Alcoa Fourth Quarter Income from Continuing Operations at $0.39; Up $486 Million from Year-Ago Quarter; Full-Year Up 117 Percent Over 2002.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 8, 2004 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: -- $340 million of 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 for the fourth quarter up from a loss of $146 million in the same quarter 2002 -- $1.034 billion, or $1.20 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, in income from continuing operations for the full year - up 117 percent over 2002 -- $1.2 billion of debt reduction in 2003 with the company's debt-to-capital ratio declining from 43.1 to 35.1 percent -- The company surpasses its goal of $1 billion in annual cost savings -- Every segment showed improved profitability over 2002 Alcoa (NYSE:AA) today reported fourth quarter income from continuing operations of $340 million, or $0.39 per diluted share, up 21 percent from the previous quarter's $282 million, $0.33 per share. The results were a substantial improvement over the loss from continuing operations of $146 million, $0.17 per share, in the fourth quarter of last year. Net income in the fourth quarter was $291 million, up 4 percent from $280 million in the third quarter of 2003, and significantly improved from a loss of $223 million in the fourth quarter of 2002. The difference between net income and income from continuing operations in the fourth quarter of 2003 is due primarily to an adjustment to the anticipated proceeds from the sale of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Both measures are recognized by Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . For the full year, income from continuing operations was $1.034 billion, $1.20 per diluted share, the highest in three years. Net income was $938 million, $1.08 per diluted share, a 123 percent improvement over 2002. "Over the year, we improved productivity, managed capital, and worked every lever lever, simple machine consisting of a bar supported at some stationary point along its length and used to overcome resistance at a second point by application of force at a third point. The stationary point of a lever is known as its fulcrum. in our control to offset cost increases for raw materials, energy, benefits, and the impact of a weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. dollar,"
said Alain Alain: see Chartier, Émile Auguste. Belda, 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. of Alcoa. "The result was
consistently improving profitability, a considerably stronger balance
sheet, and a company that is well positioned for future growth as world
markets continue to strengthen. That is what we promised last year, and
our team delivered."Market Overview For the full year, revenues increased 6 percent to $21.5 billion after integration of newly acquired packaging and fastener businesses. "As global demand for alumina alumina (əl  `mĭnə) or aluminum oxide, Al2O3, chemical compound with m.p. about 2,000°C; and sp. gr. about 4.0. and aluminum continues to increase,
we expect to realize the benefits of the improved market," said
Belda.In the fourth quarter of 2003, sales were $5.5 billion, increasing 9 percent over 2002 and 4 percent over the third quarter. Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , strong alumina shipments and higher aluminum prices overcame slightly lower volumes in markets that typically experience weakness in the fourth quarter: closures, can sheet, and building and construction. Solid Improvement of the Balance Sheet "Aggressive capital controls, management of working capital, and the initial benefits of a well-designed divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). plan helped us retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. more than $1.2 billion in debt over the year," said Belda. The company cut its debt-to-capital ratio in 2003 from 43.1 to 35.1 percent, an improvement of 370 basis points from the third quarter. In 2003, capital expenditures were $867 million, 32 percent below last year's level of $1.27 billion. The balance sheet will improve further in the first half of 2004 as the divestiture program outlined last January January: see month. is completed. To date, the company has shed shed rural building used for agricultural pursuits. shed hands miscellaneous workers in a shearing shed at shearing time, i.e. persons other than the shearers, wool classers. its Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of PET business and an equity interest in Latasa, a South American can producer. In the first quarter, the company expects to close on the sale of its specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. , automotive fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , and packaging equipment businesses. The total proceeds of the divestiture program should be in line with the company's earlier estimates -- $750 million to $1 billion. In addition, a strong return of 19.75 percent on the company's pension investments essentially offset the impact of a 50 basis point decline in discount rates. As a result, the company did not record a material charge for minimum pension liability to its balance sheet in 2003. Cost Savings and Management Actions In the fourth quarter, the company surpassed its three-year $1 billion cost savings goal, marking the second time in six years that the company has achieved more than $1 billion in sustainable savings. That intense focus on profitability was critical as the company faced considerably higher costs for energy, raw materials, and benefits, as well as the impact of a weaker dollar on manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. outside the U.S. this year. In the fourth quarter alone, those costs increased by more than $150 million before tax over the last quarter of 2002. Management actions that offset the higher costs included: -- Drove $12 million of new cost savings in the fourth quarter; -- Reduced the company's fourth-quarter effective tax rate to 21 percent by recognizing benefits from foreign net operating losses, offsetting higher taxes from the Latasa sale; -- Recognizing $105 million in pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gains from insurance settlements of a series of historical environmental matters in the U.S.; and -- Achieved higher gross margins of 20.3 percent in 2003, up from 19.8 in 2002. Together with higher metal prices, these management actions more than compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for higher costs in the quarter. The company will announce a new set of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. cost challenges at the 4th quarter analyst workshop on January 22, 2004. Positioning the Company for Future Growth Despite tight capital restraint RESTRAINT. Something which prevents us from doing what we would desire to do. 2. Restraint is lawful and unlawful. It is lawful when its object is to prevent the violation of the law, or the rights of others. , Alcoa continued to make long-term investments to improve its world-class world-class 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. position in alumina refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and 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 expand other high-growth businesses. Through 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), Alcoa's global alliance with Alumina Ltd., the company moved forward this year on its plan to add 1.1 million 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. of annual capacity at its 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) 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. , Suriname Suriname (s  rĭnäm`, –năm`), officially Republic of Suriname, republic (2005 est. pop. 438,000), 63,037 sq mi (163,266 sq km), NE South America, on the Atlantic Ocean. , and Western Australia Western Australia, state (1991 pop. 1,409,965), 975,920 sq mi (2,527,633 sq km), Australia, comprising the entire western part of the continent. It is bounded on the N, W, and S by the Indian Ocean. Perth is the capital. .Final approvals were granted for the company's new aluminum 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. , and the company signed an MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. for a stake in the low-cost Alba alba /al·ba/ (al´bah) [L.] white. al·ba n. See white matter. alba [L.] white. facility in Bahrain Bahrain or Bahrein (both: bärān`, bə–), officially Kingdom of Bahrain, constitutional monarchy and archipelago (2005 est. pop. 688,300), 266 sq mi (689 sq km), in the Persian Gulf. . The company scaled back higher-cost production at its smelters in Massena Massena (məsē`nə), village (1990 pop. 11,719), St. Lawrence co., extreme N N.Y., on the St. Lawrence River; settled 1792, inc. 1886. Aluminum and aluminum products are the chief manufactures. Two locks and two dams of the St. and Intalco, where higher energy costs had made the plants less competitive. Providing Solutions to Customers Through disciplined 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, Alcoa intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: its focus on its customers in 2003. The company's Market Sector Lead Teams developed a more coordinated approach to customers in all of Alcoa's major markets. As a result, Alcoa was awarded significant new aerospace contracts, working with Airbus toward launch of its landmark A structure that has significant historical, architectural, or cultural meaning and that has been given legal protection from alteration and destruction. Although landmark preservation laws vary by city and state, they have the same basic purpose: to keep landmarks as close new A380; and continued its expansion of new products such as Dura-Bright(R) wheels for the commercial transportation market, new customized siding for the home construction market, and Reynolds Wrap(R) Release(R) non-stick non-stick non adj → qui n'attache pas non-stick non adj → kunststoffbeschichtet, Teflon-® non-stick adj foil for the consumer. In the automotive market, Alcoa collaborated with GM on its Cadillac Cadillac expensive automobile and status symbol. [Trademarks: Crowley Trade, 83] See : Luxury 16 concept car, with Ford on its new F-150 truck and Jaguar XJ The Jaguar XJ is a luxury saloon sold under the British Jaguar luxury marque. The XJ was launched in 1968 and has served as the Jaguar flagship model for most of its production span which continues through to today. , with Toyota Toyota (toi-ō`tə, Jap. tōyō`tä), city (1990 pop. 332,336), Aichi prefecture, central Honshu, Japan. It is a major industrial center dominated by the Toyota Motor Company, which produces passenger vehicles and auto parts there. on a lightweight Use in English The word lightweight is conserderd one of the most insulting words in the English language. Is is the only word in the English language is every part of speech at the same time. One lightweight of note is Jason. engine cradle for the Lexus RX The Lexus RX is a mid-size entry-level luxury crossover SUV produced by Toyota Motor Corporation. It is the world's first mid-size crossover SUV. In North America, Europe, Oceania, and parts of Asia, including Singapore as a 2003 introduction and Japan as a 2008 introduction, it is 330, with Ferrari Ferrari S.p.A. is an Italian sports car manufacturer based in Maranello and Modena, Italy. Founded by Enzo Ferrari in 1929 as Scuderia Ferrari, the company sponsored drivers and manufactured race cars before moving into production of street legal vehicles in 1947 as Ferrari on the 612 Scaglietti, and with Audi on its second-generation sec·ond-gen·er·a·tion adj. 1. Of or relating to a person or persons whose parents are immigrants. 2. Of or relating to a person or persons whose parents are citizens by birth and whose grandparents are immigrants. 3. A8 sedan Sedan (sədäN`), town (1990 pop. 22,407), Ardennes dept., NE France, on the Meuse River. A noted textile center since the 16th cent., Sedan also has metal and brewing industries. The town became part of French crown lands in 1642. . The company also announced plans to create a single automotive customer center in Detroit Detroit, city, United States Detroit (dĭtroit`), city (1990 pop. 1,027,974), seat of Wayne co., SE Mich., on the Detroit River and between lakes St. Clair and Erie; inc. as a city 1815. . In the fourth quarter, Alcoa's AFL AFL: see American Federation of Labor and Congress of Industrial Organizations. Automotive group announced that it is working with Pacific Insights on a new contract to design and supply a hi-tech hi-tech adj. Variant of high-tech. hi-tech Adjective using sophisticated, esp. electronic, technology Adj. 1. component for new PACCAR PACCAR Pacific Car and Foundry Company (former railroad car manufacturer now parent corp of Peterbilt & Kenworth Truck) and Peterbilt Peterbilt Motors Company is a manufacturer of medium- and heavy-duty Class 6 through Class 8 trucks headquartered in Denton, Texas. The company is a subsidiary of PACCAR. Founded in 1939, Peterbilt operates manufacturing facilities in Madison, Tennessee (1969), Denton, Texas trucks. Alcoa Closure Systems International (CSI CSI Crime Scene Investigator CSI CompuServe, Inc. CSI Commodity Systems, Inc. CSI Commodity Systems Inc. (Boca Raton, FL) CSI Crime Scene Investigation (CBS TV show) CSI Christian Schools International ) business developed a new closure for the dairy dairy 1. a retail outlet for milk products. 2. the feeding and milking sheds on a dairy farm. 3. pertaining to or emanating from an animals or other thing concerned in the production of milk, e.g. dairy goat, dairy cleanser. market that is easy to open and offers improved tamper-proof capability. Quarterly Analyst Workshop Alcoa's quarterly analyst workshop will be at 4:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Thursday Thursday: see week. , January 22, 2004. The meeting will be web cast via alcoa.com. Call information and related information will be available at www.alcoa.com under "Invest." About Alcoa Alcoa is the world's leading producer 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, 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 120,000 employees in 41 countries. More information can be found at www.alcoa.com Alcoa Business System The Alcoa Business System is an integrated set of systems, tools and language organized to encourage unencumbered Unencumbered Property that is not subject to any creditor claims or liens. Notes: For example, if a house is owned free and clear (meaning the owner owes no mortgage to anyone), it is unencumbered. transfer of knowledge across businesses and borders. It focuses on serving customer demand by emphasizing the elimination of all waste and making what the customer wants, when the customer wants it. 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) the company's inability to complete or to complete in the anticipated timeframe pending divestitures, acquisitions or expansion projects or to realize the projected amount of proceeds from divestitures, (b) the company's inability to achieve the level of cost savings or productivity improvements anticipated by management, (c) unexpected changes in global economic, business, competitive, market and 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. factors, and (d) the other risk factors summarized in Alcoa's 2002 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. Report and other SEC reports.
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)
Quarter ended
December 31 December 31 September 30
2003 2002 (a) 2003 (a)
------------ ------------ ------------
Sales $ 5,532 $ 5,096 $ 5,335
Cost of goods sold 4,435 4,121 4,226
Selling, general
administrative and other
expenses 346 343 305
Research and development
expenses 47 59 47
Provision for depreciation,
depletion and amortization 312 297 295
Impairment of goodwill - 44 -
Special items (26) 386 1
Interest expense 71 97 75
Other income, net (139) (67) (42)
------------ ------------ ------------
5,046 5,280 4,907
Income (loss) from
continuing operations
before taxes on income 486 (184) 428
Provision (benefit) for
taxes on income 103 (36) 92
------------ ------------ ------------
Income (loss)from continuing
operations before minority
interests' share 383 (148) 336
Less: Minority interests'
share 43 (2) 54
------------ ------------ ------------
Income (loss) from
continuing operations 340 (146) 282
Loss from discontinued
operations (49) (77) (2)
Cumulative effect of
accounting change - - -
------------ ------------ ------------
NET INCOME (LOSS) $ 291 $ (223) $ 280
============ ============ ============
Earnings (loss) per common
share:
Basic:
Income (loss) from
continuing operations $ .39 $ (.17) $ .33
Loss from discontinued
operations (.06) (.09) -
Cumulative effect of
accounting change - - -
------------ ------------ ------------
Net income (loss) $ .33 $ (.26) $ .33
============ ============ ============
Diluted:
Income (loss) from
continuing operations $ .39 $ (.17) $ .33
Loss from discontinued
operations (.06) (.09) -
Cumulative effect of
accounting change - - -
------------ ------------ ------------
Net income (loss) $ .33 $ (.26) $ .33
============ ============ ============
Average number of shares
used to compute:
Basic earnings per common
share 866,243,592 844,456,673 855,477,116
Diluted earnings per
common share 871,969,592 844,456,673 859,375,461
Shipments of aluminum
products (metric tons) 1,320,000 1,325,000 1,262,000
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
2003 2002 (a)
---------------- ----------------
Sales $ 21,504 $ 20,351
Cost of goods sold 17,138 16,327
Selling, general administrative
and other expenses 1,295 1,157
Research and development expenses 194 214
Provision for depreciation,
depletion and amortization 1,194 1,111
Impairment of goodwill - 44
Special items (26) 425
Interest expense 314 350
Other income, net (274) (179)
---------------- ----------------
19,835 19,449
Income from continuing operations
before taxes on income 1,669 902
Provision for taxes on income 404 291
---------------- ----------------
Income from continuing operations
before minority interests' share 1,265 611
Less: Minority interests' share 231 135
---------------- ----------------
Income from continuing operations 1,034 476
Loss from discontinued operations (49) (90)
Cumulative effect of accounting
change (47) 34
---------------- ----------------
NET INCOME $ 938 $ 420
================ ================
Earnings (loss) per common share:
Basic:
Income from continuing
operations $ 1.21 $ .56
Loss from discontinued
operations (.06) (.11)
Cumulative effect of
accounting change (.06) .04
---------------- ----------------
Net income $ 1.09 $ .49
================ ================
Diluted:
Income from continuing
operations $ 1.20 $ .56
Loss from discontinued
operations (.06) (.11)
Cumulative effect of
accounting change (.06) .04
---------------- ----------------
Net income $ 1.08 $ .49
================ ================
Average number of shares used to
compute:
Basic earnings per common share 853,352,313 845,438,913
Diluted earnings per common
share 856,586,189 849,848,984
Common stock outstanding at the
end of the period 868,490,686 844,819,462
Shipments of aluminum products
(metric tons) 5,047,000 5,236,000
(a) Prior periods have been adjusted to reflect the reclassification
of certain businesses between discontinued operations and continuing
operations in the third and fourth quarters of 2003.
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)
December 31 December 31
2003 2002(b)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 576 $ 344
Receivables from customers, less allowances:
$105 in 2003 and $124 in 2002 2,521 2,361
Other receivables 350 171
Inventories 2,524 2,414
Deferred income taxes 267 469
Prepaid expenses and other current assets 502 506
---------- ----------
Total current assets 6,740 6,265
---------- ----------
Properties, plants and equipment, at cost 24,797 22,818
Less: accumulated depreciation,
depletion and amortization 12,240 10,708
---------- ----------
Net properties, plants and equipment 12,557 12,110
---------- ----------
Goodwill 6,549 6,379
Other assets 5,316 4,438
Assets held for sale 549 618
---------- ----------
Total assets $ 31,711 $ 29,810
========== ==========
LIABILITIES
Current liabilities:
Short-term borrowings $ 56 $ 39
Accounts payable, trade 1,976 1,621
Accrued compensation and retirement costs 948 936
Taxes, including taxes on income 703 814
Other current liabilities 878 966
Long-term debt due within one year 523 83
---------- ----------
Total current liabilities 5,084 4,459
---------- ----------
Long-term debt,
less amount due within one year 6,692 8,366
Accrued postretirement benefits 2,220 2,319
Other noncurrent liabilities
and deferred credits 3,389 2,867
Deferred income taxes 804 520
Liabilities of operations held for sale 107 59
---------- ----------
Total liabilities 18,296 18,590
---------- ----------
MINORITY INTERESTS 1,340 1,293
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,831 6,101
Retained earnings 7,850 7,428
Treasury stock, at cost (2,017) (2,828)
Accumulated other comprehensive loss (569) (1,754)
---------- ----------
Total shareholders' equity 12,075 9,927
---------- ----------
Total liabilities and equity $ 31,711 $ 29,810
========== ==========
(b) The prior period has been adjusted to reflect the reclassification
of certain businesses between discontinued operations and continuing
operations in the third and fourth quarters of 2003.
Alcoa and subsidiaries
Segment Information (unaudited)
(in millions, except realized prices)
Consolidated
Third-Party
Revenues: 4Q02 2002 1Q03 2Q03 3Q03 4Q03 2003
------- ------- ------- ------ ------ ------ -------
Alumina and
Chemicals 430 1,743 449 491 526 536 2,002
Primary Metals 830 3,174 732 805 816 876 3,229
Flat-Rolled
Products 1,130 4,640 1,152 1,200 1,176 1,287 4,815
Engineered
Products (c) 1,161 5,150 1,390 1,455 1,369 1,375 5,589
Packaging and
Consumer (c) 845 2,838 749 836 812 818 3,215
Other 700 2,806 668 710 636 640 2,654
----------------- ------- ------- ------- ------ ------ ------ -------
Total 5,096 20,351 5,140 5,497 5,335 5,532 21,504
================= ======= ======= ======= ====== ====== ====== =======
Consolidated
Intersegment
Revenues: 4Q02 2002 1Q03 2Q03 3Q03 4Q03 2003
------- ------- ------- ------ ------ ------ -------
Alumina and
Chemicals 258 955 240 248 258 275 1,021
Primary Metals 619 2,655 840 690 740 828 3,098
Flat-Rolled
Products 14 68 20 15 17 14 66
Engineered
Products 8 34 9 5 5 5 24
Packaging and
Consumer - - - - - - -
Other - - - - - - -
----------------- ------- ------- ------- ------ ------ ------ -------
Total 899 3,712 1,109 958 1,020 1,122 4,209
================= ======= ======= ======= ====== ====== ====== =======
Consolidated
Third-Party
Shipments
(KMT's): 4Q02 2002 1Q03 2Q03 3Q03 4Q03 2003
------- ------- ------- ------ ------ ------ -------
Alumina and
Chemicals 1,926 7,486 1,794 1,939 1,982 1,956 7,671
Primary Metals 546 2,073 453 495 488 516 1,952
Flat-Rolled
Products 433 1,774 434 453 450 482 1,819
Engineered
Products (c) 208 919 223 221 222 213 879
Packaging and
Consumer 55 162 36 42 40 49 167
Other 83 308 52 56 62 60 230
----------------- ------- ------- ------- ------ ------ ------ -------
Total
Aluminum 1,325 5,236 1,198 1,267 1,262 1,320 5,047
================= ======= ======= ======= ====== ====== ====== =======
Average realized
price - Primary 0.66 0.66 0.69 0.68 0.71 0.73 0.70
================= ======= ======= ======= ====== ====== ====== =======
After-Tax
Operating Income
(ATOI): 4Q02 2002 1Q03 2Q03 3Q03 4Q03 2003
------- ------- ------- ------ ------ ------ -------
Alumina and
Chemicals 84 315 91 89 113 122 415
Primary Metals 157 650 166 162 163 166 657
Flat-Rolled
Products 47 220 53 56 59 53 221
Engineered
Products (c) (30) 105 29 46 47 33 155
Packaging and
Consumer (c) 64 197 53 57 52 52 214
Other (43) (9) 9 17 8 17 51
----------------- ------- ------- ------- ------ ------ ------ -------
Total 279 1,478 401 427 442 443 1,713
================= ======= ======= ======= ====== ====== ====== =======
Reconciliation of
ATOI to
consolidated net
income: (c) 4Q02 2002 1Q03 2Q03 3Q03 4Q03 2003
------- ------- ------- ------ ------ ------ -------
Total ATOI 279 1,478 401 427 442 443 1,713
Impact of
intersegment
profit
eliminations 3 (6) 7 (4) 2 4 9
Unallocated
amounts
(net of tax):
Interest
income 5 31 5 6 7 6 24
Interest
expense (62) (227) (57) (52) (49) (46) (204)
Minority
interests 2 (135) (59) (75) (54) (43) (231)
Corporate
expense (83) (234) (57) (81) (65) (84) (287)
Special items (279) (304) 4 (2) (1) 25 26
Discontinued
operations (77) (90) 3 (1) (2) (49) (49)
Accounting
change - 34 (47) - - - (47)
Other (11) (127) (49) (2) - 35 (16)
----------------- ------- ------- ------- ------ ------ ------ -------
Consolidated
net income (223) 420 151 216 280 291 938
================= ======= ======= ======= ====== ====== ====== =======
(c) Prior periods have been adjusted to reflect the reclassification
of certain businesses between discontinued operations and
continuing operations in the third and fourth quarters of 2003.
SUPPLEMENTAL FINANCIAL INFORMATION
Alcoa and subsidiaries
Net Income and EPS Information (unaudited)
(in millions, except per-share amounts)
Net Income Diluted EPS
--------------------- ----------------------
4Q03 3Q03 4Q02 4Q03 3Q03 4Q02
----------------------------------------------- ----------------------
GAAP Net income (loss) $ 291 $ 280 $(223) $0.33 $0.33 $(0.26)
Discontinued operations
- operating loss 4 2 18 - - -
Discontinued operations
- loss on divestitures 45 - 59 - - -
----------------------------------------------------------------------
GAAP Income (loss) from
continuing operations $ 340 $ 282 $(146) $0.39 $0.33 $(0.17)
----------------------------------------------------------------------
Special items (2):
Restructurings (4) 1 95 - - -
(Gain)loss on
divestitures (21) - 161 - - -
Goodwill impairment - - 20 - - -
----------------------------------------------------------------------
Income from continuing
operations excluding
charges for
restructurings
and divestitures and
goodwill impairment (1) $ 315 $ 283 $ 130 $0.36 $0.33 $0.16
======================================================================
Average diluted
shares outstanding 872 859 844
Net Income Diluted EPS
--------------------- ----------------------
2003 2002 2003 2002
----------------------------------------------- ----------------------
GAAP Net income $ 938 $ 420 $1.08 $0.49
Cumulative effect of
accounting change 47 (34) - -
Discontinued operations
- operating loss 4 31 - -
Discontinued operations
- loss on divestitures 45 59 - -
----------------------------------------------------------------------
GAAP Income from
continuing operations $1,034 $ 476 $1.20 $0.56
----------------------------------------------------------------------
Special items (2):
Restructurings (4) 118 - -
(Gain)loss on divestitures (21) 161 - -
Goodwill impairment - 20 - -
----------------------------------------------------------------------
Income from continuing
operations excluding
charges for
restructurings
and divestitures and
goodwill impairment (1) $1,009 $ 775 $1.17 $0.91
======================================================================
Average diluted shares
outstanding 857 850
(1) Alcoa believes that income from continuing operations excluding
charges for restructurings and divestitures and goodwill impairment is
a measure that should be presented in addition to income from
continuing operations determined in accordance with GAAP. The
following matters should be considered when evaluating this non-GAAP
financial measure:
-- Alcoa reviews the operating results of its businesses
excluding the impacts of restructurings and divestitures and
goodwill impairment. Excluding the impacts of these charges
can provide an additional basis of comparison. Management
believes that these charges are unusual in nature, and would
not be indicative of ongoing operating results. As a result,
management believes these charges should be considered in
order to compare past, current, and future periods.
-- The economic impacts of the restructuring and divestiture
charges are described in the footnotes to Alcoa's financial
statements. Generally speaking, charges associated with
restructurings include cash and non-cash charges and are the
result of employee layoff, plant consolidation of assets, or
plant closure costs. These actions are taken in order to
achieve a lower cost base for future operating results.
-- Charges associated with divestitures principally represent
adjustments to the carrying value of certain assets and
liabilities and do not typically require a cash payment. These
actions are taken primarily for strategic reasons as the
company has decided not to participate in this portion of the
portfolio of businesses.
-- Alcoa's growth over the last five years, and the onset of the
manufacturing recession led to the aforementioned charges in
2001 and 2002. Before the start of the recent manufacturing
recession, Alcoa last recorded charges associated with
restructuring and divestitures in 1997.
-- Restructuring and divestiture charges are typically material
and are considered to be outside the normal operations of a
business. Corporate management is responsible for making
decisions about restructurings and divestitures.
-- There can be no assurance that additional restructurings and
divestitures and goodwill impairment will not occur in future
periods. To compensate for this limitation, management
believes that it is appropriate to consider both income from
continuing operations determined under GAAP as well as income
from continuing operations excluding restructuring and
divestiture charges and goodwill impairment.
(2) Special items totaled $26 of income for the fourth quarter and
full year of 2003 before taxes and minority interests. The amount
principally represents net gains from assets held for sale including
the reversal of previously established reserves for businesses that
Alcoa decided to retain, and a realized gain on the sale of a
business, partially offset by adjustments to estimated proceeds for
ongoing sale activities. After taxes and minority interests, special
items amounted to income of $25 in the fourth quarter and full year of
2003.
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