Alcoa Announces Annual Income from Continuing Operations of $1.23 Billion, or $1.40 per share; Highest Annual Revenues in Company History.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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): Highlights: --Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $1.23 billion, or $1.40 per share, for 2005; --Annual revenues increased 13 percent to an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal record of $26.2 billion; --Progress executing upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger and downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). growth projects to build share in attractive growth markets; --Fourth quarter 2005 income from continuing operations of $210 million, or $0.24, including a net negative impact of $93 million, or $0.11; --Strong quarterly performance in alumina alumina (əl  `mĭnə) or aluminum oxide, Al2O3, chemical compound with m.p. about 2,000°C; and sp. gr. about 4.0. and primary metals with
segment ATOI ATOI ASCII to IntegerATOI After Tax Operating Income ATOI Average Time on Ice (hockey) improving 17 and 44 percent respectively over third quarter; --Debt-to-capital ratio of 30.8 percent at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , within target range despite investments in aggressive growth strategy. Alcoa (NYSE: AA) announced today that its 2005 income from continuing operations was $1.23 billion, or $1.40 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, as the company took action to partially mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. $878 million in impacts
from raw materials, energy, and other cost inflation.For the fourth quarter, income from continuing operations was $210 million, or $0.24. Profitability was eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. by negative impacts totaling $93 million, or $0.11, including: lowered production at refineries in Jamaica Jamaica (jəmā`kə), independent state within the Commonwealth (2005 est. pop. 2,732,000), 4,232 sq mi (10,962 sq km), coextensive with the island of Jamaica, West Indies, S of Cuba and W of Haiti. and Texas due to the Gulf Coast hurricanes; an unplanned outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. at the Portland Portland, town, England Portland, town (1991 pop. 12,945), Dorset, S England. It is on the Isle of Portland, a small rocky peninsula. Portland stone has been used in St. Paul's Cathedral and other important London buildings. Lobsters and crabs are harvested. , 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. smelter; the impact of strikes on operations at Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. plants; restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs for plant closings and layoffs; mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. losses on metal and metal-related activities; and integration costs for the newly acquired facilities in Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). ; partially offset by a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. legal settlement for power costs. Income from continuing operations was $0.33 in the third quarter of 2005, and $0.39 in the fourth quarter of 2004. "Entering 2005, we anticipated significant pressures from rising input, energy costs and other cost inflation, but actual increases were even higher, nearly $900 million for the year," said Alain Alain: see Chartier, Émile Auguste. Belda, Alcoa Chairman and 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. . "To meet that challenge, we took aggressive action, passing through significant price increases to downstream customers, improving our mix of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: products, continuing productivity gains, and lowering taxes. That management action helped offset cost pressures and drove the top-line to the highest level in Alcoa's 117-year history," said Belda. "In the year ahead, we don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. the same sharp spikes spikes see peplomer. on input prices, and our initiatives will gain further momentum to offset inflation and improve the bottom line. "As we enter 2006, the vast majority of our primary metal production will benefit from the highest metal prices in more than 15 years," Belda added. "And we are working to secure future growth in attractive markets with customers around the world." Net income in the quarter was $224 million, or $0.26, compared to $289 million, or $0.33, in the previous quarter, and $268 million, or $0.30, in the fourth quarter of 2004. Annual revenues climbed 13 percent to $26.2 billion, the highest in the company's history. Revenues for the fourth quarter rose approximately 12 percent compared to the fourth quarter of 2004, driven by higher metal prices and strength in the aerospace market. Balance Sheet Overview Cash from operations in the quarter was $1 billion, helping lower the company's debt to capital ratio to 30.8 percent at year's end, down from 31.5 percent in the third quarter. In addition to that, the company completed the sale of Southern Graphic Systems for $408 million in cash in the quarter. For the year, cash from operations was $1.7 billion, including the impact of a discretionary $300 million contribution to the company's pension plans. Annual capital expenditures were $2.1 billion, primarily used to fund growth projects. After excluding spending on growth projects, the company's return on capital for the year was 9.5 percent. Including those investments, the company's return on capital stood at 8.3 percent. Update on Growth Projects "We have the most aggressive growth strategy in the industry and the best growth projects around the world. We continue to achieve the highest returns in the industry, generating the cash we need to fund our growth and maintain a strong balance sheet," said Belda. In addition to negotiations and feasibility studies The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. underway in Trinidad Trinidad (trēnēthäth`), town (1983 est. pop. 43,500), Sancti Spíritus prov., central Cuba. Tobacco processing is the chief industry, although other agricultural processing has been developed. , Ghana Ghana, country, Africa Ghana, officially Republic of Ghana, republic (2005 est. pop. 21,030,000), 92,099 sq mi (238,536 sq km), W Africa, on the Gulf of Guinea, an arm of the Atlantic Ocean. The capital and largest city is Accra. and Guinea Guinea, archaic term for Africa's west coast Guinea (gĭn`ē), an archaic term for the west coast of Africa. In its widest sense it has been applied to the region from Angola to Senegal. , the company has a comprehensive array of growth projects that are moving ahead in 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. and downstream, including: Refining Refining growth is focused on capturing Alcoa's unique advantage of multiple options to build low-capital cost brownfield See greenfield. expansions of existing low operating cost facilities: --Alumar refinery expansion - The expansion will add 2.1 million metric tons per year ("mtpy mtpy Metric Tons Per Year ") in capacity, bringing the low-cost refinery's total capacity to 3.5 million metric tons. Work began this quarter and the expansion is expected to be completed by the first half of 2008. This project includes creation of a bauxite bauxite (bôk`sīt, bŏk`–), mixture of hydrated aluminum oxides usually containing oxides of iron and silicon in varying quantities. mine near Juruti in Para para (par´ah) a woman who has produced one or more viable offspring, regardless of whether the child or children were living at birth. state, which will initially produce 2.6 million mtpy of bauxite to supply the expansion. --Pinjarra efficiency upgrade - The project will expand the low-cost Pinjarra refinery by 657,000 mtpy to more than 4.2 million mtpy. It is scheduled to be completed in the first quarter of 2006. --Jamalco expansion - The Company's Alcoa World Alumina and Chemicals Alcoa World Alumina and Chemicals is a joint venture between Alumina Limited (40% share) and Alcoa (60% share) and is abbreviated to AWAC. AWAC's business is the mining of bauxite, the extraction of alumina (aluminium oxide) and the smelting of aluminium. (AWAC) affiliate plans to expand the refinery in Clarendon CLARENDON. The constitutions of Clarendon were certain statutes made in the reign of Henry H., of England, in a parliament holden at Clarendon, by which the king checked the power of the pope and his clergy. 4 Bl. Com. 415. , Jamaica by 1.5 million mtpy, more than doubling the refinery's capacity to approximately 2.8 million mtpy. Smelting Growth development work includes greenfield Greenfield, town (1990 pop. 18,666), seat of Franklin co., NW Mass., at the confluence of the Deerfield and Green rivers, near their junction with the Connecticut; settled 1686, set off from Deerfield and inc. 1753. and brownfield smelting projects utilizing globally competitive energy sources. --Alumar smelter expansion - The expansion will add 63,000 mtpy to 433,000 mtpy in total. Approximately 50 percent was completed in November November: see month. 2005, and the remainder is scheduled to be finished by the end of the first quarter of 2006. --Alcoa Fjardaal in Iceland Iceland, Icel. Ísland, officially Republic of Iceland, republic (2005 est. pop. 297,000), 39,698 sq mi (102,819 sq km), the westernmost state of Europe, occupying an island in the Atlantic Ocean just S of the Arctic Circle, c. - The company continued progress building its first greenfield smelter in 20 years, which is now approximately 40 percent complete. The 346,000 mtpy smelter is on-schedule to produce its first metal in April 2007. --Mosjoen, Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. anode anode (ăn`ōd), electrode through which current enters an electric device. In electrolysis, it is the positive electrode in the electrolytic cell. anode Terminal or electrode from which electrons leave a system. plant - Work to build a carbon plant together with Elkem Elkem is one of Norway's largest industrial companies, and one of the world's leading suppliers of metals and materials. The companies main products are aluminium, energy and silicon as well as specialised products such as ferrosilicon to foundries, microsilica and carbon. , our partners in Norway, began in the third quarter 2004 and is expected to be completed in time to ramp-up to full production in parallel with Fjardaal in late 2007. --Warrick, Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). power self-generation - The company began construction work to continue its ability to self-generate power to fuel its Warrick, IN smelter and rolling mill rolling mill: see steel. while lowering costs through an environmental upgrade. As part of this project the company purchased the rights to mine coal in nearby Friendsville Friendsville can refer to:
--Modernization of Pocos de Caldas Caldas may refer to:
adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. environmental controls to lower emissions and costs, and improve operational efficiency. --Aviles, and La Coruna La Co·ru·ña A city of northwest Spain on the Atlantic Ocean west of Oviedo. Perhaps predating Roman times, it was the point of departure for the Spanish Armada (1588). Population: 224,000. , Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. Soderberg modernizations - The Aviles modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, project is approximately 40 percent complete and is scheduled to be fully operational in the second quarter of 2007. La Coruna is scheduled to be completed in the second quarter of 2008. Fabricating and Downstream Growth Growth work is underway to expand the company's position and lower its costs in fabricating and downstream businesses: --Final approval from the Ministry of Commerce in China was received and the new joint venture was formed with China International Trust & Investment (CITIC CITIC China International Trust and Investment Corporation ), Alcoa's equity partner in Bohai Aluminum, to produce aluminum rolled products at the Bohai plant in Qinghuangdao, China. Alcoa anticipates having the expansion commissioned by 2008. --To serve customers in the aerospace market, the company is expanding its heat-treated sheet and plate capacity by 50 percent. The expansion is expected to be completed by the end of next year at plants in Davenport, Iowa Davenport is a city in the American state of Iowa that borders the Mississippi River. As of the 2000 census, the city had a total population of 98,359. A 2006 estimate tells that the city had grown slightly to 99,514. USA; Kitts Green Kitts Green is an area of Birmingham, England which is situated on the borders of Stechford, Ward End, Shard End, Lea Village and the Meadway. The original green which belonged to 'Mr Kitts' is located opposite St Richards Church near Lea Hall railway station. , UK; Fusina, Italy; and Belaya Kalitva Belaya Kalitva (Russian: Бе́лая Кали́тва) is a town in Rostov Oblast, Russia. , Russia. --Alcoa Fastening Systems business is creating two new 50,000 square-foot manufacturing sites in the Suzhou Industrial Park The China-Singapore Suzhou Industrial Park (中国——新加坡苏州工业园区, SIP) is an industrial park built in Suzhou, China with significant Singaporean input. in China, 100 km from Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , to support rapidly growing commercial aviation and railway/rail car production and sub-assembly in that market. --Continued integration of the recently acquired Belaya Kalitva and Samara Samara, river, Russia Samara (səmä`rə), river, c.360 mi (580 km) long, rising in the foothills of the S Urals, European Russia. It flows generally northwest, and joins the Volga River at Samara. plants in the Russian Federation Russian Federation: see Russia. . The plants have already begun the process of servicing North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. automotive customers and have made additional progress to qualify products for key customers in the aerospace and commercial transportation markets. Segment and Other Results (all comparisons on a sequential quarter basis, unless noted) Alumina - 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. ("ATOI") was $183 million, up 17 percent from the third quarter. Stronger overall shipments and higher pricing drove the result. Higher maintenance, energy and caustic soda caustic soda: see sodium hydroxide. caustic soda Sodium hydroxide (NaOH), an inorganic compound. The alkalies called caustic soda and caustic potash (potassium hydroxide) are very important industrial chemicals, with uses in the manufacture of costs negatively affected the segment by $18 million. Alumina production for the quarter was 3,706 thousand metric tons ("kmt"), compared to 3,688 kmt in the third quarter of 2005, with increases coming from the Western Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. operations. Primary Metals - Segment ATOI increased by $74 million, or 44 percent, to $242 million largely due to higher metal prices and a favorable legal settlement related to power costs. Total shipments declined as the company purchased less primary metal for internal use. Purchases for the quarter were 164 kmt, down from 189 kmt in the third quarter. Primary metal production for the quarter was 900 kmt, down slightly from third quarter production of 904 kmt. Increased production from the Alumar expansion was offset by the outage at the Portland smelter. Third party realized metal prices increased $214 to $2,177 per ton. The mark-to-market impact on metal and metal-related activity is not recognized in the segment results. Flat Rolled Products - ATOI for the segment decreased $19 million to $62 million. Strong productivity improvements and favorable aerospace mix were offset by raw material and energy cost increases, seasonally lower can sheet volumes, along with higher Russian Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. losses. Aerospace demand remained strong. Extruded and End Products - Seasonal declines in residential and commercial building and construction coupled with overall weak market conditions in 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 drove ATOI down by $26 million. Engineered Solutions - ATOI for the segment increased to $45 million, up 41 percent, driven by continued strong performance from the Industrial Castings and Forged forge 1 n. 1. A furnace or hearth where metals are heated or wrought; a smithy. 2. A workshop where pig iron is transformed into wrought iron. v. Products business, Fastening Systems and Wheel Products business. Product launch costs at AFL AFL: see American Federation of Labor and Congress of Industrial Organizations. Automotive began to abate abate v. to do away with a problem, such as a public or private nuisance or some structure built contrary to public policy. This can include dikes which illegally direct water onto a neighbors property, high volume noise from a rock band or a factory, an improvement in the quarter. Packaging and Consumer - Segment ATOI declined $8 million to $20 million in the quarter. The usual seasonal strength in the consumer products business was offset by higher raw material costs, largely hurricane related. ATOI to Net Income Reconciliation The largest variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality in reconciling items was in the "other" line item. The sequential change in the "other" line item is related to higher LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack cost, the gain on the sale of the railroad railroad or railway, form of transportation most commonly consisting of steel rails, called tracks, on which freight cars, passenger cars, and other rolling stock are drawn by one locomotive or more. business in the third quarter, and the mark-to-market losses on metal and metal-related activity. Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on January 9th to present the quarter's results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under "Invest." About Alcoa Alcoa is the world's leading producer and manager of primary aluminum, 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: aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding Wikipedia is not the place for advertisement or self-advertising. Vinyl siding, first introduced to the exterior cladding market in the late 1950s, is an alternative to aluminum siding, fiber cement siding, and timber siding. , closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 42 countries and has been named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com Forward Looking Statement Certain statements in this release 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 and uncertainties that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in economic or aluminum industry conditions generally, including global supply and demand conditions and prices for primary aluminum, alumina and other products; (b) material adverse changes in the markets served by Alcoa, including the transportation, building, construction, distribution, packaging, industrial gas turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. and other markets; (c) Alcoa's inability to achieve the level of cost savings, productivity improvements or earnings growth anticipated by management, whether due to significant increases in energy, raw materials or employee benefits costs, labor disputes or other factors; (d) Alcoa's inability to realize the full extent of the expected savings or benefits from its restructuring activities or to complete such activities in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with its planned timetable; (e) Alcoa's inability to complete its expansion projects and investment activities outside the U.S. as planned and by targeted completion dates, or to assure that the anticipated integration costs at its recently acquired Russian facilities will not exceed its estimates; (f) unfavorable changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (g) significant legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (h) the other risk factors summarized in Alcoa's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004, Forms 10-Q for the quarters ended March 31, 2005, June 30, 2005, and September 30, 2005 and other reports filed with the Securities and Exchange Commission.
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share, and metric ton amounts)
Quarter ended
December 31 September 30 December 31
2004 (a) 2005 2005
------------- ------------- -------------
Sales $ 5,979 $ 6,566 $ 6,669
Cost of goods sold 4,839 5,405 5,459
Selling, general
administrative, and other
expenses 327 317 362
Research and development
expenses 53 51 50
Provision for depreciation,
depletion, and amortization 306 321 316
Restructuring and other
charges 1 7 27
Interest expense 72 96 78
Other income, net (69) (92) (5)
------------- ------------- -------------
Total costs and expenses 5,529 6,105 6,287
Income from continuing
operations before taxes on
income 450 461 382
Provision for taxes on income 62 112 92
------------- ------------- -------------
Income from continuing
operations before minority
interests' share 388 349 290
Less: Minority interests'
share 48 59 80
------------- ------------- -------------
Income from continuing
operations 340 290 210
(Loss) income from
discontinued operations (72) (1) 16
Cumulative effect of
accounting change - - (2)
------------- ------------- -------------
NET INCOME $ 268 $ 289 $ 224
============= ============= =============
Earnings (loss) per common
share:
Basic:
Income from continuing
operations $ .39 $ .33 $ .24
(Loss) income from
discontinued operations (.08) - .02
Cumulative effect of
accounting change - - -
------------- ------------- -------------
Net income $ .31 $ .33 $ .26
============= ============= =============
Diluted:
Income from continuing
operations $ .39 $ .33 $ .24
(Loss) income from
discontinued operations (.09) - .02
Cumulative effect of
accounting change - - -
------------- ------------- -------------
Net income $ .30 $ .33 $ .26
============= ============= =============
Average number of shares used
to compute:
Basic earnings per common
share 870,608,606 872,515,797 871,135,611
Diluted earnings per common
share 877,423,613 876,583,063 874,617,798
Shipments of aluminum
products (metric tons) 1,266,000 1,424,000 1,388,000
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)
Twelve months ended
December 31 December 31
2004 (a) 2005
------------- -------------
Sales $ 23,236 $ 26,159
Cost of goods sold 18,469 21,217
Selling, general administrative, and other
expenses 1,252 1,352
Research and development expenses 182 194
Provision for depreciation, depletion, and
amortization 1,189 1,265
Restructuring and other charges (21) 339
Interest expense 271 339
Other income, net (271) (480)
------------- -------------
Total costs and expenses 21,071 24,226
Income from continuing operations before
taxes on income 2,165 1,933
Provision for taxes on income 543 441
------------- -------------
Income from continuing operations before
minority interests' share 1,622 1,492
Less: Minority interests' share 245 259
------------- -------------
Income from continuing operations 1,377 1,233
(Loss) income from discontinued operations (67) 2
Cumulative effect of accounting change - (2)
------------- -------------
NET INCOME $ 1,310 $ 1,233
============= =============
Earnings (loss) per common share:
Basic:
Income from continuing operations $ 1.58 $ 1.41
Loss from discontinued operations (.08) -
Cumulative effect of accounting change - -
------------- -------------
Net income $ 1.50 $ 1.41
============= =============
Diluted:
Income from continuing operations $ 1.57 $ 1.40
Loss from discontinued operations (.08) -
Cumulative effect of accounting change - -
------------- -------------
Net income $ 1.49 $ 1.40
============= =============
Average number of shares used to compute:
Basic earnings per common share 869,906,895 871,721,392
Diluted earnings per common share 877,449,161 876,897,531
Common stock outstanding at the end of the
period 870,980,083 870,268,513
Shipments of aluminum products (metric
tons) 5,120,000 5,503,000
(a) Prior periods financial statements have been reclassified to
reflect the imaging and graphic communications business in
discontinued operations in 2005.
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)
December 31 December 31
2004 (b) 2005
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 457 $ 762
Receivables from customers, less allowances:
$86 in 2004 and $80 in 2005 2,694 2,916
Other receivables 256 427
Inventories 2,968 3,452
Deferred income taxes 279 197
Prepaid expenses and other current assets 788 1,036
----------- -----------
Total current assets 7,442 8,790
----------- -----------
Properties, plants and equipment, at cost 25,569 27,017
Less: accumulated depreciation, depletion and
amortization 13,244 13,854
----------- -----------
Net properties, plants and equipment 12,325 13,163
----------- -----------
Goodwill 6,412 6,249
Investments 2,066 1,370
Other assets 3,822 4,090
Assets held for sale 542 34
----------- -----------
Total assets $32,609 $33,696
=========== ===========
LIABILITIES
Current liabilities:
Short-term borrowings $ 267 $ 300
Commercial paper 630 912
Accounts payable, trade 2,218 2,661
Accrued compensation and retirement costs 1,013 1,102
Taxes, including taxes on income 1,018 874
Other current liabilities 1,073 1,461
Long-term debt due within one year 57 58
----------- -----------
Total current liabilities 6,276 7,368
----------- -----------
Long-term debt, less amount due within one year 5,345 5,279
Accrued pension benefits 1,513 1,500
Accrued postretirement benefits 2,150 2,105
Other noncurrent liabilities and deferred
credits 1,727 1,823
Deferred income taxes 789 875
Liabilities of operations held for sale 93 8
----------- -----------
Total liabilities 17,893 18,958
----------- -----------
MINORITY INTERESTS 1,416 1,365
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,775 5,721
Retained earnings 8,636 9,344
Treasury stock, at cost (1,926) (1,899)
Accumulated other comprehensive loss (165) (773)
----------- -----------
Total shareholders' equity 13,300 13,373
----------- -----------
Total liabilities and equity $32,609 $33,696
=========== ===========
(b) Prior periods financial statements have been reclassified to
reflect the imaging and graphic communications business in
discontinued operations in 2005.
Alcoa and subsidiaries
Condensed Statement of Consolidated Cash Flows (unaudited)
(in millions)
Year ended
December 31
2004 (c) 2005
--------- ---------
CASH FROM OPERATIONS
Net income $ 1,310 $ 1,233
Adjustments to reconcile net income to cash from
operations:
Depreciation, depletion, and amortization 1,197 1,267
Change in deferred income taxes (95) (16)
Equity (income) loss, net of dividends (54) 35
Noncash restructuring and other charges (21) 339
Net gain on early retirement of debt and
interest rate swaps (58) -
Gains from investing activities - sale of assets (44) (406)
Provision for doubtful accounts 24 20
Loss (income) from discontinued operations 67 (2)
Minority interests 245 259
Accounting changes - 2
Other 80 5
Changes in assets and liabilities, excluding
effects of acquisitions and divestitures:
Increase in receivables (94) (483)
Increase in inventories (397) (526)
Increase in prepaid expenses and other current
assets (93) (3)
Increase in accounts payable and accrued
expenses 118 691
Increase (decrease) in taxes, including taxes on
income 113 (93)
Cash paid on early retirement of debt and
interest rate swaps (52) -
Cash paid on long-term aluminum supply contract - (93)
Pension contributions (101) (383)
Net change in noncurrent assets and liabilities (137) (169)
Net change in net assets held for sale 145 -
--------- ---------
CASH PROVIDED FROM CONTINUING OPERATIONS 2,153 1,677
CASH PROVIDED FROM (USED FOR) DISCONTINUED
OPERATIONS 46 (1)
--------- ---------
CASH FROM OPERATIONS 2,199 1,676
--------- ---------
FINANCING ACTIVITIES
Net changes to short-term borrowings 213 5
Common stock issued for stock compensation plans 83 72
Repurchase of common stock (67) (108)
Dividends paid to shareholders (524) (524)
Dividends paid to minority interests (119) (75)
Net change in commercial paper 630 282
Additions to long-term debt 180 278
Payments on long-term debt (1,921) (254)
--------- ---------
CASH USED FOR FINANCING ACTIVITIES (1,525) (324)
--------- ---------
INVESTING ACTIVITIES
Capital expenditures (1,143) (2,138)
Acquisition of AFL minority interest - (176)
Acquisitions, net of cash acquired (2) (262)
Proceeds from the sale of assets 392 505
Sale of investments - 1,081
Change in short-term investments and restricted
cash 30 (8)
Other (79) (37)
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (802) (1,035)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 9 (12)
--------- ---------
Net change in cash and cash equivalents (119) 305
Cash and cash equivalents at beginning of year 576 457
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 457 $ 762
========= =========
(c) Prior periods financial statements have been reclassified to
reflect the imaging and graphic communications business in
discontinued operations in 2005.
Alcoa and subsidiaries
Segment Information (unaudited) (a)
(in millions, except metric ton amounts and realized prices)
Consolidated Third-
Party Revenues: 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
------ ------- ------ ------ ------ ------ --------
Alumina $ 536 $ 1,975 $ 505 $ 533 $ 531 $ 561 $ 2,130
Primary Metals 1,039 3,806 1,089 1,124 1,204 1,281 4,698
Flat-Rolled
Products 1,502 5,962 1,655 1,763 1,679 1,739 6,836
Extruded and End
Products 976 3,974 1,037 1,153 1,092 1,022 4,304
Engineered
Solutions 1,159 4,603 1,241 1,286 1,246 1,275 5,048
Packaging and
Consumer (3) 764 2,923 708 827 806 798 3,139
----------------------------------------------------------------------
Total (1) $5,976 $23,243 $6,235 $6,686 $6,558 $6,676 $26,155
======================================================================
Consolidated
Intersegment
Revenues: 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
------ ------- ------ ------ ------ ------ --------
Alumina $ 390 $ 1,418 $ 393 $ 439 $ 424 $ 451 $ 1,707
Primary Metals 1,129 4,335 1,303 1,215 1,108 1,182 4,808
Flat-Rolled
Products 18 89 34 36 29 29 128
Extruded and End
Products 13 54 14 19 14 17 64
Engineered
Solutions - - - - - - -
Packaging and
Consumer - - - - - - -
----------------------------------------------------------------------
Total $1,550 $ 5,896 $1,744 $1,709 $1,575 $1,679 $ 6,707
======================================================================
Consolidated Third-
Party Shipments
(Kmt): 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
------ ------- ------ ------ ------ ------ --------
Alumina 2,213 8,062 1,923 1,951 2,017 1,966 7,857
Primary Metals 482 1,882 487 520 590 557 2,154
Flat-Rolled
Products 493 2,046 509 560 543 544 2,156
Extruded and End
Products 210 895 221 237 224 212 894
Engineered
Solutions 35 133 39 38 36 35 148
Packaging and
Consumer 46 164 34 46 31 40 151
----------------------------------------------------------------------
Total Aluminum 1,266 5,120 1,290 1,401 1,424 1,388 5,503
======================================================================
Alcoa's average
realized price-
Primary (mt) $1,942 $ 1,867 $2,042 $1,977 $1,963 $2,177 $ 2,044
======================================================================
After-Tax Operating
Income (ATOI): 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
------ ------- ------ ------ ------ ------ --------
Alumina $ 177 $ 632 $ 161 $ 182 $ 156 $ 183 $ 682
Primary Metals 198 808 225 187 168 242 822
Flat-Rolled
Products 59 246 75 70 81 62 288
Extruded and End
Products (2) (2) 73 10 20 23 (3) 50
Engineered
Solutions 41 211 59 60 32 45 196
Packaging and
Consumer 30 141 16 41 28 20 105
----------------------------------------------------------------------
Total $ 503 $ 2,111 $ 546 $ 560 $ 488 $ 549 $ 2,143
======================================================================
Reconciliation of
ATOI to
consolidated net
income (3): 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
------ ------- ------ ------ ------ ------ --------
Total ATOI $ 503 $ 2,111 $ 546 $ 560 $ 488 $ 549 $ 2,143
Impact of
intersegment
profit
adjustments 18 52 17 (16) (2) 38 37
Unallocated
amounts (net of
tax):
Interest income 6 26 7 9 12 14 42
Interest
expense (46) (176) (51) (56) (62) (51) (220)
Minority
interests (48) (245) (60) (60) (59) (80) (259)
Corporate
expense (78) (283) (69) (73) (82) (88) (312)
Restructuring
and other
charges (1) 23 (30) (172) (5) (19) (226)
Discontinued
operations (72) (67) (7) (6) (1) 16 2
Other (14) (131) (93) 274 - (155) 26
----------------------------------------------------------------------
Consolidated net
income $ 268 $ 1,310 $ 260 $ 460 $ 289 $ 224 $ 1,233
======================================================================
(a) Segment information for all prior periods has been reclassified to
reflect the change in segments due to a global realignment within
the company, effective January 2005.
(1) The difference between the segment total and consolidated
third-party revenues is in Corporate.
(2) The first quarter 2005 ATOI amount has been modified to correct a
tax adjustment that should have been reflected in Corporate.
(3) Prior periods segment information has been reclassified to reflect
the imaging and graphic communications business in discontinued
operations in 2005.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions)
Return on Capital
Trailing
Four Quarters
--------------------
Net Income $ 1,233
Minority Interest 259
Interest Expense 261
--------------------
(After taxes of 23%)
Numerator (Sum Total) $ 1,753
Russia Net Income Impact 69
--------------------
Adjusted Net Income $ 1,822
Average Balances (1)
Short Term Borrowings $ 1,112
Long Term Borrowings 5,312
Preferred Equity 55
Minority Interest 1,391
Common Equity 13,282
--------------------
Denominator (Sum Total) $21,152
--------------------
Capital projects in progress &
Russia Capital Base (1,913)
--------------------
Adjusted Capital Base $19,239
Return on Capital 9.5%
(1) Calculated as (December 2004 ending balance + December 2005 ending
balance) divided by 2.
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