Alcoa 2009 Annual Report Download - page 60

somewhat offset by the gain related to the acquisition of a BHP Billiton subsidiary in the Republic of Suriname and the
absence of the impact of the 2008 gas outage in Western Australia.
Net income attributable to noncontrolling interests was $221 in 2008 compared with $365 in 2007. The decrease of
$144 was mostly due to lower earnings at AWAC attributed primarily to significant cost increases for raw materials
and energy, unfavorable foreign currency movements due to a weaker U.S. dollar, and the impact of the gas outage in
Western Australia.
Loss From Discontinued Operations—Loss from discontinued operations in 2009 was $166 comprised of a $129
($168 pretax) loss on the divestiture of the wire harness and electrical portion of the EES business, a $9 ($13 pretax)
loss on the divestiture of the electronics portion of the EES business, and the remainder was for the operational results
of the EES business prior to the divestitures.
Loss from discontinued operations in 2008 was $303 comprised of asset impairments of $162 ($225 pretax) to reflect
the estimated fair value of the EES business and a net operating loss of $141 ($199 pretax), which included
restructuring charges of $39 ($53 pretax) for headcount reductions of approximately 6,200 and a charge of $16 ($25
pretax) for obsolete inventory.
Loss from discontinued operations in 2007 was $250 comprised of a $243 loss related to the EES business, including
severance charges of $36 ($53 pretax) for headcount reductions of approximately 5,900, as part of a strategic business
review to restructure EES, and impairment charges of $93 ($133 pretax) for goodwill and $60 ($74 pretax) for various
fixed assets, as the forecasted future earnings and cash flows of the EES business no longer supported the carrying
values of such assets; an $11 loss related to working capital and other adjustments associated with the 2006 sale of the
home exteriors business; and net operating income of $4 for other discontinued businesses.
In late 2008, Alcoa reclassified the EES business to discontinued operations based on the decision to sell the business.
The Consolidated Financial Statements for all prior periods presented were reclassified to reflect the EES business in
discontinued operations. The sale of the wire harness and electrical portion of the EES business was completed in June
2009 and the sale of the electronics portion of the EES business was completed in December 2009. The results of the
Engineered Products and Solutions segment were reclassified to reflect the movement of the EES business into
discontinued operations.
Segment Information
In May 2009, management approved the movement of Alcoa’s hard alloy extrusions business from the Flat-Rolled
Products segment to the Engineered Products and Solutions segment. This move was made to capture market,
customer, and manufacturer synergies through the combination of the hard alloy extrusions business with the power
and propulsion and forgings businesses. Prior period amounts were reclassified to reflect this change.
Alcoa’s operations consist of four worldwide reportable segments: Alumina, Primary Metals, Flat-Rolled Products, and
Engineered Products and Solutions (the Packaging and Consumer segment no longer contains any operations as the
businesses within this segment were divested during 2008). Segment performance under Alcoa’s management
reporting system is evaluated based on a number of factors; however, the primary measure of performance is the
after-tax operating income (ATOI) of each segment. Certain items such as the impact of LIFO inventory accounting;
interest income and expense; noncontrolling interests; corporate expense (general administrative and selling expenses
of operating the corporate headquarters and other global administrative facilities, along with depreciation and
amortization on corporate-owned assets); restructuring and other charges; discontinued operations; and other items,
including intersegment profit eliminations and other metal adjustments, differences between tax rates applicable to the
segments and the consolidated effective tax rate, the results of the soft alloy extrusions business in Brazil, and other
nonoperating items such as foreign currency translation gains/losses are excluded from segment ATOI. Segment assets
exclude, among others, cash and cash equivalents, deferred income taxes, goodwill not allocated to businesses for
segment reporting purposes, corporate fixed assets, LIFO reserves, and assets classified as held for sale related to
discontinued operations.
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