Alcoa's Earnings Surge 24% Year-to-Year, Exceed $1 Billion for the First Time
11 January 2000
Alcoa's Earnings Surge 24% Year-to-Year, Exceed $1 Billion for the First Time
PITTSBURGH--Jan. 10, 2000--Alcoa announced today that for the first time in its 110-year history, the company had over a billion-dollars in earnings for the year.For the year 1999, Alcoa's net income was $1.054 billion, or $2.82 per diluted share, up 24% from $853 million, or $2.42 per share for 1998.
"Alcoa's excellent performance in 1999 reflects the growing success of Alcoans worldwide in aligning our processes and systems with the Alcoa Business System," said CEO Alain Belda. "Our processes are more efficient, with improved cycle time, less waste, and reduced inventories as we strive to produce what the customer wants, when it's wanted."
Fourth Quarter Year
1999 1998 %Change 1999 1998 %Change
Revenues $4,253.1 $4,198.8 1% $16,322.8 $15,339.8 6%
Net Income 333.9 218.3 53 1,054.1 853.0 24
Earnings
per share $.89 $.59 51 $2.82 $2.42 17
Debt as a % of
Invested Capital 28.3% 31.7% (11)
(dollars in millions, except for share amounts)
Net income for the 1999 fourth quarter was $333.9 million, or 89 cents per diluted share, up 53% from $218.3 million, or 59 cents per share, for the 1998 fourth quarter.
Revenues for the 1999 fourth quarter were $4.3 billion, compared with $4.2 billion in the year ago quarter. For the full year 1999, revenues were a record $16.3 billion, compared with $15.3 billion for 1998.
"We continued to make progress on our $1.1 billion cost-reduction initiative," noted CEO Belda. At the end of 1999, the company had achieved $728 million in annualized cost savings towards its $1.1 billion target. Announced in mid-1998, this aggressive target is to be achieved by January 1, 2001. The quarterly run rate at the end of the 1999 fourth quarter was $182 million, compared with $159 million for the 1999 third quarter.
Results for the 1999 fourth quarter were affected positively by $31 million, or 8 cents per share, related to LIFO inventory reductions which are tangible results coming from the Alcoa Production System, and a decrease in Alcoa's effective tax rate from 32% to 29.9% for the year as a result of a decrease in the Australian income tax rate. The quarter was affected negatively by an uptick in administrative costs which is substantially attributable to higher acquisition expenses and incentive accruals for exceptional performance.
Return on shareholders' equity was 17.2% for 1999 and 16.3% for 1998.
Founded in 1888, Alcoa is the world's leading producer of aluminum and alumina and a major participant in all segments of the industry: mining, refining, smelting, fabricating and recycling. Alcoa serves customers worldwide in the packaging, automotive, aerospace, construction and other markets with a great variety of fabricated and finished products. The company has 250 operating locations in 31 countries.
Alcoa Inc.
Financial and operating data for Alcoa and its subsidiaries follow.
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Fourth quarter
For the period ended December 31 1999 1998
Sales $4,253.1 $4,198.8
Other income 45.9 55.4
4,299.0 4,254.2
Cost of goods sold 3,147.8 3,262.8
Selling, general administrative
and other expenses 254.7 251.2
Research and development expenses 36.6 47.2
Provision for depreciation and depletion 224.4 238.3
Interest expense 42.0 57.9
3,705.5 3,857.4
Income from operations before
taxes on income 593.5 396.8
Provision for taxes on income 151.1 120.9
Income from operations 442.4 275.9
Less: Minority interests' share (108.5) (57.6)
NET INCOME $333.9 $218.3
Earnings per common share:
Basic $0.91 $0.59
Diluted $0.89 $0.59
Average number of shares used to compute:
Basic earnings per common share 366,913,979 366,838,176
Diluted earnings per common share 375,375,259 369,341,168
Translation and exchange adjustments included
in net income $2.8 $(3.8)
Shipments of aluminum products
(metric tons) 1,129,000 1,174,000
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Twelve months
For the period ended December 31 1999 1998
Sales $16,322.8 $15,339.8
Other income 123.6 149.6
16,446.4 15,489.4
Cost of goods sold 12,535.5 11,933.4
Selling, general administrative and
other expenses 851.2 782.5
Research and development expenses 128.0 128.4
Provision for depreciation and depletion 887.6 842.4
Interest expense 195.2 197.9
14,597.5 13,884.6
Income from operations before taxes
on income 1,848.9 1,604.8
Provision for taxes on income 552.8 513.5
Income from operations 1,296.1 1,091.3
Less: Minority interests' share (242.0) (238.3)
Net Income $1,054.1 $853.0
Earnings per common share:
Basic $2.87 $2.44
Diluted $2.82 $2.42
Average number of shares used to compute:
Basic earnings per common share 366,944,365 349,113,644
Diluted earnings per common share 373,644,872 351,616,636
Shares outstanding at end of period 367,748,998 366,809,078
Translation and exchange adjustments included
in net income $(8.3) $(8.0)
Shipments of aluminum products
(metric tons) 4,478,000 3,951,000
ALCOA 4th QUARTER SUPPLEMENTAL INFORMATION
Consolidated
Revenues 4Q98 1Q99 2Q99 3Q99 4Q99 1999
Alumina and
chemicals 452.7 420.3 455.8 473.9 492.0 1,842.0
Primary metals 629.8 533.7 518.6 559.9 628.7 2,240.9
Flat-rolled
products 1,291.8 1,269.6 1,257.6 1,273.0 1,312.3 5,112.5
Engineered
products 978.8 942.3 939.3 917.1 929.6 3,728.5
Other 839.4 812.8 861.1 828.4 890.5 3,392.8
Total 4,192.5 3,978.7 4,032.4 4,052.3 4,253.1 16,316.5
Consolidated Shipments (KMT's)
Alumina and
chemicals 1,783 1,664 1,836 1,814 1,740 7,054
Primary metals 441 370 354 335 383 1,442
Flat-rolled
products 479 487 496 496 503 1,982
Engineered
products 240 258 249 249 233 989
Other 14 17 18 20 10 65
Total Aluminum 1,174 1,132 1,117 1,100 1,129 4,478
Average realized
price - Primary 0.64 0.63 0.64 0.71 0.72 0.673
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
December 31 December 31
ASSETS 1999 1998
----------- -----------
Current assets:
Cash and cash equivalents
(includes cash of $67.4 in
1999 and $131.1 in 1998) $ 236.9 $ 342.2
Short-term investments 76.8 39.4
Receivables from customers,
less allowances:
1999-$58.0; 1998-$61.4 2,199.5 2,163.2
Other receivables 164.6 171.0
Inventories 1,618.4 1,880.5
Deferred income taxes 232.9 198.0
Prepaid expenses and other
current assets 270.9 230.8
----------- -----------
Total current assets 4,800.0 5,025.1
----------- -----------
Properties, plants and
equipment, at cost 18,435.6 18,224.5
Less, accumulated depreciation,
depletion and Amortization 9,302.7 9,091.0
----------- -----------
Net properties, plants
and equipment 9,132.9 9,133.5
----------- -----------
Goodwill, net of accumulated
amortization of $220.5 in
1999 and $179.3 in 1998 1,328.4 1,414.1
Other assets 1,804.5 1,889.8
----------- -----------
Total assets $ 17,065.8 $ 17,462.5
----------- -----------
----------- -----------
LIABILITIES
Current liabilities:
Short-term borrowings $ 342.7 $ 431.0
Accounts payable, trade 1,218.9 1,044.3
Accrued compensation and
retirement costs 582.5 553.2
Taxes, including taxes on income 368.2 431.3
Other current liabilities 423.6 627.4
Long-term debt due within one year 67.4 181.1
----------- -----------
Total current liabilities 3,003.3 3,268.3
----------- -----------
Long-term debt, less amount
due within one year 2,656.9 2,877.0
Accrued postretirement benefits 1,720.2 1,840.1
Other noncurrent liabilities
and deferred credits 1,472.8 1,587.1
Deferred income taxes 437.0 358.1
----------- -----------
Total liabilities 9,290.2 9,930.6
----------- -----------
MINORITY INTERESTS 1,457.9 1,476.0
----------- -----------
CONTINGENT LIABILITIES -- --
SHAREHOLDERS' EQUITY
Preferred stock 55.8 55.8
Common stock 394.7 394.7
Additional capital 1,703.7 1,675.9
Retained earnings 6,061.4 5,305.1
Treasury stock, at cost (1,259.6) (1,028.7)
Accumulated other comprehensive
loss (638.3) (346.9)
----------- -----------
Total shareholders' equity 6,317.7 6,055.9
----------- -----------
Total liabilities and
shareholders' equity $ 17,065.8 $ 17,462.5
----------- -----------
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