Alcoa 2010 Annual Report Download - page 66

The following table reconciles total segment ATOI to consolidated net income (loss) attributable to Alcoa:
2010 2009 2008
Total segment ATOI $1,424 $ (234) $2,199
Unallocated amounts (net of tax):
Impact of LIFO (16) 235 (7)
Interest expense (321) (306) (265)
Noncontrolling interests (138) (61) (221)
Corporate expense (291) (304) (328)
Restructuring and other charges (134) (155) (693)
Discontinued operations (8) (166) (303)
Other (262) (160) (456)
Consolidated net income (loss) attributable to Alcoa $ 254 $(1,151) $ (74)
The significant changes in the reconciling items between total segment ATOI and consolidated net income (loss)
attributable to Alcoa for 2010 compared with 2009 consisted of:
• a change in the Impact of LIFO due to higher prices for alumina and metal, both of which were driven by a
significant rise in LME prices, and a significantly smaller reduction in LIFO inventory quantities;
• an increase in Interest expense, primarily due to a decline in interest capitalized (mainly the result of placing
the Juruti and São Luís growth projects in service during the second half of 2009) and a $9 net charge related
to the early retirement of various outstanding notes ($27 in purchase premiums paid partially offset by an $18
gain for “in-the-money” interest rate swaps), mostly offset by a 7% lower average debt level (primarily due
to the absence of commercial paper resulting from Alcoa’s improved liquidity position) and lower
amortization expense of financing costs (principally related to the fees paid (fully amortized in October
2009) for the former $1,900 364-day senior unsecured revolving credit facility);
• an increase in Noncontrolling interests, mainly due to higher earnings at AWAC, primarily driven by a
continued rise in realized prices, partially offset by net unfavorable foreign currency movements due to a
weaker U.S. dollar, higher depreciation and operating costs related to the Juruti and São Luís growth projects
placed into service in the second half of 2009, and the absence of a gain recognized on the acquisition of a
BHP Billiton subsidiary in the Republic of Suriname;
• a decline in Corporate expense, primarily due to continued reductions in expenses for contractors and
consultants, lower deferred compensation (as a result of a decline in plan performance), a decrease in bad
debt expense, and a decrease in information technology expenditures, somewhat offset by an increase in
labor costs (principally due to higher annual incentive and performance compensation and employee benefits
costs (employer matching savings plan contributions for U.S. salaried participants were suspended during
2009));
• a decrease in Restructuring and other charges, mainly due to lower layoff charges, somewhat offset by higher
asset impairments and other exit costs, primarily related to the permanent shutdown and planned demolition
of certain idled structures at five U.S. locations;
• a change in Discontinued operations, mostly the result of the absence of both a $129 loss (an additional $6
loss was recognized in 2010) on the divestiture of the wire harness and electrical portion of the EES business
(June 2009) and a $9 loss on the divestiture of the electronics portion of the EES business (December 2009);
and
• a change in Other, mainly due to a net income tax charge (includes discrete tax items) related to the
difference in the consolidated effective tax rate and the estimated tax rates applicable to the segments, net
foreign currency losses, the absence of a $21 favorable adjustment for the finalization of the estimated fair
value of the former Sapa AB joint venture, and a smaller improvement in the cash surrender value of
company-owned life insurance; partially offset by the absence of a $118 realized loss on the sale of the
former Shining Prospect investment and favorable changes in mark-to-market derivative contracts.
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