Alcoa 2012 Annual Report Download - page 194

Calculation of Financial Measures (unaudited)
(dollars in millions, except per-share and per metric ton amounts)
Reconciliation of Adjusted Income
Year ended
December 31, 2012
Income Diluted EPS
Net income attributable to Alcoa $ 191 $ 0.18
Loss from discontinued operations –
Income from continuing operations attributable to Alcoa 191 0.18
Restructuring and other charges 73
Discrete tax items* (22)
Other special items** 20
Income from continuing operations attributable to Alcoa – as adjusted $ 262 0.24
Income from continuing operations attributable to Alcoa – as adjusted is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because management reviews the operating results
of Alcoa excluding the impacts of restructuring and other charges, discrete tax items, and other special items
(collectively, “special items”). There can be no assurances that additional special items will not occur in future
periods. To compensate for this limitation, management believes that it is appropriate to consider both Income from
continuing operations attributable to Alcoa determined under GAAP as well as Income from continuing operations
attributable to Alcoa – as adjusted.
* Discrete tax items include a benefit for a change in the legal structure of an investment ($13); a benefit as a result of
including the then anticipated gain from the sale of the Tapoco Hydroelectric Project in the calculation of the estimated
annual effective tax rate applied to the results for the nine months ended September 30, 2012 ($12); a charge related to
prior year U.S. taxes on certain depletable assets ($8); and a net benefit for other miscellaneous items ($5).
** Other special items include a gain on the sale of the Tapoco Hydroelectric Project ($161: $275 is included in the
Primary Metals segment and $(114) is included in Corporate); a net increase in the environmental reserve related
to the Grasse River remediation in Massena, NY, remediation at two former locations, East St. Louis, IL and
Sherwin, TX, and two new remediation projects at the smelter sites in Baie Comeau, Quebec, Canada and
Mosjøen, Norway ($133); a litigation reserve ($33); uninsured losses related to fire damage to the cast house at
the Massena, NY location ($28); interest income on an escrow deposit ($8); and a net favorable change in certain
mark-to-market energy derivative contracts ($5).
Reconciliation of Adjusted EBITDA
Year ended
December 31, 2012
Net income attributable to Alcoa $ 191
Add:
Net loss attributable to noncontrolling interests (29)
Loss from discontinued operations –
Provision for income taxes 162
Other income, net (341)
Interest expense 490
Restructuring and other charges 87
Provision for depreciation, depletion, and amortization 1,460
Adjusted EBITDA $ 2,020
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin
plus an add-back for depreciation, depletion, and amortization. Net margin is equivalent to Sales minus the following
items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and
Provision for depreciation, depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional
information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations.
The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.