Segment and Geographical Area Information

3 Months Ended

Mar. 31, 2017

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 March 31, 2017, approximately 63% of our employees were covered by collective bargaining agreements and approximately 12% of our employees were covered by collective bargaining agreements with expiration dates occurring within one year from March 31, 2017.

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):

	Quarter Ended
	March 31,
	2017			2016
Net sales:
Fabricated Products	$	355.3		$	343.2
Segment operating income (loss):
Fabricated Products1	$	70.6		$	57.9
All Other	(11.1		)	(13.1		)
Total operating income	$	59.5		$	44.8
Interest expense	(5.6		)	(3.7		)
Other income, net	0.6			0.3
Income before income taxes	$	54.5		$	41.4
Depreciation and amortization:
Fabricated Products	$	9.4		$	8.6
All Other	0.2			0.1
Total depreciation and amortization	$	9.6		$	8.7
Capital expenditures:
Fabricated Products	$	14.6		$	25.8
All Other	0.2			0.1
Total capital expenditures	$	14.8		$	25.9

_____________________

¹  Fabricated Products segment operating income included non-cash mark-to-market gain on primary aluminum, natural gas and foreign currency hedging activities, which totaled $15.1 million and $4.0 million for the quarters ended March 31, 2017 and March 31, 2016, respectively. For further discussion regarding mark-to-market matters, see Note 8.

	March 31, 2017		December 31, 2016
Assets:
Fabricated Products	$	1,017.3	$	969.4
All Other1	395.8		474.1
Total assets	$	1,413.1	$	1,443.5

_____________________

¹  Assets in All Other represent primarily all of our cash and cash equivalents, short-term investments, financial derivative assets (see Note 8) and net deferred income tax assets.

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

	Quarter Ended
	March 31,
	2017		2016
Net sales:
Aero/HS products	$	167.5	$	176.9
Automotive Extrusions	53.0		48.4
GE products	123.2		105.4
Other products	11.6		12.5
Total net sales	$	355.3	$	343.2

Geographic information for income taxes paid were as follows (in millions of dollars):

	Quarter Ended
	March 31,
	2017		2016
Income taxes paid:
Fabricated Products –
Domestic	$	0.1	$	0.1
Foreign	0.1		0.2
Total income taxes paid	$	0.2	$	0.3

The aggregate foreign currency transaction gain (loss) included in Net income was immaterial for the quarters ended March 31, 2017 and March 31, 2016.

For the quarter ended March 31, 2017, one customer represented 29% and another represented 10% of Fabricated Products Net sales. For the quarter endedMarch 31, 2016, one customer represented 25% and another represented 10% of Fabricated Products Net Sales.

At March 31, 2017, one customer represented 19% and a second customer represented 16% of the trade receivables balance. One individual customer accounted for 18% and two individual customers each accounted for 12% of the trade receivables balance at December 31, 2016.

Information for delivery of our primary aluminum supply from our major suppliers were as follows:

	Quarter Ended
	March 31,
	2017		2016
Percentage of total primary aluminum supply (lbs):
Supply from our top five major suppliers	86	%	83	%
Supply from our largest supplier	37	%	30	%
Supply from our second and third largest suppliers	34	%	35	%