Alcoa Announces 2002 First Quarter Results
PITTSBURGH--April 5, 2002--Alcoa Inc. today announced net income for the 2002 first quarter of $218 million, or 26 cents per diluted share. Alcoa earned $404 million, or 46 cents per diluted share, in the 2001 first quarter.
Alcoa lost $142 million, or 17 cents per share, in the fourth quarter of 2001. Included in the fourth quarter is a special after tax charge of $241 million, or 28 cents per share, for a strategic restructuring in the company's manufacturing system.
``The near-term operating climate remains challenging, and we continue to focus on managing what is in our control,'' said Chairman and CEO Alain Belda. ``As demand for aluminum strengthens, we will capture the efficiencies generated by last year's strategic restructuring of our operations and the continued deployment of the Alcoa Business System (ABS).''
Net income for the 2002 first quarter includes income of $34 million, or 4 cents per share, from the cumulative effect of the change in accounting for goodwill required by the adoption of FASB 142. The income is primarily the result of the write-off of negative goodwill generated by acquiring assets below book value, demonstrating Alcoa's disciplined approach to acquisitions. In addition to this one-time adjustment, goodwill will no longer be amortized under the new accounting standard. This change had a positive impact of $44 million, or 5 cents per share, in the first quarter compared with the year ago quarter.
A restructuring at Elkem, the company's partner in Norway, and charges associated with the power failure at Alcoa's Warrick, Ind., smelter had negative one-time impacts on net income in the 2002 first quarter. The negative impacts were nearly offset by favorable non-operating gains. The net effect of these items was a charge of 1 cent per share in the quarter.
Comparing the first quarter of 2002 with the first quarter of 2001, the company stated that the average three-month LME price for primary aluminum declined by 7.5 cents per pound, or 11%. The company also stated that this quarter was negatively effected by a significant decline in year over year end market demand. The decline in both price and demand dampened the benefits derived from ongoing cost reduction efforts.
At the end of the 2002 first quarter, Alcoa had achieved $436 million in annualized cost savings and remains on target to achieve its $1.0 billion 2003 goal. The run rate at the end of the quarter was $109 million, compared with $87 million in the prior quarter. Capital expenditures were held to $238 million in the first quarter.
Alcoa continues to have 635,000 metric tons (mt) of aluminum production idled on a base capacity of 4.1 million mt.
Quarterly Analysts' Meeting
Alcoa's quarterly analysts' meeting and conference call will be at 4:00 p.m. EDT on Thursday, April 25, 2002. The meeting will be webcast via alcoa.com.
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry. Alcoa's aluminum products and components are used worldwide in aircraft, automobiles, beverage cans, buildings, chemicals, sports and recreation, and a wide variety of industrial and consumer applications, including such Alcoa consumer brands as Alcoa® wheels, Reynolds Wrap® aluminum foil, and Baco® household wraps. Among its related businesses are precision castings, vinyl siding, closures, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 38 countries.
Editor's Note: The Alcoa Business System is Alcoa's worldwide performance standard. It is an integrated set of systems, tools and language organized to encourage 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.
Certain statements relate to future events and expectations and as
such constitute forward-looking statements involving known and unknown
risks, uncertainties and other factors that may cause actual results,
performance or achievements of Alcoa to be different from those
expressed or implied in the forward-looking statements. Important
factors that could cause actual results to differ materially from
those in the forward-looking statements include other risk factors
summarized in Alcoa's SEC reports.
FINANCIAL REPORT
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)
First quarter ended
March 31
--------
2002 2001
---- ----
Sales $ 4,983 $ 6,176
Cost of goods sold 4,044 4,713
Selling, general administrative
and other expenses 278 323
Research and development expenses 51 49
Provision for depreciation,
depletion and amortization 261 321
Interest expense 75 115
Other income, net (55) (92)
------------- -------------
4,654 5,429
Income before taxes on income 329 747
Provision for taxes on income 104 247
------------- -------------
Income from operations 225 500
Less: Minority interests' share 41 96
------------- -------------
Income before accounting change 184 404
Cumulative effect of accounting
change for goodwill 34 --
------------- -------------
NET INCOME $ 218 $ 404
============= =============
Earnings per common share:
Basic (before cumulative effect) $ 0.22 $ 0.47
Basic (after cumulative effect) $ 0.26 $ 0.47
Diluted (before cumulative effect) $ 0.22 $ 0.46
Diluted (after cumulative effect) $ 0.26 $ 0.46
Average number of shares used
to compute:
Basic earnings per common share 847,105,553 865,440,328
Diluted earnings per common share 854,151,135 874,197,629
Common stock outstanding
at the end of the period 846,809,997 864,060,712
Shipments of aluminum products
(metric tons) 1,259,000 1,320,000
Return on average shareholders' equity 7.2% 13.8%
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
March 31 December 31
2002 2001
ASSETS ------- -------
Current assets:
Cash and cash equivalents $ 569 $ 512
Short-term investments 48 15
Receivables from customers,
less allowances:
$115 in 2002 and $129 in 2001 2,659 2,577
Other receivables 251 288
Inventories 2,413 2,531
Deferred income taxes 404 410
Prepaid expenses and other
current assets 489 459
------- -------
Total current assets 6,833 6,792
Properties, plants and equipment,
at cost 22,739 22,536
Less: accumulated depreciation,
depletion and amortization 10,740 10,554
------- -------
Net properties, plants and equipment 11,999 11,982
------- -------
Goodwill 5,832 5,733
Other assets 3,748 3,848
------- -------
Total assets $28,412 $28,355
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings $ 78 $ 142
Accounts payable, trade 1,626 1,630
Accrued compensation and retirement
costs 784 889
Taxes, including taxes on income 876 903
Other current liabilities 1,304 1,336
Long-term debt due within one year 134 103
------- -------
Total current liabilities 4,802 5,003
Long-term debt, less amount due
within one year 6,825 6,388
Accrued postretirement benefits 2,482 2,513
Other noncurrent liabilities and
deferred credits 1,852 1,968
Deferred income taxes 575 556
------- -------
Total liabilities 16,536 16,428
------- -------
MINORITY INTERESTS 1,357 1,313
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock 56 56
Common stock 925 925
Additional capital 6,099 6,114
Retained earnings 7,480 7,517
Treasury stock, at cost (2,751) (2,706)
Accumulated other comprehensive loss (1,290) (1,292)
------- -------
Total shareholders' equity 10,519 10,614
------- -------
Total liabilities and equity $28,412 $28,355
======= =======
Consolidated
Third-Party
Revenues 1Q01 2Q01 3Q01 4Q01 2001 1Q02
---- ---- ---- ---- ---- ----
Alumina and
Chemicals 547 490 454 417 1,908 425
Primary Metals 967 972 808 685 3,432 764
Flat-Rolled
Products 1,343 1,255 1,219 1,182 4,999 1,156
Engineered
Products 1,593 1,582 1,514 1,409 6,098 1,396
Packaging and
Consumer 646 701 671 702 2,720 624
Other 1,080 991 845 786 3,702 618
------- ------ ------ ------ ------ ------
Total 6,176 5,991 5,511 5,181 22,859 4,983
Consolidated
Intersegment
Revenues 1Q01 2Q01 3Q01 4Q01 2001 1Q02
---- ---- ---- ---- ---- ----
Alumina and
Chemicals 283 275 246 217 1,021 229
Primary Metals 867 887 839 707 3,300 878
Flat-Rolled
Products 16 15 20 13 64 15
Engineered
Products 9 8 9 9 35 8
Packaging and
Consumer 0 0 0 0 0 0
Other 0 0 0 0 0 0
----- ----- ----- ----- ----- -----
Total 1,175 1,185 1,114 946 4,420 1,130
Consolidated
Third-Party
Shipments (KMT's) 1Q01 2Q01 3Q01 4Q01 2001 1Q02
---- ---- ---- ---- ---- ----
Alumina and
Chemicals 2,031 1,730 1,789 1,667 7,217 1,825
Primary Metals 476 494 448 455 1,873 503
Flat-Rolled
Products 470 450 442 456 1,818 439
Engineered
Products 254 242 232 204 932 228
Packaging and
Consumer 42 41 33 27 143 31
Other 78 65 57 28 228 58
----- ----- ----- ----- ----- -----
Total Aluminum 1,320 1,292 1,212 1,170 4,994 1,259
Average realized
price
-Primary 0.77 0.73 0.71 0.65 0.72 0.66
After-Tax
Operating Income 1Q01 2Q01 3Q01 4Q01 2001 1Q02(1)
---- ---- ---- ---- ---- ----
Alumina and
Chemicals 166 130 115 60 471 65
Primary Metals 294 264 216 131 905 143
Flat-Rolled
Products 65 74 59 64 262 61
Engineered
Products 40 60 62 11 173 51
Packaging and
Consumer 43 47 47 48 185 28
Other 50 45 4 (52) 47 7
----- ----- ----- ----- ----- -----
Total 658 620 503 262 2,043 355
Reconciliation of
after-tax operating
income to consolidated
net income 1Q01 2Q01 3Q01 4Q01 2001 1Q02
---- ---- ---- ---- ---- ----
Total after-tax
operating
income 658 620 503 262 2,043 355
Impact of
intersegment profit
eliminations 4 (8) (14) (2) (20) (3)
Unallocated
amounts (net
of tax):
Interest income 8 12 10 10 40 10
Interest expense (75) (61) (55) (51) (242) (49)
Minority interests (96) (32) (52) (28) (208) (41)
Corporate expense (66) (66) (45) (84) (261) (58)
Special items -- (148) -- (249) (397) --
Accounting change -- -- -- -- -- 34
Other (29) (10) (8) -- (47) (30)
------ ------ ------ ------ ------ ------
Consolidated
net income 404 307 339 (142) 908 218
(1) Under the provisions of SFAS No. 142, goodwill is no longer
amortized. This resulted in a positive impact to segment ATOI results
as follows: Primary $5, Flat-Rolled Products ($1), Engineered
Products $15, Packaging and Consumer $4, and Other $10.