Alcoa 2013 Annual Report Download - page 69

Results of Operations
Earnings Summary
Loss from continuing operations attributable to Alcoa for 2013 was $2,285, or $2.14 per diluted share, compared with
Income from continuing operations attributable to Alcoa of $191, or $0.18 per share, in 2012. The decrease of
$2,476 in the results from continuing operations was mostly due to an impairment of goodwill, a discrete income tax
charge for valuation allowances on certain deferred tax assets, and charges for the resolution of a legal matter. Other
significant changes in the results from continuing operations included the following: lower realized prices for
aluminum in the upstream and midstream businesses, higher input costs across three of the four segments, the absence
of a gain on the sale of U.S. hydroelectric power assets, and restructuring and other charges related to the permanent
shutdown of smelter capacity. These other changes were mostly offset by net productivity improvements, net favorable
foreign currency movements, the absence of both a net charge for certain environmental remediation matters and a
charge for the civil portion of a legal matter, and stronger volumes in three of the four segments.
Income from continuing operations attributable to Alcoa for 2012 was $191, or $0.18 per share, compared with $614,
or $0.55 per share, in 2011. The decline of $423 in the results from continuing operations was primarily due to the
following: lower realized prices for aluminum and alumina, higher input costs, and charges for the civil portion of a
legal matter and certain environmental remediation matters. These items were partially offset by net productivity
improvements, a gain on the sale of U.S. hydroelectric power assets, a decline in the results attributable to
noncontrolling interests, lower restructuring charges, net favorable foreign currency movements, lower income taxes
due to a decline in operating results, a favorable LIFO (last in, first out) impact, and higher volumes in the midstream
and downstream segments.
Net loss attributable to Alcoa for 2013 was $2,285, or $2.14 per share, compared with Net income attributable to Alcoa
of $191, or $0.18 per share, in 2012, and Net income attributable to Alcoa of $611, or $0.55 per share, in 2011. In
2011, net income of $611 included a loss from discontinued operations of $3 (see Loss From Discontinued Operations
below).
Sales—Sales for 2013 were $23,032 compared with sales of $23,700 in 2012, a decline of $668, or 3%. The decrease
was primarily due to lower primary aluminum volumes, including those related to curtailed and shutdown smelter
capacity; a decline in realized prices for aluminum, driven by lower London Metal Exchange (LME) prices; and
unfavorable pricing in the midstream segment due to a decrease in metal prices; somewhat offset by higher volumes in
the Alumina, midstream, and downstream segments.
Sales for 2012 were $23,700 compared with sales of $24,951 in 2011, a decrease of $1,251, or 5%. The decline was
mainly the result of a drop in realized prices for aluminum and alumina, driven by lower LME prices, unfavorable
pricing in the midstream segment due to a decrease in metal prices, and unfavorable foreign currency movements,
mostly due to a weaker euro, somewhat offset by higher volumes in the midstream and downstream segments and
favorable product mix in the midstream segment.
Cost of Goods Sold—COGS as a percentage of Sales was 83.7% in 2013 compared with 86.1% in 2012. The
percentage was positively impacted by net productivity improvements across all segments, the absence of a net charge
for five environmental remediation matters ($194), net favorable foreign currency movements due to a stronger U.S.
dollar, and a positive impact related to the March 2012 fire at the cast house in Massena, NY (insurance recovery in
2013 plus the absence of business interruption and repair costs that occurred in 2012). These items were partially offset
by the previously mentioned realized price impacts and higher input costs, including those related to bauxite mining
and planned maintenance outages at various power plants.
COGS as a percentage of Sales was 86.1% in 2012 compared with 82.1% in 2011. The percentage was negatively
impacted by the previously mentioned lower realized prices in the upstream and midstream segments, higher input
costs, and a net charge for five environmental remediation matters ($194). These items were somewhat offset by net
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