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Alcoa Adopts Brazilian Real as Functional Currency for Alcoa Aluminio
PITTSBURGH--July 9, 1999--
Alcoa announced that, effective July 1, 1999, the company has adopted
the Brazilian Real as the functional currency for translating the
financial statements of Alcoa Aluminio, a 59% owned subsidiary.
Functional currency is the currency of the principal economic
environment in which a company operates and maintains its records.
In announcing the change, Richard B. Kelson, Alcoa executive vice
president and chief financial officer, said, "This change is required
under the guidelines in Financial Accounting Standard No. 52 regarding
Foreign Currency Translation as a consequence of changes in the economic
fundamentals prevalent in Brazil as well as an increase in the
percentage of Aluminio's costs and product sales that are Real-based."
Mr. Kelson added, "Alcoa evaluates each of its investments based on
their performance. Changing Aluminio's functional currency will allow us
to better manage and analyze its business based on the macro-economic
fundamentals in Aluminio's operating environment."
The change in Aluminio's functional currency is not expected to have a
material impact on Alcoa's future earnings. Adopting the Real reduces
Alcoa's consolidated shareholders' equity by $156 million, and minority
interests by $108 million on the company's balance sheet. A reduction in
the value of Aluminio's fixed assets offsets the majority of these
Alcoa Aluminio, headquartered in São Paulo, Brazil, produces primary
aluminum, fabricated aluminum and packaging products for a variety of
internal and external customers worldwide.
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. The company has 215
operating locations in 31 countries.
Editor's Note: The statements in this press release that are not
historical facts are forward-looking statements that involve risks and
uncertainties. Among other factors that could cause actual results to
differ materially from the forward-looking statements are: (1) changes
in Brazil's economic policies and political environment; (2) a general
decline in Brazil's economy and the economies of countries that have an
impact on the international price of aluminum; (3) other changes in the
aluminum industry or in the demand for aluminum products; and (4) other
risks and uncertainties, including those detailed from time to time in
Alcoa's latest quarterly and annual reports filed with the Securities
and Exchange Commission.