Alcoa 2015 Annual Report Download - page 139

Also in March 2015, Alcoa signed a definitive agreement to acquire RTI International Metals, Inc. (RTI), a U.S.
company that was publicly traded on the New York Stock Exchange under the ticker symbol “RTI.” On July 23, 2015,
after satisfying all customary closing conditions and receiving the required regulatory and RTI shareholder approvals,
Alcoa completed the acquisition of RTI. Alcoa purchased all outstanding shares of RTI common stock in a stock-for-
stock transaction valued at $870 (based on the $9.96 per share July 23, 2015 closing price of Alcoa’s common stock).
Each issued and outstanding share of RTI common stock prior to the completion of the transaction was converted into
the right to receive 2.8315 shares of Alcoa common stock. In total, Alcoa issued 87,397,414 shares of its common
stock to consummate this transaction, which was not reflected in the accompanying Statement of Consolidated Cash
Flows as it represents a noncash financing activity. The exchange ratio was the quotient of a $41 per RTI common
share acquisition price and the $14.48 per share March 6, 2015 closing price of Alcoa’s common stock. In addition to
the transaction price, Alcoa also paid $25 ($19 after-tax) in professional fees and costs related to this acquisition. This
amount was recorded in Selling, general administrative, and other expenses on the accompanying Statement of
Consolidated Operations.
RTI is a global supplier of titanium and specialty metal products and services for the commercial aerospace, defense,
energy, and medical device end markets. The purpose of this acquisition is to expand Alcoa’s range of titanium
offerings and add advanced technologies and materials, primarily related to the aerospace end market. In 2014, RTI
generated net sales of $794 and had approximately 2,600 employees. The operating results and assets and liabilities of
RTI were included within Alcoa’s Engineered Products and Solutions segment since the date of acquisition. Third-
party sales and after-tax operating income (Alcoa’s primary segment performance measure—see Note Q) of RTI from
the acquisition date through December 31, 2015 were $309 and less than $(1), respectively.
The following table represents the preliminary allocation of the purchase price by major asset acquired and liability
assumed, as well as the amount of goodwill recognized:
Assets:
Cash and cash equivalents $ 302
Receivables from customers 103
Inventories 531
Prepaid expenses and other current assets 47
Properties, plants, and equipment 436
Goodwill 240
Other noncurrent assets 93
Total assets $1,752
Liabilities:
Accounts payable $90
Other current liabilities 94
Long-term debt due within one year 115
Long-term debt, less amount due within one year 385
Other noncurrent liabilities 138
Total liabilities $ 822
Equity:
Additional capital $60
Total equity $60
The amounts in the table above are subject to change based, in part, on management’s review of a third-party valuation
of the assets acquired and liabilities assumed, which is expected to be completed in mid-2016.
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