Alcoa and subsidiaries Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share, and metric ton amounts)
Quarter ended
March 31 March 31 December 31
2004 2003 2003
------------ ------------ ------------
Sales $5,696 $5,140 $5,532
Cost of goods sold 4,438 4,098 4,435
Selling, general administrative,
and other expenses 344 297 346
Research and development expenses 45 50 47
Provision for depreciation,
depletion, and amortization 303 285 312
Restructuring and other charges (31) (4) (26)
Interest expense 64 88 71
Other income, net (22) (36) (139)
------------ ------------ ------------
5,141 4,778 5,046
Income from continuing operations
before taxes on income 555 362 486
Provision for taxes on income 155 108 103
------------ ------------ ------------
Income from continuing
operations before minority
interests' share 400 254 383
Less: Minority interests' share 50 59 43
------------ ------------ ------------
Income from continuing
operations 350 195 340
Income (loss) from discontinued
operations 5 3 (49)
Cumulative effect of accounting
change - (47) -
------------ ------------ ------------
NET INCOME $355 $151 $291
============ ============ ============
Earnings (loss) per common
share:
Basic:
Income from continuing
operations $.40 $.23 $.39
Income (loss) from
discontinued operations .01 - (.06)
Cumulative effect of
accounting change - (.06) -
------------ ------------ ------------
Net income $.41 $.17 $.33
============ ============ ============
Diluted:
Income from continuing
operations $.40 $.23 $.39
Income (loss) from
discontinued operations .01 - (.06)
Cumulative effect of
accounting change - (.06) -
------------ ------------ ------------
Net income $.41 $.17 $.33
============ ============ ============
Average number of shares used
to compute:
Basic earnings per common
share 869,402,685 845,065,093 866,243,592
Diluted earnings per common
share 878,755,125 846,328,622 871,969,592
Common stock outstanding at the
end of the period 869,356,569 845,157,381 868,490,686
Shipments of aluminum products
(metric tons) 1,312,000 1,198,000 1,320,000
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)
March 31 December 31
2004 2003
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $459 $576
Receivables from customers, less allowances:
$116 in 2004 and $105 in 2003 2,854 2,521
Other receivables 275 350
Inventories 2,816 2,524
Deferred income taxes 240 267
Prepaid expenses and other current assets 656 502
--------- -----------
Total current assets 7,300 6,740
--------- -----------
Properties, plants, and equipment, at cost 24,930 24,797
Less: accumulated depreciation, depletion, and
amortization 12,459 12,240
--------- -----------
Net properties, plants, and equipment 12,471 12,557
--------- -----------
Goodwill 6,567 6,549
Other assets 5,563 5,316
Assets held for sale 198 549
--------- -----------
Total assets $32,099 $31,711
========= ===========
LIABILITIES
Current liabilities:
Short-term borrowings $38 $56
Accounts payable, trade 2,230 1,976
Accrued compensation and retirement costs 953 948
Taxes, including taxes on income 680 703
Other current liabilities 923 878
Long-term debt due within one year 490 523
--------- -----------
Total current liabilities 5,314 5,084
--------- -----------
Long-term debt, less amount due within one year 6,782 6,692
Accrued postretirement benefits 2,213 2,220
Other noncurrent liabilities and deferred credits 3,249 3,389
Deferred income taxes 851 804
Liabilities of operations held for sale 39 107
--------- -----------
Total liabilities 18,448 18,296
--------- -----------
MINORITY INTERESTS 1,357 1,340
--------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,792 5,831
Retained earnings 8,074 7,850
Treasury stock, at cost (1,986) (2,017)
Accumulated other comprehensive loss (566) (569)
--------- -----------
Total shareholders' equity 12,294 12,075
--------- -----------
Total liabilities and equity $32,099 $31,711
========= ===========
Alcoa and subsidiaries
Segment Information (unaudited)
(in millions, except metric ton amounts and realized prices)
Consolidated Third-Party
Revenues: 1Q03 2Q03 3Q03 4Q03 2003 1Q04
--------------------------------------------
Alumina and Chemicals $449 $491 $526 $536 $2,002 $463
Primary Metals 732 805 816 876 3,229 878
Flat-Rolled Products 1,152 1,200 1,176 1,287 4,815 1,450
Engineered Products 1,390 1,455 1,369 1,375 5,589 1,523
Packaging and Consumer 749 836 812 818 3,215 744
Other 668 710 636 640 2,654 638
----------------------------------------------------------------------
Total $5,140 $5,497 $5,335 $5,532 $21,504 $5,696
======================================================================
Consolidated Intersegment
Revenues: 1Q03 2Q03 3Q03 4Q03 2003 1Q04
--------------------------------------------
Alumina and Chemicals $240 $248 $258 $275 $1,021 $338
Primary Metals 840 690 740 828 3,098 1,038
Flat-Rolled Products 20 15 17 14 66 23
Engineered Products 9 5 5 5 24 4
Packaging and Consumer - - - - - -
Other - - - - - -
----------------------------------------------------------------------
Total $1,109 $958 $1,020 $1,122 $4,209 $1,403
======================================================================
Consolidated Third-Party
Shipments (Kmt): 1Q03 2Q03 3Q03 4Q03 2003 1Q04
--------------------------------------------
Alumina and Chemicals 1,794 1,939 1,982 1,956 7,671 1,718
Primary Metals 453 495 488 516 1,952 469
Flat-Rolled Products 434 453 450 482 1,819 515
Engineered Products 223 221 222 213 879 234
Packaging and Consumer 36 42 40 49 167 38
Other 52 56 62 60 230 56
----------------------------------------------------------------------
Total Aluminum 1,198 1,267 1,262 1,320 5,047 1,312
======================================================================
Alcoa's average realized
price-Primary $0.69 $0.68 $0.71 $0.73 $0.70 $0.79
======================================================================
After-Tax Operating Income
(ATOI): 1Q03 2Q03 3Q03 4Q03 2003 1Q04
--------------------------------------------
Alumina and Chemicals $91 $89 $113 $122 $415 127
Primary Metals 166 162 163 166 657 192
Flat-Rolled Products 53 56 59 53 221 66
Engineered Products 29 46 47 33 155 62
Packaging and Consumer 53 57 52 52 214 35
Other 9 17 8 17 51 18
----------------------------------------------------------------------
Total $401 $427 $442 $443 $1,713 $500
======================================================================
Reconciliation of ATOI to
consolidated net income: 1Q03 2Q03 3Q03 4Q03 2003 1Q04
--------------------------------------------
Total ATOI $401 $427 $442 $443 $1,713 $500
Impact of intersegment
profit adjustments 7 (4) 2 4 9 23
Unallocated amounts
(net of tax):
Interest income 5 6 7 6 24 7
Interest expense (57) (52) (49) (46) (204) (41)
Minority interests (59) (75) (54) (43) (231) (50)
Corporate expense (57) (81) (65) (84) (287) (74)
Restructuring and
other charges 4 (2) (1) 25 26 31
Discontinued
operations 3 (1) (2) (49) (49) 5
Accounting change (47) - - - (47) -
Other (49) (2) - 35 (16) (46)
----------------------------------------------------------------------
Consolidated net
income $151 $216 $280 $291 $938 $355
======================================================================
SUPPLEMENTAL FINANCIAL INFORMATION
Alcoa and subsidiaries
Net Income and EPS Information (unaudited)
(in millions, except per-share amounts)
Net Income Diluted EPS
--------------------- ---------------------
1Q04 4Q03 1Q03 1Q04 4Q03 1Q03
----------------------------------------------------------------------
GAAP Net income $355 $291 $151 $.41 $.33 $.17
Discontinued operations
- operating loss (income) - 4 (3)
Discontinued operations
- (gain) loss on
divestitures (5) 45 -
Cumulative effect of
accounting change - - 47
----------------------------------------------------------------------
GAAP income from continuing
operations $350 $340 $195 $.40 $.39 $.23
----------------------------------------------------------------------
Restructuring and other
charges (2):
Restructurings 8 (4) (3)
Gain on divestitures (58) (21) -
----------------------------------------------------------------------
Income from continuing
operations excluding
restructuring and other
charges (1) $300 $315 $192 $.34 $.36 $.23
----------------------------------------------------------------------
Average diluted shares
outstanding 879 872 846
----------------------------------------------------------------------
(1) Alcoa believes that income from continuing operations excluding
restructuring and other charges is a measure that should be presented
in addition to income from continuing operations determined in
accordance with GAAP. The following matters should be considered when
evaluating this non-GAAP financial measure:
-- Alcoa reviews the operating results of its businesses
excluding the impacts of restructurings and divestitures.
Excluding the impacts of these charges can provide an
additional basis of comparison. Management believes that these
charges are unusual in nature, and would not be indicative of
ongoing operating results. As a result, management believes
these charges should be considered in order to compare past,
current, and future periods.
-- The economic impacts of the restructuring and divestiture
charges are described in the footnotes to Alcoa's financial
statements. Generally speaking, charges associated with
restructurings include cash and non-cash charges and are the
result of employee layoff, plant consolidation of assets, or
plant closure costs. These actions are taken in order to
achieve a lower cost base for future operating results.
-- Charges associated with divestitures principally represent
adjustments to the carrying value of certain assets and
liabilities and do not typically require a cash payment. These
actions are taken primarily for strategic reasons as the
company has decided not to participate in this portion of the
portfolio of businesses.
-- Alcoa's growth over the last five years, and the onset of the
manufacturing recession led to the aforementioned charges in
2001 and 2002. Before the start of the recent manufacturing
recession, Alcoa last recorded charges associated with
restructuring and divestitures in 1997.
-- Restructuring and divestiture charges are typically material
and are considered to be outside the normal operations of a
business. Corporate management is responsible for making
decisions about restructurings and divestitures.
-- There can be no assurance that additional restructurings and
divestitures will not occur in future periods. To compensate
for this limitation, management believes that it is
appropriate to consider both income from continuing operations
determined under GAAP as well as income from continuing
operations excluding restructuring and other charges.
(2) Restructuring and other charges totaled $31 of income for the
first quarter of 2004 before taxes and minority interests. The amount
principally represents a realized gain on the sale of the specialty
chemicals business, partially offset by layoff charges. After taxes
and minority interests, restructuring and other charges amounted to
income of $50 in the first quarter of 2004.
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