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October 4, 2002

Cost Control, Strategic Acquisitions Highlight Alcoa Third Quarter

PITTSBURGH--(BUSINESS WIRE)--Oct. 4, 2002--Alcoa (NYSE:AA) today reported earnings for the 2002 third quarter of $216 million, or 26 cents per diluted share, excluding a special after-tax charge of $23 million, or three cents per share, principally related to the previously announced curtailment of production in the company's primary smelting operations. Including the special charge, net income was $193 million, or 23 cents per share, compared with net income of $232 million, or 27 cents per share, in the second quarter of 2002.

"Despite lower aluminum prices and idle capacity, our alumina and primary metals businesses performed well. These upstream businesses partially offset continued weakness in the aerospace, industrial gas turbine and telecommunications markets. We are looking beyond the challenging global economy, and are focused on managing those things that are in our control," said Chairman and CEO Alain Belda.

"In the short term, our restructuring activities and deployment of the Alcoa Business System (ABS) are helping to lessen the impact of continuing weak economic conditions. In the long term, they will position us to capture opportunities and efficiencies as conditions improve."

The three-month LME price for primary aluminum fell two cents a pound, or 3.5%, from the second quarter of 2002. Compared with the third quarter of 2001, the LME three-month average price declined three cents a pound, or 5.3%.

At the end of the 2002 third quarter, Alcoa had achieved $560 million in annualized cost savings and remains confident it will achieve its $1.0 billion 2003 goal. The run rate at the end of the third quarter was $140 million, compared with $123 million in the prior quarter.

In this quarter, Alcoa continued its strategic growth initiative on several fronts: completed purchase of Ivex Packaging, a specialty packaging company; announced acquisition of Fairchild Fasteners, a high-tech aerospace supplier; and increased its stake in Elkem to 46.2%. Ivex's operations are being integrated and its contribution to Alcoa's margins will begin in the fourth quarter. The company has already achieved $8 million of the anticipated $75 million in annual cost synergies as it integrates Ivex. These savings are in addition to the $1.0 billion 2003 cost savings goal.

Alcoa has approximately 438,000 metric tons (mt) of aluminum production idled on a base capacity of 3,948,000 mtpy.

Quarterly Analyst Meeting; Facility Tour

Alcoa's quarterly analyst meeting will be at 4:00 p.m. EDST on Monday, October 21, 2002. The meeting will be webcast via www.alcoa.com

On November 7 and 8, analysts and media will tour the Alcoa Technical Center. At that time, presentations will be posted on 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 to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) products, 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.

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.

Alcoa (NYSE:AA)

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

                                                 Nine months ended
                                                   September 30
                                                   ------------
                                                2002          2001
                                                ----          ----

Sales                                     $     15,450  $     17,678

Cost of goods sold                              12,405        13,548
Selling, general administrative 
 and other expenses                                823           922
Research and development expenses                  156           151
Provision for depreciation, 
 depletion and amortization                        820           939
Special items                                       39           212
Interest expense                                   253           293
Other income, net                                 (112)         (196)
                                          ------------- -------------
                                                14,384        15,869


   Income before taxes on income                 1,066         1,809
Provision for taxes on income                      320           579
                                          ------------- -------------
   Income from operations                          746         1,230

Less:  Minority interests' share                   137           180
                                          ------------- -------------

   Income before accounting change                 609         1,050

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

NET INCOME                                $        643  $      1,050
                                          ------------- -------------
                                          ------------- -------------
Earnings per common share:
  Basic (before cumulative effect)        $      0.72   $      1.22
  Basic (after cumulative effect)         $      0.76   $      1.22

  Diluted (before cumulative effect)      $      0.71   $      1.21
  Diluted (after cumulative effect)       $      0.75   $      1.21

Average number of shares used to compute:
  Basic earnings per common share          845,712,344   860,901,124
  Diluted earnings per common share        850,999,801   870,105,171

Common stock outstanding at the 
 end of the period                         844,244,257   849,839,940

Currency translation adjustments 
 included in net income                   $         (6) $          4

Shipments of aluminum products 
 (metric tons)                               3,913,000     3,824,000

Return on average shareholders' equity           7.9%         12.6%


The effects of adopting SFAS No. 142 on net income and diluted
earnings per share for the nine-month periods ended September 30, 2002
and 2001 follow.

                                  Net Income         Diluted EPS
                                  ----------         -----------
                                2002      2001      2002     2001
                                ----      ----      ----     ----
Net Income                     $  643    $1,050   $   .75 $    1.21
Less: cumulative effect
 income from accounting
 change for goodwill              (34)      -        (.04)     -
                               --------- -------- -------- --------
Income excluding cumulative
 effect                           609     1,050       .71      1.21
Add: goodwill amortization         -        128        -        .15
                               --------- -------- -------- --------
Income excluding cumulative
 effect in 2002 and goodwill
 amortization in 2001          $  609    $1,178   $   .71 $    1.36
                               --------- -------- -------- --------
                               --------- -------- -------- --------




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

                                               Third quarter ended
                                                  September 30
                                                  ------------
                                                2002          2001
                                                ----          ----

Sales                                     $      5,222  $      5,511

Cost of goods sold                               4,165         4,228
Selling, general administrative 
 and other expenses                                268           273
Research and development expenses                   53            47
Provision for depreciation, 
 depletion and amortization                        290           309
Special items                                       39            -
Interest expense                                    95            85
Other income, net                                  (23)            3
                                           ------------ ------------
                                                 4,887         4,945

   Income before taxes on income                   335           566
Provision for taxes on income                       93           175
                                           ------------ ------------
   Income from operations                          242           391

Less:  Minority interests' share                    49            52
                                           ------------ ------------

   Income before accounting change                 193           339

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

NET INCOME                                $        193  $        339
                                           ------------ ------------
                                           ------------ ------------

Earnings per common share:
   Basic (before cumulative effect)       $      0.23   $      0.40
   Basic (after cumulative effect)        $      0.23   $      0.40

   Diluted (before cumulative effect)     $      0.23   $      0.39
   Diluted (after cumulative effect)      $      0.23   $      0.39


Average number of shares used to compute:
   Basic earnings per common share         844,272,163   855,782,046
   Diluted earnings per common share       847,289,635   864,386,294

Currency translation adjustments 
 included in net income                   $         (6) $        (20)

Shipments of aluminum products 
 (metric tons)                               1,321,000     1,212,000


The effects of adopting SFAS No. 142 on net income and diluted
earnings per share for the three-month periods ended September 30,
2002 and 2001 follow.

                                 Net Income         Diluted EPS
                                 ----------         -----------
                               2002      2001     2002       2001
                               ----      ----     ----       ---- 
Net Income                     $193      $339     $   .23  $   .39
Less: cumulative effect
 income from accounting
 change for goodwill             -         -          -         -
                               --------- -------- -------- --------
Income excluding cumulative
 effect                         193       339         .23      .39
Add: goodwill amortization       -         41          -       .05
                               --------- -------- -------- --------
Income excluding cumulative
 effect in 2002 and goodwill
 amortization in 2001          $193      $380     $   .23  $   .44
                               --------- -------- -------- --------
                               --------- -------- -------- --------



Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)


                                              (unaudited)
                                               September     December
                                                   30           31
                                                  2002         2001
                                               -----------  ----------
ASSETS
Current assets:
Cash and cash equivalents                            $463        $512
Short-term investments                                 74          15
Receivables from customers, less allowances:
  $119 in 2002 and $129 in 2001                     2,662       2,577
Other receivables                                     259         288
Inventories                                         2,388       2,531
Deferred income taxes                                 382         410
Prepaid expenses and other current assets             538         459
                                               -----------  ----------
     Total current assets                           6,766       6,792

Properties, plants and equipment, at cost          23,000      22,536
Less: accumulated depreciation, depletion and
  amortization                                     10,787      10,554
                                               -----------  ----------
Net properties, plants and equipment               12,213      11,982
                                               -----------  ----------

Goodwill                                            6,314       5,733
Other assets                                        3,882       3,848
                                               -----------  ----------
     Total assets                                 $29,175     $28,355
                                               -----------  ----------
                                               -----------  ----------

LIABILITIES
Current liabilities:
Short-term borrowings                                 $98        $142
Accounts payable, trade                             1,591       1,630
Accrued compensation and retirement costs             860         889
Taxes, including taxes on income                      621         903
Other current liabilities                           1,146       1,336
Long-term debt due within one year                     96         103
                                               -----------  ----------
     Total current liabilities                      4,412       5,003
                                               -----------  ----------
Long-term debt, less amount due within one year     7,938       6,388
Accrued postretirement benefits                     2,408       2,513
Other noncurrent liabilities and deferred
 credits                                            1,817       1,968
Deferred income taxes                                 588         556
                                               -----------  ----------
     Total liabilities                             17,163      16,428
                                               -----------  ----------

MINORITY INTERESTS                                  1,284       1,313
                                               -----------  ----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock                                        55          56
Common stock                                          925         925
Additional capital                                  6,096       6,114
Retained earnings                                   7,651       7,517
Treasury stock, at cost                            (2,845)     (2,706)
Accumulated other comprehensive loss               (1,154)     (1,292)
                                               -----------  ----------
     Total shareholders' equity                    10,728      10,614
                                               -----------  ----------
     Total liabilities and equity                 $29,175     $28,355
                                               -----------  ----------
                                               -----------  ----------

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

Consolidated                                                          
 Third-Party   1Q01   2Q01   3Q01   4Q01   2001    1Q02   2Q02   3Q02
 Revenues                                                         
               -----  -----  -----  -----  -----   -----  -----  -----
Alumina and                                                           
 Chemicals       547    490    454    417  1,908    425    419    469 
Primary Metals   967    972    808    685  3,432    764    788    792 
Flat-Rolled                                                           
 Products      1,343  1,255  1,219  1,182  4,999  1,156  1,192  1,162 
Engineered                                                            
 Products      1,593  1,582  1,514  1,409  6,098  1,396  1,411  1,311 
Packaging and                                                         
 Consumer        646    701    671    702  2,720    624    678    757 
Other          1,080    991    845    786  3,702    618    757    731 
               -----  -----  -----  -----  -----   -----  -----  -----
Total          6,176  5,991  5,511  5,181 22,859  4,983  5,245  5,222 

Consolidated                                                          
 Intersegment  1Q01   2Q01   3Q01   4Q01   2001    1Q02   2Q02   3Q02
 Revenues                                                         
               -----  -----  -----  -----  -----   -----  -----  -----
Alumina and                                                           
 Chemicals       283    275    246    217  1,021    229    233    235 
Primary Metals   867    887    839    707  3,300    878  1,001    888 
Flat-Rolled                                                           
 Products         16     15     20     13     64     15     18     21 
Engineered                                                            
 Products          9      8      9      9     35      8     10      8 
Packaging and                                                         
 Consumer          0      0      0      0      0      0      0      0 
Other              0      0      0      0      0      0      0      0 
               -----  -----  -----  -----  -----   -----  -----  -----
Total          1,175  1,185  1,114    946  4,420  1,130  1,262  1,152 

Consolidated                                                          
 Third-Party   1Q01   2Q01   3Q01   4Q01   2001    1Q02   2Q02   3Q02
 Shipments                                                            
 (KMT's)                                                          
               -----  -----  -----  -----  -----   -----  -----  -----
Alumina and                                                           
 Chemicals     2,031  1,730  1,789  1,667  7,217  1,825  1,796  1,939 

Primary Metals   476    494    448    455  1,873    503    507    517 
Flat-Rolled                                                           
 Products        470    450    442    456  1,818    439    456    446 
Engineered                                                            
 Products        254    242    232    204    932    228    252    231 
Packaging and                                                         
 Consumer         42     41     33     27    143     31     31     47 
Other             78     65     57     28    228     58     87     80 
               -----  -----  -----  -----  -----   -----  -----  -----
Total Aluminum 1,320  1,292  1,212  1,170  4,994  1,259  1,333  1,321 

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

After-Tax                                                             
 Operating     1Q01   2Q01   3Q01   4Q01   2001    1Q02   2Q02   3Q02
 Income (1)                                                       
               -----  -----  -----  -----  -----   -----  -----  -----
Alumina and                                                           
 Chemicals       166    130    115     60    471     65     73     93 
Primary Metals   294    264    216    131    905    143    175    175 
Flat-Rolled                                                           
 Products         65     74     59     64    262     61     66     46 
Engineered                                                            
 Products         40     60     62     11    173     51     45     25 
Packaging and                                                         
 Consumer         43     47     47     48    185     28     55     51 
Other             50     45      4    (52)    47      7     19      8 
               -----  -----  -----  -----  -----   -----  -----  -----
Total            658    620    503    262  2,043    355    433    398 

Reconciliation                                                        
 of after-tax                                                         
 operating                                                            
 income (ATOI)                                                        
 to            1Q01   2Q01   3Q01   4Q01   2001    1Q02   2Q02   3Q02
 consolidated                                                         
 net income                                                       
               -----  -----  -----  -----  -----   -----  -----  -----

Total ATOI       658    620    503    262  2,043    355    433    398 
Impact of                                                             
 intersegment                                                         
 profit                                                               
 eliminations      4     (8)   (14)    (2)   (20)    (3)    (1)    (5)
Unallocated                                                           
 amounts (net                                                         
 of tax):                                                             
Interest                                                              
 income            8     12     10     10     40     10      9      7 
Interest                                                              
 expense         (75)   (61)   (55)   (51)  (242)   (49)   (54)   (62)
Minority                                                              
 interests       (96)   (32)   (52)   (28)  (208)   (41)   (47)   (49)
Corporate                                                             
 expense         (66)   (66)   (45)   (84)  (261)   (58)   (53)   (40)
Special items      -   (148)     -   (249)  (397)     -      -    (25)
Accounting                                                            
 change            -      -      -      -      -     34      -      - 
Other            (29)   (10)    (8)     -    (47)   (30)   (55)   (31)
               -----  -----  -----  -----  -----   -----  -----  -----
Consolidated                                                          
 net income      404    307    339   (142)   908    218    232    193 


(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 third quarter as follows: Primary $6,
Flat-Rolled Products ($2), Engineered Products $15, Packaging and
Consumer $4, and Other $7. $11 was recorded in corporate.