Segment and Geographical Area Information

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Segment and Geographical Area Information

Segment and Geographical Area Information

The Company’s primary line of business is the production of semi-fabricated specialty aluminum products through 11 focused production facilities in the United States and one in Canada. The Company also owns a 49% interest in Anglesey, which owns and operates a secondary aluminum remelt and casting facility in Holyhead, Wales. Although Anglesey is decommissioning a portion of the site and pursuing the disposition of some of its assets, Anglesey currently expects to continue to conduct secondary aluminum remelt and casting operations.  The Company does not expect those efforts to impact the Company's results or result in any distribution by Anglesey to its owners.

Each of the Company’s North American production facilities is an operating segment. Such operating segments are aggregated for reporting purposes to one reportable segment, Fabricated Products. The Fabricated Products segment sells value-added products, such as aluminum sheet and plate and extruded and drawn products, which are primarily used in aerospace/high strength, general engineering, automotive, and other industrial applications.

The Company’s operations consist of the Fabricated Products segment and three business units, Secondary Aluminum, Hedging, and Corporate and Other. The Secondary Aluminum business unit sells value-added products, such as ingot and billet, produced at Anglesey, for which the Company receives a portion of a premium over normal commodity market prices. The Hedging business unit conducts hedging activities with respect to the Company’s exposure to primary aluminum prices. The Corporate and Other business unit provides general and administrative support for the Company’s operations. For purposes of segment reporting under GAAP, the Company treats the Fabricated Products segment as a reportable segment and combines the three other business units, Secondary Aluminum, Hedging and the Corporate and Other into one category, which is referred to as All Other. All Other is not considered a reportable segment.

The accounting policies of the Fabricated Products segment are the same as those described in Note 1. Segment results are evaluated internally by management before any allocation of corporate overhead and without any charge for income taxes, interest expense, or Other operating charges, net.

The following tables provide financial information by operating segment for each period or as of each period-end, as applicable:

	Year Ended December 31,
	2011			2010			2009
Net Sales:
Fabricated Products	$	1,301.3		$	1,078.8		$	897.1
All Other1	—			0.3			89.9
Total net sales	$	1,301.3		$	1,079.1		$	987.0
Segment Operating Income (Loss):
Fabricated Products 2,3,4	$	108.6		$	78.6		$	73.6
All Other4,5	(53.6		)	(37.5		)	45.1
Total operating income	$	55.0		$	41.1		$	118.7
Interest expense	(18.0		)	(11.8		)	—
Other income (expense), net	4.3			(4.2		)	(0.1		)
Income before income taxes	$	41.3		$	25.1		$	118.6
Depreciation and Amortization:
Fabricated Products	$	24.8		$	19.4		$	16.2
All Other	0.4			0.4			0.2
Total depreciation and amortization	$	25.2		$	19.8		$	16.4
Capital expenditures:
Fabricated Products	$	32.1		$	38.0		$	58.5
All Other	0.4			0.9			0.7
Total capital expenditures	$	32.5		$	38.9		$	59.2

	December 31, 2011		December 31, 2010
Segment assets:
Fabricated Products	$	636.4	$	496.7
All Other6	684.2		822.2
Total assets	$	1,320.6	$	1,318.9

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¹  Net sales in All Other in 2010 represent residual activity involving primary aluminum purchased by the Company from Anglesey while it continued its smelting operations, prior to September 30, 2009, and resold by the Company in the first quarter of 2010. In connection with Anglesey’s remelt operations beginning in the fourth quarter of 2009, the Company changed its basis of revenue recognition from gross to a net basis (see Note 1).

²  Operating results in the Fabricated Products segment for 2011, 2010 and 2009 included non-cash LIFO inventory (benefits) charges of $(7.1), $16.5 and $8.7, respectively. Also included in the Fabricated Products segment operating results for 2009 were $9.3 of lower of cost or market inventory write-down and $5.4 of restructuring charges relating to the restructuring plans involving the Company's Tulsa, Oklahoma and Bellwood, Virginia facilities. Restructuring charges in 2011 and 2010 were not material. Also included in the Fabricated Products segment operating results for 2011, 2010 and 2009 were $1.7, $13.6 and $0.7, respectively, of environmental expense. Fabricated Products segment operating results for 2010 also included $3.9 of asset impairment charge relating to certain Property, plant and equipment.

³  Fabricated Products segment results for 2011, 2010 and 2009 include non-cash mark-to-market (losses) gains on natural gas, electricity and foreign currency hedging activities totaling $(3.4), $(4.3) and $4.9, respectively. For further discussion regarding mark-to-market matters, see Note 12.

⁴  Operating results of the Fabricated Products segment and All Other include gains and losses on intercompany hedging activities related to metal. At the time the Fabricated Products segment enters into a firm-price customer contract, the Hedging business unit and Fabricated Products segment enter into an “internal hedge” so that metal price risk resides in the Hedging business unit under All Other. The Hedging business unit uses third-party hedging instruments to limit exposure to metal price risks related to firm-price customer sales contracts. Results from internal hedging activities between the Fabricated Products segment and Hedging business unit eliminate in consolidation. Internal hedging gains (losses) in the Fabricated Products segment were $8.1, $(0.1) and $(42.8) for 2011, 2010 and 2009, respectively. All Other included the same amounts as (losses) gains for 2011, 2010 and 2009, respectively.

⁵  Operating results of All Other for 2011, 2010 and 2009 include non-cash mark-to-market (losses) gains on primary aluminum hedging activities totaling $(26.5), $3.6 and $61.2 respectively. The non-cash mark-to-market gain on foreign currency derivatives for 2009 was $14.4. Non-cash mark-to-market gains (losses) on foreign currency derivatives for 2011 and 2010 were immaterial. Also included in the operating income of All Other were $1.8 of impairment charges in 2009 relating to the Company's investment in Anglesey.

⁶  Assets in All Other represent primarily all of the Company’s cash and cash equivalents, metal and financial derivative assets, net assets in respect of VEBA(s) and net deferred income tax assets.

Geographic information for net sales, based on country of origin, and income taxes paid are as follows:

	Year Ended December 31,
	2011		2010		2009
Net sales to unaffiliated customers:
Fabricated Products —
United States	$	1,195.1	$	991.2	$	840.1
Canada	106.2		87.6		57.0
Total Fabricated Products net sales	1,301.3		1,078.8		897.1
All Other —
United Kingdom	—		0.3		89.9
Total All Other net sales	—		0.3		89.9
Total net sales	$	1,301.3	$	1,079.1	$	987.0
Income Taxes Paid:
Fabricated Products —
United States	$	1.7	$	0.1	$	4.0
Canada	1.8		0.7		8.8
Total income taxes paid	$	3.5	$	0.8	$	12.8

The aggregate foreign currency transaction gains (losses) included in determining net income were immaterial for 2011, 2010, and 2009. Sales to the Company’s largest fabricated products customer accounted for sales of approximately 21%, 23% and 20% of total revenue in 2011, 2010, and 2009, respectively. The loss of the Company’s largest customer would have a material adverse effect on the Company taken as a whole. However, in the Company’s opinion, the relationship between the customer and the Company is good, and the risk of loss of the customer is remote. Export sales were approximately 14%, 13% and 10% of total revenue during 2011, 2010 and 2009, respectively.