Operating profit from ongoing operations was lower in the third quarter of 2012 than in the third quarter of 2011 as higher conversion costs were partially offset by improved pricing and favorable product mix. To meet increased demand for finishing services, manufacturing costs for Bonnell Aluminum were negatively impacted by operating inefficiencies as it ramped up additional capacity. Operating profit from ongoing operations in the first nine months of 2012 was favorable compared to the same period of 2011, primarily as a result of improved pricing and lower energy costs.
Capital expenditures for Bonnell Aluminum were $1.8 million in the first nine months of 2012 and $2.2 million in the first nine months of 2011. Capital expenditures are projected to be approximately $4 million in 2012. Depreciation expense was $7.6 million in the first nine months of 2012 compared with $6.3 million in first nine months of 2011, and is projected to be approximately $9 million in 2012. Higher depreciation expense in 2012 is primarily related to approximately $2.4 million in accelerated depreciation on property, plant and equipment at the Kentland manufacturing facility.
The Other segment includes the mitigation banking business, which is also referred to as Falling Springs. Net sales for this business can fluctuate from quarter-to-quarter as Falling Springs’ revenue varies based upon the timing of development projects within its markets. Operating profit from ongoing operations was $0.7 million in the first nine months of 2012 compared to $0.6 million in the first nine months of 2011.Corporate Expenses, Interest and Taxes Pension expense was $6.1 million in the first nine months of 2012, an unfavorable change of $4.4 million from the comparable period of 2011. Most of the pension impact on earnings is reflected in “Corporate expenses, net” in the net sales and operating profit by segment table. Corporate expenses, net increased in 2012 versus 2011 primarily due to the higher pension expenses noted above, an unrealized loss on our investment in the Harbinger Capital Partners Special Situations Fund, L.P. (see Note (d) within the Notes to the Financial Tables for additional detail) and the timing of certain non-recurring corporate related expenses.