Segment and Related Information

12 Months Ended

Dec. 31, 2012

Segment and Related Information

Note 14: Segment and Related Information

The Company is comprised of two reportable business segments. The Bridgeville, North Jackson and Titusville facilities have been aggregated into one reportable segment, Universal Stainless & Alloy Products (“USAP”). Dunkirk Specialty Steel represents the second reportable segment.

From the North Jackson acquisition date through December 31, 2012, the Company has included the results of North Jackson in the USAP segment. North Jackson was included in the USAP reporting segment as a result of North Jackson having consistent characteristics as identified in ASC Topic 280, “Segment Reporting”, with the USAP segment. As a result of the North Jackson acquisition, the Company’s operating facilities have become more integrated, resulting in the Company’s chief operating decision maker (“CODM”) increasingly viewing the Company as one unit. When full integration occurs and information and metrics are established and used by the Company’s CODM to make key decisions including allocations of resources, it is expected that the Company will move to one reportable segment.

The accounting policies of both reportable segments are the same as those described in Note 1: Significant Accounting Policies. Sales between the segments are generally made at market-related prices.

The segment data is as follows:

For the years ended December 31,	2012			2011			2010
(dollars in thousands)
Net sales
Universal Stainless & Alloy Products	$	212,902		$	225,333		$	173,294
Dunkirk Specialty Steel		100,056			97,378			56,600
Intersegment		(61,968	)		(70,115	)		(40,471	)
Consolidated net sales	$	250,990		$	252,596		$	189,423
Operating income
Universal Stainless & Alloy Products	$	11,548		$	20,176		$	17,311
Dunkirk Specialty Steel		9,384			10,277			4,296
Intersegment		2,471			(766	)		(1,184	)
Consolidated operating income	$	23,403		$	29,687		$	20,423
Interest expense and other financing costs
Universal Stainless & Alloy Products (A)	$	2,592		$	1,406		$	412
Dunkirk Specialty Steel		-			15			40
Consolidated interest expense and other financing costs	$	2,592		$	1,421		$	452
Other income, net
Universal Stainless & Alloy Products	$	89		$	68		$	40
Dunkirk Specialty Steel (B)		51			144			52
Consolidated other income, net	$	140		$	212		$	92
Depreciation and amortization (C)
Universal Stainless & Alloy Products	$	10,650		$	5,738		$	4,210
Dunkirk Specialty Steel		1,389			1,274			1,162
Corporate		280			106			97
Consolidated depreciation and amortization	$	12,319		$	7,118		$	5,469
Capital expenditures (D)
Universal Stainless & Alloy Products	$	32,007		$	22,455		$	6,831
Dunkirk Specialty Steel		2,722			1,829			425
Corporate		328			196			225
Consolidated capital expenditures	$	35,057		$	24,480		$	7,481

(A) Includes amortization of deferred financing costs of $308,000, $153,000 and $17,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

(B) Includes net receipt of import duties of $13,000, $115,000 and $32,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

(C) These amounts include depreciation on property, plant and equipment and amortization on the non-compete agreement.

(D) These amounts include capital expenditures included in current liabilities of $828,000, $7.7 million and $578,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

The following table presents total assets by segment:

December 31,	2012			2011
(dollars in thousands)
Universal Stainless & Alloy Products	$	294,098		$	271,107
Dunkirk Specialty Steel		53,289			55,820
Corporate		140,763			149,101
Intersegment eliminations		(111,884	)		(114,356	)
Total assets	$	376,266		$	361,672

The following table presents net sales by product line:

For the years ended December 31,	2012		2011		2010
(dollars in thousands)
Stainless steel	$	195,315	$	202,000	$	142,302
Tool steel		20,420		21,963		26,196
High-strength low alloy steel		21,897		17,532		10,310
High-temperature alloy steel		7,787		6,809		5,853
Conversion services		4,868		3,905		2,719
Other		703		387		2,043
Total net sales	$	250,990	$	252,596	$	189,423

The Company derived 6%, 4% and 5% of its net sales from markets outside of the United States for the years ended December 31, 2012, 2011 and 2010, respectively. The Company has no assets located outside of the United States.