Alcoa 2012 Annual Report Download - page 108

market considerations; cost factors; overall financial performance; and other relevant entity-specific events. If an entity
elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then
required to perform the existing two-step quantitative impairment test, otherwise no further analysis is required. An entity
also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative
impairment test. These changes become effective for Alcoa for any indefinite-lived intangible asset impairment test
performed on January 1, 2013 or later, although early adoption is permitted. Upon adoption of these changes, management
plans to proceed directly to the two-step quantitative test for Alcoa’s indefinite-lived intangible assets. As these changes
should not affect the outcome of the impairment analysis of an indefinite-lived intangible asset, management has
determined these changes will not have an impact on the Consolidated Financial Statements.
In December 2011, the FASB issued changes to the disclosure of offsetting assets and liabilities. These changes require an
entity to disclose both gross information and net information about both instruments and transactions eligible for offset in
the statement of financial position and instruments and transactions subject to an agreement similar to a master netting
arrangement. The enhanced disclosures will enable users of an entity’s financial statements to understand and evaluate the
effect or potential effect of master netting arrangements on an entity’s financial position, including the effect or potential
effect of rights of setoff associated with certain financial instruments and derivative instruments. These changes become
effective for Alcoa on January 1, 2013. Other than the additional disclosure requirements, management has determined
that the adoption of these changes will not have an impact on the Consolidated Financial Statements.
B. Discontinued Operations and Assets Held for Sale
For the years ended December 31, 2012, 2011, and 2010, there were no active businesses classified as discontinued
operations in the accompanying Statement of Consolidated Operations.
The following table details selected financial information of discontinued operations:
2012 2011 2010
Sales $- $ - $ -
Loss from operations before income taxes $- $(4) $(11)
Benefit for income taxes - 1 3
Loss from discontinued operations $- $(3) $ (8)
In 2011, discontinued operations included an additional loss of $3 ($5 pretax) related to the wire harness and electrical
portion (divested in June 2009) of the Electrical and Electronic Solutions (EES) business as a result of a negotiated
preliminary settlement related to claims filed in 2010 against Alcoa by Platinum Equity in an insolvency proceeding in
Germany, a net gain of $2 ($3 pretax) related to both the wire harness and electrical portion and the electronics portion
(divested in December 2009) of the EES business for a number of small post-closing and other adjustments, and a $2 ($2
pretax) reversal of the gain recognized in 2006 related to the sale of the home exteriors business for an adjustment to an
outstanding obligation, which was part of the terms of sale. In 2010, discontinued operations included an additional loss of
$6 ($9 pretax) related to the wire harness and electrical portion of the EES business as a result of a contract settlement
with a former customer of this business and an additional loss of $2 ($4 pretax) related to the electronics portion of the
EES business for the settling of working capital, which was not included in the divestiture transaction.
For both periods presented in the accompanying Consolidated Balance Sheet, the assets and liabilities of operations classified
as held for sale included the electronics portion of the EES business (working capital components) and the Hawesville, KY
automotive casting facility. Additionally, assets of the Tapoco Hydroelectric Project (“Tapoco”), along with an allocation of
goodwill from the Primary Metals reporting unit, were classified as held for sale as of December 31, 2011.
In June 2012, management committed to a plan to sell the assets, consisting of properties, plants, and equipment and
intangible assets, of Tapoco. As a result, these assets were reclassified to held for sale. The Consolidated Financial
Statements for all prior periods presented were reclassified to reflect this change. In November 2012, Alcoa completed
the sale of Tapoco (see Note F).
97