Alcoa 2012 Annual Report Download - page 70

Noncontrolling Interests—Net loss attributable to noncontrolling interests was $29 in 2012 compared with Net
income attributable to noncontrolling interests of $194 in 2011. The change of $223 was mostly due to lower earnings
at Alcoa World Alumina and Chemicals (AWAC), which is owned 60% by Alcoa and 40% by Alumina Limited. The
decline in earnings at AWAC were attributed primarily to lower realized prices, due to a decrease in contractual LME-
based pricing, higher input costs, particularly caustic and fuel oil, and a charge for a litigation reserve of $34. These
items were somewhat offset by net productivity improvements and net favorable foreign currency movements due to a
stronger U.S. dollar.
Net income attributable to noncontrolling interests was $194 in 2011 compared with $138 in 2010. The increase of $56 was
largely the result of higher earnings at AWAC. The improved earnings at AWAC were mainly driven by higher realized
prices, partially offset by higher input costs and net unfavorable foreign currency movements due to a weaker U.S. dollar.
Loss From Discontinued Operations—Loss from discontinued operations in 2011 was $3 comprised of 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.
Loss from discontinued operations in 2010 was $8 comprised of 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.
Segment Information
Alcoa’s operations consist of four worldwide reportable segments: Alumina, Primary Metals, Global Rolled Products,
and Engineered Products and Solutions. Segment performance under Alcoa’s management reporting system is
evaluated based on a number of factors; however, the primary measure of performance is the after-tax operating
income (ATOI) of each segment. Certain items such as the impact of LIFO inventory accounting; interest expense;
noncontrolling interests; corporate expense (general administrative and selling expenses of operating the corporate
headquarters and other global administrative facilities, along with depreciation and amortization on corporate-owned
assets); restructuring and other charges; discontinued operations; and other items, including intersegment profit
eliminations and other metal adjustments, differences between tax rates applicable to the segments and the consolidated
effective tax rate, the results of the soft alloy extrusions business in Brazil, and other nonoperating items such as
foreign currency transaction gains/losses and interest income are excluded from segment ATOI.
ATOI for all reportable segments totaled $1,369 in 2012, $1,893 in 2011, and $1,424 in 2010. See Note Q to the
Consolidated Financial Statements in Part II Item 8 of this Form 10-K for additional information. The following
discussion provides shipments, sales, and ATOI data for each reportable segment and production data for the Alumina
and Primary Metals segments for each of the three years in the period ended December 31, 2012.
Alumina
2012 2011 2010
Alumina production (kmt) 16,342 16,486 15,922
Third-party alumina shipments (kmt) 9,295 9,218 9,246
Third-party sales $ 3,092 $ 3,462 $ 2,815
Intersegment sales 2,310 2,727 2,212
Total sales $ 5,402 $ 6,189 $ 5,027
ATOI $ 90 $ 607 $ 301
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