Alcoa 2009 Annual Report Download - page 108

after-tax) was recognized in Restructuring and other charges on the accompanying Statement of Consolidated
Operations, of which $68 ($51 after-tax) was recorded as an impairment charge to reflect the write-down of the
carrying value of the assets of the business to its estimated fair value (see Note D). This business produced cast
aluminum components, including steering knuckles, swing arms and control arms through a Vacuum Riserless Casting/
Pressure Riserless Casting (VRC/PRC) process. The Automotive Castings business employed approximately 530
employees and consisted of two operating locations, one in Fruitport, MI (the Michigan Casting Center) and one in
Farsund, Norway (the Scandinavian Casting Center). This business generated approximately $150 in sales in 2006.
Separately from the sale transaction, Alcoa entered into an agreement with Compass to supply metal to the Michigan
Casting Center.
In 2008 and 2007, Alcoa made a $47 contingent payment related to a 2003 acquisition (see 2008 Acquisitions) and a
contingent payment of $13 related to the Fairchild acquisition, respectively. These payments were recorded as
adjustments to goodwill and were included in Acquisitions, net of cash acquired on the accompanying Statement of
Consolidated Cash Flows in the respective periods. Alcoa is no longer subject to contingent payments related to the
Fairchild acquisition. In connection with the 2005 acquisition of two fabricating facilities in Russia, Alcoa could be
required to make additional contingent payments of approximately $85 through 2015 based upon the achievement of
various financial and operating targets.
Pro forma results of the Company, assuming all acquisitions were made at the beginning of each period presented,
would not have been materially different from the results reported.
G. Inventories
December 31, 2009 2008
Finished goods $ 441 $ 747
Work-in-process 680 960
Bauxite and alumina 593 724
Purchased raw materials 359 575
Operating supplies 255 232
$2,328 $3,238
At December 31, 2009 and 2008, 35% and 39% of total inventories, respectively, were valued on a LIFO basis. If
valued on an average-cost basis, total inventories would have been $717 and $1,078 higher at December 31, 2009 and
2008, respectively. During the three-year period ended December 31, 2009, reductions in LIFO inventory quantities
caused partial liquidations of the lower cost LIFO inventory base. These liquidations resulted in the recognition of
income of $175 ($114 after-tax) in 2009, $38 ($25 after-tax) in 2008, and $31 ($20 after-tax) in 2007.
H. Properties, Plants, and Equipment, Net
December 31, 2009 2008
Land and land rights, including mines $ 576 $ 447
Structures 10,542 7,825
Machinery and equipment 21,960 18,471
33,078 26,743
Less: accumulated depreciation, depletion, and amortization 15,697 13,846
17,381 12,897
Construction work-in-progress 2,447 4,558
$19,828 $17,455
As of December 31, 2009 and 2008, the net carrying value of idled smelting assets was $710 and $453, representing
1,163 kmt and 807 kmt of idle capacity, respectively. Also, the net carrying value of idled refining assets was $157 as
of December 31, 2009, representing 1,791 kmt of idle capacity.
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