Alcoa 2015 Annual Report Download - page 79

Selling, General Administrative, and Other Expenses—SG&A expenses were $979, or 4.3% of Sales, in 2015
compared with $995, or 4.2% of Sales, in 2014. The decrease of $16 was principally the result of favorable foreign
currency movements due to a stronger U.S. dollar, the absence of SG&A related to closed and sold locations, and lower
acquisition costs ($15), partially offset by expenses for professional and consulting services related to the planned
separation of Alcoa ($24—see Management Review of 2015 and Outlook for the Future above) and new SG&A related
to inorganic growth in the Engineered Products and Solutions segment.
SG&A expenses were $995, or 4.2% of Sales, in 2014 compared with $1,008, or 4.4% of Sales, in 2013. The decline of
$13 was due to decreases in various expenses, including legal and consulting fees and contract services, mostly offset
by costs associated with the acquisition of Firth Rixson ($42—see Engineered Products and Solutions in Segment
Information below) and higher stock-based compensation expense.
Research and Development Expenses—R&D expenses were $238 in 2015 compared with $218 in 2014 and $192 in
2013. The increase in 2015 as compared to 2014 was mainly driven by additional spending related to the upgrade of a
Micromill™ in San Antonio, TX, which was completed during 2015 and began production of automotive sheet on a
limited basis, for the Global Rolled Products segment and additive manufacturing for 3-D printing, partially offset by
lower spending related to inert anode and carbothermic technology for the Primary Metals segment. The increase in
2014 as compared to 2013 was primarily caused by spending related to an upgrade of a Micromill™ in San Antonio,
TX for the Global Rolled Products segment and additional spending related to inert anode and carbothermic technology
for the Primary Metals segment.
Provision for Depreciation, Depletion, and Amortization—The provision for DD&A was $1,280 in 2015 compared
with $1,371 in 2014. The decrease of $91, or 7%, was mostly due to favorable foreign currency movements due to a
stronger U.S. dollar, particularly against the Australian dollar and Brazilian real, and the absence of DD&A ($71)
related to the divestiture and/or permanent closure of five smelters, six rolling mills, one refinery, and one rod mill (see
Alumina, Primary Metals, and Global Rolled Products in Segment Information below), all of which occurred from
March 2014 through June 2015. These positive impacts were partially offset by new DD&A ($93) associated with
three acquisitions that occurred from November 2014 through July 2015 (see Engineered Products and Solutions in
Segment Information below).
The provision for DD&A was $1,371 in 2014 compared with $1,421 in 2013. The decrease of $50, or 4%, was
principally the result of favorable foreign currency movements due to a stronger U.S. dollar, particularly against the
Australian dollar and Brazilian real, and a reduction in expense related to the permanent shutdown of smelter capacity
in Australia, Canada, the United States, and Italy that occurred at different points during both 2013 and 2014 (see
Primary Metals in Segment Information below). These items were somewhat offset by new DD&A associated with
both the acquisition of Firth Rixson in November 2014 (see Engineered Products and Solutions in Segment
Information below) and assets placed into service in January 2014 related to the completed automotive expansion at the
Davenport, IA plant.
Impairment of Goodwill—In 2015 and 2013, Alcoa recognized an impairment of goodwill in the amount of $25 and
$1,731 ($1,719 after noncontrolling interest), respectively, related to the annual impairment review of the soft alloy
extrusion business in Brazil and the Primary Metals segment, respectively, (see Goodwill in Critical Accounting
Policies and estimates below).
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