Alcoa Announces Highest Quarterly Income and Revenue 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: --Second quarter 2006 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 $752 million, or $0.86 per share. --Results include negative impact of previously announced charges of $0.04 per share for labor contract and strike preparation. --Quarterly revenues of nearly $8 billion. --First-half 2006 net income of $1.35 billion was higher than full-year results for every year in Company's history except fiscal 2000. --Record ATOI ATOI ASCII to Integer ATOI After Tax Operating Income ATOI Average Time on Ice (hockey) 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, up 15 and 10 percent,
sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . --Engineered Solutions ATOI a record $100 million, up 64 percent from year ago quarter, and Flat Rolled Products ATOI up 20% sequentially. --Annualized ROC year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. stood at 15.4 percent. --Debt-to-capital ratio down slightly to 32.0 percent, within target range while making strategic investments in growth. Alcoa (NYSE:AA) today announced second quarter 2006 income from continuing operations of $752 million, or $0.86 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, the highest quarterly profit in the company's more than 115-year history. Income from continuing operations of $752 million, or $0.86, was 52 percent better than the $496 million, or $0.56, in the second quarter of 2005, and 22 percent higher than the $615 million, or $0.70, in the previous quarter. Net income for the quarter was a record $744 million, or $0.85, 62 percent higher than the $460 million, or $0.52, in the second quarter of 2005, and 22 percent higher than the $608 million, or $0.69, in the previous quarter. Included in the second quarter results are previously announced after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charges of $35 million, or $0.04 per share, associated with ratification The confirmation or adoption of an act that has already been performed. A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. of a U.S. labor contract and costs to prepare for a potential work stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." . For the first half of 2006, income from continuing operations was $1.37 billion, up 79 percent from last year's $764 million first-half results. First half 2006 net income of $1.35 billion was higher than the full-year results of all but one year in the company's history. Revenues for the quarter increased 10 percent sequentially to $7.96 billion, the highest quarterly sales in the company's history, as each of the company's six global business segments achieved higher volumes. Results were driven by higher LME See London Metal Exchange. LME See London Metal Exchange (LME). prices and strong market demand in the aerospace, building and construction, commercial vehicle and can sheet markets. Compared to the year-ago quarter, sales have grown 19 percent. "Alcoans have generated another record quarter - delivering today while we continue building for the future," 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. . "By creating solutions for our customers and continuously improving productivity, we have driven record top and bottom line performances. "We are consistently delivering returns well in excess of the cost of capital, generating cash to fund strategic growth projects, and keeping our balance sheet strong," added Belda. Balance Sheet and Growth Projects In the quarter, capital expenditures were $729 million, 64 percent of which was devoted to growth projects designed to capture opportunities in global aluminum consumption, which is expected to double by 2020. Year to date, the company's capital expenditures stand at $1.32 billion, primarily dedicated to growth projects such as the 341,000 mtpy mtpy Metric Tons Per Year Alcoa Fjardaal smelter 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 Mosjoen 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 in 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. , and the Pinjarra alumina refinery upgrade 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. . Cash from operations for the quarter was $699 million, a $912 million improvement from the previous quarter, and $315 million better than the second quarter of 2005. Days of working capital improved three days in the quarter compared to the second quarter of last year. Working capital dollars increased from the previous quarter due to the building of strategic inventories in the event of a work stoppage, higher prices, and continued strong markets. The debt-to-capital ratio declined slightly to 32.0 percent at the end of the quarter, within the Company's target range and while continuing capital investments in strategic growth projects around the world. During the quarter, Alcoa took several additional strides in its strategic growth program, including: the acquisition of a 70% stake in a brazing brazing, method of joining metal parts using nonferrous filler metals with high melting points such as copper, silver, and aluminum alloys. Brazing differs from soldering (see solder) by using a higher temperature; and unlike welding, the parts are not melted. sheet facility in Kunshan Kunshan (Simplified Chinese: 昆山; Hanyu Pinyin: Kūnshān , China to serve the automotive market; the signing of an MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. with Vinacomin for a possible bauxite bauxite (bôk`sīt, bŏk`–), mixture of hydrated aluminum oxides usually containing oxides of iron and silicon in varying quantities. and alumina refinery joint venture in the Dak Nong Province Dak Nong (in Vietnamese, Đăk/Ðắc Nông) is a Province of Vietnam. It is located in the country's central highlands. The provincial capital is Gia Nghia. of Vietnam Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos ; the opening of the Company's first plant in Bulgaria Bulgaria (bŭlgâr`ēə), Bulgarian Balgarija, officially Republic of Bulgaria, republic (2005 est. pop. 7,450,000), 42,823 sq mi (110,912 sq km), SE Europe, on the E Balkan Peninsula. to produce consumer packaging products; and a sales operation in South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. to serve the aluminum wheels market. During the quarter, the Company also announced its plan to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. its Home Exteriors business to free up resources to invest in strategic growth opportunities. The Company's year-to-date 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. return on capital (ROC) stood at 15.4 percent. Innovation/New Products and Sustainability Alcoa continued its leadership position in applying technologies to generate innovation on behalf of customers and the company. Examples this quarter included: an agreement with Nike Nike (nī`kē), in Greek religion and mythology, goddess of victory, daughter of Pallas and Styx. Often an attendant of Zeus or Athena, she also presided over all contests, athletic as well as military. to supply aluminum for two new lines of baseball baseball, bat-and-ball sport known as the national pastime of the United States. It derives its name from the four bases that form a diamond (the infield) around the pitcher's mound. bats globally; the introduction of Reynobond with Kevlar Kevlar Trademarked name of poly-para-phenylene terephthalamide, a nylonlike polymer first produced by Du Pont in 1971. Kevlar can be made into strong, tough, stiff, high-melting fibres, five times stronger per weight than steel; it is used in radial tires, heat- or , a new hurricane-resistant architectural panel system; and a new natural media filtration filtration: see sewerage; water supply. Filtration The separation of solid particles from a fluidsolids suspension of which they are a part by passage of most of the fluid through a septum or membrane that retains most of the solids system as a low-cost environmental control solution that saves the company millions. During the quarter, Alcoa continued its leadership position in sustainability. The company was recognized for its stewardship stewardship the occupation of being a steward or custodian. Referring to animals it implies the caring sort of relationship based on an acceptance of the need to include the rights of animals in overall plans to maintain financial viability. of rivers by the U.S. Hydropower hy·dro·pow·er n. Hydroelectric power. organization; and donated do·nate v. do·nat·ed, do·nat·ing, do·nates v.tr. To present as a gift to a fund or cause; contribute. v.intr. To make a contribution to a fund or cause. 20 Million ISK ISK In currencies, this is the abbreviation for the Iceland Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. (US$280,000) to help create national parks This is a list of national parks ordered by nation. Africa
Segment and Other Results 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 $278 million, up 15% over the previous quarter. Higher pricing was partially offset by the effect of a weaker dollar. Additionally, alumina production for the quarter was a record 3,746 thousand metric tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. (kmt), up by 44kmt from the previous quarter. Primary Metals - Segment ATOI was $489 million, up 10% over the prior quarter. The ATOI increase was driven by higher LME prices and premiums, partially offset by higher energy, a weaker dollar, and strike preparation costs. Third party realized metal prices increased $194 per ton, or 8%, to $2,728 per ton. Primary metal production for the quarter increased 15 kmt to 882 kmt, due to the completion of the Alumar, Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. expansion and partial return to service in 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. The Company purchased roughly 145 kmt of primary metal for internal use as part of its strategy to sell 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. Flat Rolled Products - ATOI for the segment was $79 million, up 20% over the prior quarter. Higher volumes in can sheet, aerospace, commercial transportation and common 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. distribution, coupled with lower natural gas prices, more than offset strike preparation and related costs. Engineered Solutions -- Segment ATOI rose $17 million 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 high of $100 million, 64% above the prior year quarter and 20% higher than the record performance delivered in the sequential One after the other in some consecutive order such as by name or number. quarter. Strong demand in the aerospace, commercial vehicle, and industrial markets, continued productivity gains and price increases led to the improved results. Packaging and Consumer -- Segment ATOI was $37 million, an increase of $29 million over the previous quarter. Higher volume due to seasonal strength, improved pricing, and productivity gains led to the improved results. Extruded and End Products -- ATOI improved $20 million from the prior quarter and all businesses achieved higher revenues including the soft alloy business which saw increased demand in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and
productivity advances. Global building and construction and hard alloy
extrusion businesses continued their strong performance and also
improved profitability.Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on July July: see month. 10th 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 closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 44 countries and has been named one of the top sustainable corporations in the world at the World Economic Forum in Davos Davos (dävôs`), town (1990 pop. 10,957), Grisons canton, E Switzerland, on the Landwasser River. It is a famous winter sports center and a health resort. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. . 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 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: (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 mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. impacts from rising energy and raw
materials costs, or other cost inflation; (d) Alcoa's inability to
achieve the level of cost savings, productivity improvements or earnings
or revenue growth anticipated by management; (e) Alcoa's inability
to complete its expansion projects and integration of acquired
facilities as planned and by targeted completion dates, including the
integration of its recently acquired Russian Russianassociated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. facilities; (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 December: see month. 31, 2005, Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2006 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
June 30 March 31 June 30
2005(a) 2006 2006
---- ---- ----
Sales $6,693 $7,244 $7,959
Cost of goods sold 5,408 5,459 5,967
Selling, general administrative,
and other expenses 348 369 368
Research and development expenses 47 48 51
Provision for depreciation,
depletion, and amortization 314 308 326
Restructuring and other charges 216 1 (9)
Interest expense 87 92 98
Other income, net (347) (35) (61)
------ ------ ------
Total costs and expenses 6,073 6,242 6,740
Income from continuing operations
before taxes on income 620 1,002 1,219
Provision for taxes on income 64 282 343
------ ------ ------
Income from continuing operations
before minority interests' share 556 720 876
Less: Minority interests' share 60 105 124
------ ------ ------
Income from continuing operations 496 615 752
Loss from discontinued operations (36) (7) (8)
------ ------ ------
NET INCOME $ 460 $ 608 $ 744
====== ====== ======
Earnings (loss) per common share:
Basic:
Income from continuing
operations $ .57 $ .71 $ .86
Loss from discontinued
operations (.04) (.01) (.01)
------ ------ ------
Net income $ .53 $ .70 $ .85
====== ====== ======
Diluted:
Income from continuing
operations $ .56 $ .70 $ .86
Loss from discontinued
operations (.04) (.01) (.01)
------ ------ ------
Net income $ .52 $ .69 $ .85
====== ====== ======
Average number of shares used to
compute:
Basic earnings per common
share 872,149,447 870,560,769 869,811,164
Diluted earnings per common
share 877,950,254 875,971,920 877,005,617
Shipments of aluminum products
(metric tons) 1,400,000 1,359,000 1,410,000
(a) Prior periods financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility in
discontinued operations in 2006.
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)
Six months ended
June 30 June 30
2005(a) 2006
------- ----
Sales $12,914 $15,203
Cost of goods sold 10,341 11,426
Selling, general administrative, and other
expenses 673 737
Research and development expenses 93 99
Provision for depreciation, depletion, and
amortization 626 634
Restructuring and other charges 261 (8)
Interest expense 165 190
Other income, net (383) (96)
------- -------
Total costs and expenses 11,776 12,982
Income from continuing operations before taxes
on income 1,138 2,221
Provision for taxes on income 254 625
------- -------
Income from continuing operations before
minority interests' share 884 1,596
Less: Minority interests' share 120 229
------- -------
Income from continuing operations 764 1,367
Loss from discontinued operations (44) (15)
------- -------
NET INCOME $ 720 $ 1,352
======= =======
Earnings (loss) per common share:
Basic:
Income from continuing operations $ .88 $ 1.57
Loss from discontinued operations (.05) (.02)
------- -------
Net income $ .83 $ 1.55
======= =======
Diluted:
Income from continuing operations $ .87 $ 1.56
Loss from discontinued operations (.05) (.02)
------- -------
Net income $ .82 $ 1.54
======= =======
Average number of shares used to compute:
Basic earnings per common share 871,817,999 870,195,464
Diluted earnings per common share 878,211,268 876,595,985
Common stock outstanding at the end of the
period 872,246,965 869,315,328
Shipments of aluminum products (metric tons) 2,689,000 2,769,000
(a) Prior periods financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility in
discontinued operations in 2006.
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)
December 31 June 30
2005(b) 2006
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 762 $ 453
Receivables from customers, less allowances:
$80 in 2005 and $85 in 2006 2,914 3,625
Other receivables 427 370
Inventories 3,446 4,087
Fair value of derivative contracts 520 345
Prepaid expenses and other current assets 713 989
------- -------
Total current assets 8,782 9,869
------- -------
Properties, plants and equipment, at cost 26,944 28,387
Less: accumulated depreciation, depletion and
amortization 13,787 14,352
------- -------
Net properties, plants and equipment 13,157 14,035
------- -------
Goodwill 6,249 6,296
Investments 1,370 1,411
Other assets 4,090 4,132
Assets held for sale 48 28
------- -------
Total assets $33,696 $35,771
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings $ 300 $ 361
Commercial paper 912 1,898
Accounts payable, trade 2,659 2,822
Accrued compensation and retirement costs 1,102 1,018
Taxes, including taxes on income 874 947
Other current liabilities 1,460 1,100
Long-term debt due within one year 58 62
------- -------
Total current liabilities 7,365 8,208
------- -------
Long-term debt, less amount due within one
year 5,279 5,158
Accrued pension benefits 1,500 1,464
Accrued postretirement benefits 2,105 2,111
Other noncurrent liabilities and deferred
credits 1,823 2,098
Deferred income taxes 875 833
Liabilities of operations held for sale 11 5
------- -------
Total liabilities 18,958 19,877
------- -------
MINORITY INTERESTS 1,365 1,474
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,720 5,807
Retained earnings 9,345 10,431
Treasury stock, at cost (1,899) (1,952)
Accumulated other comprehensive loss (773) (846)
------- -------
Total shareholders' equity 13,373 14,420
------- -------
Total liabilities and equity $33,696 $35,771
======= =======
(b) Prior periods financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility in
discontinued operations in 2006.
Alcoa and subsidiaries
Condensed Statement of Consolidated Cash Flows (unaudited)
(in millions)
Six months ended
June 30
2005(c) 2006
------- ----
CASH FROM OPERATIONS
Net income $ 720 $1,352
Adjustments to reconcile net income to cash from
operations:
Depreciation, depletion, and amortization 627 634
Deferred income taxes (102) (3)
Equity loss (income), net of dividends 64 (42)
Restructuring and other charges 261 (8)
Gains from investing activities-sale of assets (342) (8)
Provision for doubtful accounts 10 11
Loss from discontinued operations 44 15
Minority interests 120 229
Stock-based compensation 12 50
Other (59) (66)
Changes in assets and liabilities, excluding
effects of acquisitions and divestitures:
Increase in receivables (656) (525)
Increase in inventories (472) (559)
Increase in prepaid expenses and other current
assets (25) (130)
Increase (decrease) in accounts payable and
accrued expenses 89 (374)
Increase in taxes, including taxes on income 12 29
Cash paid on long-term aluminum supply contract (93) -
Pension contributions (46) (102)
Excess tax benefits from share-based payment
arrangements - (15)
Net change in noncurrent assets and liabilities (21) -
------ ------
CASH PROVIDED FROM CONTINUING OPERATIONS 143 488
CASH PROVIDED FROM (USED FOR) DISCONTINUED
OPERATIONS 2 (2)
------ ------
CASH FROM OPERATIONS 145 486
------ ------
FINANCING ACTIVITIES
Net changes to short-term borrowings (9) 54
Common stock issued for stock compensation plans 17 136
Repurchase of common stock - (210)
Dividends paid to shareholders (263) (262)
Dividends paid to minority interests (72) (200)
Net change in commercial paper 475 986
Additions to long-term debt 200 8
Payments on long-term debt (47) (27)
Excess tax benefits from share-based payment
arrangements - 15
Other - 40
------ ------
CASH PROVIDED FROM FINANCING ACTIVITIES 301 540
------ ------
INVESTING ACTIVITIES
Capital expenditures (829) (1,321)
Capital expenditures of discontinued operations (5) -
Acquisition of minority interests (176) (1)
Acquisitions, net of cash acquired (257) 8
Sale of investments 1,077 7
Change in short-term investments and restricted
cash (228) (21)
Additions to investments (10) (44)
Other (9) 20
------ ------
CASH USED FOR INVESTING ACTIVITIES (437) (1,352)
------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (9) 17
------ ------
Net change in cash and cash equivalents - (309)
Cash and cash equivalents at beginning of year 457 762
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 457 $ 453
====== ======
(c) Prior period financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility in
discontinued operations in 2006.
Alcoa and subsidiaries
Segment Information (unaudited)
(in millions, except metric ton amounts and realized prices)
1Q05 2Q05 3Q05 4Q05 2005 1Q06 2Q06
---- ---- ---- ---- ---- ---- ----
Alumina:
Third-party
shipments (Kmt) 1,923 1,951 2,017 1,966 7,857 2,023 2,108
Alumina production
(Kmt) 3,583 3,621 3,688 3,706 14,598 3,702 3,746
Third-party sales $505 $533 $531 $561 $2,130 $628 $713
Intersegment sales $393 $439 $424 $451 $1,707 $555 $515
ATOI $161 $182 $156 $183 $682 $242 $278
Depreciation,
depletion and
amortization $41 $43 $44 $44 $172 $43 $46
Income taxes $61 $66 $47 $72 $246 $93 $112
Equity (loss) income $(1) $- $- $1 $- $(1) $-
======================================================================
Primary Metals:
Third-party realized
price - aluminum $2,042 $1,977 $1,963 $2,177 $2,044 $2,534 $2,728
Third-party
shipments (Kmt) 487 520 590 557 2,154 488 508
Aluminum production
(Kmt) 851 899 904 900 3,554 867 882
Third-party sales $1,089 $1,124 $1,204 $1,281 $4,698 $1,408 $1,589
Intersegment sales $1,303 $1,215 $1,108 $1,182 $4,808 $1,521 $1,696
ATOI $225 $187 $168 $242 $822 $445 $489
Depreciation,
depletion and
amortization $90 $90 $93 $95 $368 $96 $102
Income taxes $92 $75 $50 $90 $307 $197 $209
Equity income (loss) $18 $(76) $20 $26 $(12) $20 $28
======================================================================
Flat-Rolled Products:
Third-party
shipments (Kmt) 509 560 543 544 2,156 562 579
Third-party sales $1,655 $1,763 $1,679 $1,739 $6,836 $1,940 $2,115
Intersegment sales $34 $36 $29 $29 $128 $49 $66
ATOI $75 $70 $81 $62 $288 $66 $79
Depreciation,
depletion and
amortization $52 $54 $57 $54 $217 $50 $57
Income taxes $24 $27 $30 $30 $111 $26 $25
Equity income (loss) $- $- $- $- $- $- $( 1)
======================================================================
Extruded and End
Products:
Third-party
shipments (Kmt) 221 237 224 212 894 232 241
Third-party sales $1,037 $1,153 $1,092 $1,022 $4,304 $1,170 $1,328
Intersegment sales $14 $19 $14 $17 $64 $23 $31
ATOI $10 $20 $23 $(3) $50 $- $20
Depreciation,
depletion and
amortization(1) $31 $32 $31 $32 $126 $30 $31
Income taxes $(2) $18 $10 $2 $28 $2 $9
======================================================================
Engineered Solutions:
Third-party
shipments (Kmt) 38 37 36 34 145 37 38
Third-party sales $1,237 $1,282 $1,242 $1,271 $5,032 $1,360 $1,405
ATOI $61 $61 $34 $47 $203 $83 $100
Depreciation,
depletion and
amortization $47 $45 $42 $42 $176 $40 $42
Income taxes $26 $30 $23 $10 $89 $37 $44
Equity income $1 $- $- $- $1 $- $-
======================================================================
Packaging and Consumer:
Third-party shipments
(Kmt) 34 46 31 40 151 40 44
Third-party sales $708 $827 $806 $798 $3,139 $749 $834
ATOI $16 $41 $28 $20 $105 $8 $37
Depreciation,
depletion and
amortization(1) $32 $31 $31 $32 $126 $31 $31
Income taxes $10 $18 $14 $8 $50 $5 $9
Equity income $1 $- $- $- $1 $- $-
======================================================================
(1) Segment depreciation, depletion and amortization has been adjusted
from the previously reported annual amounts to reflect the
movement of certain amounts to Corporate.
Alcoa and subsidiaries
Segment Information (unaudited), continued
Reconciliation of ATOI to
consolidated net income: 1Q05 2Q05 3Q05 4Q05 2005 1Q06 2Q06
---- ---- ---- ---- ---- ---- ----
Total ATOI $548 $561 $490 $551 $2,150 $844 $1,003
Impact of LIFO and
intersegment profit
adjustments(2) (2) (18) (23) (19) (62) 24 13
Unallocated amounts
(net of tax):
Interest income 7 9 12 14 42 11 10
Interest expense (51) (56) (62) (51) (220) (60) (63)
Minority interests (60) (60) (59) (80) (259) (105) (124)
Corporate expense (69) (73) (82) (88) (312) (89) (82)
Restructuring and
other charges (30) (144) (5) (18) (197) (1) 6
Discontinued
operations (8) (36) (3) 14 (33) (7) (8)
Other(2) (75) 277 21 (99) 124 (9) (11)
----------------------------------------------------------------------
Consolidated net income $260 $460 $289 $224 $1,233 $608 $744
======================================================================
Prior periods segment information has been reclassified to reflect
the movement of the Hawesville, KY automotive casting facility to
discontinued operations in 2006.
The difference between total segment third-party sales and
consolidated third-party sales is in Corporate.
(2) Prior periods Corporate LIFO expense has been reclassified from
"Other" to combine the total impact of inventory related items.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions)
Return on Capital,
Return on Capital Excluding Growth
Bloomberg(1) Annualized(2) Investments
------------ -------------
Net income $ 1,865 $ 2,704 Net income $ 1,865
Minority Minority
interests 368 458 interests 368
Interest expense 268 273 Interest expense 268
(after tax) ------- ------- (after tax) -------
Numerator (sum Numerator (sum
total) $ 2,501 $ 3,435 total) $ 2,501
Russia and Bohai
net loss 78
Adjusted net
income $ 2,579
Average Balances Average
Balances(1)
Short-term Short-term
borrowings $ 309 $ 331 borrowings $ 309
Short-term debt 55 60 Short-term debt 55
Commercial paper 1,501 1,405 Commercial paper 1,501
Long-term debt 5,335 5,219 Long-term debt 5,335
Preferred stock 55 55 Preferred stock 55
Minority Minority
interests 1,340 1,419 interests 1,340
Common equity(3) 13,834 13,842 Common equity(3) 13,834
------- ------- -------
Denominator (sum Denominator (sum
total) $22,429 $22,331 total) $22,429
------- ------- -------
Capital projects
in progress and
Russia and Bohai
capital base (2,330)
-------
Adjusted capital
base $20,099
Return on
capital,
excluding growth
Return on Capital 11.2% 15.4% investments 12.8%
Return on capital, excluding growth investments is a non-GAAP
financial measure. Management believes that this measure is meaningful
to investors because it provides greater insight with respect to the
underlying operating performance of the company's productive assets.
The company has significant growth investments underway in its
upstream and downstream businesses, as previously noted, with expected
completion dates over the next several years. As these investments
generally require a period of time before they are productive,
management believes that a return on capital measure excluding these
growth investments is more representative of current operating
performance.
(1) The Bloomberg Methodology calculates ROC based on trailing four
quarters. Average balances are calculated as (June 2005 ending
balance + June 2006 ending balance) divided by 2.
(2) The Annualized Methodology numerator amounts are calculated using
the first six months of 2006 balances and multiplying by 2.
Average balances are calculated as (June 2006 ending balance +
December 2005 ending balance) divided by 2.
(3) Calculated as total shareholders' equity, less preferred stock.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
Days of Working Capital
June 30 December 31 June 30
2005 2005 2006
Receivables from customers, less
allowances $3,195 $2,914 $3,625
Add: Inventories 3,462 3,446 4,087
Less: Accounts payable, trade 2,339 2,659 2,822
------ ------ ------
Working Capital $4,318 $3,701 $4,890
Sales 6,693 6,666 7,959
Days of Working Capital 58.7 51.1 55.9
Days of Working Capital = Working Capital divided by (Sales/number of
days in the quarter)
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