Operating income for the Engineered Solutions segment, excluding the impact of rationalization and related charges *, was $5 million in the third quarter of 2013 versus $6 million in the same period in 2012. Despite solid growth in our advanced consumer electronics product line, operating income was negatively impacted by continued weakness in advanced graphite material products serving industrial sectors and start-up costs as we add production capabilities to serve growing markets.
Mr. Shular commented, “Our Engineered Solutions business had its second consecutive quarter of $70 million in sales. We expect the majority of the start-up expenditures to be behind us and therefore target double-digit operating income margins for the segment in the fourth quarter as production ramps up for new products.”
Total Company overhead expenses in the quarter were $31 million versus $36 million in the third quarter of 2012. The decline was largely a result of rightsizing initiatives, reduced discretionary spend and lower incentive compensation expense in a challenging operating environment.Mr. Shular commented, “Our team has continued to aggressively manage overhead spend in this difficult operating environment. In the first nine months of 2013, overhead expense has been reduced by approximately 18 percent year-over-year.” Interest expense in the quarter was $9 million versus $6 million in the third quarter of 2012. The increase was largely driven by the effects of the November 2012 issuance of $300 million Senior Notes due in 2020, which lengthened our debt maturity profile. In the third quarter, we recognized tax credits in support of our research and development efforts related to new high-tech Engineered Solutions products. In addition, jurisdictional profitability mix and the favorable settlement of tax audits also positively impacted the quarter. In total, these items resulted in a tax benefit of approximately $3 million in the current quarter.