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July 8, 2002

Alcoa Announces 2002 Second Quarter Sequential Increases in Shipments, Revenues and Profits; Net Income of $232 Million or $.27 EPS

PITTSBURGH--(BUSINESS WIRE)--July 8, 2002--Alcoa Inc. today announced net income for the 2002 second quarter of $232 million, or 27 cents per diluted share. Revenues were up 5% over the previous quarter, the first sequential increase in six quarters.

"Despite essentially flat aluminum prices, we achieved higher profits driven by improving shipment levels, and on-going control of costs and operating expenses through continuing deployment of the Alcoa Business System," said Chairman and CEO Alain Belda. "If economic trends solidify, we should continue to see improving profitability over the second half of the year, even at current aluminum prices."

During the quarter, automotive, commercial transportation, and industrial products markets all showed strength, along with seasonal expansions in building and construction, and packaging and consumer markets. Those improvements more than offset continuing weakness in the aerospace and industrial gas turbine markets, where build rates have declined substantially since last year.

Alcoa earned $307 million, or 35 cents per diluted share, in the second quarter of 2001, and $218 million, or 26 cents per share, in the first quarter of 2002, according to Generally Accepted Accounting Principles ("GAAP".) In the previous quarter, a one-time gain for the change in accounting for goodwill boosted Alcoa's earnings by $34 million, or 4 cents per share, and a special charge for restructuring diluted GAAP earnings by $114 million or 13 cents per share in the second quarter of 2001.

Compared to the second quarter of 2001, price declines and the impact from idled capacity have dampened profitability, as the average three-month LME price for primary aluminum declined by 6 cents per pound, or 8.8%.

When the previously announced restart of the Intalco smelter is complete, Alcoa will have 540,000 metric tons (mt) of aluminum production idled on a base capacity of 4.1 million metric tons.

At the end of the 2002 second quarter, Alcoa had achieved $492 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 $123 million, compared with $109 million in the prior quarter.

Quarterly Analysts' Meeting

Alcoa's quarterly analysts' meeting and conference call will be at 4:00 p.m. EDT on Wednesday, July 17, 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 serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses as a single solution to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) aluminum foil, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 38 countries.

Alcoa Inc. (NYSE: AA)

Editor's Note: The Alcoa Business System 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 the risk that estimated cost savings from the Alcoa Business System will not be reflected in earnings and other risk factors summarized in Alcoa's 2001 10-K report and other SEC reports.

FINANCIAL REPORT
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)

                                                Second quarter ended
                                                      June 30
                                                      -------
                                                   2002        2001
                                                -------     -------
Sales                                           $ 5,245     $ 5,991

Cost of goods sold                                4,196       4,607
Selling, general administrative 
 and other expenses                                 277         326
Research and development expenses                    52          55
Provision for depreciation, depletion            
 and amortization                                   269         309
Special items                                         -         212
Interest expense                                     83          93
Other income, net                                   (34)       (107)
                                                -------     -------

                                                  4,843       5,495
                                                -------     -------

   Income before taxes on income                    402         496
Provision for taxes on income                       123         157
                                                -------     -------
   Income from operations                           279         339

Less:  Minority interests' share                     47          32
                                                -------     -------

   Income before accounting change                  232         307

Cumulative effect of accounting 
 change for goodwill                                  -           -
                                                -------     -------

NET INCOME                                      $   232       $ 307
                                                =======     =======
Earnings per common share:
   Basic (before cumulative effect)             $  0.27     $  0.36
   Basic (after cumulative effect)              $  0.27     $  0.36

   Diluted (before cumulative effect)           $  0.27     $  0.35
   Diluted (after cumulative effect)            $  0.27     $  0.35

Average number of shares used to compute:
   Basic earnings per common share         845,712,405  861,633,715
   Diluted earnings per common share       851,877,799  872,047,474

Currency translation adjustments
 included in net income                         $   (3)     $    14

Shipments of aluminum products 
 (metric tons)                                1,333,000   1,292,000



The effects of adopting SFAS No. 142 on net income and diluted
earnings per share for the three-month periods ended June 30, 2002 and
2001 follow.
                                Net Income             Diluted EPS
                            ------------------     ------------------
                              2002       2001        2002       2001
                            -------    -------     -------    -------
Net Income                  $   232    $   307     $   .27    $   .35
Less: cumulative effect
 income from accounting
 change for goodwill              -          -           -          -
                            -------    -------     -------    -------
Income excluding cumulative
 effect                         232        307         .27        .35
Add: goodwill amortization        -         43           -        .05
                            -------    -------     -------    -------
Income excluding cumulative
 effect in 2002 and
 goodwill amortization 
 in 2001                    $   232    $   350     $   .27    $   .40
                            =======    =======     =======    =======

Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)

                                                   Six months ended
                                                        June 30
                                                        ------- 
                                                    2002        2001
                                                 --------    --------

Sales                                            $ 10,228    $ 12,167

Cost of goods sold                                  8,240       9,320
Selling, general administrative 
 and other expenses                                   555         649
Research and development expenses                     103         104
Provision for depreciation, depletion              
 and amortization                                     530         630
Special items                                           -         212
Interest expense                                      158         208
Other income, net                                     (89)       (199)
                                                 --------    --------

                                                    9,497      10,924
                                                 --------    --------

   Income before taxes on income                      731       1,243
Provision for taxes on income                         227         404
                                                 --------    --------
   Income from operations                             504         839

Less:  Minority interests' share                       88         128
                                                 --------    --------

   Income before accounting change                    416         711

Cumulative effect of accounting 
 change for goodwill                                   34           -
                                                 --------    --------

NET INCOME                                        $   450       $ 711
                                                 ========    ========
Earnings per common share:
   Basic (before cumulative effect)               $  0.49    $   0.82
   Basic (after cumulative effect)                $  0.53    $   0.82

   Diluted (before cumulative effect)             $  0.49    $   0.81
   Diluted (after cumulative effect)              $  0.53    $   0.81

Average number of shares used to compute:
   Basic earnings per common share           846,351,690  863,462,208
   Diluted earnings per common share         852,870,259  873,156,282

Common stock outstanding at 
 the end of the period                       844,427,046  858,352,398

Currency translation adjustments
 included in net income                          $    (1)   $      24

Shipments of aluminum 
 products (metric tons)                         2,592,000   2,612,000

Return on average shareholders' equity                8.0%       13.1%


The effects of adopting SFAS No. 142 on net income and diluted
earnings per share for the six-month periods ended June 30, 2002 and
2001 follow.
                                 Net Income             Diluted EPS
                            -------------------     -----------------
                              2002        2001        2002      2001
                            -------     -------     -------   ------- 
Net Income                  $   450     $   711     $   .53   $   .81
Less: cumulative effect
 income from accounting
 change for goodwill            (34)          -        (.04)        -
                            -------     -------     -------   ------- 
Income excluding 
 cumulative effect              416         711         .49       .81
Add: goodwill amortization        -          87           -       .10
                            -------     -------     -------   ------- 
Income excluding cumulative
 effect in 2002 and
 goodwill amortization 
 in 2001                    $   416     $   798     $   .49   $   .91
                            =======     =======     =======   ======= 


Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
                                         (unaudited)
                                           June 30    December 31
                                            2002          2001
                                          -------       -------
ASSETS
Current assets:
Cash and cash equivalents                 $   413       $   512
Short-term investments                         38            15
Receivables from customers, 
 less allowances:
  $123 in 2002 and $129 in 2001             2,764         2,577
Other receivables                             427           288
Inventories                                 2,423         2,531
Deferred income taxes                         398           410
Prepaid expenses and 
 other current assets                         517           459
                                          -------       -------
     Total current assets                   6,980         6,792

Properties, plants and 
 equipment, at cost                        23,098        22,536
Less: accumulated depreciation, 
 depletion and amortization                10,900        10,554
                                          -------       -------
Net properties, plants and equipment       12,198        11,982
                                          -------       -------

Goodwill                                    5,927         5,733
Other assets                                3,792         3,848
                                          -------       -------
     Total assets                         $28,897       $28,355
                                          =======       =======

LIABILITIES
Current liabilities:
Short-term borrowings                     $    54       $   142
Accounts payable, trade                     1,729         1,630
Accrued compensation and retirement costs     821           889
Taxes, including taxes on income              867           903
Other current liabilities                   1,065         1,336
Long-term debt due within one year            133           103
                                          -------       -------
     Total current liabilities              4,669         5,003
Long-term debt, less amount 
 due within one year                        7,120         6,388
Accrued postretirement benefits             2,443         2,513
Other noncurrent liabilities 
 and deferred credits                       1,851         1,968
Deferred income taxes                         600           556
                                          -------       -------
     Total liabilities                     16,683        16,428
                                          -------       -------

MINORITY INTERESTS                          1,331         1,313
                                          -------       -------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock                                55            56
Common stock                                  925           925
Additional capital                          6,094         6,114
Retained earnings                           7,712         7,517
Treasury stock, at cost                    (2,838)       (2,706)
Accumulated other comprehensive loss       (1,065)       (1,292)
                                          -------       -------
     Total shareholders' equity            10,883        10,614
                                          -------       -------
     Total liabilities and equity         $28,897       $28,355
                                          =======       =======

Alcoa and subsidiaries
Segment Information (unaudited)
(in millions, except realized prices)

Consolidated         
Third-Party Revenues   1Q01   2Q01   3Q01   4Q01   2001   1Q02   2Q02
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   547    490    454    417  1,908    425    419
Primary Metals          967    972    808    685  3,432    764    788
Flat-Rolled Products  1,343  1,255  1,219  1,182  4,999  1,156  1,192
Engineered Products   1,593  1,582  1,514  1,409  6,098  1,396  1,411
Packaging and Consumer  646    701    671    702  2,720    624    678
Other                 1,080    991    845    786  3,702    618    757
                       ----   ----   ----   ----   ----   ----   ----
Total                 6,176  5,991  5,511  5,181 22,859  4,983  5,245

Consolidated Intersegment 
 Revenues              1Q01   2Q01   3Q01   4Q01   2001   1Q02   2Q02
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   283    275    246    217  1,021    229    233
Primary Metals          867    887    839    707  3,300    878  1,001
Flat-Rolled Products     16     15     20     13     64     15     18
Engineered Products       9      8      9      9     35      8     10
Packaging and Consumer    0      0      0      0      0      0      0
Other                     0      0      0      0      0      0      0
                       ----   ----   ----   ----   ----   ----   ----
Total                 1,175  1,185  1,114    946  4,420  1,130  1,262

Consolidated
Third-Party Shipments  
(KMT's)                1Q01   2Q01   3Q01   4Q01   2001   1Q02   2Q02
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals 2,031  1,730  1,789  1,667  7,217  1,825  1,796
Primary Metals          476    494    448    455  1,873    503    507
Flat-Rolled Products    470    450    442    456  1,818    439    456
Engineered Products     254    242    232    204    932    228    252
Packaging and Consumer   42     41     33     27    143     31     31
Other                    78     65     57     28    228     58     87
                       ----   ----   ----   ----   ----   ----   ----
Total Aluminum        1,320  1,292  1,212  1,170  4,994  1,259  1,333

Average realized 
 price - Primary       0.77   0.73   0.71   0.65   0.72   0.66   0.67

After-Tax Operating   
 Income (1)            1Q01   2Q01   3Q01   4Q01   2001   1Q02   2Q02
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   166    130    115     60    471     65     73
Primary Metals          294    264    216    131    905    143    175
Flat-Rolled Products     65     74     59     64    262     61     66
Engineered Products      40     60     62     11    173     51     45
Packaging and Consumer   43     47     47     48    185     28     55
Other                    50     45      4    (52)    47      7     19
                       ----   ----   ----   ----   ----   ----   ----
Total                   658    620    503    262  2,043    355    433

Reconciliation of
 after-tax operating
 income (ATOI) to
 consolidated net     
 income                1Q01   2Q01   3Q01   4Q01   2001   1Q02   2Q02
                       ----   ----   ----   ----   ----   ----   ----
Total ATOI              658    620    503    262  2,043    355    433
Impact of intersegment 
 profit eliminations      4     (8)   (14)    (2)   (20)    (3)    (1)
Unallocated amounts
 (net of tax):
Interest income           8     12     10     10     40     10      9
Interest expense        (75)   (61)   (55)   (51)  (242)   (49)   (54)
Minority interests      (96)   (32)   (52)   (28)  (208)   (41)   (47)
Corporate expense       (66)   (66)   (45)   (84)  (261)   (58)   (53)
Special items             -   (148)     -   (249)  (397)     -      -
Accounting change         -      -      -      -      -     34      -
Other                   (29)   (10)    (8)     -    (47)   (30)   (55)
                       ----   ----   ----   ----   ----   ----   ----
Consolidated net      
 income                 404    307    339   (142)   908    218    232

(1) Under the provisions of SFAS No. 142, effective January 1, 2002,
    goodwill is no longer amortized. This resulted in a positive
    impact to segment ATOI results in the 2002 second quarter as
    follows: Primary $6, Flat-Rolled Products ($1), Engineered
    Products $15, Packaging and Consumer $4, and Other $8. $11 was
    recorded in Corporate.