Segment and Geographical Area Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment and Geographical Area Information

Segment and Geographical Area Information

Our primary line of business is the production of semi-fabricated specialty aluminum products, such as aluminum plate and sheet and extruded and drawn products, primarily used in Aero/HS products, Automotive Extrusions, GE products, and Other products. We operate 11 focused production facilities in the United States and one in Canada. Consistent with the manner in which our chief operating decision maker reviews and evaluates our business, the Fabricated Products business is treated as a single operating segment. At December 31, 2016, approximately 63% of our employees were covered by collective bargaining agreements and approximately 6% of our employees were covered by collective bargaining agreements with expiration dates occurring within one year from December 31, 2016.

In addition to the Fabricated Products segment, we have a business unit, All Other, which provides general and administrative support for our operations. For purposes of segment reporting under GAAP, we treat the Fabricated Products segment as a reportable segment. 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 net operating charges.

The following tables provide financial information by reporting segment and business unit for each period or as of each period end, as applicable (in millions of dollars):

	Year Ended December 31,
	2016			2015			2014
Net sales:
Fabricated Products	$	1,330.6		$	1,391.9		$	1,356.1
Segment operating income (loss):
Fabricated Products 1,2	229.6			190.8			151.4
All Other3	(51.8		)	(536.7		)	(13.5		)
Total operating income (loss)	177.8			(345.9		)	137.9
Interest expense	(20.3		)	(24.1		)	(37.5		)
Other (expense) income, net	(10.3		)	(1.8		)	6.7
Income (loss) before income taxes	$	147.2		$	(371.8	)	$	107.1
Depreciation and amortization:
Fabricated Products	$	35.4		$	31.9		$	30.6
All Other	0.6			0.5			0.5
Total depreciation and amortization	$	36.0		$	32.4		$	31.1
Capital expenditures:
Fabricated Products	$	75.6		$	62.4		$	58.5
All Other	0.5			0.7			0.9
Total capital expenditures	$	76.1		$	63.1		$	59.4

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^1.  Fabricated Products segment operating income during 2016 included a $2.6 million non-cash impairment charge relating to the write-off of a customer relationship intangible asset (see Note 4). Also included in the Fabricated Products segment operating income were lower of cost or market inventory write-downs of $4.9 million and $2.6 million during 2016 and 2015, respectively.

^2.  Fabricated Products segment results for 2016, 2015 and 2014 included a non-cash mark-to-market gain (loss) on primary aluminum, natural gas, electricity and foreign currency hedging activities totaling $18.7 million, $(3.4) million and $(10.4) million, respectively. See Note 10 for further discussion regarding mark-to-market matters.

^3.  Operating loss of All Other included net periodic postretirement benefit cost (income) of $3.4 million, $2.4 million and $(23.7) million for 2016, 2015 and 2014, respectively. Additionally, operating (income) loss of All Other included (Gain) loss on removal of Union VEBA net assets of $(0.1) million and $493.4 million during the year ended December 31, 2016 and December 31, 2015, respectively. See Note 6 for further details.

	December 31, 2016		December 31, 2015
Assets:
Fabricated Products	$	969.4	$	904.7
All Other1	474.1		342.2
Total assets	$	1,443.5	$	1,246.9

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^1.  Assets in All Other represent primarily all of our cash and cash equivalents, short-term investments, financial derivative assets, net assets of VEBAs (see Note 6 and Note 10) and net deferred income tax assets.

Net sales by end market applications for the Fabricated Products segment were as follows (in millions of dollars):

	Year Ended December 31,
	2016		2015		2014
Net sales:
Aero/HS products	$	675.4	$	695.5	$	686.3
Automotive Extrusions	188.8		199.2		173.5
GE products	420.1		426.1		419.5
Other products	46.3		71.1		76.8
Total net sales	$	1,330.6	$	1,391.9	$	1,356.1

Geographic information for net sales based on country of origin, income taxes paid and long-lived assets were as follows (in millions of dollars):

	Year Ended December 31,
	2016		2015		2014
Net sales to unaffiliated customers:
Fabricated Products –
United States	$	1,278.6	$	1,321.3	$	1,254.0
Canada	52.0		70.6		102.1
Total net sales	$	1,330.6	$	1,391.9	$	1,356.1
Income taxes paid:
Fabricated Products –
United States	$	0.7	$	0.6	$	2.1
Canada	0.5		1.7		1.4
Total income taxes paid	$	1.2	$	2.3	$	3.5

	December 31,
	2016		2015
Long-lived assets:1
Fabricated Products –
United States	$	494.7	$	459.6
Canada	31.4		30.9
Total Fabricated Products long-lived assets	526.1		490.5
All Other –
United States	4.8		4.9
Total All Other long-lived assets	4.8		4.9
Total long-lived assets	$	530.9	$	495.4

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^1.  Long-lived assets represent Property, plant and equipment – net.

The aggregate foreign currency transaction gain (loss) included in determining net income (loss) were immaterial for 2016, 2015 and 2014.

For the years ended December 31, 2016, December 31, 2015 and December 31, 2014, one customer represented 26%, 25% and 22%, respectively, of Fabricated Products Net sales. For each of the years ended December 31, 2016, December 31, 2015, and December 31, 2014, a second customer represented 10% of Fabricated Products Net sales.

One individual customer accounted for 18% and two individual customers each accounted for 12% of the trade receivables balance at December 31, 2016. Two individual customers each accounted for 17% of the trade receivables balance at December 31, 2015.

Information for export sales and primary aluminum supply from our major suppliers were as follows:

	Year Ended December 31,
	2016		2015		2014
Percentage of Net sales:
Export sales	19	%	19	%	19	%
Percentage of total annual primary aluminum supply (lbs):
Supply from our top five major suppliers	84	%	86	%	71	%
Supply from our largest supplier	32	%	28	%	30	%
Supply from our second and third largest suppliers	32	%	36	%	25	%