Alcoa 2010 Annual Report Download - page 107

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 facilities 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. These two transactions are no longer subject to post-closing adjustments. 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
book value of the businesses, additional transaction costs, and various post-closing adjustments. Also, a net discrete
income tax charge of $19 was recognized in 2008 primarily due to the allocation of the sale proceeds to higher tax rate
jurisdictions as opposed to the allocation previously contemplated, changes in tax assumptions surrounding transaction
costs, and the finalization of the divestiture of certain foreign locations. Furthermore, Alcoa paid Rank a net $42 as a
result of working capital and certain other post-closing adjustments as defined in the sales agreement. This transaction
is no longer subject to working capital and other post-closing adjustments. Alcoa will sell metal to Rank under a supply
agreement that was entered into in conjunction with the sale agreement in December 2007. This metal supply
agreement constitutes significant continuing involvement in the sold businesses by Alcoa, and, therefore, the results of
operations of the Packaging and Consumer businesses were not classified as discontinued operations. The Packaging
and Consumer segment generated sales of $3,288 in 2007 and had approximately 9,300 employees in 22 countries.
This segment no longer contains any operations. The following is a description of the four businesses that were
included in this segment:
• Flexible Packaging, manufacturers of laminated, printed, and extruded non-rigid packaging materials such as
pouch, blister packaging, unitizing films, high quality shrink labels, and foil lidding for the pharmaceutical,
food and beverage, tobacco, and industrial markets;
• Closure Systems International, a leading global manufacturer of plastic and aluminum packaging closures
and capping equipment for beverage, food, and personal care customers;
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