Highlights:
-
Income from continuing operations of $137 million or $0.13 per share;
net income of $136 million or $0.13 per share. -
Revenue of $5.2 billion, a six percent increase from the first quarter
of 2010, primarily driven by higher volume. -
EBITDA of $724 million — EBITDA Margin of 14.0 percent highest since
third quarter 2008. - Free cash flow in the second quarter totaled $87 million.
- Cash on hand of $1.34 billion.
-
Global aluminum consumption forecast raised from 10 to 12 percent on
improved end-market demand.
NEW YORK–Alcoa (NYSE: AA) today announced second quarter 2010 income from
continuing operations of $137 million or $0.13 per share compared with a
first quarter 2010 loss from continuing operations of $194 million, or a
loss of $0.19 per share. First quarter 2010 results included
restructuring and special charges of $295 million, or $0.29 per share.
The second quarter of 2009 showed a loss from continuing operations of
$312 million, or $0.32 per share including restructuring charges.
Earnings for the second quarter improved $331 million sequentially as
stronger volumes, productivity improvements, favorable currency and
lower energy costs more than offset slightly lower average realized
metal prices which declined $22 a metric ton, to an average of $2,309 a
ton in the quarter.
The second quarter 2010 results reflect the impact of restructuring
including job reductions and special items such as costs associated with
the recently completed United Steelworkers contract negotiations, offset
by non-cash, mark-to-market benefits on derivatives in several power
contracts as well as a net discrete tax benefit. Taken together these
items had a net unfavorable impact of $2 million in the quarter. First
quarter 2010 results included restructuring and special charges of $295
million or $0.29 per share.
Revenues for the quarter were $5.2 billion, a six percent increase from
the first quarter of 2010 driven by a four percent increase in aluminum
shipments and a one percent increase in third-party prices for alumina,
partially offset by a one percent decrease in realized prices for
aluminum. In many markets we saw strong revenue growth from the previous
quarter with packaging (+17%), commercial transportation (+10%),
building and construction (+9%), distribution (+5%), industrial gas
turbines (+5%) and aerospace (+5%) realizing gains. Revenues increased
22 percent from $4.2 billion in the second quarter of 2009.
“We improved profits and revenues and maintained our solid cash
position,” said Klaus Kleinfeld, Alcoa Chairman and CEO. “The top and
bottom line growth was driven by higher volumes from stronger end
markets and continued gains from our productivity programs. Based on
this improved end-market demand, we are raising our projection for
aluminum consumption from 10 percent to 12 percent this year.
“Prospects for Alcoa and aluminum continue to be excellent,” Kleinfeld
said. “Aluminum is traditionally a backbone of growing economies and is
penetrating new applications every day. Alcoa has enviable positions in
bauxite, alumina and aluminum and our investments will move us further
down the cost curve. Meanwhile, our mid- and downstream businesses
continue to improve margins.”
Alcoa continued to produce strong results in its cash sustainability
program. After the first six months of 2010, the Company is tracking
toward its expanded goals for 2010, including: $1.4 billion of the
targeted $2.5 billion in procurement savings; $311 million of the
targeted $500 million in annual overhead reduction savings; days of
working capital at 42, a six-day improvement from the same period last
year; and $514 million toward the targeted $1.25 billion in capital
spending. The capital spending includes the Company’s investment in the
Ma’aden/Alcoa joint venture in Saudi Arabia, which will create the
world’s lowest-cost aluminum complex, including a mine, refinery,
smelter and rolling mill.
Cash sustainability efforts helped improve the cost of goods sold as a
percentage of sales by 90 basis points to 81.2 percent from 82.1 percent
in the first quarter of 2010. EBITDA for the second quarter 2010 was
$724 million. The Company’s second quarter 2010 EBITDA margin of 14.0
percent was the highest since third quarter 2008.
Net income for the second quarter 2010 was $136 million or $0.13 per
share compared with a net loss of $201 million, or a loss of $0.20 per
share in the first quarter of 2010, which includes the previously
mentioned restructuring and special items. The second quarter of 2009
showed a net loss of $454 million, or $0.47 per share, including
restructuring charges.
Free cash flow in the second quarter of 2010 totaled $87 million. In the
quarter, the Company ended several accounts receivable sales programs,
which resulted in an unfavorable working capital impact of approximately
$260 million and held free cash flow back from even stronger performance.
Debt-to-capital at the end of the second quarter 2010 stands at 38.4
percent, 130 basis points lower than the second quarter of 2009. Overall
debt decreased $465 million from the second quarter of 2009. Cash on
hand at the end of the second quarter of 2010 was $1.34 billion.
Revenues for the first half of 2010 were $10.1 billion, and results from
continuing operations showed a loss of $57 million, or $0.06 per share.
The first half of 2010 showed a net loss of $65 million, or $0.06 per
share.
Segment Results
Alumina
After-tax operating income (ATOI) in the second quarter was $94 million,
an increase of $22 million compared with first quarter ATOI of $72
million. Higher production and a one percent increase in realized price,
along with favorable currency and productivity benefits, were partially
offset by commissioning issues at the Sao Luis refinery. Alumina
production in the second quarter increased 24 thousand metric tons (kmt)
to 3,890 kmt as increases across our global system more than offset
declines at Sao Luis.
Primary Metals
ATOI in the second quarter was $109 million, a decrease of $14 million
from the first quarter. Lower LME prices and higher LME-linked costs,
primarily energy, were partially offset by favorable currency,
non-LME-linked energy benefits and continued productivity gains.
Litigation related to a power contract at the Rockdale smelter and the
associated legal costs negatively impacted results by $10 million. Also
in the quarter, the Fusina smelter was fully curtailed and the Aviles
smelter was forced to halt operations due to flooding. Primary metal
production for the quarter increased 4 kmt to 893 kmt and buy/resell
activity totaled 68 kmt.
Flat-Rolled Products
ATOI in the second quarter was $71 million, a sequential increase of $41
million. Higher volumes in Russia, China and North America, and
continued productivity gains were partially offset by lower prices. In
the quarter, the Russia operations benefited from improving market
conditions and a lower cost structure to generate positive ATOI.
Engineered Products and Solutions
ATOI in the second quarter was $107 million, up 32 percent while sales
rose four percent. Higher volumes in the aerospace, building &
construction and commercial vehicle markets along with strong
productivity gains.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
July 12, 2010 to present the quarter’s results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com
under “Invest.”
About Alcoa
Alcoa is the world’s leading producer of primary aluminum, fabricated
aluminum and alumina. In addition to inventing the modern-day aluminum
industry, Alcoa innovation has been behind major milestones in the
aerospace, automotive, packaging, building and construction, commercial
transportation, consumer electronics and industrial markets over the
past 120 years. Among the solutions Alcoa markets are flat-rolled
products, hard alloy extrusions, and forgings, as well as Alcoa® wheels,
fastening systems, precision and investment castings, and building
systems in addition to its expertise in other light metals such as
titanium and nickel-based super alloys. Sustainability is an integral
part of Alcoa’s operating practices and the product design and
engineering it provides to customers. Alcoa has been a member of the Dow
Jones Sustainability Index for eight consecutive years and approximately
75 percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 59,000 people in 31
countries across the world. More information can be found at www.alcoa.com.
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,” “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 aluminum industry growth, aluminum end-market demand or other
trend projections, anticipated financial results or operating
performance, anticipated achievement of 2010 cash sustainability
targets, and statements about Alcoa’s strategies, objectives, goals,
targets, 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. Actual results, performance, or outcomes may differ
materially from those expressed in or implied by those forward-looking
statements. Important factors that could cause actual results to differ
materially from those 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 for primary aluminum, alumina and other products;
(b) unfavorable changes in general business and economic conditions, in
the global financial markets, or in the markets served by Alcoa,
including automotive and commercial transportation, aerospace, building
and construction, distribution, packaging, and industrial gas turbine;
(c) the impact of changes in foreign currency exchange rates on costs
and results, particularly the Australian dollar, Brazilian real,
Canadian dollar and Euro; (d) increases in energy costs, including
electricity, natural gas and fuel oil, or the unavailability or
interruption of energy supplies; (e) increases in the costs of other raw
materials, including caustic soda or carbon products; (f) Alcoa’s
inability to achieve the level of cash generation, cost savings,
improvement in profitability and margins, or strengthening of operations
anticipated from its cash sustainability, productivity improvement and
other initiatives; (g) Alcoa’s inability to realize expected benefits
from newly constructed, expanded or acquired facilities or from
international joint ventures as planned and by targeted completion
dates, including the joint venture in Saudi Arabia or the upstream
operations in Brazil; (h) political, economic and regulatory risks in
the countries in which Alcoa operates or sells products, including
unfavorable changes in laws and governmental policies; (i) the outcome
of contingencies, including legal proceedings, government investigations
and environmental remediation; (j) the outcome of negotiations with, and
the business or financial condition of, key customers, suppliers and
business partners; (k) changes in tax rates or benefits; and (l) the
other risk factors summarized in Alcoa’s Form 10-K for the year ended
December 31, 2009, Form 10-Q for the quarter ended March 31, 2010, 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.
|
Alcoa and Statement of Consolidated Operations (unaudited) (in millions, except per-share, share, and metric ton amounts) |
|||||||||
| Quarter ended | |||||||||
| June 30, | March 31, | June 30, | |||||||
|
2009 |
2010 |
2010 |
|||||||
| Sales | $ | 4,244 | $ | 4,887 | $ | 5,187 | |||
| Cost of goods sold (exclusive of expenses below) | 3,966 | 4,013 | 4,210 | ||||||
| Selling, general administrative, and other expenses | 240 | 239 | 208 | ||||||
| Research and development expenses | 38 | 39 | 45 | ||||||
| Provision for depreciation, depletion, and amortization | 317 | 358 | 363 | ||||||
| Restructuring and other charges | 82 | 187 | 30 | ||||||
| Interest expense | 115 | 118 | 119 | ||||||
| Other (income) expenses, net | (89) | 21 | (16) | ||||||
| Total costs and expenses | 4,669 | 4,975 | 4,959 | ||||||
| (Loss) income from continuing operations before income taxes | (425) | (88) | 228 | ||||||
| (Benefit) provision for income taxes | (108) | 84 | 57 | ||||||
| (Loss) income from continuing operations | (317) | (172) | 171 | ||||||
| Loss from discontinued operations | (142) | (7) | (1) | ||||||
| Net (loss) income | (459) | (179) | 170 | ||||||
| Less: Net (loss) income attributable to noncontrolling interests | (5) | 22 | 34 | ||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA | $ | (454) | $ | (201) | $ | 136 | |||
|
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS: |
|||||||||
| (Loss) income from continuing operations | $ | (312) | $ | (194) | $ | 137 | |||
| Loss from discontinued operations | (142) | (7) | (1) | ||||||
| Net (loss) income | $ | (454) | $ | (201) | $ | 136 | |||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS: |
|||||||||
| Basic: | |||||||||
| (Loss) income from continuing operations | $ | (0.32) | $ | (0.19) | $ | 0.13 | |||
| Loss from discontinued operations | (0.15) | (0.01) | – | ||||||
| Net (loss) income | $ | (0.47) | $ | (0.20) | $ | 0.13 | |||
| Diluted: | |||||||||
| (Loss) income from continuing operations | $ | (0.32) | $ | (0.19) | $ | 0.13 | |||
| Loss from discontinued operations | (0.15) | (0.01) | – | ||||||
| Net (loss) income | $ | (0.47) | $ | (0.20) | $ | 0.13 | |||
| Average number of shares used to compute: | |||||||||
| Basic earnings per common share | 974,279,655 | 1,007,221,162 | 1,021,064,062 | ||||||
| Diluted earnings per common share | 974,279,655 | 1,007,221,162 | 1,116,861,304 | ||||||
| Shipments of aluminum products (metric tons) | 1,288,000 | 1,134,000 | 1,182,000 | ||||||
|
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited), continued (in millions, except per-share, share, and metric ton amounts) |
||||||||
| Six months ended | ||||||||
|
June 30, |
||||||||
|
2009 |
2010 |
|||||||
| Sales | $ | 8,391 | $ | 10,074 | ||||
| Cost of goods sold (exclusive of expenses below) | 8,109 | 8,223 | ||||||
| Selling, general administrative, and other expenses | 484 | 447 | ||||||
| Research and development expenses | 79 | 84 | ||||||
| Provision for depreciation, depletion, and amortization | 600 | 721 | ||||||
| Restructuring and other charges | 151 | 217 | ||||||
| Interest expense | 229 | 237 | ||||||
| Other (income) expenses, net | (59 | ) | 5 | |||||
| Total costs and expenses | 9,593 | 9,934 | ||||||
| (Loss) income from continuing operations before income taxes | (1,202 | ) | 140 | |||||
| (Benefit) provision for income taxes | (415 | ) | 141 | |||||
| Loss from continuing operations | (787 | ) | (1 | ) | ||||
| Loss from discontinued operations | (159 | ) | (8 | ) | ||||
| Net loss | (946 | ) | (9 | ) | ||||
| Less: Net income attributable to noncontrolling interests | 5 | 56 | ||||||
| NET LOSS ATTRIBUTABLE TO ALCOA | $ | (951 | ) | $ | (65 | ) | ||
| AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: | ||||||||
| Loss from continuing operations | $ | (792 | ) | $ | (57 | ) | ||
| Loss from discontinued operations | (159 | ) | (8 | ) | ||||
| Net loss | $ | (951 | ) | $ | (65 | ) | ||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS: |
||||||||
| Basic: | ||||||||
| Loss from continuing operations | $ | (0.89 | ) | $ | (0.06 | ) | ||
| Loss from discontinued operations | (0.17 | ) | – | |||||
| Net loss | $ | (1.06 | ) | $ | (0.06 | ) | ||
| Diluted: | ||||||||
| Loss from continuing operations | $ | (0.89 | ) | $ | (0.06 | ) | ||
| Loss from discontinued operations | (0.17 | ) | – | |||||
| Net loss | $ | (1.06 | ) | $ | (0.06 | ) | ||
| Average number of shares used to compute: | ||||||||
| Basic earnings per common share | 895,919,914 | 1,014,138,578 | ||||||
| Diluted earnings per common share | 895,919,914 | 1,014,138,578 | ||||||
| Common stock outstanding at the end of the period | 974,286,776 | 1,021,204,374 | ||||||
| Shipments of aluminum products (metric tons) | 2,463,000 | 2,316,000 | ||||||
|
Alcoa and subsidiaries Consolidated Balance Sheet (unaudited) (in millions) |
||||||||
|
|
December 31, | June 30, | ||||||
|
2009 |
2010 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,481 | $ | 1,344 | ||||
|
Receivables from customers, less allowances of |
1,529 | 1,938 | ||||||
| Other receivables | 653 | 273 | ||||||
| Inventories | 2,328 | 2,391 | ||||||
| Prepaid expenses and other current assets | 1,031 | 876 | ||||||
| Total current assets | 7,022 | 6,822 | ||||||
| Properties, plants, and equipment | 35,525 | 35,154 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 15,697 | 16,016 | ||||||
| Properties, plants, and equipment, net | 19,828 | 19,138 | ||||||
| Goodwill | 5,051 | 5,032 | ||||||
| Investments | 1,061 | 1,079 | ||||||
| Deferred income taxes | 2,958 | 2,848 | ||||||
| Other noncurrent assets | 2,419 | 2,298 | ||||||
| Assets held for sale | 133 | 95 | ||||||
| Total assets | $ | 38,472 | $ | 37,312 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 176 | $ | 134 | ||||
| Commercial paper | – | 74 | ||||||
| Accounts payable, trade | 1,954 | 1,854 | ||||||
| Accrued compensation and retirement costs | 925 | 832 | ||||||
| Taxes, including income taxes | 345 | 372 | ||||||
| Other current liabilities | 1,345 | 1,125 | ||||||
| Long-term debt due within one year | 669 | 1,311 | ||||||
| Total current liabilities | 5,414 | 5,702 | ||||||
| Long-term debt, less amount due within one year | 8,974 | 8,281 | ||||||
| Accrued pension benefits | 3,163 | 2,679 | ||||||
| Accrued postretirement benefits | 2,696 | 2,687 | ||||||
| Other noncurrent liabilities and deferred credits | 2,605 | 2,207 | ||||||
| Liabilities of operations held for sale | 60 | 31 | ||||||
| Total liabilities | 22,912 | 21,587 | ||||||
| CONVERTIBLE SECURITIES OF SUBSIDIARY | 40 | – | ||||||
| EQUITY | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 1,097 | 1,141 | ||||||
| Additional capital | 6,608 | 7,091 | ||||||
| Retained earnings | 11,020 | 10,892 | ||||||
| Treasury stock, at cost | (4,268 | ) | (4,177 | ) | ||||
| Accumulated other comprehensive loss | (2,092 | ) | (2,393 | ) | ||||
| Total Alcoa shareholders’ equity | 12,420 | 12,609 | ||||||
| Noncontrolling interests | 3,100 | 3,116 | ||||||
| Total equity | 15,520 | 15,725 | ||||||
| Total liabilities and equity | $ | 38,472 | $ | 37,312 | ||||
|
Alcoa and subsidiaries Statement of Consolidated Cash Flows (unaudited) (in millions) |
||||||||
| Six months ended | ||||||||
|
June 30, |
||||||||
|
2009 |
2010 |
|||||||
| CASH FROM OPERATIONS | ||||||||
| Net loss | $ | (946 | ) | $ | (9 | ) | ||
| Adjustments to reconcile net loss to cash from operations: | ||||||||
| Depreciation, depletion, and amortization | 600 | 722 | ||||||
| Deferred income taxes | (22 | ) | 156 | |||||
| Equity loss (income), net of dividends | 16 | (19 | ) | |||||
| Restructuring and other charges | 151 | 217 | ||||||
| Net gain from investing activities – asset sales | (17 | ) | – | |||||
| Loss from discontinued operations | 159 | 8 | ||||||
| Stock-based compensation | 53 | 50 | ||||||
| Excess tax benefits from stock-based payment arrangements | – | (1 | ) | |||||
| Other | 114 | 81 | ||||||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
||||||||
| Decrease (increase) in receivables | 428 | (570 | ) | |||||
| Decrease (increase) in inventories | 942 | (189 | ) | |||||
| Decrease in prepaid expenses and other current assets | 114 | 67 | ||||||
| (Decrease) increase in accounts payable, trade | (690 | ) | 1 | |||||
| (Decrease) in accrued expenses | (280 | ) | (246 | ) | ||||
| (Decrease) increase in taxes, including income taxes | (479 | ) | 190 | |||||
| Pension contributions | (69 | ) | (44 | ) | ||||
| (Increase) in noncurrent assets | (133 | ) | (4 | ) | ||||
| Increase in noncurrent liabilities | 112 | 104 | ||||||
| Decrease (increase) in net assets held for sale | 14 | (20 | ) | |||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 67 | 494 | ||||||
| CASH (USED FOR) PROVIDED FROM DISCONTINUED OPERATIONS | (10 | ) | 5 | |||||
| CASH PROVIDED FROM OPERATIONS | 57 | 499 | ||||||
| FINANCING ACTIVITIES | ||||||||
| Net change in short-term borrowings | 189 | (41 | ) | |||||
| Net change in commercial paper | (1,435 | ) | 74 | |||||
| Additions to long-term debt | 905 | 83 | ||||||
| Debt issuance costs | (17 | ) | – | |||||
| Payments on long-term debt | (23 | ) | (123 | ) | ||||
| Proceeds from exercise of employee stock options | – | 7 | ||||||
| Excess tax benefits from stock-based payment arrangements | – | 1 | ||||||
| Issuance of common stock | 876 | – | ||||||
| Dividends paid to shareholders | (168 | ) | (63 | ) | ||||
| Distributions to noncontrolling interests | (79 | ) | (113 | ) | ||||
| Contributions from noncontrolling interests | 253 | 64 | ||||||
| Acquisitions of noncontrolling interests | – | (66 | ) | |||||
| CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES | 501 | (177 | ) | |||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (884 | ) | (434 | ) | ||||
| Capital expenditures of discontinued operations | (5 | ) | – | |||||
| Acquisitions, net of cash acquired (a) | 15 | 5 | ||||||
| Proceeds from the sale of assets and businesses (b) | (78 | ) | (11 | ) | ||||
| Additions to investments (c) | 4 | (159 | ) | |||||
| Sales of investments | 506 | 138 | ||||||
| Net change in short-term investments and restricted cash | (50 | ) | 7 | |||||
| Other | (5 | ) | – | |||||
| CASH USED FOR INVESTING ACTIVITIES | (497 | ) | (454 | ) | ||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH |
28 |
(5 |
) |
|||||
| Net change in cash and cash equivalents | 89 | (137 | ) | |||||
| Cash and cash equivalents at beginning of year | 762 | 1,481 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 851 | $ | 1,344 | ||||
|
(a) |
Acquisitions, net of cash acquired for the six months ended June |
|
|
(b) |
Proceeds from the sale of assets and businesses for the six months |
|
|
(c) |
Additions to investments for the six months ended June 30, 2009 |
|
Alcoa and subsidiaries Segment Information (unaudited)
(dollars in millions, except realized prices; production and |
||||||||||||||||||||||||||||
|
1Q09 |
2Q09 |
3Q09 |
4Q09 |
2009 |
1Q10 |
2Q10 |
||||||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||||||
| Alumina production (kmt) | 3,445 | 3,309 | 3,614 | 3,897 | 14,265 | 3,866 | 3,890 | |||||||||||||||||||||
| Third-party alumina shipments (kmt) | 1,737 | 2,011 | 2,191 | 2,716 | 8,655 | 2,126 | 2,264 | |||||||||||||||||||||
| Third-party sales | $ | 430 | $ | 441 | $ | 530 | $ | 760 | $ | 2,161 | $ | 638 | $ | 701 | ||||||||||||||
| Intersegment sales | $ | 384 | $ | 306 | $ | 432 | $ | 412 | $ | 1,534 | $ | 591 | $ | 530 | ||||||||||||||
| Equity income | $ | 2 | $ | 1 | $ | 2 | $ | 3 | $ | 8 | $ | 2 | $ | 4 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 55 | $ | 67 | $ | 81 | $ | 89 | $ | 292 | $ | 92 | $ | 107 | ||||||||||||||
| Income taxes | $ | (1 | ) | $ | (21 | ) | $ | 13 | $ | (13 | ) | $ | (22 | ) | $ | 27 | $ | 41 | ||||||||||
| After-tax operating income (ATOI) | $ | 35 | $ | (7 | ) | $ | 65 | $ | 19 | $ | 112 | $ | 72 | $ | 94 | |||||||||||||
| Primary Metals: | ||||||||||||||||||||||||||||
| Aluminum production (kmt) | 880 | 906 | 881 | 897 | 3,564 | 889 | 893 | |||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 683 | 779 | 698 | 878 | 3,038 | 695 | 699 | |||||||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
1,567 |
$ |
1,667 |
$ |
1,972 |
$ |
2,155 |
$ |
1,856 |
$ |
2,331 |
$ |
2,309 |
||||||||||||||
| Third-party sales | $ | 844 | $ | 1,146 | $ | 1,362 | $ | 1,900 | $ | 5,252 | $ | 1,702 | $ | 1,710 | ||||||||||||||
| Intersegment sales | $ | 393 | $ | 349 | $ | 537 | $ | 557 | $ | 1,836 | $ | 623 | $ | 693 | ||||||||||||||
| Equity (loss) income | $ | (30 | ) | $ | 4 | $ | – | $ | – | $ | (26 | ) | $ | – | $ | 1 | ||||||||||||
| Depreciation, depletion, and amortization | $ | 122 | $ | 139 | $ | 143 | $ | 156 | $ | 560 | $ | 147 | $ | 142 | ||||||||||||||
| Income taxes | $ | (147 | ) | $ | (119 | ) | $ | (52 | ) | $ | (47 | ) | $ | (365 | ) | $ | 18 | $ | – | |||||||||
| ATOI | $ | (212 | ) | $ | (178 | ) | $ | (8 | ) | $ | (214 | ) | $ | (612 | ) | $ | 123 | $ | 109 | |||||||||
| Flat-Rolled Products: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 442 | 448 | 476 | 465 | 1,831 | 379 | 420 | |||||||||||||||||||||
| Third-party sales | $ | 1,510 | $ | 1,427 | $ | 1,529 | $ | 1,603 | $ | 6,069 | $ | 1,435 | $ | 1,574 | ||||||||||||||
| Intersegment sales | $ | 26 | $ | 23 | $ | 34 | $ | 30 | $ | 113 | $ | 46 | $ | 40 | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 52 | $ | 55 | $ | 60 | $ | 60 | $ | 227 | $ | 59 | $ | 57 | ||||||||||||||
| Income taxes | $ | – | $ | (1 | ) | $ | 17 | $ | 32 | $ | 48 | $ | 18 | $ | 28 | |||||||||||||
| ATOI | $ | (61 | ) | $ | (35 | ) | $ | 10 | $ | 37 | $ | (49 | ) | $ | 30 | $ | 71 | |||||||||||
| Engineered Products and Solutions: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 41 | 50 | 43 | 46 | 180 | 46 | 50 | |||||||||||||||||||||
| Third-party sales | $ | 1,270 | $ | 1,194 | $ | 1,128 | $ | 1,097 | $ | 4,689 | $ | 1,074 | $ | 1,122 | ||||||||||||||
| Equity income | $ | – | $ | – | $ | 1 | $ | 1 | $ | 2 | $ | 1 | $ | – | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 40 | $ | 46 | $ | 41 | $ | 50 | $ | 177 | $ | 41 | $ | 38 | ||||||||||||||
| Income taxes | $ | 46 | $ | 40 | $ | 33 | $ | 20 | $ | 139 | $ | 31 | $ | 48 | ||||||||||||||
| ATOI | $ | 95 | $ | 88 | $ | 75 | $ | 57 | $ | 315 | $ | 81 | $ | 107 | ||||||||||||||
|
Reconciliation of ATOI to consolidated net (loss) income attributable to Alcoa: |
||||||||||||||||||||||||||||
| Total segment ATOI | $ | (143 | ) | $ | (132 | ) | $ | 142 | $ | (101 | ) | $ | (234 | ) | $ | 306 | $ | 381 | ||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||||||
| Impact of LIFO | 29 | 39 | 80 | 87 | 235 | (14 | ) | (3 | ) | |||||||||||||||||||
| Interest income | 1 | 8 | (1 | ) | 4 | 12 | 3 | 3 | ||||||||||||||||||||
| Interest expense | (74 | ) | (75 | ) | (78 | ) | (79 | ) | (306 | ) | (77 | ) | (77 | ) | ||||||||||||||
| Noncontrolling interests | (10 | ) | 5 | (47 | ) | (9 | ) | (61 | ) | (22 | ) | (34 | ) | |||||||||||||||
| Corporate expense | (71 | ) | (70 | ) | (71 | ) | (92 | ) | (304 | ) | (67 | ) | (59 | ) | ||||||||||||||
| Restructuring and other charges | (46 | ) | (56 | ) | (3 | ) | (50 | ) | (155 | ) | (122 | ) | (21 | ) | ||||||||||||||
| Discontinued operations | (17 | ) | (142 | ) | 4 | (11 | ) | (166 | ) | (7 | ) | (1 | ) | |||||||||||||||
| Other | (166 | ) | (31 | ) | 51 | (26 | ) | (172 | ) | (201 | ) | (53 | ) | |||||||||||||||
| Consolidated net (loss) income attributable to Alcoa |
$ |
(497 |
) |
$ |
(454 |
) |
$ |
77 |
$ |
(277 |
) |
$ |
(1,151 |
) |
$ |
(201 |
) |
$ |
136 |
|||||||||
The difference between certain segment totals and consolidated amounts
is in Corporate.
|
Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (dollars in millions) |
||||||||
| Earnings before interest, taxes, depreciation, and |
Quarter ended |
|||||||
| amortization (EBITDA) Margin | June 30, | |||||||
|
2010 |
||||||||
| Net income attributable to Alcoa | $ | 136 | ||||||
| Add: | ||||||||
| Net income attributable to noncontrolling interests | 34 | |||||||
| Loss from discontinued operations | 1 | |||||||
| Provision for income taxes | 57 | |||||||
| Other income, net | (16 | ) | ||||||
| Interest expense | 119 | |||||||
| Restructuring and other charges | 30 | |||||||
| Provision for depreciation, depletion, and amortization | 363 | |||||||
| EBITDA | $ | 724 | ||||||
| Sales | $ | 5,187 | ||||||
| EBITDA/Sales (EBITDA Margin) | 14 | % | ||||||
Alcoa’s definition of EBITDA 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. 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. The EBITDA presented may not be
comparable to similarly titled measures of other companies.
| Free Cash Flow |
Quarter ended |
|||
| June 30, | ||||
|
2010 |
||||
| Cash provided from operations | $ | 300 | ||
| Capital expenditures | (213 | ) | ||
| Free cash flow | $ | 87 | ||
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.