Highlights:
-
Income from continuing operations of $61 million or $0.06 per share;
includes a net charge for special items of $35 million or $0.03 per
share. - Net Income of $61 million or $0.06 per share.
- Adjusted EBITDA of $602 million, up 33 percent over third quarter 2009.
-
Revenue of $5.3 billion, up 15 percent over third quarter 2009 and a 2
percent increase from second quarter 2010. - Free cash flow of $176 million.
- Reduced debt by $491 million.
-
Debt to capital ratio 35.7 percent, 270 basis point improvement over
previous quarter. -
Aluminum consumption forecast increased from 12 to 13 percent on
strengthening global demand.
NEW YORK–Alcoa (NYSE: AA) today announced third quarter 2010 income from
continuing operations of $61 million, or $0.06 per share, compared with
second quarter 2010 income from continuing operations of $137 million,
or $0.13 per share, and third quarter 2009 income from continuing
operations of $73 million, or $0.07 per share. Third quarter 2010
results included a negative impact for special items of $35 million, or
$0.03 per share, compared to a $2 million net charge for special items
in the sequential quarter and a positive impact of $34 million, or $0.03
per share, in the year ago quarter.
Quarterly results were impacted by lower London Metal Exchange (LME)
prices and negative currency impacts. These were partially offset by
higher volumes in Alumina, Flat-Rolled Products, and Engineered Products
and Solutions and the continued benefits from Alcoa’s Cash
Sustainability Program.
The third quarter 2010 results also reflect the impact of special items
such as previously announced recovery costs associated with the São Luís
alumina refinery; a negative impact from the second quarter flood at the
Avilés smelter in Spain; costs associated with the recent debt tender
offer; non-cash, mark-to-market impacts of derivatives in several power
contracts; and restructuring activities. These items were partially
offset by a discrete income tax benefit.
“We enhanced our liquidity, improved our balance sheet, and saw strong
performance in our mid and downstream businesses,” said Klaus Kleinfeld,
Alcoa Chairman and CEO. “And despite unfavorable currency shifts and
slightly lower metal prices, our upstream businesses continue to make
progress.
“We see markets strengthening and have increased our 2010 global
aluminum consumption forecast to 13 percent from 12 percent. In
countries such as China, Brazil, India, and Russia, more and more people
are moving into the middle class, driving demand in building and
construction, transportation, and packaging. This trend favors aluminum
as it is light, strong, and infinitely recyclable.”
Net income for the quarter was $61 million, or $0.06 per share, compared
to $136 million, or $0.13 per share, for the second quarter of 2010. Net
income for the third quarter of 2009 was $77 million or $0.08 per share.
Revenues for the quarter were $5.3 billion, a 2 percent increase from
$5.2 billion in the second quarter of 2010 and a 15 percent increase
from $4.6 billion in the third quarter of 2009. The sequential increase
was the result of a 3 percent increase in aluminum shipment volumes and
a 7 percent increase in alumina shipments, offset by lower realized
third-party prices for alumina (-5 percent) and aluminum (-2 percent).
Strong end-market revenue performance in the quarter was achieved in
Packaging (+11 percent), Commercial Transportation (+10 percent),
Building & Construction (+10 percent), and Aerospace (+3 percent).
Alcoa continued to produce strong results in its Cash Sustainability
Program and is on track to reach its goals for the year. Results
year-to-date include procurement savings of $2.2 billion of the $2.5
billion target, overhead savings of $431 million toward the $500 million
reduction target, capital spending at $785 million toward the $1.25
billion target, and working capital at 42 days, five days better than
the same period last year.
Cash from Operations was $392 million, up $92 million from the second
quarter of 2010, and an improvement of $208 million from the year ago
quarter. Free cash flow was positive at $176 million in the quarter, an
increase of $89 million compared to the previous quarter. Adjusted
EBITDA was $602 million, a 33 percent increase over the third quarter of
2009.
Capital expenditures for the third quarter were $216 million, flat with
the second quarter of 2010 and on target with the Cash Sustainability
Program.
Debt-to-Capital at the end of the third quarter stands at 35.7 percent,
270 basis points lower than the previous quarter and a 260 basis point
improvement over the prior-year quarter. The decrease was the result of
a reduction in debt of $491 million from the sequential quarter and $764
million over the third quarter of 2009.
Segment Results
Alumina
After-tax operating income (ATOI) in the third quarter was $70 million,
a decrease of $24 million compared with second quarter ATOI of $94
million. A 5 percent decline in realized alumina price, negative
currency impacts, and São Luís production recovery efforts were
partially offset by higher production, continued productivity benefits,
and a favorable tax rate change. Alumina production in the third quarter
increased to 4,047 thousand metric tons (kmt).
Primary Metals
ATOI in the third quarter was $78 million, a decrease of $31 million
compared with second quarter ATOI of $109 million. Lower LME prices,
unfavorable currency, the Avilés smelter ramp up, and increases in
energy and carbon product prices were partially offset by continued
productivity gains. Primary production for the quarter decreased
slightly by 2 kmt to 891 kmt, with buy/resell activity totaling 48 kmt.
The Avilés smelter is on track to return to full capacity by the end of
the year.
Flat-Rolled Products
ATOI in the third quarter was $66 million, a decrease of $5 million
compared with second quarter ATOI of $71 million. Revenue growth across
many end-markets and increased volumes in China, North America, and
Russia helped to partially offset higher costs related to the Tennessee
hot mill fire, lower production levels in North America, and also the
summer shutdown of our European plants. A rapid response to the
Tennessee outage minimized the negative financial impact. The Russian
operations achieved their second consecutive quarter of profitability
and the Bohai, China, facility continued its ramp-up.
Engineered Products and Solutions
ATOI in the third quarter was $114 million, an increase of $7 million
compared with second quarter ATOI of $107 million. Continued strong Cash
Sustainability initiative performance helped to generate a record
adjusted EBITDA margin of 18.2 percent, 4.9 percentage points better
than the third quarter of 2009. Revenues increased sequentially on
higher volumes in aerospace and increased market share in the building
and construction market.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on October 7, 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 nine 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 days working capital, 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, Forms 10-Q for the
quarters ended March 31, 2010 and June 30, 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 subsidiaries | ||||||||||||
| Statement of Consolidated Operations (unaudited) | ||||||||||||
|
(in millions, except per-share, share, and metric ton amounts) |
||||||||||||
| Quarter ended | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| 2009 | 2010 | 2010 | ||||||||||
| Sales | $ | 4,615 | $ | 5,187 | $ | 5,287 | ||||||
| Cost of goods sold (exclusive of expenses below) | 3,888 | 4,210 | 4,413 | |||||||||
| Selling, general administrative, and other expenses | 234 | 208 | 232 | |||||||||
| Research and development expenses | 39 | 45 | 40 | |||||||||
| Provision for depreciation, depletion, and amortization | 342 | 363 | 358 | |||||||||
| Restructuring and other charges | 17 | 30 | 2 | |||||||||
| Interest expense | 120 | 119 | 139 | |||||||||
| Other (income) expenses, net | (123 | ) | (16 | ) | 43 | |||||||
| Total costs and expenses | 4,517 | 4,959 | 5,227 | |||||||||
| Income from continuing operations before income taxes | 98 | 228 | 60 | |||||||||
| (Benefit) provision for income taxes | (22 | ) | 57 | (49 | ) | |||||||
| Income from continuing operations | 120 | 171 | 109 | |||||||||
| Income (loss) from discontinued operations | 4 | (1 | ) | – | ||||||||
| Net income | 124 | 170 | 109 | |||||||||
| Less: Net income attributable to noncontrolling interests | 47 | 34 | 48 | |||||||||
| NET INCOME ATTRIBUTABLE TO ALCOA | $ | 77 | $ | 136 | $ | 61 | ||||||
|
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON |
||||||||||||
| Income from continuing operations | $ | 73 | $ | 137 | $ | 61 | ||||||
| Income (loss) from discontinued operations | 4 | (1 | ) | – | ||||||||
| Net income | $ | 77 | $ | 136 | $ | 61 | ||||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON |
||||||||||||
| Basic: | ||||||||||||
| Income from continuing operations | $ | 0.07 | $ | 0.13 | $ | 0.06 | ||||||
| Income (loss) from discontinued operations | 0.01 | – | – | |||||||||
| Net income | $ | 0.08 | $ | 0.13 | $ | 0.06 | ||||||
| Diluted: | ||||||||||||
| Income from continuing operations | $ | 0.07 | $ | 0.13 | $ | 0.06 | ||||||
| Income (loss) from discontinued operations | 0.01 | – | – | |||||||||
| Net income | $ | 0.08 | $ | 0.13 | $ | 0.06 | ||||||
| Average number of shares used to compute: | ||||||||||||
| Basic earnings per common share | 974,353,242 | 1,021,064,062 | 1,021,260,553 | |||||||||
| Diluted earnings per common share | 977,593,656 | 1,116,861,304 | 1,026,774,598 | |||||||||
| Shipments of aluminum products (metric tons) | 1,230,000 | 1,182,000 | 1,223,000 | |||||||||
|
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited), continued (in millions, except per-share, share, and metric ton amounts) |
|||||||
| Nine months ended | |||||||
| September 30, | |||||||
| 2009 | 2010 | ||||||
| Sales | $ | 13,006 | $ | 15,361 | |||
| Cost of goods sold (exclusive of expenses below) | 11,997 | 12,636 | |||||
| Selling, general administrative, and other expenses | 718 | 679 | |||||
| Research and development expenses | 118 | 124 | |||||
| Provision for depreciation, depletion, and amortization | 942 | 1,079 | |||||
| Restructuring and other charges | 168 | 219 | |||||
| Interest expense | 349 | 376 | |||||
| Other (income) expenses, net | (182 | ) | 48 | ||||
| Total costs and expenses | 14,110 | 15,161 | |||||
| (Loss) income from continuing operations before income taxes | (1,104 | ) | 200 | ||||
| (Benefit) provision for income taxes | (437 | ) | 92 | ||||
| (Loss) income from continuing operations | (667 | ) | 108 | ||||
| Loss from discontinued operations | (155 | ) | (8 | ) | |||
| Net (loss) income | (822 | ) | 100 | ||||
| Less: Net income attributable to noncontrolling interests | 52 | 104 | |||||
| NET LOSS ATTRIBUTABLE TO ALCOA | $ | (874 | ) | $ | (4 | ) | |
| AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: | |||||||
| (Loss) income from continuing operations | $ | (719 | ) | $ | 4 | ||
| Loss from discontinued operations | (155 | ) | (8 | ) | |||
| Net loss | $ | (874 | ) | $ | (4 | ) | |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON |
|||||||
| Basic: | |||||||
| (Loss) income from continuing operations | $ | (0.78 | ) | $ | – | ||
| Loss from discontinued operations | (0.17 | ) | (0.01 | ) | |||
| Net loss | $ | (0.95 | ) | $ | (0.01 | ) | |
| Diluted: | |||||||
| (Loss) income from continuing operations | $ | (0.78 | ) | $ | – | ||
| Loss from discontinued operations | (0.17 | ) | (0.01 | ) | |||
| Net loss | $ | (0.95 | ) | $ | (0.01 | ) | |
| Average number of shares used to compute: | |||||||
| Basic earnings per common share | 922,347,792 | 1,016,516,286 | |||||
| Diluted earnings per common share | 922,347,792 | 1,022,836,762 | |||||
| Common stock outstanding at the end of the period | 974,376,883 | 1,021,350,038 | |||||
| Shipments of aluminum products (metric tons) | 3,693,000 | 3,539,000 | |||||
|
Alcoa and subsidiaries Consolidated Balance Sheet (unaudited) (in millions) |
||||||||
|
December 31,
2009 |
September 30,
2010 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,481 | $ | 843 | ||||
|
Receivables from customers, less allowances of |
1,529 | 1,971 | ||||||
| Other receivables | 653 | 323 | ||||||
| Inventories | 2,328 | 2,435 | ||||||
| Prepaid expenses and other current assets | 1,031 | 947 | ||||||
| Total current assets | 7,022 | 6,519 | ||||||
| Properties, plants, and equipment | 35,525 | 36,802 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 15,697 | 16,888 | ||||||
| Properties, plants, and equipment, net | 19,828 | 19,914 | ||||||
| Goodwill | 5,051 | 5,128 | ||||||
| Investments | 1,061 | 1,189 | ||||||
| Deferred income taxes | 2,958 | 3,070 | ||||||
| Other noncurrent assets | 2,419 | 2,449 | ||||||
| Assets held for sale | 133 | 101 | ||||||
| Total assets | $ | 38,472 | $ | 38,370 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 176 | $ | 119 | ||||
| Accounts payable, trade | 1,954 | 1,971 | ||||||
| Accrued compensation and retirement costs | 925 | 904 | ||||||
| Taxes, including income taxes | 345 | 397 | ||||||
| Other current liabilities | 1,345 | 1,091 | ||||||
| Long-term debt due within one year | 669 | 200 | ||||||
| Total current liabilities | 5,414 | 4,682 | ||||||
| Long-term debt, less amount due within one year | 8,974 | 8,990 | ||||||
| Accrued pension benefits | 3,163 | 2,677 | ||||||
| Accrued postretirement benefits | 2,696 | 2,686 | ||||||
| Other noncurrent liabilities and deferred credits | 2,605 | 2,526 | ||||||
| Liabilities of operations held for sale | 60 | 31 | ||||||
| Total liabilities | 22,912 | 21,592 | ||||||
| CONVERTIBLE SECURITIES OF SUBSIDIARY | 40 | – | ||||||
| EQUITY | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 1,097 | 1,141 | ||||||
| Additional capital | 6,608 | 7,094 | ||||||
| Retained earnings | 11,020 | 10,922 | ||||||
| Treasury stock, at cost | (4,268 | ) | (4,171 | ) | ||||
| Accumulated other comprehensive loss | (2,092 | ) | (1,688 | ) | ||||
| Total Alcoa shareholders’ equity | 12,420 | 13,353 | ||||||
| Noncontrolling interests | 3,100 | 3,425 | ||||||
| Total equity | 15,520 | 16,778 | ||||||
| Total liabilities and equity | $ | 38,472 | $ | 38,370 | ||||
|
Alcoa and subsidiaries Statement of Consolidated Cash Flows (unaudited) (in millions) |
||||||||
|
Nine months ended
September 30, |
||||||||
| 2009 | 2010 | |||||||
| CASH FROM OPERATIONS | ||||||||
| Net (loss) income | $ | (822 | ) | $ | 100 | |||
| Adjustments to reconcile net (loss) income to cash from operations: | ||||||||
| Depreciation, depletion, and amortization | 942 | 1,080 | ||||||
| Deferred income taxes | (55 | ) | 62 | |||||
| Equity loss (income), net of dividends | 4 | (25 | ) | |||||
| Restructuring and other charges | 168 | 219 | ||||||
| Net gain from investing activities – asset sales | (104 | ) | (8 | ) | ||||
| Loss from discontinued operations | 155 | 8 | ||||||
| Stock-based compensation | 69 | 70 | ||||||
| Excess tax benefits from stock-based payment arrangements | – | (1 | ) | |||||
| Other | 137 | 121 | ||||||
|
Changes in assets and liabilities, excluding effects of |
||||||||
| Decrease (increase) in receivables | 463 | (467 | ) | |||||
| Decrease (increase) in inventories | 1,053 | (94 | ) | |||||
| Decrease in prepaid expenses and other current assets | 94 | 34 | ||||||
| (Decrease) increase in accounts payable, trade | (736 | ) | 16 | |||||
| (Decrease) in accrued expenses | (430 | ) | (384 | ) | ||||
| (Decrease) increase in taxes, including income taxes | (515 | ) | 167 | |||||
| Pension contributions | (102 | ) | (70 | ) | ||||
| (Increase) in noncurrent assets | (223 | ) | (56 | ) | ||||
| Increase in noncurrent liabilities | 141 | 136 | ||||||
| Decrease (increase) in net assets held for sale | 11 | (24 | ) | |||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 250 | 884 | ||||||
| CASH (USED FOR) PROVIDED FROM DISCONTINUED OPERATIONS | (9 | ) | 7 | |||||
| CASH PROVIDED FROM OPERATIONS | 241 | 891 | ||||||
| FINANCING ACTIVITIES | ||||||||
| Net change in short-term borrowings | (125 | ) | (57 | ) | ||||
| Net change in commercial paper | (1,535 | ) | – | |||||
| Additions to long-term debt | 1,043 | 1,082 | ||||||
| Debt issuance costs | (17 | ) | (5 | ) | ||||
| Payments on long-term debt | (31 | ) | (1,587 | ) | ||||
| Proceeds from exercise of employee stock options | – | 8 | ||||||
| Excess tax benefits from stock-based payment arrangements | – | 1 | ||||||
| Issuance of common stock | 876 | – | ||||||
| Dividends paid to shareholders | (198 | ) | (94 | ) | ||||
| Distributions to noncontrolling interests | (93 | ) | (154 | ) | ||||
| Contributions from noncontrolling interests | 327 | 121 | ||||||
| Acquisitions of noncontrolling interests | – | (66 | ) | |||||
| CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES | 247 | (751 | ) | |||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (1,254 | ) | (650 | ) | ||||
| Capital expenditures of discontinued operations | (5 | ) | – | |||||
| Acquisitions, net of cash acquired (a) | 112 | (72 | ) | |||||
| Proceeds from the sale of assets and businesses (b) | (73 | ) | (6 | ) | ||||
| Additions to investments (c) | (26 | ) | (224 | ) | ||||
| Sales of investments | 1,026 | 138 | ||||||
| Net change in short-term investments and restricted cash | 8 | 7 | ||||||
| Other | (9 | ) | 9 | |||||
| CASH USED FOR INVESTING ACTIVITIES | (221 | ) | (798 | ) | ||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH |
37 |
20 |
||||||
| Net change in cash and cash equivalents | 304 | (638 | ) | |||||
| Cash and cash equivalents at beginning of year | 762 | 1,481 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,066 | $ | 843 | ||||
| (a) |
Acquisitions, net of cash acquired for the nine months ended September 30, 2010 includes a cash inflow for cash received as a result of post-closing adjustments related to 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. 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 from the previously mentioned acquisition of a BHP Billiton subsidiary. |
|
| (b) |
Proceeds from the sale of assets and businesses for the nine months ended September 30, 2010 was a cash outflow as this line item includes cash paid to settle former customer contracts of the divested Electrical and Electronic Solutions and Automotive Castings businesses. 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. |
|
| (c) |
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 |
||||||||||||||||||||||||||||||||
| 1Q09 | 2Q09 | 3Q09 | 4Q09 | 2009 | 1Q10 | 2Q10 | 3Q10 | |||||||||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||||||||||
| Alumina production (kmt) | 3,445 | 3,309 | 3,614 | 3,897 | 14,265 | 3,866 | 3,890 | 4,047 | ||||||||||||||||||||||||
| Third-party alumina shipments (kmt) | 1,737 | 2,011 | 2,191 | 2,716 | 8,655 | 2,126 | 2,264 | 2,423 | ||||||||||||||||||||||||
| Third-party sales | $ | 430 | $ | 441 | $ | 530 | $ | 760 | $ | 2,161 | $ | 638 | $ | 701 | $ | 717 | ||||||||||||||||
| Intersegment sales | $ | 384 | $ | 306 | $ | 432 | $ | 412 | $ | 1,534 | $ | 591 | $ | 530 | $ | 506 | ||||||||||||||||
| Equity income | $ | 2 | $ | 1 | $ | 2 | $ | 3 | $ | 8 | $ | 2 | $ | 4 | $ | 1 | ||||||||||||||||
| Depreciation, depletion, and amortization | $ | 55 | $ | 67 | $ | 81 | $ | 89 | $ | 292 | $ | 92 | $ | 107 | $ | 100 | ||||||||||||||||
| Income taxes | $ | (1 | ) | $ | (21 | ) | $ | 13 | $ | (13 | ) | $ | (22 | ) | $ | 27 | $ | 41 | $ | (22 | ) | |||||||||||
| After-tax operating income (ATOI) | $ | 35 | $ | (7 | ) | $ | 65 | $ | 19 | $ | 112 | $ | 72 | $ | 94 | $ | 70 | |||||||||||||||
| Primary Metals: | ||||||||||||||||||||||||||||||||
| Aluminum production (kmt) | 880 | 906 | 881 | 897 | 3,564 | 889 | 893 | 891 | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 683 | 779 | 698 | 878 | 3,038 | 695 | 699 | 708 | ||||||||||||||||||||||||
|
Alcoa’s average realized price per metric ton of |
$ |
1,567 |
$ |
1,667 |
$ |
1,972 |
$ |
2,155 |
$ |
1,856 |
$ |
2,331 |
$ |
2,309 |
$ |
2,261 |
||||||||||||||||
| Third-party sales | $ | 844 | $ | 1,146 | $ | 1,362 | $ | 1,900 | $ | 5,252 | $ | 1,702 | $ | 1,710 | $ | 1,688 | ||||||||||||||||
| Intersegment sales | $ | 393 | $ | 349 | $ | 537 | $ | 557 | $ | 1,836 | $ | 623 | $ | 693 | $ | 589 | ||||||||||||||||
| Equity (loss) income | $ | (30 | ) | $ | 4 | $ | – | $ | – | $ | (26 | ) | $ | – | $ | 1 | $ | – | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 122 | $ | 139 | $ | 143 | $ | 156 | $ | 560 | $ | 147 | $ | 142 | $ | 142 | ||||||||||||||||
| Income taxes | $ | (147 | ) | $ | (119 | ) | $ | (52 | ) | $ | (47 | ) | $ | (365 | ) | $ | 18 | $ | – | $ | (3 | ) | ||||||||||
| ATOI | $ | (212 | ) | $ | (178 | ) | $ | (8 | ) | $ | (214 | ) | $ | (612 | ) | $ | 123 | $ | 109 | $ | 78 | |||||||||||
| Flat-Rolled Products: | ||||||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 442 | 448 | 476 | 465 | 1,831 | 379 | 420 | 448 | ||||||||||||||||||||||||
| Third-party sales | $ | 1,510 | $ | 1,427 | $ | 1,529 | $ | 1,603 | $ | 6,069 | $ | 1,435 | $ | 1,574 | $ | 1,645 | ||||||||||||||||
| Intersegment sales | $ | 26 | $ | 23 | $ | 34 | $ | 30 | $ | 113 | $ | 46 | $ | 40 | $ | 46 | ||||||||||||||||
| Depreciation, depletion, and amortization | $ | 52 | $ | 55 | $ | 60 | $ | 60 | $ | 227 | $ | 59 | $ | 57 | $ | 57 | ||||||||||||||||
| Income taxes | $ | – | $ | (1 | ) | $ | 17 | $ | 32 | $ | 48 | $ | 18 | $ | 28 | $ | 26 | |||||||||||||||
| ATOI | $ | (61 | ) | $ | (35 | ) | $ | 10 | $ | 37 | $ | (49 | ) | $ | 30 | $ | 71 | $ | 66 | |||||||||||||
| Engineered Products and Solutions: | ||||||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 41 | 50 | 43 | 46 | 180 | 46 | 50 | 51 | ||||||||||||||||||||||||
| Third-party sales | $ | 1,270 | $ | 1,194 | $ | 1,128 | $ | 1,097 | $ | 4,689 | $ | 1,074 | $ | 1,122 | $ | 1,173 | ||||||||||||||||
| Equity income | $ | – | $ | – | $ | 1 | $ | 1 | $ | 2 | $ | 1 | $ | – | $ | 1 | ||||||||||||||||
| Depreciation, depletion, and amortization | $ | 40 | $ | 46 | $ | 41 | $ | 50 | $ | 177 | $ | 41 | $ | 38 | $ | 37 | ||||||||||||||||
| Income taxes | $ | 46 | $ | 40 | $ | 33 | $ | 20 | $ | 139 | $ | 31 | $ | 48 | $ | 63 | ||||||||||||||||
| ATOI | $ | 95 | $ | 88 | $ | 75 | $ | 57 | $ | 315 | $ | 81 | $ | 107 | $ | 114 | ||||||||||||||||
|
Reconciliation of ATOI to consolidated net |
||||||||||||||||||||||||||||||||
| Total segment ATOI | $ | (143 | ) | $ | (132 | ) | $ | 142 | $ | (101 | ) | $ | (234 | ) | $ | 306 | $ | 381 | $ | 328 | ||||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||||||||||
| Impact of LIFO | 29 | 39 | 80 | 87 | 235 | (14 | ) | (3 | ) | (2 | ) | |||||||||||||||||||||
| Interest income | 1 | 8 | (1 | ) | 4 | 12 | 3 | 3 | 3 | |||||||||||||||||||||||
| Interest expense | (74 | ) | (75 | ) | (78 | ) | (79 | ) | (306 | ) | (77 | ) | (77 | ) | (91 | ) | ||||||||||||||||
| Noncontrolling interests | (10 | ) | 5 | (47 | ) | (9 | ) | (61 | ) | (22 | ) | (34 | ) | (48 | ) | |||||||||||||||||
| Corporate expense | (71 | ) | (70 | ) | (71 | ) | (92 | ) | (304 | ) | (67 | ) | (59 | ) | (71 | ) | ||||||||||||||||
| Restructuring and other charges | (46 | ) | (56 | ) | (3 | ) | (50 | ) | (155 | ) | (122 | ) | (21 | ) | 1 | |||||||||||||||||
| Discontinued operations | (17 | ) | (142 | ) | 4 | (11 | ) | (166 | ) | (7 | ) | (1 | ) | – | ||||||||||||||||||
| Other | (166 | ) | (31 | ) | 51 | (26 | ) | (172 | ) | (201 | ) | (53 | ) | (59 | ) | |||||||||||||||||
|
Consolidated net (loss) income attributable to |
$ |
(497 |
) |
$ |
(454 |
) |
$ |
77 |
$ |
(277 |
) |
$ |
(1,151 |
) |
$ |
(201 |
) |
$ |
136 |
$ |
61 |
|||||||||||
The difference between certain segment totals and consolidated amounts
is in Corporate.
|
Alcoa and subsidiaries |
|
Calculation of Financial Measures (unaudited) |
|
(dollars in millions) |
|
Adjusted Earnings before interest, taxes, depreciation, and |
Quarter ended
September 30, |
||||||||||
| 2009 | 2010 | ||||||||||
| Net income attributable to Alcoa | $ | 77 | $ | 61 | |||||||
| Add: | |||||||||||
| Net income attributable to noncontrolling interests | 47 | 48 | |||||||||
| Income from discontinued operations | (4 | ) | – | ||||||||
| Benefit for income taxes | (22 | ) | (49 | ) | |||||||
| Other (income) expenses, net | (123 | ) | 43 | ||||||||
| Interest expense | 120 | 139 | |||||||||
| Restructuring and other charges | 17 | 2 | |||||||||
| Provision for depreciation, depletion, and amortization | 342 | 358 | |||||||||
| Adjusted EBITDA | $ | 454 | $ | 602 | |||||||
Alcoa’s definition of Adjusted 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. 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 | |||||||||||||||||||||||||||||||||||||||||
|
June 30,
2010 |
September 30,
2010 |
|||||||||||||||||||||||||||||||||||||||||
| Cash provided from operations | $ | 300 | $ | 392 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | (213 | ) | (216 | ) | ||||||||||||||||||||||||||||||||||||||
| Free cash flow | $ | 87 | $ | 176 | ||||||||||||||||||||||||||||||||||||||
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) |
| Engineered Products and Solutions | ||||||||||
|
Adjusted Earnings before interest, taxes, depreciation, and |
Quarter ended
September 30, |
|||||||||
| 2009 | 2010 | |||||||||
| After-tax operating income (ATOI) | $ | 75 | $ | 114 | ||||||
| Add: | ||||||||||
| Depreciation, depletion, and amortization | 41 | 37 | ||||||||
| Equity income | (1 | ) | (1 | ) | ||||||
| Income taxes | 33 | 63 | ||||||||
| Other | 2 | 1 | ||||||||
| Adjusted EBITDA | $ | 150 | $ | 214 | ||||||
| Total sales | $ | 1,128 | $ | 1,173 | ||||||
| Adjusted EBITDA/Total sales | 13.3 | % | 18.2 | % | ||||||
Alcoa’s definition of Adjusted 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. 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.