Based on the settlement agreement with Alba, Alcoa recorded a $40 million charge ($15 million after-tax and non-controlling interest) in the third quarter in addition to the $45 million charge ($18 million after-tax and non-controlling interest) it recorded in the second quarter. Alcoa estimates an additional possible after-tax charge of approximately $25 to 30 million to reflect an agreement between the shareholders of Alcoa World Alumina LLC regarding the cash costs of the settlement of the Alba civil lawsuit; such charge would be recognized in the event that a settlement is reached with the Department of Justice and the Securities and Exchange Commission regarding their investigations.
Alcoa and Alba have also resumed a commercial relationship and have entered into an Alumina Price Index-based, long-term alumina supply agreement, demonstrating a mutual desire to work together going forward and the significant value that Alcoa brings to customers in the region through superior quality and optimal logistics of its alumina.
Third quarter 2012 revenue was $5.8 billion, down 9 percent compared with third quarter 2011, primarily due to a 17 and 20 percent year-on-year respective decline in the realized metal price and realized alumina price.
Alcoa continued to turn in strong performance in the third quarter, despite market turbulence.Amidst challenging market conditions, Alcoa’s upstream businesses achieved significant performance improvement in the third quarter, delivering $98 million of combined sequential operational improvements across the Alumina and Primary Metals segments as higher volume, improved price and mix, and productivity gains more than offset cost headwinds. In what is traditionally a weaker quarter, Alcoa’s midstream and downstream businesses continued to turn in record performance. Global Rolled Products continued to deliver strong profitability despite European weakness, achieving record third quarter ATOI of $98 million, up 3 percent sequentially, and 63 percent year-on-year. Adjusted EBITDA per metric ton for Global Rolled Products was a third quarter record at $395, and year-to-date record at $405, 72 percent higher than the 10-year average. Engineered Products and Solutions achieved a record adjusted EBITDA margin of 20 percent, a third consecutive quarterly record.
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