Alcoa 2009 Annual Report Download - page 106

2009 Divestitures. In June 2009, Alcoa completed the divestiture of the wire harness and electrical portion of the EES
business to Platinum Equity effective June 1, 2009. Alcoa paid $200 to divest this portion of the EES business and
recognized a loss of $129 ($168 pretax) in discontinued operations (see Note B) on the accompanying Statement of
Consolidated Operations. The total cash payment was comprised of the agreed upon transaction price of $175 and
working capital and other adjustments of $25 based on the provisions of the purchase agreement. This transaction is
subject to certain post-closing adjustments as defined in the purchase agreement. Proceeds from the sale of assets and
businesses on the accompanying Statement of Consolidated Cash Flows include the $200 as a cash outflow. The wire
harness and electrical portion of the EES business generated sales of $1,114 in 2008 and, at the time of divestiture, had
operations in 13 countries employing approximately 16,200 employees.
In December 2009, Alcoa completed the divestiture of the electronics portion of the EES business to Flextronics Inc.
Alcoa paid $4 upon consummation of the transaction and recognized a loss of $9 ($13 pretax) in discontinued
operations (see Note B) on the accompanying Statement of Consolidated Operations. This transaction is subject to
certain post-closing adjustments as defined in the purchase agreement. Proceeds from the sale of assets and businesses
on the accompanying Statement of Consolidated Cash Flows include this payment as a cash outflow. The electronics
portion of the EES business generated sales of $104 in 2008 and, at the time of divestiture, had operations in four
countries employing approximately 450 employees.
In late 2009, Alcoa completed the sale of two of its foil plants (Sabiñánigo, Spain and Shanghai, China), which were
part of the Global Foil business, the assets and liabilities of which were classified as held for sale in 2008 (see Note B),
to two separate buyers. Combined, these two transactions were sold for $20, which was included in Proceeds from the
sale of assets and businesses on the accompanying Statement of Consolidated Cash Flows, and resulted in a net loss of
less than $1. The Sabiñánigo transaction is subject to certain post-closing adjustments as defined in the purchase
agreement. These two locations generated sales of $169 in 2008 and, at the time of divestiture, had approximately 460
employees.
2008 Acquisitions. In March 2008, Alcoa acquired the remaining outstanding noncontrolling interest of four percent in
the Belaya Kalitva fabricating facility in Russia for $15 in cash. Based on the allocation of the purchase price, Alcoa
recorded $6 in goodwill, all of which is non-deductible for income tax purposes.
Also in March 2008, Alcoa acquired the stock of Republic Fastener Manufacturing Corporation (“Republic”) and Van
Petty Manufacturing (“Van Petty”) from The Wood Family Trust for $276 in cash. The two aerospace fastener
manufacturing businesses are located in Newbury Park, California, and employed a combined 240 people. Republic
offers a wide variety of sheet metal and aerospace fasteners and Van Petty produces high performance precision
aerospace fasteners, and, combined, the businesses had revenue of $51 in 2007. These businesses are included in the
Engineered Products and Solutions segment. Based on the final purchase price allocation, $246 of goodwill was
recorded for these transactions, all of which is deductible for income tax purposes.
Lastly in March 2008, Alcoa received formal approval from regulators in China for the acquisition of the 27%
outstanding noncontrolling interest in Alcoa Bohai Aluminum Industries Company Limited. In May 2008, Alcoa
completed the purchase of such noncontrolling interest for $79 in cash. Based on the final allocation of the purchase
price, Alcoa recorded $24 in goodwill, all of which is non-deductible for income tax purposes.
In connection with the August 2003 acquisition of 40.9% of Alcoa Alumínio S.A. (Alumínio), which was held by
Camargo Corrêa Group (Camargo), the acquisition agreement provided for a contingent payment to Camargo based on
the five-year performance of Alumínio limited by the appreciation in the market price of Alcoa’s common stock. In
July 2008, Alcoa paid Camargo $47 under the contingent payment provisions in the acquisition agreement. This
payment resulted in $47 of goodwill, all of which is non-deductible for income tax purposes, representing an increase
in the original purchase price. Alcoa is no longer subject to contingent payments related to the Alumínio acquisition.
2008 Divestitures. In February 2008, Alcoa completed the sale of its Packaging and Consumer businesses to Rank
Group Limited (Rank). During 2008, Alcoa received $2,693 in cash in exchange for a combination of assets and shares
of stock in certain subsidiaries and recognized a loss of $43 ($32 after-tax) in Restructuring and other charges on the
accompanying Statement of Consolidated Operations (see Note D). The loss was mainly the result of changes in the net
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