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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/29/20 Alcoa Corp 10-Q 6/30/20 90:19M ActiveDisclosure/FA |
Document/Exhibit Description Pages Size
1: 10-Q 2Q20 Form 10-Q HTML 1.61M
6: EX-95.1 Mine-Safety Disclosure HTML 26K
2: EX-31.1 Certification -- §302 - SOA'02 HTML 33K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 33K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 28K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 28K
13: R1 Document and Entity Information HTML 80K
14: R2 Statement of Consolidated Operations (Unaudited) HTML 93K
15: R3 Statement of Consolidated Comprehensive Income HTML 95K
(Unaudited)
16: R4 Consolidated Balance Sheet (Unaudited) HTML 148K
17: R5 Statement of Consolidated Cash Flows (Unaudited) HTML 114K
18: R6 Statement of Changes in Consolidated Equity HTML 71K
(Unaudited)
19: R7 Basis of Presentation HTML 33K
20: R8 Recently Adopted and Recently Issued Accounting HTML 44K
Guidance
21: R9 Divestitures HTML 28K
22: R10 Restructuring and Other Charges, Net HTML 136K
23: R11 Segment Information HTML 428K
24: R12 Earnings Per Share HTML 78K
25: R13 Accumulated Other Comprehensive Loss HTML 520K
26: R14 Investments HTML 223K
27: R15 Receivables HTML 28K
28: R16 Inventories HTML 50K
29: R17 Debt HTML 35K
30: R18 Pension and Other Postretirement Benefits HTML 198K
31: R19 Derivatives and Other Financial Instruments HTML 515K
32: R20 Income Taxes HTML 63K
33: R21 Leasing HTML 100K
34: R22 Contingencies HTML 76K
35: R23 Other Expenses (Income), Net HTML 82K
36: R24 Basis of Presentation (Policies) HTML 44K
37: R25 Restructuring and Other Charges, Net (Tables) HTML 130K
38: R26 Segment Information (Tables) HTML 429K
39: R27 Earnings Per Share (Tables) HTML 75K
40: R28 Accumulated Other Comprehensive Loss (Tables) HTML 520K
41: R29 Investments (Tables) HTML 221K
42: R30 Inventories (Tables) HTML 51K
43: R31 Pension and Other Postretirement Benefits (Tables) HTML 191K
44: R32 Derivatives and Other Financial Instruments HTML 511K
(Tables)
45: R33 Income Taxes (Tables) HTML 56K
46: R34 Leasing (Tables) HTML 105K
47: R35 Contingencies (Tables) HTML 54K
48: R36 Other Expenses (Income), Net (Tables) HTML 80K
49: R37 Basis of Presentation - Additional Information HTML 33K
(Detail)
50: R38 Divestitures - Additional Information (Detail) HTML 37K
51: R39 Restructuring and Other Charges, Net - Additional HTML 130K
Information (Detail)
52: R40 Restructuring and Other Charges, Net - Schedule of HTML 39K
Restructuring and Other Charges by Reportable
Segments, Pretax (Detail)
53: R41 Restructuring and Other Charges,Net - Activity and HTML 42K
Reserve Balances for Restructuring Charges
(Detail)
54: R42 Segment Information - Schedule of Operating HTML 67K
Results of Alcoa's Reportable Segments (Detail)
55: R43 Segment Information - Schedule of Segment Adjusted HTML 69K
EBITDA to Consolidated Net Loss Attributable to
Alcoa Corporation (Detail)
56: R44 Segment Information - Schedule of Sales by Product HTML 44K
Division (Detail)
57: R45 Earnings Per Share - Schedule of Computation of HTML 41K
Basic and Diluted EPS Attributable to Alcoa
Corporation Common Shareholders (Detail)
58: R46 Earnings Per Share - Additional Information HTML 37K
(Detail)
59: R47 Accumulated Other Comprehensive Loss - Summary of HTML 120K
Changes in Accumulated Other Comprehensive (Loss)
Income by Component (Detail)
60: R48 Investments - Summary of Unaudited Financial HTML 71K
Information for Alcoa Corporation's Equity
Investments (Detail)
61: R49 Investments - Additional Information (Detail) HTML 30K
62: R50 Receivables - Additional Information (Detail) HTML 39K
63: R51 Inventories - Schedule of Inventory Components HTML 40K
(Detail)
64: R52 Debt - Additional Information (Detail) HTML 70K
65: R53 Pension and Other Postretirement Benefits - HTML 55K
Components of Net Periodic Benefit Cost (Detail)
66: R54 Pension and Other Postretirement Benefits - HTML 50K
Additional Information (Detail)
67: R55 Pension and Other Postretirement Benefits - HTML 54K
Summary of Information in Curtailment or
Settlement of Benefits Requiring Remeasurement,
Update to Discount Rates Used to Determine Benefit
Obligations of Affected Plans (Detail)
68: R56 Derivatives and Other Financial Instruments - HTML 64K
Schedule of Detail for Level 1, 2 and 3
Derivatives (Detail)
69: R57 Derivatives and Other Financial Instruments - HTML 63K
Additional Information (Detail)
70: R58 Derivatives and Other Financial Instruments - HTML 50K
Schedule of Quantitative Information for Level 3
Derivative Contracts (Detail)
71: R59 Derivatives and Other Financial Instruments - HTML 54K
Schedule of Fair Values of Level 3 Derivative
Instruments Recorded as Assets and Liabilities
(Detail)
72: R60 Derivatives and Other Financial Instruments - HTML 63K
Schedule of Reconciliation of Activity for
Derivative Contracts (Detail)
73: R61 Derivatives and Other Financial Instruments - HTML 39K
Schedule of Carrying Values and Fair Values of
Other Financial Instruments (Detail)
74: R62 Income Taxes - Additional Information (Detail) HTML 33K
75: R63 Income Taxes - Schedule of Income Taxes (Detail) HTML 42K
76: R64 Leasing - Additional Information (Detail) HTML 33K
77: R65 Leasing - Schedule of Lease Expense and Operating HTML 32K
Cash Flows (Detail)
78: R66 Leasing - Schedule of Weighted Average Lease Term HTML 30K
and Weighted Average Discount Rate (Detail)
79: R67 Leasing - Schedule of Aggregate Right-of Use HTML 40K
Assets and Related Lease Obligations (Detail)
80: R68 Leasing - Schedule of Future Cash Flows Related to HTML 45K
Operating Lease Obligations (Detail)
81: R69 Contingencies - Changes in Carrying Value of HTML 38K
Recorded Environmental Remediation Reserves
(Detail)
82: R70 Contingencies - Additional Information (Detail) HTML 60K
83: R71 Contingencies - Estimate Timing of Cash Outflows HTML 34K
on Environmental Reserves (Detail)
84: R72 Contingencies - Additional Information - 1 HTML 112K
(Detail)
85: R73 Other Expenses (Income), Net - Schedule of Other HTML 41K
(Income) Expenses, Net (Detail)
86: R74 Other Expenses (Income), Net - Additional HTML 30K
Information (Detail)
88: XML IDEA XML File -- Filing Summary XML 167K
12: XML XBRL Instance -- aa-10q_20200630_htm XML 6.15M
87: EXCEL IDEA Workbook of Financial Reports XLSX 115K
8: EX-101.CAL XBRL Calculations -- aa-20200630_cal XML 227K
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11: EX-101.PRE XBRL Presentations -- aa-20200630_pre XML 1.15M
7: EX-101.SCH XBRL Schema -- aa-20200630 XSD 238K
89: JSON XBRL Instance as JSON Data -- MetaLinks 462± 708K
90: ZIP XBRL Zipped Folder -- 0001564590-20-034293-xbrl Zip 273K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-Q
(Mark One)
|
i ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended i June 30, i 2020 /
OR
|
i ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to _____
Commission File Number i 1-37816
i ALCOA CORPORATION
(Exact name of registrant as specified in its charter)
|
i Delaware (State or other jurisdiction of incorporation or organization) |
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i 81-1789115 (I.R.S. Employer Identification No.) |
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i 201 Isabella Street, i Suite 500, i Pittsburgh, i Pennsylvania (Address of principal executive offices) |
|
i 15212-5858 (Zip Code) |
i 412- i 315-2900
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
i Common Stock, par value $0.01 per share |
|
i AA |
|
i New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
☒ |
|
Accelerated filer |
☐ |
|
Non-accelerated filer |
☐ |
|
Smaller reporting company |
i ☐ |
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Emerging growth company |
i ☐ |
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|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
As of July 24, 2020, i 185,924,291 shares of common stock, par value $0.01 per share, of the registrant were outstanding.
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1 |
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Item 1. |
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1 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
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Item 3. |
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41 |
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Item 4. |
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41 |
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42 |
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Item 1A. |
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42 |
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Item 2. |
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43 |
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Item 4. |
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43 |
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Item 6. |
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44 |
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45 |
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Forward-Looking Statements
This report 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 by Alcoa Corporation that reflect 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 bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results or operating performance; statements about strategies, outlook, and business and financial prospects; and statements about return of capital. These statements reflect beliefs and assumptions that are based on Alcoa Corporation’s perception of historical trends, current conditions, and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation 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) current and potential future impacts of the coronavirus (COVID-19) pandemic on the global economy and our business, financial condition, results of operations, or cash flows and judgments and assumptions used in our estimates; (b) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum and other products, and fluctuations in indexed-based and spot prices for alumina; (c) deterioration in global economic and financial market conditions generally and which may also affect Alcoa Corporation’s ability to obtain credit or financing upon acceptable terms or at all; (d) unfavorable changes in the markets served by Alcoa Corporation; (e) the impact of changes in foreign currency exchange and tax rates on costs and results; (f) increases in energy costs or uncertainty of energy supply; (g) declines in the discount rates used to measure pension liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; (h) the inability to achieve improvement in profitability and margins, cost savings, cash generation, revenue growth, fiscal discipline, or strengthening of competitiveness and operations anticipated from portfolio actions, operational and productivity improvements, cash sustainability, technology advancements, and other initiatives; (i) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, restructuring activities, facility closures, curtailments, restarts, expansions, or joint ventures; (j) political, economic, trade, legal, public health and safety, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (k) labor disputes and/or and work stoppages; (l) the outcome of contingencies, including legal and tax proceedings (including the Australian Taxation Office Matter), government or regulatory investigations, and environmental remediation; (m) the impact of cyberattacks and potential information technology or data security breaches; and (n) the other risk factors discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, and this Quarterly Report on Form 10-Q, and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission (SEC). Alcoa Corporation 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 described above and other risks in the market.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
Alcoa Corporation and Subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share amounts)
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Sales (E) |
|
$ |
i 2,148 |
|
|
$ |
i 2,711 |
|
|
$ |
i 4,529 |
|
|
$ |
i 5,430 |
|
|
Cost of goods sold (exclusive of expenses below) |
|
|
i 1,932 |
|
|
|
i 2,189 |
|
|
|
i 3,957 |
|
|
|
i 4,369 |
|
|
Selling, general administrative, and other expenses |
|
|
i 44 |
|
|
|
i 68 |
|
|
|
i 104 |
|
|
|
i 152 |
|
|
Research and development expenses |
|
|
i 5 |
|
|
|
i 7 |
|
|
|
i 12 |
|
|
|
i 14 |
|
|
Provision for depreciation, depletion, and amortization |
|
|
i 152 |
|
|
|
i 174 |
|
|
|
i 322 |
|
|
|
i 346 |
|
|
Restructuring and other charges, net (D) |
|
|
i 37 |
|
|
|
i 370 |
|
|
|
i 39 |
|
|
|
i 483 |
|
|
Interest expense |
|
|
i 32 |
|
|
|
i 30 |
|
|
|
i 62 |
|
|
|
i 60 |
|
|
Other expenses (income), net (Q) |
|
|
i 51 |
|
|
|
i 50 |
|
|
|
( i 81 |
) |
|
|
i 91 |
|
|
Total costs and expenses |
|
|
i 2,253 |
|
|
|
i 2,888 |
|
|
|
i 4,415 |
|
|
|
i 5,515 |
|
|
(Loss) income before income taxes |
|
|
( i 105 |
) |
|
|
( i 177 |
) |
|
|
i 114 |
|
|
|
( i 85 |
) |
|
Provision for income taxes |
|
|
i 45 |
|
|
|
i 116 |
|
|
|
i 125 |
|
|
|
i 266 |
|
|
Net loss |
|
|
( i 150 |
) |
|
|
( i 293 |
) |
|
|
( i 11 |
) |
|
|
( i 351 |
) |
|
Less: Net income attributable to noncontrolling interest |
|
|
i 47 |
|
|
|
i 109 |
|
|
|
i 106 |
|
|
|
i 250 |
|
|
NET LOSS ATTRIBUTABLE TO ALCOA CORPORATION |
|
$ |
( i 197 |
) |
|
$ |
( i 402 |
) |
|
$ |
( i 117 |
) |
|
$ |
( i 601 |
) |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F): |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Basic |
|
$ |
( i 1.06 |
) |
|
$ |
( i 2.17 |
) |
|
$ |
( i 0.63 |
) |
|
$ |
( i 3.24 |
) |
|
Diluted |
|
$ |
( i 1.06 |
) |
|
$ |
( i 2.17 |
) |
|
$ |
( i 0.63 |
) |
|
$ |
( i 3.24 |
) |
The accompanying notes are an integral part of the consolidated financial statements.
1
Alcoa Corporation and Subsidiaries
Statement of Consolidated Comprehensive Income (unaudited)
(in millions)
|
|
|
Alcoa Corporation |
|
|
Noncontrolling interest |
|
|
Total |
|
|||||||||||||||
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Second quarter ended June 30, |
|
|
Second quarter ended June 30, |
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Second quarter ended |
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2019 |
|
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2020 |
|
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2019 |
|
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2020 |
|
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2019 |
|
|||||||
|
Net (loss) income |
|
$ |
( i 197 |
) |
|
$ |
( i 402 |
) |
|
$ |
i 47 |
|
|
$ |
i 109 |
|
|
$ |
( i 150 |
) |
|
$ |
( i 293 |
) |
|
Other comprehensive (loss) income, net of tax (G): |
|
|
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|
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Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits |
|
|
( i 127 |
) |
|
|
i 10 |
|
|
|
i 2 |
|
|
|
( i 2 |
) |
|
|
( i 125 |
) |
|
|
i 8 |
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|
Foreign currency translation adjustments |
|
|
i 135 |
|
|
|
i 40 |
|
|
|
i 94 |
|
|
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i 4 |
|
|
|
i 229 |
|
|
|
i 44 |
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|
Net change in unrecognized gains/losses on cash flow hedges |
|
|
( i 390 |
) |
|
|
i 79 |
|
|
|
( i 1 |
) |
|
|
( i 1 |
) |
|
|
( i 391 |
) |
|
|
i 78 |
|
|
Total Other comprehensive (loss) income, net of tax |
|
|
( i 382 |
) |
|
|
i 129 |
|
|
|
i 95 |
|
|
|
i 1 |
|
|
|
( i 287 |
) |
|
|
i 130 |
|
|
Comprehensive (loss) income |
|
$ |
( i 579 |
) |
|
$ |
( i 273 |
) |
|
$ |
i 142 |
|
|
$ |
i 110 |
|
|
$ |
( i 437 |
) |
|
$ |
( i 163 |
) |
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Alcoa Corporation |
|
|
Noncontrolling interest |
|
|
Total |
|
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|
Six months ended June 30, |
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|
Six months ended June 30, |
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|
Six months ended |
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|||||||||||||||
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2019 |
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|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||||
|
Net (loss) income |
|
$ |
( i 117 |
) |
|
$ |
( i 601 |
) |
|
$ |
i 106 |
|
|
$ |
i 250 |
|
|
$ |
( i 11 |
) |
|
$ |
( i 351 |
) |
|
Other comprehensive (loss) income, net of tax (G): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits |
|
|
( i 89 |
) |
|
|
i 51 |
|
|
|
i 2 |
|
|
|
( i 1 |
) |
|
|
( i 87 |
) |
|
|
i 50 |
|
|
Foreign currency translation adjustments |
|
|
( i 528 |
) |
|
|
i 18 |
|
|
|
( i 151 |
) |
|
|
i 6 |
|
|
|
( i 679 |
) |
|
|
i 24 |
|
|
Net change in unrecognized gains/losses on cash flow hedges |
|
|
i 311 |
|
|
|
( i 209 |
) |
|
|
( i 21 |
) |
|
|
i 5 |
|
|
|
i 290 |
|
|
|
( i 204 |
) |
|
Total Other comprehensive (loss) income, net of tax |
|
|
( i 306 |
) |
|
|
( i 140 |
) |
|
|
( i 170 |
) |
|
|
i 10 |
|
|
|
( i 476 |
) |
|
|
( i 130 |
) |
|
Comprehensive (loss) income |
|
$ |
( i 423 |
) |
|
$ |
( i 741 |
) |
|
$ |
( i 64 |
) |
|
$ |
i 260 |
|
|
$ |
( i 487 |
) |
|
$ |
( i 481 |
) |
The accompanying notes are an integral part of the consolidated financial statements.
2
Alcoa Corporation and Subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
|
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ASSETS |
|
|
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|
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Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents (M) |
|
$ |
i 965 |
|
|
$ |
i 879 |
|
|
Receivables from customers (I) |
|
|
i 402 |
|
|
|
i 546 |
|
|
Other receivables |
|
|
i 105 |
|
|
|
i 114 |
|
|
Inventories (J) |
|
|
i 1,419 |
|
|
|
i 1,644 |
|
|
Fair value of derivative instruments (M) |
|
|
i 24 |
|
|
|
i 59 |
|
|
Prepaid expenses and other current assets |
|
|
i 264 |
|
|
|
i 288 |
|
|
Total current assets |
|
|
i 3,179 |
|
|
|
i 3,530 |
|
|
Properties, plants, and equipment |
|
|
i 20,877 |
|
|
|
i 21,715 |
|
|
Less: accumulated depreciation, depletion, and amortization |
|
|
i 13,588 |
|
|
|
i 13,799 |
|
|
Properties, plants, and equipment, net |
|
|
i 7,289 |
|
|
|
i 7,916 |
|
|
Investments (H) |
|
|
i 1,037 |
|
|
|
i 1,113 |
|
|
Deferred income taxes |
|
|
i 482 |
|
|
|
i 642 |
|
|
Fair value of derivative instruments (M) |
|
|
i 5 |
|
|
|
i 18 |
|
|
Other noncurrent assets |
|
|
i 1,308 |
|
|
|
i 1,412 |
|
|
Total assets |
|
$ |
i 13,300 |
|
|
$ |
i 14,631 |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable, trade |
|
$ |
i 1,253 |
|
|
$ |
i 1,484 |
|
|
Accrued compensation and retirement costs |
|
|
i 393 |
|
|
|
i 413 |
|
|
Taxes, including income taxes |
|
|
i 96 |
|
|
|
i 104 |
|
|
Fair value of derivative instruments (M) |
|
|
i 47 |
|
|
|
i 67 |
|
|
Other current liabilities |
|
|
i 451 |
|
|
|
i 494 |
|
|
Long-term debt due within one year (K & M) |
|
|
i 1 |
|
|
|
i 1 |
|
|
Total current liabilities |
|
|
i 2,241 |
|
|
|
i 2,563 |
|
|
Long-term debt, less amount due within one year (K & M) |
|
|
i 1,800 |
|
|
|
i 1,799 |
|
|
Accrued pension benefits (L) |
|
|
i 1,602 |
|
|
|
i 1,505 |
|
|
Accrued other postretirement benefits (L) |
|
|
i 711 |
|
|
|
i 749 |
|
|
Asset retirement obligations |
|
|
i 565 |
|
|
|
i 606 |
|
|
Environmental remediation (P) |
|
|
i 277 |
|
|
|
i 296 |
|
|
Fair value of derivative instruments (M) |
|
|
i 203 |
|
|
|
i 581 |
|
|
Noncurrent income taxes |
|
|
i 245 |
|
|
|
i 276 |
|
|
Other noncurrent liabilities and deferred credits |
|
|
i 332 |
|
|
|
i 370 |
|
|
Total liabilities |
|
|
i 7,976 |
|
|
|
i 8,745 |
|
|
CONTINGENCIES AND COMMITMENTS (P) |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
Alcoa Corporation shareholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
i 2 |
|
|
|
i 2 |
|
|
Additional capital |
|
|
i 9,655 |
|
|
|
i 9,639 |
|
|
Accumulated deficit |
|
|
( i 672 |
) |
|
|
( i 555 |
) |
|
Accumulated other comprehensive loss (G) |
|
|
( i 5,280 |
) |
|
|
( i 4,974 |
) |
|
Total Alcoa Corporation shareholders’ equity |
|
|
i 3,705 |
|
|
|
i 4,112 |
|
|
Noncontrolling interest |
|
|
i 1,619 |
|
|
|
i 1,774 |
|
|
Total equity |
|
|
i 5,324 |
|
|
|
i 5,886 |
|
|
Total liabilities and equity |
|
$ |
i 13,300 |
|
|
$ |
i 14,631 |
|
The accompanying notes are an integral part of the consolidated financial statements.
3
Alcoa Corporation and Subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
|
|
|
Six months ended June 30, |
|
|||||
|
|
|
|
|
2019 |
|
|||
|
CASH FROM OPERATIONS |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( i 11 |
) |
|
$ |
( i 351 |
) |
|
Adjustments to reconcile net loss to cash from operations: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
|
i 322 |
|
|
|
i 346 |
|
|
Deferred income taxes |
|
|
( i 6 |
) |
|
|
i 64 |
|
|
Equity earnings, net of dividends |
|
|
i 15 |
|
|
|
i 14 |
|
|
Restructuring and other charges, net (D) |
|
|
i 39 |
|
|
|
i 483 |
|
|
Net gain from investing activities – asset sales (Q) |
|
|
( i 176 |
) |
|
|
( i 1 |
) |
|
Net periodic pension benefit cost (L) |
|
|
i 67 |
|
|
|
i 60 |
|
|
Stock-based compensation |
|
|
i 17 |
|
|
|
i 21 |
|
|
Provision for bad debt expense |
|
|
i 2 |
|
|
|
i 20 |
|
|
Other |
|
|
i 5 |
|
|
|
i 24 |
|
|
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments: |
|
|
|
|
|
|
|
|
|
Decrease in receivables |
|
|
i 124 |
|
|
|
i 94 |
|
|
Decrease in inventories |
|
|
i 184 |
|
|
|
i 53 |
|
|
Decrease in prepaid expenses and other current assets |
|
|
i 13 |
|
|
|
i 68 |
|
|
(Decrease) in accounts payable, trade |
|
|
( i 183 |
) |
|
|
( i 144 |
) |
|
(Decrease) in accrued expenses |
|
|
( i 120 |
) |
|
|
( i 51 |
) |
|
Increase (Decrease) in taxes, including income taxes |
|
|
i 7 |
|
|
|
( i 342 |
) |
|
Pension contributions (L) |
|
|
( i 59 |
) |
|
|
( i 55 |
) |
|
Decrease (Increase) in noncurrent assets |
|
|
i 19 |
|
|
|
( i 32 |
) |
|
(Decrease) in noncurrent liabilities |
|
|
( i 61 |
) |
|
|
( i 21 |
) |
|
CASH PROVIDED FROM OPERATIONS |
|
|
i 198 |
|
|
|
i 250 |
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Proceeds from the exercise of employee stock options |
|
|
— |
|
|
|
i 1 |
|
|
Financial contributions for the divestiture of businesses (D) |
|
|
( i 24 |
) |
|
|
— |
|
|
Contributions from noncontrolling interest |
|
|
i 16 |
|
|
|
i 21 |
|
|
Distributions to noncontrolling interest |
|
|
( i 106 |
) |
|
|
( i 286 |
) |
|
Other |
|
|
( i 1 |
) |
|
|
( i 6 |
) |
|
CASH USED FOR FINANCING ACTIVITIES |
|
|
( i 115 |
) |
|
|
( i 270 |
) |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
( i 168 |
) |
|
|
( i 158 |
) |
|
Proceeds from the sale of assets |
|
|
i 199 |
|
|
|
i 11 |
|
|
Additions to investments |
|
|
( i 3 |
) |
|
|
( i 111 |
) |
|
CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES |
|
|
i 28 |
|
|
|
( i 258 |
) |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
( i 26 |
) |
|
|
( i 1 |
) |
|
Net change in cash and cash equivalents and restricted cash |
|
|
i 85 |
|
|
|
( i 279 |
) |
|
Cash and cash equivalents and restricted cash at beginning of year |
|
|
i 883 |
|
|
|
i 1,116 |
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
|
$ |
i 968 |
|
|
$ |
i 837 |
|
The accompanying notes are an integral part of the consolidated financial statements.
4
Alcoa Corporation and Subsidiaries
Statement of Changes in Consolidated Equity (unaudited)
(in millions)
|
|
|
Alcoa Corporation shareholders |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Second quarter ended June 30, 2019 |
|
Common stock |
|
|
Additional capital |
|
|
Retained earnings (deficit) |
|
|
Accumulated other comprehensive loss |
|
|
Non- controlling interest |
|
|
Total equity |
|
||||||
|
Balance at March 31, 2019 |
|
$ |
i 2 |
|
|
$ |
i 9,618 |
|
|
$ |
i 371 |
|
|
$ |
( i 4,834 |
) |
|
$ |
i 1,926 |
|
|
$ |
i 7,083 |
|
|
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
( i 402 |
) |
|
|
— |
|
|
|
i 109 |
|
|
|
( i 293 |
) |
|
Other comprehensive income (G) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 129 |
|
|
|
i 1 |
|
|
|
i 130 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
i 11 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 11 |
|
|
Contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 72 |
) |
|
|
( i 72 |
) |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 1 |
) |
|
|
( i 1 |
) |
|
Balance at June 30, 2019 |
|
$ |
i 2 |
|
|
$ |
i 9,629 |
|
|
$ |
( i 31 |
) |
|
$ |
( i 4,705 |
) |
|
$ |
i 1,964 |
|
|
$ |
i 6,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second quarter ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020 |
|
$ |
i 2 |
|
|
$ |
i 9,647 |
|
|
$ |
( i 476 |
) |
|
$ |
( i 4,898 |
) |
|
$ |
i 1,536 |
|
|
$ |
i 5,811 |
|
|
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
( i 197 |
) |
|
|
— |
|
|
|
i 47 |
|
|
|
( i 150 |
) |
|
Other comprehensive (loss) income (G) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 382 |
) |
|
|
i 95 |
|
|
|
( i 287 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
i 9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 9 |
|
|
Contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 16 |
|
|
|
i 16 |
|
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 75 |
) |
|
|
( i 75 |
) |
|
Other |
|
|
— |
|
|
|
( i 1 |
) |
|
|
i 1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Balance at June 30, 2020 |
|
$ |
i 2 |
|
|
$ |
i 9,655 |
|
|
$ |
( i 672 |
) |
|
$ |
( i 5,280 |
) |
|
$ |
i 1,619 |
|
|
$ |
i 5,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018 |
|
$ |
i 2 |
|
|
$ |
i 9,611 |
|
|
$ |
i 570 |
|
|
$ |
( i 4,565 |
) |
|
$ |
i 1,970 |
|
|
$ |
i 7,588 |
|
|
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
( i 601 |
) |
|
|
— |
|
|
|
i 250 |
|
|
|
( i 351 |
) |
|
Other comprehensive (loss) income (G) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 140 |
) |
|
|
i 10 |
|
|
|
( i 130 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
i 21 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 21 |
|
|
Common stock issued: compensation plans |
|
|
— |
|
|
|
i 1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 1 |
|
|
Contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 21 |
|
|
|
i 21 |
|
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 286 |
) |
|
|
( i 286 |
) |
|
Other |
|
|
— |
|
|
|
( i 4 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 1 |
) |
|
|
( i 5 |
) |
|
Balance at June 30, 2019 |
|
$ |
i 2 |
|
|
$ |
i 9,629 |
|
|
$ |
( i 31 |
) |
|
$ |
( i 4,705 |
) |
|
$ |
i 1,964 |
|
|
$ |
i 6,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
|
$ |
i 2 |
|
|
$ |
i 9,639 |
|
|
$ |
( i 555 |
) |
|
$ |
( i 4,974 |
) |
|
$ |
i 1,774 |
|
|
$ |
i 5,886 |
|
|
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
( i 117 |
) |
|
|
— |
|
|
|
i 106 |
|
|
|
( i 11 |
) |
|
Other comprehensive loss (G) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 306 |
) |
|
|
( i 170 |
) |
|
|
( i 476 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
i 17 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 17 |
|
|
Contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 16 |
|
|
|
i 16 |
|
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 106 |
) |
|
|
( i 106 |
) |
|
Other |
|
|
— |
|
|
|
( i 1 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 1 |
) |
|
|
( i 2 |
) |
|
Balance at June 30, 2020 |
|
$ |
i 2 |
|
|
$ |
i 9,655 |
|
|
$ |
( i 672 |
) |
|
$ |
( i 5,280 |
) |
|
$ |
i 1,619 |
|
|
$ |
i 5,324 |
|
The accompanying notes are an integral part of the consolidated financial statements.
5
Alcoa Corporation and Subsidiaries
Notes to the Consolidated Financial Statements (unaudited)
(dollars in millions, except per-share amounts; metric tons in thousands (kmt))
i iA. Basis of Presentation – The interim Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (Alcoa Corporation, Alcoa, or the Company) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2019 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which includes all disclosures required by GAAP.
In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Management uses historical experience and all available information to make these estimates, including considerations for the impact of the coronavirus (COVID-19) pandemic on the macroeconomic environment. The Company has experienced certain negative impacts as a result of the COVID-19 pandemic to date, however, the magnitude and duration of the COVID-19 pandemic remains unknown, and the pandemic’s ultimate future impact on the Company’s business, financial condition, operating results, cash flows, and market capitalization is uncertain. In addition, the COVID-19 pandemic could adversely impact estimates made as of June 30, 2020 regarding future results, such as the recoverability of goodwill and long-lived assets and the realizability of deferred tax assets. Despite these inherent limitations, management believes that the amounts recorded in the financial statements related to these items are based on its best estimates and judgments using all relevant information available at the time. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information.
References in these Notes to ParentCo refer to Alcoa Inc., a Pennsylvania corporation, and its consolidated subsidiaries through October 31, 2016, at which time it was renamed Arconic Inc. (and since has been subsequently renamed Howmet Aerospace Inc.). On November 1, 2016 (the Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation and Arconic Inc. (the Separation Transaction). In connection with the Separation Transaction, as of October 31, 2016, the Company and Arconic Inc. entered into several agreements to effect the Separation Transaction, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Note A to the Consolidated Financial Statements in Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.
iPrinciples of Consolidation. The Consolidated Financial Statements of Alcoa Corporation include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the Alcoa World Alumina & Chemicals (AWAC) joint venture (see below). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which Alcoa Corporation has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted for on the cost method.
AWAC is an unincorporated global joint venture between Alcoa Corporation and Alumina Limited and consists of several affiliated operating entities, which own, or have an interest in, or operate the bauxite mines and alumina refineries within Alcoa Corporation’s Bauxite and Alumina segments (except for the Poços de Caldas mine and refinery and portions of the São Luís refinery and investment in Mineração Rio do Norte S.A., all in Brazil) and the Portland smelter in Australia within Alcoa Corporation’s Aluminum segment. Alcoa Corporation owns i 60% and Alumina Limited owns i 40% of these individual entities, which are consolidated by the Company for financial reporting purposes and include Alcoa of Australia Limited (AofA), Alcoa World Alumina LLC (AWA), and Alcoa World Alumina Brasil Ltda. (AWAB). Alumina Limited’s interest in the equity of such entities is reflected as Noncontrolling interest on the accompanying Consolidated Balance Sheet.
/ / i
B. Recently Adopted and Recently Issued Accounting Guidance
Adopted
On January 1, 2020, the Company adopted the following Accounting Standard Updates (ASU) issued by the Financial Accounting Standard Board (FASB), none of which had a material impact on the Company’s Consolidated Financial Statements:
|
|
• |
ASU No. 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606); |
|
|
• |
ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software; |
6
|
|
• |
ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20); |
|
|
• |
ASU No. 2018-13, Fair Value Measurement (Topic 820); and, |
|
|
• |
ASU No. 2016-13, Financial Instruments – Credit Losses. |
Issued
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) which is intended to simplify the accounting for income taxes by eliminating certain exceptions and simplifying certain requirements under Topic 740. Updates are related to intraperiod tax allocation, deferred tax liabilities for equity method investments, interim period tax calculations, tax laws or rate changes in interim periods, and income taxes related to employee stock ownership plans. The guidance for ASU No. 2019-12 becomes effective for Alcoa on January 1, 2021. The primary provision expected to impact the Company is related to intraperiod tax allocations, which have historically not had a significant impact on the Company. Upon adoption of this provision there will be no impact to the Consolidated Financial Statements. Once adopted, the provision will eliminate the requirement to make an intraperiod allocation if there is a loss in continuing operations and income outside of continuing operations. Management is currently evaluating the remaining provisions but does not expect a material impact to the Consolidated Financial Statements.
In March 2020, the FASB issued ASU No. 2020-04 to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Management is currently evaluating the impact of the replacement of the London Interbank Offered Rate (LIBOR) as well as the impact that the expected adoption of the applicable provisions within the optional guidance will have on the Consolidated Financial Statements. The adoption of the applicable provisions will coincide with the modifications of the affected contracts.
i
C. Divestitures – During the first quarter of 2020, the Company sold Elemental Environmental Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste processing facility in Gum Springs, Arkansas, to a global environmental firm in a transaction valued at $ i 250. At the close of the transaction the Company recorded a gain of $ i 180 (pre- and after-tax; see Note Q) and received $ i 200 with another $ i 50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in additional gain being recorded. During the second quarter of 2020, an additional $ i 1 gain was recorded as a result of certain post-closing adjustments based on the terms of the agreement. Further post-closing adjustments may occur related to this transaction and are not expected to be significant.
/ i
D. Restructuring and Other Charges, Net – In the second quarter and six-month period of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $ i 37 and $ i 39, respectively, which were primarily comprised of costs related to the curtailment of the Intalco (Washington) smelter of $ i i 27 / (both periods), and $ i 11 and $ i 13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) smelter, in addition to several insignificant items including impacts related to pension curtailments (see Note L).
In April 2020, as part of the Company’s portfolio review, Alcoa Corporation announced the curtailment of the remaining i 230 kmt of uncompetitive smelting capacity at the Intalco (Washington) smelter amid declining market conditions. The full curtailment, which includes i 49 kmt of earlier-curtailed capacity is expected to be completed during the third quarter of 2020. The $ i 27 net restructuring charge recorded in the second quarter of 2020 was comprised of $ i 17 for severance and employee termination costs from the separation of approximately i 685 employees, $ i 11 for contract termination costs, and a net curtailment gain of $1 related to the U.S. hourly defined benefit pension and retiree life plans (see Note L). The severance costs and contract termination costs are expected to be paid primarily in the third quarter of 2020. At June 30, 2020, approximately i 250 of the 685 employees had been terminated with approximately $ i 2 of payments made against the severance and employee termination cost reserve.
In the second quarter and six-month period of 2019, Alcoa Corporation recorded Restructuring and other charges, net of $ i 370 and $ i 483, respectively, which were comprised of the following components: $ i 5 and $ i 108, respectively, for exit costs related to the curtailment of the Avilés and La Coruña smelters in Spain (see below); $ i i 38 / (both periods) related to the curtailment of certain pension benefits; $ i i 319 / (both periods) related to the divestiture of Alcoa Corporation’s interest in the Ma’aden Rolling Company (MRC) (see below); $ i 1 and $ i 8, respectively, for closure costs related to a coal mine; and $ i 7 and $ i 10, respectively, for net charges related to various items.
Restructuring charges recorded in the first quarter of 2019 related to the smelter curtailments in Spain included asset impairments of $ i 80, employee-related costs of $ i 15 and contract termination costs of $ i 8. Additional charges recorded in the first quarter of 2019 included a $ i 15 write down of remaining inventories to their net realizable value, which was recorded in Cost of goods sold, and $ i 2 in miscellaneous charges recorded in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations. Restructuring charges recorded in the second quarter of 2019 related to this process were comprised of severance costs of $ i 3 and other employee-related costs of $ i 2.
/
7
The $ i 319 restructuring charge resulting from the MRC divestiture includes the write-off of Alcoa Corporation’s investment in MRC of $ i 161, cash contributions of $ i 100, and the write-off of Alcoa Corporation’s share of MRC’s delinquent payables due to Ma’aden Aluminum Company of $ i 59 that were forgiven as part of this transaction, which were partially offset by a gain of $ i 1 resulting from the write-off of the fair value of debt guarantee.
i
Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Bauxite |
|
$ |
— |
|
|
$ |
( i 1 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
Alumina |
|
|
— |
|
|
|
— |
|
|
|
i 2 |
|
|
|
i 1 |
|
|
Aluminum |
|
|
i 37 |
|
|
|
i 353 |
|
|
|
i 39 |
|
|
|
i 460 |
|
|
Segment total |
|
|
i 37 |
|
|
|
i 352 |
|
|
|
i 41 |
|
|
|
i 461 |
|
|
Corporate |
|
|
— |
|
|
|
i 18 |
|
|
|
( i 2 |
) |
|
|
i 22 |
|
|
Total Restructuring and other charges, net |
|
$ |
i 37 |
|
|
$ |
i 370 |
|
|
$ |
i 39 |
|
|
$ |
i 483 |
|
During 2019, Alcoa Corporation announced and implemented a new operating model that resulted in a leaner, more integrated, operator-centric organization. As a result of the restructuring, a Severance and other employee termination cost reserve of $ i 27 remained at December 31, 2019. During the second quarter and six-month period of 2020, changes to the reserve included additional net charges of $ i 1 and $ i 2, respectively, an increase of $ i 1 and a reduction of $ i 1, respectively, caused by foreign currency impacts, and a reduction from cash payments of $ i 9 and $ i 22, respectively. As of June 30, 2020, approximately i 225 of the i 260 employees expected to be terminated in connection with the implementation of the new operating model were separated. In addition to the employees separated under the program, the Company eliminated i 60 positions as open roles or retirements were not replaced.
In December 2019, Alcoa Corporation announced the closure of its Point Comfort (Texas) alumina refinery. As a result of the restructuring, a Severance and other employee termination cost reserve of $ i 4 remained at December 31, 2019. During the second quarter and six-month period of 2020, payments of $ i 1 and $ i 2, respectively, were made against the reserve. At June 30, 2020, approximately i 30 of the i 40 employees were separated.
Also during 2019, Alcoa Corporation curtailed and subsequently divested the aluminum facilities at Avilés and La Coruña (Spain). As a result of the divestiture, a restructuring reserve of $ i 68 remained at December 31, 2019 relating to financial contributions to the investment firm that acquired the facilities. In the second quarter and six-month period of 2020, cash payments of $ i 12 and $ i 24, respectively, were made against the reserve. The remaining reserve of $ i 44 is scheduled to be paid through the second quarter of 2021.
iActivity and reserve balances for restructuring charges were as follows:
|
|
|
Severance and employee termination costs |
|
|
Other costs |
|
|
Total |
|
|||
|
Balance at December 31, 2018 |
|
$ |
i 5 |
|
|
$ |
i 42 |
|
|
$ |
i 47 |
|
|
Restructuring and other charges, net |
|
|
i 51 |
|
|
|
i 161 |
|
|
|
i 212 |
|
|
Cash payments |
|
|
( i 19 |
) |
|
|
( i 99 |
) |
|
|
( i 118 |
) |
|
Reversals and other |
|
|
( i 2 |
) |
|
|
( i 2 |
) |
|
|
( i 4 |
) |
|
Balance at December 31, 2019 |
|
|
i 35 |
|
|
|
i 102 |
|
|
|
i 137 |
|
|
Restructuring and other charges, net |
|
|
i 19 |
|
|
|
i 24 |
|
|
|
i 43 |
|
|
Cash payments |
|
|
( i 28 |
) |
|
|
( i 43 |
) |
|
|
( i 71 |
) |
|
Reversals and other |
|
|
( i 1 |
) |
|
|
( i 3 |
) |
|
|
( i 4 |
) |
|
Balance at June 30, 2020 |
|
$ |
i 25 |
|
|
$ |
i 80 |
|
|
$ |
i 105 |
|
The activity and reserve balances include only Restructuring and other charges, net that impact the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other liability accounts such as environmental obligations (see Note P), asset retirement obligations, and pension and other postretirement reserves (see Note L) are excluded from the above activity and balances. Reversals and other includes reversals of previously recorded liabilities and foreign currency translation impacts.
The noncurrent portion of the reserve was $ i 1 and $ i 13 at June 30, 2020 and December 31, 2019, respectively. At December 31, 2019, $ i 12 related to financial contributions to the investment firm that acquired the Avilés and La Coruña aluminum facilities.
8
i
E. Segment Information – i The operating results of Alcoa Corporation’s reportable segments were as follows (differences between segment totals and consolidated amounts are in Corporate):
|
|
|
Bauxite |
|
|
Alumina |
|
|
Aluminum |
|
|
Total |
|
||||
|
Second quarter ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party sales |
|
$ |
i 66 |
|
|
$ |
i 603 |
|
|
$ |
i 1,475 |
|
|
$ |
i 2,144 |
|
|
Intersegment sales |
|
|
i 245 |
|
|
|
i 289 |
|
|
|
i 2 |
|
|
|
i 536 |
|
|
Total sales |
|
$ |
i 311 |
|
|
$ |
i 892 |
|
|
$ |
i 1,477 |
|
|
$ |
i 2,680 |
|
|
Segment Adjusted EBITDA |
|
$ |
i 131 |
|
|
$ |
i 88 |
|
|
$ |
( i 34 |
) |
|
$ |
i 185 |
|
|
Supplemental information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
$ |
i 30 |
|
|
$ |
i 37 |
|
|
$ |
i 79 |
|
|
$ |
i 146 |
|
|
Equity loss |
|
$ |
— |
|
|
$ |
( i 8 |
) |
|
$ |
( i 12 |
) |
|
$ |
( i 20 |
) |
|
Second quarter ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party sales |
|
$ |
i 67 |
|
|
$ |
i 864 |
|
|
$ |
i 1,757 |
|
|
$ |
i 2,688 |
|
|
Intersegment sales |
|
|
i 246 |
|
|
|
i 445 |
|
|
|
i 4 |
|
|
|
i 695 |
|
|
Total sales |
|
$ |
i 313 |
|
|
$ |
i 1,309 |
|
|
$ |
i 1,761 |
|
|
$ |
i 3,383 |
|
|
Segment Adjusted EBITDA |
|
$ |
i 112 |
|
|
$ |
i 369 |
|
|
$ |
i 3 |
|
|
$ |
i 484 |
|
|
Supplemental information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
$ |
i 27 |
|
|
$ |
i 55 |
|
|
$ |
i 85 |
|
|
$ |
i 167 |
|
|
Equity income (loss) |
|
$ |
— |
|
|
$ |
i 3 |
|
|
$ |
( i 17 |
) |
|
$ |
( i 14 |
) |
|
|
|
Bauxite |
|
|
Alumina |
|
|
Aluminum |
|
|
Total |
|
||||
|
Six months ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party sales |
|
$ |
i 137 |
|
|
$ |
i 1,310 |
|
|
$ |
i 3,073 |
|
|
$ |
i 4,520 |
|
|
Intersegment sales |
|
|
i 480 |
|
|
|
i 625 |
|
|
|
i 5 |
|
|
|
i 1,110 |
|
|
Total sales |
|
$ |
i 617 |
|
|
$ |
i 1,935 |
|
|
$ |
i 3,078 |
|
|
$ |
i 5,630 |
|
|
Segment Adjusted EBITDA |
|
$ |
i 251 |
|
|
$ |
i 281 |
|
|
$ |
i 28 |
|
|
$ |
i 560 |
|
|
Supplemental information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
$ |
i 64 |
|
|
$ |
i 86 |
|
|
$ |
i 160 |
|
|
$ |
i 310 |
|
|
Equity loss |
|
|
— |
|
|
|
( i 17 |
) |
|
|
( i 7 |
) |
|
|
( i 24 |
) |
|
Six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party sales |
|
$ |
i 132 |
|
|
$ |
i 1,761 |
|
|
$ |
i 3,492 |
|
|
$ |
i 5,385 |
|
|
Intersegment sales |
|
|
i 482 |
|
|
|
i 862 |
|
|
|
i 7 |
|
|
|
i 1,351 |
|
|
Total sales |
|
$ |
i 614 |
|
|
$ |
i 2,623 |
|
|
$ |
i 3,499 |
|
|
$ |
i 6,736 |
|
|
Segment Adjusted EBITDA |
|
$ |
i 238 |
|
|
$ |
i 741 |
|
|
$ |
( i 93 |
) |
|
$ |
i 886 |
|
|
Supplemental information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
$ |
i 55 |
|
|
$ |
i 103 |
|
|
$ |
i 174 |
|
|
$ |
i 332 |
|
|
Equity income (loss) |
|
|
— |
|
|
|
i 15 |
|
|
|
( i 39 |
) |
|
|
( i 24 |
) |
9
i
The following table reconciles total Segment Adjusted EBITDA to consolidated net loss attributable to Alcoa Corporation:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Total Segment Adjusted EBITDA |
|
$ |
i 185 |
|
|
$ |
i 484 |
|
|
$ |
i 560 |
|
|
$ |
i 886 |
|
|
Unallocated amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transformation(1) |
|
|
( i 10 |
) |
|
|
i 3 |
|
|
|
( i 26 |
) |
|
|
i 5 |
|
|
Intersegment eliminations |
|
|
i 30 |
|
|
|
( i 1 |
) |
|
|
i 22 |
|
|
|
i 85 |
|
|
Corporate expenses(2) |
|
|
( i 21 |
) |
|
|
( i 28 |
) |
|
|
( i 48 |
) |
|
|
( i 52 |
) |
|
Provision for depreciation, depletion, and amortization |
|
|
( i 152 |
) |
|
|
( i 174 |
) |
|
|
( i 322 |
) |
|
|
( i 346 |
) |
|
Restructuring and other charges, net (D) |
|
|
( i 37 |
) |
|
|
( i 370 |
) |
|
|
( i 39 |
) |
|
|
( i 483 |
) |
|
Interest expense |
|
|
( i 32 |
) |
|
|
( i 30 |
) |
|
|
( i 62 |
) |
|
|
( i 60 |
) |
|
Other (expenses) income, net (Q) |
|
|
( i 51 |
) |
|
|
( i 50 |
) |
|
|
i 81 |
|
|
|
( i 91 |
) |
|
Other(3) |
|
|
( i 17 |
) |
|
|
( i 11 |
) |
|
|
( i 52 |
) |
|
|
( i 29 |
) |
|
Consolidated (loss) income before income taxes |
|
|
( i 105 |
) |
|
|
( i 177 |
) |
|
|
i 114 |
|
|
|
( i 85 |
) |
|
Provision for income taxes |
|
|
( i 45 |
) |
|
|
( i 116 |
) |
|
|
( i 125 |
) |
|
|
( i 266 |
) |
|
Net income attributable to noncontrolling interest |
|
|
( i 47 |
) |
|
|
( i 109 |
) |
|
|
( i 106 |
) |
|
|
( i 250 |
) |
|
Consolidated net loss attributable to Alcoa Corporation |
|
$ |
( i 197 |
) |
|
$ |
( i 402 |
) |
|
$ |
( i 117 |
) |
|
$ |
( i 601 |
) |
|
(1) |
Transformation includes, among other items, the Adjusted EBITDA of previously closed operations. |
|
(2) |
Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center. |
|
(3) |
Other includes certain items that impact Cost of goods sold and Selling, general administrative, and other expenses on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the Adjusted EBITDA of the reportable segments. |
i
The following table details Alcoa Corporation’s Sales by product division:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Primary aluminum |
|
$ |
i 1,202 |
|
|
$ |
i 1,382 |
|
|
$ |
i 2,499 |
|
|
$ |
i 2,776 |
|
|
Alumina |
|
|
i 600 |
|
|
|
i 862 |
|
|
|
i 1,307 |
|
|
|
i 1,759 |
|
|
Flat-rolled aluminum |
|
|
i 271 |
|
|
|
i 327 |
|
|
|
i 543 |
|
|
|
i 639 |
|
|
Bauxite |
|
|
i 61 |
|
|
|
i 63 |
|
|
|
i 120 |
|
|
|
i 121 |
|
|
Energy |
|
|
i 22 |
|
|
|
i 85 |
|
|
|
i 74 |
|
|
|
i 154 |
|
|
Other |
|
|
( i 8 |
) |
|
|
( i 8 |
) |
|
|
( i 14 |
) |
|
|
( i 19 |
) |
|
|
|
$ |
i 2,148 |
|
|
$ |
i 2,711 |
|
|
$ |
i 4,529 |
|
|
$ |
i 5,430 |
|
Other primarily includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.
10
F. Earnings Per Share – Basic earnings per share (EPS) amounts are computed by dividing earnings by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.
iThe information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions):
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Net loss attributable to Alcoa Corporation |
|
$ |
( i 197 |
) |
|
$ |
( i 402 |
) |
|
$ |
( i 117 |
) |
|
$ |
( i 601 |
) |
|
Average shares outstanding – basic |
|
|
i 186 |
|
|
|
i 186 |
|
|
|
i 186 |
|
|
|
i 185 |
|
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Average shares outstanding – diluted |
|
|
i 186 |
|
|
|
i 186 |
|
|
|
i 186 |
|
|
|
i 185 |
|
In the second quarter and six-month period of 2020, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in the second quarter or six-month period of 2020, i i one / million common share equivalents related to i i six / million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the periods. Options to purchase i i two / million shares of common stock outstanding at June 30, 2020 were excluded because they had a weighted average exercise price of $ i i 26.45 / per share which was greater than the average market price of Alcoa Corporation’s common stock.
In the second quarter and six-month period of 2019, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in the second quarter or the six-month period of 2019, i i one / million common share equivalents related to i i five / million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the periods. Options to purchase i i two / million shares of common stock outstanding at June 30, 2019 were excluded because they had a weighted average exercise price of $ i i 33.77 / per share which was greater than the average market price of Alcoa Corporation’s common stock.
/
11
G. Accumulated Other Comprehensive Loss
iThe following table details the activity of the three components that comprise Accumulated other comprehensive loss for both Alcoa Corporation’s shareholders and Noncontrolling interest:
|
|
|
Alcoa Corporation |
|
|
Noncontrolling interest |
|
||||||||||
|
|
|
Second quarter ended June 30, |
|
|
Second quarter ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Pension and other postretirement benefits (L) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( i 2,244 |
) |
|
$ |
( i 2,242 |
) |
|
$ |
( i 56 |
) |
|
$ |
( i 45 |
) |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net actuarial loss and prior service cost/benefit |
|
|
( i 181 |
) |
|
|
( i 78 |
) |
|
|
i 1 |
|
|
|
( i 3 |
) |
|
Tax benefit |
|
|
i 4 |
|
|
|
i 16 |
|
|
|
— |
|
|
|
— |
|
|
Total Other comprehensive loss before reclassifications, net of tax |
|
|
( i 177 |
) |
|
|
( i 62 |
) |
|
|
i 1 |
|
|
|
( i 3 |
) |
|
Amortization of net actuarial loss and prior service cost/benefit(1) |
|
|
i 52 |
|
|
|
i 83 |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
Tax expense(2) |
|
|
( i 2 |
) |
|
|
( i 11 |
) |
|
|
— |
|
|
|
— |
|
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(7) |
|
|
i 50 |
|
|
|
i 72 |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
Total Other comprehensive (loss) income |
|
|
( i 127 |
) |
|
|
i 10 |
|
|
|
i 2 |
|
|
|
( i 2 |
) |
|
Balance at end of period |
|
$ |
( i 2,371 |
) |
|
$ |
( i 2,232 |
) |
|
$ |
( i 54 |
) |
|
$ |
( i 47 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( i 2,823 |
) |
|
$ |
( i 2,093 |
) |
|
$ |
( i 1,079 |
) |
|
$ |
( i 808 |
) |
|
Other comprehensive income(3) |
|
|
i 135 |
|
|
|
i 40 |
|
|
|
i 94 |
|
|
|
i 4 |
|
|
Balance at end of period |
|
$ |
( i 2,688 |
) |
|
$ |
( i 2,053 |
) |
|
$ |
( i 985 |
) |
|
$ |
( i 804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges (M) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
i 169 |
|
|
$ |
( i 499 |
) |
|
$ |
— |
|
|
$ |
i 37 |
|
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change from periodic revaluations |
|
|
( i 513 |
) |
|
|
i 80 |
|
|
|
( i 4 |
) |
|
|
i 6 |
|
|
Tax benefit (expense) |
|
|
i 112 |
|
|
|
( i 12 |
) |
|
|
i 1 |
|
|
|
( i 2 |
) |
|
Total Other comprehensive (loss) income before reclassifications, net of tax |
|
|
( i 401 |
) |
|
|
i 68 |
|
|
|
( i 3 |
) |
|
|
i 4 |
|
|
Net amount reclassified to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts(4) |
|
|
i 1 |
|
|
|
i 12 |
|
|
|
— |
|
|
|
— |
|
|
Financial contracts(5) |
|
|
i 4 |
|
|
|
( i 6 |
) |
|
|
i 3 |
|
|
|
( i 7 |
) |
|
Interest rate contracts(6) |
|
|
i 1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign exchange contracts(4) |
|
|
i 7 |
|
|
|
i 4 |
|
|
|
— |
|
|
|
— |
|
|
Sub-total |
|
|
i 13 |
|
|
|
i 10 |
|
|
|
i 3 |
|
|
|
( i 7 |
) |
|
Tax (expense) benefit(2) |
|
|
( i 2 |
) |
|
|
i 1 |
|
|
|
( i 1 |
) |
|
|
i 2 |
|
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(7) |
|
|
i 11 |
|
|
|
i 11 |
|
|
|
i 2 |
|
|
|
( i 5 |
) |
|
Total Other comprehensive (loss) income |
|
|
( i 390 |
) |
|
|
i 79 |
|
|
|
( i 1 |
) |
|
|
( i 1 |
) |
|
Balance at end of period |
|
$ |
( i 221 |
) |
|
$ |
( i 420 |
) |
|
$ |
( i 1 |
) |
|
$ |
i 36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Accumulated other comprehensive loss |
|
$ |
( i 5,280 |
) |
|
$ |
( i 4,705 |
) |
|
$ |
( i 1,040 |
) |
|
$ |
( i 815 |
) |
12
|
|
|
Alcoa Corporation |
|
|
Noncontrolling interest |
|
||||||||||
|
|
|
Six months ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Pension and other postretirement benefits (L) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( i 2,282 |
) |
|
$ |
( i 2,283 |
) |
|
$ |
( i 56 |
) |
|
$ |
( i 46 |
) |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net actuarial loss and prior service cost/benefit |
|
|
( i 201 |
) |
|
|
( i 82 |
) |
|
|
— |
|
|
|
( i 3 |
) |
|
Tax benefit |
|
|
i 10 |
|
|
|
i 17 |
|
|
|
— |
|
|
|
— |
|
|
Total Other comprehensive loss before reclassifications, net of tax |
|
|
( i 191 |
) |
|
|
( i 65 |
) |
|
|
— |
|
|
|
( i 3 |
) |
|
Amortization of net actuarial loss and prior service cost/benefit(1) |
|
|
i 106 |
|
|
|
i 128 |
|
|
|
i 2 |
|
|
|
i 2 |
|
|
Tax expense(2) |
|
|
( i 4 |
) |
|
|
( i 12 |
) |
|
|
— |
|
|
|
— |
|
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(7) |
|
|
i 102 |
|
|
|
i 116 |
|
|
|
i 2 |
|
|
|
i 2 |
|
|
Total Other comprehensive (loss) income |
|
|
( i 89 |
) |
|
|
i 51 |
|
|
|
i 2 |
|
|
|
( i 1 |
) |
|
Balance at end of period |
|
$ |
( i 2,371 |
) |
|
$ |
( i 2,232 |
) |
|
$ |
( i 54 |
) |
|
$ |
( i 47 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( i 2,160 |
) |
|
$ |
( i 2,071 |
) |
|
$ |
( i 834 |
) |
|
$ |
( i 810 |
) |
|
Other comprehensive (loss) income(3) |
|
|
( i 528 |
) |
|
|
i 18 |
|
|
|
( i 151 |
) |
|
|
i 6 |
|
|
Balance at end of period |
|
$ |
( i 2,688 |
) |
|
$ |
( i 2,053 |
) |
|
$ |
( i 985 |
) |
|
$ |
( i 804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges (M) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( i 532 |
) |
|
$ |
( i 211 |
) |
|
$ |
i 20 |
|
|
$ |
i 31 |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change from periodic revaluations |
|
|
i 339 |
|
|
|
( i 272 |
) |
|
|
( i 30 |
) |
|
|
i 33 |
|
|
Tax (expense) benefit |
|
|
( i 63 |
) |
|
|
i 54 |
|
|
|
i 8 |
|
|
|
( i 10 |
) |
|
Total Other comprehensive income (loss) before reclassifications, net of tax |
|
|
i 276 |
|
|
|
( i 218 |
) |
|
|
( i 22 |
) |
|
|
i 23 |
|
|
Net amount reclassified to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts(4) |
|
|
i 14 |
|
|
|
i 25 |
|
|
|
— |
|
|
|
— |
|
|
Financial contracts(5) |
|
|
i 7 |
|
|
|
( i 32 |
) |
|
|
i 1 |
|
|
|
( i 25 |
) |
|
Interest rate contracts(6) |
|
|
i 2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign exchange contracts(4) |
|
|
i 15 |
|
|
|
i 8 |
|
|
|
— |
|
|
|
— |
|
|
Sub-total |
|
|
i 38 |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
|
( i 25 |
) |
|
Tax (expense) benefit(2) |
|
|
( i 3 |
) |
|
|
i 8 |
|
|
|
— |
|
|
|
i 7 |
|
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(7) |
|
|
i 35 |
|
|
|
i 9 |
|
|
|
i 1 |
|
|
|
( i 18 |
) |
|
Total Other comprehensive income (loss) |
|
|
i 311 |
|
|
|
( i 209 |
) |
|
|
( i 21 |
) |
|
|
i 5 |
|
|
Balance at end of period |
|
$ |
( i 221 |
) |
|
$ |
( i 420 |
) |
|
$ |
( i 1 |
) |
|
$ |
i 36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Accumulated other comprehensive loss |
|
$ |
( i 5,280 |
) |
|
$ |
( i 4,705 |
) |
|
$ |
( i 1,040 |
) |
|
$ |
( i 815 |
) |
|
(1) |
These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note L). |
|
(2) |
These amounts were reported in Provision for income taxes on the accompanying Statement of Consolidated Operations. |
|
(3) |
In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings. |
|
(4) |
These amounts were primarily reported in Sales on the accompanying Statement of Consolidated Operations. |
|
(5) |
These amounts were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations. |
|
(6) |
These amounts were reported in Other expenses (income), net of the accompanying Statement of Consolidated Operations. |
|
(7) |
A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. |
13
H. Investments – i A summary of unaudited financial information for Alcoa Corporation’s equity investments is as follows (amounts represent 100% of investee financial information):
|
Second quarter ended June 30, 2020 |
|
Saudi Arabia Joint Venture |
|
|
Mining |
|
|
Energy |
|
|
Other |
|
||||
|
Sales |
|
$ |
i 507 |
|
|
$ |
i 209 |
|
|
$ |
i 47 |
|
|
$ |
i 85 |
|
|
Cost of goods sold |
|
|
i 446 |
|
|
|
i 130 |
|
|
|
i 24 |
|
|
|
i 75 |
|
|
Net (loss) income |
|
|
( i 75 |
) |
|
|
( i 5 |
) |
|
|
i 20 |
|
|
|
( i 6 |
) |
|
Equity in net (loss) income of affiliated companies, before reconciling adjustments |
|
|
( i 19 |
) |
|
|
i 3 |
|
|
|
i 7 |
|
|
|
( i 3 |
) |
|
Other |
|
|
( i 1 |
) |
|
|
i 2 |
|
|
|
i 1 |
|
|
|
i 5 |
|
|
Alcoa Corporation’s equity in net (loss) income of affiliated companies |
|
|
( i 20 |
) |
|
|
i 5 |
|
|
|
i 8 |
|
|
|
i 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second quarter ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
i 976 |
|
|
$ |
i 187 |
|
|
$ |
i 64 |
|
|
$ |
i 25 |
|
|
Cost of goods sold |
|
|
i 821 |
|
|
|
i 132 |
|
|
|
i 35 |
|
|
|
i 23 |
|
|
Net (loss) income |
|
|
( i 57 |
) |
|
|
i 2 |
|
|
|
i 26 |
|
|
|
— |
|
|
Equity in net (loss) income of affiliated companies, before reconciling adjustments |
|
|
( i 14 |
) |
|
|
i 3 |
|
|
|
i 10 |
|
|
|
— |
|
|
Other |
|
|
( i 2 |
) |
|
|
( i 2 |
) |
|
|
i 1 |
|
|
|
— |
|
|
Alcoa Corporation’s equity in net (loss) income of affiliated companies |
|
|
( i 16 |
) |
|
|
i 1 |
|
|
|
i 11 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
i 1,092 |
|
|
$ |
i 427 |
|
|
$ |
i 106 |
|
|
$ |
i 158 |
|
|
Cost of goods sold |
|
|
i 908 |
|
|
|
i 278 |
|
|
|
i 50 |
|
|
|
i 142 |
|
|
Net (loss) income |
|
|
( i 88 |
) |
|
|
i 4 |
|
|
|
i 47 |
|
|
|
( i 15 |
) |
|
Equity in net (loss) income of affiliated companies, before reconciling adjustments |
|
|
( i 22 |
) |
|
|
i 9 |
|
|
|
i 18 |
|
|
|
( i 7 |
) |
|
Other |
|
|
( i 4 |
) |
|
|
( i 1 |
) |
|
|
( i 1 |
) |
|
|
i 10 |
|
|
Alcoa Corporation’s equity in net (loss) income of affiliated companies |
|
|
( i 26 |
) |
|
|
i 8 |
|
|
|
i 17 |
|
|
|
i 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
i 1,934 |
|
|
$ |
i 415 |
|
|
$ |
i 127 |
|
|
$ |
i 39 |
|
|
Cost of goods sold |
|
|
i 1,673 |
|
|
|
i 281 |
|
|
|
i 64 |
|
|
|
i 38 |
|
|
Net (loss) income |
|
|
( i 125 |
) |
|
|
— |
|
|
|
i 54 |
|
|
|
( i 6 |
) |
|
Equity in net (loss) income of affiliated companies, before reconciling adjustments |
|
|
( i 31 |
) |
|
|
i 8 |
|
|
|
i 21 |
|
|
|
( i 3 |
) |
|
Other |
|
|
i 4 |
|
|
|
i 6 |
|
|
|
i 1 |
|
|
|
i 2 |
|
|
Alcoa Corporation’s equity in net (loss) income of affiliated companies |
|
|
( i 27 |
) |
|
|
i 14 |
|
|
|
i 22 |
|
|
|
( i 1 |
) |
During the second quarter of 2019, Alcoa Corporation and the Saudi Arabian Mining Company (Ma’aden) amended the joint venture agreement that governed the operations of each of the three companies that comprised the joint venture at that time. The amendment resulted in various changes including the divestiture of the Company’s investment in Ma’aden Rolling Company (MRC). As a result, Saudi Arabia Joint Venture only includes MRC’s results for the second quarter and six-month period of 2019.
The Company’s basis in the ElysisTM Limited Partnership, included in Other in the table above, has been reduced to i zero for its share of losses incurred to date. As a result, the Company has $ i 27 in unrecognized losses as of June 30, 2020 that will be recognized upon additional contributions into the partnership.
/ i
I. Receivables
On October 25, 2019, a wholly-owned subsidiary of the Company entered into a $ i 120 three-year revolving credit facility agreement secured by certain customer receivables. On April 20, 2020, the Company amended this agreement converting it to a Receivables Purchase Agreement to sell up to $ i 120 of the receivables previously secured by the credit facility without recourse on a
/14
revolving basis. The unsold portion of the specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. During both the second quarter and six months ended June 30, 2020, i i no / receivables were sold under this agreement.
i
J. Inventories
i
|
|
|
|
|
|
||||
|
Finished goods |
|
$ |
i 220 |
|
|
$ |
i 305 |
|
|
Work-in-process |
|
|
i 254 |
|
|
|
i 282 |
|
|
Bauxite and alumina |
|
|
i 396 |
|
|
|
i 446 |
|
|
Purchased raw materials |
|
|
i 392 |
|
|
|
i 453 |
|
|
Operating supplies |
|
|
i 157 |
|
|
|
i 158 |
|
|
|
|
$ |
i 1,419 |
|
|
$ |
i 1,644 |
|
/ i
K. Debt.
Credit Facilities.
Revolving Credit Facility
On April 21, 2020, the Company and Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, entered into Amendment No. 2 (Amendment No. 2) to the Revolving Credit Agreement (as amended, the Revolving Credit Agreement) that temporarily adjusts the Leverage Ratio requirement, calculated as Total Indebtedness divided by Consolidated EBITDA, to i 3.00 to 1.00 from i 2.50 to 1.00 for the next four consecutive fiscal quarters, beginning in the second quarter of 2020 (the Amendment Period). Leverage Ratio, Total Indebtedness, and Consolidated EBITDA are each defined terms in the Revolving Credit Agreement and may not be comparable to similarly titled measures used by the Company. The Leverage Ratio requirement will return to i 2.50 to 1.00 starting in the second quarter of 2021. The temporary revision positively impacts the maximum indebtedness calculation for the Company during the Amendment Period. Additionally, during the Amendment Period, the Company, ANHBV, and any restricted subsidiaries will be restricted from making certain restricted payments or incurring incremental secured loans under the Revolving Credit Agreement.
On June 24, 2020, the Company and ANHBV entered into an additional amendment to the Revolving Credit Agreement (Amendment No. 3) that (i) permanently adjusts the calculation of Consolidated EBITDA by allowing the add back of certain additional non-cash costs, and (ii) temporarily adjusts, for the remaining fiscal quarters in 2020, the manner in which Consolidated Cash Interest Expense (as defined in the Revolving Credit Agreement) and Total Indebtedness are calculated with respect to certain senior notes issuances during the fiscal year ending December 31, 2020, inclusive of the July 2020 issuance discussed below.
ANHBV has the option to extend the periods under Amendment No. 3 to apply to either or both fiscal quarters ending March 31, 2021 and June 30, 2021. However, doing so would also reduce the borrowing availability under the Revolving Credit Facility during the respective fiscal quarters by one-third of the net proceeds of any note issuances during the fiscal year ending December 31, 2020. If ANHBV extends the temporary amendments, the bonds issued in July 2020 would reduce the aggregate amount of commitments under the Revolving Credit Facility by approximately $ i 245 during the applicable fiscal quarters.
The aggregate amount of commitments under the Revolving Credit Facility remains at $ i 1,500, which the Company has the ability to access through a combination of the borrowing capacity and issuances of letters of credit. As of June 30, 2020 and December 31, 2019, Alcoa Corporation was in compliance with all covenants.
Alcoa Norway ANS Credit Facility
On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa Corporation, entered into a one-year, multicurrency revolving credit facility agreement for NOK i 1.3 billion (approximately $ i 134) which is fully and unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, Alcoa Norway ANS drew $ i 100 against this facility, and may do so from time to time in the future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at i 2.93%, occurred upon maturity on i June 29, 2020.
On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with Amendment No. 2 and Amendment No. 3 of the Revolving Credit Agreement discussed above.
/
15
144A Debt.
In July 2020, ANHBV, completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt issuance for $ i 750 aggregate principal amount of i 5.500% Senior Notes due 2027 (the i 2027 Notes). The net proceeds of this issuance were approximately $ i 736 reflecting a discount to the initial purchasers of the 2027 Notes as well as issuance costs. The Company intends to use the net proceeds for general corporate purposes, including adding cash to its balance sheet. The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2027 Notes. Interest on the 2027 Notes is paid i semi-annually in June and December, which will commence i December 15, 2020. The indenture contains customary affirmative and negative covenants that are similar to those included in the indenture from the notes issued in May 2018, such as limitations on liens, limitations on sale and leaseback transactions, and a prohibition on a reduction in the ownership of AWAC entities below an agreed level, and the calculation of certain financial ratios. See Note L to the Consolidated Financial Statements in Part II Item 8 of the 2019 Annual Report on Form 10-K for additional information related to Alcoa’s existing debt and related covenants.
iL. Pension and Other Postretirement Benefits – i The components of net periodic benefit cost were as follows:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
Pension benefits |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Service cost |
|
$ |
i 13 |
|
|
$ |
i 12 |
|
|
$ |
i 27 |
|
|
$ |
i 24 |
|
|
Interest cost(1) |
|
|
i 41 |
|
|
|
i 56 |
|
|
|
i 83 |
|
|
|
i 112 |
|
|
Expected return on plan assets(1) |
|
|
( i 73 |
) |
|
|
( i 82 |
) |
|
|
( i 147 |
) |
|
|
( i 163 |
) |
|
Recognized net actuarial loss(1) |
|
|
i 53 |
|
|
|
i 42 |
|
|
|
i 104 |
|
|
|
i 84 |
|
|
Amortization of prior service cost(1) |
|
|
— |
|
|
|
i 2 |
|
|
|
— |
|
|
|
i 3 |
|
|
Curtailments(2) |
|
|
i 1 |
|
|
|
i 38 |
|
|
|
i 4 |
|
|
|
i 38 |
|
|
Net periodic benefit cost |
|
$ |
i 35 |
|
|
$ |
i 68 |
|
|
$ |
i 71 |
|
|
$ |
i 98 |
|
|
|
|
Second quarter ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
Other postretirement benefits |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Service cost |
|
$ |
i 1 |
|
|
$ |
i 1 |
|
|
$ |
i 2 |
|
|
$ |
i 2 |
|
|
Interest cost(1) |
|
|
i 5 |
|
|
|
i 10 |
|
|
|
i 10 |
|
|
|
i 18 |
|
|
Recognized net actuarial loss(1) |
|
|
i 5 |
|
|
|
i 2 |
|
|
|
i 9 |
|
|
|
i 5 |
|
|
Amortization of prior service benefit(1) |
|
|
( i 4 |
) |
|
|
— |
|
|
|
( i 7 |
) |
|
|
— |
|
|
Curtailments(2) |
|
|
( i 2 |
) |
|
|
— |
|
|
|
( i 2 |
) |
|
|
— |
|
|
Net periodic benefit cost |
|
$ |
i 5 |
|
|
$ |
i 13 |
|
|
$ |
i 12 |
|
|
$ |
i 25 |
|
|
(1) |
These amounts were reported in Other expenses (income), net on the accompanying Statement of Consolidated Operations (see Note Q). |
|
(2) |
These amounts were reported in Restructuring and other charges, net on the accompanying Statements of Consolidated Operations (see Note D) and of Cash Flows. |
Plan Actions. In 2020, management initiated the following actions to certain pension plans:
Action #1 – In February 2020, the Company entered into a new, six-year collective bargaining agreement with the Union of Professional and Office Workers of the Alcoa Smelter of Baie-Comeau in Canada. Under the agreement, all unionized office employees that are participants in one of the Company’s defined benefit pension plans will cease accruing retirement benefits for future service effective January 1, 2021. This change will affect approximately i 20 employees, who are targeted to be transitioned to a target benefit plan, where the funding risk is assumed by the employees. The Company will contribute approximately i 12% of these participants’ eligible earnings to the new plan on an annual basis. Participants already collecting benefits or who terminated with a vested benefit under the defined benefit pension plan are not affected by these changes.
Action #2 – In February 2020, the Company notified all non-unionized hourly employees of Aluminerie de Deschambault, who are participants in one of the Company’s defined benefit pension plans, that they will cease accruing retirement benefits for future service effective January 1, 2021. This change will affect approximately i 430 employees, who will be transitioned to a replacement plan yet to be determined, where the funding risk is assumed by the employees. The Company will contribute a certain percentage of these participants’ eligible earnings to the new plan on an annual basis. Participants already collecting benefits or who terminated with a vested benefit under the defined benefit pension plan are not affected by these changes.
/16
Action #3 – In April 2020, as part of the Company’s portfolio review, Alcoa announced that it will curtail the remaining capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment is expected to be complete during the third quarter of 2020. Intalco employed approximately i 700 people at the time of the announcement, and the workforce is being significantly reduced due to the curtailment. As a result, curtailment accounting was triggered in the U.S. hourly defined benefit pension and retiree life plans (3a and 3b in the below table, respectively).
The above actions caused the respective plans to be remeasured, including an update to the discount rates used to determine the benefit obligations of the affected plans. i The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements:
|
Action # |
|
Number of affected plan participants |
|
Weighted average discount rate as of |
|
|
Plan remeasurement date |
|
Weighted average discount rate as of plan remeasurement date |
|
|
Increase to accrued pension benefits liability |
|
|
Increase to accrued other postretirement benefits liability |
|
|
Curtailment charge (gain)(1) |
|
|||||
|
1 |
|
~ i 20 |
|
i 3.15% |
|
|
|
i 2.75% |
|
|
$ |
i 18 |
|
|
$ |
— |
|
|
$ |
i 1 |
|
|||
|
2 |
|
~ i 430 |
|
i 3.20% |
|
|
|
i 2.75% |
|
|
|
i 28 |
|
|
|
— |
|
|
|
i 2 |
|
|||
|
3a |
|
~ i 300 |
|
i 3.25% |
|
|
|
i 2.92% |
|
|
|
i 156 |
|
|
|
— |
|
|
|
i 1 |
|
|||
|
3b |
|
~ i 600 |
|
i 3.75% |
|
|
|
i 3.44% |
|
|
|
— |
|
|
|
— |
|
|
|
( i 2 |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
i 202 |
|
|
$ |
— |
|
|
$ |
i 2 |
|
|
(1) |
These amounts represent the accelerated amortization of a portion of the existing prior service cost or benefit and was reclassified from Accumulated other comprehensive loss to Restructuring and other charges, net (see Note D) on the accompanying Statement of Consolidated Operations. |
Funding and Cash Flows. As permitted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Company is deferring approximately $ i 220 of pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of June 30, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in 2020 is estimated to be approximately $ i 75, of which approximately $ i 40 is primarily for U.S. plans and was contributed in January 2020 before CARES was enacted, and approximately $ i 19 was contributed to non-U.S. plans during the 2020 six-month period.
iM. Derivatives and Other Financial Instruments
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
|
|
• |
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|
|
• |
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
• |
Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
Derivatives
Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, foreign currency exchange rates and interest rates. Alcoa Corporation’s commodity and derivative activities include aluminum, energy, foreign exchange, and interest rate contracts which are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility, and to cover underlying exposures. Alcoa Corporation is not involved in trading activities for energy, weather derivatives, or other nonexchange commodity trading activities.
17
Several of Alcoa Corporation’s aluminum, energy, and foreign exchange contracts are classified as Level 1 or Level 2 under the fair value hierarchy. All of these contracts are designated as either fair value or cash flow hedging instruments. Alcoa Corporation also has several derivative instruments classified as Level 3 under the fair value hierarchy, which are either designated as cash flow hedges or undesignated.
iThe following tables present the detail for Level 1, 2 and 3 derivatives (see additional Level 3 information in further tables below):
|
|
|
|
|
|
||||||||||||
|
|
|
Assets |
|
|
Liabilities |
|
|
Assets |
|
|
Liabilities |
|
||||
|
Level 1 and 2 derivative instruments |
|
$ |
i 20 |
|
|
$ |
i 44 |
|
|
$ |
i 3 |
|
|
$ |
i 33 |
|
|
Level 3 derivative instruments |
|
|
i 9 |
|
|
|
i 206 |
|
|
|
i 74 |
|
|
|
i 615 |
|
|
Total |
|
$ |
i 29 |
|
|
$ |
i 250 |
|
|
$ |
i 77 |
|
|
$ |
i 648 |
|
|
Less: Current |
|
|
i 24 |
|
|
|
i 47 |
|
|
|
i 59 |
|
|
|
i 67 |
|
|
Noncurrent |
|
$ |
i 5 |
|
|
$ |
i 203 |
|
|
$ |
i 18 |
|
|
$ |
i 581 |
|
|
|
|
Unrealized (loss) gain recognized in Other comprehensive (loss) income |
|
|
Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings |
|
||||||||||
|
Second quarter ended June 30, |
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Level 1 and 2 derivative instruments |
|
$ |
i 22 |
|
|
$ |
i 5 |
|
|
$ |
( i 1 |
) |
|
$ |
( i 8 |
) |
|
Level 3 derivative instruments |
|
|
( i 536 |
) |
|
|
i 80 |
|
|
|
( i 14 |
) |
|
|
i 5 |
|
|
Noncontrolling and equity interest |
|
|
i 1 |
|
|
|
( i 5 |
) |
|
|
i 2 |
|
|
|
( i 7 |
) |
|
Total |
|
$ |
( i 513 |
) |
|
$ |
i 80 |
|
|
$ |
( i 13 |
) |
|
$ |
( i 10 |
) |
For the quarter ended June 30, 2020, the realized loss of $ i 1 on Level 1 and 2 cash flow hedges was recognized in Cost of goods sold. For the quarter ended June 30, 2019, the realized loss of $ i 8 on Level 1 and 2 cash flow hedges was recognized in Sales.
|
|
|
Unrealized gain (loss) recognized in Other comprehensive (loss) income |
|
|
Realized (loss) gain reclassed from Other comprehensive (loss) income to earnings |
|
||||||||||
|
Six months ended June 30, |
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Level 1 and 2 derivative instruments |
|
$ |
( i 7 |
) |
|
$ |
( i 3 |
) |
|
$ |
( i 15 |
) |
|
$ |
( i 12 |
) |
|
Level 3 derivative instruments |
|
|
i 331 |
|
|
|
( i 237 |
) |
|
|
( i 22 |
) |
|
|
i 36 |
|
|
Noncontrolling and equity interest |
|
|
i 15 |
|
|
|
( i 32 |
) |
|
|
( i 1 |
) |
|
|
( i 25 |
) |
|
Total |
|
$ |
i 339 |
|
|
$ |
( i 272 |
) |
|
$ |
( i 38 |
) |
|
$ |
( i 1 |
) |
For the six months ended June 30, 2020, the realized loss of $ i 15 on Level 1 and 2 cash flow hedges was comprised of a $ i 7 loss recognized in Sales and a $ i 8 loss recognized in Cost of goods sold. For the six months ended June 30, 2019, the realized loss of $ i 12 on Level 1 and 2 cash flow hedges was recognized in Sales.
18
Additional Level 3 Disclosures
iThe following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative instruments (megawatt hours in MWh):
|
|
|
|
|
Unobservable Input |
|
Unobservable Input Range |
||||
|
Asset Derivatives |
|
|
|
|
|
|
|
|
|
|
|
Financial contract |
|
$ |
i 2 |
|
|
Interrelationship of |
|
Electricity (per MWh) |
|
2020: $32.29 |
|
|
|
|
|
|
|
forward energy price and the Consumer Price Index |
|
|
|
2021: $28.35 |
|
Total Asset Derivatives |
|
$ |
i 2 |
|
|
|
|
|
|
|
|
Liability Derivatives |
|
|
|
|
|
|
|
|
|
|
|
Power contract |
|
$ |
i 147 |
|
|
MWh of energy needed |
|
LME (per mt) |
|
2020: $1,594 |
|
|
|
|
|
|
|
to produce the forecasted |
|
|
|
2027: $2,119 |
|
|
|
|
|
|
|
mt of aluminum |
|
Electricity |
|
Rate of 4 million MWh per year |
|
Power contracts |
|
|
i 27 |
|
|
MWh of energy needed to produce the forecasted mt of aluminum |
|
LME (per mt) |
|
2020: $1,594 2029: $2,227 2036: $2,523 |
|
|
|
|
|
|
|
|
|
Midwest premium (per pound) |
|
2020: $0.0900 2029: $0.1500 2036: $0.1500 |
|
|
|
|
|
|
|
|
|
Electricity |
|
Rate of 11 million MWh per year |
|
Power contract |
|
|
i 1 |
|
|
MWh of energy needed to produce the forecasted mt of aluminum |
|
LME (per mt) |
|
2020: $1,594 2020: $1,616 |
|
|
|
|
|
|
|
|
|
Midwest premium (per pound) |
|
2020: $0.0900 2020: $0.1400 |
|
|
|
|
|
|
|
|
|
Electricity |
|
Rate of 2 million MWh per year |
|
Power contract (undesignated) |
|
i 24 |
|
|
Estimated spread between the 30-year debt yield of Alcoa and the counterparty |
|
Credit spread |
|
3.55%: 30-year debt yield spread 6.55%: Alcoa (estimated) 3.00%: counterparty |
|
|
Total Liability Derivatives |
|
$ |
i 199 |
|
|
|
|
|
|
|
The Total Asset Derivatives and Total Liability Derivatives in the table above are lower by $ i 7 compared with the respective amount reflected in the Level 3 tables presented below. This is due to the fact that the financial contract and two of the power contracts are in an asset position for the current portion and are in a liability position for the noncurrent portion and are reflected as such on the accompanying Consolidated Balance Sheet. However, the financial contract is reflected as a net asset and the two power contracts are reflected as a net liability in the above table for purposes of presenting the assumptions utilized to measure the fair value of the derivative instruments in their entirety.
iThe fair values of Level 3 derivative instruments recorded in the accompanying Consolidated Balance Sheet were as follows:
|
Asset Derivatives |
|
|
|
|
||||
|
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
Current—power contracts |
|
$ |
i 4 |
|
|
$ |
— |
|
|
Current—financial contract |
|
|
i 4 |
|
|
|
i 57 |
|
|
Noncurrent—power contracts |
|
|
i 1 |
|
|
|
— |
|
|
Noncurrent—financial contract |
|
|
— |
|
|
|
i 17 |
|
|
Total derivatives designated as hedging instruments |
|
$ |
i 9 |
|
|
$ |
i 74 |
|
|
Total Asset Derivatives |
|
$ |
i 9 |
|
|
$ |
i 74 |
|
|
Liability Derivatives |
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
Current—power contracts |
|
$ |
i 15 |
|
|
$ |
i 47 |
|
|
Noncurrent—power contracts |
|
|
i 165 |
|
|
|
i 551 |
|
|
Noncurrent—financial contract |
|
|
i 2 |
|
|
|
— |
|
|
Total derivatives designated as hedging instruments |
|
$ |
i 182 |
|
|
$ |
i 598 |
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
Current—power contracts |
|
$ |
i 4 |
|
|
$ |
i 3 |
|
|
Noncurrent—power contracts |
|
|
i 20 |
|
|
|
i 14 |
|
|
Total derivatives not designated as hedging instruments |
|
$ |
i 24 |
|
|
$ |
i 17 |
|
|
Total Liability Derivatives |
|
$ |
i 206 |
|
|
$ |
i 615 |
|
19
Assuming market rates remain constant with the rates at June 30, 2020, a realized loss of $ i 11 related to power contracts and a gain of $ i 4 related to the financial contract are expected to be recognized in Sales and Cost of goods sold, respectively, over the next 12 months.
At June 30, 2020 and December 31, 2019, the power contracts with embedded derivatives designated as cash flow hedges hedge forecasted aluminum sales of i 2,244 kmt and i 2,347 kmt, respectively. At June 30, 2020 and December 31, 2019, the financial contract hedges forecasted electricity purchases of i i 2,265,872 / and i 3,891,096 megawatt hours, respectively.
iThe following tables present the reconciliation of activity for Level 3 derivative instruments:
|
|
|
Assets |
|
|
Liabilities |
|
||||||||||||||
|
Second quarter ended June 30, 2020 |
|
Power contracts |
|
|
Financial |
|
|
Power contracts |
|
|
Financial |
|
|
Embedded credit derivative |
|
|||||
|
|
$ |
i 461 |
|
|
$ |
i 6 |
|
|
$ |
i 113 |
|
|
$ |
i 2 |
|
|
$ |
i 28 |
|
|
|
Total gains or losses included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (realized) |
|
|
i 6 |
|
|
|
— |
|
|
|
( i 1 |
) |
|
|
— |
|
|
|
— |
|
|
Cost of goods sold (realized) |
|
|
— |
|
|
|
i 7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other expenses (income), net (unrealized/realized) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 2 |
) |
|
Other comprehensive (loss) income (unrealized) |
|
|
( i 462 |
) |
|
|
( i 7 |
) |
|
|
i 67 |
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
( i 2 |
) |
|
|
i 1 |
|
|
|
— |
|
|
|
( i 2 |
) |
|
|
$ |
i 5 |
|
|
$ |
i 4 |
|
|
$ |
i 180 |
|
|
$ |
i 2 |
|
|
$ |
i 24 |
|
|
|
Change in unrealized gains or losses included in earnings for derivative instruments held at June 30, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses (income), net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
Assets |
|
|
Liabilities |
|
||||||||||||||
|
Six months ended June 30, 2020 |
|
Power contracts |
|
|
Financial |
|
|
Power contracts |
|
|
Financial |
|
|
Embedded credit derivative |
|
|||||
|
|
$ |
— |
|
|
$ |
i 74 |
|
|
$ |
i 598 |
|
|
$ |
— |
|
|
$ |
i 17 |
|
|
|
Total gains or losses included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (realized) |
|
|
i 5 |
|
|
|
— |
|
|
|
( i 15 |
) |
|
|
— |
|
|
|
— |
|
|
Cost of goods sold (realized) |
|
|
— |
|
|
|
i 2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other expenses (income), net (unrealized/realized) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 9 |
|
|
Other comprehensive (loss) income (unrealized) |
|
|
— |
|
|
|
( i 68 |
) |
|
|
( i 401 |
) |
|
|
i 2 |
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
( i 4 |
) |
|
|
( i 2 |
) |
|
|
— |
|
|
|
( i 2 |
) |
|
|
$ |
i 5 |
|
|
$ |
i 4 |
|
|
$ |
i 180 |
|
|
$ |
i 2 |
|
|
$ |
i 24 |
|
|
|
Change in unrealized gains or losses included in earnings for derivative instruments held at June 30, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses (income), net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
i 11 |
|
There were no purchases, sales or settlements of Level 3 derivative instruments in the periods presented.
Other Financial Instruments
iThe carrying values and fair values of Alcoa Corporation’s other financial instruments were as follows:
|
|
|
|
|
|
||||||||||||
|
|
|
Carrying value |
|
|
Fair value |
|
|
Carrying value |
|
|
Fair value |
|
||||
|
Cash and cash equivalents |
|
$ |
i 965 |
|
|
$ |
i 965 |
|
|
$ |
i 879 |
|
|
$ |
i 879 |
|
|
Restricted cash |
|
|
i 3 |
|
|
|
i 3 |
|
|
|
i 4 |
|
|
|
i 4 |
|
|
Long-term debt due within one year |
|
|
i 1 |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
|
i 1 |
|
|
Long-term debt, less amount due within one year |
|
|
i 1,800 |
|
|
|
i 1,896 |
|
|
|
i 1,799 |
|
|
|
i 1,961 |
|
20
The following methods were used to estimate the fair values of other financial instruments:
Cash and cash equivalents and Restricted cash. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1 of the fair value hierarchy.
Long-term debt due within one year and Long-term debt, less amount due within one year. The fair value was based on quoted market prices for public debt and on interest rates that are currently available to Alcoa Corporation for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.
i
N. Income Taxes – Alcoa Corporation’s estimated annualized effective tax rate (AETR) for 2020 as of June 30, 2020 differs from the U.S. federal statutory rate of i 21% primarily due to losses in countries with full valuation reserves resulting in i no tax benefit, as well as foreign income taxed in higher rate jurisdictions.
i
|
|
|
Six months ended June 30, |
|
||||||
|
|
|
|
|
|
2019 |
|
|||
|
Income (loss) before income taxes |
|
$ |
i 114 |
|
|
|
$ |
( i 85 |
) |
|
Estimated annualized effective tax rate |
|
|
( i 183.0 |
) |
% |
|
|
i 137.1 |
% |
|
Income tax benefit |
|
$ |
( i 209 |
) |
|
|
$ |
( i 116 |
) |
|
Unfavorable tax impact related to losses in jurisdictions with no tax benefit |
|
|
i 333 |
|
|
|
|
i 381 |
|
|
Discrete tax charge |
|
|
i 1 |
|
|
|
|
i 1 |
|
|
Provision for income taxes |
|
$ |
i 125 |
|
|
|
$ |
i 266 |
|
/ i
Deferred taxes are recorded for future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. These future tax consequences result from differences between the financial and tax bases of Alcoa’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.
The future realization of net deferred tax assets is reviewed quarterly, or more frequently if there are changes in the positive and negative evidence used in management’s assessments, and is based on projections of the respective future taxable income (defined as the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards.
Management’s forecasted taxable income is based on macroeconomic indicators and involves assumptions related to, among others: commodity prices; volume levels; and key inputs and raw materials, such as bauxite, alumina, caustic soda, calcined petroleum coke, liquid pitch, energy, labor, and transportation costs. These are the same assumptions utilized by management to develop the financial and operating plan that is used to manage the Company and measure performance against actual results. Additionally, uncertainty and changes in the macroeconomic environment and the economy in Alcoa’s operating locations may arise as a result of the COVID-19 pandemic. Adverse effects from these changes may impact the assumptions utilized to develop the forecasted taxable income and may result in the need for a valuation allowance on certain deferred tax assets.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management applies judgment in assessing all available positive and negative evidence and considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Alcoa’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance.
At December 31, 2019, Alcoa Canada Company was in a three-year cumulative loss position without a valuation allowance where, in management’s judgment, the weight of the positive evidence more than offset the negative evidence of the cumulative losses. At June 30, 2020, in management’s judgment, the positive evidence continued to more than offset the negative evidence of the cumulative losses. Upon changes in facts and circumstances, management may conclude that Alcoa Canada Company’s deferred tax assets may not be realized, resulting in a future charge to establish a valuation allowance. Alcoa Canada Company’s net deferred tax assets were $ i 80 and $ i 137 at June 30, 2020 and December 31, 2019, respectively. The majority of the Alcoa Canada Company net deferred tax assets relate to pension obligations and derivatives.
/
21
O. Leasing
Management records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, alumina refinery process control technology, plant equipment, vehicles, and computer equipment. The leases have remaining terms of i one to i 38 years. The discount rate applied to these leases is the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments, unless there is a rate implicit in the lease agreement. The Company does not have material financing leases.
i
Lease expense and operating cash flows include:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Costs from operating leases |
|
$ |
i 20 |
|
|
$ |
i 20 |
|
|
$ |
i 38 |
|
|
$ |
i 39 |
|
|
Variable lease payments |
|
$ |
i 1 |
|
|
$ |
i 5 |
|
|
$ |
i 5 |
|
|
$ |
i 8 |
|
|
Short-term rental expense |
|
$ |
— |
|
|
$ |
i 1 |
|
|
$ |
i 1 |
|
|
$ |
i 4 |
|
i
The weighted average lease term and weighted average discount rate as of June 30, 2020 and December 31, 2019 were as follows:
|
|
|
|
|
|
||||
|
Weighted average lease term for operating leases (years) |
|
|
4.3 |
|
|
|
4.6 |
|
|
Weighted average discount rate for operating leases |
|
i 5.3% |
|
|
i 5.4% |
|
||
i
The following represents the aggregate right-of use assets and related lease obligations recognized in the Consolidated Balance Sheet at:
|
|
|
|
|
|
||||
|
Properties, plants and equipment, net |
|
$ |
i 141 |
|
|
$ |
i 154 |
|
|
Other current liabilities |
|
$ |
i 58 |
|
|
$ |
i 61 |
|
|
Other noncurrent liabilities and deferred credits |
|
|
i 90 |
|
|
|
i 100 |
|
|
Total operating lease liabilities |
|
$ |
i 148 |
|
|
$ |
i 161 |
|
New leases of $ i 18 and $ i 25 were added during the three and six months ended June 30, 2020, respectively.
i
The future cash flows related to the operating lease obligations as of June 30, 2020 were as follows:
|
2020 (excluding the six months ended June 30) |
|
$ |
i 36 |
|
|
2021 |
|
|
i 58 |
|
|
2022 |
|
|
i 27 |
|
|
2023 |
|
|
i 17 |
|
|
2024 |
|
|
i 9 |
|
|
Thereafter |
|
|
i 24 |
|
|
Total lease payments (undiscounted) |
|
|
i 171 |
|
|
Less: discount to net present value |
|
|
( i 23 |
) |
|
Total |
|
$ |
i 148 |
|
/ i
P. Contingencies
Environmental Matters
Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include currently or previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.
A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as, among others, the nature and extent of contamination, changes in remedial requirements, and technology advancements.
22
Alcoa Corporation’s environmental remediation reserve balance reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. i The following table details the changes in the carrying value of recorded environmental remediation reserves:
|
Balance at December 31, 2018 |
|
$ |
i 280 |
|
|
Liabilities incurred |
|
|
i 73 |
|
|
Cash payments |
|
|
( i 17 |
) |
|
Reversals of previously recorded liabilities |
|
|
( i 1 |
) |
|
Balance at December 31, 2019 |
|
|
i 335 |
|
|
Liabilities incurred |
|
|
i 2 |
|
|
Cash payments |
|
|
( i 9 |
) |
|
Foreign currency translation and other |
|
|
( i 5 |
) |
|
Balance at June 30, 2020 |
|
$ |
i 323 |
|
At June 30, 2020 and December 31, 2019, the current portion of Alcoa Corporation’s environmental remediation reserve balance was $ i 46 and $ i 39, respectively. The Company incurred liabilities of $ i 2 for the six-month period of 2020 due to charges related to increases for ongoing monitoring and maintenance and environmental consulting work for a remediation project at the Fusina site. These charges are primarily recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $ i 6 and $ i 9 in the second quarter and six-month period of 2020, respectively. These amounts include mandated expenditures as well as those not required by any regulatory authority or third party. The reserve also reflects a decrease of $ i 6 in the six-month period of 2020, due to the effects of foreign currency translation.
In the second quarter and six-month period of 2019, the Company incurred liabilities of $ i 1 and $ i 2, respectively, due to charges related to increases for ongoing monitoring and maintenance. These charges are recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $ i 7 and $ i 10 in the second quarter and six-month period of 2019, respectively.
i
The estimated timing of cash outflows on the environmental remediation reserve at June 30, 2020 is as follows:
|
2020 (excluding the six months ended June 30, 2020) |
$ |
i 17 |
|
|
2021 - 2025 |
|
i 205 |
|
|
Thereafter |
|
i 101 |
|
|
Total |
$ |
i 323 |
|
Reserve balances at June 30, 2020 and December 31, 2019, associated with significant sites with active remediation underway or for future remediation were $ i 263 and $ i 274, respectively. In management’s judgment, the Company’s reserves are sufficient to satisfy the provisions of the respective action plans. Upon changes in facts or circumstances, a change to the reserve may be required. The Company’s significant sites include:
Poços de Caldas, Brazil—The reserve associated with the 2015 closure of the Alcoa Alumínio S.A. smelter in Poços de Caldas, Brazil, is for remediation of historic spent potlining storage and disposal areas. The final remediation plan is currently under review; such review could require the reserve balance to be adjusted.
Fusina and Portovesme, Italy—Alcoa Corporation’s subsidiary Alcoa Trasformazioni S.r.l. has remediation projects underway for its closed smelter sites at Fusina and Portovesme which have been approved by the Italian Ministry of Environment and Protection of Land and Sea (MOE). Work is ongoing for soil remediation at both sites with expected completion in 2022 for Fusina and 2020 for Portovesme. Additionally, annual payments are made to MOE over a 10-year period through 2022 for groundwater emergency containment and natural resource damages at the Fusina site. A groundwater remediation project at Portovesme will have a final remedial design completed in 2020 which may result in a change to the existing reserve.
Suriname—The reserve associated with the 2017 closure of the Suralco refinery and bauxite mine is for treatment and disposal of refinery waste and soil remediation. The work began in 2017 and is expected to be completed at the end of 2025.
Hurricane Creek, Arkansas—The reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas is for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas.
23
Massena, New York—The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work is expected to commence in 2021 and will take i four to i eight years to complete.
Point Comfort, Texas—The reserve associated with the 2019 closure of the Point Comfort alumina refinery is for disposal of industrial wastes contained at the site, subsurface remediation, and post-closure monitoring and maintenance. The final remediation plan is currently under review, which may result in a change to the existing reserve.
Sherwin, Texas—In connection with the 2018 settlement of a dispute related to the previously-owned Sherwin alumina refinery, the Company’s subsidiary, Copano Enterprises LLC, accepted responsibility for the final closure of four bauxite residue waste disposal areas (known as the Copano facility). Work commenced on the first residue disposal area in 2018 and will take eight to i twelve years to complete, depending on the nature of its potential re-use. Work on the next three areas has not commenced but is expected to be completed by 2048, depending on its potential re-use.
Longview, Washington—In connection with a 2018 Consent Decree and Cleanup Action Plan with the Washington State Department of Ecology, the Company’s subsidiary, Northwest Alloys, accepted certain responsibilities for future remediation of contaminated soil and sediments at the site located near Longview, Washington.
Other Sites—The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are approximately i 35 remediation projects at these other sites that are planned or underway. These activities will be completed at various times in the future with the latest expected to be in 2026, after which ongoing monitoring and other activities may be required. At June 30, 2020 and December 31, 2019, the reserve balance associated with these activities was $ i 60 and $ i 61, respectively.
Tax
Spain— In July 2013, following a corporate income tax audit covering the 2006 through 2009 tax years, an assessment was received from Spain’s tax authorities disallowing certain interest deductions claimed by ParentCo’s Spanish consolidated tax group. In 2015, ParentCo filed an appeal of this assessment to Spain’s Central Tax Administrative Court which was denied. Two months later, ParentCo filed an appeal in Spain’s National Court (the National Court). The amount of this assessment, including interest, was $ i 152 (€ i 131) as of June 30, 2018.
In July 2018, the National Court denied ParentCo’s appeal of the assessment; however, it required Spain’s tax authorities to issue a new assessment, which considers available net operating losses of the former Spanish consolidated tax group from prior tax years that can be utilized during the assessed tax years. Subsequently, Arconic Inc. and Alcoa Corporation (collectively, the Companies) estimated the amount of the new assessment, including applicable interest, to be in the range of $ i 25 to $ i 61 (€ i 21 to € i 53) after consideration of available net operating losses and tax credits. Under the Tax Matters Agreement related to the Separation Transaction, unfavorable tax outcomes are split by Arconic Inc. and Alcoa Corporation i 51% and i 49%, respectively. Based on a review of the basis on which the National Court decided this matter, Alcoa Corporation management no longer believed that the Companies were more likely than not (greater than 50%) to prevail in this matter. Accordingly, in the third quarter of 2018, Alcoa Corporation recorded a charge of $ i 30 (€ i 26) in Provision for income taxes to establish a liability for its i 49% share of the estimated loss in this matter, representing management’s best estimate at the time.
On November 8, 2018, the Companies filed a petition for appeal to the Supreme Court of Spain, which was accepted in March 2019 and an appeal was submitted on May 6, 2019. On June 18, 2019 the State Attorney filed its opposition to the appeal and the Companies are awaiting further response from the Supreme Court.
Separately, in January 2017, the National Court issued a decision in favor of the former Spanish consolidated tax group related to a similar assessment for the 2003 through 2005 tax years, effectively making that assessment null and void. Additionally, in August 2017, in lieu of receiving a formal assessment, the Companies reached a settlement with Spain’s tax authorities for the 2010 through 2013 tax years that had been under audit for a similar matter. Alcoa Corporation’s share of this settlement was not material to the Company’s Consolidated Financial Statements. The ultimate outcomes related to the 2003 through 2005 and the 2010 through 2013 tax years are not indicative of the potential ultimate outcome of the assessment for the 2006 through 2009 tax years due to procedural differences. Also, it is possible that the Companies may receive similar assessments for tax years subsequent to 2013; however, management does not expect any such assessment, if received, to be material to Alcoa Corporation’s Consolidated Financial Statements.
Brazil (AWAB)— In March 2013, AWAB was notified by the Brazilian Federal Revenue Office (RFB) that approximately $ i 110 (R$ i 220) of value added tax credits previously claimed are being disallowed and a penalty of i 50% assessed. Of this amount, AWAB received $ i 41 (R$ i 82) in cash in May 2012. The value-added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and São Luís refinery expansion. The RFB has disallowed credits they allege belong to the consortium in which AWAB owns an interest and should not have been claimed by AWAB. Credits have also been disallowed as
24
a result of challenges to apportionment methods used, questions about the use of the credits, and an alleged lack of documented proof. AWAB presented defense of its claim to the RFB on April 8, 2013. If AWAB is successful in this administrative process, the RFB would have no further recourse. If unsuccessful in this process, AWAB has the option to litigate at a judicial level. Separately from AWAB’s administrative appeal, in June 2015, new tax law was enacted repealing the provisions in the tax code that were the basis for the RFB assessing a 50% penalty in this matter. As such, the estimated range of reasonably possible loss for these matters is $ i 0 to $ i 40 (R$ i 220). It is management’s opinion that the allegations have no basis; however, at this time, the Company is unable to reasonably predict an outcome for this matter.
Australia (AofA)— In December 2019, AofA received a statement of audit position (SOAP) from the Australian Taxation Office (ATO) related to the pricing of certain historic third-party alumina sales. The SOAP proposed adjustments that would result in additional income tax payable by AofA of approximately $ i 144 (A$ i 212), exclusive of interest and penalties.
During 2020, the SOAP was the subject of an independent review process within the ATO. At the conclusion of this process, the ATO determined to continue with the proposed adjustments and issued Notices of Assessment (the Notices) that were received by AofA on July 7, 2020. The Notices asserted claims for income tax payable by AofA of approximately $ i 147 (A$ i 214), which is $ i 1 (A$ i 2) higher than the amount previously reported by the Company. The Notices also include claims for compounded interest on the tax amount totaling approximately $ i 488 (A$ i 707). The ATO is also expected to assess administrative penalties and has informed AofA that its proposed position will be communicated after August 1, 2020. The ATO has not indicated the amount of administrative penalties it proposes to apply in this matter, and AofA is not in a position to estimate the amount, if any, at this time. AofA expects to have an opportunity to respond to the ATO’s proposed position on penalties, as well as to request reductions on the interest assessment.
The Company does not agree with the ATO’s position, and AofA will continue to defend this matter and pursue all available dispute resolution methods, up to and including the filing of proceedings in the Australian Courts, a process which could last several years and could involve significant expenses. The Company maintains that the sales subject to the ATO’s review, which were ultimately sold to Aluminium Bahrain B.S.C., were the result of arm’s length transactions by AofA over two decades and were made at arm’s length prices consistent with the prices paid by other third-party alumina customers.
In accordance with the ATO’s dispute resolution practices, AofA will pay i 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $ i 74 (A$ i 107), in the third quarter 2020 and the ATO is not expected to seek further payment prior to final resolution of the matter. If AofA is ultimately successful, any amounts paid to the ATO as part of the i 50% payment would be refunded. AofA expects to fund the payment with cash on hand and will record the payment as a noncurrent prepaid tax asset. Further interest on the unpaid amounts will continue to accrue during the dispute. The initial interest assessment and the additional interest accrued are deductible against taxable income by AofA but would be taxable as income in the year the dispute is resolved if AofA is ultimately successful.
The Company continues to believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to this matter. However, because the ultimate resolution of this matter is uncertain at this time, the Company cannot predict the potential loss or range of loss associated with the outcome, which may materially affect its results of operations and financial condition.
AofA is part of the Company’s joint venture with Alumina Limited, an Australian public company listed on the Australian Securities Exchange. The Company and Alumina Limited own i 60% and i 40%, respectively, of the joint venture entities, including AofA.
25
General
In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, safety and health, commercial, tax, product liability, intellectual property infringement, employment, and employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability is not readily determinable because of the considerable uncertainties that exist. Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company.
iQ. Other Expenses (Income), Net
i
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Equity loss |
|
$ |
i 22 |
|
|
$ |
i 15 |
|
|
$ |
i 29 |
|
|
$ |
i 27 |
|
|
Foreign currency losses, net |
|
|
i 2 |
|
|
|
i 5 |
|
|
|
i 13 |
|
|
|
i 17 |
|
|
Net loss (gain) from asset sales |
|
|
i 1 |
|
|
|
i 7 |
|
|
|
( i 176 |
) |
|
|
( i 1 |
) |
|
Net (gain) loss on mark-to-market derivative instruments (M) |
|
|
( i 2 |
) |
|
|
— |
|
|
|
i 9 |
|
|
|
— |
|
|
Non-service costs – Pension & OPEB (L) |
|
|
i 27 |
|
|
|
i 30 |
|
|
|
i 52 |
|
|
|
i 59 |
|
|
Other |
|
|
i 1 |
|
|
|
( i 7 |
) |
|
|
( i 8 |
) |
|
|
( i 11 |
) |
|
|
|
$ |
i 51 |
|
|
$ |
i 50 |
|
|
$ |
( i 81 |
) |
|
$ |
i 91 |
|
/
Net gain from asset sales for the second quarter and six months ended June 30, 2020 includes a net gain of $ i 1 and $ i 181, respectively, related to the sale of EES (see Note C).
/
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(dollars in millions, except per-share amounts, average realized prices, and average cost amounts; dry metric tons in millions (mdmt); metric tons in thousands (kmt))
References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to ParentCo refer to Alcoa Inc., a Pennsylvania corporation, and its consolidated subsidiaries through October 31, 2016, at which time it was renamed Arconic Inc. (and has since been subsequently renamed Howmet Aerospace Inc.). On November 1, 2016 (the Separation Date), ParentCo separated into two standalone, publicly-traded companies, Alcoa Corporation and Arconic Inc. (the Separation Transaction). In connection with the Separation Transaction, as of October 31, 2016, the Company and Arconic Inc. entered into several agreements to affect the Separation Transaction, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Overview in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding the Separation Transaction.
Business Update
Coronavirus
In response to the coronavirus (COVID-19) pandemic, Alcoa continues to operate with comprehensive measures in place to protect the health of the Company’s workforce, prevent infection in our locations, and mitigate impacts. As a result of these measures and the aluminum industry being classified as an essential business, all of Alcoa’s bauxite mines, alumina refineries, and aluminum manufacturing facilities continue to remain in operation with comprehensive measures in place for health and business continuity. Each location has implemented extensive preparedness and response plans which include social distancing protocols and other protective actions aligned with guidance from the U.S. Centers for Disease Control and Prevention, the World Health Organization, and all other relevant government agencies in countries where we operate. These actions include:
|
|
• |
Adjusted shift schedules and other work patterns to create separation for the workforce and ensure redundancy for critical resources; |
|
|
• |
Developed and implemented additional hygiene protocols and cleaning routines at each location; |
|
|
• |
Deployed communications to our suppliers, vendors, customers, and delivery personnel on our comprehensive actions, including health and safety protocols; |
|
|
• |
Issued global communications to educate and update employees on public health practices to mitigate the potential spread of the virus in our communities; |
|
|
• |
Implemented access restrictions; everyone must be free of the signs and symptoms of COVID-19 before entering Alcoa sites; |
|
|
• |
Implemented remote work procedures where practical; and, |
|
|
• |
Eliminated non-essential travel. |
The Company’s locations have had minimal contractor- and employee-related disruptions to date. Company-wide there have been approximately 475 confirmed employee and contractor COVID-19 cases as of June 30, 2020; however, most of the employees and contractors have received medical treatment, have returned to work, and are currently contributing to our operations.
The COVID-19 pandemic has resulted in certain negative impacts on the Company’s business, financial condition, operating results, and cash flows. For example, due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was at approximately 90 percent of total nameplate capacity as of June 30, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020. Additionally, COVID-19 has negatively impacted customer demand for value-added aluminum products as customers have reduced production levels in response to the economic impacts of the pandemic. This has resulted in lower margins on aluminum products as sales shift from value-add products to commodity-grade products. Furthermore, Alcoa has experienced challenges from low metal prices which could continue in the near term. The Company has not experienced any significant interruption from its supply sources.
Alcoa and Alcoa Foundation continue to support the communities near our operating locations, with special focus on Brazil communities that have been more adversely affected by the pandemic. Alcoa Foundation has pledged more than $1 to support COVID-19 relief efforts in the communities where Alcoa operates through its humanitarian aid program. This is in addition to the almost $3 the Foundation already committed to grantmaking in communities where we operate, which is being used to provide needed support such as medical supplies, equipment, and food.
As the impact of COVID-19 on the global economy continues to evolve, the Company is constantly evaluating the broad impact of the pandemic on the macroeconomic environment, including specific regions and end markets in which the Company operates. As a result of the pandemic’s impact on the macroeconomic environment, management evaluated the future recoverability of the
27
Company’s assets, including goodwill and long-lived assets, and the realizability of deferred tax assets while considering the Company’s current market capitalization. Management concluded that no asset impairments and no additional valuation allowances were required in the second quarter and six months ended June 30, 2020.
The magnitude and duration of the COVID-19 pandemic is unknown. The pandemic could have adverse future impacts on the Company’s business, financial condition, operating results, and cash flows. Specifically, if this global health threat persists, it could adversely affect:
|
|
• |
Global demand for aluminum, negatively impacting our ability to generate cash flows from operations; |
|
|
• |
The liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows; |
|
|
• |
Commercial sustainability of key vendors within our supply chain which could result in higher inventory costs and/or inability to fulfill customer orders; |
|
|
• |
Alcoa’s ability to fund capital expenditures and required maintenance at our facilities, which could negatively impact our ability to operate, results of operations, and profitability; |
|
|
• |
Global financial and credit markets and our ability to obtain additional credit or financing upon acceptable terms or at all, which could negatively affect our liquidity and financial condition; |
|
|
• |
The Company’s ability to meet covenants in our outstanding debt and credit facility agreements; |
|
|
• |
The financial condition of equity method investments and key joint venture partners, negatively impacting the results of operations, cash flows, and recoverability of investment balances; |
|
|
• |
Alcoa’s ability to generate income in certain jurisdictions, negatively impacting the realizability of our deferred tax assets; |
|
|
• |
Investment return on pension assets, declining interest rates, and contribution deferrals, resulting in increased required Company contributions or unfavorable contribution timing, negatively impacting future cash flows; |
|
|
• |
The effectiveness of hedging instruments; |
|
|
• |
The recoverability of certain long-lived and intangible assets, including goodwill; |
|
|
• |
Legal obligations resulting from employee claims related to health and safety; and, |
|
|
• |
The efficiency of production at our operating locations, negatively impacting the results of operations. |
The preceding list of potential adverse effects of the COVID-19 pandemic is not all-inclusive or necessarily in order of importance or magnitude. The potential impact(s) of the pandemic on the Company’s business, financial condition, operating results, cash flows and/or market capitalization is difficult to predict and will continue to be monitored in subsequent periods. Further or prolonged deterioration of adverse conditions could negatively impact our financial condition and result in asset impairment charges, including long-lived assets or goodwill, or affect the realizability of deferred tax assets.
In addition to utilizing all preventative and mitigation options available to ensure continuity of operations, the Company has implemented various cash preservation initiatives. These measures include:
|
|
• |
Reducing non-critical capital expenditures planned for 2020 by $100; |
|
|
• |
Deferring non-regulated environmental and asset retirement obligations payments of $25; |
|
|
• |
Deferring approximately $220 in pension contributions from 2020 to January 1, 2021 and deferring employer payroll taxes of approximately $14 into 2021 and 2022 in the U.S., as permitted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; and, |
|
|
• |
Implementing hiring restrictions outside of critical production roles, implementing and extending travel restrictions throughout the organization, and utilizing other appropriate government support programs to save or defer approximately $35. |
Strategic Actions
Alcoa continues to progress with its strategic actions to drive lower costs and sustainable profitability, however, the global effects of the COVID-19 pandemic may impact the timing of the previously announced strategic actions. In late 2019, Alcoa Corporation announced the following strategic actions:
|
|
• |
The implementation of a new operating model that results in a leaner, more integrated, operator-centric organization with reduced overhead costs; |
|
|
• |
The pursuit of non-core asset sales by early 2021 expected to generate an estimated $500 to $1,000 in net proceeds in support of its updated strategic priorities; and, |
|
|
• |
The realignment of the operating portfolio over the next five years, placing 1.5 million metric tons of smelting capacity and 4 million metric tons of alumina refining capacity under review. The review will consider opportunities for significant improvement, potential curtailments, closures, or divestitures. |
28
The new operating model has been implemented and the Company is substantially complete with the transition of eliminated roles. At June 30, 2020, approximately 225 of the 260 employees expected to be terminated in connection with the implementation of the new operating model were separated. In addition to the employees separated under severance programs, the Company eliminated 60 positions as open roles or retirements were not replaced.
In January 2020, the Company announced the sale of Elemental Environmental Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste processing facility in Gum Springs, Arkansas, to a global environmental firm in a transaction valued at $250. The transaction closed as of January 31, 2020 whereby the Company received $200 with another $50 held in escrow to be paid to Alcoa if certain post-closing conditions are satisfied, which would result in an additional gain being recorded. As a result of the transaction, the Company recognized a gain of $180 (pre- and after-tax) in the first quarter of 2020 and anticipates annual net income improvement of approximately $10. During the second quarter of 2020, an additional $1 gain was recorded as a result of certain post-closing adjustments based on the terms of the agreement.
On April 22, 2020, Alcoa announced that it will curtail the remaining 230 kmt of uncompetitive smelting capacity at its Intalco smelter in Ferndale, Washington amid declining market conditions. The full curtailment of 279 kmt, which includes 49 kmt of earlier-curtailed capacity, is expected to be complete in the third quarter of 2020. At June 30, 2020, total curtailed capacity at the smelter was approximately 209 kmt of the total base capacity of 279 kmt. The smelter recorded a net loss of $71 in the six months ended June 30, 2020. This action will bring Alcoa’s total curtailed smelting capacity to approximately 830 kmt, or approximately 30%, of its total global smelting capacity upon completion of the Bécancour (Canada) smelter restart.
The Company recorded restructuring charges of approximately $27 (pre- and after-tax) in the second quarter of 2020 associated with the curtailment for employee-related costs and contract termination costs, which are all cash-based charges expected to be paid primarily in the third quarter of 2020. Intalco employed approximately 700 people at the time of announcement, and the workforce is being significantly reduced due to the curtailment.
On June 25, 2020, Alcoa launched a formal 30-day consultation process with the Spanish Works Council representing employees at the San Ciprián aluminum facility in Spain, which the Company and the Spanish Works Council have agreed to extend until August 4, 2020. The formal consultation began after the conclusion of an informal process that started on May 28, 2020. A collective dismissal could potentially affect up to 534 employees at the aluminum plant. The San Ciprián aluminum facility has incurred significant and recurring financial losses that are expected to continue. The Company envisions a restructuring that retains a portion of the casthouse in operation. No final decisions will be made until the formal consultation process is complete. The San Ciprián site has both an aluminum plant and alumina refinery; the San Ciprián alumina refinery is not included in this formal consultation process.
In December 2019, the Company announced the permanent closure of its alumina refinery in Point Comfort, Texas as its first action of the multi-year portfolio review. The site’s 2.3 million metric tons of refining capacity had been fully curtailed since 2016. As a result of the decision to close the refinery, a $274 charge was recorded to Restructuring and other charges, net (see Note D to the Consolidated Financial Statements in Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019). Beginning in 2020, the closure is expected to result in annual net income improvement of approximately $15 (after-tax and noncontrolling interest) and cash savings of approximately $10 (Alcoa’s share) when compared to the ongoing spend for curtailment, exclusive of closure costs.
2020 Programs
In February 2020, Alcoa announced 2020 programs to drive leaner working capital and improved productivity. First, by utilizing a holistic solution for managing the supply chain across procurement, operations, and the commercial team, the Company is targeting a working capital benefit between $75 to $100 during 2020 to improve its operating cash flows. Secondly, the Company is expecting greater productivity and lower costs of approximately $100 which will be achieved through operational efficiency programs and specific initiatives taken throughout 2020.
Liquidity Levers
Through a combination of the COVID-19 response initiatives, the strategic actions, and the 2020 programs discussed above, the Company is targeting approximately $900 in cash improvements during 2020. As of June 30, 2020, the Company is on track to achieve the overall target of the programs.
Additionally, management has taken several measures to improve Alcoa’s liquidity levers. These include amending the Company’s Revolving Credit Agreement to temporarily provide a more favorable leverage ratio calculation, permanently adjusting the calculation of Consolidated EBITDA, and temporarily adjusting for up to the next consecutive four full fiscal quarters the manner in which Consolidated Cash Interest Expense and Total Indebtedness are calculated. During the first quarter of 2020, the Company also amended a three-year revolving credit facility agreement of one of its wholly-owned subsidiaries secured by certain customer
29
receivables, converting it to a Receivables Purchase Agreement that provides the option for faster liquidation of certain customer receivables.
On April 8, 2020, the Company’s wholly-owned subsidiary, Alcoa Norway ANS, drew $100 against its one-year, multicurrency revolving credit facility, and may do so from time to time in the future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with the amendments to the Revolving Credit Agreement (discussed above).
In July 2020, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $750 aggregate principal amount of 5.500% Senior Notes due 2027 (the 2027 Notes) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act). The net proceeds of this issuance were approximately $736 reflecting a discount to the initial purchasers of the 2027 Notes as well as issuance costs.
See Credit Facilities under the Liquidity and Capital Resources section of Management’s Discussion and Analysis for additional details on the above described liquidity measures.
Results of Operations
Selected Financial Data:
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Sales |
|
$ |
2,148 |
|
|
$ |
2,711 |
|
|
$ |
4,529 |
|
|
$ |
5,430 |
|
|
Net loss attributable to Alcoa Corporation |
|
$ |
(197 |
) |
|
$ |
(402 |
) |
|
$ |
(117 |
) |
|
$ |
(601 |
) |
|
Diluted loss per share attributable to Alcoa Corporation common shareholders |
|
$ |
(1.06 |
) |
|
$ |
(2.17 |
) |
|
$ |
(0.63 |
) |
|
$ |
(3.24 |
) |
|
Third-party shipments of alumina (kmt) |
|
|
2,415 |
|
|
|
2,299 |
|
|
|
4,780 |
|
|
|
4,628 |
|
|
Third-party shipments of aluminum products (kmt) |
|
|
789 |
|
|
|
724 |
|
|
|
1,514 |
|
|
|
1,433 |
|
|
Average realized price per metric ton of alumina |
|
$ |
250 |
|
|
$ |
376 |
|
|
$ |
274 |
|
|
$ |
381 |
|
|
Average realized price per metric ton of primary aluminum |
|
$ |
1,694 |
|
|
$ |
2,167 |
|
|
$ |
1,835 |
|
|
$ |
2,193 |
|
Overview—Net loss attributable to Alcoa Corporation was $197 in the second quarter of 2020 compared with a Net loss attributable to Alcoa Corporation of $402 in the second quarter of 2019. Net loss attributable to Alcoa Corporation was $117 in the six months ended June 30, 2020 compared with a Net loss attributable to Alcoa Corporation of $601 in the six months ended June 30, 2019. The improvement in results in the quarterly and six-month comparable period of $205 and $484 were principally related to:
|
|
• |
Lower Restructuring and other charges, net; |
|
|
• |
Lower Provision for income taxes; |
|
|
• |
Lower Net income attributable to noncontrolling interest; |
|
|
• |
Lower raw material and energy costs; and, |
|
|
• |
Favorable currency impacts, mainly due to changes in the Australian dollar and Brazilian real. |
Partially offset by:
|
|
• |
Lower alumina and aluminum prices; and, |
|
|
• |
Lower product premiums as a result of reduced demand for value-added aluminum products. |
Additionally, a gain on the divestiture of a waste processing facility in Gum Springs, Arkansas had a favorable impact on the comparable 2020 six-month period.
Sales — Sales declined $563, or 21%, in the second quarter of 2020 compared with the second quarter of 2019, and $901, or 17%, in the six-month period of 2020 compared with the same period in 2019. The decline in both periods was principally related to:
|
|
• |
Lower alumina and aluminum prices; |
|
|
• |
Lower product premiums as a result of reduced demand for value-added aluminum products; and, |
|
|
• |
Lower revenue resulting from the divestiture of two Spanish facilities in July 2019. |
Partially offset by:
|
|
• |
Higher sales resulting from the restart of the Bécancour smelter in Québec. |
30
Cost of goods sold— As a percentage of Sales, Cost of goods sold was 89.9% and 87.4% in the second quarter and six-month period of 2020, respectively, compared with 80.7% and 80.5% in the second quarter and six-month period of 2019, respectively. The second quarter and six-month period percentages were negatively impacted by lower prices for alumina and aluminum products which were partially offset by favorable foreign currency impacts and raw material costs. The six-month period was also favorably impacted by lower energy costs.
Selling, general administrative, and other expenses— Selling, general administrative, and other expenses decreased by $24, or 35%, and $48, or 32%, in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019. Both periods were favorably impacted by cost savings from the new operating model, lower fees for professional services, lower travel expenses, and favorable foreign currency impacts, mainly from the Brazilian real. The 2019 six-month period also included the unfavorable impact of a bad debt reserve recorded against a Canadian customer receivable due to bankruptcy.
Provision for depreciation, depletion, and amortization— Provision for depreciation, depletion, and amortization decreased $22, or 13%, and $24, or 7%, in the second quarter and six-month period in 2020, respectively, compared with the corresponding periods in 2019. This decrease in both periods is primarily due to changes in the weighted-average useful lives of assets and currency impacts of the Brazil real and Australian dollar.
Restructuring and other charges, net— In the second quarter and six-month period of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $37 and $39, respectively, which were primarily comprised of costs related to the curtailment of the Intalco (Washington) smelter of $27 (both periods), and $11 and $13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) smelter.
In the second quarter and six-month period of 2019, Alcoa Corporation recorded Restructuring and other charges, net of $370 and $483, respectively, which were primarily comprised of the following components:
|
|
• |
$5 and $108, respectively, for exit costs related to the curtailment of the Avilés and La Coruña smelters in Spain; |
|
|
• |
$38 (both periods) related to the curtailment of certain pension benefits; and, |
|
|
• |
$319 (both periods) related to the divestiture of Alcoa Corporation’s interest in the MRC. |
See Note D to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional detail on the above net charges.
Other expenses (income), net— Other expenses (income), net was $51 in the second quarter of 2020 compared with $50 in the second quarter of 2019, and ($81) in the 2020 six-month period compared with $91 in the 2019 six-month period. The change of $1 in the second quarter of 2020 was largely attributable to unfavorable changes in Alcoa Corporation’s share of equity method investment earnings partially offset by lower losses on asset sales and favorable changes in foreign currency impacts. The favorable change of $172 in the comparable six-month period was primarily attributable to the gain on divestiture of a waste processing facility in Gum Springs, Arkansas recorded in 2020.
Noncontrolling interest— Net income attributable to noncontrolling interest was $47 and $106 in the second quarter and six-month period of 2020, respectively, compared with $109 and $250 in the second quarter and six-month period of 2019, respectively. These amounts are entirely related to Alumina Limited’s 40% ownership interest in several affiliated operating entities. See Note A to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.
In the second quarter and six-month periods of 2020 these combined entities, particularly the Alumina segment entities, generated lower net income compared with the second quarter and six-month periods of 2019. The unfavorable change in earnings was mostly driven by lower alumina prices (see Alumina under Segment Information below).
31
Segment Information
Bauxite
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Production (mdmt) |
|
|
12.2 |
|
|
|
11.3 |
|
|
|
23.8 |
|
|
|
23.2 |
|
|
Third-party shipments (mdmt) |
|
|
1.6 |
|
|
|
1.5 |
|
|
|
3.0 |
|
|
|
2.7 |
|
|
Intersegment shipments (mdmt) |
|
|
10.8 |
|
|
|
10.3 |
|
|
|
21.3 |
|
|
|
20.5 |
|
|
Total shipments (mdmt) |
|
|
12.4 |
|
|
|
11.8 |
|
|
|
24.3 |
|
|
|
23.2 |
|
|
Third-party sales |
|
$ |
66 |
|
|
$ |
67 |
|
|
$ |
137 |
|
|
$ |
132 |
|
|
Intersegment sales |
|
|
245 |
|
|
|
246 |
|
|
|
480 |
|
|
|
482 |
|
|
Total sales |
|
$ |
311 |
|
|
$ |
313 |
|
|
$ |
617 |
|
|
$ |
614 |
|
|
Segment Adjusted EBITDA |
|
$ |
131 |
|
|
$ |
112 |
|
|
$ |
251 |
|
|
$ |
238 |
|
|
Operating costs |
|
$ |
209 |
|
|
$ |
220 |
|
|
$ |
422 |
|
|
$ |
415 |
|
|
Average cost per dry metric ton of bauxite |
|
$ |
17 |
|
|
$ |
19 |
|
|
$ |
17 |
|
|
$ |
18 |
|
Production in the above table can vary from Total shipments due primarily to differences between the equity allocation of production and off-take agreements with the respective equity investment. Operating costs in the table above includes all production-related costs: conversion costs, such as labor, materials, and utilities; depreciation, depletion, and amortization; and plant administrative expenses.
Bauxite production increased 8% and 3% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods of 2019. The Bauxite segment achieved both a quarterly and first half production record for the second quarter and six-month period of 2020, respectively. The improvement in both the quarterly and six-month comparable periods was primarily attributable to the Willowdale (Australia), Juruti (Brazil), and Boké (Guinea) mines.
Third-party sales for the Bauxite segment decreased 1% and increased 4% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods of 2019. In the second quarter of 2020, the decrease was due to a lower average realized price, partially offset by an increase in shipments. The increase in the six-month period of 2020 was principally caused by an increase in shipments, partially offset by lower average realized price.
Intersegment sales were flat in the second quarter and six-month period of 2020 compared with the corresponding periods of 2019 as a result of increased intersegment shipments offsetting the lower average realized price on intersegment sales. The increased intersegment shipments are due to higher production in the alumina segment driving higher intersegment bauxite demand.
Segment Adjusted EBITDA increased $19 and $13 in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods of 2019. The improvements in both periods were primarily the result of increased shipments combined with favorable foreign currency movements due to a stronger U.S. dollar against the Australian dollar and Brazilian real.
For the third quarter of 2020 in comparison with the third quarter of 2019, a lower average realized price for intersegment sales is expected.
32
Alumina
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Production (kmt) |
|
|
3,371 |
|
|
|
3,309 |
|
|
|
6,669 |
|
|
|
6,549 |
|
|
Third-party shipments (kmt) |
|
|
2,415 |
|
|
|
2,299 |
|
|
|
4,780 |
|
|
|
4,628 |
|
|
Intersegment shipments (kmt) |
|
|
987 |
|
|
|
1,070 |
|
|
|
2,062 |
|
|
|
2,042 |
|
|
Total shipments (kmt) |
|
|
3,402 |
|
|
|
3,369 |
|
|
|
6,842 |
|
|
|
6,670 |
|
|
Third-party sales |
|
|
603 |
|
|
$ |
864 |
|
|
|
1,310 |
|
|
$ |
1,761 |
|
|
Intersegment sales |
|
|
289 |
|
|
|
445 |
|
|
|
625 |
|
|
|
862 |
|
|
Total sales |
|
$ |
892 |
|
|
$ |
1,309 |
|
|
$ |
1,935 |
|
|
$ |
2,623 |
|
|
Segment Adjusted EBITDA |
|
$ |
88 |
|
|
$ |
369 |
|
|
$ |
281 |
|
|
$ |
741 |
|
|
Average realized third-party price per metric ton of alumina |
|
$ |
250 |
|
|
$ |
376 |
|
|
$ |
274 |
|
|
$ |
381 |
|
|
Operating costs |
|
$ |
788 |
|
|
$ |
925 |
|
|
$ |
1,632 |
|
|
$ |
1,848 |
|
|
Average cost per metric ton of alumina |
|
$ |
232 |
|
|
$ |
275 |
|
|
$ |
238 |
|
|
$ |
277 |
|
Total shipments include metric tons that were not produced by the Alumina segment. Such alumina was purchased to satisfy certain customer commitments. The Alumina segment bears the risk of loss of the purchased alumina until control of the product has been transferred to this segment’s customer. Additionally, operating costs in the table above includes all production-related costs: raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.
At June 30, 2020, the Alumina segment had base capacity of 12,759 kmt with 214 kmt of curtailed refining capacity compared with a base capacity of 15,064 kmt and curtailed refining capacity of 2,519 kmt at June 30, 2019. The decrease in base and curtailed capacity was due to the permanent closure of the previously curtailed Point Comfort alumina refinery.
Alumina production increased by 2% in both the second quarter and six-month comparable periods. Both increases were principally due to continued stabilization of operations across the refining system. During the second quarter of 2020, the Alumina segment achieved a record quarterly production rate (tonnes per day), and both the Wagerup (Australia) and São Luís (Brazil) refineries set first half production records for the six months ended June 30, 2020.
Third-party sales for the Alumina segment decreased 30% and 26% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019. The decrease in both periods was primarily due to a decline in average realized price which was principally driven by a lower average alumina index price (on 30-day lag). Both price decreases were partially offset by an increase in shipments. Third-party shipments increased 5% and 3% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019.
Intersegment sales declined 35% and 27% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019. The decrease in the second quarter was due primarily to a lower average realized price and, to a lesser extent, a decrease in shipments. The decrease in the six-month period was due to a lower average realized price slightly offset by increased demand from the Aluminum segment. The increased demand from the Aluminum segment was primarily driven by the restart at the Bécancour (Canada) smelter partially offset by the curtailment of the Intalco smelter (see Aluminum below).
Segment Adjusted EBITDA decreased $281 and $460 in the second quarter and six-month period of 2020 compared with the corresponding periods of 2019. The decline in the both periods was primarily attributable to the decline in average realized price of alumina, partially offset by net favorable foreign currency movements due to a stronger U.S. dollar (particularly against the Australian dollar and Brazilian real), lower costs for bauxite and caustic soda, as well as increased total shipments.
For the third quarter of 2020 in comparison with the third quarter of 2019, lower costs for both bauxite and caustic soda partially offset by higher energy costs, primarily natural gas costs in Australia, are expected.
33
Aluminum
|
|
|
Second quarter ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
Total Aluminum information |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Third-party aluminum shipments (kmt) |
|
|
789 |
|
|
|
724 |
|
|
|
1,514 |
|
|
|
1,433 |
|
|
Third-party sales |
|
$ |
1,475 |
|
|
$ |
1,757 |
|
|
$ |
3,073 |
|
|
$ |
3,492 |
|
|
Intersegment sales |
|
|
2 |
|
|
|
4 |
|
|
|
5 |
|
|
|
7 |
|
|
Total sales |
|
$ |
1,477 |
|
|
$ |
1,761 |
|
|
$ |
3,078 |
|
|
$ |
3,499 |
|
|
Segment Adjusted EBITDA |
|
$ |
(34 |
) |
|
$ |
3 |
|
|
$ |
28 |
|
|
$ |
(93 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary aluminum information |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Production (kmt) |
|
|
581 |
|
|
|
533 |
|
|
|
1,145 |
|
|
|
1,070 |
|
|
Third-party shipments (kmt) |
|
|
710 |
|
|
|
638 |
|
|
|
1,362 |
|
|
|
1,266 |
|
|
Third-party sales |
|
$ |
1,202 |
|
|
$ |
1,382 |
|
|
$ |
2,499 |
|
|
$ |
2,776 |
|
|
Average realized third-party price per metric ton |
|
$ |
1,694 |
|
|
$ |
2,167 |
|
|
$ |
1,835 |
|
|
$ |
2,193 |
|
|
Total shipments (kmt) |
|
|
730 |
|
|
|
656 |
|
|
|
1,393 |
|
|
|
1,295 |
|
|
Operating costs |
|
$ |
1,306 |
|
|
$ |
1,512 |
|
|
$ |
2,633 |
|
|
$ |
3,080 |
|
|
Average cost per metric ton |
|
$ |
1,788 |
|
|
$ |
2,305 |
|
|
$ |
1,890 |
|
|
$ |
2,378 |
|
Total aluminum third-party shipments and total primary aluminum shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. The Aluminum segment bears the risk of loss of the purchased aluminum until control of the product has been transferred to this segment’s customer. Total aluminum information incudes flat-rolled aluminum while Primary aluminum information does not. Operating costs includes all production-related costs: raw materials consumed; conversion costs, such as labor, materials, and utilities; depreciation and amortization; and plant administrative expenses.
The average realized third-party price per metric ton of primary aluminum includes three elements: a) the underlying base metal component, based on quoted prices from the LME; b) the regional premium, which represents the incremental price over the base LME component that is associated with the physical delivery of metal to a particular region (e.g., the Midwest premium for metal sold in the United States); and c) the product premium, which represents the incremental price for receiving physical metal in a particular shape (e.g., billet, slab, rod, etc.) or alloy.
The following table provides annual consolidated base and idle capacity (each in kmt) for each smelter owned by Alcoa Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Facility |
|
Country |
|
Base Capacity |
|
|
Idle Capacity |
|
|
Base Capacity |
|
|
Idle Capacity |
|
|
Base Change |
|
|
Idle Change |
|
||||||
|
Portland (1) |
|
Australia |
|
|
197 |
|
|
|
30 |
|
|
|
197 |
|
|
|
30 |
|
|
|
— |
|
|
|
— |
|
|
São Luís (Alumar) (1) |
|
Brazil |
|
|
268 |
|
|
|
268 |
|
|
|
268 |
|
|
|
268 |
|
|
|
— |
|
|
|
— |
|
|
Baie Comeau |
|
Canada |
|
|
280 |
|
|
|
— |
|
|
|
280 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Bécancour (1) |
|
Canada |
|
|
310 |
|
|
|
25 |
|
|
|
310 |
|
|
|
259 |
|
|
|
— |
|
|
|
(234 |
) |
|
Deschambault |
|
Canada |
|
|
260 |
|
|
|
— |
|
|
|
260 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Fjarðaál |
|
Iceland |
|
|
344 |
|
|
|
— |
|
|
|
344 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Lista |
|
Norway |
|
|
94 |
|
|
|
— |
|
|
|
94 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Mosjøen |
|
Norway |
|
|
188 |
|
|
|
— |
|
|
|
188 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
San Ciprián |
|
Spain |
|
|
228 |
|
|
|
— |
|
|
|
228 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Avilés |
|
Spain |
|
|
— |
|
|
|
— |
|
|
|
93 |
|
|
|
93 |
|
|
|
(93 |
) |
|
|
(93 |
) |
|
La Coruña |
|
Spain |
|
|
— |
|
|
|
— |
|
|
|
87 |
|
|
|
87 |
|
|
|
(87 |
) |
|
|
(87 |
) |
|
Intalco (2) |
|
U.S. |
|
|
279 |
|
|
|
209 |
|
|
|
279 |
|
|
|
49 |
|
|
|
— |
|
|
|
160 |
|
|
Massena West |
|
U.S. |
|
|
130 |
|
|
|
— |
|
|
|
130 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Warrick |
|
U.S. |
|
|
269 |
|
|
|
108 |
|
|
|
269 |
|
|
|
108 |
|
|
|
— |
|
|
|
— |
|
|
Wenatchee |
|
U.S. |
|
|
146 |
|
|
|
146 |
|
|
|
146 |
|
|
|
146 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
2,993 |
|
|
|
786 |
|
|
|
3,173 |
|
|
|
1,040 |
|
|
|
(180 |
) |
|
|
(254 |
) |
|
(1) |
These figures represent Alcoa Corporation’s share of the facility capacity based on its ownership interest in the respective smelter. |
34
|
(2) |
On April 22, 2020, Alcoa announced the curtailment of the remaining 230 kmt of smelting capacity at the Intalco smelter. The full curtailment of 279 kmt, which includes 49 kmt of earlier-curtailed capacity, is expected to be complete during the third quarter of 2020. |
Idle capacity at the Bécancour smelter decreased by 234 kmt from the second quarter 2019 to the second quarter 2020 as a result of the restart process. Due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was at approximately 90 percent of total nameplate capacity as of June 30, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020.
Base and idle capacity at the Avilés and La Coruña facilities decreased from the second quarter of 2019 to the second quarter of 2020 as a result of the curtailment (February 2019) and subsequent divestiture (July 2019) of these smelters. In addition to the smelters at these locations, the casthouse at each facility and the paste plant at La Coruña were also divested.
Idle capacity at the Intalco (Washington) smelter has increased by 160 kmt from the second quarter of 2019 to the second quarter of 2020 as a result of the curtailment process, which was announced April 22, 2020. The full capacity of 279 kmt at the Intalco smelter is expected to be curtailed during the third quarter of 2020.
Primary aluminum production increased 9% and 7% in the second and the six-month period of 2020, respectively, compared with the corresponding periods in 2019, principally due to the Bécancour smelter restart discussed above.
Third-party sales for the Aluminum segment decreased 16% and 12% in the second quarter and six-month period of 2020, respectively, compared with the corresponding periods in 2019, primarily due to a reduction in realized metal prices. The change in average realized price of primary aluminum was mainly driven by a 17% and 12% lower average LME price (on 15-day lag) for the comparable second quarter and six-month periods, respectively, combined with a decrease in regional and product premiums for both comparative periods. During the second quarter and six-month period of 2019, product premiums experienced pricing benefits from the section 232 tariffs which were not repeated in the 2020 comparable periods. Additionally, product premiums also decreased from reduced demand for value-added products. The unfavorable impact of lower metal prices was partially offset by an increase in sales volume driven primarily from the restart of the Bécancour smelter in both comparative periods.
Segment Adjusted EBITDA decreased $37 in the second quarter of 2020 compared with the second quarter of 2019. The decrease is mainly the result of lower metal prices and an unfavorable mix of value-added products. These unfavorable impacts were partially offset by decreases in the cost of alumina and carbon, and favorable impacts from the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities. Segment Adjusted EBITDA increased $121 during the six-month period of 2020, compared with the corresponding period in 2019. The change during this period was mainly driven by favorable impacts from lower alumina, carbon and energy prices, the restart of the Bécancour smelter and the divestiture of the Avilés and La Coruña facilities, favorable impacts related to Section 232 tariffs, favorable currency impacts, and a favorable impact from the non-recurrence of a bad debt reserve recorded in 2019 against a Canadian customer receivable due to bankruptcy. These favorable impacts were partially offset by lower realized metal prices and unfavorable product mix from lower demand for value-added products.
35
For the third quarter of 2020 compared with the third quarter of 2019, continued near-term challenges from low metal prices could occur. Additionally, favorable impacts from the Bécancour smelter restart, Intalco smelter curtailment, and lower raw materials costs are expected to be partially offset by lower margins from lower demand for value-added products.
Reconciliation of Certain Segment Information
Reconciliation of Total Segment Third-Party Sales to Consolidated Sales
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Bauxite |
|
$ |
66 |
|
|
$ |
67 |
|
|
$ |
137 |
|
|
$ |
132 |
|
|
Alumina |
|
|
603 |
|
|
|
864 |
|
|
|
1,310 |
|
|
|
1,761 |
|
|
Aluminum: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary aluminum |
|
|
1,202 |
|
|
|
1,382 |
|
|
|
2,499 |
|
|
|
2,776 |
|
|
Other(1) |
|
|
273 |
|
|
|
375 |
|
|
|
574 |
|
|
|
716 |
|
|
Total segment third-party sales |
|
|
2,144 |
|
|
|
2,688 |
|
|
|
4,520 |
|
|
|
5,385 |
|
|
Other |
|
|
4 |
|
|
|
23 |
|
|
|
9 |
|
|
|
45 |
|
|
Consolidated sales |
|
$ |
2,148 |
|
|
$ |
2,711 |
|
|
$ |
4,529 |
|
|
$ |
5,430 |
|
|
(1) |
Other includes third-party sales of flat-rolled aluminum and energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum. |
Reconciliation of Total Segment Operating Costs to Consolidated Cost of Goods Sold
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Bauxite |
|
$ |
209 |
|
|
$ |
220 |
|
|
$ |
422 |
|
|
$ |
415 |
|
|
Alumina |
|
|
788 |
|
|
|
925 |
|
|
|
1,632 |
|
|
|
1,848 |
|
|
Primary aluminum |
|
|
1,306 |
|
|
|
1,512 |
|
|
|
2,633 |
|
|
|
3,080 |
|
|
Other(1) |
|
|
312 |
|
|
|
362 |
|
|
|
626 |
|
|
|
727 |
|
|
Total segment operating costs |
|
|
2,615 |
|
|
|
3,019 |
|
|
|
5,313 |
|
|
|
6,070 |
|
|
Eliminations(2) |
|
|
(566 |
) |
|
|
(694 |
) |
|
|
(1,132 |
) |
|
|
(1,436 |
) |
|
Provision for depreciation, depletion, amortization(3) |
|
|
(146 |
) |
|
|
(166 |
) |
|
|
(309 |
) |
|
|
(330 |
) |
|
Other(4) |
|
|
29 |
|
|
|
30 |
|
|
|
85 |
|
|
|
65 |
|
|
Consolidated cost of goods sold |
|
$ |
1,932 |
|
|
$ |
2,189 |
|
|
$ |
3,957 |
|
|
$ |
4,369 |
|
|
(1) |
Other largely relates to the Aluminum segment’s flat-rolled aluminum product division. |
|
(2) |
This line item represents the elimination of cost of goods sold related to intersegment sales between Bauxite and Alumina and between Alumina and Aluminum. |
|
(3) |
Depreciation, depletion, and amortization is included in the operating costs used to calculate average cost for each of the bauxite, alumina, and primary aluminum product divisions (see Bauxite, Alumina, and Aluminum above). However, for financial reporting purposes, depreciation, depletion, and amortization is presented as a separate line item on Alcoa Corporation’s Statement of Consolidated Operations. |
|
(4) |
Other includes costs related to Transformation and certain other items that impact Cost of goods sold on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the operating costs of segments (see footnotes 1 and 3 in the Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Loss Attributable to Alcoa Corporation below). |
36
Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Loss Attributable to Alcoa Corporation
|
|
|
Second quarter ended June 30, |
|
|
Six months ended |
|
||||||||||
|
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Total Segment Adjusted EBITDA |
|
$ |
185 |
|
|
$ |
484 |
|
|
$ |
560 |
|
|
$ |
886 |
|
|
Unallocated amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transformation(1) |
|
|
(10 |
) |
|
|
3 |
|
|
|
(26 |
) |
|
|
5 |
|
|
Intersegment eliminations |
|
|
30 |
|
|
|
(1 |
) |
|
|
22 |
|
|
|
85 |
|
|
Corporate expenses(2) |
|
|
(21 |
) |
|
|
(28 |
) |
|
|
(48 |
) |
|
|
(52 |
) |
|
Provision for depreciation, depletion, and amortization |
|
|
(152 |
) |
|
|
(174 |
) |
|
|
(322 |
) |
|
|
(346 |
) |
|
Restructuring and other charges, net |
|
|
(37 |
) |
|
|
(370 |
) |
|
|
(39 |
) |
|
|
(483 |
) |
|
Interest expense |
|
|
(32 |
) |
|
|
(30 |
) |
|
|
(62 |
) |
|
|
(60 |
) |
|
Other (expenses) income, net |
|
|
(51 |
) |
|
|
(50 |
) |
|
|
81 |
|
|
|
(91 |
) |
|
Other(3) |
|
|
(17 |
) |
|
|
(11 |
) |
|
|
(52 |
) |
|
|
(29 |
) |
|
Consolidated (loss) income before income taxes |
|
|
(105 |
) |
|
|
(177 |
) |
|
|
114 |
|
|
|
(85 |
) |
|
Provision for income taxes |
|
|
(45 |
) |
|
|
(116 |
) |
|
|
(125 |
) |
|
|
(266 |
) |
|
Net income attributable to noncontrolling interest |
|
|
(47 |
) |
|
|
(109 |
) |
|
|
(106 |
) |
|
|
(250 |
) |
|
Consolidated net loss attributable to Alcoa Corporation |
|
$ |
(197 |
) |
|
$ |
(402 |
) |
|
$ |
(117 |
) |
|
$ |
(601 |
) |
|
(1) |
Transformation includes, among other items, the Adjusted EBITDA of previously closed operations. |
|
(2) |
Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center. |
|
(3) |
Other includes certain items that impact Cost of goods sold and Selling, general administrative, and other expenses on Alcoa Corporation’s Statement of Consolidated Operations that are not included in the Adjusted EBITDA of the reportable segments. |
Environmental Matters
See the Environmental Matters section of Note P to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.
Liquidity and Capital Resources
Changes in market conditions caused by the COVID-19 pandemic could have adverse effects on Alcoa’s ability to obtain additional financing and cost of borrowing. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of liquidity or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the Company. Additionally, the impact on market conditions from the COVID-19 pandemic could adversely affect the liquidity of Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the collectability of outstanding receivables and our cash flows. In response to the impacts caused by the COVID-19 pandemic, the Company has implemented various cash preservation initiatives. These measures include:
|
|
• |
Reducing non-critical capital expenditures planned for 2020 by $100; |
|
|
• |
Deferring non-regulated environmental and asset retirement obligations payments of $25; |
|
|
• |
Deferring approximately $220 in pension contributions from 2020 to January 1, 2021 and employer payroll taxes of approximately $14 million into 2021 and 2022 in the U.S., as permitted under the CARES Act; and, |
|
|
• |
Implementing hiring restrictions outside of critical production roles, implementing and extending travel restrictions throughout the organization, and utilizing other appropriate government support programs to save or defer approximately $35. |
Alcoa Corporation’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Alcoa Corporation’s debt by the major credit rating agencies.
On April 9, 2020, Moody’s Investor Service (Moody’s) affirmed a Ba1 rating of Alcoa’s long-term debt. Additionally, Moody’s affirmed the current outlook as stable. On July 7, Moody’s reaffirmed the Ba1 rating of Alcoa’s long-term debt as well as the stable outlook.
On April 29, 2020, Fitch Ratings (Fitch) affirmed a BB+ rating for Alcoa Corporation’s long-term debt. Additionally, Fitch affirmed the current outlook as stable. On July 7, Fitch reaffirmed the BB+ rating of Alcoa’s long-term debt as well as the stable outlook.
37
On June 26, 2020 Standard and Poor’s Global Ratings (S&P) affirmed the BB+ rating of Alcoa’s long-term debt and revised the outlook to negative.
Cash from Operations
Cash provided from operations was $198 in the 2020 six-month period compared with cash provided from operations of $250 for the same period of 2019, resulting in a decrease in cash provided of $52. Notable changes to (uses) and sources of cash include:
|
|
• |
$122 in certain working capital accounts (receivables, inventories, and accounts payable, trade); |
|
|
• |
($41) due to timing of the collection of value added tax receivables; |
|
|
• |
($69) from higher accrued expenses caused primarily by the timing of customer advances, employee compensation payments, and the 2020 recognition of the state grant revenue at the Portland (Australia) facility relieving the previous deferred credit recorded during the 2019 six-month period; and, |
|
|
• |
$349 relating to changes in taxes, including income taxes. The source of cash includes changes related to lower tax payments made in the 2020 six-month period compared with the 2019 six-month period, primarily payments on income taxes, and changes in the underlying tax accounts. |
The remaining change in Cash used for operations is primarily attributable to the changes in related Statement of Consolidated Operations amounts.
In the third quarter of 2020, AofA will pay approximately $74 (A$107) related to the tax dispute described in Note P to the Consolidated Financial Statements in Part I Item I of this Form 10-Q. Upon payment, AofA will record a noncurrent prepaid tax asset, as the Company continues to believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to this matter. In accordance with Australian tax laws, the initial interest assessment and additional interest are deductible against AofA’s 2020 taxable income resulting in approximately $150 (A$219) lower cash tax payments in the second half of 2020. Interest compounded in future years is also deductible against AofA’s income in the respective periods. If AofA is ultimately successful, the interest deduction would become taxable as income in the year the dispute is resolved. During 2020, AofA will continue to record its tax provision and tax liability without effect of the ATO assessment, since it expects to prevail. The 2020 tax payable will remain on AofA’s balance sheet, increased by the tax effect of subsequent years’ interest deductions, until dispute resolution which is expected to take several years.
Financing Activities
Cash used for financing activities was $115 in the 2020 six-month period compared with $270 in the 2019 six-month period, resulting in a favorable change of $155.
The use of cash in the 2020 six-month period was primarily the result of $90 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above) and $24 in financial contributions related to the divested Spanish facilities.
The use of cash in the 2019 six-month period was primarily the result of $265 in net cash paid to Alumina Limited (see Noncontrolling interest in Results of Operations above).
Credit Facilities
The Revolving Credit Facility provides a $1,500 senior secured revolving credit facility to be used for working capital and/or other general corporate purposes of Alcoa Corporation and its subsidiaries. The Revolving Credit Agreement includes a number of covenants, including financial covenants, that require maintenance of a specified interest expense coverage ratio and a leverage ratio. The leverage ratio compares total indebtedness to a calculated earnings metric as defined in the credit facility agreement to determine compliance with the financial covenant. The leverage ratio calculation also determines the maximum indebtedness the Company can have based on the defined earnings metric.
On April 21, 2020, the Company and ANHBV entered into Amendment No. 2 to the Revolving Credit Agreement that temporarily revises the Leverage Ratio requirement to 3.00 to 1.00 from 2.50 to 1.00 for the next four consecutive fiscal quarters, beginning in the second quarter of 2020 (Amendment Period). The Leverage Ratio requirement will return to 2.50 to 1.00 starting in the second quarter of 2021. The temporary revision positively impacts the maximum indebtedness calculation for the Company during the Amendment Period. Additionally, during the Amendment Period, the Company, ANHBV, and any restricted subsidiaries will be restricted from making certain restricted payments or incurring incremental secured loans under the Amended Revolving Credit Agreement.
38
On June 24, 2020, the Company and ANHBV entered into Amendment No. 3 to the Revolving Credit Agreement that (i) permanently adjusts the calculation of Consolidated EBITDA as defined in the Revolving Credit Agreement by allowing the add back of certain additional non-cash costs and (ii) temporarily adjusts, for the remaining fiscal quarters in 2020, the manner in which Consolidated Cash Interest Expense and Total Indebtedness (as defined in the Revolving Credit Agreement) are calculated with respect to certain senior notes issuances during the fiscal year ending December 31, 2020, inclusive of the July 2020 issuance described below.
ANHBV has the option to extend the periods under Amendment No. 3 to apply to either or both fiscal quarters ending March 31, 2021 and June 30, 2021. However, doing so would also reduce the borrowing availability under the Revolving Credit Facility by one-third of the net proceeds of such note issuances during such fiscal quarters. If ANHBV extends the temporary amendments, the bonds issued in July 2020 would reduce the aggregate amount of commitments under the Revolving Credit Facility by $245 during the applicable fiscal quarters.
The aggregate amount of commitments under the Revolving Credit Facility remains at $1,500, which the Company has the ability to access through a combination of borrowing capacity and issuances of letters of credit. As of June 30, 2020 and December 31, 2019, Alcoa Corporation was in compliance with all covenants.
On October 2, 2019, Alcoa Norway ANS, a wholly-owned subsidiary of Alcoa Corporation, entered into a one-year, multicurrency revolving credit facility agreement for NOK 1.3 billion (approximately $134) which is fully and unconditionally guaranteed on an unsecured basis by Alcoa Corporation. On April 8, 2020, Alcoa Norway ANS drew $100 against this facility, and may do so from time to time in the future, in the ordinary course of business. Repayment of the drawn amount, including interest accrued at 2.93%, occurred upon maturity on June 29, 2020. On July 3, 2020, Alcoa Norway ANS amended the revolving credit facility agreement to align the terms of the agreement with Amendment No. 2 and Amendment No. 3 of the Revolving Credit Agreement discussed above.
On October 25, 2019, a wholly-owned subsidiary of the Company entered into a $120 three-year revolving credit facility agreement secured by certain customer receivables. On April 20, 2020, the Company amended this agreement converting it to a Receivables Purchase Agreement to sell up to $120 of the receivables previously secured by the credit facility. The unsold portion of specified receivable pool will be pledged as collateral to the purchasing bank to secure the sold receivables. During the second quarter and six months ended June 30, 2020, no receivables were sold under this program.
Alcoa’s combined additional borrowing capacity can be drawn through Alcoa’s two credit facilities. The Company may draw on these facilities periodically to ensure working capital needs are met. See Note K to the Consolidated Financial Statements in this Form 10-Q and Note L to the Consolidated Financial Statements in Part II Item 8 of the 2019 Annual Report on Form 10-K for additional information related to Alcoa’s credit facilities.
In July 2020, ANHBV, a wholly-owned subsidiary of Alcoa Corporation, issued $750 aggregate principal amount of 5.500% Senior Notes due 2027 (the 2027 Notes) in a private transaction exempt from the registration requirements of the Securities Act. The net proceeds of this issuance were approximately $736 reflecting a discount to the initial purchasers of the 2027 Notes as well as issuance costs. The Company intends to use the net proceeds for general corporate purposes, including adding cash to its balance sheet. The discount to the initial purchasers, as well as costs to complete the financing, was deferred and is being amortized to interest expense over the term of the 2027 Notes. Interest on the 2027 Notes is paid semi-annually in June and December, which will commence December 15, 2020.
The Company’s liquidity options, including the credit facilities and the Receivables Purchase Agreement, provide for flexibility in managing cash flows. Management believes that the Company’s cash on hand, future operating cash flows, and liquidity options, combined with its strategic actions and cash preservation initiatives, are adequate to fund its near term operating and investing needs.
Investing Activities
Cash provided from investing activities was $28 in the 2020 six-month period compared with cash used for investing activities of $258 in the 2019 six-month period, resulting in a favorable change of $286.
In the 2020 six-month period, the source of cash was primarily attributable to proceeds from the sale of assets of $199, primarily the Gum Springs waste treatment facility, partially offset by $168 in capital expenditures, composed of $137 in sustaining projects and $31 in return-seeking projects.
In the 2019 six-month period, the use of cash was largely attributable to $158 in capital expenditures, composed of $112 in sustaining projects and $46 in return-seeking projects, and additions to investments of $111, partially offset by proceeds from the sale of assets of $11.
39
Contractual Obligations
As permitted under the CARES Act, the Company is deferring approximately $220 of pension contributions, primarily for the U.S. plans, from 2020 to January 1, 2021. As a result, as of June 30, 2020, Alcoa’s minimum required contribution to defined benefit pension plans in 2020 is now estimated to be approximately $75, of which approximately $40 is primarily for U.S. plans and was contributed in January 2020 before CARES was enacted, and approximately $19 was contributed to non-U.S. plans during the 2020 six-month period.
Recently Adopted and Recently Issued Accounting Guidance
See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.
Dissemination of Company Information
Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, http://www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, and webcasts.
40
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
See the Derivatives and Other Financial Instruments section of Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective as of June 30, 2020.
(b) Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting during the second quarter of 2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
41
PART II – OTHER INFORMATION
Item 1A. Risk Factors.
We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A discussion of our risk factors can be found in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The information below includes additional risks relating to the coronavirus (COVID-19) pandemic. The impact of COVID-19 may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, any of which could have a material adverse effect on us. This situation is continuously evolving, and additional impacts may arise of which we are not currently aware.
A global public health crisis, such as the current coronavirus (COVID-19) pandemic, could adversely affect the Company’s business, financial condition, operating results, and cash flows.
In December 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) in China that has since spread to nearly all regions of the world. The outbreak was subsequently declared a pandemic by the World Health Organization in March 2020. To date, the COVID-19 pandemic and preventative measures taken to contain or mitigate the outbreak have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas and significant disruption in the financial markets both globally and in the United States.
Having global operations exposes the Company to the effects of a global public health crisis, such as the current COVID-19 pandemic. Uncertainty around the magnitude and duration of a global public health crisis can cause instability in the global markets and economies, affecting our business in a multitude of ways and in varying magnitudes. Although we are unable to predict the ultimate impact of the COVID-19 pandemic on our business, financial condition, sales, results of operations, cash flows, and market capitalization, if this global health threat persists, it could adversely affect:
|
|
• |
Global demand for aluminum, negatively impacting our ability to generate cash flows from operations; |
|
|
• |
Our operations, including causing interruptions, reductions, or closures of our operations, due to decreased demand for our products, government regulations and/or fewer workers in the facilities due to illness or public health restrictions; |
|
|
• |
Commercial sustainability of key vendors or transportation disruptions within our supply chain, which could result in higher inventory costs and/or inability to obtain key raw materials or fulfill customer orders; |
|
|
• |
The liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows; |
|
|
• |
Alcoa’s ability to fund capital expenditures and required maintenance at our facilities, which could negatively impact our results of operations and profitability; |
|
|
• |
Global financial and credit markets and our ability to obtain additional credit or financing upon acceptable terms or at all, which could negatively affect our liquidity and financial condition; |
|
|
• |
The Company’s ability to meet covenants in our outstanding debt and credit facility agreements; |
|
|
• |
Investment return on pension assets and declining interest rates, and contribution deferrals, resulting in increased required Company contributions or unfavorable contribution timing, negatively impacting future cash flows; |
|
|
• |
Alcoa’s ability to generate income in certain jurisdictions, negatively impacting the realizability of our deferred tax assets; |
|
|
• |
The recoverability of certain long-lived and intangible assets, including goodwill; |
|
|
• |
The financial condition of our investments and key joint venture partners, negatively impacting the results of operations, cash flows, and recoverability of investment balances; |
|
|
• |
The effectiveness of hedging instruments; |
|
|
• |
Legal obligations resulting from employee claims related to health and safety; and, |
|
|
• |
Our ability to efficiently manage certain corporate functions and other activities as a result of employees working remotely. |
For example, due to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour (Canada) smelter had been slowed at the end of the first quarter of 2020 but has since resumed, and the operating capacity was at approximately 90 percent of total nameplate capacity as of June 30, 2020. The restart, which was originally expected to be complete by the end of the second quarter of 2020, is now expected to be complete in the third quarter of 2020. Additionally, COVID-19 has negatively impacted customer demand for value-added aluminum products as customers have reduced production levels in response to the economic impacts of the pandemic. This has resulted in lower margins on aluminum products as sales shift from value-add products to commodity-grade products. Furthermore, Alcoa has experienced challenges from low metal prices which could continue in the near term. The Company has not experienced any significant interruption from its supply sources.
Further or prolonged deterioration of adverse conditions could negatively impact our business, financial condition, sales, results of operations, cash flows, and/or market capitalization, and result in asset impairment charges, including long-lived assets or goodwill, or affect the realizability of deferred tax assets. The situation surrounding COVID-19 remains fluid, and given its inherent uncertainty, we expect the pandemic will continue to cause instability in the global markets and economies in the near term. The duration and
42
magnitude of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, suppliers, joint venture partners, and equity method investments. Should these conditions persist for a prolonged period, the COVID-19 pandemic, including any of the above factors and others that are currently unknown, is expected to have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
On October 17, 2018, Alcoa Corporation announced that its Board of Directors authorized a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $200, depending on cash availability, market conditions, and other factors. Repurchases under the program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program does not have a predetermined expiration date. Alcoa Corporation intends to retire the repurchased shares of common stock.
|
Second Quarter 2020 |
|
Total Number of Shares Purchased |
|
|
Weighted Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program |
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Program |
|
||||
|
April 1 to April 30 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
150,000,000 |
|
|
May 1 to May 31 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
150,000,000 |
|
|
June 1 to June 30 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
150,000,000 |
|
|
Total |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Item 4. Mine Safety Disclosures.
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of U.S. Securities and Exchange Commission Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this report.
43
Item 6. Exhibits.
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|
|
|
|
|
|
4.1 |
|
|
|
|
|
10.1 |
|
|
|
|
|
31.1 |
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
31.2 |
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
32.1 |
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
32.2 |
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
95.1 |
|
|
|
|
|
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Alcoa Corporation |
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Date |
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Executive Vice President and |
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|
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Chief Financial Officer |
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(Principal Financial Officer) |
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/s/ Molly S. Beerman |
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Date |
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Senior Vice President and Controller |
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(Principal Accounting Officer) |
45
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 6/30/21 | ||||
| 3/31/21 | ||||
| 1/1/21 | ||||
| 12/31/20 | ||||
| 12/15/20 | ||||
| 8/4/20 | ||||
| 8/1/20 | ||||
| Filed on: | 7/29/20 | |||
| 7/24/20 | ||||
| 7/7/20 | 4, 8-K | |||
| 7/3/20 | ||||
| For Period end: | 6/30/20 | |||
| 6/29/20 | ||||
| 6/26/20 | ||||
| 6/25/20 | 8-K | |||
| 6/24/20 | 8-K | |||
| 5/28/20 | ||||
| 4/30/20 | ||||
| 4/29/20 | 10-Q | |||
| 4/22/20 | 8-K | |||
| 4/21/20 | 8-K | |||
| 4/20/20 | 4 | |||
| 4/9/20 | 3, SC 13G/A | |||
| 4/8/20 | ||||
| 4/1/20 | 3 | |||
| 3/31/20 | 10-Q | |||
| 1/31/20 | ||||
| 1/1/20 | ||||
| 12/31/19 | 10-K, 11-K, SD | |||
| 10/25/19 | ||||
| 10/2/19 | ||||
| 6/30/19 | 10-Q | |||
| 6/18/19 | ||||
| 5/6/19 | ||||
| 3/31/19 | 10-Q | |||
| 12/31/18 | 10-K, 11-K, SD | |||
| 11/8/18 | ||||
| 10/17/18 | 8-K | |||
| 6/30/18 | 10-Q | |||
| 11/1/16 | 3, 3/A, 8-K | |||
| 10/31/16 | 8-K, CORRESP, UPLOAD | |||
| 4/8/13 | ||||
| List all Filings | ||||