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PITTSBURGH--December 18, 2001--
Alcoa reaffirmed today that it will take a special charge for its
strategic restructuring, which will total approximately $225 million
after taxes in the fourth quarter of 2001. “By optimizing our
manufacturing system, Alcoa will emerge better equipped to meet customer
needs, while positioning for stronger profitability in 2002 and the
years ahead,” said Alain Belda, Chairman and CEO of Alcoa.
In this quarter, Alcoa will also incur costs of approximately $60
million before taxes, primarily as a result of persistently weak
economic conditions. A significant portion of those losses involves
Alcoa customers who have become insolvent and are not expected to meet
the full terms of their contracts, and other long-term contracts and
claims.
In addition, the financial impact associated with the power failure at
Alcoa’s Warrick, Indiana plant earlier this month will be approximately
$45 million before taxes. Those losses, for restarting the smelter and
procuring replacement power and metal, will be incurred over this
quarter and the next. That amount falls below Alcoa's insurance
deductibles, which rose dramatically this September. The company
expects that production capacity at Warrick will be fully restored by
the end of the second quarter. Warrick has nameplate capacity of
300,000 metric tons per year.
“The fourth quarter has proven to be extremely challenging as a result
of lower volumes, depressed metal prices, and overall weak downstream
markets,” said Mr. Belda. As a result, the company expects earnings per
diluted share to be approximately $.10 for the fourth quarter of 2001,
excluding the special $225 million after tax (approximately $0.26 per
share) restructuring charge.
“The strategic restructuring, coupled with efficiencies generated by the
Alcoa Business System, and our strong balance sheet will help the
company achieve future sustained savings and profitable growth,” said
Mr. Belda.
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.
Editorial Contact:
Jake Siewert
212-836-2733
Investor Relations:
Charles D. McLane Jr.
212-836-2674
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