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Business Segments
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Business Segments
Business Segments
The Company operates in two business segments: High Performance Materials & Components and Flat Rolled Products. The High Performance Materials & Components business segment produces, converts and distributes a wide range of high performance materials, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, zirconium and related alloys including hafnium and niobium, advanced powder alloys and other specialty materials, in long product forms such as ingot, billet, bar, rod, wire, shapes and rectangles, and seamless tubes, plus precision forgings and castings, components and machined parts. These products are designed for the high performance requirements of such major end markets as aerospace and defense, oil and gas, chemical process industry, electrical energy, and medical. The business units in this segment include ATI Specialty Materials, ATI Specialty Alloys and Components, ATI Forged Products, ATI Cast Products and ATI Flowform Products.

The Flat Rolled Products business segment produces, converts and distributes stainless steel, nickel-based alloys, specialty alloys, and titanium and titanium-based alloys, in a variety of product forms including plate, sheet, engineered strip, and Precision Rolled Strip® products, as well as grain-oriented electrical steel. The major end markets for our flat rolled products are oil and gas, chemical process industry, electrical energy, automotive, food processing equipment and appliances, construction and mining, electronics, communication equipment and computers, and aerospace and defense. The business units in this segment include ATI Flat Rolled Products and STAL, in which the Company has a 60% ownership interest. Segment results also include ATI’s 50% interest in Uniti, which is accounted for under the equity method. Sales to Uniti, which are included in ATI’s consolidated statements of operations, were $75.3 million in 2014, $95.9 million in 2013, and $77.1 million in 2012. ATI’s share of Uniti’s (loss)/income was $(8.9) million in 2014, $(7.1) million in 2013, and $4.9 million in 2012, which is included in the Flat Rolled Products segment’s operating profit, and within cost of sales in the consolidated statements of operations. The remaining 50% interest in Uniti is held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products.
Intersegment sales are generally recorded at full cost or market. Common services are allocated on the basis of estimated utilization. Business segment results exclude amounts reported in discontinued operations.
(In millions)
 
2014
 
2013
 
2012
Total sales:
 
 
 
 
 
 
High Performance Materials & Components
 
$
2,084.6

 
$
2,016.7

 
$
2,398.1

Flat Rolled Products
 
2,320.2

 
2,146.6

 
2,398.9

Total sales
 
4,404.8

 
4,163.3

 
4,797.0

Intersegment sales:
 
 
 
 
 
 
High Performance Materials & Components
 
77.8

 
71.9

 
84.1

Flat Rolled Products
 
103.6

 
47.9

 
46.0

Total intersegment sales
 
181.4

 
119.8

 
130.1

Sales to external customers:
 
 
 
 
 
 
High Performance Materials & Components
 
2,006.8

 
1,944.8

 
2,314.0

Flat Rolled Products
 
2,216.6

 
2,098.7

 
2,352.9

Total sales to external customers
 
$
4,223.4

 
$
4,043.5

 
$
4,666.9


Total direct international sales were $1,607.5 million in 2014, $1,585.1 million in 2013, and $1,705.7 million in 2012. Of these amounts, sales by operations in the United States to customers in other countries were $1,201.8 million in 2014, $1,175.1 million in 2013, and $1,262.9 million in 2012.
(In millions)
 
2014
 
2013
 
2012
Operating profit (loss):
 
 
 
 
 
 
High Performance Materials & Components
 
$
289.6

 
$
209.1

 
$
385.4

Flat Rolled Products
 
(43.3
)
 
(44.7
)
 
127.8

Total operating profit
 
246.3

 
164.4

 
513.2

Corporate expenses
 
(44.2
)
 
(43.0
)
 
(68.4
)
Interest expense, net
 
(108.7
)
 
(65.2
)
 
(71.6
)
Restructuring costs
 
—

 
(67.5
)
 
—

Closed company and other expenses
 
(21.2
)
 
(14.2
)
 
(18.5
)
Retirement benefit expense
 
(70.7
)
 
(129.3
)
 
(122.4
)
Income (loss) before income taxes
 
$
1.5

 
$
(154.8
)
 
$
232.3


Business segment operating profit excludes costs for restructuring charges (see Note 16), retirement benefit income or expense, corporate expenses, interest expenses, debt extinguishment costs, and costs associated with closed operations. These costs are excluded for segment reporting to provide a profit measure based on what management considers to be controllable costs at the segment level. Retirement benefit expense includes both defined benefit pension expense and other postretirement benefit expenses. Costs associated with multiemployer pension plans are included in segment operating profit, and costs associated with defined contribution retirement plans are included in segment operating profit or corporate expenses, as applicable.
Business segment operating profit for 2013 includes a $55.5 million charge for inventory valuation adjustments, including a $35.0 million LIFO-related net realizable value charge in the High Performance Materials & Components segment and a $20.5 million charge related to the market-based valuation of industrial titanium products in the Flat Rolled Products segment. The $35.0 million net realizable value reserve in the High Performance Materials & Components segment was reduced to $10.0 million at December 31, 2014. A charge of $23.2 million related to the market-based valuation of industrial titanium products was recorded in 2014 in the Flat Rolled Products segment.
Closed company and other expenses, which were $21.2 million in 2014, $14.2 million in 2013 and $18.5 million in 2012, includes charges incurred in connection with closed operations, pre-tax gains and losses on the sale of surplus real estate, non-strategic investments, and other assets, and other non-operating income or expense. Other items are primarily presented in selling and administrative expenses in the consolidated statements of operations. In 2014, these other items included $8.0 million for closed company environmental costs, $3.8 million for closed company insurance obligations, and $9.4 million for other expenses including legal matters and real estate costs at closed companies. In 2013, the Company recorded $14.2 million in other charges primarily related to closed companies, including $3.9 million for environmental costs and $10.3 million for other expenses including real estate costs at closed companies. In 2012, the Company recorded $18.5 million in other charges primarily related to closed companies, including $4.3 million for environmental costs, $4.0 million for real estate costs at closed companies, and $10.2 million for other expenses including legal matters and foreign exchange losses.
Certain additional information regarding the Company’s business segments is presented below:
(In millions)
 
2014
 
2013
 
2012
Depreciation and amortization:
 
 
 
 
 
 
High Performance Materials & Components
 
$
124.4

 
$
127.4

 
$
130.0

Flat Rolled Products
 
49.3

 
49.5

 
49.7

Corporate
 
2.9

 
3.7

 
1.7

Total depreciation and amortization
 
176.6

 
180.6

 
181.4

Capital expenditures:
 
 
 
 
 
 
High Performance Materials & Components
 
51.9

 
39.5

 
59.9

Flat Rolled Products
 
172.1

 
568.1

 
311.3

Corporate
 
1.7

 
0.2

 
1.3

Total capital expenditures
 
225.7

 
607.8

 
372.5

Identifiable assets:
 
2014
 
2013
 
2012
High Performance Materials & Components
 
3,555.8

 
3,452.2

 
3,720.7

Flat Rolled Products
 
2,601.6

 
2,320.9

 
1,857.0

Discontinued Operations
 
1.8

 
9.8

 
214.0

Corporate:
 
 
 
 
 
 
Prepaid pension cost
 
—

 
5.1

 
—

Deferred taxes
 
—

 
—

 
71.5

Cash and cash equivalents and other
 
423.4

 
1,110.5

 
384.6

Total assets
 
$
6,582.6

 
$
6,898.5

 
$
6,247.8


Geographic information for external sales based on country of destination, and assets, are as follows:
($ in millions)
 
2014
 
Percent
of total
 
2013
 
Percent
of total
 
2012
 
Percent
of total
External sales:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
2,615.9

 
62
%
 
$
2,458.4

 
61
%
 
$
2,961.1

 
63
%
China
 
249.6

 
6
%
 
237.7

 
6
%
 
255.4

 
5
%
United Kingdom
 
228.4

 
5
%
 
251.5

 
6
%
 
303.9

 
7
%
Germany
 
207.7

 
5
%
 
215.4

 
5
%
 
256.0

 
6
%
France
 
168.1

 
4
%
 
152.8

 
4
%
 
157.0

 
3
%
Italy
 
160.7

 
4
%
 
132.3

 
3
%
 
136.1

 
3
%
Canada
 
147.0

 
3
%
 
141.0

 
4
%
 
134.9

 
3
%
Japan
 
89.3

 
2
%
 
124.7

 
3
%
 
93.7

 
2
%
Mexico
 
76.5

 
2
%
 
54.9

 
1
%
 
49.3

 
1
%
Other
 
280.2

 
7
%
 
274.8

 
7
%
 
319.5

 
7
%
Total External Sales
 
$
4,223.4

 
100
%
 
$
4,043.5

 
100
%
 
$
4,666.9

 
100
%

($ in millions)
 
2014
 
Percent
of total
 
2013
 
Percent
of total
 
2012
 
Percent
of total
Total assets:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
5,879.6

 
90
%
 
$
6,145.4

 
89
%
 
$
5,505.0

 
88
%
China
 
280.5

 
4
%
 
258.1

 
4
%
 
276.2

 
4
%
United Kingdom
 
196.3

 
3
%
 
208.0

 
3
%
 
239.2

 
4
%
Luxembourg (a)
 
81.8

 
1
%
 
145.9

 
2
%
 
48.3

 
1
%
Other
 
144.4

 
2
%
 
141.1

 
2
%
 
179.1

 
3
%
Total Assets
 
$
6,582.6

 
100
%
 
$
6,898.5

 
100
%
 
$
6,247.8

 
100
%
(a)
Comprises assets held by the Company’s European Treasury Center operation.