Alcoa Better Positioned To Achieve Long-Term Cost Reduction and Return on Capital Goals, Despite Current Weak Demand and Depressed Prices
PITTSBURGH--Jan. 8, 2002--Alcoa today announced earnings for the 2001 fourth quarter of $99 million, or $0.11 per diluted share, excluding a special after tax charge of $241 million, or $0.28 per share for a strategic restructuring announced in November. Including the special charge, Alcoa had a net loss for the quarter of $142 million, or $0.17 per share. For the 2000 fourth quarter, net income was $392 million, or $0.45 per share.For the year 2001, earnings were $1.263 billion, or $1.46 per share, excluding special after tax charges of $355 million, or $0.41 cents per share. Including special charges, net income was $908 million, or $1.05 per share. For the year 2000 net income was $1.484 billion, or $1.80 per share.
"We are not satisfied with these results," said Alain Belda, Chairman and CEO. "We are confident that the restructuring of our primary and fabricating businesses, coupled with our continued focus on implementing the Alcoa Business System and our commitment to grow the company, will enable us to resume sustainable savings and profitable growth in 2002 and beyond."
Revenues for the 2001 fourth quarter were $5.2 billion, compared with $6.6 billion in the year ago quarter. For the full year 2001, revenues matched the 2000 record of $22.9 billion.
The fourth quarter 2001 special charge reflects work associated with Alcoa's previously announced strategic review aimed at optimizing and aligning the company's manufacturing system with customer needs, while positioning Alcoa for stronger profitability. The quarter also included net costs of $72 million, before tax, associated with customer bad debts and claims, net contract losses and settlements, and the power failure at the company's Warrick, Indiana smelter. The remainder of the loss for restarting the potlines at Warrick will be primarily incurred in the first quarter 2002.
Alcoa's cost reductions in the fourth quarter were affected by lower volumes associated with persistently weak markets, and restructuring activities in the company's fabricating businesses. The company has achieved $348 million in annual cost savings towards its 2003 target of $1 billion. The impact of the restructuring activities will begin to contribute to costs savings in the first quarter of 2002.
"Although the near term business climate remains challenging, we are confident that we will achieve the two key financial goals we established for 2003: $1 billion in cost savings and entering the top quintile of ROC performance for S&P Industrials," said Mr. Belda.
Quarterly Analysts Meeting
Alcoa's quarterly analysts' meeting and conference call will be at 4:00 p.m. EST on January 23, 2002. The meeting will be web cast via alcoa.com.
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina. It is active in all major aspects of the industry - technology, mining, refining, smelting, fabricating and recycling.
NYSE (AA)
Financial and operating data for Alcoa and its subsidiaries follow
Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements 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 the company's inability to achieve the level of cost savings or productivity improvements anticipated by management, including possible increases in the cost of doing business resulting from war or terrorist activities; and other risk factors summarized in Alcoa's SEC reports.
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions, except share and ton amounts)
(UNAUDITED)
Fourth quarter
--------------
For the period ended December 31 2001 2000
---- ----
Sales $ 5,181 $ 6,560
Cost of goods sold 4,309 5,014
Selling, general administrative
and other expenses 354 295
Research and development expenses 52 60
Provision for depreciation, depletion
and amortization 314 342
Special items 354 -
Interest expense 78 140
Other income, net (112) (15)
-------- --------
5,349 5,836
Income (loss) from operations before
taxes on income (168) 724
Benefit (provision) for taxes on income 54 (232)
-------- --------
Income (loss) from operations (114) 492
Less: Minority interests' share 28 100
-------- --------
Income (loss) before cumulative effect (142) 392
Cumulative effect of accounting
change for revenue recognition - -
-------- --------
NET INCOME (LOSS) $ (142) $ 392
Earnings (Loss) per common share:
Basic $ (0.17) $ 0.45
Diluted $ (0.17) $ 0.45
Average number of shares used to compute:
Basic earnings per common share 848,675,958 865,152,223
Diluted earnings per common share 854,997,916 872,352,602
Translation and exchange adjustments
included in net income $ (11) $ (4)
Shipments of aluminum
products (metric tons) 1,170,000 1,485,000
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions, except share and ton amounts)
(UNAUDITED)
Twelve months ended
-------------------
For the period ended December 31 2001 2000
---- ----
Sales $ 22,859 $ 22,936
Cost of goods sold 17,857 17,342
Selling, general administrative
and other expenses 1,276 1,108
Research and development expenses 203 194
Provision for depreciation, depletion
and amortization 1,253 1,207
Special items 566 -
Interest expense 371 427
Other income, net (308) (154)
-------- --------
21,218 20,124
Income from operations before
taxes on income 1,641 2,812
Provision for taxes on income (525) (942)
-------- --------
Income from operations 1,116 1,870
Less: Minority interests' share 208 381
-------- --------
Income before cumulative effect 908 1,489
Cumulative effect of accounting
change for revenue recognition - (5)
-------- --------
NET INCOME $ 908 $ 1,484
Earnings per common share:
Basic $ 1.06 $ 1.82
Diluted $ 1.05 $ 1.80
Average number of shares used to compute:
Basic earnings per common share 857,990,395 814,229,329
Diluted earnings per common share 866,561,053 823,172,824
Shares outstanding at the end of period 847,581,876 865,517,240
Translation and exchange adjustments
included in net income $ (2) $ (8)
Shipments of aluminum
products (metric tons) 4,994,000 5,398,000
Return on average shareholders' equity 8.3% 16.8%
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
December 31 December 31
ASSETS 2001 2000
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 512 $ 315
Short-term investments 15 56
Receivables from customers, less allowances:
$129 in 2001 and $69 in 2000 2,577 3,461
Other receivables 288 354
Inventories 2,531 2,703
Deferred income taxes 410 385
Prepaid expenses and other current assets 459 304
--------- ---------
Total current assets 6,792 7,578
Properties, plants and equipment, at cost 22,536 22,600
Less: accumulated depreciation, depletion
and amortization 10,554 9,750
--------- ---------
Net properties, plants and equipment 11,982 12,850
--------- ---------
Goodwill, net of accumulated amortization
of $524 in 2001 and $344 in 2000 5,733 6,003
Other assets, including assets held for sale 3,848 5,260
--------- ---------
Total assets $ 28,355 $ 31,691
========= =========
LIABILITIES
Current liabilities:
Short-term borrowings $ 142 $ 2,719
Accounts payable, trade 1,630 1,876
Accrued compensation and retirement costs 889 928
Taxes, including taxes on income 903 702
Other current liabilities 1,336 1,302
Long-term debt due within one year 225 427
--------- ---------
Total current liabilities 5,125 7,954
Long-term debt, less amount
due within one year 6,266 4,987
Accrued postretirement benefits 2,513 2,719
Other noncurrent liabilities
and deferred credits 1,968 2,126
Deferred income taxes 556 969
--------- ---------
Total liabilities 16,428 18,755
--------- ---------
MINORITY INTERESTS 1,313 1,514
--------- ---------
CONTINGENT LIABILITIES - -
SHAREHOLDERS' EQUITY
Preferred stock 56 56
Common stock 925 925
Additional capital 6,114 5,927
Retained earnings 7,517 7,127
Treasury stock, at cost (2,706) (1,717)
Accumulated other comprehensive loss (1,292) (896)
--------- ---------
Total shareholders' equity 10,614 11,422
--------- ---------
Total liabilities and equity $ 28,355 $ 31,691
========= =========
Consolidated Third-
Party Revenues 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001
---- ---- ---- ---- ---- ---- ----
Alumina and Chemicals 524 2,108 547 490 454 417 1,908
Primary Metals 1,244 3,756 967 972 808 685 3,432
Flat-Rolled Products 1,287 5,446 1,343 1,255 1,219 1,182 4,999
Engineered Products 1,536 5,471 1,593 1,582 1,514 1,409 6,098
Packaging and Consumer 726 2,084 646 701 671 702 2,720
Other 1,243 4,071 1,080 991 845 786 3,702
----- ----- ----- ----- ----- ----- -----
Total 6,560 22,936 6,176 5,991 5,511 5,181 22,859
Consolidated
Intersegment Revenues 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001
---- ---- ---- ---- ---- ---- ----
Alumina and Chemicals 286 1,104 283 275 246 217 1,021
Primary Metals 886 3,504 867 887 839 707 3,300
Flat-Rolled Products 26 97 16 15 20 13 64
Engineered Products 16 62 9 8 9 9 35
Packaging and Consumer 0 0 0 0 0 0 0
Other 0 0 0 0 0 0 0
----- ----- ----- ----- ----- ----- -----
Total 1,214 4,767 1,175 1,185 1,114 946 4,420
Consolidated Third-
Party Shipments
(KMT's) 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001
---- ---- ---- ---- ---- ---- ----
Alumina and Chemicals 1,945 7,472 2,031 1,730 1,789 1,667 7,217
Primary Metals 665 2,071 476 494 448 455 1,873
Flat-Rolled Products 457 1,960 470 450 442 456 1,818
Engineered Products 255 1,061 254 242 232 204 932
Packaging and Consumer 48 119 42 41 33 27 143
Other 60 187 78 65 57 28 228
----- ----- ----- ----- ----- ----- -----
Total Aluminum 1,485 5,398 1,320 1,292 1,212 1,170 4,994
Average realized price
-Primary 0.77 0.77 0.77 0.73 0.71 0.65 0.72
After-Tax Operating
Income 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001
---- ---- ---- ---- ---- ---- ----
Alumina and Chemicals 144 585 166 130 115 60 471
Primary Metals 294 1,000 294 264 216 131 905
Flat-Rolled Products 69 299 65 74 59 64 262
Engineered Products 46 210 40 60 62 11 173
Packaging and Consumer 41 131 43 47 47 48 185
Other 49 164 50 45 4 (52) 47
----- ----- ----- ----- ----- ----- -----
Total 643 2,389 658 620 503 262 2,043
Reconciliation of
after-tax operating
income to consolidated
net income 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001
---- ---- ---- ---- ---- ---- ----
Total after-tax
operating income 643 2,389 658 620 503 262 2,043
Impact of intersegment
profit eliminations 8 24 4 (8) (14) (2) (20)
Unallocated amounts
(net of tax):
Interest income 10 40 8 12 10 10 40
Interest expense (91) (278) (75) (61) (55) (51) (242)
Minority interests (100) (381) (96) (32) (52) (28) (208)
Corporate expense (54) (227) (66) (66) (45) (84) (261)
Special items - - - (148) - (249) (397)
Other (24) (83) (29) (10) (8) - (47)
----- ----- ----- ----- ----- ----- -----
Consolidated net income 392 1,484 404 307 339 (142) 908