Highlights:
- Cash from operations in 4Q09 of $1.1 billion.
-
Free cash flow (FCF) of $761 million; FCF positive for first time
since 2Q08. - Exceeded every operational cash sustainability target in 2009.
- Loss from continuing operations of $266 million, or $0.27 per share.
-
Net charges for restructuring, special items and discrete tax items
were $275 million, or $0.28 per share, in 4Q09. -
Excluding these charges, Company had 2nd consecutive
profitable quarter. - Revenues of $5.4 billion, up 18 percent from 3Q09.
- Strong liquidity with $1.5 billion of cash on hand.
-
Debt-to-cap ratio down to 38.6 percent, 390 basis point improvement
from year ago. - Total debt reduced by $759 million since end of 2008.
-
Finished 2009 with stronger portfolio, growth opportunities and
operations.
NEW YORK–Alcoa (NYSE: AA) today announced it finished its fourth quarter 2009
free cash flow positive, the first such quarterly achievement since the
second quarter of 2008 when the economic downturn began to impact
results. The Company is ahead of its key financial goals for 2009,
including being free cash flow neutral by the end of the year. In the
fourth quarter of 2009, Alcoa generated free cash flow of $761 million,
a $947 million improvement from the third quarter of 2009 driven by
strong cash from operations performance of $1.1 billion, a $940 million
increase from the third quarter of 2009. The Company also surpassed
targets for each of its Cash Sustainability Program initiatives in 2009,
a major contributor to the strong cash performance.
The fourth quarter of 2009 showed a loss from continuing operations of
$266 million, or $0.27 per share. The results include net charges for
restructuring, special items and discrete tax items of $275 million, or
$0.28 per share. Excluding these charges, the Company demonstrated its
second consecutive profitable quarter. The third quarter of 2009 had
income from continuing operations of $73 million, or $0.07 per share.
The fourth quarter of 2008 showed a loss from continuing operations of
$929 million, or $1.16 per share.
“This was a tough year for the aluminum industry – a price crash, demand
destruction, and credit crunch. Yet, today Alcoa is stronger than when
the year started,” said Klaus Kleinfeld, Alcoa President and CEO. “We
reshaped our cost structure and portfolio for profitable growth. And, we
built the cash reserves to weather current economic uncertainties and
invest in opportunities for future growth. Alcoa will benefit from those
achievements for many years to come.”
Net income for the fourth quarter 2009 was a loss of $277 million, or
$0.28 per share which includes the unfavorable impact of $275 million,
or $0.28 per share, for restructuring, special items and discrete tax
items. Net income for the third quarter 2009 was $77 million, or $0.08
per share, and net income for the fourth quarter of 2008 was a loss of
$1.19 billion, or $1.49 per share.
Revenues for the fourth quarter 2009 were $5.4 billion, an 18 percent
increase from the third quarter of 2009. All markets but aerospace,
commercial building and construction, and industrial gas turbines
improved from the previous quarter. Revenues in the fourth quarter 2008
were $5.7 billion.
The Company exceeded all targets on its Cash Sustainability Program for
the year. The Company reduced overhead by $412 million, more than 200
percent of the 2009 target. Procurement spending was reduced by $2
billion in 2009, $500 million above the target for the year. Reductions
in working capital generated more than $1.3 billion in cash or more than
$500 million above the 2009 target of $800 million.
“The Cash Sustainability Program is an extraordinary success, exceeding
every target we set. We asked a lot of Alcoa’s employees around the
world. Their creativity, initiative and hard work turned crisis into
opportunity,” said Kleinfeld. “Facing continued headwinds from energy
and currency costs, the entire Company is committed to continuing those
efforts in 2010.”
Cash from operations in the quarter was $1.1 billion compared with $184
million in the third quarter of 2009 and $608 million in the fourth
quarter of 2008. The Company finished the fourth quarter of 2009 with
$1.5 billion of cash on hand. The Company’s debt-to-capital ratio stood
at 38.6 percent at the end of the quarter, a 390 basis point improvement
from a year ago. During the year, Alcoa reduced its total debt by $759
million from the end of 2008.
Capital expenditures in the quarter were $363 million and $1.6 billion
for the year, a more than 50 percent reduction from 2008. Despite the
capital expenditure reductions, the Company completed a number of
important projects that will have a major impact on future growth and
profitability. Key growth investments in 2009 include the Juruti bauxite
mine and Sao Luis refinery expansion in Brazil; new lithographic sheet
operations in Bohai, China; and a new end and tab line in Russia. These
investments in three major growth regions will lower costs and position
the Company well for growth as markets improve in those areas. In 2009,
Alcoa also secured long-term power agreements on approximately 2.0
million metric tons of its smelting operations in Quebec, Spain,
Massena, NY, and Ferndale, WA.
In 2009, Alcoa also reshaped its portfolio to focus on key strategic
assets and industry-leading businesses. Early in the year, the Company
completed a non-cash swap of its interest in the SAPA soft alloy
extrusions joint venture for 282,000 metric tons per year (mtpy) of
smelting with long-term, clean power contracts and an anode business
that serves the Norway and Iceland operations. It also acquired the
minority partner’s position in its Suriname operations. The Company also
completed the sale of non-core and underperforming assets, including the
electrical and electronic solutions business, resulting in a portfolio
containing more than 90 percent of its businesses number one or two in
their markets.
In December, the Company announced the formation of a joint venture with
the Saudi Arabian Mining Company (Ma’aden) to develop an aluminum
complex in the Kingdom of Saudi Arabia. In addition to being the world’s
preeminent and lowest-cost supplier of primary aluminum, alumina and
aluminum products, the joint venture will also have access to the
growing markets of the Middle East and beyond and will be capable of
future expansion. In its initial phases, the joint venture will develop
a fully integrated industrial complex, including a 4 million mtpy
bauxite mine; a 1.8 million mtpy alumina refinery; a 740,000 mtpy
smelter; and a 250,000-460,000 mtpy rolling mill. Ma’aden will own 60
percent of the joint venture and Alcoa will control 40 percent through
an investment partnership that includes Alumina Ltd, through AWAC, and
other regional investors. Alcoa’s capital commitment will total $900
million over the next four years and the joint venture will utilize
project financing of 60 percent of total capital.
For the full year 2009, revenues were $18.4 billion, compared to $26.9
billion in 2008. Income from continuing operations for 2009 showed a
loss of $985 million, or $1.06 per share, compared with income of $229
million, or $0.27 per share, in 2008. The full year 2009 showed a net
loss of $1.15 billion, or $1.23 per share, compared to a net loss of $74
million, or $0.10 per share, in 2008.
Segment Results
Alumina
After tax operating income (ATOI) in the fourth quarter was $19 million,
a decline of $46 million compared with third quarter ATOI of $65
million. The prior period included a $58 million benefit from the
Company’s acquisition of the remaining share of its business in
Suriname. Increased pricing and all-time record production and third
party shipments, along with lower costs driven by productivity and lower
caustic prices, were partially offset by a weaker U.S. dollar.
Additionally, a tax settlement related to an equity investment in Brazil
yielded a $30 million charge while Juruti start-up costs negatively
affected the segment by $14 million sequentially.
Primary Metals
ATOI in the fourth quarter was a loss of $214 million, which includes
$250 million in charges related to the recent European Commission’s
ruling on electricity tariffs affecting the Company’s Italian smelters.
Results were impacted by an additional $23 million as a result of higher
energy costs in Italy since that ruling. Operationally, higher LME
prices and regional premiums were partially offset by unfavorable
currency movements and higher power costs, primarily at the Company’s
Italian smelters. Third-party realized metal prices increased nine
percent over the previous quarter. Primary metal production for the
quarter increased 16 thousand metric tons (kmt) to 897 kmt mainly due to
higher production at smelters in Spain and the U.S. Product purchased
and resold increased to 207 kmt during the quarter as the Company
satisfied several purchase commitments. Excluding the recently acquired
Norwegian smelters, production levels are 20 percent lower than second
quarter 2008 levels.
Flat-Rolled Products
ATOI in the fourth quarter was $37 million, a sequential increase of $27
million. Continued improvement in pricing in North American and select
European facilities combined with ongoing success of the cash
sustainability savings more than offset weak end-market conditions that
lowered shipments by two percent.
Engineered Products and Solutions
Fourth quarter ATOI of $57 million was 24 percent lower than the third
quarter. Continued de-stocking in aerospace and weakness in the building
and construction market coupled with further declines in industrial gas
turbines sales more than offset the benefit of marginally improved
commercial transportation markets and the benefits from cash
sustainability efforts.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
January 11, 2010 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 60,000 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 achieve the level of cash generation,
cost savings, improvement in profitability and margins, or strengthening
of operations anticipated by management from its cash sustainability,
productivity improvement and other initiatives; (d) Alcoa’s inability to
realize expected benefits from newly constructed, expanded or acquired
facilities or from international joint ventures as planned and by
targeted completion dates, including the new joint venture in Saudi
Arabia; (e) significant increases in power or energy costs or the
unavailability or interruption of energy supplies for Alcoa’s
operations; (f) political, economic and regulatory risks in the
countries in which Alcoa operates or sells products, including
unfavorable changes in laws and governmental policies and fluctuations
in foreign currency exchange rates and interest rates; (g) outcomes of
significant legal proceedings or investigations adverse to Alcoa; and
(h) the other risk factors summarized in Alcoa’s Form 10-K for the year
ended December 31, 2008, Forms 10-Q for the quarters ended March 31,
2009, June 30, 2009 and September 30, 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 | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| 2008 | 2009 | 2009 | ||||||||||
| Sales | $ | 5,688 | $ | 4,615 | $ | 5,433 | ||||||
| Cost of goods sold (exclusive of expenses below) | 5,277 | 3,888 | 4,905 | |||||||||
| Selling, general administrative, and other expenses | 273 | 234 | 291 | |||||||||
| Research and development expenses | 61 | 39 | 51 | |||||||||
| Provision for depreciation, depletion, and amortization | 292 | 342 | 369 | |||||||||
| Restructuring and other charges | 863 | 17 | 69 | |||||||||
| Interest expense | 125 | 120 | 121 | |||||||||
| Other (income) expenses, net | (36 | ) | (123 | ) | 21 | |||||||
| Total costs and expenses | 6,855 | 4,517 | 5,827 | |||||||||
| (Loss) income from continuing operations before income taxes | (1,167 | ) | 98 | (394 | ) | |||||||
| Benefit for income taxes | (238 | ) | (22 | ) | (137 | ) | ||||||
| (Loss) income from continuing operations | (929 | ) | 120 | (257 | ) | |||||||
| (Loss) income from discontinued operations | (262 | ) | 4 | (11 | ) | |||||||
| Net (loss) income | (1,191 | ) | 124 | (268 | ) | |||||||
| Less: Net income attributable to noncontrolling interests | – | 47 | 9 | |||||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA | $ | (1,191 | ) | $ | 77 | $ | (277 | ) | ||||
|
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| (Loss) income from continuing operations | $ | (929 | ) | $ | 73 | $ | (266 | ) | ||||
| (Loss) income from discontinued operations | (262 | ) | 4 | (11 | ) | |||||||
| Net (loss) income | $ | (1,191 | ) | $ | 77 | $ | (277 | ) | ||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS (b): |
||||||||||||
| Basic: | ||||||||||||
| (Loss) income from continuing operations | $ | (1.16 | ) | $ | 0.07 | $ | (0.27 | ) | ||||
| (Loss) income from discontinued operations | (0.33 | ) | 0.01 | (0.01 | ) | |||||||
| Net (loss) income | $ | (1.49 | ) | $ | 0.08 | $ | (0.28 | ) | ||||
| Diluted: | ||||||||||||
| (Loss) income from continuing operations | $ | (1.16 | ) | $ | 0.07 | $ | (0.27 | ) | ||||
| (Loss) income from discontinued operations | (0.33 | ) | 0.01 | (0.01 | ) | |||||||
| Net (loss) income | $ | (1.49 | ) | $ | 0.08 | $ | (0.28 | ) | ||||
| Average number of shares used to compute: | ||||||||||||
| Basic earnings per common share | 800,317,368 | 974,353,242 | 974,377,851 | |||||||||
| Diluted earnings per common share | 800,317,368 | 977,593,656 | 974,377,851 | |||||||||
| Shipments of aluminum products (metric tons) | 1,375,000 | 1,230,000 | 1,404,000 | |||||||||
|
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited), continued (a) (in millions, except per-share, share, and metric ton amounts) |
||||||||
| Year ended | ||||||||
| December 31, | ||||||||
| 2008 | 2009 | |||||||
| Sales | $ | 26,901 | $ | 18,439 | ||||
| Cost of goods sold (exclusive of expenses below) | 22,175 | 16,902 | ||||||
| Selling, general administrative, and other expenses | 1,167 | 1,009 | ||||||
| Research and development expenses | 246 | 169 | ||||||
| Provision for depreciation, depletion, and amortization | 1,234 | 1,311 | ||||||
| Restructuring and other charges | 939 | 237 | ||||||
| Interest expense | 407 | 470 | ||||||
| Other income, net | (59 | ) | (161 | ) | ||||
| Total costs and expenses | 26,109 | 19,937 | ||||||
| Income (loss) from continuing operations before income taxes | 792 | (1,498 | ) | |||||
| Provision (benefit) for income taxes | 342 | (574 | ) | |||||
| Income (loss) from continuing operations | 450 | (924 | ) | |||||
| Loss from discontinued operations | (303 | ) | (166 | ) | ||||
| Net income (loss) | 147 | (1,090 | ) | |||||
| Less: Net income attributable to noncontrolling interests | 221 | 61 | ||||||
| NET LOSS ATTRIBUTABLE TO ALCOA | $ | (74 | ) | $ | (1,151 | ) | ||
| AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: | ||||||||
| Income (loss) from continuing operations | $ | 229 | $ | (985 | ) | |||
| Loss from discontinued operations | (303 | ) | (166 | ) | ||||
| Net loss | $ | (74 | ) | $ | (1,151 | ) | ||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS (b): |
||||||||
| Basic: | ||||||||
| Income (loss) from continuing operations | $ | 0.27 | $ | (1.06 | ) | |||
| Loss from discontinued operations | (0.37 | ) | (0.17 | ) | ||||
| Net loss | $ | (0.10 | ) | $ | (1.23 | ) | ||
| Diluted: | ||||||||
| Income (loss) from continuing operations | $ | 0.27 | $ | (1.06 | ) | |||
| Loss from discontinued operations | (0.37 | ) | (0.17 | ) | ||||
| Net loss | $ | (0.10 | ) | $ | (1.23 | ) | ||
| Average number of shares used to compute: | ||||||||
| Basic earnings per common share | 810,496,653 | 935,457,676 | ||||||
| Diluted earnings per common share | 812,901,432 | 935,457,676 | ||||||
| Common stock outstanding at the end of the period | 800,317,368 | 974,378,820 | ||||||
| Shipments of aluminum products (metric tons) | 5,481,000 | 5,097,000 | ||||||
|
(a) |
On January 1, 2009, Alcoa adopted changes issued by the Financial |
|
| (b) |
On January 1, 2009, Alcoa adopted changes issued by the Financial Accounting Standards Board to the calculation of earnings per share. These changes state that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented. As a result, certain prior period earnings per share amounts were revised in accordance with this new guidance. |
|
|
Alcoa and subsidiaries Consolidated Balance Sheet (unaudited) (in millions) |
||||||||
|
|
December 31,
2008 |
December 31,
2009 |
||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 762 | $ | 1,481 | ||||
|
Receivables from customers, less allowances of $65 in 2008 and $70 |
1,883 | 1,529 | ||||||
| Other receivables | 708 | 653 | ||||||
| Inventories | 3,238 | 2,328 | ||||||
| Fair value of hedged aluminum | 586 | – | ||||||
| Prepaid expenses and other current assets | 973 | 1,031 | ||||||
| Total current assets | 8,150 | 7,022 | ||||||
| Properties, plants, and equipment | 31,301 | 35,462 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 13,846 | 15,697 | ||||||
| Properties, plants, and equipment, net | 17,455 | 19,765 | ||||||
| Goodwill | 4,981 | 5,106 | ||||||
| Investments | 1,915 | 1,061 | ||||||
| Deferred income taxes | 2,688 | 2,941 | ||||||
| Other noncurrent assets | 2,386 | 2,427 | ||||||
| Assets held for sale | 247 | 133 | ||||||
| Total assets | $ | 37,822 | $ | 38,455 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 478 | $ | 176 | ||||
| Commercial paper | 1,535 | – | ||||||
| Accounts payable, trade | 2,518 | 1,954 | ||||||
| Accrued compensation and retirement costs | 866 | 925 | ||||||
| Taxes, including income taxes | 378 | 345 | ||||||
| Fair value of derivative contracts | 461 | 127 | ||||||
| Other current liabilities | 987 | 1,218 | ||||||
| Long-term debt due within one year | 56 | 669 | ||||||
| Total current liabilities | 7,279 | 5,414 | ||||||
| Long-term debt, less amount due within one year | 8,509 | 8,974 | ||||||
| Accrued pension benefits | 2,941 | 3,113 | ||||||
| Accrued postretirement benefits | 2,730 | 2,696 | ||||||
| Other noncurrent liabilities and deferred credits | 1,901 | 2,606 | ||||||
| Liabilities of operations held for sale | 130 | 60 | ||||||
| Total liabilities | 23,490 | 22,863 | ||||||
| Convertible securities of subsidiary | – | 40 | ||||||
| EQUITY (c) | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 925 | 1,097 | ||||||
| Additional capital | 5,850 | 6,608 | ||||||
| Retained earnings | 12,400 | 11,020 | ||||||
| Treasury stock, at cost | (4,326 | ) | (4,268 | ) | ||||
| Accumulated other comprehensive loss | (3,169 | ) | (2,060 | ) | ||||
| Total Alcoa shareholders’ equity | 11,735 | 12,452 | ||||||
| Noncontrolling interests | 2,597 | 3,100 | ||||||
| Total equity | 14,332 | 15,552 | ||||||
| Total liabilities and equity | $ | 37,822 | $ | 38,455 | ||||
| (c) |
On January 1, 2009, Alcoa adopted changes issued by the Financial Accounting Standards Board to consolidation accounting and reporting. These changes, among others, require 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) (d) (in millions) |
||||||||
|
Year ended
December 31, |
||||||||
| 2008 | 2009 | |||||||
| CASH FROM OPERATIONS | ||||||||
| Net income (loss) | $ | 147 | $ | (1,090 | ) | |||
| Adjustments to reconcile net income (loss) to cash from operations: | ||||||||
| Depreciation, depletion, and amortization | 1,234 | 1,311 | ||||||
| Deferred income taxes | (261 | ) | (596 | ) | ||||
| Equity (income) loss, net of dividends | (48 | ) | 39 | |||||
| Restructuring and other charges | 939 | 237 | ||||||
| Gains from investing activities – asset sales | (50 | ) | (106 | ) | ||||
| Provision for doubtful accounts | 31 | 16 | ||||||
| Loss from discontinued operations | 303 | 166 | ||||||
| Stock-based compensation | 94 | 87 | ||||||
| Excess tax benefits from stock-based payment arrangements | (15 | ) | – | |||||
| Other | (237 | ) | 203 | |||||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
||||||||
| Decrease in receivables | 233 | 676 | ||||||
| (Increase) decrease in inventories | (353 | ) | 1,258 | |||||
| (Increase) decrease in prepaid expenses and other current assets | (97 | ) | 126 | |||||
| Increase (decrease) in accounts payable, trade | 21 | (632 | ) | |||||
| (Decrease) in accrued expenses | (288 | ) | (101 | ) | ||||
| Increase (decrease) in taxes, including income taxes | 28 | (144 | ) | |||||
| Pension contributions | (523 | ) | (128 | ) | ||||
| (Increase) in noncurrent assets | (242 | ) | (203 | ) | ||||
| Increase in noncurrent liabilities | 169 | 233 | ||||||
| Decrease in net assets held for sale | 16 | 27 | ||||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 1,101 | 1,379 | ||||||
| CASH PROVIDED FROM (USED FOR) DISCONTINUED OPERATIONS | 133 | (14 | ) | |||||
| CASH PROVIDED FROM OPERATIONS | 1,234 | 1,365 | ||||||
| FINANCING ACTIVITIES | ||||||||
| Net change in short-term borrowings | (96 | ) | (292 | ) | ||||
| Net change in commercial paper | 679 | (1,535 | ) | |||||
| Additions to long-term debt | 2,253 | 1,049 | ||||||
| Debt issuance costs | (56 | ) | (17 | ) | ||||
| Payments on long-term debt | (204 | ) | (156 | ) | ||||
| Proceeds from exercise of employee stock options | 177 | – | ||||||
| Excess tax benefits from stock-based payment arrangements | 15 | – | ||||||
| Issuance of common stock | – | 876 | ||||||
| Repurchase of common stock | (1,082 | ) | – | |||||
| Dividends paid to shareholders | (556 | ) | (228 | ) | ||||
| Dividends paid to noncontrolling interests | (295 | ) | (140 | ) | ||||
| Contributions from noncontrolling interests | 643 | 480 | ||||||
| CASH PROVIDED FROM FINANCING ACTIVITIES | 1,478 | 37 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (3,413 | ) | (1,617 | ) | ||||
| Capital expenditures of discontinued operations | (25 | ) | (5 | ) | ||||
| Acquisitions, net of cash acquired (e) | (276 | ) | 112 | |||||
| Acquisitions of noncontrolling interests | (141 | ) | – | |||||
| Proceeds from the sale of assets and businesses (f) | 2,710 | (65 | ) | |||||
| Additions to investments (g) | (1,303 | ) | (181 | ) | ||||
| Sales of investments | 72 | 1,031 | ||||||
| Other | (34 | ) | 4 | |||||
| CASH USED FOR INVESTING ACTIVITIES | (2,410 | ) | (721 | ) | ||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(23 |
) |
38 |
|||||
| Net change in cash and cash equivalents | 279 | 719 | ||||||
| Cash and cash equivalents at beginning of year | 483 | 762 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 762 | $ | 1,481 | ||||
| (d) |
On January 1, 2009, Alcoa adopted changes issued by the Financial Accounting Standards Board to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests for all periods presented. |
|
| (e) |
Acquisitions, net of cash acquired for the year ended December 31, 2009 was 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, and cash received in the acquisition of a BHP Billiton subsidiary that holds interests in four bauxite mines and one refining facility in the Republic of Suriname, which was completed on July 31, 2009. |
|
| (f) |
Proceeds from the sale of assets and businesses for the year ended December 31, 2009 was 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. |
|
| (g) |
Additions to investments for the year ended December 31, 2009 includes a cash inflow for 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 |
||||||||||||||||||||||||||||
| 4Q08 | 2008 | 1Q09 | 2Q09 | 3Q09 | 4Q09 | 2009 | ||||||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||||||
| Alumina production (kmt) | 3,776 | 15,256 | 3,445 | 3,309 | 3,614 | 3,897 | 14,265 | |||||||||||||||||||||
| Third-party alumina shipments (kmt) | 2,123 | 8,041 | 1,737 | 2,011 | 2,191 | 2,716 | 8,655 | |||||||||||||||||||||
| Third-party sales | $ | 722 | $ | 2,924 | $ | 430 | $ | 441 | $ | 530 | $ | 760 | $ | 2,161 | ||||||||||||||
| Intersegment sales | $ | 640 | $ | 2,803 | $ | 384 | $ | 306 | $ | 432 | $ | 412 | $ | 1,534 | ||||||||||||||
| Equity income | $ | 1 | $ | 7 | $ | 2 | $ | 1 | $ | 2 | $ | 3 | $ | 8 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 59 | $ | 268 | $ | 55 | $ | 67 | $ | 81 | $ | 89 | $ | 292 | ||||||||||||||
| Income taxes | $ | 62 | $ | 277 | $ | (1 | ) | $ | (21 | ) | $ | 13 | $ | (13 | ) | $ | (22 | ) | ||||||||||
| After-tax operating income (ATOI) | $ | 162 | $ | 727 | $ | 35 | $ | (7 | ) | $ | 65 | $ | 19 | $ | 112 | |||||||||||||
| Primary Metals: | ||||||||||||||||||||||||||||
| Aluminum production (kmt) | 971 | 4,007 | 880 | 906 | 881 | 897 | 3,564 | |||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 807 | 2,926 | 683 | 779 | 698 | 878 | 3,038 | |||||||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,125 |
$ |
2,714 |
$ |
1,567 |
$ |
1,667 |
$ |
1,972 |
$ |
2,155 |
$ |
1,856 |
||||||||||||||
| Third-party sales | $ | 1,580 | $ | 8,021 | $ | 844 | $ | 1,146 | $ | 1,362 | $ | 1,900 | $ | 5,252 | ||||||||||||||
| Intersegment sales | $ | 636 | $ | 3,927 | $ | 393 | $ | 349 | $ | 537 | $ | 557 | $ | 1,836 | ||||||||||||||
| Equity (loss) income | $ | (18 | ) | $ | 2 | $ | (30 | ) | $ | 4 | $ | – | $ | – | $ | (26 | ) | |||||||||||
| Depreciation, depletion, and amortization | $ | 120 | $ | 503 | $ | 122 | $ | 139 | $ | 143 | $ | 156 | $ | 560 | ||||||||||||||
| Income taxes | $ | (104 | ) | $ | 172 | $ | (147 | ) | $ | (119 | ) | $ | (52 | ) | $ | (47 | ) | $ | (365 | ) | ||||||||
| ATOI | $ | (101 | ) | $ | 931 | $ | (212 | ) | $ | (178 | ) | $ | (8 | ) | $ | (214 | ) | $ | (612 | ) | ||||||||
| Flat-Rolled Products (1): | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 499 | 2,221 | 442 | 448 | 476 | 465 | 1,831 | |||||||||||||||||||||
| Third-party sales | $ | 1,924 | $ | 8,966 | $ | 1,510 | $ | 1,427 | $ | 1,529 | $ | 1,603 | $ | 6,069 | ||||||||||||||
| Intersegment sales | $ | 35 | $ | 218 | $ | 26 | $ | 23 | $ | 34 | $ | 30 | $ | 113 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 51 | $ | 216 | $ | 52 | $ | 55 | $ | 60 | $ | 60 | $ | 227 | ||||||||||||||
| Income taxes | $ | (21 | ) | $ | 35 | $ | – | $ | (1 | ) | $ | 17 | $ | 32 | $ | 48 | ||||||||||||
| ATOI | $ | (106 | ) | $ | (3 | ) | $ | (61 | ) | $ | (35 | ) | $ | 10 | $ | 37 | $ | (49 | ) | |||||||||
|
Engineered Products and |
||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 56 | 257 | 41 | 50 | 43 | 46 | 180 | |||||||||||||||||||||
| Third-party sales | $ | 1,392 | $ | 6,199 | $ | 1,270 | $ | 1,194 | $ | 1,128 | $ | 1,097 | $ | 4,689 | ||||||||||||||
| Equity income | $ | – | $ | – | $ | – | $ | – | $ | 1 | $ | 1 |
$ |
2 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 41 | $ | 165 | $ | 40 | $ | 46 | $ | 41 | $ | 50 | $ | 177 | ||||||||||||||
| Income taxes | $ | 27 | $ | 222 | $ | 46 | $ | 40 | $ | 33 | $ | 20 | $ | 139 | ||||||||||||||
| ATOI | $ | 73 | $ | 533 | $ | 95 | $ | 88 | $ | 75 | $ | 57 | $ | 315 | ||||||||||||||
| Packaging and Consumer (2): | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | – | 19 | – | – | – | – | – | |||||||||||||||||||||
| Third-party sales | $ | – | $ | 516 | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
| Depreciation, depletion, and amortization | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
| Income taxes | $ | – | $ | 10 | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
| ATOI | $ | – | $ | 11 | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
|
Alcoa and subsidiaries Segment Information (unaudited), continued (in millions) |
||||||||||||||||||||||||||||
|
Reconciliation of ATOI to consolidated net (loss) income attributable to Alcoa: |
4Q08 | 2008 | 1Q09 | 2Q09 | 3Q09 | 4Q09 | 2009 | |||||||||||||||||||||
| Total segment ATOI | $ | 28 | $ | 2,199 | $ | (143 | ) | $ | (132 | ) | $ | 142 | $ | (101 | ) | $ | (234 | ) | ||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||||||
| Impact of LIFO | 73 | (7 | ) | 29 | 39 | 80 | 87 | 235 | ||||||||||||||||||||
| Interest income | 4 | 35 | 1 | 8 | (1 | ) | 4 | 12 | ||||||||||||||||||||
| Interest expense | (81 | ) | (265 | ) | (74 | ) | (75 | ) | (78 | ) | (79 | ) | (306 | ) | ||||||||||||||
| Noncontrolling interests (3) | – | (221 | ) | (10 | ) | 5 | (47 | ) | (9 | ) | (61 | ) | ||||||||||||||||
| Corporate expense | (78 | ) | (328 | ) | (71 | ) | (70 | ) | (71 | ) | (92 | ) | (304 | ) | ||||||||||||||
| Restructuring and other charges | (637 | ) | (693 | ) | (46 | ) | (56 | ) | (3 | ) | (50 | ) | (155 | ) | ||||||||||||||
| Discontinued operations | (262 | ) | (303 | ) | (17 | ) | (142 | ) | 4 | (11 | ) | (166 | ) | |||||||||||||||
| Other | (238 | ) | (491 | ) | (166 | ) | (31 | ) | 51 | (26 | ) | (172 | ) | |||||||||||||||
| Consolidated net (loss) income attributable to Alcoa |
$ |
(1,191 |
) |
$ |
(74 |
) |
$ |
(497 |
) |
$ |
(454 |
) |
$ |
77 |
$ |
(277 |
) |
$ |
(1,151 |
) |
||||||||
|
The difference between certain segment totals and consolidated |
||
| (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) |
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. |
|
| (3) |
On January 1, 2009, Alcoa adopted changes issued by the Financial Accounting Standards Board to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests for all periods presented. |
|
|
Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (in millions) |
|||||||||||
| Free Cash Flow | |||||||||||
| Quarter ended | |||||||||||
|
September 30,
2009 |
December 31,
2009 |
Change |
|||||||||
| Cash provided from operations | $ | 184 | $ | 1,124 | $ | 940 | |||||
| Capital expenditures | (370 | ) | (363 | ) | 7 | ||||||
| Free cash flow | $ | (186 | ) | $ | 761 | $ | 947 | ||||
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.