NOTE 5 - OPERATING SEGMENT INFORMATION

Management has defined Constellium’s operating segments based upon the product lines, markets and industries it serves, and prepares and reports operating segment information to Constellium’s chief operating decision maker (CODM) (see NOTE 2 – Summary of Significant Accounting Policies) on that basis.

5.1 Segment Revenue


	Three months ended							Three months ended							Six months ended							Six months ended
			June 30, 2019							June 30, 2018							June 30, 2019							June 30, 2018
			Inter							Inter							Inter							Inter
	Segment		segment			External		Segment		segment			External		Segment		segment			External		Segment		segment			External
(in millions of Euros)	revenue		elimination			revenue		revenue		elimination			revenue		revenue		elimination			revenue		revenue		elimination			revenue
P&ARP		821		(2	)		819		801		(2	)		799		1,649		(4	)		1,645		1,539		(4	)		1,535
A&T		383		(11	)		372		356		(11	)		345		761		(22	)		739		699		(23	)		676
AS&I		347		—			347		327		(1	)		326		691		(1	)		690		644		(1	)		643
Holdings & Corporate^(A)		—		—			—		4		—			4		—		—			—		6		—			6

Total		1,551		(13	)		1,538		1,488		(14	)		1,474		3,101		(27	)		3,074		2,888		(28	)		2,860

(A)	In 2018, Holdings & Corporate segment included revenues from supplying metal to third parties.

5.2 Segment Adjusted EBITDA and reconciliation of Adjusted EBITDA to Net Income


			Three months			Three months			Six months			Six months
			ended			ended			ended			ended
(in millions of Euros)	Notes		June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
P&ARP				79			75			138			127
A&T				64			47			116			83
AS&I				30			39			59			75
Holdings & Corporate				(6	)		(6	)		(11	)		(9	)

Adjusted EBITDA				167			155			302			276

Metal price lag ^(A)				(13	)		20			(31	)		24
Start-up and development costs ^(B)				(3	)		(5	)		(5	)		(9	)
Bowling Green one-time costs related to the acquisition ^(C)				—			—			(6	)		—
Share-based compensation costs				(4	)		(3	)		(7	)		(6	)
Depreciation and amortization		15, 16		(60	)		(46	)		(117	)		(90	)
Restructuring costs				(1	)		—			(1	)		—
Unrealized (losses) / gains on derivatives		6		(14	)		11			17			(43	)
Unrealized exchange (losses) / gains from the remeasurement of monetary assets and liabilities – net		6		(1	)		—			—			1
Losses on disposals		6		(1	)		(3	)		(2	)		(4	)
Other				(1	)		—			(1	)		1

Income from operations				69			129			149			150

Finance costs - net		8		(43	)		(40	)		(89	)		(78	)
Share of income / (loss) of joint-ventures				—			(9	)		5			(12	)

Income before income tax				26			80			65			60

Income tax expense		10		(9	)		(25	)		(24	)		(29	)

Net income				17			55			41			31

(A)

Metal price lag represents the financial impact of the timing difference between when aluminium prices included within Constellium Revenues are established and when aluminium purchase prices included in Cost of sales are established. The Group accounts for inventory using a weighted average price basis and this adjustment aims to remove the effect of volatility in LME prices. The calculation of the Group metal price lag adjustment is based on an internal standardized methodology calculated at each of Constellium’s manufacturing sites and is primarily calculated as the average value of product recorded in inventory, which approximates the spot price in the market, less the average value transferred out of inventory, which is the weighted average of the metal element of cost of sales, based on the quantity sold in the period.

(B)	For the six months ended June 30, 2019 and 2018, start-up and development costs include €5 million and €9 million respectively, related to new projects in our AS&I operating segment.

(C)	For the six months ended June 30, 2019, Bowling Green one-time costs related to the acquisition include the non-cash reversal of the inventory step-up.

5.3 Segment capital expenditures


	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
(in millions of Euros)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
P&ARP		(23	)		(17	)		(44	)		(30	)
A&T		(16	)		(10	)		(29	)		(23	)
AS&I		(31	)		(22	)		(56	)		(42	)
Holdings & Corporate		(1	)		(1	)		(1	)		(2	)

Capital expenditures		(71	)		(50	)		(130	)		(97	)

5.4 Segment assets

Segment assets are comprised of total assets of Constellium by segment, less deferred income tax assets, cash and cash equivalents and other financial assets.


(in millions of Euros)	At June 30, 2019		At December 31, 2018
P&ARP		2,008		1,791
A&T		861		831
AS&I		694		544
Holdings & Corporate		344		304

Segment assets		3,907		3,470

Unallocated:
Deferred income tax assets		155		163
Cash and cash equivalents		213		164
Other financial assets		26		104

Total Assets		4,301		3,901