Alcoa 2012 Annual Report Download - page 116

open market. Prior to November 2012, the carrying value of the assets sold, which consisted of properties, plants, and
equipment and intangible assets, along with an allocation of goodwill ($94) from the Primary Metals reporting unit,
were classified as held for sale (see Note B).
2011 Acquisitions. On March 9, 2011, Alcoa completed an acquisition of the aerospace fastener business of
TransDigm Group Inc. for $240 (cash acquired and post-closing adjustments resulted in a net purchase price of $239).
This business is a leading global designer, producer, and supplier of highly engineered aircraft components, with three
locations (one in the state of California and two in the United Kingdom) that employ a combined 400 people.
Specifically, this business provides a wide variety of high-strength, high temperature nickel alloy specialty engine
fasteners, airframe bolts, and slotted entry bearings. In 2010, this business generated sales of $61. The assets and
liabilities of this business were included in the Engineered Products and Solutions segment as of March 31, 2011; this
business’ results of operations were included in this segment beginning March 9, 2011. Based on the preliminary
purchase price allocation, goodwill of $154 was recorded for this transaction. In 2012, the purchase price allocation
was finalized based on the completion of a valuation study resulting in a $1 reduction of the initial goodwill amount.
Approximately $60 of goodwill is deductible for income tax purposes. No other intangible assets were identified as a
result of the final valuation. This transaction is no longer subject to post-closing adjustments. This acquisition is part of
a strategic plan to accelerate the growth of Alcoa’s fastener business, while adding efficiencies, broadening the existing
technology base, and expanding product offerings to better serve customers and increase shareholder value.
2010 Acquisitions. In July 2010, Alcoa completed an acquisition of the commercial building and construction business
of a privately-held company, Traco, for $77. This business, located in Cranberry, Pennsylvania, employing 650 people,
is a premier manufacturer of windows and doors for the commercial building and construction market and generated
sales of approximately $100 in 2009. The assets and liabilities of this business were included in the Engineered
Products and Solutions segment as of the end of July 2010 and this business’ results of operations were included in this
segment since the beginning of August 2010. Based on the preliminary purchase price allocation, goodwill of $28 was
recorded for this transaction. In 2011, the purchase price allocation was finalized based on the completion of a
valuation study resulting in a reduction in the initial goodwill amount of $4. All of the $24 in goodwill is deductible for
income tax purposes. Also in 2011, Alcoa paid an additional $1 to settle working capital, as provided for in the
acquisition agreement, reflecting an adjustment to the purchase price. This transaction is no longer subject to post-
closing adjustments.
2010 Divestitures. In April 2010, Alcoa completed the divestiture of the Transportation Products Europe business, the
assets and liabilities of which were classified as held for sale in 2008, to two separate buyers. Combined, this business
sold for $14, which was included in Proceeds from the sale of assets and businesses on the accompanying Statement of
Consolidated Cash Flows; a gain of $5 ($5 after-tax) was recognized in Restructuring and other charges on the
accompanying Statement of Consolidated Operations. These two transactions are no longer subject to post-closing
adjustments. This business generated sales of $78 in 2009 and, at the time of divestiture, had approximately 360
employees at three locations.
Contingent Payments. In connection with the 2005 acquisition of two fabricating facilities in Russia, Alcoa could be
required to make contingent payments of approximately $50 through 2015 based upon the achievement of various
financial and operating targets. Any such payment would be reflected as additional goodwill.
G. Inventories
December 31, 2012 2011
Finished goods $ 542 $ 537
Work-in-process 866 911
Bauxite and alumina 618 656
Purchased raw materials 536 532
Operating supplies 263 263
$2,825 $2,899
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