Alcoa 2009 Annual Report Download - page 124

Alcoa’s operations consist of four worldwide reportable segments as follows (there were five such segments previous
to 2009):
Alumina. This segment consists of Alcoa’s worldwide alumina system, including the mining of bauxite, which is then
refined into alumina. Alumina is mainly sold directly to internal and external smelter customers worldwide or is sold to
customers who process it into industrial chemical products. A portion of this segment’s third-party sales are completed
through the use of agents, alumina traders, and distributors. Slightly more than half of Alcoa’s alumina production is
sold under supply contracts to third parties worldwide, while the remainder is used internally.
Primary Metals. This segment consists of Alcoa’s worldwide smelter system. Primary Metals receives alumina,
primarily from the Alumina segment, and produces primary aluminum used by Alcoa’s fabricating businesses, as well
as sold to external customers, aluminum traders, and commodity markets. Results from the sale of aluminum powder,
scrap, and excess power are also included in this segment, as well as the results of aluminum derivative contracts.
Primary aluminum produced by Alcoa and used internally is transferred to other segments at prevailing market prices.
The sale of primary aluminum represents more than 90% of this segment’s third-party sales.
Flat-Rolled Products. This segment’s principal business is the production and sale of aluminum plate, sheet, and foil.
This segment includes rigid container sheet (RCS), which is sold directly to customers in the packaging and consumer
market and is used to produce aluminum beverage cans. Seasonal increases in RCS sales are generally experienced in
the second and third quarters of the year. This segment also includes sheet and plate used in the transportation, building
and construction, and distribution markets (mainly used in the production of machinery and equipment and consumer
durables), which is sold directly to customers and through distributors. Approximately one-third of the third-party sales
in this segment consist of RCS, while the remaining two-thirds of third-party sales are derived from sheet and plate and
foil used in industrial markets. While the customer base for flat-rolled products is large, a significant amount of sales of
RCS, sheet, and plate is to a relatively small number of customers.
Engineered Products and Solutions. This segment includes titanium, aluminum, and super alloy investment castings;
forgings and fasteners; aluminum wheels; integrated aluminum structural systems; and architectural extrusions used in
the aerospace, automotive, building and construction, commercial transportation, and power generation markets. These
products are sold directly to customers and through distributors. Additionally, hard alloy extrusions products, which are
also sold directly to customers and through distributors, serve the distribution, aerospace, automotive, and commercial
transportation markets. In 2008, the Electrical and Electronic Solutions business was classified as discontinued
operations; therefore, all periods presented exclude the results of this business (this business was sold during 2009 –
see Note F).
Packaging and Consumer. The businesses within this segment were sold to Rank in 2008; therefore, this segment no
longer contains any operations (see Note F). Prior to the sale of these businesses, this segment included consumer,
foodservice, and flexible packaging products; food and beverage closures; and plastic sheet and film for the packaging
industry. The principal products in this segment included aluminum foil; plastic wraps and bags; plastic beverage and
food closures; flexible packaging products; thermoformed plastic containers; and extruded plastic sheet and film.
Consumer products were marketed under brands including Reynolds Wrap®, Diamond®, Baco®, and Cut-Rite®.
Seasonal increases generally occurred in the second and fourth quarters of the year for such products as consumer foil
and plastic wraps and bags, while seasonal slowdowns for closures generally occurred in the fourth quarter of the year.
Products were generally sold directly to customers, consisting of supermarkets, beverage companies, food processors,
retail chains, and commercial foodservice distributors.
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