Alcoa 2009 Annual Report Download - page 98

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and expand the disclosures related to multiple-deliverable revenue arrangements. These changes become effective for
Alcoa on January 1, 2011. Management has determined that the adoption of these changes will not have an impact on
the Consolidated Financial Statements, as Alcoa does not currently have any such arrangements with its customers.
B. Discontinued Operations and Assets Held for Sale
For all periods presented in the accompanying Statement of Consolidated Operations, the Electrical and Electronic
Solutions (EES) business was classified as discontinued operations. There were no other active businesses classified as
discontinued operations in the three-year period ended December 31, 2009.
In late 2008, Alcoa reclassified the EES business to discontinued operations based on the decision to divest the
business. The Consolidated Financial Statements for all prior periods presented were reclassified to reflect the EES
business in discontinued operations. The divestiture of the wire harness and electrical portion of the EES business was
completed in June 2009 and the divestiture of the electronics portion of the EES business was completed in December
2009 (see Note F). The results of the Engineered Products and Solutions segment were reclassified to reflect the
movement of the EES business into discontinued operations.
The following table details selected financial information for the businesses included within discontinued operations:
2009 2008 2007
Sales $ 306 $1,218 $1,468
Loss from operations before income taxes $(221) $ (424) $ (333)
Benefit for income taxes 55 121 83
Loss from discontinued operations $(166) $ (303) $ (250)
In 2009 and 2008, the loss from discontinued operations of $166 and $303, respectively, all related to the EES
business. The $166 was 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. The $303 was 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. In 2007, the loss from discontinued
operations of $250 consisted 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.
For both periods presented in the accompanying Consolidated Balance Sheet, the assets and liabilities of operations
classified as held for sale included the Global Foil business, the Transportation Products Europe business, and the
Hawesville, KY automotive casting facility. Additionally, the assets and related liabilities of the EES business, the
wireless component of the previously divested telecommunications business, and a small automotive casting business
in the U.K. were classified as held for sale as of December 31, 2008.
In late 2008, Alcoa reclassified its Global Foil and Transportation Products Europe businesses to held for sale based on
the decision to sell these businesses (see Note D). These two businesses do not qualify as discontinued operations
because Alcoa may have significant continuing involvement with these businesses subsequent to their divestiture. The
assets of the Flat-Rolled Products and Engineered Products and Solutions segments were reclassified to reflect the
movement of the Global Foil and Transportation Products Europe businesses, respectively, into assets held for sale.
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