisition for which the purchase price allocation was completed during fiscal year 2013.

Other Intangible Assets, Net

		2013							2012
($ in millions)	Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	2.5 - 30	$	42.0	$	(22.1	)	$	19.9	$	42.0	$	(17.3	)	$	24.7
Customer relationships	5 - 15	78.2		(9.4		)	68.8		78.2		(3.4		)	74.8
Non-compete agreements	6.5	5.4		(2.1		)	3.3		5.4		(1.2		)	4.2
Contracts	2.9	3.7		(0.7		)	3.0		6.4		(0.2		)	6.2
Total		$	129.3	$	(34.3	)	$	95.0	$	132.0	$	(22.1	)	$	109.9

Carpenter recorded $12.2 million of amortization expense related to intangible assets during fiscal year 2013, $6.2 million during fiscal year 2012, and $2.0 million during fiscal year 2011. The estimated annual amortization expense related to intangible assets for each of the succeeding five fiscal years is $12.4 million in fiscal year 2014, $9.0 million in fiscal year 2015, $7.6 million in fiscal year 2016, $6.7 million in fiscal year 2017 and $5.9 million in fiscal year 2018.

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Income Taxes (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Operating loss carryforwards disclosures
Increased valuation allowance amount	$ 1.1
State
Operating loss carryforwards disclosures
Net operating loss carryforwards expiring between 2014 and 2032	$ 324.5

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Contingencies and Commitments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended			12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011 Boarhead Farms	Jun. 30, 2011 Boarhead Farms	Aug. 18, 2008 Boarhead Farms	Jun. 30, 2008 Export Regulations Violations item
Loss contingencies
Increase made by the company in the liabilities of environmental remediation costs	$ 0.3	$ 0.7	$ 0.3
Environmental remediation liability	14.8	14.5
Percentage of past remediating costs including prejudgment interest						80.00%
Percentage of future remediating costs						80.00%
Contingent liability					21.8
Payment for settlement		$ 21.8		$ 21.8
Foreign nationals employed, exposed to protected technical data							40

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Earnings per Common Share

12 Months Ended

Jun. 30, 2013

Earnings per Common Share

Earnings per Common Share

3. Earnings per Common Share

The calculations of basic and diluted earnings from continuing operations per common share for the years ended June 30, 2013, 2012 and 2011 were as follows:

	Years Ended June 30,
($ in millions, except per share data)	2013			2012			2011
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Less: earnings and dividends allocated to participating securities	(0.8		)	(1.1		)	(0.8		)
Earnings available for Carpenter common shareholders	$	145.3		$	120.1		$	70.2
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Basic earnings per common share	$	2.75		$	2.55		$	1.59
Net income attributable to Carpenter	$	146.1		$	121.2		$	71.0
Weighted average number of common shares outstanding, basic	52.9			47.1			44.1
Effect of shares issuable under share based compensation plans	0.5			0.7			0.6
Weighted average number of common shares outstanding, diluted	53.4			47.8			44.7
Diluted earnings per common share	$	2.73		$	2.53		$	1.59

The following awards issued under share-based compensation plans were excluded from the calculations of diluted earnings per share above because their effects were anti-dilutive:

	Years Ended June 30,
(in millions)	2013	2012	2011
Stock options	0.4	—	0.1

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED BALANCE SHEETS
Allowance for doubtful accounts (in dollars)	$ 4.1	$ 4.9
Common stock, authorized shares	100,000,000	100,000,000
Common stock, issued shares	54,925,335	54,809,735
Common stock, outstanding shares	52,773,060	52,412,967
Common stock in treasury, shares	2,152,275	2,396,768

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Income Taxes (Details 2)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company's effective income tax rate
Statutory federal income tax rate (as a percent)	35.00%	35.00%	35.00%
State income taxes, net of federal tax benefit (as a percent)	2.00%	2.20%	2.90%
Domestic manufacturing deduction (as a percent)	(2.70%)	(2.30%)	(3.40%)
Research and development tax credit (as a percent)	(1.30%)	(0.60%)	(3.70%)
Foreign tax rate differential (as a percent)	(0.90%)	(0.60%)	(1.70%)
Nontaxable income (as a percent)	(0.60%)		(0.60%)
Foreign source income (as a percent)			(7.30%)
Increases (decreases) in valuation allowances (as a percent)	0.50%	0.10%	(0.20%)
Adjustments of prior years' income taxes (as a percent)	0.30%	(0.50%)	(2.60%)
Changes in uncertain tax positions, net (as a percent)	(0.60%)	0.40%	(0.40%)
Other, net (as a percent)	0.70%	1.80%	0.30%
Effective income tax rate (as a percent)	32.40%	35.50%	18.30%

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Acquisition and Strategic Partnership (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended		0 Months Ended				0 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2010 Amega West item	Dec. 31, 2010 Amega West Customer relationships	Dec. 31, 2010 Amega West Non-compete agreements	Dec. 31, 2010 Amega West Trademarks and trade names	Jun. 27, 2011 Oilfield Alloys	Sep. 30, 2011 Oilfield Alloys
Acquisition and strategic partnership disclosures
Net working capital			$ 6.5					$ 1.2
Property, plant and equipment			25.9					1.7
Intangible assets				5.2	5.4	1.9
Intangible assets								1.5
Goodwill			9.7					0.4
Deferred tax liabilities			(0.6)
Long-term debt			(12.4)
Total purchase price			41.6				4.8
Accounts payable included in working capital			4.9
Amount of goodwill expected to be tax deductible			8.3
Cash purchase price held back to pay earn-out participants			2.8
Multiple of holdback which can be achieved			2
Duration of earn-out			4 years 6 months
Earn-out payments, guaranteed amount included in total purchase price			2.2
Cash paid, net of cash acquired	12.9	45.4					4.1
Cash acquired							0.3
Remaining purchase price							$ 0.7

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Segment Information, Geographic and Product Data (Tables)

12 Months Ended

Jun. 30, 2013

Segment Information, Geographic and Product Data

Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments

Segment Data	Years Ended June 30,
($ in millions)	2013			2012			2011
Net Sales:
Specialty Alloys Operations	$	1,547.4		$	1,566.6		$	1,431.3
Latrobe	491.2			200.8			38.7
Performance Engineered Products	378.8			365.7			248.3
Intersegment	(145.7		)	(104.4		)	(43.2		)
Consolidated net sales	$	2,271.7		$	2,028.7		$	1,675.1

Operating Income:	Years Ended June 30,
($ in millions)	2013			2012			2011
Specialty Alloys Operations	$	218.9		$	229.4		$	139.3
Latrobe	58.3			11.0			2.2
Performance Engineered Products	36.5			44.1			35.0
Corporate costs	(47.7		)	(53.2		)	(42.0		)
Pension earnings, interest & deferrals	(31.9		)	(15.3		)	(35.2		)
Intersegment	(1.4		)	(5.9		)	(2.9		)
Consolidated operating income	$	232.7		$	210.1		$	96.4

	Years Ended June 30,
($ in millions)	2013			2012			2011
Depreciation and Amortization:
Specialty Alloys Operations	$	56.7		$	53.2		$	51.1
Latrobe	22.7			7.7			0.4
Performance Engineered Products	19.4			17.7			10.2
Corporate	5.9			5.6			4.9
Intersegment	(0.6		)	(0.4		)	(0.1		)
Consolidated depreciation and amortization	$	104.1		$	83.8		$	66.5

	Years Ended June 30,
($ in millions)	2013			2012			2011
Capital Expenditures:
Specialty Alloys Operations	$	284.8		$	121.1		$	51.6
Latrobe	25.0			7.9			0.4
Performance Engineered Products	24.7			40.0			24.8
Corporate	4.0			5.0			3.9
Intersegment	(1.6		)	(2.1		)	(1.1		)
Consolidated capital expenditures	$	336.9		$	171.9		$	79.6

	June 30,
($ in millions)	2013			2012
Total Assets:
Specialty Alloys Operations	$	1,537.9		$	1,293.4
Latrobe	771.6			807.6
Performance Engineered Products	391.7			394.7
Corporate	233.7			191.4
Intersegment	(52.0		)	(59.3		)
Consolidated total assets	$	2,882.9		$	2,627.8

Schedule of net sales by geographic segment

Geographic Data	Years Ended June 30,
($ in millions)	2013		2012		2011
Net Sales:(a)
United States	$	1,575.3	$	1,364.2	$	1,163.7
Europe	382.1		375.9		277.4
Asia Pacific	153.6		142.1		110.7
Mexico	66.6		68.8		67.1
Canada	59.8		52.1		36.6
Other	34.3		25.6		19.6
Consolidated net sales	$	2,271.7	$	2,028.7	$	1,675.1

(a) Net sales were attributed to countries based on the location of the customer.

Schedule of long-lived assets by geographic segment

Long-lived assets:	June 30,
($ in millions)	2013		2012
United States	$	1,142.5	$	901.7
Canada	9.1		9.8
Europe	6.1		6.9
Mexico	1.6		1.6
Asia Pacific	9.1		4.6
Consolidated long-lived assets	$	1,168.4	$	924.6

Schedule of net sales by product segment

Product Data	Year Ended June 30,
($ in millions)	2013		2012		2011
Special alloys	$	989.9	$	931.4	$	831.8
Stainless steel	638.8		637.3		564.9
Titanium products	155.0		156.6		135.3
Powder metals	60.4		64.3		61.4
Alloy and tool steel	255.7		108.6		27.2
Other materials	171.9		130.5		54.5
Total net sales	$	2,271.7	$	2,028.7	$	1,675.1

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Share-Based Compensation (Details 4) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Share-based compensation disclosures
Compensation cost	$ 13.1	$ 13.3	$ 14.4
Director's Plan
Share-based compensation disclosures
Compensation cost	1.2	1.1	1.0
Unvested stock option cost	0.3
Unvested stock option weighted average remaining life	3 months 18 days
Stock options
Share-based compensation disclosures
Weighted average grant date fair value (in dollars per share)	$ 20.37	$ 23.46	$ 14.75
Compensation cost	3.4	3.1	3.8
Unvested stock option cost	$ 2.0
Unvested stock option weighted average remaining life	1 year 4 months 24 days
Options outstanding (in shares)	1,088,728	1,022,606	956,807	820,655
Stock options | 1993 Plan
Share-based compensation disclosures
Options outstanding (in shares)	877,477
Stock options | Director's Plan
Share-based compensation disclosures
Options outstanding (in shares)	211,251

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Acquisition and Strategic Partnership (Tables)

12 Months Ended

Jun. 30, 2013

Acquisition and strategic partnership disclosures

Schedule of proforma results

	June 30,
($ in millions)	2012		2011
Revenue	$	2,339.6	$	2,125.3
Earnings	$	160.1	$	93.5
Earnings per Common Share
Basic	$	3.04	$	1.78
Diluted	$	3.01	$	1.77

Latrobe Acquisition

Acquisition and strategic partnership disclosures

Summary of purchase price allocation

($ in millions)	Preliminary Purchase Price Allocation as of June 30, 2012			Measurement Period Adjustments			Final Purchase Price Allocation
Accounts receivable	$	67.3		$	(0.3	)	$	67.0
Inventory	241.2			1.4			242.6
Property, plant and equipment	172.4			—			172.4
Intangible assets	87.1			—			87.1
Other	10.6			(0.8		)	9.8
Accounts Payable and accrued liabilities	(63.9		)	(0.2		)	(64.1		)
Long-term debt	(153.7		)	—			(153.7		)
Pension and other postretirement liabilities	(100.8		)	—			(100.8		)
Deferred income taxes	(47.7		)	2.7			(45.0		)
Total identifiable net assets	212.5			2.8			215.3
Goodwill	214.5			(2.8		)	211.7
Total purchase price, net of cash acquired	$	427.0		$	—		$	427.0

Amega West Services

Acquisition and strategic partnership disclosures

Summary of purchase price allocation

$ in millions
Net working capital, including $4.9 million of accounts payable to Carpenter effectively settled at closing	$	6.5
Property, plant and equipment	25.9
Customer relationships	5.2
Non-compete agreements	5.4
Trademarks and tradenames	1.9
Goodwill	9.7
Deferred tax liabilities	(0.6		)
Long-term debt	(12.4		)
Total purchase price	$	41.6

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Quarterly Financial Data (Unaudited) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Quarterly Financial Data (Unaudited)
Net sales	$ 611.8	$ 581.4	$ 533.5	$ 544.9	$ 643.7	$ 539.9	$ 431.1	$ 414.1	$ 2,271.7	$ 2,028.7	$ 1,675.1
Gross profit	120.5	101.0	102.6	109.3	120.6	105.1	84.3	81.1	433.5	391.0	249.0
Operating income	65.4	53.0	52.7	61.6	66.5	55.7	43.9	44.0	232.7	210.1	96.4
Net income	40.9	32.9	33.2	39.5	41.0	33.0	23.8	23.7	146.5	121.6	71.7
Net income attributable to Carpenter	$ 40.9	$ 32.9	$ 33.0	$ 39.2	$ 40.8	$ 33.0	$ 23.6	$ 23.8	$ 146.1	$ 121.2	$ 71.0
Basic (in dollars per share)	$ 0.77	$ 0.62	$ 0.62	$ 0.74	$ 0.77	$ 0.69	$ 0.53	$ 0.53	$ 2.75	$ 2.55	$ 1.59
Diluted (in dollars per share)	$ 0.77	$ 0.62	$ 0.62	$ 0.74	$ 0.77	$ 0.69	$ 0.52	$ 0.53	$ 2.73	$ 2.53	$ 1.59
Weighted average common shares outstanding, basic	52.9	52.9	52.9	52.8	52.6	47.2	44.4	44.3	52.9	47.1	44.1
Weighted average common shares outstanding, diluted	53.5	53.5	53.5	53.4	53.3	47.9	45.1	45.1	53.4	47.8	44.7

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Segment Information, Geographic and Product Data (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Geographic Data
Net sales	$ 611.8	$ 581.4	$ 533.5	$ 544.9	$ 643.7	$ 539.9	$ 431.1	$ 414.1	$ 2,271.7	$ 2,028.7	$ 1,675.1
Long-lived assets	1,168.4				924.6				1,168.4	924.6
United States
Geographic Data
Net sales									1,575.3	1,364.2	1,163.7
Long-lived assets	1,142.5				901.7				1,142.5	901.7
Europe
Geographic Data
Net sales									382.1	375.9	277.4
Long-lived assets	6.1				6.9				6.1	6.9
Asia Pacific
Geographic Data
Net sales									153.6	142.1	110.7
Long-lived assets	9.1				4.6				9.1	4.6
Mexico
Geographic Data
Net sales									66.6	68.8	67.1
Long-lived assets	1.6				1.6				1.6	1.6
Canada
Geographic Data
Net sales									59.8	52.1	36.6
Long-lived assets	9.1				9.8				9.1	9.8
Other
Geographic Data
Net sales									$ 34.3	$ 25.6	$ 19.6

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Share-Based Compensation (Details 3) (Stock options, USD $)	12 Months Ended
	Jun. 30, 2013
Exercise price range disclosures
Number of Awards, Outstanding (in shares)	1,088,728
Weighted Average Exercise Price (in dollars per share)	$ 37.51
Number Exercisable (in shares)	759,720
Weighted Average Exercise Price (in dollars per share)	$ 33.02
$5.00 - $20.00
Exercise price range disclosures
Minimum Exercise Price Range (in dollars per share)	$ 5.00
Maximum Exercise Price Range (in dollars per share)	$ 20.00
Number of Awards, Outstanding (in shares)	176,139
Weighted Average Remaining Contractual Term	5 years 10 months 24 days
Weighted Average Exercise Price (in dollars per share)	$ 17.18
Number Exercisable (in shares)	176,139
Weighted Average Exercise Price (in dollars per share)	$ 17.18
$20.01 - $30.00
Exercise price range disclosures
Minimum Exercise Price Range (in dollars per share)	$ 20.01
Maximum Exercise Price Range (in dollars per share)	$ 30.00
Number of Awards, Outstanding (in shares)	189,624
Weighted Average Remaining Contractual Term	6 years
Weighted Average Exercise Price (in dollars per share)	$ 22.66
Number Exercisable (in shares)	189,624
Weighted Average Exercise Price (in dollars per share)	$ 22.66
$30.01- - $40.00
Exercise price range disclosures
Minimum Exercise Price Range (in dollars per share)	$ 30.01
Maximum Exercise Price Range (in dollars per share)	$ 40.00
Number of Awards, Outstanding (in shares)	196,699
Weighted Average Remaining Contractual Term	7 years 1 month 6 days
Weighted Average Exercise Price (in dollars per share)	$ 34.64
Number Exercisable (in shares)	138,419
Weighted Average Exercise Price (in dollars per share)	$ 34.73
$40.01 - $50.00
Exercise price range disclosures
Minimum Exercise Price Range (in dollars per share)	$ 40.01
Maximum Exercise Price Range (in dollars per share)	$ 50.00
Number of Awards, Outstanding (in shares)	294,669
Weighted Average Remaining Contractual Term	7 years 6 months
Weighted Average Exercise Price (in dollars per share)	$ 46.23
Number Exercisable (in shares)	127,251
Weighted Average Exercise Price (in dollars per share)	$ 43.93
$50.01 - $63.54
Exercise price range disclosures
Minimum Exercise Price Range (in dollars per share)	$ 50.01
Maximum Exercise Price Range (in dollars per share)	$ 63.54
Number of Awards, Outstanding (in shares)	231,597
Weighted Average Remaining Contractual Term	6 years 10 months 24 days
Weighted Average Exercise Price (in dollars per share)	$ 56.47
Number Exercisable (in shares)	128,287
Weighted Average Exercise Price (in dollars per share)	$ 57.40

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Derivatives and Hedging Activities (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Gains (losses) related to cash flow hedges
Net derivative losses included in AOCI expected to be reclassified into earnings	$ 15.9
Changes in AOCI associated with derivative hedging activities
Balance, beginning	(32.8)
Balance, ending	(41.5)		2.6
Cash collateral held by counterparties	0
Cash flow hedges
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	(38.6)	(79.1)	13.8
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	(24.6)	(22.2)	6.4
Changes in AOCI associated with derivative hedging activities
Balance, beginning	(32.8)	2.6	(2.4)
Current period changes in fair value, net of tax	(24.2)	(49.1)	8.5
Reclassification to earnings, net of tax	15.5	13.7	(3.5)
Balance, ending	(41.5)	(32.8)	2.6
Cash flow hedges | Commodity contracts
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	(43.2)	(79.0)	15.2
Cash flow hedges | Commodity contracts | Cost of Sales
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	(24.9)	(23.4)	7.6
Cash flow hedges | Foreign exchange contracts
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	1.9	(0.1)	(2.4)
Cash flow hedges | Foreign exchange contracts | Net Sales
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	0.1	1.2	(1.2)
Cash flow hedges | Forward interest rate swaps
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Recognized in AOCI on Derivatives (Effective Portion)	2.7		1.0
Cash flow hedges | Forward interest rate swaps | Interest expense
Gains (losses) related to cash flow hedges
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)	$ 0.2

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Pension and Other Postretirement Benefits (Details 3) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Pension Plans
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation	$ 1,186.6	$ 1,217.9
Fair value of plan assets	930.0	770.6
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	1,072.2	1,112.0
Fair value of plan assets	930.0	770.6
Other Postretirement Plans
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation	259.8	282.2
Fair value of plan assets	93.2	85.3
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	259.8	282.2
Fair value of plan assets	$ 93.2	$ 85.3

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Goodwill and Other Intangible Assets, Net (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			12 Months Ended					12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2013 Latrobe	Jun. 30, 2012 Latrobe	Feb. 28, 2013 Latrobe	Jun. 30, 2013 Carpenter Powder Products	Jun. 30, 2013 Reporting units other than Carpenter Powder Products and Latrobe Minimum	Jun. 30, 2012 Performance Engineered Products	Jun. 30, 2013 Performance Engineered Products	Jun. 30, 2011 Performance Engineered Products
Goodwill disclosures
Impairment of goodwill	$ 0	$ 0
Changes in the carrying amount of goodwill by reportable segment
Goodwill	292.4	295.2	79.6
Accumulated impairment losses	(34.7)	(34.7)	(34.7)
Total goodwill	257.7	260.5	44.9	211.7	214.5		3.4		46.0	46.0	44.9
Acquisitions		215.2			214.5				0.7
Other	$ (2.8)	$ 0.4		$ (2.8)					$ 0.4
Percentage of excess of fair value over carrying value of reporting units						8.00%	4.00%	15.00%

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Share-Based Compensation (Details 5) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Share-based compensation disclosures
Compensation cost	$ 13.1	$ 13.3	$ 14.4
Nonvested stock awards
Share-based compensation disclosures
Compensation cost	4.8	6.1	7.7
Unvested stock option cost	$ 3.3
Unvested stock option weighted average remaining life	1 year 1 month 6 days
Performance-based restricted share awards | Minimum
Share-based compensation disclosures
Shares vesting period	1 year
Performance-based restricted share awards | Maximum
Share-based compensation disclosures
Shares vesting period	2 years
Time-based restricted share awards
Share-based compensation disclosures
Shares vesting period	3 years

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Pension and Other Postretirement Benefits

12 Months Ended

Jun. 30, 2013

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

10. Pension and Other Postretirement Benefits

Carpenter provides several noncontributory defined benefit pension plans to certain employees. The plans provide defined benefits based on years of service and final average salary. Effective January 1, 2012, new employees will not be eligible to participate in the Company’s largest defined benefit pension plan.

Carpenter also provides other postretirement benefit plans to certain of its employees. The postretirement benefit plans consist of health care and life insurance plans. Benefit payments are currently paid from corporate assets.  Plan assets are maintained in a Voluntary Employee Benefit Association Trust (“VEBA”).

The following provides a reconciliation of benefit obligations, plan assets, and funded status of the plans:

							Other
	Pension Plans						Postretirement Plans
($ in millions)	2013			2012			2013			2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	1,218.1		$	929.2		$	282.2		$	204.2
Plan liabilities assumed in connection with Latrobe acquisition	—			116.3			—			57.2
Service cost	32.5			23.0			4.4			3.7
Interest cost	53.0			51.3			12.2			11.8
Benefits paid	(70.6		)	(61.1		)	(13.3		)	(11.4		)
Actuarial (gain) loss	(45.7		)	159.5			(25.9		)	16.3
Plan settlements	(0.6		)	—			—			—
Other	—			(0.1		)	0.2			0.4
Projected benefit obligation at end of year	$	1,186.7		$	1,218.1		$	259.8		$	282.2
Change in plan assets:
Fair value of plan assets at beginning of year	$	770.9		$	710.2		$	85.3		$	80.3
Plan assets acquired in connection with Latrobe acquisition	—			72.8			—			—
Actual return on plan assets	82.3			15.8			8.2			5.3
Benefits paid from plan assets	(70.6		)	(61.1		)	(13.6		)	(11.7		)
Contributions	148.2			33.2			13.3			11.4
Plan settlements	(0.6		)	—			—			—
Fair value of plan assets at end of year	$	930.2		$	770.9		$	93.2		$	85.3
Funded status of the plans	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)
Amounts recognized in the Consolidated Balance Sheets :
Other assets - noncurrent	$	0.1		$	0.1		$	—		$	—
Accrued liabilities - current	(9.7		)	(70.0		)	(15.4		)	(17.1		)
Accrued pension liabilities - noncurrent	(246.9		)	(377.3		)	—			—
Accrued postretirement benefits	—			—			(151.2		)	(179.8		)
	$	(256.5	)	$	(447.2	)	$	(166.6	)	$	(196.9	)

					Other
	Pension Plans				Postretirement Plans
($ in millions)	2013		2012		2013			2012
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	412.4	$	513.6	$	36.9		$	67.9
Prior service cost (credit)	2.9		3.6		(0.1		)	(4.2		)
Total	$	415.3	$	517.2	$	36.8		$	63.7
Additional information:
Accumulated benefit obligation for all pension plans	$	1,072.3	$	1,112.1	N/A			N/A

The following is additional information related to plans with projected benefit obligations in excess of plan assets as of June 30, 2013 and 2012:

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Projected benefit obligation	$	1,186.6	$	1,217.9	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

The following additional information is for plans with accumulated benefit obligations in excess of plan assets as of June 30, 2013 and 2012:

	Pension Plans				Other Postretirement Plans
($ in millions)	2013		2012		2013		2012
Accumulated benefit obligation	$	1,072.2	$	1,112.0	$	259.8	$	282.2
Fair value of plan assets	$	930.0	$	770.6	$	93.2	$	85.3

The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the years ended June 30, 2013, 2012 and 2011 are as follows:

	Pension Plans									Other Postretirement Plans
($ in millions)	2013			2012			2011			2013			2012			2011
Service cost	$	32.5		$	23.0		$	22.8		$	4.4		$	3.7		$	2.7
Interest cost	53.0			51.3			46.5			12.2			11.8			10.9
Expected return on plan assets	(54.8		)	(54.2		)	(45.4		)	(6.4		)	(6.4		)	(5.0		)
Amortization of net loss	28.1			17.5			29.1			3.2			2.6			6.0
Amortization of prior service cost (benefit)	0.7			0.7			1.0			(4.1		)	(7.9		)	(7.9		)
Plan settlement expense	—			—			0.1			—			—			—
Net pension expense	$	59.5		$	38.3		$	54.1		$	9.3		$	3.8		$	6.7

The service cost component of Carpenter’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” in the segment data presented in Note 18.

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine benefit obligations at fiscal year end
Discount rate	5.00	%	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%
Rate of compensation increase	3.66	%	3.67	%	3.66	%	N/A		N/A		N/A

	Pension Plans						Other Postretirement Plans
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year
Discount rate	4.50	%	5.50	%	5.00	%	4.50	%	5.50	%	5.00	%
Expected long-term rate of return on plan assets	7.00	%	7.50	%	7.50	%	7.50	%	8.00	%	8.00	%
Long-term rate of compensation increase	3.67	%	3.66	%	3.66	%	N/A		N/A		N/A

The following table shows the expected health care rate increase and the future rate and time at which it is expected to remain constant.

	June 30,
	2013		2012
Assumed health care cost trend rate	7.5	%	8.0	%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate)	5	%	5	%
Year that the rate reaches the ultimate trend rate	2020		2018

Assumed health care cost trend rates have an effect on the amounts reported for other postretirement benefits. A one percentage point increase in the assumed health care cost trend rate would increase service and interest cost by $0.6 million and increase the postretirement benefit obligation by $9.9 million. A one percentage point decrease in the assumed health care cost trend rate would decrease service and interest cost by $0.5 million and decrease the postretirement benefit obligation by $8.7 million.

Net pension expense, which we define to include the net periodic benefit costs of both the pension and other postretirement plans, is estimated to be $59.7 million for the year ended June 30, 2014, comprised of $48.6 million of net periodic benefit costs for pension plans and $11.1 million of net periodic benefit costs for other post-retirement benefit plans. The discount rate and expected long-term rate of return on plan assets used to calculate the net periodic benefit costs for pension plans for the year ended June 30, 2014 were 5.00 percent and 7.00 percent, respectively.  The discount rate and expected long-term rate of return on plan assets used to calculate the net periodic benefits costs for other post-retirement benefit plans for the year ended June 30, 2014 were 5.00 percent and 7.00 percent, respectively.

Amounts in other comprehensive loss that are expected to be recognized as components of net periodic benefit cost in the year ended June 30, 2014 are:

			Other
	Pension		Postretirement
($ in millions)	Plans		Plans			Total
Amortization of prior service cost (credit)	$	0.5	$	(0.1	)	$	0.4
Amortization of net actuarial loss	21.8		1.2			23.0
Amortization of accumulated other comprehensive loss	$	22.3	$	1.1		$	23.4

Carpenter’s U.S. pension plans’ weighted-average asset allocations at June 30, 2013 and 2012, by asset category are as follows:

	2013		2012
Equity securities	63.5	%	66.0	%
Fixed income securities	34.3		31.3
Cash and cash equivalents	2.2		2.7
Total	100.0	%	100.0	%

Carpenter’s policy for developing a pension plan investment strategy includes the periodic development of an asset and liability study by an independent investment consultant. Management considers this study in establishing an asset allocation that is presented to and approved by the Company’s Plan Committee.

Management determines an asset allocation that will provide the highest level of return for an acceptable level of risk.  Accordingly, Carpenter invests in different asset classes including large-, mid- and small-cap growth and value funds, index and international equity funds, short-term and medium-term duration fixed-income funds and high yield funds. The plan’s current allocation policy is to have approximately 60 percent U.S. and international equities and 40 percent fixed income securities. The Company may vary the actual asset mix based on the ratio of the plan assets and liabilities. Management reviews the asset allocation on a quarterly basis and makes revisions as deemed necessary. The assets related to Carpenter’s other postretirement benefit plans were invested approximately 60 percent U.S. and equities and 40 percent fixed income securities of June 30, 2013.  Management establishes the expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan’s asset allocation and risk management objectives. In determining the expected long-term rate of return, the Company considered historical returns for individual asset classes and the impact of active portfolio management.

The fair values of the Company’s pension plan assets as of June 30, 2013 and 2012, by asset category and by the levels of inputs used to determine fair value were as follows:

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Short-term investments	$	—	$	13.7	$	13.7	$	—	$	14.4	$	14.4
Domestic and international equities	281.8		—		281.8		237.9		—		237.9
Commingled funds	52.1		164.4		216.5		40.4		151.0		191.4
Limited partnerships	—		137.9		137.9		—		95.9		95.9
Government agency bonds	7.9		101.9		109.8		6.6		95.8		102.4
Corporate bonds	—		149.8		149.8		—		102.1		102.1
Mutual funds	2.5		—		2.5		10.1		—		10.1
Mortgage/asset backed securities and other	—		18.2		18.2		—		16.7		16.7
	$	344.3	$	585.9	$	930.2	$	295.0	$	475.9	$	770.9

The fair values of the Company’s other postretirement benefit plans as of June 30, 2013 and 2012, by asset category and by the level of inputs used to determine fair value, were as follows:

	June 30, 2013						June 30, 2012
	Fair Value Measurements Using Input Type						Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Commingled fund	$	—	$	51.4	$	51.4	$	—	$	44.7	$	44.7
Short-term investments	—		14.2		14.2		—		5.8		5.8
Government agency bonds	—		15.9		15.9		—		15.9		15.9
Corporate bonds and other	—		7.5		7.5		—		7.4		7.4
Mortgage backed securities	—		4.2		4.2		—		11.5		11.5
	$	—	$	93.2	$	93.2	$	—	$	85.3	$	85.3

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in domestic and international equities are generally valued at the closing price reported on the active market on which they are traded. Commingled funds are valued based on the net asset value (“NAV”) established for the fund at each valuation date. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Corporate and government agency bonds and other fixed income securities are valued using closing bid prices on an active market when possible, otherwise using evaluated bid prices.

Cash Flows — Employer Contributions

The Company made contributions of $144.9 million to its US pension plans during fiscal year 2013, a contribution of $30.0 million during fiscal year 2012 and a contribution of $3.9 million during fiscal year 2011. The Company currently expects to make approximately $6.3 million in required contributions to the Company’s pension plans during fiscal year 2014.  During the years ended June 30, 2013, 2012 and 2011, the Company made contributions of $3.3 million, $3.2 million and $3.1 million to other pension plans, respectively.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid.  Pension Benefits are currently paid from plan assets and Other Benefits are currently paid from corporate assets:

	Pension		Other
($ in millions)	Benefits		Benefits
2014	$	73.6	$	15.5
2015	$	76.0	$	16.1
2016	$	77.1	$	16.7
2017	$	78.8	$	17.2
2018	$	81.6	$	17.7
2019-2023	$	438.9	$	92.7

Other Benefit Plans

Carpenter also maintains defined contribution retirement and savings plans for substantially all domestic employees.  Company contributions to the plan were $8.9 million in fiscal year 2013, $6.8 million in fiscal year 2012 and $5.2 million in fiscal year 2011.

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Property, Plant and Equipment

12 Months Ended

Jun. 30, 2013

Property, Plant and Equipment

Property, Plant and Equipment

6. Property, Plant and Equipment

	June 30,
($ in millions)	2013		2012
Land	$	20.9	$	16.6
Buildings and building equipment	326.4		301.3
Machinery and equipment	1,555.7		1,454.6
Construction in progress	292.1		97.6
Total at cost	2,195.1		1,870.1
Less: accumulated depreciation and amortization	1,026.7		945.5
Total property, plant, and equipment	$	1,168.4	$	924.6

The estimated useful lives of depreciable assets are as follows:

Asset Category	Useful Life (in Years)
Buildings and building equipment	10 – 45
Machinery and equipment	3 – 30

Depreciation for the years ended June 30, 2013, 2012 and 2011 was $85.1 million, $71.5 million and $59.2 million, respectively.

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Pension and Other Postretirement Benefits (Details 5)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Pension Plans
Weighted-average assumptions used to determine benefit obligations at fiscal year-end
Discount rate (as a percent)	5.00%	4.50%	5.50%
Rate of compensation increase (as a percent)	3.66%	3.67%	3.66%
Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year
Discount rate (as a percent)	4.50%	5.50%	5.00%
Expected long-term rate of return on plan assets (as a percent)	7.00%	7.50%	7.50%
Long-term rate of compensation increase (as a percent)	3.67%	3.66%	3.66%
Other Postretirement Plans
Weighted-average assumptions used to determine benefit obligations at fiscal year-end
Discount rate (as a percent)	5.00%	4.50%	5.50%
Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year
Discount rate (as a percent)	4.50%	5.50%	5.00%
Expected long-term rate of return on plan assets (as a percent)	7.50%	8.00%	8.00%
Expected health care rate increase and the future rate and time at which it is expected to remain constant
Assumed health care cost trend rate (as a percent)	7.50%	8.00%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate) (as a percent)	5.00%	5.00%
Year that the rate reaches the ultimate trend rate	2020	2018

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Fair Value Measurements

12 Months Ended

Jun. 30, 2013

Fair Value Measurements

Fair Value Measurements

13. Fair Value Measurements

The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3, which the Company does not currently use, refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

June 30, 2013	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	$	—	$	5.4	$	5.4
Derivative financial instruments	—		0.9		0.9
Total assets	$	—	$	6.3	$	6.3
Liabilities:
Derivative financial instruments	$	—	$	73.1	$	73.1

June 30, 2012	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Total
Assets:
Marketable securities
Municipal auction rate securities	—		5.0		5.0
Derivative financial instruments	—		2.6		2.6
Total assets	$	—	$	7.6	$	7.6
Liabilities:
Derivative financial instruments	$	—	$	56.5	$	56.5

The Company’s derivative financial instruments consist of commodity forward contracts, foreign exchange forward contracts and interest rate swaps. These instruments are measured at fair value using the market method valuation technique.  The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest rates published by third-party leading financial news and data providers.  This is observable data; however, the valuation of these instruments is not based on actual transactions for the same instruments so they are classified as Level 2. The Company’s use of derivatives and hedging policies are more fully discussed in Note 15.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

The carrying amounts of other financial instruments not listed in the table below approximate fair value due to the short-term nature of these items.

The carrying amounts and estimated fair values of Carpenter’s financial instruments not recorded at fair value in the financial statements were as follows:

	June 30, 2013				June 30, 2012
($ in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	604.2	$	602.8	$	406.9	$	427.7
Company-owned life insurance	$	13.6	$	13.6	$	11.0	$	11.0

The carrying amount for company-owned life insurance reflects cash surrender values based upon the market values of underlying securities, net of any outstanding policy loans. The carrying value associated with the cash surrender value of these policies is recorded in other assets in the accompanying consolidated balance sheets.

The fair values of long-term debt as of June 30, 2013 and June 30, 2012 were determined by using current interest rates for debt with terms and maturities similar to the Company’s existing debt arrangements and accordingly would be classified as using Level 2 inputs in the fair value hierarchy.

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Contingencies and Commitments

12 Months Ended

Jun. 30, 2013

Contingencies and Commitments

Contingencies and Commitments

11. Contingencies and Commitments

Environmental

Carpenter is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.  Although compliance with these laws and regulations may affect the costs of Carpenter’s operations, compliance costs to date have not been material.  Carpenter has environmental remediation liabilities at some of its owned operating facilities and has been designated as a potentially responsible party (“PRP”) with respect to certain third-party Superfund waste disposal sites and other third party owned sites.  Additionally, Carpenter has been notified that it may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against Carpenter. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRP’s at these Superfund sites has been determined.  The liability for future environmental remediation costs is evaluated by management on a quarterly basis.  Carpenter accrues amounts for environmental remediation costs that represent management’s best estimate of the probable and reasonably estimable costs related to environmental remediation. During fiscal years 2013, 2012 and 2011, the Company increased the liabilities recorded for environmental remediation costs by $0.3 million, $0.7 million and $0.3 million, respectively. The liabilities recorded for environmental remediation costs at Superfund sites, at other third party-owned sites and at Carpenter-owned current or former operating facilities remaining at June 30, 2013 and 2012 was $14.8 million and $14.5 million, respectively.

Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRP’s.  Based upon information currently available, such future costs are not expected to have a material effect on Carpenter’s financial position, results of operations or cash flows over the long-term.  However, such costs could be material to Carpenter’s financial position, results of operations or cash flows in a particular future quarter or year.

Boarhead Farms

In June 2002, the Company was named as a defendant in a lawsuit filed by a group of plaintiffs in the District Court for the Eastern District of Pennsylvania titled Boarhead Farm Agreement Group v. Advanced Environmental Technology Corporation et al. (since amended to include the individual members).  The suit alleges that the Company and the other named defendants contributed to damages caused at Boarhead Farms, a Superfund site located in Bridgeton, Pennsylvania. The Boarhead Farms site was the home of a now defunct chemical and waste hauling company that the Company and many others engaged to dispose of certain wastes during the 1970’s. The plaintiff group was individually named as PRP’s for the Boarhead site in the EPA’s “Record of Decision” in November 1998. Their June 2002 lawsuit against various defendants, including Carpenter, sought contributions for a portion of costs incurred for various site cleanup activities as well as contributions to future cleanup efforts.  The suit went to trial in June 2008.  Prior to trial, all of the named co-defendants, except for Carpenter, reached an out of court settlement with the plaintiffs.  Carpenter denied the claims made by the plaintiff group. On August 18, 2008, the Court awarded the plaintiffs judgment against the Company for 80 percent of the plaintiffs’ past costs of remediating the site, including prejudgment interest from June 18, 2002 to January 1, 2008, and held the Company liable for 80 percent of future costs of the cleanup activities at the site. The Company appealed the Court’s decision and oral arguments took place before the United States Court of Appeals for the Third Circuit on December 17, 2009. On April 12, 2010, the Court of Appeals for the Third Circuit vacated the previous judgment by the District Court and remanded the case for further proceedings. As of June 30, 2011, the Company recorded a liability related to this case of $21.8 million. On July 19, 2011, the Company entered into a settlement agreement providing for a dismissal of the lawsuit and a complete release, in the Company’s favor, by all parties to the litigation in exchange for a payment of $21.8 million, which the Company paid in September 2011. The Company expects that no additional liabilities will be incurred related to this matter.

Export Regulations Violations

During fiscal year 2008, the Company became aware of potential violations of federal export regulations at a business unit that had been recently divested.  Upon investigation, the Company discovered that approximately 40 foreign nationals employed over time at the business unit’s facility may have been exposed to protected technical data related to the production of various products for military applications.  An export license from the Department of State and the Department of Commerce is required prior to the exporting of technical data for military applications. The Company has applied for and received similar applications for other business units, but did not have such a license for the divested business unit. Violations of Federal export regulations can be subject to civil penalties depending upon the severity of the violation. The Company filed voluntary disclosures with the Department of State and the Department of Commerce before the divestiture of the business unit on March 31, 2008.  The Department of State responded to the voluntary disclosure without assessing civil penalties.  The Department of Commerce has not yet responded to the voluntary disclosure.  It is not possible to determine the amount, if any, of civil penalties that may be assessed by the Department of Commerce. The statute of limitations for this matter has expired.  As a result, the Company has not recorded any liability for potential penalties as of June 30, 2013 and does not expect to incur any liabilities related to this matter.

Other

The Company is defending various routine claims and legal actions that are incidental to its business, and the Company is subject to contingencies that are common to its operations, including those pertaining to product claims, commercial disputes, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims, patent infringement and tax issues.  The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable.  The effect of the outcome of these matters on the Company’s future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company’s financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company’s financial position, results of operations or cash flows in a particular future quarter or year.

The Company has entered into purchase agreements primarily for various key raw materials at market related prices, all made in the normal course of business.  The commitments include both fixed and variable price provisions.  Raw material prices as of June 30, 213 were used for commitments with variable pricing.  The purchase commitments covered by these agreements aggregate to approximately $408.6 million as of June 30, 2013 all of which relates to fiscal year 2014.

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Document and Entity Information (USD $)	12 Months Ended
	Jun. 30, 2013	Aug. 14, 2013	Dec. 31, 2012
Document and Entity Information
Entity Registrant Name	CARPENTER TECHNOLOGY CORP
Entity Central Index Key	0000017843
Document Type	10-K
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2,582,079,427
Entity Common Stock, Shares Outstanding		52,880,099
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY

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Share-Based Compensation (Details 6) (Nonvested stock awards, USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Nonvested stock awards
Number of Awards
Balance at the beginning of the period (in shares)	419,331	480,741	345,027
Time-based granted (in shares)	22,838	43,408	171,617
Performance-based earned (in shares)	41,816	77,423	131,644
Vested (in shares)	(254,967)	(171,140)	(165,576)
Forfeited (in shares)	(13,603)	(11,101)	(1,971)
Balance at the end of the period (in shares)	215,415	419,331	480,741
Weighted-Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 35.71	$ 28.17	$ 26.63
Time-based granted (in dollars per share)	$ 50.15	$ 49.75	$ 33.10
Performance-based earned (in dollars per share)	$ 47.85	$ 55.69	$ 32.52
Vested (in dollars per share)	$ 31.39	$ 28.00	$ 33.43
Forfeited (in dollars per share)	$ 51.85	$ 21.75	$ 36.64
Balance at the end of the period (in dollars per share)	$ 43.75	$ 35.71	$ 28.17

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Operating Leases

12 Months Ended

Jun. 30, 2013

Operating Leases

Operating Leases

12. Operating Leases

The Company leases certain facilities and equipment under operating leases.  Total rent expense was $12.3 million, $9.8 million and $7.3 million for the fiscal years ended June 30, 2013, 2012 and 2011, respectively.

Future minimum payments for non-cancellable operating leases in effect at June 30, 2013 are:  $11.0 million in fiscal year 2014, $7.8 million in fiscal year 2015, $4.2 million in fiscal year 2016, $2.3 million in fiscal year 2017, $1.8 million in fiscal year 2018 and $7.2 million thereafter.

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Debt (Details) (USD $) In Millions, unless otherwise specified				12 Months Ended			0 Months Ended		12 Months Ended			12 Months Ended			12 Months Ended
	Jun. 30, 2013 4.45% Senior Notes due 2023	Feb. 26, 2013 4.45% Senior Notes due 2023	Jun. 30, 2012 4.45% Senior Notes due 2023	Jun. 30, 2013 Senior unsecured notes due May 2013	Jun. 30, 2013 Senior unsecured notes, 5.200% due July 2021	Jun. 30, 2012 Senior unsecured notes, 5.200% due July 2021	Jun. 28, 2013 Credit Agreement	Jun. 30, 2013 Credit Agreement	Jun. 30, 2013 Credit Agreement LIBOR	Jun. 30, 2013 Credit Agreement LIBOR Minimum	Jun. 30, 2013 Credit Agreement LIBOR Maximum	Jun. 30, 2013 Credit Agreement Base Rate	Jun. 30, 2013 Credit Agreement Base Rate Minimum	Jun. 30, 2013 Credit Agreement Base Rate Maximum	Jun. 30, 2013 Letters of credit	Jun. 30, 2013 Letters of credit Minimum	Jun. 30, 2013 Letters of credit Maximum
Secured and unsecured debt obligations
Face amount	$ 300.0	$ 300.0	$ 0		$ 250.0	$ 250.0
Interest rate (as a percent)	4.45%	4.45%	4.45%		5.20%	5.20%
Expected repayment of principal amount				100
Maximum borrowing capacity							500
Maturity term of debt instrument							5 years
Debt issuance costs								0.8
Variable rate basis									LIBOR			Base Rate
Interest rate margin (as a percent)									1.25%	0.75%	1.90%	0.25%	0.00%	0.90%
Commitment fee rate (as a percent)															0.15%	0.075%	0.375%
Letter of credit fees (as a percent)															1.25%	0.75%	1.90%
Letters of credit issued								7.2
Credit Agreement available for future borrowings								$ 492.8
Required interest coverage ratio															3.5
Required debt to capital ratio																	0.55

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Goodwill and Other Intangible Assets, Net (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Other intangible assets
Gross Carrying Amount	$ 129.3	$ 132.0
Accumulated Amortization	(34.3)	(22.1)
Total intangible assets, net carrying amount	95.0	109.9
Amortization expense	12.2	6.2	2.0
Estimated annual amortization expense for 2014	12.4
Estimated annual amortization expense for 2015	9.0
Estimated annual amortization expense for 2016	7.6
Estimated annual amortization expense for 2017	6.7
Estimated annual amortization expense for 2018	5.9
Trademarks and trade names
Other intangible assets
Gross Carrying Amount	42.0	42.0
Accumulated Amortization	(22.1)	(17.3)
Net Carrying Amount	19.9	24.7
Trademarks and trade names | Minimum
Other intangible assets
Useful Life	2 years 6 months
Trademarks and trade names | Maximum
Other intangible assets
Useful Life	30 years
Customer relationships
Other intangible assets
Gross Carrying Amount	78.2	78.2
Accumulated Amortization	(9.4)	(3.4)
Net Carrying Amount	68.8	74.8
Customer relationships | Minimum
Other intangible assets
Useful Life	5 years
Customer relationships | Maximum
Other intangible assets
Useful Life	15 years
Non-compete agreements
Other intangible assets
Useful Life	6 years 6 months
Gross Carrying Amount	5.4	5.4
Accumulated Amortization	(2.1)	(1.2)
Net Carrying Amount	3.3	4.2
Contracts
Other intangible assets
Useful Life	2 years 10 months 24 days
Gross Carrying Amount	3.7	6.4
Accumulated Amortization	(0.7)	(0.2)
Net Carrying Amount	$ 3.0	$ 6.2

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Share-Based Compensation (Details 7) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Share-based compensation disclosures
Compensation cost	$ 13.1	$ 13.3	$ 14.4
Total Stockholder Return Awards
Share-based compensation disclosures
Shares vesting period	3 years
Compensation cost	$ 3.7	$ 3.0	$ 1.9
Total Stockholder Return Awards | Minimum
Share-based compensation disclosures
Target shares awarded percentage	50.00%
Total Stockholder Return Awards | Maximum
Share-based compensation disclosures
Target of target shares	200.00%