Alcoa 2013 Annual Report Download - page 124

December 31, 2012
Gross
carrying
amount
Accumulated
amortization
Computer software $ 907 $(664)
Patents and licenses 133 (88)
Other intangibles 101 (28)
Total amortizable intangible assets 1,141 (780)
Indefinite-lived trade names and trademarks 46 -
Total other intangible assets $1,187 $(780)
Computer software consists primarily of software costs associated with an enterprise business solution (EBS) within
Alcoa to drive common systems among all businesses.
Amortization expense related to the intangible assets in the tables above for the years ended December 31, 2013, 2012,
and 2011 was $73, $82, and $86, respectively, and is expected to be in the range of approximately $60 to $70 annually
from 2014 to 2018.
F. Acquisitions and Divestitures
Pro forma results of the Company, assuming all acquisitions described below were made at the beginning of the earliest
prior period presented, would not have been materially different from the results reported.
2012 Divestitures. In November 2012, Alcoa completed the sale of its 351-megawatt Tapoco Hydroelectric Project
(“Tapoco”) to Brookfield Renewable Energy Partners for $597 in cash. Alcoa recognized a gain of $320 ($173 after-
tax) in Other income, net on the accompanying Statement of Consolidated Operations, of which a gain of $426 ($275
after-tax) was reflected in the Primary Metals segment and a loss of $106 ($102 after-tax) was reflected in Corporate.
The amount in Corporate represents the write-off of goodwill and capitalized interest related to Tapoco that were not
included in the assets of the Primary Metals segment. This transaction is no longer subject to post-closing adjustments.
Tapoco is a four-station hydroelectric project located on the Little Tennessee and Cheoah Rivers in eastern Tennessee
and western North Carolina. The transaction included four generating stations and dams, 86 miles of transmission lines,
and approximately 14,500 acres of land associated with and surrounding Tapoco. The power generated by Tapoco was
primarily consumed by Alcoa’s smelter in Tennessee, which was temporarily idled in 2009 and permanently shut down
in 2011. Since 2009, the power generated from Tapoco was sold into the open market. Prior to November 2012, the
carrying value of the assets sold, which consisted of properties, plants, and equipment and intangible assets, along with
an allocation of goodwill ($94) from the Primary Metals reporting unit, were classified as held for sale.
2011 Acquisitions. On March 9, 2011, Alcoa completed an acquisition of the aerospace fastener business of
TransDigm Group Inc. for $240 (cash acquired and post-closing adjustments resulted in a net purchase price of $239).
This business is a leading global designer, producer, and supplier of highly engineered aircraft components, with three
locations (one in the state of California and two in the United Kingdom) that employ a combined 400 people.
Specifically, this business provides a wide variety of high-strength, high temperature nickel alloy specialty engine
fasteners, airframe bolts, and slotted entry bearings. In 2010, this business generated sales of $61. The assets and
liabilities of this business were included in the Engineered Products and Solutions segment as of March 31, 2011;
this business’ results of operations were included in this segment beginning March 9, 2011. Based on the preliminary
purchase price allocation, goodwill of $154 was recorded for this transaction. In 2012, the purchase price allocation
was finalized based on the completion of a valuation study resulting in a $1 reduction of the initial goodwill amount.
Approximately $60 of goodwill is deductible for income tax purposes. No other intangible assets were identified as a
result of the final valuation. This transaction is no longer subject to post-closing adjustments. This acquisition is part of
a strategic plan to accelerate the growth of Alcoa’s fastener business, while adding efficiencies, broadening the existing
technology base, and expanding product offerings to better serve customers and increase shareholder value.
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