Summary
Allegheny Technologies Incorporated (ATI) filed an 8-K on October 17, 2013, to report on its third-quarter 2013 financial results and a significant business restructuring. The company announced the closure of its fabricated components business and the planned divestiture of its iron castings business. These actions are driven by a strategic review indicating that these segments were not meeting return on capital employed expectations. Investors should note the associated exit costs and impairment charges that will impact the third quarter's financial performance, as well as the expected cash outflows over the next four years related to lease exits.
Key Highlights
- 1ATI announced preliminary Q3 2013 financial results and a restructuring of its Engineered Products segment.
- 2The company is closing its fabricated components business.
- 3ATI is planning to divest its iron castings business, classifying it as held for sale.
- 4The closure of the fabricated components business will incur approximately $6.4 million in pre-tax exit costs, including a $5.6 million non-cash asset impairment charge.
- 5The planned divestiture of the iron castings business resulted in a $3.1 million pre-tax, non-cash long-lived asset impairment charge.
- 6The company anticipates cash requirements of $3.8 - $4.3 million over the next four years related to lease exit costs for the fabricated components business.
- 7These decisions stem from a strategic review showing these businesses did not meet return on capital employed expectations.
Frequently Asked Questions
ATI is closing its fabricated components business and plans to divest its iron castings business. These businesses were part of the Engineered Products segment.
Investors should expect approximately $6.4 million in pre-tax exit costs for the fabricated components business closure, including a $5.6 million non-cash impairment. Additionally, the iron castings divestiture led to a $3.1 million pre-tax, non-cash impairment charge.
Yes, ATI anticipates cash requirements between $3.8 million and $4.3 million over the next four years, primarily related to lease exit costs for the fabricated components business.
The company conducted a strategic review and determined that these businesses were not meeting ATI's expectations for return on capital employed.