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 Alcoa Reports Fourth Quarter 2015 and Full-Year Results
   Monday, January 11, 2016 4:03:01 PM ET

--Portfolio strengthened ahead of separation

--4Q 2015 Results

--Net loss of $500 million, or $0.39 per share;excluding-special items, net income of $65 million, or $0.04 per share

--Revenue of $5.2 billion, 7 percent revenue increase year-over-year from aerospace and acquisitions more than offset by a 25 percent decrease from lower alumina and aluminum prices, divestitures and closures

--Value-Add businesses: $3.3 billion of revenue, after-tax operating income of $215 million and adjusted EBITDA of $448 million Global Rolled Products: $52 million after-tax operating income; year-over-year auto sheet shipment growth of 18 percent; shifting revenue mix to higher margin products resulted in an adjusted EBITDA per metric ton increase of 19 percent year-over-year



--Engineered Products and Solutions: record revenue of $1.4 billion as well as $123 million after-tax operating income; year-over-year aerospace revenue increased 34 percent

--Transportation and Construction Solutions: $40 million after-tax operating income and record fourth quarter adjusted EBITDA margin of 14.6 percent

--Upstream businesses: $2.4 billion of revenue, after-tax operating income of $58 million, and adjusted EBITDA of $239 million Sequential price declines in alumina of 24 percent and aluminum of 1 percent (down 43 percent and 28 percent, respectively, in 2015); Alumina profitable and Primary Metals improved adjusted EBITDA per metric ton sequentially

--Alcoa projecting robust global aluminum demand growth, up 6 percent over 2015, and global alumina and aluminum deficits in 2016

--Productivity gains of $350 million year-over-year across all segments

--$865 million in cash from operations; $467 million in free cash flow

--$1.9 billion of cash on hand

--4Q 2015 Business Highlights

--Aerospace growth strategy delivers: three major multi-year aerospace contracts in the fourth quarter; approximately $9 billion in 2015 contracts, double the amount of 2014 More than $2.5 billion in multi-year agreements with Boeing for fastening systems and titanium seat tracks with RTI pull-through

--$1.5 billion-plus multi-year agreement with GE Aviation for blades, vanes and structural parts

--Aggressive Upstream portfolio actions: Announced curtailments and closures of approximately 25 percent operating smelting and approximately 20 percent operating refining capacity in 2015

--Launched new business improvement programs for 2016: Value-Add to deliver $650 million

--Upstream to deliver $600 million

--Above includes overhead reduction across Alcoa with $100 million to be realized in 2016, $225 million over two years

--Two strengthened portfolios on track for separation in the second half of 2016 Announced executive management teams for the future Value-Add and Upstream companies

--Form 10 filing with the U.S. Securities and Exchange Commission targeted by mid-year

--Full-Year 2015 Results

--Net loss of $121 million, or $0.15 per share;excluding special items, net income of $787 million, or $0.56 per share

--Revenue of $22.5 billion, down 6 percent from 2014

--Value-Add portfolio after-tax operating income of $1.0 billion and adjusted EBITDA up 5 percent over 2014 Global Rolled Products after-tax operating income of $244 million and 15 percent increase in adjusted EBITDA per metric ton; auto sheet shipments doubled from 2014

--Engineered Products and Solutions revenue up 27 percent, after-tax operating income of $595 million and adjusted EBITDA up 9 percent

--$1.6 billion in cash from operations; $402 million in free cash flow

--$1.2 billion in productivity gains

Lightweight metals leader Alcoa (AA ) today reported full-year 2015 results, ending the year on solid operational footing. In fourth quarter 2015, the Value-Add businesses reported strong performance, while the Upstream remained profitable despite lower alumina and aluminum prices. Every segment delivered productivity gains. The Company also undertook restructuring to further strengthen the Upstream portfolio and streamline overhead ahead of its planned separation in the second half of 2016.

In fourth quarter 2015, Alcoa reported a net loss of $500 million, or $0.39 per share. Results include $565 million in special items related primarily to closures or curtailments of capacity in the Upstream business and discrete income tax charges. Fourth quarter 2015 results compare to net income of $159 million, or $0.11 per share, in fourth quarter 2014.

Excluding special items, fourth quarter 2015 net income was $65 million, or $0.04 per share, compared to net income of $432 million, or $0.33 per share, in the year-ago period. Strong productivity gains were more than offset by lower alumina and aluminum prices. In 2015, the Midwest transaction price for primary aluminum fell $657 per metric ton, or 28 percent, and the Alumina Price Index dropped $154 per metric ton, or 43 percent.

Fourth quarter 2015 revenue was $5.2 billion, down 18 percent from $6.4 billion in fourth quarter 2014. Organic growth in aerospace and acquisitions increased revenue 7 percent, which was more than offset by a 25 percent revenue decline from lower alumina and aluminum prices, the impact of divested, curtailed or closed facilities, and unfavorable currency.

"2015 was a pivotal year for Alcoa," said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. "We substantially strengthened our aerospace offerings through innovations and acquisitions and our customers responded favorably, awarding us $9 billion in aerospace contracts; and we continued to ramp up our automotive business and shift the midstream to a higher-margin product mix. In the Upstream, we faced harsh headwinds with prices for alumina down 43 percent and aluminum down 28 percent. As a result of our closures, curtailments, productivity actions and new business structure we improved competitiveness and strengthened the portfolio. We are fully on track to launch two strong, standalone companies in the second half of 2016."

Turning to the current quarter, Kleinfeld continued, "Our solid fourth quarter results reflect our active portfolio management. Aerospace momentum accelerated with record sales and a $4 billion string of major contract wins. In the midstream, adjusted EBITDA per metric ton grew 19 percent as our shift to higher value products like automotive paid off. A new $650 million Value-Add business improvement program will further sharpen our profitability edge. In the Upstream, alumina prices dropped a further 24 percent and aluminum prices stayed stubbornly low. We took aggressive actions: closed and curtailed more unprofitable capacity, accelerated productivity and weathered the storm with Upstream remaining profitable. To further boost resilience we launched a $600 million Upstream business improvement program. We ended the year in an excellent cash position, with all businesses delivering strong productivity."

2015 Full-Year Results

In 2015, Alcoa reported a net loss of $121 million, or $0.15 per share, compared to net income of $268 million, or $0.21 per share, in 2014. Excluding the impact of special items, the Company reported net income of $787 million, or $0.56 per share, in 2015, down from $1.1 billion, or $0.92 per share, in 2014. Strong productivity and favorable currency impacts were more than offset by lower metal prices and cost increases. Revenue in 2015 was $22.5 billion, down 6 percent from $23.9 billion in 2014.

In 2015, Alcoa delivered strong performance against its financial targets. The Company achieved $1.2 billion in productivity savings, exceeding a $900 million annual target; managed return-seeking capital of $602 million against a $750 million annual target; controlled sustaining capital expenditures of $605 million against a $725 million annual target; and attained a debt-to-adjusted EBITDA ratio of 2.80, slightly above the target range.

For full-year 2015, Alcoa’s cash from operations totaled $1.6 billion, resulting in $402 million in positive free cash flow. In fourth quarter 2015, the Company’s cash from operations was $865 million, which drove $467 million in positive free cash flow. Alcoa’s debt totaled $9.1 billion at the end of 2015, with cash on hand of $1.9 billion, resulting in net debt of $7.2 billion.

Separation Update

Alcoa’s plan to separate into two publicly traded companies is expected to be completed in the second half of 2016. Alcoa has announced executive management teams for the future Value-Add and Upstream companies, both of which will be U.S. domiciled.

Alcoa is also undertaking business improvement programs across its portfolios: Value-Add will deliver $650 million and the Upstream $600 million, both in productivity and margin improvement, in 2016. This includes implementation of an overhead reduction program across the Company, of which $100 million in benefits will be realized in 2016, and $225 million over two years.

Alcoa is targeting a Form 10 filing with the U.S. Securities and Exchange Commission by mid-year, which will include financials and information regarding the form of the separation, legal and capital structure and allocation of assets and liabilities and governance structure, among other items. The separation will be completed subject to the Form 10 being declared effective, final approval from Alcoa’s Board of Directors and completed financing.

Value-Add Business Highlights

After the separation, the innovation and technology-driven Value-Add Company will include Global Rolled Products, Engineered Products and Solutions and Transportation and Construction Solutions.

For full-year 2015, these combined business segments reported revenue of $13.5 billion, after-tax operating income (ATOI) of $1.0 billion and adjusted EBITDA of $2.0 billion, up 5 percent over 2014. Other full-year highlights:

-- Global Rolled Products realized a year-over-year, 15 percent increase in adjusted EBITDA per metric ton, reflecting a shift to a higher-margin product mix; automotive sheet shipments doubled from 2014.

-- Engineered Products and Solutions revenue up 27 percent and adjusted EBITDA up 9 percent from 2014.

Alcoa secured approximately $9 billion in aerospace contracts in 2015, more than double the amount in 2014, as recent aerospace growth investments delivered value. In the fourth quarter, the Company announced long-term agreements with Boeing valued at over $2.5 billion. Alcoa will supply fastening systems for every Boeing platform and ready-to-install titanium seat track assemblies for the entire 787 Dreamliner family. The seat tracks, from raw material to finished part, will be made using titanium capabilities Alcoa gained through the RTI acquisition. Earlier today, the Company also announced a more than $1.5 billion contract with GE Aviation. Alcoa will provide advanced nickel-based superalloy, titanium and aluminum jet engine components for a broad range of GE Aviation engine programs.

The Company opened its state-of-the-art jet engine parts facility in La Porte, Indiana in the fourth quarter. The facility enables Alcoa to manufacture nickel-based structural parts that are nearly 60 percent larger for the industry’s best-selling jet engines for large commercial aircraft. In addition, Alcoa completed its jet engine expansion in Hampton, Virginia. This facility includes technology that cuts the weight of Alcoa’s highest-volume jet engine blades by 20 percent and significantly improves aerodynamic performance.

In the automotive business, Alcoa’s shipments of aluminum automotive sheet grew 18 percent and, by shifting the revenue mix to higher-margin products, EBITDA per metric ton increased 19 percent, both year-over-year. The Company’s newly expanded Alcoa, Tennessee facility continued to ramp up automotive sheet shipments in the fourth quarter. The plant will provide aluminum sheet to automakers that include Ford, Fiat Chrysler Automobiles and General Motors.

Upstream Business Highlights

After the separation, the Upstream Company will comprise five strong business units that today make up Global Primary Products: Bauxite, Alumina, Aluminum, Cast Products and Energy. In full-year 2015, the combined Upstream businesses reported revenue of $11.2 billion, ATOI of $901 million and adjusted EBITDA of $2.0 billion.

In the fourth quarter, Alcoa made significant progress executing its plan to strengthen its Upstream portfolio. As a result, the Company is on target to meet or exceed its 2016 goals of moving to the 38th percentile on the global aluminum cost curve and 21st percentile on the global alumina cost curve. During the fourth quarter, the Company:

-- Entered into a three-and-a-half year agreement with New York State to increase the competitiveness of its Massena West smelter, improving its cost position and supporting growth projects for the casthouse;

-- Announced plans to curtail smelting capacity at the Intalco and Wenatchee primary aluminum smelters in Washington State by the end of the first quarter 2016 and permanently close the Massena East, New York site; and

-- Curtailed the remaining capacity at its Suralco refinery in Suriname, as previously announced, and announced that it will curtail refining capacity at its Point Comfort, Texas refinery.

Earlier this month, Alcoa also said it will:

-- Permanently close the Warrick Operations smelter in Evansville, Indiana; and

-- Reduce additional alumina production by one million metric tons across its refining system, including curtailing the remaining capacity at its Point Comfort refinery.

Alcoa’s aggressive portfolio actions will remove approximately 25 percent operating smelting capacity and approximately 20 percent of operating refining capacity by mid-2016. Once all of the above actions are implemented, Alcoa globally will have 2.1 million metric tons of operating smelting capacity and 12.3 million metric tons of operating refining capacity remaining.

2016 End Market Projections

Alcoa projects another strong year for global aerospace sales. The Company expects 2016 global aerospace sales to increase 8 to 9 percent over 2015 on continued robust demand for large commercial aircraft and jet engines. In automotive, the Company forecasts global production growth of 1 to 4 percent, including 1 to 5 percent growth in North America driven by strong sales.

In the heavy duty truck and trailer market, Alcoa projects production of negative 3 to positive 1 percent globally. In North America, the heavy duty truck and trailer market is expected to decline 19 to 23 percent this year after a strong end for 2015, which was the fourth highest production year on record. In the packaging market, Alcoa forecasts global sales growth of 1 to 3 percent in 2016.

Alcoa expects the building and construction market to continue to improve in 2016, with global sales growth of 4 to 6 percent with the same growth range in North America.

In the industrial gas turbine market, the Company projects a 2 to 4 percent growth rate in 2016. The airfoil market continues to improve as original equipment manufacturers move to higher value-add products for new high efficiency turbines with advanced technology.

In 2016, Alcoa expects a global aluminum deficit of 1.2 million metric tons and a global alumina deficit of 2.8 million metric tons due to global curtailments. The Company also projects record global aluminum demand in 2016 of 60.5 million metric tons, up 6 percent over 2015. Global aluminum demand is expected to double between 2010 and 2020; so far this decade, global demand growth is tracking ahead of this projection.

Segment Information

Global Rolled Products

ATOI in the fourth quarter was $52 million, flat as compared to the year-ago quarter. Strong productivity and automotive shipment growth of 18 percent were offset by cost increases, volume declines in aerospace from fewer spot opportunities and packaging, portfolio actions, and investments for ramping up growth projects, including the Tennessee automotive expansion and Micromill commercialization. As a result of this segment’s ongoing transformation initiatives, including divestitures and upgrading the product mix, adjusted EBITDA per metric ton was $312 in fourth quarter 2015, up 19 percent, or $50, from $262 in the year-ago quarter.

Engineered Products and Solutions

In the fourth quarter, this segment reported record revenue of $1.41 billion, up 26 percent year-over-year; a 34 percent increase in aerospace sales; and ATOI of $123 million, essentially flat year-over-year from $124 million. The RTI acquisition contributed $7 million of ATOI to the quarter, which is net of $6 million of an unfavorable impact attributable to purchase accounting adjustments. Year-over-year, productivity improvements of $54 million and positive contributions from the Firth Rixson and RTI acquisitions were largely offset by cost headwinds, investments in growth projects and unfavorable price/mix. Compared to 2014, 2015 revenue was $5.3 billion, up 27 percent, ATOI was $595 million, up 3 percent, and adjusted EBITDA was $1.1 billion, up 9 percent.

Transportation and Construction Solutions

ATOI was $40 million in the fourth quarter, up $2 million, or 5 percent, year over year. The increase was mostly driven by productivity gains, partially offset by cost headwinds. This segment delivered a fourth quarter record adjusted EBITDA margin of 14.6 percent, compared to 12.6 percent in the year-ago quarter.

Alumina

In the face of a 24 percent alumina price decline, ATOI was $98 million in the fourth quarter, down $114 million sequentially from $212 million and $80 million lower year-over-year from $178 million. Sequentially, cost reductions slightly offset the impact of lower pricing related to both the Alumina Price Index and London Metal Exchange-based contracts and unfavorable foreign currency movements. Adjusted EBITDA per metric ton decreased $38 from third quarter 2015 to $57 in fourth quarter 2015 and decreased $28 year-over-year.

Primary Metals

ATOI in the fourth quarter was a negative $40 million, a $19 million sequential improvement from a negative $59 million, and down $307 million year-over-year from $267 million. Sequentially, ATOI improved due to lower costs for alumina and energy and higher energy sales, partially offset by a lower average realized aluminum price, resulting from both lower London Metal Exchange aluminum pricing and regional premiums. Despite third-party realized pricing declining 5 percent in fourth quarter 2015 to $1,799 per metric ton, cost improvements drove a $26 increase in adjusted EBITDA per metric ton to $30.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on January 11, 2016 to present quarterly results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under "Invest." Presentation materials will be available for viewing at www.alcoa.com.

About Alcoa

A global leader in lightweight metals technology, engineering and manufacturing, Alcoa innovates multi-material solutions that advance our world. Our technologies enhance transportation, from automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. We enable smart buildings, sustainable food and beverage packaging, high performance defense vehicles across air, land and sea, deeper oil and gas drilling and more efficient power generation. We pioneered the aluminum industry over 125 years ago, and today, our approximately 60,000 people in 30 countries deliver value-add products made of titanium, nickel and aluminum, and produce best-in-class bauxite, alumina and primary aluminum products. For more information, visit www.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoa and follow us on Facebook at www.facebook.com/Alcoa.

Forward-Looking Statements

This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goal," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts concerning global demand growth for aluminum, supply/demand balances, and growth of the aerospace, automotive, and other end markets; statements regarding targeted financial results or operating performance; statements about Alcoa’s strategies, outlook, business and financial prospects, and Alcoa’s portfolio transformation; and statements regarding the separation transaction, including the future performance of Value-Add Company and Upstream Company if the separation is completed, the expected benefits of the separation, the expected timing of the Form 10 filing and the completion of the separation, and the expected qualification of the separation as a tax-free transaction. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) uncertainties as to the timing of the separation and whether it will be completed; (b) the possibility that various closing conditions for the separation may not be satisfied; (c) failure of the separation to qualify for the expected tax treatment; (d) the possibility that any third-party consents required in connection with the separation will not be received; (e) the impact of the separation on the businesses of Alcoa; (f) the risk that the businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on Alcoa’s resources, systems, procedures and controls, disruption of its ongoing business and diversion of management’s attention from other business concerns; (g) material adverse changes in aluminum industry conditions; (h) deterioration in global economic and financial market conditions generally; (i) unfavorable changes in the markets served by Alcoa; (j) the impact of changes in foreign currency exchange rates on costs and results; (k) increases in energy costs; (l) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations (including executing on the Upstream business improvement plan, moving the Upstream alumina and aluminum businesses down on the industry cost curves, and increasing revenues and improving margins in the Value-Add businesses) anticipated from restructuring programs and productivity improvement, cash sustainability, technology advancements (including, without limitation, advanced aluminum alloys, Alcoa Micromill, and other materials and processes), and other initiatives; (m) Alcoa’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, or expansions, or international joint ventures; (n) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products; (o) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (p) the impact of cyber attacks and potential information technology or data security breaches; (q) the potential failure to retain key employees while the separation transaction is pending or after it is completed; (r) the risk that increased debt levels, deterioration in debt protection metrics, contraction in liquidity, or other factors could adversely affect the targeted credit ratings for Value-Add Company or Upstream Company; and (s) the other risk factors discussed in Alcoa’s Form 10-K for the year ended December 31, 2014, and other reports filed with the U.S. Securities and Exchange Commission (SEC). Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market.

Non-GAAP Financial Measures

Some of the information included in this release is derived from Alcoa’s consolidated financial information but is not presented in Alcoa’s financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain of these data are considered "non-GAAP financial measures" under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in the schedules to this release and on our website at www.alcoa.com under the "Invest" section. Alcoa has not provided a reconciliation of any forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures, due primarily to variability and difficulty in making accurate forecasts and projections, as not all of the information necessary for a quantitative reconciliation is available to the Company without unreasonable effort.

Alcoa and subsidiaries
Statement of Consolidated
Operations (unaudited)
(in millions, except per-share,
share, and metric ton amounts)
                                                                  
                                                                                                                                                                                          Quarter ended
                                                                                      --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            December 31,                                               September 30,                                              December 31,
                                                                                                                2014                                                                          2015                                                                          2015
                                                                                      ------------------------------------------------------                        ------------------------------------------------------                        -----------------------------------------------------
Sales                                                                                                    $          6,377                                                              $          5,573                                                              $         5,245
                                                                                                                                                                                                                                                   
Cost of goods sold (exclusive of expenses below)                                                                    4,973                                                                         4,559                                                                        4,404
Selling, general administrative, and other expenses                                                                   271                                                                           261                                                                          262
Research and development expenses                                                                                      60                                                                            55                                                                           60
Provision for depreciation, depletion, and amortization                                                               335                                                                           318                                                                          322
Impairment of goodwill                                                                                     -                                                                -                                                                           25
Restructuring and other charges                                                                                       388                                                                            66                                                                          534
Interest expense                                                                                                      122                                                                           123                                                                          129
Other (income) expenses, net                                                                        (6 )                                                      (15 )                                                      29  
                                                                                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
      Total costs and expenses                                                                                      6,143                                                                         5,367                                                                        5,765
                                                                                                                                                                                                                                                   
Income (loss) before income taxes                                                                                     234                                                                           206                                                                         (520 )
Provision for income taxes                                                                         120                                     100                                     44  
                                                                                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
                                                                                                                                                                                                                                                   
Net income (loss)                                                                                                     114                                                                           106                                                                         (564 )
                                                                                                                                                                                                                                                   
Less: Net (loss) income attributable to noncontrolling interests                                   (45 )                                                       62                                    (64 )
                                                                                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
                                                                                                                                                                                                                                                   
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA                                                                  $            159                                           $             44                                           $          (500 )
                                                                                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============= ====================
                                                                                                                                                                                                                                                   
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS:
   Basic:
     Net income (loss)(1)                                                                                $           0.12                                                              $           0.02                                                              $         (0.39 )
     Average number of shares(2)                                                                            1,196,232,954                                                                 1,280,536,623                                                                1,310,111,498
                                                                                                                                                                                                                                                   
   Diluted:
     Net income (loss)(1)                                                                                $           0.11                                                              $           0.02                                                              $         (0.39 )
     Average number of shares(3)                                                                            1,217,350,305                                                                 1,294,392,945                                                                1,310,111,498
                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                   
Shipments of aluminum products (metric tons)                                                                    1,196,000                                                                     1,137,000                                                                    1,144,000
                                                                                                                                                                                                                                                                                      
   (1)   In order to calculate both basic and diluted earnings per share for
                            the quarters ended December 31, 2014, September 30, 2015, and
                            December 31, 2015, preferred stock dividends declared of $19, $18,
                            and $17, respectively, need to be subtracted from Net income (loss)
                            attributable to Alcoa.
 
   (2)                      In the fourth quarter of 2014, Alcoa issued 37 million shares of its
                            common stock as part of the consideration paid to acquire Firth
                            Rixson. As a result, the basic average number of shares for the
                            quarter ended December 31, 2014 includes 17 million representing the
                            weighted average number of shares for the length of time the 37
                            million shares were outstanding during the fourth quarter of 2014,
                            and the respective basic average number of shares for the quarters
                            ended September 30, 2015 and December 31, 2015 includes all 37
                            million shares.
 
                            Additionally, in the third quarter of 2015, Alcoa issued 87 million
                            shares of its common stock to acquire RTI International Metals. As a
                            result, the basic average number of shares for the quarter ended
                            September 30, 2015 includes 58 million representing the weighted
                            average number of shares for the length of time the 87 million
                            shares were outstanding during the third quarter of 2015, and the
                            basic average number of shares for the quarter ended December 31,
                            2015 includes all 87 million shares.
 
   (3)                      In the quarters ended December 31, 2014 and September 30, 2015,
                            the difference between the respective diluted average number of
                            shares and the respective basic average number of shares relates
                            to share equivalents associated with outstanding employee stock
                            options and awards. The respective diluted average number of
                            shares for the quarters ended December 31, 2014 and September 30,
                            2015 does not include any share equivalents related to the
                            mandatory convertible preferred stock as their effect was
                            anti-dilutive. Additionally, the diluted average number of shares
                            for the quarter ended September 30, 2015 does not include any
                            share equivalents related to convertible debt (acquired through
                            RTI International Metals) as their effect was anti-dilutive. In
                            the quarter ended December 31, 2015, the diluted average number of
                            shares does not include any share equivalents as their effect was
                            anti-dilutive.
                             
Alcoa and subsidiaries
Statement of Consolidated
Operations (unaudited), continued
(in millions, except
per-share, share, and metric ton amounts)
                                                                  
                                                                                                                                                    Year ended
                                                                                                                                                   December 31,
                                                                                      -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                2014                                                       2015
                                                                                      ------------------------------------------------------                        -----------------------------------------------------
Sales                                                                                                    $         23,906                                                              $        22,534
                                                                                                                                                                     
Cost of goods sold (exclusive of expenses below)                                                                   19,137                                                                       18,069
Selling, general administrative, and other expenses                                                                   995                                                                          979
Research and development expenses                                                                                     218                                                                          238
Provision for depreciation, depletion, and amortization                                                             1,371                                                                        1,280
Impairment of goodwill                                                                                     -                                                                           25
Restructuring and other charges                                                                                     1,168                                                                          994
Interest expense                                                                                                      473                                                                          498
Other expenses, net                                                                                 47                                      2  
                                                                                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
      Total costs and expenses                                                                                     23,409                                                                       22,085
                                                                                                                                                                     
Income before income taxes                                                                                            497                                                                          449
Provision for income taxes                                                                         320                                    445  
                                                                                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
                                                                                                                                                                     
Net income                                                                                                            177                                                                            4
                                                                                                                                                                     
Less: Net (loss) income attributable to noncontrolling interests                                   (91 )                                                     125  
                                                                                      -------------------- -------------- --------------------                      -------------------- ------------- --------------------
                                                                                                                                                                     
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA                                                                  $            268                                           $          (121 )
                                                                                      ==================== ============== ====================                      ==================== ============= ====================
                                                                                                                                                                     
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS:
   Basic:
     Net income (loss)(1)                                                                                $           0.21                                                              $         (0.15 )
     Average number of shares(2)                                                                            1,161,718,625                                                                1,258,689,555
                                                                                                                                                                     
   Diluted:
     Net income (loss)(1)                                                                                $           0.21                                                              $         (0.15 )
     Average number of shares(3)                                                                            1,180,050,215                                                                1,258,689,555
                                                                                                                                                                     
Common stock outstanding at the end of the period                                                           1,216,663,661                                                                1,310,160,141
                                                                                                                                                                     
                                                                                                                                                                     
Shipments of aluminum products (metric tons)                                                                    4,794,000                                                                    4,537,000
                                                                                                                                                                                                        
   (1)   In order to calculate both basic and diluted earnings per share for
                            the years ended December 31, 2014 and 2015, preferred stock
                            dividends declared of $21 and $69, respectively, need to be
                            subtracted from Net income (loss) attributable to Alcoa.
 
   (2)                      In the first quarter of 2014, holders of $575 principal amount of
                            Alcoa’s 5.25% Convertible Notes due March 15, 2014 (the "Notes")
                            exercised their option to convert the Notes into 89 million shares
                            of Alcoa common stock. As a result, the basic average number of
                            shares for the year ended December 31, 2014 includes 73 million
                            representing the weighted average number of shares for the length of
                            time the 89 million shares were outstanding during 2014, and the
                            basic average number of shares for the year ended December 31, 2015
                            includes all 89 million shares.
 
                            Additionally, in the fourth quarter of 2014, Alcoa issued 37 million
                            shares of its common stock as part of the consideration paid to
                            acquire Firth Rixson. As a result, the basic average number of
                            shares for the year ended December 31, 2014 includes 4 million
                            representing the weighted average number of shares for the length of
                            time the 37 million shares were outstanding during 2014, and the
                            basic average number of shares for the year ended December 31, 2015
                            includes all 37 million shares.
 
                            Furthermore, in the third quarter of 2015, Alcoa issued 87 million
                            shares of its common stock to acquire RTI International Metals. As a
                            result, the basic average number of shares for the year ended
                            December 31, 2015 includes 37 million representing the weighted
                            average number of shares for the length of time the 87 million
                            shares were outstanding during 2015.
 
   (3)                      In the year ended December 31, 2014, the difference between the
                            diluted average number of shares and the basic average number of
                            shares relates to share equivalents associated with outstanding
                            employee stock options and awards. The diluted average number of
                            shares for the year ended December 31, 2014 does not include any
                            share equivalents related to the Notes or mandatory convertible
                            preferred stock as their effect was anti-dilutive. In the year
                            ended December 31, 2015, the diluted average number of shares does
                            not include any share equivalents as their effect was
                            anti-dilutive.
                             
Alcoa and subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
                                                                                                                         
                                                                                         December 31,                                                          December 31,
                                                                                                               2014(1)                                                             2015(1),(2)
                                                                                          ----------------------------------------------                        ----------------------------------------------
ASSETS
Current assets:
  Cash and cash equivalents                                                                                  $  1,877                                                              $  1,919
                                                                                                                1,395                                                                 1,340
  Receivables from customers, less allowances of $14 in 2014 and $13
  in 2015
  Other receivables                                                                                               733                                                                   522
  Inventories                                                                                                   3,082                                                                 3,442
  Prepaid expenses and other current assets(3)                                                 761                             751  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current assets                                                                     7,848                           7,974  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                                 
Properties, plants, and equipment                                                                              35,517                                                                33,687
Less: accumulated depreciation, depletion, and amortization                                 19,091                          18,872  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
Properties, plants, and equipment, net                                                      16,426                          14,815  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
Goodwill                                                                                                        5,247                                                                 5,406
Investments                                                                                                     1,944                                                                 1,685
Deferred income taxes(3)                                                                                        3,175                                                                 2,676
Other noncurrent assets                                                                      2,759                           4,181  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total assets                                                                                           $ 37,399                                           $ 36,737  
                                                                                          ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                 
LIABILITIES
Current liabilities:
  Short-term borrowings                                                                                      $     54                                                              $     38
  Accounts payable, trade                                                                                       3,152                                                                 2,910
  Accrued compensation and retirement costs                                                                       937                                                                   850
  Taxes, including income taxes(3)                                                                                265                                                                   239
  Other current liabilities                                                                                     1,021                                                                 1,137
  Long-term debt due within one year                                                            29                              21  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current liabilities                                                                5,458                           5,195  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
Long-term debt, less amount due within one year                                                                 8,769                                                                 9,044
Accrued pension benefits                                                                                        3,291                                                                 3,321
Accrued other postretirement benefits                                                                           2,155                                                                 2,106
Other noncurrent liabilities and deferred credits(3)                                         2,932                           2,742  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total liabilities                                                                      22,605                          22,408  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                                 
EQUITY
Alcoa shareholders’ equity:
  Preferred stock                                                                                                  55                                                                    55
  Mandatory convertible preferred stock                                                                             3                                                                     3
  Common stock                                                                                                  1,304                                                                 1,391
  Additional capital                                                                                            9,284                                                                10,019
  Retained earnings                                                                                             9,379                                                                 9,035
  Treasury stock, at cost                                                                                      (3,042 )                                                              (2,825 )
  Accumulated other comprehensive loss                                                      (4,677 )                                           (5,434 )
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total Alcoa shareholders’ equity                                                        12,306                          12,244  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
Noncontrolling interests                                                                     2,488                           2,085  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total equity                                                                           14,794                          14,329  
                                                                                          -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total liabilities and equity                                                                           $ 37,399                                           $ 36,737  
                                                                                          ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                                             
   (1)   On November 19, 2014, Alcoa completed the acquisition of Firth
                            Rixson. As a result, Alcoa’s Consolidated Balance Sheet as of
                            December 31, 2014 included an estimate of the beginning balance
                            sheet of Firth Rixson. This estimate resulted in the allocation of
                            $1,227 of the $3,125 purchase price (includes $130 of contingent
                            consideration) to various assets, primarily Properties, plants, and
                            equipment, and liabilities with the difference included in Goodwill.
                            In 2015, an adjustment of $128 was recorded to decrease the initial
                            amount recorded as Goodwill. This adjustment was based on
                            management’s final allocation of the purchase price, which was
                            based, in part, on information from a third-party valuation of the
                            acquired business.
 
   (2)                      The Consolidated Balance Sheet as of December 31, 2015 includes
                            amounts related to the acquisition of RTI International Metals.
                            These amounts are composed of an estimate of the beginning balance
                            sheet of RTI International Metals on the acquisition date, July 23,
                            2015, and the changes in these balances from July 23, 2015 through
                            December 31, 2015. The estimate of the beginning balance sheet is
                            the result of allocating $625 of the $870 purchase price to various
                            assets, primarily Properties, plants, and equipment, and liabilities
                            with the difference included in Goodwill. The final allocation of
                            the purchase price will be based, in part, on management’s review of
                            information from a third-party valuation of the acquired business,
                            which is expected to be completed in the second quarter of 2016.
 
   (3)                      In the fourth quarter of 2015, Alcoa adopted changes issued by the
                            Financial Accounting Standards Board to accounting for income taxes,
                            which requires all deferred income tax assets and liabilities to be
                            classified as noncurrent in a classified balance sheet. These
                            changes were to become effective for Alcoa on January 1, 2017;
                            however, management elected the early adoption provision. As such,
                            all deferred income tax assets and liabilities were classified in
                            the Deferred income taxes and Other noncurrent liabilities and
                            deferred credits, respectively, line items on the December 31, 2015
                            Consolidated Balance Sheet. Additionally, management elected to
                            update the December 31, 2014 Consolidated Balance Sheet for these
                            changes for comparative purposes. As a result, $421 of current
                            deferred income tax assets (previously reported in Prepaid expenses
                            and other current assets) and $83 of current deferred income tax
                            liabilities (previously reported in Taxes, including income taxes)
                            were reclassified to the respective, aforementioned noncurrent asset
                            and liability line items on the December 31, 2014 Consolidated
                            Balance Sheet.
                             
Alcoa and subsidiaries
Statement of Consolidated
Cash Flows (unaudited)
(in millions)
                                                                       
                                                                                                                                                         Year ended
                                                                                                                                                        December 31,
                                                                                           --------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     2014                                                       2015
                                                                                           ------------------------------------------------------                        ------------------------------------------------------
CASH FROM OPERATIONS
Net income                                                                                                    $            177                                                              $              4
Adjustments to reconcile net income to cash from operations:
   Depreciation, depletion, and amortization                                                                             1,372                                                                         1,280
   Deferred income taxes                                                                                                   (35 )                                                                         113
   Equity income, net of dividends                                                                                         104                                                                           158
   Impairment of goodwill                                                                                       -                                                                            25
   Restructuring and other charges                                                                                       1,168                                                                           994
   Net gain from investing activities - asset sales                                                           (47 )                                                                         (74 )
   Net periodic pension benefit cost(1)                                                                                    423                                                                           485
   Stock-based compensation                                                                                                 87                                                                            92
   Excess tax benefits from stock-based payment arrangements                                                                (9 )                                                                          (9 )
   Other                                                                                                                    66                                                                           (32 )
   Changes in assets and liabilities, excluding effects of
   acquisitions, divestitures, and foreign currency translation
   adjustments:
     (Increase) decrease in receivables                                                                                   (312 )                                                                         212
     (Increase) in inventories                                                                                            (355 )                                                                         (64 )
     (Increase) decrease in prepaid expenses and other current assets                                                      (25 )                                                                          26
     Increase (decrease) in accounts payable, trade                                                                        256                                                                           (70 )
     (Decrease) in accrued expenses                                                                                       (451 )                                                                        (437 )
     Increase (decrease) in taxes, including income taxes                                                                    7                                                                           (54 )
     Pension contributions                                                                                                (501 )                                                                        (470 )
     (Increase) in noncurrent assets(1),(2)                                                                                (42 )                                                                        (370 )
     (Decrease) in noncurrent liabilities(1)                                                           (209 )                                                     (227 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH PROVIDED FROM OPERATIONS                                                                   1,674                                   1,582  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
FINANCING ACTIVITIES
Net change in short-term borrowings (original maturities of three                                                           (2 )                                                                         (16 )
months or less)
Additions to debt (original maturities greater than three months)                                                        2,878                                                                         1,901
Debt issuance costs                                                                                                        (17 )                                                                          (3 )
Payments on debt (original maturities greater than three months)(3)                                                     (1,723 )                                                                      (2,030 )
Proceeds from exercise of employee stock options                                                                           150                                                                            25
Excess tax benefits from stock-based payment arrangements                                                                    9                                                                             9
Issuance of mandatory convertible preferred stock                                                                        1,211                                                                -
Dividends paid to shareholders                                                                                            (161 )                                                                        (223 )
Distributions to noncontrolling interests                                                                                 (120 )                                                                        (106 )
Contributions from noncontrolling interests                                                                                 53                                                                             2
Acquisitions of noncontrolling interests                                                                (28 )                                           -  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES                                              2,250                                    (441 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
INVESTING ACTIVITIES
Capital expenditures                                                                                                    (1,219 )                                                                      (1,180 )
Acquisitions, net of cash acquired(4)                                                                                   (2,385 )                                                                          97
Proceeds from the sale of assets and businesses(5)                                                                         253                                                                           112
Additions to investments                                                                                                  (195 )                                                                        (134 )
Sales of investments                                                                                                        57                                                                            40
Net change in restricted cash                                                                                               (2 )                                                                         (20 )
Other                                                                                                    31                                      25  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH USED FOR INVESTING ACTIVITIES                                                             (3,460 )                                                   (1,060 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
                                                                                                        (24 )                                                      (39 )
      EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Net change in cash and cash equivalents                                                                                    440                                                                            42
Cash and cash equivalents at beginning of year                                                        1,437                                   1,877  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH AND CASH EQUIVALENTS AT END OF YEAR                                                                $          1,877                                           $          1,919  
                                                                                           ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                              
   (1)   In the first quarter of 2015, management decided to reflect the net
                            periodic benefit cost related to Alcoa-sponsored defined benefit
                            pension plans as a separate line item in the Statement of
                            Consolidated Cash Flows. In prior periods, a portion of this amount
                            was reported in both the (Increase) in noncurrent assets (overfunded
                            plans) and the (Decrease) in noncurrent liabilities (underfunded
                            plans) line items. As a result, the Statement of Consolidated Cash
                            Flows for the year ended December 31, 2014 was revised to conform to
                            the current period presentation.
 
   (2)                      The (Increase) in noncurrent assets line item for the year ended
                            December 31, 2015 includes a $300 prepayment related to a natural
                            gas supply agreement for three alumina refineries in Western
                            Australia, which are owned by Alcoa’s majority-owned subsidiary,
                            Alcoa of Australia Limited.
 
   (3)                      In the first quarter of 2014, holders of $575 principal amount of
                            Alcoa’s 5.25% Convertible Notes due March 15, 2014 (the "Notes")
                            exercised their option to convert the Notes into 89 million shares
                            of Alcoa common stock. This transaction was not reflected in the
                            Statement of Consolidated Cash Flows for the year ended December 31,
                            2014 as it represents a noncash financing activity.
 
   (4)                      In the fourth quarter of 2014, Alcoa paid $2,995 (net of cash
                            acquired) to acquire Firth Rixson. A portion of this consideration
                            was paid through the issuance of 37 million shares in Alcoa common
                            stock valued at $610. The issuance of common stock was not reflected
                            in the Statement of Consolidated Cash Flows for the year ended
                            December 31, 2014 as it represents a noncash investing activity.
 
                            In the third quarter of 2015, Alcoa issued 87 million shares of its
                            common stock valued at $870 to acquire RTI International Metals. The
                            issuance of common stock was not reflected in the Statement of
                            Consolidated Cash Flows for the year ended December 31, 2015 as it
                            represents a noncash investing activity. However, through this
                            acquisition, Alcoa acquired $302 in cash, which was reflected as a
                            cash inflow in the Acquisitions, net of cash acquired line item on
                            the Statement of Consolidated Cash Flows for the year ended December
                            31, 2015.
 
   (5)                      Proceeds from the sale of assets and businesses for the year ended
                            December 31, 2015 includes a cash outflow for cash paid as a
                            result of post-closing adjustments associated with the December
                            2014 divestiture of three rolling mills in Spain and France.
                             
Alcoa and subsidiaries
Segment Information
(unaudited)
(dollars in millions, except realized
prices; production and shipments in thousands of metric tons [kmt])
                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                      4Q14                                                                          2014                                                                          1Q15                                                                          2Q15                                                                          3Q15                                                                      4Q15                                                                 2015
                                                                                                            ------------------------------------------------------                        ------------------------------------------------------                        ------------------------------------------------------                        ------------------------------------------------------                        ------------------------------------------------------                        ---------------------------------------------                        ----------------------------------------------
Alumina:
  Alumina production (kmt)                                                                                                                4,161                                                                        16,606                                                                         3,933                                                                         3,977                                                                         3,954                                                                3,856                                                                15,720
  Third-party alumina shipments (kmt)                                                                                                     2,928                                                                        10,652                                                                         2,538                                                                         2,706                                                                         2,798                                                                2,713                                                                10,755
  Third-party sales                                                                                                            $          1,017                                                              $          3,509                                                              $            887                                                              $            924                                                              $            912                                                              $   732                                                              $  3,455
  Intersegment sales                                                                                                           $            469                                                              $          1,941                                                              $            501                                                              $            431                                                              $            391                                                              $   364                                                              $  1,687
  Equity loss                                                                                                                  $            (10 )                                                            $            (29 )                                                            $             (7 )                                                            $            (11 )                                                            $             (9 )                                                            $   (14 )                                                            $    (41 )
  Depreciation, depletion, and amortization                                                                                    $             90                                                              $            387                                                              $             80                                                              $             77                                                              $             71                                                              $    68                                                              $    296
  Income taxes                                                                                                                 $             75                                                              $            153                                                              $             92                                                              $             87                                                              $             85                                                              $    36                                                              $    300
  After-tax operating income (ATOI)                                                                         $            178                        $            370                        $            221                        $            215                        $            212                        $    98                        $    746  
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Primary Metals:
  Aluminum production (kmt)                                                                                                                 731                                                                         3,125                                                                           711                                                                           701                                                                           700                                                                  699                                                                 2,811
  Third-party aluminum shipments (kmt)                                                                                                      637                                                                         2,534                                                                           589                                                                           630                                                                           615                                                                  644                                                                 2,478
  Alcoa’s average realized price per metric ton of aluminum                                         $          2,578                                                              $          2,405                                                              $          2,420                                                              $          2,180                                                              $          1,901                                                              $ 1,799                                                              $  2,069
  Third-party sales                                                                                                            $          1,852                                                              $          6,800                                                              $          1,572                                                              $          1,534                                                              $          1,249                                                              $ 1,236                                                              $  5,591
  Intersegment sales                                                                                                           $            749                                                              $          2,931                                                              $            692                                                              $            562                                                              $            479                                                              $   437                                                              $  2,170
  Equity income (loss)                                                                                                         $             11                                                              $            (34 )                                                            $             (3 )                                                            $             (5 )                                                            $             (7 )                                                            $     3                                                              $    (12 )
  Depreciation, depletion, and amortization                                                                                    $            117                                                              $            494                                                              $            109                                                              $            109                                                              $            106                                                              $   105                                                              $    429
  Income taxes                                                                                                                 $             89                                                              $            203                                                              $             57                                                              $              6                                                              $            (49 )                                                            $   (42 )                                                            $    (28 )
  ATOI                                                                                                      $            267                        $            594                        $            187                        $             67                        $            (59 )                                         $   (40 )                                         $    155  
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Global Rolled Products:
  Third-party aluminum shipments (kmt)                                                                                                      487                                                                         1,964                                                                           432                                                                           462                                                                           449                                                                  432                                                                 1,775
  Third-party sales                                                                                                            $          1,888                                                              $          7,351                                                              $          1,621                                                              $          1,668                                                              $          1,527                                                              $ 1,422                                                              $  6,238
  Intersegment sales                                                                                                           $             46                                                              $            185                                                              $             36                                                              $             34                                                              $             29                                                              $    26                                                              $    125
  Equity loss                                                                                                                  $             (8 )                                                            $            (27 )                                                            $             (9 )                                                            $             (7 )                                                            $             (8 )                                                            $    (8 )                                                            $    (32 )
  Depreciation, depletion, and amortization                                                                                    $             57                                                              $            235                                                              $             56                                                              $             56                                                              $             56                                                              $    59                                                              $    227
  Income taxes(1)                                                                                                              $             16                                                              $             89                                                              $             36                                                              $             25                                                              $             28                                                              $    20                                                              $    109
  ATOI(1)                                                                                                   $             52                        $            245                        $             54                        $             76                        $             62                        $    52                        $    244  
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Engineered Products and Solutions(2):
  Third-party sales                                                                                                            $          1,114                                                              $          4,217                                                              $          1,257                                                              $          1,279                                                              $          1,397                                                              $ 1,409                                                              $  5,342
  Depreciation, depletion, and amortization                                                                                    $             42                                                              $            137                                                              $             51                                                              $             54                                                              $             61                                                              $    67                                                              $    233
  Income taxes(1)                                                                                                              $             64                                                              $            298                                                              $             76                                                              $             81                                                              $             71                                                              $    54                                                              $    282
  ATOI(1)                                                                                                   $            124                        $            579                        $            156                        $            165                        $            151                        $   123                        $    595  
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Transportation and Construction Solutions(2):
  Third-party sales                                                                                                            $            500                                                              $          2,021                                                              $            471                                                              $            492                                                              $            475                                                              $   444                                                              $  1,882
  Depreciation, depletion, and amortization                                                                                    $             11                                                              $             42                                                              $             10                                                              $             11                                                              $             11                                                              $    11                                                              $     43
  Income taxes(1)                                                                                                              $             14                                                              $             69                                                              $             14                                                              $             17                                                              $             18                                                              $    14                                                              $     63
  ATOI(1)                                                                                                   $             38                        $            180                        $             38                        $             44                        $             44                        $    40                        $    166  
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Reconciliation of total segment ATOI to consolidated net income
(loss) attributable to Alcoa(2):
  Total segment ATOI(1)                                                                                                        $            659                                                              $          1,968                                                              $            656                                                              $            567                                                              $            410                                                              $   273                                                              $  1,906
  Unallocated amounts (net of tax):
    Impact of LIFO                                                                                                                          (21 )                                                                         (54 )                                                                           7                                                                            36                                                                            50                                                                   43                                                                   136
    Metal price lag(1)                                                                                                                       22                                                                            78                                                                           (23 )                                                                         (39 )                                                                         (48 )                                                                (23 )                                                                (133 )
    Interest expense                                                                                                                        (80 )                                                                        (308 )                                                                         (80 )                                                                         (80 )                                                                         (80 )                                                                (84 )                                                                (324 )
    Noncontrolling interests                                                                                                                 45                                                                            91                                                                           (60 )                                                                         (67 )                                                                         (62 )                                                                 64                                                                  (125 )
    Corporate expense                                                                                                                       (80 )                                                                        (284 )                                                                         (62 )                                                                         (65 )                                                                         (72 )                                                                (67 )                                                                (266 )
    Impairment of goodwill                                                                                                       -                                                                -                                                                -                                                                -                                                                -                                                                  (25 )                                                                 (25 )
    Restructuring and other charges                                                                                                        (307 )                                                                        (894 )                                                                        (161 )                                                                        (159 )                                                                         (48 )                                                               (374 )                                                                (742 )
    Other                                                                                             (79 )                                  (329 )                                   (82 )                                   (53 )                                  (106 )                         (307 )                          (548 )
-------------------------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
  Consolidated net income (loss) attributable to Alcoa                                                      $            159                        $            268                        $            195                        $            140                        $             44                        $  (500 )                                         $   (121 )
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The difference between certain segment totals and consolidated
amounts is in Corporate.
 
                 (1)   Effective in the second quarter of 2015, management removed the
                                          impact of metal price lag from the results of the Global Rolled
                                          Products and Engineered Products and Solutions (now Engineered
                                          Products and Solutions and Transportation and Construction Solutions
                                          - see footnote 2 below) segments in order to enhance the visibility
                                          of the underlying operating performance of these businesses. Metal
                                          price lag describes the timing difference created when the average
                                          price of metal sold differs from the average cost of the metal when
                                          purchased by the respective segment. The impact of metal price lag
                                          is now reported as a separate line item in Alcoa’s reconciliation of
                                          total segment ATOI to consolidated net income (loss) attributable to
                                          Alcoa. As a result, this change does not impact the consolidated
                                          results of Alcoa. Segment information for all prior periods
                                          presented was updated to reflect this change.
 
                 (2)                      In the third quarter of 2015, management approved a realignment of
                                          Alcoa’s Engineered Products and Solutions segment due to the
                                          expansion of this part of Alcoa’s business portfolio through both
                                          organic and inorganic growth. This realignment consisted of moving
                                          both the Alcoa Wheel and Transportation Products and Building and
                                          Construction Systems business units to a new reportable segment
                                          named Transportation and Construction Solutions. Additionally, the
                                          Latin American soft alloy extrusions business previously included in
                                          Corporate was moved into the new Transportation and Construction
                                          Solutions segment. The remaining Engineered Products and Solutions
                                          segment consists of the Alcoa Fastening Systems and Rings (renamed
                                          to include portions of the Firth Rixson business acquired in
                                          November 2014), Alcoa Power and Propulsion (includes the TITAL
                                          business acquired in March 2015), Alcoa Forgings and Extrusions
                                          (includes the other portions of Firth Rixson), and Alcoa Titanium
                                          and Engineered Products (a new business unit that represents the RTI
                                          International Metals business acquired in July 2015) business units.
                                          Segment information for all prior periods presented was updated to
                                          reflect the new segment structure.
                                           
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited)
(in millions, except per-share
amounts)
                                                                                                                                                                                                                                   
Adjusted Income                                                                                                                                                        Quarter ended                                                                                                                                 Year ended
                                                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------
                                                                                               December 31,                         September 30,                   December 31,                                              December 31,                           December 31,
                                                                                                   2014                                                    2015                                               2015                                                      2014                                                      2015
                                                                                ----------------------------------------                       --------------------------                       -----------------------------                        ----------------------------------------                       ------------------------------
                                                                                                                                                                                                                                                                                                                          
Net income (loss) attributable to Alcoa                                                                                 $                  159                           $                   44                         $  (500 )                                                            $                  268                         $   (121 )
                                                                                                                                                                                                                                                                                                                          
Restructuring and other charges                                                                                                            200                                               30                             306                                                                                 703                              635
                                                                                                                                                                                                                                                                                                                          
Discrete tax items(1)                                                                                                                       16                                                4                             187                                                                                  33                              186
                                                                                                                                                                                                                                                                                                                          
Other special items(2)                                                                                                   57                            31           72                                           112            87  
                                                                                                     -------------------- --------------------        -------------------- --------------------      -------------------- ----- --------------------                      -------------------- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                          
Net income attributable to Alcoa - as adjusted                                                             $                  432                           $                  109                         $    65                                           $                1,116                         $    787  
                                                                                                     ==================== ====================        ==================== ====================      ==================== ===== ====================                      ==================== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                          
Diluted EPS(3):
Net income (loss) attributable to Alcoa common shareholders                                                             $                 0.11                           $                 0.02                         $ (0.39 )                                                            $                 0.21                         $  (0.15 )
                                                                                                                                                                                                                                                                                                                          
Net income attributable to Alcoa common shareholders - as adjusted                                                           0.33                                             0.07                            0.04                                                                                0.92                             0.56
                                                                                                                                                                                                                                                                                                                                                      
Net income (loss) attributable to Alcoa - as adjusted is a non-GAAP
financial measure. Management believes that this measure is
meaningful to investors because management reviews the operating
results of Alcoa excluding the impacts of restructuring and other
charges, discrete tax items, and other special items (collectively,
"special items"). There can be no assurances that additional special
items will not occur in future periods. To compensate for this
limitation, management believes that it is appropriate to consider
both Net income (loss) attributable to Alcoa determined under GAAP
as well as Net income attributable to Alcoa - as adjusted.
                                          
(1)                                                                               Discrete tax items include the following:
                          ?                                          for the quarter ended December 31, 2015, a charge for valuation
                                                                                  allowances related to certain U.S. and Iceland deferred tax assets
                                                                                  ($190) and a net benefit for a number of small items ($3);
                          ?                                          for the quarter ended September 30, 2015, a net charge for a
                                                                                  number of small items;
                          ?                                          for the quarter ended December 31, 2014, a charge for the
                                                                                  remeasurement of certain deferred tax assets of a subsidiary in
                                                                                  Spain due to a tax rate change ($16), a benefit for an adjustment
                                                                                  to the remeasurement of certain deferred tax assets of a
                                                                                  subsidiary in Brazil due to a tax rate change ($3), and a net
                                                                                  charge for a number of small items ($3);
                          ?                                          for the year ended December 31, 2015, a charge for valuation
                                                                                  allowances related to certain U.S. and Iceland deferred tax assets
                                                                                  ($190) and a net benefit for a number of small items ($4); and
                          ?                                          for the year ended December 31, 2014, a charge for the
                                                                                  remeasurement of certain deferred tax assets of a subsidiary in
                                                                                  Brazil due to a tax rate change ($31), a charge for the
                                                                                  remeasurement of certain deferred tax assets of a subsidiary in
                                                                                  Spain due to a tax rate change ($16), and a net benefit for a
                                                                                  number of other items ($14).
                                                                                   
(2)                                                                               Other special items include the following:
                          ?                                          for the quarter ended December 31, 2015, a write-down of inventory
                                                                                  related to the permanent closure or temporary curtailment of
                                                                                  various facilities in Suriname and the United States ($28), an
                                                                                  impairment of goodwill related to the soft alloy extrusions
                                                                                  business in Brazil ($25), costs associated with the planned
                                                                                  separation of Alcoa ($12), a net unfavorable change in certain
                                                                                  mark-to-market energy derivative contracts ($5), and an
                                                                                  unfavorable tax impact related to the interim period treatment of
                                                                                  operational losses in certain foreign jurisdictions for which no
                                                                                  tax benefit was recognized ($2);
                          ?                                          for the quarter ended September 30, 2015, an unfavorable tax
                                                                                  impact resulting from the difference between Alcoa’s consolidated
                                                                                  estimated annual effective tax rate and the statutory rates
                                                                                  applicable to special items ($27), a gain on the sale of land in
                                                                                  the United States and an equity investment in a China rolling mill
                                                                                  ($25), costs associated with the planned separation of Alcoa and
                                                                                  the acquisition of RTI International Metals ($22), a favorable tax
                                                                                  impact related to the interim period treatment of operational
                                                                                  losses in certain foreign jurisdictions for which no tax benefit
                                                                                  was recognized ($16), a write-down of inventory related to a
                                                                                  refinery in Suriname ($13), and a net unfavorable change in
                                                                                  certain mark-to-market energy derivative contracts ($10);
                          ?                                          for the quarter ended December 31, 2014, an unfavorable tax impact
                                                                                  resulting from the difference between Alcoa’s consolidated
                                                                                  estimated annual effective tax rate and the statutory rates
                                                                                  applicable to special items ($81), a favorable tax impact related
                                                                                  to the interim period treatment of operational losses in certain
                                                                                  foreign jurisdictions for which no tax benefit was recognized
                                                                                  ($44), costs associated with the acquisition of Firth Rixson and
                                                                                  the then-planned acquisition of TITAL ($22), and a net favorable
                                                                                  change in certain mark-to-market energy derivative contracts ($2);
                          ?                                          for the year ended December 31, 2015, costs associated with the
                                                                                  planned separation of Alcoa and the acquisitions of RTI
                                                                                  International Metals and TITAL ($46), a gain on the sale of land
                                                                                  in the United States and an equity investment in a China rolling
                                                                                  mill ($44), a write-down of inventory related to the permanent
                                                                                  closure or temporary curtailment of various facilities in
                                                                                  Suriname, the United States, Brazil, and Australia ($43), an
                                                                                  impairment of goodwill related to the soft alloy extrusions
                                                                                  business in Brazil ($25), and a net unfavorable change in certain
                                                                                  mark-to-market energy derivative contracts ($17); and
                          ?                                          for the year ended December 31, 2014, a write-down of inventory
                                                                                  related to the permanent closure of various facilities in Italy,
                                                                                  Australia, and the United States ($47), costs associated with the
                                                                                  acquisition of Firth Rixson and the then-planned acquisition of
                                                                                  TITAL ($47), a gain on the sale of both a mining interest in
                                                                                  Suriname and an equity investment in a China rolling mill ($20),
                                                                                  an unfavorable impact related to the restart of one potline at the
                                                                                  joint venture in Saudi Arabia that was previously shut down due to
                                                                                  a period of pot instability ($19), costs associated with
                                                                                  preparation for and ratification of a new labor agreement with the
                                                                                  United Steelworkers ($11), a net unfavorable change in certain
                                                                                  mark-to-market energy derivative contracts ($6), and a loss on the
                                                                                  write-down of an asset to fair value ($2).
                                                                                   
(3)                                                                               The average number of shares applicable to diluted EPS for Net
                                                                                  income (loss) attributable to Alcoa common shareholders excludes
                                                                                  certain share equivalents as their effect was anti-dilutive (see
                                                                                  footnote 3 to the Statement of Consolidated Operations). However,
                                                                                  certain of these share equivalents may become dilutive in the EPS
                                                                                  calculation applicable to Net income attributable to Alcoa common
                                                                                  shareholders - as adjusted due to a larger and/or positive
                                                                                  numerator. Specifically:
                          ?                                          for the quarter ended December 31, 2015, share equivalents
                                                                                  associated with outstanding employee stock options and awards were
                                                                                  dilutive based on Net income attributable to Alcoa common
                                                                                  shareholders - as adjusted, resulting in a diluted average number
                                                                                  of shares of 1,324,378,133;
                          ?                                          for the quarter ended September 30, 2015, no additional share
                                                                                  equivalents were dilutive based on Net income attributable to
                                                                                  Alcoa common shareholders - as adjusted, resulting in a diluted
                                                                                  average number of shares of 1,294,392,945;
                          ?                                          for the quarter ended December 31, 2014, share equivalents
                                                                                  associated with mandatory convertible preferred stock were
                                                                                  dilutive based on Net income attributable to Alcoa common
                                                                                  shareholders - as adjusted, resulting in a diluted average number
                                                                                  of shares of 1,294,701,805 (the subtraction of preferred stock
                                                                                  dividends declared from the numerator (see footnote 1 to the
                                                                                  Statement of Consolidated Operations) needs to be reversed since
                                                                                  the related mandatory convertible preferred stock was dilutive);
                          ?                                          for the year ended December 31, 2015, share equivalents associated
                                                                                  with both outstanding employee stock options and awards and
                                                                                  convertible notes related to the acquisition of RTI International
                                                                                  Metals were dilutive based on Net income attributable to Alcoa
                                                                                  common shareholders - as adjusted, resulting in a diluted average
                                                                                  number of shares of 1,288,633,988 (after-tax interest expense of
                                                                                  $8 needs to be added back to the numerator since the convertible
                                                                                  notes were dilutive); and
                          ?                                          for the year ended December 31, 2014, share equivalents associated
                                                                                  with both Alcoa’s 5.25% convertible notes and mandatory
                                                                                  convertible preferred stock were dilutive based on Net income
                                                                                  attributable to Alcoa common shareholders - as adjusted, resulting
                                                                                  in a diluted average number of shares of 1,217,720,724 (after-tax
                                                                                  interest expense of $6 needs to be added back to the numerator
                                                                                  since the convertible notes were dilutive and the subtraction of
                                                                                  $19 of the preferred stock dividends declared from the numerator
                                                                                  (see footnote 1 to the Statement of Consolidated Operations) needs
                                                                                  to be reversed since the related mandatory convertible preferred
                                                                                  stock was dilutive).
                                                                                   
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited), continued
(dollars in millions)
                                                                                                                                                                                                                                           
Adjusted EBITDA                                                                                                                                                  Quarter ended                                                                                                                                                      Year ended
                                                                                 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------
                                                                                  December 31,                                       September 30,                          December 31,                                                     December 31,                                   December 31,
                                                                                      2014                                                                  2015                                                      2015                                                             2014                                                              2015
                                                            ------------------------------------------------------                        --------------------------------------                        -----------------------------                        ------------------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                                 
Net income (loss) attributable to Alcoa                                                             $            159                                              $             44                                              $  (500 )                                                            $            268                                              $   (121 )
                                                                                                                                                                                                                                                                                                                                                 
Add:
 Net (loss) income attributable to noncontrolling interests                                                      (45 )                                                          62                                                  (64 )                                                                         (91 )                                                 125
 Provision for income taxes                                                                                      120                                                           100                                                   44                                                                           320                                                   445
 Other (income) expenses, net                                                                                     (6 )                                                         (15 )                                                 29                                                                            47                                                     2
 Interest expense                                                                                                122                                                           123                                                  129                                                                           473                                                   498
 Restructuring and other charges                                                                                 388                                                            66                                                  534                                                                         1,168                                                   994
 Impairment of goodwill                                                                               -                                                -                                                   25                                                                -                                                    25
 Provision for depreciation, depletion, and amortization                                      335                     318            322                                   1,371           1,280  
                                                                                 -------------------- -------------- --------------------      -------------------- -------------- --------------------      -------------------- ----- --------------------                      -------------------- -------------- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                 
Adjusted EBITDA                                                                                     $          1,073                           $            698                           $   519                                           $          3,556                           $  3,248  
                                                                                 ==================== ============== ====================      ==================== ============== ====================      ==================== ===== ====================                      ==================== ============== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                 
Adjusted EBITDA Measures:
                                                                                                                                                                                                                                                                                                                                                 
Sales                                                                                               $          6,377                                              $          5,573                                              $ 5,245                                                              $         23,906                                              $ 22,534
Adjusted EBITDA Margin                                                                                          16.8 %                                                        12.5 %                                                9.9 %                                                                        14.9 %                                                14.4 %
                                                                                                                                                                                                                                                                                                                                                 
Total Debt                                                                                                                                                                                                                                                                                           $          8,852                                              $  9,103
Debt-to-Adjusted EBITDA Ratio                                                                                                                                                                                                                                                                                    2.49                                                  2.80
                                                                                                                                                                                                                                                                                                                                                                             
Alcoa’s definition of Adjusted EBITDA (Earnings before interest,
taxes, depreciation, and amortization) is net margin plus an
add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods
sold; Selling, general administrative, and other expenses; Research
and development expenses; and Provision for depreciation, depletion,
and amortization. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because Adjusted EBITDA provides additional information with respect
to Alcoa’s operating performance and the Company’s ability to meet
its financial obligations. The Adjusted EBITDA presented may not be
comparable to similarly titled measures of other companies.
 
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited), continued
(dollars in millions,
except per metric ton amounts)
                                                                                                                                                                                                                                                                                        
Segment Measures                                                                                                                                                                       Alumina                                                                                                                                                                                                                                                                        Primary Metals
                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA                                                                                                                Quarter ended                                                                                                 Year ended                                                                                                                               Quarter ended                                                                                                                     Year ended
                                                                     ---------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------
                                                               December 31,                           September 30,                   December 31,                                December 31,                             December 31,                                December 31,                             September 30,                    December 31,                                                 December 31,                              December 31,
                                                                   2014                                                      2015                                               2015                                        2014                                                        2015                                        2014                                                        2015                                                2015                                                         2014                                                         2015
                                                ----------------------------------------                       -----------------------------                        --------------------------        ----------------------------------------------                        --------------------------         --------------------------------------------                        ----------------------------                        ----------------------------                        ---------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
After-tax operating income (ATOI)                                                       $                  178                         $   212                                                $    98                                         $    370                                                $    746                                         $  267                                              $  (59 )                                            $  (40 )                                                            $   594                                              $    155
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Add:
Depreciation, depletion, and amortization                                                                   90                              71                                                     68                                              387                                                     296                                            117                                                 106                                                 105                                                                  494                                                   429
Equity loss (income)                                                                                        10                               9                                                     14                                               29                                                      41                                            (11 )                                                 7                                                  (3 )                                                                 34                                                    12
Income taxes                                                                                                75                              85                                                     36                                              153                                                     300                                             89                                                 (49 )                                               (42 )                                                                203                                                   (28 )
Other                                                                                     2           (1 )                                 2                           (28 )                                  1                          (2 )                             (2 )                              1                             (6 )                               (2 )
                                                                     -------------------- --------------------      -------------------- ----- --------------------        -------------------- -----                      -------------------- ------ --------------------        -------------------- ------                      -------------------- ---- --------------------      -------------------- ---- --------------------      -------------------- ---- --------------------                      -------------------- ----- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Adjusted EBITDA                                                                         $                  355                         $   376                             $   218                                         $    911                             $  1,384                                         $  460                           $    3                           $   21                                           $ 1,319                           $    566  
                                                                     ==================== ====================      ==================== ===== ====================        ==================== =====                      ==================== ====== ====================        ==================== ======                      ==================== ==== ====================      ==================== ==== ====================      ==================== ==== ====================                      ==================== ===== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Production (thousand metric tons) (kmt)                                                                  4,161                           3,954                                                  3,856                                           16,606                                                  15,720                                            731                                                 700                                                 699                                                                3,125                                                 2,811
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Adjusted EBITDA / Production ($ per metric ton)                                         $                   85                         $    95                                                $    57                                         $     55                                                $     88                                         $  629                                              $    4                                              $   30                                                              $   422                                              $    201
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Alcoa’s definition of Adjusted EBITDA (Earnings before interest,
taxes, depreciation, and amortization) is net margin plus an
add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods
sold; Selling, general administrative, and other expenses; Research
and development expenses; and Provision for depreciation, depletion,
and amortization. The Other line in the table above includes
gains/losses on asset sales and other nonoperating items. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because Adjusted EBITDA
provides additional information with respect to Alcoa’s operating
performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
 
Alcoa and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(dollars in millions, except per
metric ton amounts)
                                                      
Segment Measures                                                                                                                                                                                Global Rolled Products(1)
                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA                                                                                                                         Quarter ended                                                                                                              Year ended
                                                                          -----------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------
                                                                    December 31,                          September 30,                   December 31,                                         December 31,                              December 31,
                                                                        2014                                                     2015                                               2015                                                 2014                                                         2015
                                                     ----------------------------------------                       ----------------------------                        --------------------------                 ---------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                              
After-tax operating income (ATOI)                                                            $                   52                         $   62                                                $             52                                         $   245                                              $    244
                                                                                                                                                                                                                                                                                              
Add:
Depreciation, depletion, and amortization                                                                        57                             56                                                              59                                             235                                                   227
Equity loss                                                                                                       8                              8                                                               8                                              27                                                    32
Income taxes                                                                                                     16                             28                                                              20                                              89                                                   109
Other                                                                             -          (1 )                             -                           (1 )                               (1 )
                                                                          -------------------- --------------------      -------------------- ---- --------------------        -------------------- --------------                      -------------------- ----- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                              
Adjusted EBITDA                                                                              $                  133                         $  153                             $            139                                         $   595                           $    611  
                                                                          ==================== ====================      ==================== ==== ====================        ==================== ==============                      ==================== ===== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                              
Total shipments (thousand metric tons) (kmt)                                                                    508                            464                                                             446                                           2,056                                                 1,836
                                                                                                                                                                                                                                                                                              
Adjusted EBITDA / Total shipments ($ per metric ton)                                         $                  262                         $  330                                                $            312                                         $   289                                              $    333
                                                                                                                                                                                                                                                                                                                          
Alcoa’s definition of Adjusted EBITDA (Earnings before interest,
taxes, depreciation, and amortization) is net margin plus an
add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods
sold; Selling, general administrative, and other expenses; Research
and development expenses; and Provision for depreciation, depletion,
and amortization. The Other line in the table above includes
gains/losses on asset sales and other nonoperating items. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because Adjusted EBITDA
provides additional information with respect to Alcoa’s operating
performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
 
(1)   Effective in the second quarter of 2015, management removed the
                         impact of metal price lag from the results of the Global Rolled
                         Products segment in order to enhance the visibility of the
                         underlying operating performance of this business. Metal price lag
                         describes the timing difference created when the average price of
                         metal sold differs from the average cost of the metal when purchased
                         by this segment. The impact of metal price lag is now reported as a
                         separate line item in Alcoa’s reconciliation of total segment ATOI
                         to consolidated net income (loss) attributable to Alcoa. As a
                         result, this change does not impact the consolidated results of
                         Alcoa. Segment information for all prior periods presented was
                         updated to reflect this change. See Segment Information above for
                         additional information.
                          
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited), continued
(dollars in millions)
                                                                                                                                                                                                                                                                                  
Segment Measures                                                                                                                                                                                       Engineered Products and Solutions(1),(2)                                                                                                                                                                                                                                                                                            Transportation and Construction Solutions(1),(2)
                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA                                                                                                                                Quarter ended                                                                                                                                       Year ended                                                                                                                                                           Quarter ended                                                                                                                                   Year ended
                                                               ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------
                                                            December 31,                                  September 30,                              December 31,                                                          December 31,                                       December 31,                                                          December 31,                                  September 30,                         December 31,                                                          December 31,                                   December 31,
                                                                2014                                                             2015                                                          2015                                                                  2014                                                                  2015                                                                  2014                                                             2015                                                     2015                                                                  2014                                                              2015
                                          ---------------------------------------------                        --------------------------------------                        --------------------------------------                        ------------------------------------------------------                        --------------------------------------                        ------------------------------------------------------                        ----------------------------                        --------------------------------------                        ------------------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
After-tax operating income (ATOI)                                                 $   124                                              $            151                                              $            123                                                              $            579                                              $            595                                                              $             38                                              $   44                                              $             40                                                              $            180                                              $    166
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Add:
Depreciation, depletion, and amortization                                              42                                                            61                                                            67                                                                           137                                                           233                                                                            11                                                  11                                                            11                                                                            42                                                    43
Income taxes                                                                           64                                                            71                                                            54                                                                           298                                                           282                                                                            14                                                  18                                                            14                                                                            69                                                    63
Other                                                               (1 )                           -          -                          -          -                          -            (1 )                           -                          -              (1 )
                                                               -------------------- ----- --------------------      -------------------- -------------- --------------------      -------------------- -------------- --------------------                      -------------------- -------------- --------------------      -------------------- -------------- --------------------                      -------------------- -------------- --------------------      -------------------- ---- --------------------      -------------------- -------------- --------------------                      -------------------- -------------- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted EBITDA                                                                   $   229                           $            283                           $            244                                           $          1,014                           $          1,110                                           $             63                           $   72                           $             65                                           $            291                           $    271  
                                                               ==================== ===== ====================      ==================== ============== ====================      ==================== ============== ====================                      ==================== ============== ====================      ==================== ============== ====================                      ==================== ============== ====================      ==================== ==== ====================      ==================== ============== ====================                      ==================== ============== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Third-party sales                                                                 $ 1,114                                              $          1,397                                              $          1,409                                                              $          4,217                                              $          5,342                                                              $            500                                              $  475                                              $            444                                                              $          2,021                                              $  1,882
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted EBITDA Margin                                                               20.6 %                                                        20.3 %                                                        17.3 %                                                                        24.0 %                                                        20.8 %                                                                        12.6 %                                              15.2 %                                                        14.6 %                                                                        14.4 %                                                14.4 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Alcoa’s definition of Adjusted EBITDA (Earnings before interest,
taxes, depreciation, and amortization) is net margin plus an
add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods
sold; Selling, general administrative, and other expenses; Research
and development expenses; and Provision for depreciation, depletion,
and amortization. The Other line in the table above includes
gains/losses on asset sales and other nonoperating items. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because Adjusted EBITDA
provides additional information with respect to Alcoa’s operating
performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
 
   (1)   Effective in the second quarter of 2015, management removed the
                            impact of metal price lag from the results of the Engineered
                            Products and Solutions (now Engineered Products and Solutions and
                            Transportation and Construction Solutions - see footnote 2 below)
                            segment in order to enhance the visibility of the underlying
                            operating performance of this business. Metal price lag describes
                            the timing difference created when the average price of metal sold
                            differs from the average cost of the metal when purchased by this
                            segment. The impact of metal price lag is now reported as a separate
                            line item in Alcoa’s reconciliation of total segment ATOI to
                            consolidated net income (loss) attributable to Alcoa. As a result,
                            this change does not impact the consolidated results of Alcoa.
                            Segment information for all prior periods presented was updated to
                            reflect this change. See Segment Information above for additional
                            information.
 
   (2)                      In the third quarter of 2015, management approved a realignment of
                            Alcoa’s Engineered Products and Solutions segment due to the
                            expansion of this part of Alcoa’s business portfolio through both
                            organic and inorganic growth. This realignment consisted of moving
                            both the Alcoa Wheel and Transportation Products and Building and
                            Construction Systems business units to a new reportable segment
                            named Transportation and Construction Solutions. Additionally, the
                            Latin American soft alloy extrusions business previously included in
                            Corporate was moved into the new Transportation and Construction
                            Solutions segment. The remaining Engineered Products and Solutions
                            segment consists of the Alcoa Fastening Systems and Rings (renamed
                            to include portions of the Firth Rixson business acquired in
                            November 2014), Alcoa Power and Propulsion (includes the TITAL
                            business acquired in March 2015), Alcoa Forgings and Extrusions
                            (includes the other portions of Firth Rixson), and Alcoa Titanium
                            and Engineered Products (a new business unit that represents the RTI
                            International Metals business acquired in July 2015) business units.
                            Segment information for all prior periods presented was updated to
                            reflect the new segment structure.
                             
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited), continued
(dollars in millions)
                                                                                                                                                                             
Free Cash Flow                                                                             Quarter ended                                                                                                                    Year ended
                                          --------------------------------------------------------------------- ------------------------------------------------------------------- -------------------------------------------------                     -------------------------------------------------------------------------------------------------------
                                       December 31,                                                         September 30,                                                        December 31,                                                          December 31,                               December 31,
                                           2014                                                                 2015                                                                 2015                                                                  2014                                                          2015
                     ----------------------------------------------                        --------------------------------------------                        ----------------------------------------------                        ----------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                           
Cash from operations                                         $  1,458                                                              $  420                                                              $    865                                                              $  1,674                                              $  1,582
                                                                                                                                                                                                                                                                                                                 
Capital expenditures                          (469 )                                           (268 )                                             (398 )                                           (1,219 )                           (1,180 )
                                          -------------------- ------ --------------------                      -------------------- ---- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                 
Free cash flow                                               $    989                                           $  152                                           $    467                                           $    455                           $    402  
                                          ==================== ====== ====================                      ==================== ==== ====================                      ==================== ====== ====================                      ==================== ====== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                             
Free Cash Flow is a non-GAAP financial measure. Management believes
that this measure is meaningful to investors because management
reviews cash flows generated from operations after taking into
consideration capital expenditures due to the fact that these
expenditures are considered necessary to maintain and expand Alcoa’s
asset base and are expected to generate future cash flows from
operations. It is important to note that Free Cash Flow does not
represent the residual cash flow available for discretionary
expenditures since other non-discretionary expenditures, such as
mandatory debt service requirements, are not deducted from the
measure.
 
Days Working Capital                                                                                                       Quarter ended
                                                                              --------------------------------------------------------------------------------------------------------------------------------------------
                                                                        December 31,                         September 30,                 December 31,
                                                                            2014                                                   2015(3)                                          2015(3)
                                                         ----------------------------------------                       --------------------------                       --------------------------
                                                                                                                                                                                 
Receivables from customers, less allowances                                                      $                1,513                           $                1,489                           $                1,428
Add: Deferred purchase price receivable(1)                                                       395                           382                           324
                                                                              -------------------- --------------------        -------------------- --------------------        -------------------- --------------------
Receivables from customers, less allowances, as adjusted                                                          1,908                                            1,871                                            1,752
Add: Inventories                                                                                                  3,064                                            3,443                                            3,523
Less: Accounts payable, trade                                                                  3,021                         2,871                         2,849
                                                                              -------------------- --------------------        -------------------- --------------------        -------------------- --------------------
Working Capital(2)                                                                               $                1,951                           $                2,443                           $                2,426
                                                                              ==================== ====================        ==================== ====================        ==================== ====================
                                                                                                                                                                                 
Sales                                                                                            $                6,377                           $                5,573                           $                5,245
                                                                                                                                                                                 
Days Working Capital                                                                                                 28                                               40                                               43
                                                                                                                                                                                                      
Days Working Capital = Working Capital divided by (Sales/number of
days in the quarter).
 
                   (1)     The deferred purchase price receivable relates to an arrangement to
                                              sell certain customer receivables to several financial institutions
                                              on a recurring basis. Alcoa is adding back this receivable for the
                                              purposes of the Days Working Capital calculation.
 
                   (2)                        The Working Capital for each period presented represents an average
                                              quarter Working Capital, which reflects the capital tied up during a
                                              given quarter. As such, the components of Working Capital for each
                                              period presented represent the average of the ending balances in
                                              each of the three months during the respective quarter.
 
                   (3)                        In the quarters ended September 30, 2015 and December 31, 2015,
                                              Working Capital and Sales include $708 and $387, respectively, and
                                              $924 and $422 respectively, related to three acquisitions, Firth
                                              Rixson (November 2014), TITAL (March 2015), and RTI International
                                              Metals (July 2015). Excluding these amounts, Days Working Capital
                                              was 31 and 29 for the quarters ended September 30, 2015 and December
                                              31, 2015, respectively.
                                               
Alcoa and subsidiaries
Calculation of Financial
Measures (unaudited), continued
(in millions)
                                                                                                             
Net Debt                                                                     December 31,                                     September 30,                                           December 31,
                                                                                 2014                                             2015                                                    2015
                                                                     --------------------------                       --------------------------                       ----------------------------------------
                                                                                                                                                                        
Short-term borrowings                                                                   $     54                                         $     50                                         $                   38
Long-term debt due within one year                                                            29                                              136                                                             21
Long-term debt, less amount due within one year                         8,769                         9,091                                       9,044
                                                                     -------------------- ------                      -------------------- ------                      -------------------- --------------------
Total debt                                                                              $  8,852                                         $  9,277                                         $                9,103
                                                                                                                                                                        
Less: Cash and cash equivalents                                         1,877                         1,739                                       1,919
                                                                     -------------------- ------                      -------------------- ------                      -------------------- --------------------
                                                                                                                                                                        
Net debt                                                                                $  6,975                                         $  7,538                                         $                7,184
                                                                     ==================== ======                      ==================== ======                      ==================== ====================
                                                                                                                                                                                             
Net debt is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because management assesses
Alcoa’s leverage position after factoring in available cash that
could be used to repay outstanding debt.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160111006449r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160111006449/en/

SOURCE: Alcoa"> <Property FormalName="PrimaryTwitterHandle" Value="@Alcoa

Alcoa 
Investor Contact 
Nahla Azmy, 212-836-2674 
Nahla.Azmy@alcoa.com 
or 
Media Contact 
Monica Orbe, 212-836-2632 
Monica.Orbe@alcoa.com


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