Restructuring Charges

2015

For the year ended December 31, 2015, the Company recorded restructuring charges of $64.3 million ($41.6 million after-tax or $0.39 per share) which are presented as restructuring charges in the consolidated statement of operations. These charges were comprised of $54.5 million in long-lived asset impairment charges, $3.5 million in facility idling costs, and $6.3 million in employee severance charges. The long-lived asset impairment charges were based on analysis of the estimated fair values, including asset appraisals using income and market approaches, which represents Level 3 unobservable information in the fair value hierarchy.


•	In December 2015, the Company announced the following rightsizing actions to better align its Flat Rolled Products operations to the challenging market conditions for its commodity products:


•	Idling the standard stainless melt shop and sheet finishing operations at the Midland, PA facility, which was completed in January 2016. A $24.2 million impairment charge was recognized to reduce the carrying value of the Midland facility to estimated fair value.


•	Idling grain-oriented electrical steel (GOES) operations in Western PA, including the Bagdad, PA facility, which is expected to be completed by April 2016. A $30.3 million impairment charge was recognized to reduce the carrying value of GOES operations assets to estimated fair value.

A $3.5 million charge for future idling costs of the Midland and GOES operations was also recognized. The future restart of the Midland and GOES operations, respectively, will depend on future business conditions and the Company’s ability to earn an acceptable return on invested capital on products produced at these operations.

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As announced in October 2015, in the fourth quarter 2015 the Company implemented a salaried workforce reduction of approximately 100 employees, in response to business conditions, in both the High Performance Materials & Components segment and at ATI’s headquarters. Severance charges of $6.3 million were recorded in the fourth quarter for this action and these cash costs will be paid over a period of up to 12 months.

Reserves for restructuring charges at December 31, 2015 were approximately $8 million for severance and idling costs, which are expected to be paid in 2016.

2013

For the year ended December 31, 2013, the Company recorded restructuring charges in continuing operations of $67.5 million ($41.2 million after-tax or $0.39 per share) which are presented as restructuring charges in the consolidated statement of operations. These charges were comprised of $55.1 million in long-lived asset impairment charges, $4.2 million in facility closure costs and $8.2 million in employee severance and termination benefit charges. The long-lived asset impairment charges were based on analysis of the estimated fair values, which represents Level 3 unobservable information in the fair value hierarchy.


•	In the High Performance Materials & Components segment, the Company permanently closed the previously idled Albany, Oregon standard-grade titanium sponge facility, resulting in a $38.1 million asset impairment charge in 2013. In addition, a charge was recorded for $3.5 million of asset retirement obligations, which were substantially completed in 2014.

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In the Flat Rolled Products segment, the Company permanently closed the previously idled New Castle, Indiana stainless finishing facility in 2013, and the Wallingford, Connecticut stainless finishing facility in 2014. The closure of New Castle and Wallingford resulted in $6.3 million and $2.7 million, respectively, of asset impairment charges in 2013. Facility closure costs in 2013 included $0.3 million and $0.4 million in asset retirement obligations for New Castle and Wallingford, respectively. Additionally, pension and other postretirement benefit termination charges of $5.0 million, and $1.0 million of employee termination costs were recognized in 2013 for approximately 65 employees affected by the Wallingford facility closure.

In addition to the above facility closures, restructuring costs in 2013 included $8.0 million of other long-lived asset impairment charges in the High Performance Materials & Components segment. Other severance charges in 2013 included $1.1 million in pension benefit termination charges in the High Performance Materials & Components segment, and $1.1 million in severance costs, collectively affecting approximately 75 employees.

Reserves for restructuring charges at December 31, 2013 were approximately $2 million for severance costs, which were paid in 2014.