Alcoa's Earnings Up 42% From Year-Ago Quarter; Nine-Month Results Exceed Full Year 1999.Business Editors PITTSBURGH--(BUSINESS WIRE)--Oct. 5, 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. today reported net income of $368 million (42 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 third quarter of 2000 compared with net income of $259 million (35 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 third quarter. For the first nine months of 2000, net income was $1,100 million ($1.36 per share), a 53% increase over $720 million (96 cents per share) for the comparable 1999 period. "The third quarter 2000 was the second-best second best n. One that is next to the best. adv. Next to the best. sec  ond-best quarter in
Alcoa's history, driven by continued deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of the Alcoa
Business System throughout our operations as well as managing costs and
capturing synergies from our recent acquisitions," said 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. Alain Alain: see Chartier, Émile Auguste. Belda.
Third Quarter Nine Months
2000 1999 %Change 2000 1999 %Change
---- ---- ------- ---- ---- -------
Revenues $ 6,298 $ 4,052 55 $16,398 $12,070 36
Net Income 368 259 42 1,100 720 53
Earnings per share .42 .35 20 1.36 .96 42
Average common
Shares Outstanding 874 750 17 808 751 8
(in millions except per share amounts)
As previously announced, the third quarter 2000 results were affected by softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. in the transportation, building, construction, and distribution markets and higher natural gas and fuel oil costs. This quarter's results are a 42% improvement from a year ago. "Looking to the fourth quarter, we expect to continue to benefit from recent acquisitions, our cost reduction program and the seasonal strength of our packaging and consumer business. However, we also expect the softness to continue in the construction, transportation, building and distribution markets and see no relief from the higher energy prices," Mr. Belda said. Revenues for the 2000 third quarter were $6.3 billion, up 55% from $4.1 billion for the 1999 third quarter. Revenues for the first nine months of 2000 were $16.4 billion compared with $12.1 billion for the first nine months of 1999. 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 nine-month period, 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 15.7% for the year-ago period. Alcoa stated that at the end of the 2000 third quarter, the company had achieved $924 million in annualized cost savings towards its $1.1 billion target. The quarterly run rate at the end of the quarter was $231 million, compared with $221 million for the 2000 second quarter. The company remains confident that it will achieve its cost cutting goal by January January: see month. 1, 2001, excluding the impact of higher natural gas and fuel oil costs, which were $70 million higher for the 2000 nine-month period. Recent Acquisitions Alcoa noted that earnings for the third quarter 2000 included the first full quarter of operating results from both 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 Cordant Technologies. These 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 regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval of this acquisition. The Reynolds and Cordant acquisitions were profitable in the third quarter; Alcoa expects them to be accretive to earnings per share in the 2001 first quarter. The company noted that approval has been received from the European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community for the sale of its 56% of the Worsley refinery, located in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , to Billiton Billiton: see Belitung. Billiton or Belitung Island, Bangka-Belitung province, west-central Indonesia. Lying on the Karimata Strait between the islands of Bangka (west) and Borneo (northeast), it is situated between the South China . Approval of this sale has been requested from the US Dept. of Justice. Quarterly Analyst Meeting; Smelter Tour Alcoa's quarterly analyst meeting and conference call will be at 4:00 p.m. on Tuesday Tuesday: see week. , October October: see month. 24, 2000. The meeting will be webcast via alcoa.com. On October 11 and 12, analysts and media will tour the company's smelter at Lauralco, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . At that time, presentations will be posted on alcoa.com. Founded in 1888, Alcoa is the world's leading producer of aluminum and alumina alumina (əl  `mĭnə) or aluminum oxide, Al2O3, chemical compound with m.p. about 2,000°C; and sp. gr. about 4.0. , and a major participant ParticipantA party of a funding. It usually refers to the lowest rank or smallest level of funding. in all segments of the industry: mining, 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 , 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. , 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, consumer, 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 (NYSE NYSE See: New York Stock Exchange :AA) Alcoa financial and operating data follow: Certain statements relate to future events and expectations and as such constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involving known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include other risk factors summarized in Alcoa's SEC reports.
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Third quarter
For the period ended September 30 2000 1999
Sales and operating revenues $ 6,298 $ 4,052
Other income (loss) 46 38
--------- ---------
6,344 4,090
Cost of goods sold 4,798 3,120
Selling, general administrative
and other expenses 314 202
Research and development expenses 47 33
Provision for depreciation and depletion 350 224
Interest expense 141 51
--------- ---------
5,650 3,630
Income from operations before
taxes on income 694 460
Provision for taxes on income 235 147
--------- ---------
Income from operations 459 313
Less: Minority interests' share (91) (54)
--------- ---------
NET INCOME $ 368 $ 259
Earnings per common share:
Basic $ 0.42 $ 0.36
Diluted $ 0.42 $ 0.35
Average number of shares used to compute:
Basic earnings per common share 866,117,400 733,209,104
Diluted earnings per common share 874,231,221 750,431,096
Translation and exchange adjustments
included in net income $ (17.9) $ (1.3)
Shipments of aluminum
products (metric tons) 1,419,000 1,100,000
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Nine months
For the period ended September 30 2000 1999
Sales and operating revenues $ 16,398 $ 12,070
Other income (loss) 139 77
--------- ---------
16,537 12,147
Cost of goods sold 12,346 9,388
Selling, general administrative
and other expenses 813 597
Research and development expenses 134 91
Provision for depreciation and depletion 865 663
Interest expense 287 153
--------- ---------
14,445 10,892
Income from operations before
taxes on income 2,092 1,255
Provision for taxes on income 711 402
--------- ---------
Income from operations 1,381 853
Less: Minority interests' share (281) (133)
--------- ---------
NET INCOME $ 1,100 $ 720
Earnings per common share:
Basic $ 1.37 $ 0.98
Diluted $ 1.36 $ 0.96
Average number of shares used to compute:
Basic earnings per common share 799,000,417 733,783,156
Diluted earnings per common share 808,485,161 751,005,148
Shares outstanding at the end of period 865,631,782 732,589,886
Translation and exchange adjustments
included in net income $ (15.2) $ (11.1)
Shipments of aluminum
products (metric tons) 3,913,000 3,349,000
Return on average shareholders' equity 17.0% 15.7%
Alcoa 2000
Third Quarter
Supplemental Information
Consolidated Third-Party
Revenues 1998 1Q99 2Q99 3Q99 4Q99
Alumina and Chemicals 1,847 420 456 474 492
Primary Metals 2,105 534 519 560 628
Flat-Rolled Products 4,900 1,270 1,258 1,273 1,312
Engineered Products 3,110 942 939 917 930
Packaging & Consumer 856 196 209 191 205
Other 2,506 617 652 637 686
------ ------ ------ ------ ------
Total 15,324 3,979 4,033 4,052 4,253
Consolidated Intersegment 1998 1Q99 2Q99 3Q99 4Q99
Revenues
Alumina and Chemicals 832 231 221 214 259
Primary Metals 2,509 740 714 671 668
Flat-Rolled Products 59 15 11 14 11
Engineered Products 11 3 3 6 14
Packaging & Consumer 0 0 0 0 0
Other 0 0 0 0 0
------ ------ ------ ------ ------
Total 3,411 989 949 905 952
Consolidated Third-Party 1998 1Q99 2Q99 3Q99 4Q99
Shipments (KMT's)
Alumina and Chemicals 7,130 1,664 1,836 1,814 1,740
Primary Metals 1,392 370 354 335 383
Flat-Rolled Products 1,764 487 496 496 503
Engineered Products 729 258 249 249 233
Packaging & Consumer 10 2 3 2 2
Other 56 15 15 18 8
------ ------ ------ ------ ------
Total Aluminum 3,951 1,132 1,117 1,100 1,129
Average realized price
-Primary 0.67 0.63 0.64 0.71 0.72
After-Tax Operating Income 1998 1Q99 2Q99 3Q99 4Q99
Alumina and Chemicals 318 60 62 83 102
Primary Metals 372 97 106 159 173
Flat-Rolled Products 306 65 72 74 70
Engineered Products 183 45 61 42 32
Packaging & Consumer 61 13 25 15 15
Other 104 15 45 35 23
------ ------ ------ ------ ------
Total 1,344 295 371 408 415
Reconciliation of
after-tax operating
income to consolidated
net income: 1998 1Q99 2Q99 3Q99 4Q99
Total after-tax operating
income 1,344 295 371 408 415
Elimination of intersegment
(profit) loss (16) (9) (10) (8) 3
Unallocated amounts
(net of tax)
Interest income 64 5 8 7 6
Interest expense (129) (34) (32) (33) (27)
Minority interest (238) (26) (54) (54) (108)
Corporate expense (197) (35) (41) (34) (61)
Other 25 25 (2) (27) 106
------ ------ ------ ------ ------
Consolidated net income 853 221 240 259 334
Consolidated Third-Party
Revenues 1999 1Q00 2Q00 3Q00
Alumina and Chemicals 1,842 540 515 529
Primary Metals 2,241 611 852 1,049
Flat-Rolled Products 5,113 1,404 1,394 1,361
Engineered Products 3,728 1,053 1,296 1,586
Packaging & Consumer 801 203 524 631
Other 2,592 720 988 1,142
------ ------ ------ ------
Total 16,317 4,531 5,569 6,298
Consolidated Intersegment 1999 1Q00 2Q00 3Q00
Revenues
Alumina and Chemicals 925 250 274 294
Primary Metals 2,793 850 832 936
Flat-Rolled Products 51 13 29 29
Engineered Products 26 13 15 18
Packaging & Consumer 0 0 0 0
Other 0 0 0 0
------ ------ ------ ------
Total 3,795 1,126 1,150 1,277
Consolidated Third-Party 1999 1Q00 2Q00 3Q00
Shipments (KMT's)
Alumina and Chemicals 7,054 1,833 1,801 1,893
Primary Metals 1,442 339 493 574
Flat-Rolled Products 1,982 507 504 492
Engineered Products 989 266 282 258
Packaging & Consumer 9 2 32 37
Other 56 19 50 58
------ ------ ------ ------
Total Aluminum 4,478 1,133 1,361 1,419
Average realized price
-Primary 0.67 0.79 0.74 0.77
After-Tax Operating Income 1999 1Q00 2Q00 3Q00
Alumina and Chemicals 307 155 140 146
Primary Metals 535 227 225 254
Flat-Rolled Products 281 73 74 83
Engineered Products 180 53 62 49
Packaging & Consumer 68 17 35 38
Other 118 33 46 39
------ ------ ------ ------
Total 1,489 558 582 609
Reconciliation of
after-tax operating
income to consolidated
net income: 1999 1Q00 2Q00 3Q00
Total after-tax operating
income 1,489 558 582 609
Elimination of intersegment
(profit) loss (24) (20) (5) 5
Unallocated amounts
(net of tax)
Interest income 26 7 19 4
Interest expense (126) (33) (69) (85)
Minority interest (242) (106) (85) (90)
Corporate expense (171) (56) (51) (68)
Other 102 5 (14) (7)
------ ------ ------ ------
Consolidated net income 1,054 355 377 368
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
September 30 December 31
ASSETS 2000 1999
------- -------
Current assets:
Cash and cash equivalents
(includes cash of $134 in 2000 and $67
in 1999) $ 284 $ 237
Short-term investments 90 77
Receivables from customers, less
allowances: 2000-$71; 1999-$58 3,224 2,199
Other receivables 143 165
Inventories 2,785 1,618
Deferred income taxes 280 233
Prepaid expenses and other current assets 501 271
------- -------
Total current assets 7,307 4,800
------- -------
Properties, plants and equipment, at cost 22,304 18,436
Less, accumulated depreciation, depletion
and Amortization 9,424 9,303
------- -------
Net properties, plants and equipment 12,880 9,133
------- -------
Goodwill, net of accumulated amortization
of $296 in 2000 and $221 in 1999 5,411 1,328
Other assets, including assets held for sale 5,137 1,805
------- -------
Total assets $30,735 $17,066
------- -------
------- -------
LIABILITIES
Current liabilities:
Short-term borrowings $ 2,452 $ 343
Accounts payable, trade 1,797 1,219
Accrued compensation and retirement costs 895 582
Taxes, including taxes on income 632 368
Other current liabilities 923 424
Long-term debt due within one year 433 67
------- -------
Total current liabilities 7,132 3,003
------- -------
Long-term debt, less amount due within
one year 5,297 2,657
Accrued postretirement benefits 2,545 1,720
Other noncurrent liabilities and deferred
credits 2,278 1,473
Deferred income taxes 1,050 437
------- -------
Total liabilities 18,302 9,290
------- -------
MINORITY INTERESTS 1,439 1,458
------- -------
CONTINGENT LIABILITIES - -
SHAREHOLDERS' EQUITY
Preferred stock 56 56
Common stock 925 395
Additional capital 5,923 1,704
Retained earnings 6,742 6,061
Treasury stock, at cost (1,713) (1,260)
Accumulated other comprehensive income (939) (638)
------- -------
Total shareholders' equity 10,994 6,318
------- -------
Total liabilities and shareholders' equity $30,735 $17,066
------- -------
------- -------
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