Alcoa 2010 Annual Report Download - page 60

tax assets of the Iceland operations as a result of an applicable tax rate change (from 18% to 15%); a net $19 associated
with the sale of the Packaging and Consumer businesses, mainly due to the allocation of sale proceeds to higher tax
rate jurisdictions as opposed to the allocation previously contemplated, somewhat offset by changes in tax assumptions
surrounding transaction costs and the finalization of the divestiture of certain foreign locations. These charges were
partially offset by foreign income taxed in lower rate jurisdictions and a $20 discrete income tax benefit related to the
filing of the 2007 U.S. income tax return.
Management anticipates that the effective tax rate in 2011 will be approximately 30%. However, changes in the current
economic environment, tax legislation, currency fluctuations, and the results of operations in certain taxing
jurisdictions may cause this estimated rate to fluctuate.
Noncontrolling Interests—Net income attributable to noncontrolling interests was $138 in 2010 compared with $61
in 2009. The increase of $77 was mostly due to higher earnings at AWAC, which is owned 60% by Alcoa and 40% by
Alumina Limited. The improved earnings at AWAC were attributed primarily to a continued rise in realized prices,
partially offset by net unfavorable foreign currency movements due to a weaker U.S. dollar, higher depreciation
expense and operating costs related to the Juruti and São Luís growth projects placed into service in the second half of
2009, and the absence of a gain recognized on the acquisition of a BHP Billiton subsidiary in the Republic of
Suriname.
Net income attributable to noncontrolling interests was $61 in 2009 compared with $221 in 2008. The decline of $160
was principally due to lower earnings at AWAC, mainly driven by a significant drop in realized prices, somewhat
offset by the gain related to the acquisition of a BHP Billiton subsidiary in the Republic of Suriname and the absence of
the impact of the 2008 gas outage in Western Australia.
Loss From Discontinued Operations—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.
Loss from discontinued operations in 2009 was $166 comprised of a $129 ($168 pretax) loss on the divestiture of the
wire harness and electrical portion of the EES business, a $9 ($13 pretax) loss on the divestiture of the electronics
portion of the EES business, and the remainder was for the operational results of the EES business prior to the
divestitures.
Loss from discontinued operations in 2008 was $303 comprised of asset impairments of $162 ($225 pretax) to reflect
the estimated fair value of the EES business and a net operating loss of $141 ($199 pretax), which included
restructuring charges of $39 ($53 pretax) for headcount reductions of approximately 6,200 and a charge of $16 ($25
pretax) for obsolete inventory.
In late 2008, Alcoa reclassified the EES business to discontinued operations based on the decision to divest the
business. The divestiture of the wire harness and electrical portion of the EES business was completed in June 2009
and the divestiture of the electronics portion of the EES business was completed in December 2009. The results of the
Engineered Products and Solutions segment were reclassified to reflect the movement of the EES business into
discontinued operations.
Segment Information
Alcoa’s operations consist of four worldwide reportable segments: Alumina, Primary Metals, Flat-Rolled Products, and
Engineered Products and Solutions (the Packaging and Consumer segment no longer contains any operations as the
businesses within this segment were divested during 2008). 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;
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