Alcoa 2010 Annual Report Download - page 126

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 (known as upstream operations) consists of Alcoa’s worldwide smelter system.
Primary Metals receives alumina, mostly 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 (known as midstream operations) 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-half of the third-party sales in this segment consist of RCS, while the other one-half 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 (known as downstream operations) 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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