8-KOther EventsExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Corporate Update (Nov 20, 2009)

Filed November 20, 2009For Securities:HWM

Summary

This 8-K filing from Alcoa Inc. (now Howmet Aerospace Inc.) on November 20, 2009, announces the temporary idling of production at its aluminum smelters in Fusina and Portovesme, Italy. This decision stems from a European Commission ruling that Italy's extension of an electricity tariff after 2005 did not comply with EU state aid rules, requiring Alcoa to refund a portion of the benefit received. The curtailments will increase Alcoa's total global smelting system idleness to approximately 24%. The company anticipates a pre-tax charge of $300 million to $500 million in the fourth quarter of 2009 related to these actions, with most or all of the charge not impacting cash flow. Investors should monitor the outcome of Alcoa's appeal against the European Commission's decision and the broader impact on global aluminum supply and pricing.

Key Highlights

  • 1Alcoa Inc. is temporarily idling two Italian aluminum smelters (Fusina and Portovesme) due to a European Commission decision.
  • 2The European Commission ruled that Italy's electricity tariff extension after 2005 violated EU state aid rules, requiring a refund.
  • 3This action will bring Alcoa's global smelting system curtailments to approximately 24% of total capacity.
  • 4Alcoa expects to incur a pre-tax charge of $300 million to $500 million in Q4 2009 related to these curtailments.
  • 5Most, if not all, of the anticipated charge is not expected to impact the company's cash flow in Q4 2009.
  • 6Alcoa is appealing the European Commission's decision regarding the electricity tariffs and state aid.

Frequently Asked Questions

Alcoa is temporarily idling its Fusina and Portovesme smelters in Italy because the European Commission has ruled that Italy's extension of electricity tariffs after 2005 was not compliant with EU state aid rules and requires Alcoa to refund a portion of the benefits received. Alcoa is appealing this decision.

Alcoa expects to record a pre-tax charge of between $300 million and $500 million in the fourth quarter of 2009 related to these curtailments and recovery actions. However, the company anticipates that most, if not all, of this charge will not affect its fourth-quarter cash flow.

With the temporary idlings in Italy, Alcoa's total global smelting system curtailments will reach approximately 24 percent of its total capacity.

The filing includes forward-looking statements that highlight risks such as adverse changes in economic or aluminum industry conditions, fluctuations in aluminum prices, changes in markets served by Alcoa, significant increases in energy or other costs, failure to achieve anticipated cost reductions or financial improvements, unfavorable legal or regulatory changes, and adverse legal proceedings.