Highlights:
-
$328 million cash from operations, a $599 million improvement from
1Q09. - Free cash flow improvement of $652 million from 1Q09.
- Performed well against every operational cash sustainability target.
-
Loss from continuing operations of $312 million, or $0.32 per share, a
$168 million improvement over 1Q09. - Excluding restructuring, loss was $256 million, or $0.26 per share.
-
Revenues of $4.2 billion, up 2% from 1Q09, but down 41% from 2Q08 on
economic downturn and 49% drop in metal price. - Strong liquidity with $851 million of cash on hand.
- Debt-to-Capital ratio down 80 basis points from 1Q09 to 39.8%.
NEW YORK–Alcoa (NYSE: AA) today announced it generated cash from operations in
the second quarter of 2009 of $328 million, a $599 million improvement
from the first quarter. This improvement was driven by the Company’s
wide-ranging financial and operational initiatives to reduce costs,
increase cash, and strengthen its balance sheet.
The second quarter of 2009 showed a loss from continuing operations of
$312 million, or $0.32 per share. Excluding restructuring charges, the
loss was $256 million, or $0.26 per share. The loss from continuing
operations showed a $168 million improvement in the second quarter of
2009 compared with the first quarter loss from continuing operations of
$480 million, or $0.59 per share. Earnings from continuing operations in
the second quarter of 2008 were $553 million, or $0.67 per share.
Revenues for the quarter were $4.2 billion, a two percent increase from
the first quarter of 2009, but a decrease from the $7.2 billion in the
second quarter of 2008, as a result of the impact of lower metal prices
and the Company’s curtailment of aluminum and alumina production in
response to reduced demand. The average price of aluminum on the London
Metal Exchange in the second quarter of 2009 was $1,485 per metric ton
(mt), a nine percent increase from the first quarter of 2009, but a 49
percent decrease from the second quarter of 2008. The economic downturn
has affected most of Alcoa’s end markets – automotive, commercial
transportation, building and construction, and aerospace.
“Our cash generation initiatives, productivity improvements, and
portfolio changes are working. Now Alcoa has the staying power and
reduced cost base to withstand the most serious downturn in the history
of the aluminum industry,” said Klaus Kleinfeld, Alcoa President and
Chief Executive Officer. “Our operational and financial initiatives also
provide Alcoa with the focus and flexibility to compete and grow in the
most profitable segments of the industry as the economy recovers.”
The Company has achieved approximately $1.0 billion in procurement
savings through the first half of the year, or approximately two-thirds
of the full year target. Overhead savings year-to-date are approximately
$270 million, or 134 percent of the full year target for 2009. And,
rigorous management of working capital has generated $680 million in
cash, or 85 percent of the 2009 target of $800 million.
Capital expenditures in the quarter were $418 million and are on target
to reach the 2009 goal of a nearly 50 percent reduction from 2008; the
capital plan for 2010 calls for a further 50 percent reduction to $850
million. The Juruti bauxite mine in Brazil and the Alumar alumina
refining upgrade and expansion are both in the process of being
commissioned. First shipment of bauxite from Juruti is expected to occur
within the next ninety days. The Alumar refinery has already begun to
produce its first alumina and is on target for ramp-up to full
production during the second half of the year. The upgrade and expansion
project will increase the output of the refinery from approximately 1.5
million mt to a total production capacity of 3.5 million mt per year for
the Alumar consortium.
The Company’s debt-to-capital ratio stood at 39.8 percent at the end of
the quarter, an 80 basis point reduction from the first quarter of 2009.
Free cash flow in the quarter was a negative $90 million, but was a $652
million improvement from the first quarter of 2009. As the Company
continues to implement its cash generation programs, it finished the
quarter with $851 million of cash on hand.
Discontinued operations for the second quarter of 2009 had a loss of
$142 million, or $0.15 per share, primarily reflecting the impact of
exiting the electrical and electronics solutions business, which was
completed in June. The first quarter of 2009 had a loss of $17 million,
or $0.02 per share.
The second quarter of 2009 had a net loss of $454 million, or $0.47 per
share, compared with a net loss for the first quarter of 2009 of $497
million, or $0.61 per share. Net income in the second quarter of 2008
was $546 million, or $0.66 per share.
Revenues for the first half of 2009 were $8.4 billion, compared to $14.2
billion in the first half of 2008. For the first half of 2009, income
from continuing operations showed a loss of $792 million, or $0.89 per
share, compared with income of $852 million, or $1.03 per share, in the
first half of 2008. The first half of 2009 showed a net loss of $951
million, or $1.06 per share, compared to net income of $849 million, or
$1.03 per share, in the first half of 2008.
Segment Results
Alumina
After-tax operating income (ATOI) was a loss of $7 million, a decrease
of $42 million from the prior quarter. Production declined 136 thousand
mt, or four percent sequentially, mainly due to curtailments at Point
Comfort and Suriname. Unfavorable currency and lower LME-based pricing
was partially offset by productivity gains.
Primary Metals
ATOI was a loss of $178 million, an improvement of $34 million from the
prior quarter, which included a non-cash gain related to the Orkla ASA
exchange of $112 million. Realized pricing increased six percent, or
$100 per mt sequentially. Benefits from productivity gains more than
offset the impact of unfavorable currency. Production increased by 26
thousand mt in the quarter due to record production in Iceland as well
as the addition of the Norway smelters, which more than offset the
effects of the Tennessee and Massena East curtailments.
Flat-Rolled Products
ATOI was a loss of $35 million, an improvement of $26 million from the
prior quarter. Revenues declined five percent sequentially driven by
significant volume declines in all end markets except automotive and
packaging. Benefits from productivity gains more than offset the impacts
of unfavorable currency and volume declines in all other markets.
Engineered Products and Solutions
ATOI was $88 million, a decrease of $7 million or seven percent from the
prior quarter. Weakening conditions in the aerospace and building and
construction markets were partially offset by productivity gains.
Revenues declined six percent from the prior quarter due to weak end
markets. This segment was expanded to include the hard alloy extrusions
business which had previously been included in the Flat-Rolled Products
segment.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
July 8, 2009 to present the quarter’s results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com
under “Invest.”
About Alcoa
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum, and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation, and industrial markets, bringing design,
engineering, production, and other capabilities of Alcoa’s businesses to
customers. In addition to aluminum products and components, including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems, precision and investment
castings, and building systems. The Company has been named one of the
top most sustainable corporations in the world at the World Economic
Forum in Davos, Switzerland, and has been a member of the Dow Jones
Sustainability Index for seven consecutive years. Alcoa employs
approximately 63,000 people in 31 countries across the world. More
information can be found at www.alcoa.com.
Forward-Looking Statements
Certain statements in this release relate to future events and
expectations and, as such, constitute forward-looking statements
involving known and unknown risks and uncertainties that may cause
actual results, performance, or achievements of Alcoa to be different
from those expressed or implied in the forward-looking statements. Alcoa
disclaims any obligation to update publicly any forward-looking
statements, whether in response to new information, future events or
otherwise, except as required by applicable law. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include: (a) material adverse changes in
economic or aluminum industry conditions generally, including global
supply and demand conditions and fluctuations in London Metal
Exchange-based prices for primary aluminum, alumina, and other products;
(b) material adverse changes in the markets served by Alcoa, including
automotive and commercial transportation, aerospace, building and
construction, distribution, packaging, industrial gas turbine, and other
markets; (c) Alcoa’s inability to mitigate impacts from energy supply
interruptions or from increased energy, transportation, and raw
materials costs or other cost inflation; (d) Alcoa’s inability to
achieve the level of cash generation, return on capital improvement,
cost savings, or earnings or revenue growth anticipated by management in
connection with its restructuring, portfolio streamlining, and liquidity
strengthening actions; (e) Alcoa’s inability to complete its Brazilian
growth projects and portfolio streamlining projects or achieve
efficiency improvements at newly constructed or acquired facilities as
planned and by targeted completion dates; (f) unfavorable changes in
laws, governmental regulations or policies, foreign currency exchange
rates or competitive factors in the countries in which Alcoa operates;
(g) significant legal proceedings or investigations adverse to Alcoa,
including environmental, product liability, safety and health, and other
claims; and (h) the other risk factors summarized in Alcoa’s Form 10-K
for the year ended December 31, 2008, Form 10-Q for the quarter ended
March 31, 2009, and other reports filed with the Securities and Exchange
Commission.
|
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited) (a) (in millions, except per-share, share, and metric ton amounts) |
|||||||||||
| Quarter ended | |||||||||||
| June 30, | March 31, | June 30, | |||||||||
| 2008 (b) | 2009 | 2009 | |||||||||
| Sales | $ | 7,245 | $ | 4,147 | $ | 4,244 | |||||
| Cost of goods sold (exclusive of expenses below) | 5,723 | 4,143 | 3,966 | ||||||||
| Selling, general administrative, and other expenses | 298 | 244 | 240 | ||||||||
| Research and development expenses | 61 | 41 | 38 | ||||||||
| Provision for depreciation, depletion, and amortization | 317 | 283 | 317 | ||||||||
| Restructuring and other charges | – | 69 | 82 | ||||||||
| Interest expense | 87 | 114 | 115 | ||||||||
| Other (income) expenses, net | (96 | ) | 30 | (89 | ) | ||||||
| Total costs and expenses | 6,390 | 4,924 | 4,669 | ||||||||
| Income (loss) from continuing operations before income taxes | 855 | (777 | ) | (425 | ) | ||||||
| Provision (benefit) for income taxes | 232 | (307 | ) | (108 | ) | ||||||
| Income (loss) from continuing operations | 623 | (470 | ) | (317 | ) | ||||||
| Loss from discontinued operations | (7 | ) | (17 | ) | (142 | ) | |||||
| Net income (loss) | 616 | (487 | ) | (459 | ) | ||||||
| Less: Net income (loss) attributable to noncontrolling interests | 70 | 10 | (5 | ) | |||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 546 | $ | (497 | ) | $ | (454 | ) | |||
| Amounts attributable to Alcoa common shareholders: | |||||||||||
| Income (loss) from continuing operations | $ | 553 | $ | (480 | ) | $ | (312 | ) | |||
| Loss from discontinued operations | (7 | ) | (17 | ) | (142 | ) | |||||
| Net income (loss) | $ | 546 | $ | (497 | ) | $ | (454 | ) | |||
|
Earnings (loss) per share attributable to Alcoa common
shareholders: |
|||||||||||
| Basic: | |||||||||||
| Income (loss) from continuing operations | $ | 0.68 | $ | (0.59 | ) | $ | (0.32 | ) | |||
| Loss from discontinued operations | (0.01 | ) | (0.02 | ) | (0.15 | ) | |||||
| Net income (loss) | $ | 0.67 | $ | (0.61 | ) | $ | (0.47 | ) | |||
| Diluted: | |||||||||||
| Income (loss) from continuing operations | $ | 0.67 | $ | (0.59 | ) | $ | (0.32 | ) | |||
| Loss from discontinued operations | (0.01 | ) | (0.02 | ) | (0.15 | ) | |||||
| Net income (loss) | $ | 0.66 | $ | (0.61 | ) | $ | (0.47 | ) | |||
| Average number of shares used to compute: | |||||||||||
| Basic earnings per common share | 815,990,095 | 816,743,426 | 974,279,655 | ||||||||
| Diluted earnings per common share | 825,387,079 | 816,743,426 | 974,279,655 | ||||||||
| Shipments of aluminum products (metric tons) | 1,407,000 | 1,175,000 | 1,288,000 | ||||||||
| (a) |
On January 1, 2009, Alcoa adopted Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51,” the provisions of which, among others, requires that minority interests be renamed noncontrolling interests and that a company present a consolidated net income (loss) measure that includes the amount attributable to such noncontrolling interests for all periods presented. |
|
| (b) |
The Statement of Consolidated Operations for the quarter ended June 30, 2008 was reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth quarter of 2008. |
|
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited), continued (a) (in millions, except per-share, share, and metric ton amounts) |
|||||||
| Six months ended | |||||||
| June 30, | |||||||
| 2008 (c) | 2009 | ||||||
| Sales | $ | 14,243 | $ | 8,391 | |||
| Cost of goods sold (exclusive of expenses below) | 11,250 | 8,109 | |||||
| Selling, general administrative, and other expenses | 619 | 484 | |||||
| Research and development expenses | 124 | 79 | |||||
| Provision for depreciation, depletion, and amortization | 631 | 600 | |||||
| Restructuring and other charges | 38 | 151 | |||||
| Interest expense | 186 | 229 | |||||
| Other income, net | (38 | ) | (59 | ) | |||
| Total costs and expenses | 12,810 | 9,593 | |||||
| Income (loss) from continuing operations before income taxes | 1,433 | (1,202 | ) | ||||
| Provision (benefit) for income taxes | 444 | (415 | ) | ||||
| Income (loss) from continuing operations | 989 | (787 | ) | ||||
| Loss from discontinued operations | (3 | ) | (159 | ) | |||
| Net income (loss) | 986 | (946 | ) | ||||
| Less: Net income attributable to noncontrolling interests | 137 | 5 | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 849 | $ | (951 | ) | ||
| Amounts attributable to Alcoa common shareholders: | |||||||
| Income (loss) from continuing operations | $ | 852 | $ | (792 | ) | ||
| Loss from discontinued operations | (3 | ) | (159 | ) | |||
| Net income (loss) | $ | 849 | $ | (951 | ) | ||
| Earnings (loss) per share attributable to Alcoa common shareholders: | |||||||
| Basic: | |||||||
| Income (loss) from continuing operations | $ | 1.04 | $ | (0.89 | ) | ||
| Loss from discontinued operations | – | (0.17 | ) | ||||
| Net income (loss) | $ | 1.04 | $ | (1.06 | ) | ||
| Diluted: | |||||||
| Income (loss) from continuing operations | $ | 1.03 | $ | (0.89 | ) | ||
| Loss from discontinued operations | – | (0.17 | ) | ||||
| Net income (loss) | $ | 1.03 | $ | (1.06 | ) | ||
| Average number of shares used to compute: | |||||||
| Basic earnings per common share | 817,218,002 | 895,919,914 | |||||
| Diluted earnings per common share | 825,598,896 | 895,919,914 | |||||
| Common stock outstanding at the end of the period | 815,303,690 | 974,286,776 | |||||
| Shipments of aluminum products (metric tons) | 2,764,000 | 2,463,000 | |||||
| (c) |
The Statement of Consolidated Operations for the six months ended June 30, 2008 was reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth quarter of 2008. |
|
Alcoa and subsidiaries Consolidated Balance Sheet (unaudited) (in millions) |
|||||||
|
|
December 31,
2008 |
June 30,
2009 |
|||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 762 | $ | 851 | |||
|
Receivables from customers, less allowances of $65 in 2008 and $72 |
1,883 | 1,611 | |||||
| Other receivables | 708 | 1,246 | |||||
| Inventories | 3,238 | 2,493 | |||||
| Fair value of hedged aluminum | 586 | 199 | |||||
| Prepaid expenses and other current assets | 973 | 1,059 | |||||
| Total current assets | 8,150 | 7,459 | |||||
| Properties, plants, and equipment | 31,301 | 33,844 | |||||
| Less: accumulated depreciation, depletion, and amortization | 13,846 | 14,811 | |||||
| Properties, plants, and equipment, net | 17,455 | 19,033 | |||||
| Goodwill | 4,981 | 5,032 | |||||
| Investments | 1,915 | 850 | |||||
| Deferred income taxes | 2,688 | 2,594 | |||||
| Other assets | 2,386 | 2,526 | |||||
| Assets held for sale | 247 | 176 | |||||
| Total assets | $ | 37,822 | $ | 37,670 | |||
| LIABILITIES | |||||||
| Current liabilities: | |||||||
| Short-term borrowings | $ | 478 | $ | 663 | |||
| Commercial paper | 1,535 | 100 | |||||
| Accounts payable, trade | 2,518 | 1,838 | |||||
| Accrued compensation and retirement costs | 866 | 825 | |||||
| Taxes, including income taxes | 378 | 363 | |||||
| Fair value of derivative contracts | 461 | 199 | |||||
| Other current liabilities | 987 | 952 | |||||
| Long-term debt due within one year | 56 | 115 | |||||
| Total current liabilities | 7,279 | 5,055 | |||||
| Long-term debt, less amount due within one year | 8,509 | 9,387 | |||||
| Accrued pension benefits | 2,941 | 2,855 | |||||
| Accrued postretirement benefits | 2,730 | 2,723 | |||||
| Other noncurrent liabilities and deferred credits | 1,580 | 1,659 | |||||
| Deferred income taxes | 321 | 387 | |||||
| Liabilities of operations held for sale | 130 | 64 | |||||
| Total liabilities | 23,490 | 22,130 | |||||
| EQUITY (d) | |||||||
| Alcoa shareholders’ equity: | |||||||
| Preferred stock | 55 | 55 | |||||
| Common stock | 925 | 1,097 | |||||
| Additional capital | 5,850 | 6,601 | |||||
| Retained earnings | 12,400 | 11,281 | |||||
| Treasury stock, at cost | (4,326 | ) | (4,272 | ) | |||
| Accumulated other comprehensive loss | (3,169 | ) | (1,986 | ) | |||
| Total Alcoa shareholders’ equity | 11,735 | 12,776 | |||||
| Noncontrolling interests | 2,597 | 2,764 | |||||
| Total equity | 14,332 | 15,540 | |||||
| Total liabilities and equity | $ | 37,822 | $ | 37,670 | |||
| (d) |
On January 1, 2009, Alcoa adopted Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51,” the provisions of which, among others, requires that minority interests be renamed noncontrolling interests and that a company present such noncontrolling interests as equity for all periods presented. |
|
Alcoa and subsidiaries Statement of Consolidated Cash Flows (unaudited) (e) (in millions) |
|||||||
|
Six months ended
June 30, |
|||||||
| 2008 (f) | 2009 | ||||||
| CASH FROM OPERATIONS | |||||||
| Net income (loss) | $ | 986 | $ | (946 | ) | ||
| Adjustments to reconcile net income (loss) to cash from operations: | |||||||
| Depreciation, depletion, and amortization | 631 | 600 | |||||
| Deferred income taxes | (183 | ) | (22 | ) | |||
| Equity (income) loss, net of dividends | (46 | ) | 16 | ||||
| Restructuring and other charges | 38 | 151 | |||||
| Gains from investing activities – asset sales | (8 | ) | (17 | ) | |||
| Provision for doubtful accounts | 4 | 9 | |||||
| Loss from discontinued operations | 3 | 159 | |||||
| Stock-based compensation | 70 | 53 | |||||
| Excess tax benefits from stock-based payment arrangements | (15 | ) | – | ||||
| Other | 2 | 105 | |||||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
|||||||
| (Increase) decrease in receivables | (209 | ) | 428 | ||||
| (Increase) decrease in inventories | (349 | ) | 942 | ||||
| (Increase) decrease in prepaid expenses and other current assets | (124 | ) | 114 | ||||
| Increase (decrease) in accounts payable, trade | 210 | (690 | ) | ||||
| (Decrease) in accrued expenses | (219 | ) | (280 | ) | |||
| Increase (decrease) in taxes, including income taxes | 54 | (479 | ) | ||||
| Pension contributions | (67 | ) | (69 | ) | |||
| (Increase) in noncurrent assets | (66 | ) | (133 | ) | |||
| Increase in noncurrent liabilities | 9 | 112 | |||||
| (Increase) decrease in net assets held for sale | (1 | ) | 14 | ||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 720 | 67 | |||||
| CASH USED FOR DISCONTINUED OPERATIONS | (1 | ) | (10 | ) | |||
| CASH PROVIDED FROM OPERATIONS | 719 | 57 | |||||
| FINANCING ACTIVITIES | |||||||
| Net change in short-term borrowings | 30 | 189 | |||||
| Net change in commercial paper | 343 | (1,435 | ) | ||||
| Additions to long-term debt | 432 | 905 | |||||
| Debt issuance costs | (6 | ) | (17 | ) | |||
| Payments on long-term debt | (190 | ) | (23 | ) | |||
| Proceeds from exercise of employee stock options | 176 | – | |||||
| Excess tax benefits from stock-based payment arrangements | 15 | – | |||||
| Issuance of common stock | – | 876 | |||||
| Repurchase of common stock | (605 | ) | – | ||||
| Dividends paid to shareholders | (280 | ) | (168 | ) | |||
| Dividends paid to noncontrolling interests | (117 | ) | (79 | ) | |||
| Contributions from noncontrolling interests | 299 | 253 | |||||
| CASH PROVIDED FROM FINANCING ACTIVITIES | 97 | 501 | |||||
| INVESTING ACTIVITIES | |||||||
| Capital expenditures | (1,533 | ) | (884 | ) | |||
| Capital expenditures of discontinued operations | (11 | ) | (5 | ) | |||
| Acquisitions, net of cash acquired (g) | (276 | ) | 15 | ||||
| Acquisitions of noncontrolling interests | (94 | ) | – | ||||
| Proceeds from the sale of assets and businesses (h) | 2,636 | (78 | ) | ||||
| Additions to investments (i) | (1,237 | ) | 4 | ||||
| Sales of investments | 5 | 506 | |||||
| Net change in short-term investments and restricted cash | (2 | ) | (50 | ) | |||
| Other | (18 | ) | (5 | ) | |||
| CASH USED FOR INVESTING ACTIVITIES | (530 | ) | (497 | ) | |||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
46 |
28 |
|||||
| Net change in cash and cash equivalents | 332 | 89 | |||||
| Cash and cash equivalents at beginning of year | 483 | 762 | |||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 815 | $ | 851 | |||
| (e) |
On January 1, 2009, Alcoa adopted Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51,” the provisions of which, among others, requires that minority interests be renamed noncontrolling interests for all periods presented. |
|
| (f) |
The Statement of Consolidated Cash Flows for the six months ended June 30, 2008 was reclassified to reflect the movement of the Electrical and Electronic Solutions business to held for sale and discontinued operations and the Global Foil and Transportation Products Europe businesses to held for sale, all of which occurred in the fourth quarter of 2008. |
|
| (g) |
Acquisitions, net of cash acquired for the six months ended June 30, 2009 is a cash inflow as this line item includes cash acquired in the exchange of Alcoa’s 45.45% stake in the Sapa AB joint venture for Orkla ASA’s 50% stake in the Elkem Aluminium ANS joint venture, which was completed on March 31, 2009. |
|
| (h) |
Proceeds from the sale of assets and businesses for the six months ended June 30, 2009 is a cash outflow as this line item includes cash paid to Platinum Equity related to the divestiture of the Electrical and Electronic Solutions’ wire harness and electrical distribution business, which was completed on June 15, 2009 with an effective date of June 1, 2009. |
|
| (i) |
Additions to investments for the six months ended June 30, 2009 is a cash inflow as this line item includes the return of a portion of the contributions made in prior periods related to one of Alcoa Alumínio’s hydroelectric power projects. All contributions related to this project were originally presented as cash outflows in Additions to investments in the appropriate periods. |
|
Alcoa and subsidiaries Segment Information (unaudited)
(dollars in millions, except realized prices; production and |
||||||||||||||||||||||||
| 1Q08 | 2Q08 | 3Q08 | 4Q08 | 2008 | 1Q09 | 2Q09 | ||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||
| Alumina production (kmt) | 3,870 | 3,820 | 3,790 | 3,776 | 15,256 | 3,445 | 3,309 | |||||||||||||||||
| Third-party alumina shipments (kmt) | 1,995 | 1,913 | 2,010 | 2,123 | 8,041 | 1,737 | 2,011 | |||||||||||||||||
| Third-party sales | $ | 680 | $ | 717 | $ | 805 | $ | 722 | $ | 2,924 | $ | 430 | $ | 441 | ||||||||||
| Intersegment sales | $ | 667 | $ | 766 | $ | 730 | $ | 640 | $ | 2,803 | $ | 384 | $ | 306 | ||||||||||
| Equity income | $ | 2 | $ | 2 | $ | 2 | $ | 1 | $ | 7 | $ | 2 | $ | 1 | ||||||||||
| Depreciation, depletion, and amortization | $ | 74 | $ | 67 | $ | 68 | $ | 59 | $ | 268 | $ | 55 | $ | 67 | ||||||||||
| Income taxes | $ | 57 | $ | 67 | $ | 91 | $ | 62 | $ | 277 | $ | (1 | ) | $ | (21 | ) | ||||||||
| After-tax operating income (ATOI) | $ | 169 | $ | 190 | $ | 206 | $ | 162 | $ | 727 | $ | 35 | $ | (7 | ) | |||||||||
| Primary Metals: | ||||||||||||||||||||||||
| Aluminum production (kmt) | 995 | 1,030 | 1,011 | 971 | 4,007 | 880 | 906 | |||||||||||||||||
| Third-party aluminum shipments (kmt) | 665 | 750 | 704 | 807 | 2,926 | 683 | 779 | |||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,801 |
$ |
3,058 |
$ |
2,945 |
$ |
2,125 |
$ |
2,714 |
$ |
1,567 |
$ |
1,667 |
||||||||||
| Third-party sales | $ | 1,877 | $ | 2,437 | $ | 2,127 | $ | 1,580 | $ | 8,021 | $ | 844 | $ | 1,146 | ||||||||||
| Intersegment sales | $ | 1,105 | $ | 1,108 | $ | 1,078 | $ | 636 | $ | 3,927 | $ | 393 | $ | 349 | ||||||||||
| Equity income (loss) | $ | 9 | $ | 10 | $ | 1 | $ | (18 | ) | $ | 2 | $ | (30 | ) | $ | 4 | ||||||||
| Depreciation, depletion, and amortization | $ | 124 | $ | 128 | $ | 131 | $ | 120 | $ | 503 | $ | 122 | $ | 139 | ||||||||||
| Income taxes | $ | 116 | $ | 131 | $ | 29 | $ | (104 | ) | $ | 172 | $ | (147 | ) | $ | (119 | ) | |||||||
| ATOI | $ | 307 | $ | 428 | $ | 297 | $ | (101 | ) | $ | 931 | $ | (212 | ) | $ | (178 | ) | |||||||
| Flat-Rolled Products (1): | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 589 | 571 | 562 | 499 | 2,221 | 442 | 448 | |||||||||||||||||
| Third-party sales | $ | 2,336 | $ | 2,363 | $ | 2,343 | $ | 1,924 | $ | 8,966 | $ | 1,510 | $ | 1,427 | ||||||||||
| Intersegment sales | $ | 66 | $ | 65 | $ | 52 | $ | 35 | $ | 218 | $ | 26 | $ | 23 | ||||||||||
| Depreciation, depletion, and amortization | $ | 55 | $ | 59 | $ | 51 | $ | 51 | $ | 216 | $ | 52 | $ | 55 | ||||||||||
| Income taxes | $ | 18 | $ | 20 | $ | 18 | $ | (21 | ) | $ | 35 | $ | – | $ | (1 | ) | ||||||||
| ATOI | $ | 33 | $ | 48 | $ | 22 | $ | (106 | ) | $ | (3 | ) | $ | (61 | ) | $ | (35 | ) | ||||||
| Engineered Products and Solutions (1), (2): | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 69 | 69 | 63 | 56 | 257 | 41 | 50 | |||||||||||||||||
| Third-party sales | $ | 1,551 | $ | 1,660 | $ | 1,596 | $ | 1,392 | $ | 6,199 | $ | 1,270 | $ | 1,194 | ||||||||||
|
Depreciation, depletion, and amortization |
$ | 42 | $ | 41 | $ | 41 | $ | 41 | $ | 165 | $ | 40 | $ | 46 | ||||||||||
| Income taxes | $ | 60 | $ | 75 | $ | 60 | $ | 27 | $ | 222 | $ | 46 | $ | 40 | ||||||||||
| ATOI | $ | 148 | $ | 172 | $ | 140 | $ | 73 | $ | 533 | $ | 95 | $ | 88 | ||||||||||
| Packaging and Consumer (3): | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 19 | – | – | – | 19 | – | – | |||||||||||||||||
| Third-party sales | $ | 497 | $ | 19 | $ | – | $ | – | $ | 516 | $ | – | $ | – | ||||||||||
| Depreciation, depletion, and amortization | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
| Income taxes | $ | 10 | $ | – | $ | – | $ | – | $ | 10 | $ | – | $ | – | ||||||||||
| ATOI | $ | 11 | $ | – | $ | – | $ | – | $ | 11 | $ | – | $ | – | ||||||||||
|
Alcoa and subsidiaries Segment Information (unaudited), continued (in millions) |
|||||||||||||||||||||||||||
|
Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa: |
1Q08 | 2Q08 | 3Q08 | 4Q08 | 2008 | 1Q09 | 2Q09 | ||||||||||||||||||||
| Total segment ATOI | $ | 668 | $ | 838 | $ | 665 | $ | 28 | $ | 2,199 | $ | (143 | ) | $ | (132 | ) | |||||||||||
| Unallocated amounts (net of tax): | |||||||||||||||||||||||||||
| Impact of LIFO | (31 | ) | (44 | ) | (5 | ) | 73 | (7 | ) | 29 | 39 | ||||||||||||||||
| Interest income | 9 | 12 | 10 | 4 | 35 | 1 | 8 | ||||||||||||||||||||
| Interest expense | (64 | ) | (57 | ) | (63 | ) | (81 | ) | (265 | ) | (74 | ) | (75 | ) | |||||||||||||
| Noncontrolling interests (4) | (67 | ) | (70 | ) | (84 | ) | – | (221 | ) | (10 | ) | 5 | |||||||||||||||
| Corporate expense | (82 | ) | (91 | ) | (77 | ) | (78 | ) | (328 | ) | (71 | ) | (70 | ) | |||||||||||||
| Restructuring and other charges | (30 | ) | (1 | ) | (25 | ) | (637 | ) | (693 | ) | (46 | ) | (56 | ) | |||||||||||||
| Discontinued operations | 4 | (7 | ) | (38 | ) | (262 | ) | (303 | ) | (17 | ) | (142 | ) | ||||||||||||||
| Other | (104 | ) | (34 | ) | (115 | ) | (238 | ) | (491 | ) | (166 | ) | (31 | ) | |||||||||||||
| Consolidated net income (loss) attributable to Alcoa |
$ |
303 |
$ |
546 |
$ |
268 |
$ |
(1,191 |
) |
$ |
(74 |
) |
$ |
(497 |
) |
$ |
(454 |
) |
|||||||||
|
The difference between certain segment totals and consolidated amounts is in Corporate. |
||
| (1) |
In the second quarter of 2009, management approved the movement of Alcoa’s hard alloy extrusions business from the Flat-Rolled Products segment to the Engineered Products and Solutions segment. This move was made to capture market, customer, and manufacturer synergies through the combination of the hard alloy extrusions business with the power and propulsion forgings business. Prior period amounts were reclassified to reflect this change. |
|
| (2) |
Prior period segment information for Engineered Products and Solutions was reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth quarter of 2008. |
|
| (3) |
On February 29, 2008, Alcoa completed the sale of its packaging and consumer businesses to Rank Group Limited. The Packaging and Consumer segment no longer contains any operations. |
|
| (4) |
On January 1, 2009, Alcoa adopted Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51,” the provisions of which, among others, requires that minority interests be renamed noncontrolling interests for all periods presented. |
|
|
Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (in millions, except per-share amounts) |
|||||||||
| Adjusted Loss |
Quarter ended June 30, 2009 |
||||||||
| Loss | Loss per share | ||||||||
| Net loss attributable to Alcoa | $ | (454 | ) | $ | (0.47 | ) | |||
| Loss from discontinued operations | (142 | ) | |||||||
| Loss from continuing operations attributable to Alcoa | (312 | ) | (0.32 | ) | |||||
| Restructuring and other charges | 56 | ||||||||
| Loss from continuing operations attributable to Alcoa – as adjusted |
$ |
(256 |
) |
(0.26 |
) |
||||
|
Loss from continuing operations attributable to Alcoa – as |
| Free Cash Flow | ||||||||||||
| Quarter ended | ||||||||||||
|
March 31,
2009 |
June 30,
2009 |
Change |
||||||||||
| Cash from operations | $ | (271 | ) | $ | 328 | $ | 599 | |||||
| Total capital expenditures | (471 | ) | (418 | ) | 53 | |||||||
| Free cash flow | $ | (742 | ) | $ | (90 | ) | $ | 652 | ||||
|
Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. |