2013 Revenue of $23.0 billion Driven by Value-Add Businesses; Generated Positive Free Cash Flow for Fourth Consecutive Year
Forecasting 7 Percent Growth in Global Aluminum Demand in 2014
4Q 2013 Highlights
- Net loss of $2.3 billion, or $2.19 per share; excluding special items, net income of $40 million, or $0.04 per share
- $1.7 billion in non-cash goodwill impairment tied to legacy smelting acquisitions
- Solid revenue of $5.6 billion, despite 7 percent lower realized aluminum prices year-over-year
- Engineered Products and Solutions fourth quarter record after-tax operating income, up 20 percent year-over-year
- Upstream business improves performance for ninth consecutive quarter
- Cash from operations of $920 million, up $706 million sequentially
- Positive free cash flow of $498 million
- Strong liquidity with $1.4 billion cash on hand and the lowest year-end net debt since December 2006
- Record low 20 days working capital, a year-over-year decrease of 4 days, equal to approximately $240 million of cash
Full-Year 2013 Highlights
- Net loss of $2.3 billion, or $2.14 per share
- Excluding special items, net income of $357 million, or $0.33 per share, up 36 percent from 2012
- Revenue of $23.0 billion
- Record results in Engineered Products and Solutions
- Cash from operations of $1.6 billion
- Free cash flow of $385 million; fourth consecutive year of positive free cash flow generation
- $1.1 billion in year-over-year productivity gains
- 16 percent of Alcoa global smelting capacity offline
Alcoa (NYSE:AA) today reported solid operating performance in the fourth
quarter and full-year 2013 as the Company’s repositioning gains
traction, offset by special items primarily to address legacy matters in
the Primary Metals business. As a result, Alcoa reported a fourth
quarter 2013 net loss of $2.3 billion, or $2.19 per share.
Special items in fourth quarter 2013 totaled $2.4 billion and included a
non-cash goodwill impairment of $1.7 billion related to Primary Metals.
The impairment has no impact on the Company’s liquidity and does not
affect the ongoing operating performance of Primary Metals.
Excluding the negative impact of special items, Alcoa reported net
income of $40 million, or $0.04 per share, in fourth quarter 2013.
Engineered Products and Solutions (EPS) reported record fourth quarter
after-tax operating income (ATOI), the upstream business improved
performance for the ninth consecutive quarter, and all business segments
produced productivity gains in the fourth quarter. The Company reported
fourth quarter revenue of $5.6 billion.
“We delivered strong operating performance in the fourth quarter, led by
record downstream profitability, as our strategy to build-out the
value-add businesses and lower the cost base in the commodity segment
gains traction,” said Klaus Kleinfeld, Alcoa Chairman and Chief
Executive Officer. “In addition, we put a number of legacy matters
behind us, clearing a path for Alcoa’s continued transformation in
2014.” Kleinfeld added, “We started growing our value-add businesses and
lowering the cost base of our commodity businesses at the height of the
economic crisis. Today, this transformation is paying off, with the
value-add businesses driving 57 percent of our revenues and 80 percent
of our segment profits.”
Alcoa’s value-add businesses comprise EPS and Global Rolled Products.
In 2014, Alcoa projects global growth in the aerospace (7 percent to 8
percent), automotive (1 percent to 4 percent), packaging (2 percent to 3
percent), and building and construction (4 percent to 6 percent)
markets. After a strong 2013, Alcoa projects a steady commercial
transportation market (-1 percent to 3 percent), and a decline in the
industrial gas turbine market (-8 percent to -12 percent) on lower
orders for new gas turbines and spare parts.
Alcoa sees global aluminum demand growth of 7 percent in 2014, after 7
percent growth in 2013.
Fourth Quarter 2013 Results
Alcoa reported a fourth quarter 2013 net loss of $2.3 billion, or $2.19
per share, compared to net income of $24 million, or $0.02 per share, in
third quarter 2013 and $242 million, or $0.21 per share, in fourth
quarter 2012. Adjusted EBITDA in fourth quarter 2013 was $565 million,
compared to $675 million in third quarter 2013 and $597 million in
fourth quarter 2012.
Special items in fourth quarter 2013 reflect the results of the goodwill
impairment analysis that the Company performs annually. As a result of
this analysis, the Company recorded a non-cash goodwill impairment of
$1.7 billion related to its Primary Metals business for goodwill arising
primarily from the acquisitions of Alumax Inc. (1998) and Reynolds
Metals Company (2000), which included significant smelting assets. The
impairment is a result of unfavorable trends that impact the estimated
fair value of the Primary Metals business such as lower metal prices,
reduced operating margins and increased discount rates.
Other special items in fourth quarter 2013 included:
-
$361 million of non-cash discrete tax items, primarily for valuation
allowances recorded against certain deferred tax assets whose benefits
are unlikely to be realized, largely due to reduced earnings in the
Primary Metals business; -
$13 million non-cash charge to write-off certain upstream capital
projects no longer being pursued; -
$243 million charge in connection with the resolution of the U.S.
government investigations of the Alba matter (see “Alba Resolution”
below); -
$46 million of restructuring charges primarily tied to overhead cost
reductions across all business segments; and -
$9 million unfavorable impact tied to the temporary shutdown of one
smelter potline at the Ma’aden-Alcoa joint venture project.
Excluding special items, Alcoa reported fourth quarter 2013 net income
of $40 million, or $0.04 per share, compared to net income of $120
million, or $0.11 per share, in third quarter 2013. Sequentially,
results were affected by lower London Metal Exchange (LME) prices,
volume and cost headwinds, somewhat offset by productivity gains.
Excluding special items, fourth quarter 2013 results compare to net
income of $64 million, or $0.06 per share, in the year-ago period.
Fourth quarter 2013 revenue was $5.6 billion, compared with $5.8 billion
sequentially, and $5.9 billion in fourth quarter 2012, as realized
aluminum prices declined 1 percent sequentially, and 7 percent
year-over-year.
Alcoa generated $498 million in free cash flow in fourth quarter 2013.
Cash from operations was $920 million, up from $214 million
sequentially. The Company achieved an all-time low in days working
capital at 20 days, four days lower than fourth quarter 2012. This
milestone was the 17th successive year-over-year improvement
in days working capital and equates to approximately $240 million in
cash.
Alcoa also maintained its strong liquidity position, ending the quarter
with $1.4 billion cash on hand, up from $1.0 billion in third quarter
2013.
2013 Full-Year Results
In 2013, Alcoa reported a net loss of $2.3 billion, or $2.14 per share,
compared to 2012 net income of $191 million, or $0.18 per share.
Excluding the impact of special items, 2013 net income was $357 million,
or $0.33 per share, a 36 percent increase from $262 million, or $0.24
per share, in 2012. Full year net income, excluding special items,
increased on record EPS profitability and productivity savings,
partially offset by cost increases and lower metal prices.
Revenue in 2013 was $23.0 billion, compared to $23.7 billion in 2012 as
realized aluminum prices declined 4 percent year-over-year.
Alcoa executed against its financial targets, and for full-year 2013,
delivered $385 million in free cash flow, with cash from operations of
$1.6 billion. This is the fourth consecutive year Alcoa has generated
positive free cash flow even as LME prices reached four-year lows.
Alcoa achieved $1.1 billion year-over-year productivity savings
exceeding a $750 million annual target; managed growth capital
expenditures of $407 million against a $550 million annual plan and
controlled sustaining capital expenditures of $786 million against a
$1.0 billion annual plan. Progress on the Saudi Arabia joint venture
project is on track with $159 million invested in 2013 against a $350
million annual plan.
The Company reduced its total debt from $8.8 billion in 2012, to $8.3
billion in 2013, with year-end net debt of $6.9 billion, the lowest
since December 2006. Alcoa’s debt-to-capital ratio stood at 38.1
percent; excluding the impact of the goodwill impairment and deferred
tax valuation allowances, debt-to-capital was 34.8 percent. Net
debt-to-capital stood at 33.7 percent.
Segment Information
Engineered Products and Solutions
ATOI was a fourth quarter record of $168 million, down $24 million
sequentially and up $28 million, or 20 percent, year-over-year.
Sequentially, seasonal cost increases and unfavorable volume and
price/mix were somewhat offset by continued productivity improvements.
Days working capital improved by 3 days to a new record low.
Global Rolled Products
ATOI in the fourth quarter was $21 million, down from $71 million in
third quarter 2013, and $77 million in fourth quarter 2012.
Sequentially, seasonal volume and pricing headwinds in packaging, lower
aerospace volumes and mix, partially due to high OEM plate inventories,
as well as lower industrial volumes and prices were somewhat offset by
record automotive shipments. Days working capital was a record at 30
days, an improvement of 6 days compared with fourth quarter 2012.
Alumina
ATOI in the fourth quarter was $70 million, up from $67 million in
third quarter 2013, and up from $41 million in fourth quarter 2012. The
sequential increase was driven by strong productivity savings and energy
efficiency improvements, benchmark production levels, and sales at
Alumina Price Index-based pricing, despite higher energy costs and lower
LME-based prices. Adjusted EBITDA per metric ton was $46, up from $44 in
third quarter 2013 and up from $36 in fourth quarter 2012. Days working
capital remained at record lows, improving by 5 days compared with
fourth quarter 2012.
Primary Metals
ATOI in the fourth quarter was negative $35 million compared to $8
million in third quarter 2013 and $316 million in fourth quarter 2012,
which included a $275 million gain on the Tapoco Hydroelectric Project
asset sale. Lower LME and regional premium prices combined with a
potline outage at the Ma’aden-Alcoa joint venture to drive the
sequential decline, while strong productivity improvements and broad
cost cutting offset higher seasonal energy and other price increases.
Third-party realized price in the fourth quarter was $2,157 per metric
ton, down 1 percent sequentially. Adjusted EBITDA per metric ton
decreased to $87 from $154 in third quarter 2013, and down from $214 in
fourth quarter 2012. Days working capital improved by 4 days compared
with fourth quarter 2012, to a record 15 days.
Alba Resolution
Earlier today, Alcoa announced the resolution of the investigations by
the U.S. Department of Justice (DOJ) and the U.S. Securities and
Exchange Commission (SEC) regarding certain legacy alumina contracts
with Aluminium Bahrain B.S.C. (Alba).
The settlement with the DOJ was reached with Alcoa World Alumina LLC
(AWA). AWA is a company within Alcoa World Alumina and Chemicals (AWAC),
the unincorporated bauxite mining and alumina refining venture between
Alcoa Inc. and Alumina Limited. As part of the DOJ resolution, AWA will
pay a total of $223 million, including a fine of $209 million payable in
five equal installments over four years. The first installment of $41.8
million, plus a one-time administrative forfeiture of $14 million, will
be paid in the first quarter of 2014, and the remaining installments of
$41.8 million each will be paid in the first quarters of 2015-2018. The
$223 million amount is within the range previously disclosed by Alcoa.
During the second quarter of 2013, Alcoa recorded a $103 million charge
($62 million after non-controlling interest) for the DOJ investigation.
Under the terms of the DOJ resolution, AWA pled guilty to one count of
violating the anti-bribery provisions of the Foreign Corrupt Practices
Act (FCPA). The DOJ is bringing no case against Alcoa Inc.
Alcoa also settled civil charges filed by the SEC in an administrative
proceeding relating to the anti-bribery, internal controls, and books
and records provisions of the FCPA. Under the terms of the settlement
with the SEC, Alcoa Inc. agreed to a settlement amount of $175 million,
but will be given credit for the $14 million one-time forfeiture
payment, which is part of the DOJ resolution, resulting in a total cash
payment to the SEC of $161 million payable in five equal installments
over four years. The first installment of $32.2 million will be paid to
the SEC in the first quarter of 2014, and the remaining installments of
$32.2 million each will be paid in the first quarters of 2015-2018.
There is no allegation in the filings by the DOJ and there is no finding
by the SEC that anyone at Alcoa Inc. knowingly engaged in the conduct at
issue. The U.S. Government also recognized Alcoa for its cooperation and
compliance efforts.
AWA, owned 60% by Alcoa Inc. and 40% by Alumina Limited, is consolidated
by Alcoa for financial reporting purposes. As previously disclosed,
under an agreement between Alcoa Inc. and Alumina Limited, the costs
(including all associated legal fees) of the settlements with the DOJ
and SEC, as well as the $85 million civil settlement with Alba reached
in October 2012, will be allocated between Alcoa Inc. and Alumina
Limited on an 85% and 15% basis, respectively. As a result of the
settlements with the DOJ and the SEC, Alcoa has recorded a charge of
$288 million ($243 million after-tax and non-controlling interest, which
includes $107 million to reflect the impact of the allocation agreement
between Alcoa and Alumina Limited) in the fourth quarter of 2013. Taking
into account the fourth-quarter charge, Alcoa has recognized all costs
associated with the resolution of the Alba civil suit and related
government investigations.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on January 9, 2014 to present the quarter and full-year 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 a global innovation leader in lightweight metals, products and
solutions. Its technology, expertise and industry reach continue to
advance automotive and aerospace transportation, building and
construction, consumer electronics and packaging, defense applications
across air, land and sea, and the oil and gas industry. Alcoa pioneered
the modern-day aluminum industry 125 years ago and today is a leader in
delivering value-add products made from a range of lightweight metals
and flat-rolled aluminum. Alcoa is also a world leading producer of
primary aluminum, as well as the world’s largest miner of bauxite and
refiner of alumina. Alcoa has been a member of the Dow Jones
Sustainability Index for 12 consecutive years and approximately 75
percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 60,000 people in 30
countries around the world. For more information, visit www.alcoa.com,
follow @Alcoa on Twitter at www.twitter.com/Alcoa
and follow us on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “estimates,” “expects,” “forecasts,” “intends,”
“outlook,” “plans,” “projects,” “should,” “targets,” “will,” or other
words of similar meaning. All statements that reflect Alcoa’s
expectations, assumptions or projections about the future other than
statements of historical fact are forward-looking statements, including,
without limitation, forecasts concerning global demand growth for
aluminum, end market conditions, supply/demand balances, and growth
opportunities for aluminum in automotive, aerospace, and other
applications, trend projections, targeted financial results or operating
performance, and statements about Alcoa’s strategies, outlook, and
business and financial prospects. Forward-looking statements are subject
to a number of known and unknown risks, uncertainties, and other factors
and are not guarantees of future performance. Important factors that
could cause actual results to differ materially from those expressed or
implied in the forward-looking statements include: (a) material adverse
changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices
(and premiums, as applicable) for primary aluminum, alumina, and other
products, and fluctuations in indexed-based and spot prices for alumina;
(b) deterioration in global economic and financial market conditions
generally; (c) unfavorable changes in the markets served by Alcoa,
including aerospace, automotive, commercial transportation, building and
construction, distribution, packaging, defense, and industrial gas
turbine; (d) the impact of changes in foreign currency exchange rates on
costs and results, particularly the Australian dollar, Brazilian real,
Canadian dollar, euro, and Norwegian kroner; (e) increases in energy
costs, including electricity, natural gas, and fuel oil, or the
unavailability or interruption of energy supplies; (f) increases in the
costs of other raw materials, including calcined petroleum coke, caustic
soda, and liquid pitch; (g) Alcoa’s inability to achieve the level of
revenue growth, cash generation, cost savings, improvement in
profitability and margins, fiscal discipline, or strengthening of
competitiveness and operations (including moving its alumina refining
and aluminum smelting businesses down on the industry cost curves and
increasing revenues in its Global Rolled Products and Engineered
Products and Solutions segments) anticipated from its restructuring
programs, productivity improvement, cash sustainability, and other
initiatives; (h) Alcoa’s inability to realize expected benefits, in each
case as planned and by targeted completion dates, from sales of non-core
assets, or from newly constructed, expanded, or acquired facilities,
including facilities supplying aluminum-lithium capacity, or from
international joint ventures, including the joint venture in Saudi
Arabia; (i) political, economic, and regulatory risks in the countries
in which Alcoa operates or sells products, including unfavorable changes
in laws and governmental policies, civil unrest, or other events beyond
Alcoa’s control; (j) the outcome of contingencies, including legal
proceedings, government investigations, and environmental remediation;
(k) the business or financial condition of key customers, suppliers, and
business partners; (l) adverse changes in tax rates or benefits;
(m) adverse changes in discount rates or investment returns on pension
assets; (n) the impact of cyber attacks and potential information
technology or data security breaches; and (o) the other risk factors
summarized in Alcoa’s Form 10-K for the year ended December 31, 2012,
and other reports filed with the Securities and Exchange Commission.
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.
Non-GAAP Financial Measures
Some of the information included in this release is derived from Alcoa’s
consolidated financial information but is not presented in Alcoa’s
financial statements prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Certain of these data are considered
“non-GAAP financial measures” under SEC rules. These non-GAAP financial
measures supplement our GAAP disclosures and should not be considered an
alternative to the GAAP measure. Reconciliations to the most directly
comparable GAAP financial measures and management’s rationale for the
use of the non-GAAP financial measures can be found in the schedules to
this release and on our website at www.alcoa.com
under the “Invest” section.
| Alcoa and subsidiaries | ||||||||||||
| Statement of Consolidated Operations (unaudited) | ||||||||||||
| (in millions, except per-share, share, and metric ton amounts) | ||||||||||||
| Quarter ended | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||
|
2012 |
2013 |
2013 |
||||||||||
| Sales | $ | 5,898 | $ | 5,765 | $ | 5,585 | ||||||
| Cost of goods sold (exclusive of expenses below) | 4,968 | 4,798 | 4,708 | |||||||||
| Selling, general administrative, and other expenses | 277 | 248 | 255 | |||||||||
| Research and development expenses | 56 | 44 | 57 | |||||||||
| Provision for depreciation, depletion, and amortization | 362 | 348 | 350 | |||||||||
| Impairment of goodwill | – | – | 1,731 | |||||||||
| Restructuring and other charges | 60 | 151 | 380 | |||||||||
| Interest expense | 120 | 108 | 112 | |||||||||
| Other income, net | (345 | ) | (7 | ) | (10 | ) | ||||||
| Total costs and expenses | 5,498 | 5,690 | 7,583 | |||||||||
| Income (loss) before income taxes | 400 | 75 | (1,998 | ) | ||||||||
| Provision for income taxes | 143 | 31 | 312 | |||||||||
| Net income (loss) | 257 | 44 | (2,310 | ) | ||||||||
| Less: Net income attributable to noncontrolling interests | 15 | 20 | 29 | |||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 242 | $ | 24 | $ | (2,339 | ) | |||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS: |
||||||||||||
| Basic: | ||||||||||||
| Net income (loss) | $ | 0.23 | $ | 0.02 | $ | (2.19 | ) | |||||
| Average number of shares | 1,067,197,166 | 1,069,565,824 | 1,070,195,520 | |||||||||
| Diluted: | ||||||||||||
| Net income (loss) | $ | 0.21 | $ | 0.02 | $ | (2.19 | ) | |||||
| Average number of shares* | 1,167,549,803 | 1,079,332,302 | 1,070,195,520 | |||||||||
| Shipments of aluminum products (metric tons) | 1,280,000 | 1,260,000 | 1,242,000 | |||||||||
| * |
For the quarter ended December 31, 2013, outstanding employee stock options and awards and Alcoa’s convertible notes were not included in the diluted average number of shares as their effect was anti-dilutive. For the quarter ended September 30, 2013, Alcoa’s convertible notes were not included in the diluted average number of shares as their effect was anti-dilutive. |
|
| Alcoa and subsidiaries | ||||||||
| Statement of Consolidated Operations (unaudited), continued | ||||||||
| (in millions, except per-share, share, and metric ton amounts) | ||||||||
| Year ended | ||||||||
|
December 31, |
||||||||
|
2012 |
2013 |
|||||||
| Sales | $ | 23,700 | $ | 23,032 | ||||
| Cost of goods sold (exclusive of expenses below) | 20,486 | 19,286 | ||||||
| Selling, general administrative, and other expenses | 997 | 1,008 | ||||||
| Research and development expenses | 197 | 192 | ||||||
| Provision for depreciation, depletion, and amortization | 1,460 | 1,421 | ||||||
| Impairment of goodwill | – | 1,731 | ||||||
| Restructuring and other charges | 87 | 782 | ||||||
| Interest expense | 490 | 453 | ||||||
| Other income, net | (341 | ) | (25 | ) | ||||
| Total costs and expenses | 23,376 | 24,848 | ||||||
| Income (loss) before income taxes | 324 | (1,816 | ) | |||||
| Provision for income taxes | 162 | 428 | ||||||
| Net income (loss) | 162 | (2,244 | ) | |||||
| Less: Net (loss) income attributable to noncontrolling interests | (29 | ) | 41 | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 191 | $ | (2,285 | ) | |||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS: |
||||||||
| Basic: | ||||||||
| Net income (loss) | $ | 0.18 | $ | (2.14 | ) | |||
| Average number of shares | 1,066,650,500 | 1,069,517,485 | ||||||
| Diluted: | ||||||||
| Net income (loss) | $ | 0.18 | $ | (2.14 | ) | |||
| Average number of shares* | 1,076,478,519 | 1,069,517,485 | ||||||
| Common stock outstanding at the end of the period | 1,067,211,953 | 1,071,011,162 | ||||||
| Shipments of aluminum products (metric tons) | 5,197,000 | 4,994,000 | ||||||
| * |
For the year ended December 31, 2013, outstanding employee stock options and awards and Alcoa’s convertible notes were not included in the diluted average number of shares as their effect was anti-dilutive. For the year ended December 31, 2012, Alcoa’s convertible notes were not included in the diluted average number of shares as their effect was anti-dilutive. |
|
| Alcoa and subsidiaries | ||||||||
| Consolidated Balance Sheet (unaudited) | ||||||||
| (in millions) | ||||||||
| December 31, | December 31, | |||||||
|
2012 |
2013 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,861 | $ | 1,437 | ||||
|
Receivables from customers, less allowances of $39 in 2012 and $20 |
1,399 | 1,221 | ||||||
| Other receivables | 340 | 597 | ||||||
| Inventories | 2,825 | 2,705 | ||||||
| Prepaid expenses and other current assets | 1,275 | 1,020 | ||||||
| Total current assets | 7,700 | 6,980 | ||||||
| Properties, plants, and equipment | 38,137 | 36,866 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 19,190 | 19,227 | ||||||
| Properties, plants, and equipment, net | 18,947 | 17,639 | ||||||
| Goodwill | 5,170 | 3,415 | ||||||
| Investments | 1,860 | 1,907 | ||||||
| Deferred income taxes | 3,790 | 3,176 | ||||||
| Other noncurrent assets | 2,712 | 2,615 | ||||||
| Total assets | $ | 40,179 | $ | 35,732 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 53 | $ | 57 | ||||
| Accounts payable, trade | 2,702 | 2,960 | ||||||
| Accrued compensation and retirement costs | 1,058 | 1,013 | ||||||
| Taxes, including income taxes | 366 | 376 | ||||||
| Other current liabilities | 1,298 | 1,044 | ||||||
| Long-term debt due within one year | 465 | 655 | ||||||
| Total current liabilities | 5,942 | 6,105 | ||||||
| Long-term debt, less amount due within one year | 8,311 | 7,607 | ||||||
| Accrued pension benefits | 3,722 | 3,186 | ||||||
| Accrued other postretirement benefits | 2,603 | 2,354 | ||||||
| Other noncurrent liabilities and deferred credits | 3,078 | 2,968 | ||||||
| Total liabilities | 23,656 | 22,220 | ||||||
| EQUITY | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 1,178 | 1,178 | ||||||
| Additional capital | 7,560 | 7,509 | ||||||
| Retained earnings | 11,689 | 9,272 | ||||||
| Treasury stock, at cost | (3,881 | ) | (3,762 | ) | ||||
| Accumulated other comprehensive loss | (3,402 | ) | (3,666 | ) | ||||
| Total Alcoa shareholders’ equity | 13,199 | 10,586 | ||||||
| Noncontrolling interests | 3,324 | 2,926 | ||||||
| Total equity | 16,523 | 13,512 | ||||||
| Total liabilities and equity | $ | 40,179 | $ | 35,732 | ||||
| Alcoa and subsidiaries | |||||||||
| Statement of Consolidated Cash Flows (unaudited) | |||||||||
| (in millions) | |||||||||
| Year ended | |||||||||
| December 31, | |||||||||
| 2012 | 2013 | ||||||||
| CASH FROM OPERATIONS | |||||||||
| Net income (loss) | $ | 162 | $ | (2,244 | ) | ||||
| Adjustments to reconcile net income (loss) to cash from operations: | |||||||||
| Depreciation, depletion, and amortization | 1,462 | 1,422 | |||||||
| Deferred income taxes | (99 | ) | 158 | ||||||
| Equity income, net of dividends | 2 | 77 | |||||||
| Impairment of goodwill | – | 1,731 | |||||||
| Restructuring and other charges | 87 | 782 | |||||||
| Net gain from investing activities – asset sales | (321 | ) | (10 | ) | |||||
| Stock-based compensation | 67 | 71 | |||||||
| Excess tax benefits from stock-based payment arrangements | (1 | ) | – | ||||||
| Other | 63 | 4 | |||||||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
|||||||||
| Decrease (increase) in receivables | 104 | (141 | ) | ||||||
| Decrease in inventories | 96 | 25 | |||||||
| (Increase) in prepaid expenses and other current assets | (62 | ) | (9 | ) | |||||
| (Decrease) increase in accounts payable, trade | (12 | ) | 326 | ||||||
| (Decrease) in accrued expenses | (81 | ) | (418 | ) | |||||
| Increase (decrease) in taxes, including income taxes | 15 | (23 | ) | ||||||
| Pension contributions | (561 | ) | (462 | ) | |||||
| Decrease (increase) in noncurrent assets | 9 | (153 | ) | ||||||
| Increase in noncurrent liabilities | 570 | 442 | |||||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 1,500 | 1,578 | |||||||
| CASH USED FOR DISCONTINUED OPERATIONS | (3 | ) | – | ||||||
| CASH PROVIDED FROM OPERATIONS | 1,497 | 1,578 | |||||||
| FINANCING ACTIVITIES | |||||||||
|
Net change in short-term borrowings (original maturities of three months or less) |
(10 | ) | 5 | ||||||
| Net change in commercial paper | (224 | ) | – | ||||||
| Additions to debt (original maturities greater than three months) | 972 | 1,852 | |||||||
| Debt issuance costs | (5 | ) | (3 | ) | |||||
| Payments on debt (original maturities greater than three months) | (1,489 | ) | (2,317 | ) | |||||
| Proceeds from exercise of employee stock options | 12 | 13 | |||||||
| Excess tax benefits from stock-based payment arrangements | 1 | – | |||||||
| Dividends paid to shareholders | (131 | ) | (132 | ) | |||||
| Distributions to noncontrolling interests | (95 | ) | (109 | ) | |||||
| Contributions from noncontrolling interests | 171 | 12 | |||||||
| CASH USED FOR FINANCING ACTIVITIES | (798 | ) | (679 | ) | |||||
| INVESTING ACTIVITIES | |||||||||
| Capital expenditures | (1,261 | ) | (1,193 | ) | |||||
| Proceeds from the sale of assets and businesses | 615 | 13 | |||||||
| Additions to investments | (300 | ) | (293 | ) | |||||
| Sales of investments | 31 | – | |||||||
| Net change in restricted cash | 87 | 170 | |||||||
| Other | 69 | 13 | |||||||
| CASH USED FOR INVESTING ACTIVITIES | (759 | ) | (1,290 | ) | |||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(18 |
) |
(33 |
) |
|||||
| Net change in cash and cash equivalents | (78 | ) | (424 | ) | |||||
| Cash and cash equivalents at beginning of year | 1,939 | 1,861 | |||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 1,861 | $ | 1,437 | |||||
| Alcoa and subsidiaries | ||||||||||||||||||||||||||||
| Segment Information (unaudited) | ||||||||||||||||||||||||||||
|
(dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt]) |
||||||||||||||||||||||||||||
|
4Q12 |
2012 |
1Q13 |
2Q13 |
3Q13 |
4Q13 |
2013 |
||||||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||||||
| Alumina production (kmt) | 4,079 | 16,342 | 3,994 | 4,161 | 4,214 | 4,249 | 16,618 | |||||||||||||||||||||
| Third-party alumina shipments (kmt) | 2,440 | 9,295 | 2,457 | 2,328 | 2,603 | 2,578 | 9,966 | |||||||||||||||||||||
| Third-party sales | $ | 803 | $ | 3,092 | $ | 826 | $ | 822 | $ | 846 | $ | 832 | $ | 3,326 | ||||||||||||||
| Intersegment sales | $ | 542 | $ | 2,310 | $ | 595 | $ | 581 | $ | 513 | $ | 546 | $ | 2,235 | ||||||||||||||
| Equity income (loss) | $ | 1 | $ | 5 | $ | 1 | $ | (1 | ) | $ | (2 | ) | $ | (2 | ) | $ | (4 | ) | ||||||||||
| Depreciation, depletion, and amortization | $ | 107 | $ | 455 | $ | 109 | $ | 115 | $ | 100 | $ | 102 | $ | 426 | ||||||||||||||
| Income taxes | $ | 2 | $ | (27 | ) | $ | 14 | $ | 14 | $ | 17 | $ | 21 | $ | 66 | |||||||||||||
| After-tax operating income (ATOI) | $ | 41 | $ | 90 | $ | 58 | $ | 64 | $ | 67 | $ | 70 | $ | 259 | ||||||||||||||
| Primary Metals: | ||||||||||||||||||||||||||||
| Aluminum production (kmt) | 912 | 3,742 | 891 | 896 | 897 | 866 | 3,550 | |||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 768 | 3,056 | 705 | 693 | 686 | 717 | 2,801 | |||||||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,325 |
$ |
2,327 |
$ |
2,398 |
$ |
2,237 |
$ |
2,180 |
$ |
2,157 |
$ |
2,243 |
||||||||||||||
| Third-party sales | $ | 1,890 | $ | 7,432 | $ | 1,758 | $ | 1,620 | $ | 1,600 | $ | 1,618 | $ | 6,596 | ||||||||||||||
| Intersegment sales | $ | 643 | $ | 2,877 | $ | 727 | $ | 677 | $ | 691 | $ | 526 | $ | 2,621 | ||||||||||||||
| Equity loss | $ | (11 | ) | $ | (27 | ) | $ | (9 | ) | $ | (7 | ) | $ | (13 | ) | $ | (22 | ) | $ | (51 | ) | |||||||
| Depreciation, depletion, and amortization | $ | 134 | $ | 532 | $ | 135 | $ | 132 | $ | 131 | $ | 128 | $ | 526 | ||||||||||||||
| Income taxes | $ | 157 | $ | 106 | $ | 1 | $ | (25 | ) | $ | (16 | ) | $ | (34 | ) | $ | (74 | ) | ||||||||||
| ATOI | $ | 316 | $ | 309 | $ | 39 | $ | (32 | ) | $ | 8 | $ | (35 | ) | $ | (20 | ) | |||||||||||
| Global Rolled Products: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 448 | 1,867 | 450 | 502 | 499 | 454 | 1,905 | |||||||||||||||||||||
| Third-party sales | $ | 1,771 | $ | 7,378 | $ | 1,779 | $ | 1,877 | $ | 1,805 | $ | 1,645 | $ | 7,106 | ||||||||||||||
| Intersegment sales | $ | 33 | $ | 163 | $ | 51 | $ | 43 | $ | 47 | $ | 37 | $ | 178 | ||||||||||||||
| Equity loss | $ | (2 | ) | $ | (6 | ) | $ | (4 | ) | $ | (2 | ) | $ | (3 | ) | $ | (4 | ) | $ | (13 | ) | |||||||
| Depreciation, depletion, and amortization | $ | 58 | $ | 229 | $ | 57 | $ | 55 | $ | 56 | $ | 58 | $ | 226 | ||||||||||||||
| Income taxes* | $ | 35 | $ | 159 | $ | 39 | $ | 32 | $ | 32 | $ | 5 | $ | 108 | ||||||||||||||
| ATOI* | $ | 77 | $ | 346 | $ | 81 | $ | 79 | $ | 71 | $ | 21 | $ | 252 | ||||||||||||||
| Engineered Products and Solutions: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 52 | 222 | 55 | 58 | 60 | 56 | 229 | |||||||||||||||||||||
| Third-party sales | $ | 1,348 | $ | 5,525 | $ | 1,423 | $ | 1,468 | $ | 1,437 | $ | 1,405 | $ | 5,733 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 40 | $ | 158 | $ | 40 | $ | 39 | $ | 40 | $ | 40 | $ | 159 | ||||||||||||||
| Income taxes* | $ | 71 | $ | 297 | $ | 84 | $ | 94 | $ | 91 | $ | 79 | $ | 348 | ||||||||||||||
| ATOI* | $ | 140 | $ | 612 | $ | 173 | $ | 193 | $ | 192 | $ | 168 | $ | 726 | ||||||||||||||
|
Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa: |
||||||||||||||||||||||||||||
| Total segment ATOI* | $ | 574 | $ | 1,357 | $ | 351 | $ | 304 | $ | 338 | $ | 224 | $ | 1,217 | ||||||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||||||
| Impact of LIFO | 8 | 20 | (2 | ) | 5 | 9 | 40 | 52 | ||||||||||||||||||||
| Interest expense | (78 | ) | (319 | ) | (75 | ) | (76 | ) | (70 | ) | (73 | ) | (294 | ) | ||||||||||||||
| Noncontrolling interests | (15 | ) | 29 | (21 | ) | 29 | (20 | ) | (29 | ) | (41 | ) | ||||||||||||||||
| Corporate expense | (87 | ) | (282 | ) | (67 | ) | (71 | ) | (74 | ) | (72 | ) | (284 | ) | ||||||||||||||
| Impairment of goodwill | – | – | – | – | – | (1,731 | ) | (1,731 | ) | |||||||||||||||||||
| Restructuring and other charges | (56 | ) | (75 | ) | (5 | ) | (211 | ) | (108 | ) |
(283 |
) |
(607 |
) | ||||||||||||||
| Other* | (104 | ) | (539 | ) | (32 | ) | (99 | ) | (51 | ) |
(415 |
) |
(597 |
) | ||||||||||||||
| Consolidated net income (loss) attributable to Alcoa |
$ |
242 |
$ |
191 |
$ |
149 |
$ |
(119 |
) |
$ |
24 |
$ |
(2,339 |
) |
$ |
(2,285 |
) |
|||||||||||
|
The difference between certain segment totals and consolidated amounts is in Corporate. |
||
| * |
On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products and Engineered Products and Solutions segments, which affects the determination of the respective segment’s profitability measure, ATOI. Management made the change in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change. |
|
| Alcoa and subsidiaries | ||||||||||||||||||||
| Calculation of Financial Measures (unaudited) | ||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||
| Adjusted EBITDA Margin | Quarter ended | Year ended | ||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
| Net income (loss) attributable to Alcoa | $ | 242 | $ | 24 | $ | (2,339 | ) | $ | 191 | $ | (2,285 | ) | ||||||||
| Add: | ||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests |
15 |
20 |
29 |
(29 |
) |
41 |
||||||||||||||
| Provision for income taxes |
143 |
31 |
312 |
162 |
428 |
|||||||||||||||
| Other income, net | (345 | ) | (7 | ) | (10 | ) | (341 | ) | (25 | ) | ||||||||||
| Interest expense | 120 | 108 | 112 | 490 | 453 | |||||||||||||||
| Restructuring and other charges |
60 |
151 |
380 |
87 |
782 |
|||||||||||||||
| Impairment of goodwill |
– |
– |
1,731 |
– |
1,731 |
|||||||||||||||
| Provision for depreciation, depletion, and amortization |
362 |
348 |
350 |
1,460 |
1,421 |
|||||||||||||||
| Adjusted EBITDA | $ | 597 | $ | 675 | $ | 565 | $ | 2,020 | $ | 2,546 | ||||||||||
| Sales | $ | 5,898 | $ | 5,765 | $ | 5,585 | $ | 23,700 | $ | 23,032 | ||||||||||
| Adjusted EBITDA Margin |
10.1 |
% |
11.7 |
% |
10.1 |
% |
8.5 |
% |
11.1 |
% |
||||||||||
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to
Sales minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses;
and Provision for depreciation, depletion, and amortization. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because Adjusted EBITDA provides
additional information with respect to Alcoa’s operating performance and
the Company’s ability to meet its financial obligations. The Adjusted
EBITDA presented may not be comparable to similarly titled measures of
other companies.
| Free Cash Flow | Quarter ended | Year ended | |||||||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||||||||
| Cash from operations | $ | 933 | $ | 214 | $ | 920 | $ | 1,497 | $ | 1,578 | |||||||||||||||
| Capital expenditures | (398 | ) | (250 | ) | (422 | ) | (1,261 | ) | (1,193 | ) | |||||||||||||||
| Free cash flow | $ | 535 | $ | (36 | ) | $ | 498 | $ | 236 | $ | 385 | ||||||||||||||
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.
| Alcoa and subsidiaries | ||||||||||||||||||||
| Calculation of Financial Measures (unaudited), continued | ||||||||||||||||||||
| (dollars in millions, except per-share amounts) | ||||||||||||||||||||
| Adjusted Income | Quarter ended | Year ended | ||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
| Net income (loss) attributable to Alcoa | $ | 242 | $ | 24 | $ | (2,339 | ) | $ | 191 | $ | (2,285 | ) | ||||||||
| Restructuring and other charges |
54 |
108 |
302 |
73 |
585 |
|||||||||||||||
| Discrete tax items* | (58 | ) | 7 | 361 | (22 | ) | 360 | |||||||||||||
| Other special items** | (174 | ) | (19 | ) | 1,716 | 20 | 1,697 | |||||||||||||
| Net income attributable to Alcoa – as adjusted |
$ |
64 |
$ |
120 |
$ |
40 |
$ |
262 |
$ |
357 |
||||||||||
| Diluted EPS: | ||||||||||||||||||||
| Net income (loss) attributable to Alcoa |
$ |
0.21 |
$ |
0.02 |
$ |
(2.19 |
) |
$ |
0.18 |
$ |
(2.14 |
) |
||||||||
| Net income attributable to Alcoa – as adjusted |
0.06 |
0.11 |
0.04 |
0.24 |
0.33 |
|||||||||||||||
Net income attributable to Alcoa – as adjusted is a non-GAAP financial
measure. Management believes that this measure is meaningful to
investors because management reviews the operating results of Alcoa
excluding the impacts of restructuring and other charges, discrete tax
items, and other special items (collectively, “special items”). There
can be no assurances that additional special items will not occur in
future periods. To compensate for this limitation, management believes
that it is appropriate to consider both Net (loss) income attributable
to Alcoa determined under GAAP as well as Net income attributable to
Alcoa – as adjusted.
* Discrete tax items include the following:
-
for the quarter ended December 31, 2013, a charge for a valuation
allowance related to certain U.S. and Spain deferred tax assets
($372), a benefit related to the interim period treatment of
operational losses in certain foreign jurisdictions for which no tax
benefit was recognized during the nine months ended September 30, 2013
($3), and a net benefit for other miscellaneous items ($8); -
for the quarter ended September 30, 2013, an unfavorable impact
related to the interim period treatment of operational losses in
certain foreign jurisdictions for which no tax benefit was recognized
($6) and a net charge for other miscellaneous items ($1); -
for the quarter ended December 31, 2012, a benefit related to the
interim period treatment of operational losses in certain foreign
jurisdictions for which no tax benefit was recognized during the nine
months ended September 30, 2012 ($39), a benefit for a change in the
legal structure of an investment ($13), and a net benefit for other
miscellaneous items ($6); -
for the year ended December 31, 2013, a charge for a valuation
allowance related to certain U.S. and Spain deferred tax assets
($372), a benefit related to the reinstatement under the American
Taxpayer Relief Act of 2012 of two tax provisions that were applied in
2013 to Alcoa’s U.S income tax return for calendar year 2012 ($19), a
charge related to prior year taxes in Spain and Australia ($10), and a
net benefit for other miscellaneous items ($3); and -
for the year ended December 31, 2012, a benefit for a change in the
legal structure of an investment ($13), a benefit as a result of
including the then anticipated gain from the sale of the Tapoco
Hydroelectric Project in the calculation of the estimated annual
effective tax rate applied to the results for the nine months ended
September 30, 2012 ($12), a charge related to prior year U.S. taxes on
certain depletable assets ($8), and a net benefit for other
miscellaneous items ($5).
** Other special items include the following:
-
for the quarter ended December 31, 2013, a goodwill impairment charge
($1,719), an unfavorable impact related to a temporary shutdown of one
of the two smelter potlines at the joint venture in Saudi Arabia due
to a period of pot instability ($9), a net favorable change in certain
mark-to-market energy derivative contracts ($7), and an insurance
recovery related to the March 2012 cast house fire at the Massena, NY
location ($5); -
for the quarter ended September 30, 2013, an insurance recovery
related to the March 2012 cast house fire at the Massena, NY location
($12), a net favorable change in certain mark-to-market energy
derivative contracts ($8), and the write off of inventory related to
the permanent closure of two potlines at a smelter in Canada ($1); -
for the quarter ended December 31, 2012, a gain on the sale of the
Tapoco Hydroelectric Project ($161: $275 is included in the Primary
Metals segment and $(114) is included in Corporate), a net favorable
change in certain mark-to-market energy derivative contracts ($12),
interest income on an escrow deposit ($8), and uninsured losses
related to fire damage to the cast house at the Massena, NY location
($7); -
for the year ended December 31, 2013, a goodwill impairment charge
($1,719), a net insurance recovery related to the March 2012 cast
house fire at the Massena, NY location ($22), a net favorable change
in certain mark-to-market energy derivative contracts ($15), an
unfavorable impact related to a temporary shutdown of one of the two
smelter potlines at the joint venture in Saudi Arabia due to a period
of pot instability ($9), and the write off of inventory related to the
permanent closure of two potlines at a smelter in Canada and a smelter
in Italy ($6); and -
for the year ended December 31, 2012, a gain on the sale of the Tapoco
Hydroelectric Project ($161), a net increase in the environmental
reserve related to the Grasse River remediation in Massena, NY,
remediation at two former locations, East St. Louis, IL and Sherwin,
TX, and two new remediation projects at the smelter sites in Baie
Comeau, Quebec, Canada and Mosjøen, Norway ($133), a litigation
reserve ($33), uninsured losses related to fire damage to the cast
house at the Massena, NY location ($28), interest income on an escrow
deposit ($8), and a net favorable change in certain mark-to-market
energy derivative contracts ($5).
| Alcoa and subsidiaries | ||||||||||
| Calculation of Financial Measures (unaudited), continued | ||||||||||
| (dollars in millions) | ||||||||||
| Days Working Capital | Quarter ended | |||||||||
|
December 31, |
September 30, |
December 31, |
||||||||
| Receivables from customers, less allowances | $ | 1,399 | $ | 1,422 | $ | 1,221 | ||||
| Add: Deferred purchase price receivable* | 18 | 285 | 248 | |||||||
|
Receivables from customers, less allowances,
as adjusted |
1,417 |
1,707 |
1,469 |
|||||||
| Add: Inventories | 2,825 | 2,893 | 2,705 | |||||||
| Less: Accounts payable, trade | 2,702 | 2,816 | 2,960 | |||||||
| Working Capital | $ | 1,540 | $ | 1,784 | $ | 1,214 | ||||
| Sales | $ | 5,898 | $ | 5,765 | $ | 5,585 | ||||
| Days Working Capital | 24 | 28 | 20 | |||||||
Days Working Capital = Working Capital divided by (Sales/number of days
in the quarter).
* The deferred purchase price receivable relates to an
arrangement to sell certain customer receivables to several financial
institutions on a recurring basis. Alcoa is adding back this receivable
for the purposes of the Days Working Capital calculation.
|
Debt-to-Capital |
December 31, 2013 | ||||||||||
|
Debt-to- |
Cash and |
Net Debt-to- |
|||||||||
| Total Debt | |||||||||||
| Short-term borrowings | $ | 57 | |||||||||
| Long-term debt due within one year | 655 | ||||||||||
| Long-term debt, less amount due within one year | 7,607 | ||||||||||
| Numerator | $ | 8,319 | $ | 1,437 | $ | 6,882 | |||||
| Total Capital | |||||||||||
| Total debt | $ | 8,319 | |||||||||
| Total equity | 13,512 | ||||||||||
| Denominator | $ | 21,831 | $ | 1,437 | $ | 20,394 | |||||
| Ratio | 38.1 | % | 33.7 | % | |||||||
| Total Capital – as adjusted | |||||||||||
| Impairment of goodwill* | $ | 1,719 | $ | 1,719 | |||||||
| Deferred tax valuation allowance* | 372 | 372 | |||||||||
| Denominator – as adjusted | $ | 23,922 | $ | 22,485 | |||||||
| Ratio – as adjusted | 34.8 | % | 30.6 | % | |||||||
Net debt-to-capital is a non-GAAP financial measure. Management believes
that this measure is meaningful to investors because management assesses
Alcoa’s leverage position after factoring in available cash that could
be used to repay outstanding debt. Debt-to-capital – as adjusted and Net
debt-to-capital – as adjusted are also non-GAAP financial measures.
Management believes that these additional measures are meaningful to
investors as the adjustments represent significant, unusual noncash
items that are relevant to this metric.
* See above calculation of adjusted income for additional
information related to these items.
| Alcoa and subsidiaries | ||||||||||||||||||||||||||||||||||||||||
| Calculation of Financial Measures (unaudited), continued | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, except per metric ton amounts) | ||||||||||||||||||||||||||||||||||||||||
| Segment Measures | Alumina | Primary Metals | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | Year ended | Quarter ended | Year ended | ||||||||||||||||||||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||||||||||||||||||
| After-tax operating income (ATOI) | $ | 41 | $ | 67 | $ | 70 | $ | 90 | $ | 259 | $ | 316 | $ | 8 | $ | (35 | ) | $ | 309 | $ | (20 | ) | ||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization |
107 |
100 |
102 |
455 |
426 |
134 |
131 |
128 |
532 |
526 |
||||||||||||||||||||||||||||||
| Equity (income) loss |
(1 |
) |
2 |
2 |
(5 |
) |
4 |
11 |
13 |
22 |
27 |
51 |
||||||||||||||||||||||||||||
| Income taxes | 2 | 17 | 21 | (27 | ) | 66 | 157 | (16 | ) | (34 | ) | 106 | (74 | ) | ||||||||||||||||||||||||||
| Other | (4 | ) | (2 | ) | (1 | ) | (8 | ) | (6 | ) | (423 | ) | 2 | (6 | ) | (422 | ) | (8 | ) | |||||||||||||||||||||
| Adjusted EBITDA |
$ |
145 |
$ |
184 |
$ |
194 |
$ |
505 |
$ |
749 |
$ |
195 |
$ |
138 |
$ |
75 |
$ |
552 |
$ |
475 |
||||||||||||||||||||
| Production (thousand metric tons) (kmt) |
4,079 |
4,214 |
4,249 |
16,342 |
16,618 |
912 |
897 |
866 |
3,742 |
3,550 |
||||||||||||||||||||||||||||||
| Adjusted EBITDA / Production ($ per metric ton) |
$ |
36 |
$ |
44 |
$ |
46 |
$ |
31 |
$ |
45 |
$ |
214 |
$ |
154 |
$ |
87 |
$ |
148 |
$ |
134 |
||||||||||||||||||||
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to
Sales minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses;
and Provision for depreciation, depletion, and amortization. The Other
line in the table above includes gains/losses on asset sales and other
nonoperating items. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because
Adjusted EBITDA provides additional information with respect to Alcoa’s
operating performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
| Alcoa and subsidiaries | |||||||||||||||||||||||||||||||||||
| Calculation of Financial Measures (unaudited), continued | |||||||||||||||||||||||||||||||||||
| (dollars in millions, except per metric ton amounts) | |||||||||||||||||||||||||||||||||||
| Segment Measures | Global Rolled Products* | Engineered Products and Solutions* | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | Year ended | Quarter ended | Year ended | |||||||||||||||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||||||||||||
| After-tax operating income (ATOI) | $ | 77 | $ | 71 | $ | 21 | $ | 346 | $ | 252 | $ | 140 | $ | 192 | $ | 168 | $ | 612 | $ | 726 | |||||||||||||||
| Add: | |||||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization |
58 |
56 |
58 |
229 |
226 |
40 |
40 |
40 |
158 |
159 |
|||||||||||||||||||||||||
| Equity loss | 2 | 3 | 4 | 6 | 13 | – | – | – | – | – | |||||||||||||||||||||||||
| Income taxes | 35 | 32 | 5 | 159 | 108 | 71 | 91 | 79 | 297 | 348 | |||||||||||||||||||||||||
| Other | – | – | 1 | (2 | ) | – | (9 | ) | – | (2 | ) | (9 | ) | (2 | ) | ||||||||||||||||||||
| Adjusted EBITDA |
$ |
172 |
$ |
162 |
$ |
89 |
$ |
738 |
$ |
599 |
$ |
242 |
$ |
323 |
$ |
285 |
$ |
1,058 |
$ |
1,231 |
|||||||||||||||
| Total shipments (thousand metric tons) (kmt) |
465 |
519 |
481 |
1,943 |
1,989 |
||||||||||||||||||||||||||||||
| Adjusted EBITDA / Total shipments ($ per metric ton) |
$ |
370 |
$ |
312 |
$ |
185 |
$ |
380 |
$ |
301 |
|||||||||||||||||||||||||
| Third-party sales |
$ |
1,348 |
$ |
1,437 |
$ |
1,405 |
$ |
5,525 |
$ |
5,733 |
|||||||||||||||||||||||||
| Adjusted EBITDA Margin |
18.0 |
% |
22.5 |
% |
20.3 |
% |
19.1 |
% |
21.5 |
% |
|||||||||||||||||||||||||
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to
Sales minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses;
and Provision for depreciation, depletion, and amortization. The Other
line in the table above includes gains/losses on asset sales and other
nonoperating items. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because
Adjusted EBITDA provides additional information with respect to Alcoa’s
operating performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
* On January 1, 2013, management revised the inventory-costing method
used by certain locations within the Global Rolled Products and
Engineered Products and Solutions segments, which affects the
determination of the respective segment’s profitability measure, ATOI.
Management made the change in order to improve internal consistency and
enhance industry comparability. This revision does not impact the
consolidated results of Alcoa. Segment information for all prior periods
presented was revised to reflect this change.
Alcoa
Investor Contact
Kelly Pasterick, 212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com