Alcoa's Earnings Up 57% From Year-Ago Quarter On a 38% Increase in Revenues.Business Editors PITTSBURGH--(BUSINESS WIRE)--July 10, 2000 Alcoa Alcoa U.S. company, the world's largest producer of aluminum. Established in Pittsburgh, Pa., in 1888, it adopted the name Aluminum Co. of America in 1907. Alcoa introduced aluminum foil in 1910 and found uses for aluminum in the emerging aviation and automobile industries. (NYSE NYSE See: New York Stock Exchange :AA) today reported net income of $377 million (47 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the second quarter of 2000 compared with net income of $240 million (32 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ) for the 1999 second quarter. Earnings per share were up 47%. For the first half of 2000, net income was $732 million (94 cents per share) compared with $461 million (62 cents per share) for the comparable 1999 period - a 59% increase in earnings and a 52% increase in EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. . "Earnings were up 6% from the first quarter, making the 2000 second quarter Alcoa's eighth consecutive quarter of improved earnings," said Alain Alain: see Chartier, Émile Auguste. Belda, Alcoa CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Despite a 9% decline in LME See London Metal Exchange. LME See London Metal Exchange (LME). aluminum prices in the second quarter, higher energy costs and the temporary dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of acquisitions, earnings continued to improve as a result of our focus on profitable growth and the Alcoa Business System, as well as continued concentration on cost control."
Second Quarter Six Months
2000 1999 %Change 2000 1999 %Change
---- ---- ------- ---- ---- -------
Revenues $5,569 $4,033 38 $10,100 $8,017 26
Net Income 377 240 57 732 461 59
Earnings
per share .47 .32 47 .94 .62 52
Average common
Shares
Outstanding 805 743 8 780 748 4
(in millions except per share amounts)
Return on shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. for the 2000 first half, annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. , was 17% compared with 14.8% in the first half of 1999. Revenues were $5.6 billion for the 2000 second quarter, compared with $4.0 billion in the year-ago quarter. For the first half of 2000, revenues were $10.1 billion, compared with $8.0 billion in the 1999 period. Alcoa stated that, at the end of the 2000 second quarter, the company had achieved $884 million in annualized cost savings towards its $1.1 billion target. Announced in mid- mid- pref. Middle: midbrain. 1998, this aggressive target is to be achieved by January January: see month. 1, 2001. The quarterly run rate at the end of the quarter was $221 million, compared with $208 million for the 2000 first quarter. Cost savings would have been higher for the second quarter, but worldwide energy prices were up, particularly for gas and fuel oil. The company remains confident that it will achieve its cost cutting goal. Recent Acquisitions Alcoa noted that earnings for the second quarter 2000 included two months of operating results from Reynolds Metals Reynolds Metals Company (RMC) was the second largest aluminum company in the United States, and the third largest in the world. The company became well-known for the consumer product Reynolds Wrap as well as being a leader in developing and promoting new uses for aluminum; Company and one month of results from Cordant Technologies. Both acquisitions were completed in the second quarter of 2000. Due to accounting requirements, results for the quarter do not include earnings from those Reynolds assets (interests in three alumina refineries This is a list of alumina refineries in the world. The list is incomplete and missing some data. Smelter-grade alumina refineries Country Location Coordinates Total Annual Capacity (kt) Ownership Australia Gove, Northern Territory 2,100 100% Alcan (Alcan 2006) and part of one smelter) that Alcoa agreed to sell under the terms of the acquisition. While mildly dilutive at this time, Alcoa expects the Reynolds and Cordant acquisitions to be accretive for the year. "As a result of visiting and examining many Reynolds facilities over the past several months, we have increased our target for cost saving synergies by 50%-- from $200 million to $300 million--to be achieved by mid-year 2002," said Mr. Belda. "Half of the savings will be realized in the first 12 months. The near-term near-term adj. Of, for, or involving a short period of time in the near future. savings mainly will come from consolidating purchasing worldwide and eliminating duplicate DUPLICATE. The double of anything. 2. It is usually applied to agreements, letters, receipts, and the like, when two originals are made of either of them. Each copy has the same effect. public company activities. Longer-term savings will come from sharing best practices and aligning a·lign v. a·ligned, a·lign·ing, a·ligns v.tr. 1. To arrange in a line or so as to be parallel: align the tops of a row of pictures; aligned the car with the curb. processes and systems with the Alcoa Business System, resulting in improved cycle time, less waste and reduced inventories. Our focus is on the customer: providing what the customer wants, when it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have needed." Segments Revised Following are Alcoa's reporting segments, which have been revised to accommodate its new businesses: -- Alumina alumina (əl  `mĭnə) or aluminum oxide, Al2O3, chemical compound with m.p. about 2,000°C; and sp. gr. about 4.0. and Chemicals -- Primary activities include bauxite bauxite (bôk`sīt, bŏk`–), mixture of hydrated aluminum oxides usually containing oxides of iron and silicon in varying quantities. mining and alumina refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar . Alumina is sold to internal and external
customers worldwide and is also processed into industrial chemicals.-- Primary Metals -- This is Alcoa's worldwide smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. system. Alumina from the Alumina and Chemicals segment is used to produce aluminum ingot ingot Mass of metal cast into a size and shape such as a bar, plate, or sheet convenient to store, transport, and work into a semifinished or finished product. The term also refers to a mold in which metal is so cast. which is used by a variety of Alcoa fabricating segments as well as sold outside the company. Reynolds smelters have been added to this segment. -- Flat-Rolled Products -- The main products here are aluminum sheet and plate. These products include rigid This article is about mathematics. For the materials sense, see Stiffness. In mathematics, suppose C is a collection of mathematical objects (for instance sets or functions). container (1) Software that acts as a parent program to hold and execute a set of commands or to run other software routines. (2) A data structure that holds one or more different types of data. See metafile and OLE. sheet (RCS (1) (Remote Computer Service) A remote timesharing service. (2) (Revision Control System) A Unix utility that provides version control. RCS - Revision Control System ) for aluminum beverage cans A beverage can is most often an aluminium can manufactured to hold a single serving of a beverage. Overview The early metal beverage can was made out of steel (similar to a tin can) and had no pull-tab. , sheet and plate for aerospace applications, and mill products for a variety of industrial uses. -- Engineered Products -- Products in this segment include hard and soft alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. extrusions -- including architectural extrusion businesses -- castings, fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , forgings and wheels, primarily for aerospace, automotive and distribution markets. The Huck huck n. Huckaback. Noun 1. huck - toweling consisting of coarse absorbent cotton or linen fabric huckaback toweling, towelling - any of various fabrics (linen or cotton) used to make towels and Howmet businesses acquired under the Cordant acquisition are in this segment as well as Reynolds' wheels business. -- Packaging and Consumer -- This segment includes closures, packaging machinery, PET bottle business in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Reynolds' packaging and consumer businesses. (The Alcoa businesses here were formerly reported as "Other" businesses.) -- Other Businesses -- The operations listed here include Alcoa Fujikura, which produces electrical components for the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. , and fiber optic cable Noun 1. fiber optic cable - a cable made of optical fibers that can transmit large amounts of information at the speed of light fibre optic cable transmission line, cable, line - a conductor for transmitting electrical or optical signals or electric power and services for the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry; Thiokol Thiokol (thī´ōkôl), n.pr brand name for polysulfide polymer using a mercaptan bond. The basic ingredient of rubber-base impression materials. See also mercaptan. , which produces rocket propulsion Rocket propulsion The process of imparting a force to a flying vehicle, such as a missile or a spacecraft, by the momentum of ejected matter. This matter, called propellant, is stored in the vehicle and ejected at high velocity. systems; and Alcoa residential building products; and Reynolds' distribution businesses. Sales and after tax operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for each segment is in an attached table. Founded in 1888, Alcoa is the world's leading producer of aluminum and alumina, and a major participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. in all segments of the industry: mining, refining, smelting, fabricating and recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. . Alcoa serves customers worldwide in the packaging, automotive, aerospace, construction and other markets with a great variety of fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: and finished products. The company has over 300 operating locations in 36 countries. Alcoa financial and operating data follow:
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Second quarter
For the period ended June 30 2000 1999
Sales $ 5,569 $4,032
Other income 52 44
5,621 4,076
Cost of goods sold 4,216 3,140
Selling, general administrative and
other expenses 272 202
Research and development expenses 48 31
Provision for depreciation and depletion 290 220
Interest expense 95 51
4,921 3,644
Income from operations before taxes on income 700 432
Provision for taxes on income 238 139
Income from operations 462 293
Less: Minority interests' share (85) (53)
Net Income $ 377 $ 240
-------- --------
-------- --------
Earnings per common share:
Basic $ 0.47 $ 0.33
Diluted $ 0.47 $ 0.32
Average number of shares used to compute:
Basic earnings per common share 796,962,243 734,277,796
Diluted earnings per common share 804,964,628 742,580,644
Translation and exchange adjustments included
in net income $ 0 $ 0
Shipments of aluminum products
(metric tons) 1,361,000 1,117,000
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Six months
For the period ended June 30 2000 1999
Sales $ 10,100 $ 8,017
Other income 93 40
10,193 8,057
Cost of goods sold 7,548 6,268
Selling, general administrative and
other expenses 499 394
Research and development expenses 87 58
Provision for depreciation and depletion 515 439
Interest expense 146 103
8,795 7,262
Income from operations before taxes on income 1,398 795
Provision for taxes on income 476 255
Income from operations 922 540
Less: Minority interests' share (190) (79)
Net Income $ 732 $ 461
-------- --------
-------- --------
Earnings per common share:
Basic $ 0.95 $ 0.63
Diluted $ 0.94 $ 0.62
Basic earnings per common share 770,119,801 734,114,934
Diluted earnings per common share 780,233,133 747,976,110
Shares outstanding at end of period 865,304,034 733,809,400
Translation and exchange adjustments included
in net income $ 3 $ (10)
Shipments of aluminum products
(metric tons) 2,494,000 2,249,000
Return on average shareholders' equity 17% 14.8%
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
June 30 December 31
ASSETS 2000 1999
----------- -----------
Current assets:
Cash and cash equivalents
(includes cash of $170 in
2000 and $67 in 1999) $ 320 $ 237
Short-term investments 76 77
Receivables from customers,
less allowances:
2000-$74; 1999-$58 3,231 2,199
Other receivables 328 165
Inventories 2,842 1,618
Deferred income taxes 284 233
Prepaid expenses and other
current assets 341 271
------- -------
Total current assets 7,422 4,800
------- -------
Properties, plants and equipment,
at cost 22,562 18,436
Less, accumulated depreciation,
depletion and Amortization 9,500 9,303
------- -------
Net properties, plants and
equipment 13,062 9,133
------- -------
Goodwill, net of accumulated
amortization of $257 in 2000
and $221 in 1999 5,005 1,328
Other assets, including assets
held for sale 5,343 1,805
------- -------
Total assets $30,832 $17,066
------- -------
------- -------
LIABILITIES
Current liabilities:
Short-term borrowings $ 3,395 $ 343
Accounts payable, trade 1,819 1,219
Accrued compensation and
retirement costs 860 582
Taxes, including taxes on income 512 368
Other current liabilities 904 424
Long-term debt due within one year 315 67
------- -------
Total current liabilities 7,805 3,003
------- -------
Long-term debt, less amount due
within one year 4,608 2,657
Accrued postretirement benefits 2,536 1,720
Other noncurrent liabilities and
deferred credits 2,029 1,473
Deferred income taxes 1,369 437
------- -------
Total liabilities 18,347 9,290
------- -------
MINORITY INTERESTS 1,445 1,458
------- -------
CONTINGENT LIABILITIES - -
SHAREHOLDERS' EQUITY
Preferred stock 56 56
Common stock 925 395
Additional capital 5,921 1,704
Retained earnings 6,592 6,061
Treasury stock, at cost (1,696) (1,260)
Accumulated other comprehensive
income (758) (638)
------- -------
Total shareholders' equity 11,040 6,318
------- -------
Total liabilities and
shareholders' equity $30,832 $17,066
------- -------
------- -------
ALCOA 2000 2nd QUARTER SUPPLEMENTAL INFORMATION
Consolidated Third-Party Revenues 1998 1Q99 2Q99 3Q99
Alumina and chemicals 1,847 420 456 474
Primary metals 2,105 534 519 560
Flat-rolled products 4,900 1,270 1,258 1,273
Engineered products 3,110 942 939 917
Packaging & Consumer 856 196 209 191
Other 2,506 617 652 637
------------------------------------
Total 15,324 3,979 4,033 4,052
Consolidated Intersegment Revenues
Alumina and chemicals 832 231 221 214
Primary metals 2,509 740 714 671
Flat-rolled products 59 15 11 14
Engineered products 11 3 3 6
Packaging & Consumer - 0 0 0
Other - 0 0 0
------------------------------------
Total Aluminum 3,411 989 949 905
Consolidated Third-Party Shipments (KMT's)
Alumina and chemicals 7,130 1,664 1,836 1,814
Primary metals 1,392 370 354 335
Flat-rolled products 1,764 487 496 496
Engineered products 729 258 249 249
Packaging & Consumer 10 2 3 2
Other 56 15 15 18
------------------------------------
Total Aluminum 3,951 1,132 1,117 1,100
Average realized price - Primary 0.67 0.63 0.64 0.71
After-Tax Operating Income
Alumina and chemicals 318 60 62 83
Primary metals 372 97 106 159
Flat-rolled products 306 65 72 74
Engineered products 183 45 61 42
Packaging & Consumer 61 13 25 15
Other 104 15 45 35
------------------------------------
Total 1,344 295 371 408
Reconciliation of after-tax operating income
to consolidated net income:
Total after-tax operating income 1,344 295 371 408
Elimination of intersegment (profit)
loss (16) (9) (10) (8)
Unallocated amounts (net of tax):
Interest income 64 5 8 7
Interest expense (129) (34) (32) (33)
Minority interest (238) (26) (54) (54)
Corporate expense (197) (35) (41) (34)
Other 25 25 (2) (27)
-------------------------------------
Consolidated net income 853 221 240 259
Consolidated Third-Party Revenues 4Q99 1999 1Q00 2Q00
Alumina and chemicals 492 1,842 540 515
Primary metals 628 2,241 611 852
Flat-rolled products 1,312 5,113 1,404 1,394
Engineered products 930 3,728 1,053 1,296
Packaging & Consumer 205 801 203 524
Other 686 2,592 720 988
--------------------------------------
Total 4,253 16,317 4,531 5,569
Consolidated Intersegment Revenues
Alumina and chemicals 259 925 250 274
Primary metals 668 2,793 850 832
Flat-rolled products 11 51 13 29
Engineered products 14 26 13 15
Packaging & Consumer 0 0 0 0
Other 0 0 0 0
---------------------------------------
Total Aluminum 952 3,795 1,126 1,150
Consolidated Third-Party Shipments (KMT's)
Alumina and chemicals 1,740 7,054 1,833 1,801
Primary metals 383 1,442 339 493
Flat-rolled products 503 1,982 507 504
Engineered products 233 989 266 282
Packaging & Consumer 2 9 2 32
Other 8 56 19 50
--------------------------------------
Total Aluminum 1,129 4,478 1,133 1,361
Average realized price - Primary 0.72 0.67 0.79 0.74
After-Tax Operating Income
Alumina and chemicals 102 307 155 140
Primary metals 173 535 227 225
Flat-rolled products 70 281 73 74
Engineered products 32 180 53 62
Packaging & Consumer 15 68 17 35
Other 23 118 33 46
---------------------------------------
Total 415 1,489 558 582
Reconciliation of after-tax operating income
to consolidated net income:
Total after-tax operating income 415 1,489 558 582
Elimination of intersegment (profit)
loss 3 (24) (20) (5)
Unallocated amounts (net of tax):
Interest income 6 26 7 19
Interest expense (27) (126) (33) (69)
Minority interest (108) (242) (106) (85)
Corporate expense (61) (171) (56) (51)
Other 106 102 5 (14)
--------------------------------------
Consolidated net income 334 1,054 355 377
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