Alcoa 2014 Annual Report Download - page 133

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 and the net present value of the potential earn-out:
Assets:
Receivables from customers $ 197
Inventories 269
Prepaid expenses and other current assets 28
Properties, plants, and equipment 680
Goodwill 1,898
Other noncurrent assets 398
Total assets $3,470
Liabilities:
Accounts payable $ 162
Other current liabilities 77
Contingent consideration 130
Other noncurrent liabilities 106
Total liabilities $ 475
The amounts in the table above are subject to change upon completion of a third-party valuation of the assets acquired
and liabilities assumed. This valuation is expected to be completed by mid 2015.
As reflected in the table above, Alcoa recognized goodwill of $1,898, which represents the earnings growth potential of
Firth Rixson and expected synergies from combining the operations of the two companies. This goodwill will be
allocated to two of Alcoa’s reporting units associated with the Engineered Products and Solutions segment, Alcoa
Fastening Systems and Alcoa Forging and Extrusions, on a relative fair value basis. None of the goodwill is deductible
for income tax purposes.
The other noncurrent assets in the table above represent an estimate of intangible assets, which were included in the
other intangibles class (see Note E). The specific identification and weighted-average amortization period for these
intangible assets is dependent on the final valuation.
The contingent consideration liability presented in the table above represents the net present value of the potential earn-
out of $150. This earn-out is contingent on the Firth Rixson forging business in Savannah, Georgia achieving certain
identified financial targets through December 31, 2020. Management has determined that payment of the maximum
amount is probable based on the forecasted financial performance of this location. It is estimated that the earn-out will
be paid in 2017 through 2019. The fair value of this liability will be updated in future periods with any change resulting
in a corresponding charge or credit to earnings.
In August 2014, Alcoa completed the acquisition of the 30% outstanding noncontrolling interest in the aluminum
brazing sheet venture in Kunshan City, China from Shanxi Yuncheng Engraving Group for $28. The $3 difference
between the purchase price and the carrying value of the noncontrolling interest on Alcoa’s Consolidated Balance
Sheet was included in Additional capital.
In December 2014, Alcoa signed a definitive agreement to acquire TITAL, a privately held company with
approximately 650 employees based in Germany, for $235 (€194) in cash. TITAL’s business is composed primarily of
aluminum and titanium investment casting products for the aerospace and defense end markets. The purpose of this
acquisition is to capture increasing demand for advanced jet engine components made of titanium, establish titanium
casting capabilities in Europe, and expand existing aluminum casting capacity. The transaction is subject to customary
closing conditions and regulatory approvals and is expected to close by the end of March 2015. At that time, TITAL
will be included within the Engineered Products and Solutions segment.
111