-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ug7A5Y5roeps1ZDiFXFbXXPmRMjK1ehUmxiIj3B3aCgzXAHskEfPu68atK+MD5yX App07CvgKU56tDFnMErbGQ== 0001193125-09-205661.txt : 20091008 0001193125-09-205661.hdr.sgml : 20091008 20091008164017 ACCESSION NUMBER: 0001193125-09-205661 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20091007 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20091008 DATE AS OF CHANGE: 20091008 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALCOA INC CENTRAL INDEX KEY: 0000004281 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 250317820 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03610 FILM NUMBER: 091112396 BUSINESS ADDRESS: STREET 1: 201 ISABELLA ST STREET 2: ALCOA CORPORATE CTR CITY: PITTSBURGH STATE: PA ZIP: 15212-5858 BUSINESS PHONE: 4125532576 MAIL ADDRESS: STREET 1: 801 ISABELLA ST STREET 2: ALCOA CORPORATE CTR CITY: PITTSBURGH STATE: PA ZIP: 15212-5858 FORMER COMPANY: FORMER CONFORMED NAME: ALUMINUM CO OF AMERICA DATE OF NAME CHANGE: 19920703 8-K 1 d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 8, 2009 (October 7, 2009)

 

 

ALCOA INC.

(Exact name of Registrant as specified in its charter)

 

 

 

Pennsylvania   1-3610   25-0317820

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

 

390 Park Avenue, New York, New York   10022-4608
(Address of Principal Executive Offices)   (Zip Code)

Office of Investor Relations 212-836-2674

Office of the Secretary 212-836-2732

(Registrant’s telephone number, including area code)

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On October 7, 2009, Alcoa Inc. issued a press release announcing its financial results for the third quarter of 2009. A copy of the press release is attached hereto as Exhibit 99 and incorporated herein by reference.

The information in this Current Report on Form 8-K, including Exhibit 99, is being furnished in accordance with the provisions of General Instruction B.2 of Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

The following is furnished as an exhibit to this report:

 

  99 Alcoa Inc. press release dated October 7, 2009.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ALCOA INC.
By:   /S/    NICHOLAS J. DEROMA        
Name:   Nicholas J. DeRoma
Title:  

Executive Vice President,

Chief Legal and Compliance Officer

Date: October 8, 2009

 

3


EXHIBIT INDEX

 

Exhibit No.

 

Description

99   Alcoa Inc. press release dated October 7, 2009.

 

4

EX-99 2 dex99.htm PRESS RELEASE Press Release

Exhibit 99

[Alcoa logo]

FOR IMMEDIATE RELEASE

 

Investor Contact   Media Contact
Matthew E. Garth   Kevin G. Lowery
(212) 836-2674   (412) 553-1424
  Mobile (724) 422-7844

Alcoa Strengthens Cash Position and Returns to Profitability in Third Quarter

Highlights:

 

   

Income from continuing operations of $73 million, or $0.07 per share

 

   

Excluding restructuring and special items, income of $39 million, or $0.04 per share

 

   

Revenues up 9 percent over second quarter 2009

 

   

Cash Sustainability initiatives exceeding targets

 

   

Actions offsetting negative currency and energy impacts

 

   

EBITDA of $454 million in third quarter 2009

 

   

Cash from operations of $184 million in third quarter 2009

 

   

Debt-to-capital at 38.3%, down 140 basis points sequentially

 

   

Cash on hand of $1.1 billion

NEW YORK, NY – October 7, 2009 – Alcoa (NYSE: AA) today announced third quarter 2009 income from continuing operations of $73 million, or $0.07 per diluted share, compared to a loss from continuing operations of $312 million, or $0.32 per share, in the second quarter 2009. Income from continuing operations in the third quarter of 2008 was $306 million, or $0.37 per share. Excluding restructuring and special items, income for the third quarter 2009 was $39 million, or $0.04 per share.

The third quarter of 2009 had net income of $77 million, or $0.08 per share, compared with a net loss for the second quarter of 2009 of $454 million, or $0.47 per share. Net income in the third quarter of 2008 was $268 million, or $0.33 per share. Discontinued operations for the third quarter of 2009 had income of $4 million, or $0.01 per share. The second quarter of 2009 had a loss of $142 million, or $0.15 per share.

Restructuring and special items in the quarter totaled $34 million, or $0.03 per share. These items included a gain on the completion of a transaction to acquire bauxite and alumina refining interests in Suriname of $35 million and restructuring charges of $17 million before tax ($1 million after tax and noncontrolling interests).


Revenues for the quarter were $4.6 billion compared with $4.2 billion in the second quarter of 2009, a nine percent increase. Revenues were $7.0 billion in the third quarter of 2008. Sequentially, revenues were helped by an increase in realized prices for primary aluminum to $1,972 per metric ton from $1,667 per metric ton in the second quarter, as well as stabilization in the end markets.

“The financial and operational measures we took in the first half of the year are having a strong positive impact on our cash position and profitability,” said Klaus Kleinfeld, Alcoa President and Chief Executive Officer. “Despite unfavorable currency and energy headwinds, our performance this quarter indicates that Alcoa is weathering the economic storm and is in excellent shape to benefit when the market recovers.”

The Company is exceeding all the targets of its Cash Sustainability Program, which helped to offset negative currency and energy impacts in the quarter of $89 million. Overhead savings are $375 million, 188 percent of the full year target for 2009, and procurement savings are $1.61 billion, 107 percent of the full-year target. Reductions in working capital have generated $780 million in cash, or 98 percent of the 2009 target of $800 million.

Cash from operations in the quarter was $184 million compared with $328 million in the second quarter of 2009 as working capital reductions continued, yet at a slower pace due to rising prices. Cash from operations in the third quarter 2008 was a negative $93 million. EBITDA in the quarter improved by $454 million from zero in the second quarter of 2009.

During the quarter, the Company received the final $520 million of proceeds from the exiting of the Shining Prospect venture and finished the quarter with $1.1 billion of cash on hand. The Company’s debt-to-capital ratio stood at 38.3 percent at the end of the quarter, a 140 basis point reduction from the second quarter of 2009.

Capital expenditures in the quarter were $370 million, on-target to reach the 2009 goal of a nearly 50 percent reduction from 2008. In the quarter, the Company commissioned its Juruti bauxite mine in Brazil and new lithographic sheet operations in Bohai, China. This follows the opening of a new end and tab line in Russia in late-June. These investments will lower costs and position the Company well for growth as economies improve in those important markets.

Revenues for the first nine months of 2009 were $13.0 billion, compared to $21.2 billion in the first nine months of 2008. Income from continuing operations for the first nine months of 2009 showed a loss of $719 million, or $0.78 per share, compared with income of $1.2 billion, or $1.40 per share, in the first nine months of 2008. The nine months of 2009 showed a net loss of $874 million, or $0.95 per share, compared to net income of $1.1 billion, or $1.35 per share, in the first nine months of 2008.


In the second half of 2009, there are signs that key markets the Company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11 percent in the second half of 2009.

Segment Results

Alumina

After tax operating income (ATOI) was $65 million, a $72 million improvement from the second quarter. Alumina production increased nine percent or 305 thousand metric tons and average third-party realized pricing improved 13 percent, helped by rising LME aluminum prices and improved demand. A $58 million benefit from the Suriname acquisition was partially offset by negative currency impacts of $28 million and higher energy costs of $13 million. The Juruti mine was officially commissioned this quarter and combined with the Sao Luis refining expansion, will place Alcoa’s overall refining system in the top quartile on the global cost curve in terms of low-cost production.

Primary Metals

ATOI improved $170 million sequentially to a loss of $8 million due primarily to improved pricing. Smelting production decreased 25 thousand metric tons and third-party realized pricing was up $305 per metric ton, or 18 percent, as LME pricing and regional premiums continued to improve. Results were negatively impacted by $29 million of currency effects. The production run rate now stands at 3.5 million metric tons with approximately 20 percent of primary production curtailed.

Flat-Rolled Products

ATOI improved $45 million from the second quarter of 2009 through improved orders and significant cost reduction efforts. Shipments for the quarter increased six percent sequentially and revenue increased seven percent. Every key end market except aerospace saw revenue gains, including automotive which increased 21 percent from the second quarter of 2009. Improved shipments and cost reduction efforts more than offset the impacts of product mix and currency effects in Australia. This quarter the Bohai flat-rolled products facility in China was inaugurated and it is already serving customers in the printing, transportation, electronics, and packaging industries.

Engineered Products and Solutions

ATOI for the quarter of $75 million was 15 percent below the sequential quarter results driven by continued aerospace destocking, industrial gas turbine market declines, and normal seasonal impacts. This was partially mitigated by improved demand in commercial transportation and strong results from spend reduction efforts.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on October 7, 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 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, Forms 10-Q for the quarters ended March 31, 2009 and June 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  
     September 30,
2008 (b)
    June 30,
2009
    September 30,
2009
 

Sales

   $ 6,970      $ 4,244      $ 4,615   

Cost of goods sold (exclusive of expenses below)

     5,648        3,966        3,888   

Selling, general administrative, and other expenses

     275        240        234   

Research and development expenses

     61        38        39   

Provision for depreciation, depletion, and amortization

     311        317        342   

Restructuring and other charges

     38        82        17   

Interest expense

     96        115        120   

Other expenses (income), net

     15        (89     (123
                        

Total costs and expenses

     6,444        4,669        4,517   

Income (loss) from continuing operations before income taxes

     526        (425     98   

Provision (benefit) for income taxes

     136        (108     (22
                        

Income (loss) from continuing operations

     390        (317     120   

(Loss) income from discontinued operations

     (38     (142     4   
                        

Net income (loss)

     352        (459     124   

Less: Net income (loss) attributable to noncontrolling interests

     84        (5     47   
                        

NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA

   $ 268      $ (454   $ 77   
                        

Amounts attributable to Alcoa common shareholders:

      

Income (loss) from continuing operations

   $ 306      $ (312   $ 73   

(Loss) income from discontinued operations

     (38     (142     4   
                        

Net income (loss)

   $ 268      $ (454   $ 77   
                        

Earnings (loss) per share attributable to Alcoa common shareholders (c):

      

Basic:

      

Income (loss) from continuing operations

   $ 0.37      $ (0.32   $ 0.07   

(Loss) income from discontinued operations

     (0.04     (0.15     0.01   
                        

Net income (loss)

   $ 0.33      $ (0.47   $ 0.08   
                        

Diluted:

      

Income (loss) from continuing operations

   $ 0.37      $ (0.32   $ 0.07   

(Loss) income from discontinued operations

     (0.04     (0.15     0.01   
                        

Net income (loss)

   $ 0.33      $ (0.47   $ 0.08   
                        

Average number of shares used to compute:

      

Basic earnings per common share

     807,570,516        974,279,655        974,353,242   

Diluted earnings per common share

     809,834,586        974,279,655        977,593,656   

Shipments of aluminum products (metric tons)

     1,342,000        1,288,000        1,230,000   

 

(a) 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 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 September 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)

 

     Nine months ended
September 30,
 
     2008 (d)     2009  

Sales

   $ 21,213      $ 13,006   

Cost of goods sold (exclusive of expenses below)

     16,898        11,997   

Selling, general administrative, and other expenses

     894        718   

Research and development expenses

     185        118   

Provision for depreciation, depletion, and amortization

     942        942   

Restructuring and other charges

     76        168   

Interest expense

     282        349   

Other income, net

     (23     (182
                

Total costs and expenses

     19,254        14,110   

Income (loss) from continuing operations before income taxes

     1,959        (1,104

Provision (benefit) for income taxes

     580        (437
                

Income (loss) from continuing operations

     1,379        (667

Loss from discontinued operations

     (41     (155
                

Net income (loss)

     1,338        (822

Less: Net income attributable to noncontrolling interests

     221        52   
                

NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA

   $ 1,117      $ (874
                

Amounts attributable to Alcoa common shareholders:

    

Income (loss) from continuing operations

   $ 1,158      $ (719

Loss from discontinued operations

     (41     (155
                

Net income (loss)

   $ 1,117      $ (874
                

Earnings (loss) per share attributable to Alcoa common shareholders (c):

    

Basic:

    

Income (loss) from continuing operations

   $ 1.41      $ (0.78

Loss from discontinued operations

     (0.05     (0.17
                

Net income (loss)

   $ 1.36      $ (0.95
                

Diluted:

    

Income (loss) from continuing operations

   $ 1.40      $ (0.78

Loss from discontinued operations

     (0.05     (0.17
                

Net income (loss)

   $ 1.35      $ (0.95
                

Average number of shares used to compute:

    

Basic earnings per common share

     813,550,439        922,347,792   

Diluted earnings per common share

     816,669,728        922,347,792   

Common stock outstanding at the end of the period

     800,317,368        974,376,883   

Shipments of aluminum products (metric tons)

     4,106,000        3,693,000   

 

(c) 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.

 

(d) The Statement of Consolidated Operations for the nine months ended September 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
    September 30,
2009
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 762      $ 1,066   

Receivables from customers, less allowances of $65 in 2008 and $74 in 2009

     1,883        1,723   

Other receivables

     708        651   

Inventories

     3,238        2,516   

Fair value of hedged aluminum

     586        31   

Prepaid expenses and other current assets

     973        1,045   
                

Total current assets

     8,150        7,032   
                

Properties, plants, and equipment

     31,301        34,932   

Less: accumulated depreciation, depletion, and amortization

     13,846        15,340   
                

Properties, plants, and equipment, net

     17,455        19,592   
                

Goodwill

     4,981        5,048   

Investments

     1,915        940   

Deferred income taxes

     2,688        2,642   

Other assets

     2,386        2,666   

Assets held for sale

     247        179   
                

Total assets

   $ 37,822      $ 38,099   
                

LIABILITIES

    

Current liabilities:

    

Short-term borrowings

   $ 478      $ 343   

Commercial paper

     1,535          

Accounts payable, trade

     2,518        1,850   

Accrued compensation and retirement costs

     866        885   

Taxes, including income taxes

     378        363   

Fair value of derivative contracts

     461        81   

Other current liabilities

     987        832   

Long-term debt due within one year

     56        663   
                

Total current liabilities

     7,279        5,017   
                

Long-term debt, less amount due within one year

     8,509        9,067   

Accrued pension benefits

     2,941        2,797   

Accrued postretirement benefits

     2,730        2,755   

Other noncurrent liabilities and deferred credits

     1,580        1,803   

Deferred income taxes

     321        366   

Liabilities of operations held for sale

     130        76   
                

Total liabilities

     23,490        21,881   
                

EQUITY (e)

    

Alcoa shareholders’ equity:

    

Preferred stock

     55        55   

Common stock

     925        1,097   

Additional capital

     5,850        6,612   

Retained earnings

     12,400        11,297   

Treasury stock, at cost

     (4,326     (4,268

Accumulated other comprehensive loss

     (3,169     (1,559
                

Total Alcoa shareholders’ equity

     11,735        13,234   
                

Noncontrolling interests

     2,597        2,984   
                

Total equity

     14,332        16,218   
                

Total liabilities and equity

   $ 37,822      $ 38,099   
                

 

(e) 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) (f)

(in millions)

 

     Nine months ended
September 30,
 
   2008 (g)     2009  

CASH FROM OPERATIONS

    

Net income (loss)

   $ 1,338      $ (822

Adjustments to reconcile net income (loss) to cash from operations:

    

Depreciation, depletion, and amortization

     943        942   

Deferred income taxes

     (10     (55

Equity (income) loss, net of dividends

     (66     4   

Restructuring and other charges

     76        168   

Gains from investing activities – asset sales

     (30     (104

Provision for doubtful accounts

     8        13   

Loss from discontinued operations

     41        155   

Stock-based compensation

     85        69   

Excess tax benefits from stock-based payment arrangements

     (15       

Other

     (44     124   

Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:

    

(Increase) decrease in receivables

     (164     463   

(Increase) decrease in inventories

     (621     1,053   

(Increase) decrease in prepaid expenses and other current assets

     (74     94   

Increase (decrease) in accounts payable, trade

     76        (736

(Decrease) in accrued expenses

     (374     (430

Increase (decrease) in taxes, including income taxes

     27        (515

Pension contributions

     (485     (102

(Increase) in noncurrent assets

     (91     (223

Increase in noncurrent liabilities

     30        141   

(Increase) decrease in net assets held for sale

     (22     11   
                

CASH PROVIDED FROM CONTINUING OPERATIONS

     628        250   

CASH USED FOR DISCONTINUED OPERATIONS

     (2     (9
                

CASH PROVIDED FROM OPERATIONS

     626        241   
                

FINANCING ACTIVITIES

    

Net change in short-term borrowings

     (76     (125

Net change in commercial paper

     351        (1,535

Additions to long-term debt

     2,105        1,043   

Debt issuance costs

     (13     (17

Payments on long-term debt

     (192     (31

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

     (420     (198

Dividends paid to noncontrolling interests

     (193     (93

Contributions from noncontrolling interests

     429        327   
                

CASH PROVIDED FROM FINANCING ACTIVITIES

     1,101        247   
                

INVESTING ACTIVITIES

    

Capital expenditures

     (2,405     (1,254

Capital expenditures of discontinued operations

     (16     (5

Acquisitions, net of cash acquired (h)

     (276     112   

Acquisitions of noncontrolling interests

     (141       

Proceeds from the sale of assets and businesses (i)

     2,684        (73

Additions to investments (j)

     (1,276     (26

Sales of investments

     72        1,026   

Net change in short-term investments and restricted cash

     (2     8   

Other

     (27     (9
                

CASH USED FOR INVESTING ACTIVITIES

     (1,387     (221
                

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

     8        37   
                

Net change in cash and cash equivalents

     348        304   

Cash and cash equivalents at beginning of year

     483        762   
                

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 831      $ 1,066   
                

 

(f) 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.


(g) The Statement of Consolidated Cash Flows for the nine months ended September 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.

 

(h) Acquisitions, net of cash acquired for the nine months ended September 30, 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.

 

(i) Proceeds from the sale of assets and businesses for the nine months ended September 30, 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.

 

(j) Additions to investments for the nine months ended September 30, 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 shipments in thousands of metric tons [kmt])

 

     1Q08    2Q08    3Q08    4Q08     2008     1Q09     2Q09     3Q09  

Alumina:

                   

Alumina production (kmt)

     3,870      3,820      3,790      3,776        15,256        3,445        3,309        3,614   

Third-party alumina shipments (kmt)

     1,995      1,913      2,010      2,123        8,041        1,737        2,011        2,191   

Third-party sales

   $ 680    $ 717    $ 805    $ 722      $ 2,924      $ 430      $ 441      $ 530   

Intersegment sales

   $ 667    $ 766    $ 730    $ 640      $ 2,803      $ 384      $ 306      $ 432   

Equity income

   $ 2    $ 2    $ 2    $ 1      $ 7      $ 2      $ 1      $ 2   

Depreciation, depletion, and amortization

   $ 74    $ 67    $ 68    $ 59      $ 268      $ 55      $ 67      $ 81   

Income taxes

   $ 57    $ 67    $ 91    $ 62      $ 277      $ (1   $ (21   $ 13   

After-tax operating income (ATOI)

   $ 169    $ 190    $ 206    $ 162      $ 727      $ 35      $ (7   $ 65   
                                                               

Primary Metals:

                   

Aluminum production (kmt)

     995      1,030      1,011      971        4,007        880        906        881   

Third-party aluminum shipments (kmt)

     665      750      704      807        2,926        683        779        698   

Alcoa’s average realized price per metric ton of aluminum

   $ 2,801    $ 3,058    $ 2,945    $ 2,125      $ 2,714      $ 1,567      $ 1,667      $ 1,972   

Third-party sales

   $ 1,877    $ 2,437    $ 2,127    $ 1,580      $ 8,021      $ 844      $ 1,146      $ 1,362   

Intersegment sales

   $ 1,105    $ 1,108    $ 1,078    $ 636      $ 3,927      $ 393      $ 349      $ 537   

Equity income (loss)

   $ 9    $ 10    $ 1    $ (18   $ 2      $ (30   $ 4      $   

Depreciation, depletion, and amortization

   $ 124    $ 128    $ 131    $ 120      $ 503      $ 122      $ 139      $ 143   

Income taxes

   $ 116    $ 131    $ 29    $ (104   $ 172      $ (147   $ (119   $ (52

ATOI

   $ 307    $ 428    $ 297    $ (101   $ 931      $ (212   $ (178   $ (8
                                                               

Flat-Rolled Products (1):

                   

Third-party aluminum shipments (kmt)

     589      571      562      499        2,221        442        448        476   

Third-party sales

   $ 2,336    $ 2,363    $ 2,343    $ 1,924      $ 8,966      $ 1,510      $ 1,427      $ 1,529   

Intersegment sales

   $ 66    $ 65    $ 52    $ 35      $ 218      $ 26      $ 23      $ 34   

Depreciation, depletion, and amortization

   $ 55    $ 59    $ 51    $ 51      $ 216      $ 52      $ 55      $ 60   

Income taxes

   $ 18    $ 20    $ 18    $ (21   $ 35      $      $ (1   $ 17   

ATOI

   $ 33    $ 48    $ 22    $ (106   $ (3   $ (61   $ (35   $ 10   
                                                               

Engineered Products and Solutions (1), (2):

                   

Third-party aluminum shipments (kmt)

     69      69      63      56        257        41        50        43   

Third-party sales

   $ 1,551    $ 1,660    $ 1,596    $ 1,392      $ 6,199      $ 1,270      $ 1,194      $ 1,128   

Equity income

                                                1   

Depreciation, depletion, and amortization

   $ 42    $ 41    $ 41    $ 41      $ 165      $ 40      $ 46      $ 41   

Income taxes

   $ 60    $ 75    $ 60    $ 27      $ 222      $ 46      $ 40      $ 33   

ATOI

   $ 148    $ 172    $ 140    $ 73      $ 533      $ 95      $ 88      $ 75   
                                                               

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)

 

     1Q08     2Q08     3Q08     4Q08     2008     1Q09     2Q09     3Q09  

Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa:

                

Total segment ATOI

   $ 668      $ 838      $ 665      $ 28      $ 2,199      $ (143   $ (132   $ 142   

Unallocated amounts (net of tax):

                

Impact of LIFO

     (31     (44     (5     73        (7     29        39        80   

Interest income

     9        12        10        4        35        1        8        (1

Interest expense

     (64     (57     (63     (81     (265     (74     (75     (78

Noncontrolling interests (4)

     (67     (70     (84            (221     (10     5        (47

Corporate expense

     (82     (91     (77     (78     (328     (71     (70     (71

Restructuring and other charges

     (30     (1     (25     (637     (693     (46     (56     (3

Discontinued operations

     4        (7     (38     (262     (303     (17     (142     4   

Other

     (104     (34     (115     (238     (491     (166     (31     51   

Consolidated net income (loss) attributable to Alcoa

   $ 303      $ 546      $ 268      $ (1,191   $ (74   $ (497   $ (454   $ 77   
                                                                  

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 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, except per-share amounts)

Adjusted Income

      Quarter ended
September 30, 2009
     Income     Earnings per
share

Net income attributable to Alcoa

   $ 77      $ 0.08

Income from discontinued operations

     4     
          

Income from continuing operations attributable to Alcoa

     73        0.07

Gain on acquisition in Suriname

     (35  

Restructuring and other charges

     1     
          

Income from continuing operations attributable to Alcoa – as adjusted

   $ 39        0.04
          

Income from continuing operations 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 and transaction impacts from acquisitions and divestitures. There can be no assurances that similar items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Income from continuing operations attributable to Alcoa determined under GAAP as well as Income from continuing operations attributable to Alcoa – as adjusted.


Alcoa and subsidiaries

Calculation of Financial Measures (unaudited), continued

(in millions)

EBITDA

 

     Quarter ended     Change  
   June 30,
2009
    September 30,
2009
   

(Loss) income from continuing operations

   $ (317   $ 120      $ 437   

Benefit for income taxes

     (108     (22     86   

Other income, net

     (89     (123     (34

Interest expense

     115        120        5   

Restructuring and other charges

     82        17        (65
                        

Net margin

     (317     112        429   

Provision for depreciation, depletion, and amortization

     317        342        25   
                        

Earnings before interest, taxes, depreciation, and amortization

   $      $ 454      $ 454   
                        

Alcoa’s definition of EBITDA is net margin plus 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. EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations.

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