-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, erIh796yYNxcO9sF2M2nlGZ1bfVPd1JbmKpEGp4rMxokMD9ewo9vi/r9FrQpbVGF 6sZqZXNBqQch9lbYzAjTdw== 0000004281-94-000013.txt : 19941110 0000004281-94-000013.hdr.sgml : 19941110 ACCESSION NUMBER: 0000004281-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALUMINUM CO OF AMERICA CENTRAL INDEX KEY: 0000004281 STANDARD INDUSTRIAL CLASSIFICATION: 3334 IRS NUMBER: 250317820 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03610 FILM NUMBER: 94558340 BUSINESS ADDRESS: STREET 1: 1501 ALCOA BLDG CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4125532136 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 1994 Commission File Number 1-3610 ALUMINUM COMPANY OF AMERICA (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0317820 (State of incorporation) (I.R.S. Employer Identification No.) 425 Sixth Avenue - Alcoa Building, Pittsburgh, Pennsylvania 15219-1850 (Address of principal executive offices) (Zip Code) Office of Investor Relations 412-553-3042 Office of the Secretary 412-553-4707 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of November 8, 1994, 89,335,762 shares of common stock, par value $1.00, of the Registrant were outstanding. PART I - FINANCIAL INFORMATION Alcoa and subsidiaries Consolidated Balance Sheet (in millions)
(unaudited) September 30 December 31 ASSETS 1994 1993 ------------ ----------- Current assets: Cash (a) $ 61.9 $ 58.0 Short-term investments, (all cash equivalents except $8.3 in 1994 and $243.6 in 1993)(a) 261.3 597.3 Receivables from customers, less allowances: 1994-$41.9; 1993-$33.2 1,389.3 1,218.7 Other receivables 147.4 211.3 Inventories (b) 1,193.4 1,227.2 Prepaid expenses and other current assets 362.9 390.0 --------- --------- Total current assets 3,416.2 3,702.5 --------- --------- Properties, plants and equipment, at cost 14,175.6 13,600.7 Less, accumulated depreciation, depletion and amortization 7,671.2 7,093.9 --------- --------- Net properties, plants and equipment 6,504.4 6,506.8 --------- --------- Other assets 1,402.9 1,387.6 --------- --------- Total assets $11,323.5 $11,596.9 ========= ========= LIABILITIES Current liabilities: Short-term borrowings $ 247.0 $ 362.5 Accounts payable, trade 694.1 596.3 Accrued compensation and retirement costs 357.0 288.0 Taxes, including taxes on income 308.0 364.3 Provision for layoffs and impairments 130.8 128.8 Other current liabilities 257.9 302.2 Long-term debt due within one year 154.8 50.8 --------- --------- Total current liabilities 2,149.6 2,092.9 --------- --------- Long-term debt, less amount due within one year 1,086.0 1,432.5 Accrued postretirement benefits 1,845.0 1,845.2 Other noncurrent liabilities and deferred credits 1,000.6 1,022.2 Deferred income taxes 261.0 231.1 --------- --------- Total liabilities 6,342.2 6,623.9 --------- --------- MINORITY INTERESTS 1,372.9 1,389.2 --------- --------- SHAREHOLDERS' EQUITY Preferred stock 55.8 55.8 Common stock 89.2 88.8 Additional capital 737.8 715.9 Translation adjustment (81.0) (188.5) Retained earnings 2,810.4 2,946.1 Unfunded pension obligation (3.7) (7.0) Treasury stock, at cost (.1) (27.3) --------- --------- Total shareholders' equity 3,608.4 3,583.8 --------- --------- Total liabilities and shareholders equity $11,323.5 $11,596.9 ========= ========= (see accompanying notes)
Alcoa and subsidiaries Statement of Consolidated Income (unaudited) (in millions, except per share amounts)
Third quarter Nine months ended ended September 30 September 30 -------------- ------------ 1994 1993 1994 1993 ---- ---- ---- ---- REVENUES Sales and operating revenues $2,561.6 $2,230.2 $7,262.5 $6,745.1 Other income, principally interest 55.4 21.3 74.2 62.2 ------- ------- ------- ------- 2,617.0 2,251.5 7,336.7 6,807.3 ------- ------- ------- ------- COSTS AND EXPENSES Cost of goods sold and operating expenses 2,037.4 1,775.6 5,762.6 5,310.0 Selling, general administrative and other expenses 160.6 143.8 458.3 432.1 Research and development expenses 29.6 30.2 90.7 97.6 Provision for depreciation, depletion and amortization 167.0 175.0 499.9 515.8 Interest expense 28.5 23.0 81.5 65.0 Taxes other than payroll and severance taxes 23.7 25.8 74.1 80.2 Special items (c) - 6.2 79.7 42.2 ------- ------- ------- ------- 2,446.8 2,179.6 7,046.8 6,542.9 ------- ------- ------- ------- EARNINGS Income before taxes on income 170.2 71.9 289.9 264.4 Provision for taxes on income (d) 48.9 (1.5) 88.4 16.9 ------- ------- ------- ------- Income from operations 121.3 73.4 201.5 247.5 Less: Minority interests' share (51.2) (44.6) (126.4) (155.8) ------- ------- ------- ------- Income before extraordinary loss 70.1 28.8 75.1 91.7 Extraordinary loss on debt prepayment, net of $40.4 tax benefit (e) - - (67.9) - ------- ------- ------- ------- NET INCOME $ 70.1 $ 28.8 $ 7.2 $ 91.7 ======= ======= ======= ======= Earnings per common share: (f) Before extraordinary loss $ .79 $ .32 $ .83 $ 1.03 Extraordinary loss - - (.76) - ------- ------- ------- ------- Earnings per common share $ .79 $ .32 $ .07 $ 1.03 Dividends paid per common share $ .40 $ .40 $ 1.20 $ 1.20 ======= ======= ======= ======= (see accompanying notes)
Alcoa and subsidiaries Statement of Consolidated Cash Flows (unaudited) (in millions)
Nine months ended September 30 ------------ 1994 1993 ---------- --------- CASH FROM OPERATIONS Net income $ 7.2 $ 91.7 Adjustments to reconcile net income to cash from operations: Depreciation, depletion and amortization 511.7 531.0 Reduction of assets to net realizable value 32.8 - Change in deferred income taxes (141.6) (78.5) Equity income (losses) before additional taxes, net of dividends 7.1 (2.1) Provision for special items 46.9 42.2 Losses from financing and investing activities (2.5) (.8) Book value of asset disposals 34.3 11.9 Extraordinary loss 67.9 - Minority interests 126.4 155.8 Other 15.1 (7.8) (Increase) reduction in receivables (90.5) 79.5 (Increase) reduction in inventories 53.5 (265.9) (Increase) reduction in prepaid expenses and other current assets 109.8 (59.1) Increase (reduction) in accounts payable and accrued expenses 44.0 (136.7) Reduction in taxes, including taxes on income (9.5) (107.1) Payment of amortized interest on deep discount bonds (8.6) - Net change in noncurrent assets and liabilities (1.6) 82.2 ------- ------- CASH FROM OPERATIONS 802.4 336.3 ------- ------- FINANCING ACTIVITIES Net changes in short-term borrowings (119.5) (80.4) Common stock issued and treasury stock sold 50.9 7.8 Changes in minority interests (95.0) (10.6) Dividends paid to shareholders (107.6) (105.9) Dividends paid to minority interests (95.8) (126.2) Additions to long-term debt 493.7 705.3 Payments on long-term debt (857.6) (57.5) ------- ------- CASH FROM (USED FOR) FINANCING ACTIVITIES (730.9) 332.5 ------- ------- INVESTING ACTIVITIES Capital expenditures (394.0) (510.9) Additions to investments (16.5) (9.1) Net change in short-term investments, excluding cash equivalents 237.9 .3 Other - receipts 3.9 4.6 - payments (17.4) (18.5) ------- ------- CASH USED FOR INVESTING ACTIVITIES (186.1) (533.6) ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 17.8 (27.4) ------- ------- CHANGES IN CASH Net change in cash and cash equivalents (96.8) 107.8 Cash and cash equivalents at beginning of year 411.7 548.2 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 314.9 $ 656.0 ======= ======= (see accompanying notes)
Notes to Consolidated Financial Statements (in millions, except share amounts) Notes: (a) Summarized consolidated financial data for Alcoa Aluminio S.A. and Alcoa of Australia Limited (AofA) begin on page 13. (b) Inventories consisted of: September 30 December 31 1994 1993 -------------- ------------- Finished goods $ 265.0 $ 317.3 Work in process 480.0 415.7 Bauxite and alumina 190.8 165.9 Purchased raw materials 139.4 188.2 Operating supplies 118.2 140.1 $1,193.4 $1,227.2 Approximately 56.0% of total inventories at September 30, 1994 was valued on a LIFO basis. If valued on an average cost basis, total inventories would have been $638.8 and $623.9 higher at September 30, 1994 and December 31, 1993, respectively. (c) The special charge of $79.7 in the 1994 nine-month period was for closing a forgings and extrusion plant in Vernon, California. The charge included $32.9 for asset write- offs and $46.8 related mostly to severance costs. (d) The income tax provision for the period is based on the effective tax rate expected to be applicable for the full year. The difference between the 1994 estimated effective tax rate of 30.5% and the U.S. statutory rate of 35% is primarily due to lower taxes on income earned outside of the U.S. (e) The extraordinary loss in the 1994 nine-month period of $67.9, or 76 cents per common share, resulted from the early redemption of $225 face value of 7% deep discount debentures due 2011. (f) The following formula is used to compute primary earnings per common share (EPS): EPS = Net income - preferred dividend requirements -------------------------------------------- Weighted average number of common shares outstanding for the period The average number of shares used to compute primary earnings per common share was 88,818,784 in 1994 and 87,470,006 in 1993. Fully diluted earnings per common share are not stated since the dilution is not material. In the opinion of the Company, the financial statements and summarized financial data in this Form 10-Q report include all adjustments, including those of a normal recurring nature, necessary to fairly state the results for the periods. This Form 10-Q report should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1993. The financial data required in this Form 10-Q by Rule 10-01 of Regulation S-X have been reviewed by Coopers & Lybrand L.L.P., the Company's independent certified public accountants, as described in their report on page 7. Independent Auditor's Review Report To the Shareholders and Board of Directors Aluminum Company of America (Alcoa) We have reviewed the unaudited consolidated balance sheet of Alcoa and subsidiaries as of September 30, 1994, the unaudited statements of consolidated income for the three-month and nine-month periods ended September 30, 1994 and 1993, and consolidated cash flows for the nine- month periods ended September 30, 1994 and 1993, which are included in Alcoa's Form 10-Q for the period ended September 30, 1994. These financial statements are the responsibility of Alcoa's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Alcoa and subsidiaries as of December 31, 1993, and the related statements of consolidated income, shareholders' equity, and cash flows for the year then ended (not presented herein). In our report dated January 11, 1994, except for Note U for which the date is February 7, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1993 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Pittsburgh, Pennsylvania October 7, 1994 Management's Discussion and Analysis of the Results of Operations and Financial Condition (dollars in millions, except share amounts) Results of Operations Principal income and operating data follow.
Third quarter ended Nine months ended September 30 September 30 ------------ ------------ 1994 1993 1994 1993 ---- ---- ---- ---- Sales and operating revenues $2,561.6 $2,230.2 $7,262.5 $6,745.1 Income before extraordinary loss 70.1 28.8 75.1 91.7 Net income 70.1 28.8 7.2 91.7 Earnings per common share Before extraordinary loss .79 .32 .83 1.03 Net income .79 .32 .07 1.03 Shipments of aluminum products (1) 651 605 1,912 1,885 (1) in thousands of metric tons
Overview Alcoa earned $70.1, or 79 cents per common share, for the third quarter of 1994. For the comparable 1993 quarter, earnings were $28.8, or 32 cents per share. For the first nine months of 1994, earnings were $125.1 million, or $1.39 per share, before after-tax charges. After the one-time charges, income of $7.2 million, or seven cents per share, was reported. The two charges included in the first nine months of 1994 were: a special charge of $50.0 ($79.7 pretax), or 56 cents per share, for closing a forgings and extrusion plant in Vernon, California; and an extraordinary loss of $67.9, or 76 cents per share, for the early redemption of $225 of 7% debentures due 2011 that carried an effective interest rate of 14.7%. The Vernon charge included $20.6 for asset write-offs; most of the remaining $29.4 was for severance costs. The closure was necessary because Alcoa could not obtain union contract concessions to offset financial losses caused by a deteriorating competitive position and by competitors with lower total compensation costs. Estimated annual after tax savings from the closure are $8. For the first nine months of 1993, Alcoa had net income of $96.0, or $1.08 per share, excluding special charges and favorable adjustments resulting from changes in U.S. and Australian corporate tax rates. After adjustments, income was $91.7, or $1.03 per share. Alcoa of Australia Limited's (AofA) pretax income from operations for both the 1994 third quarter and year-to-date periods dropped 34% from the comparable 1993 periods. The reduced profit was due primarily to lower U.S. dollar prices for all products and a stronger Australian currency. These factors were partially offset by higher sales volumes for alumina and chemicals and lower production costs for all products except gold where lower ore grades increased unit costs. In Brazil, Alcoa Aluminio's (Aluminio) third quarter 1994 pretax income from operations was $46.8, an increase of $32.9 over the 1993 third quarter. Year-to-date pretax income was $74.2, up $38.7 from the 1993 nine-month period. Revenues grew 35% and 23%, respectively, from the 1993 third quarter and nine-month periods. The increased revenues were due to higher shipments and prices for extrusions and ingot. Foreign exchange gains in the 1994 quarter also had a significant impact on Aluminio's earnings. These factors, along with better operating performance and higher interest income, contributed to increased pretax income during the 1994 periods. Additionally, the monthly inflation rate recorded in Brazil during September 1994 (.8%) was the lowest recorded since 1973. This is a result of the Brazilian government's change in monetary policies and its current anti-inflation program. Alcoa's operations, divided into three segments, follow: 1. Alumina and Chemicals Segment Total revenues for the Alumina and Chemicals segment were $365 in the 1994 third quarter, down 3% from the comparable 1993 quarter. Year-to-date, revenues were $1,087, unchanged from the 1993 period. Alumina shipments for the 1994 quarter and nine months were 6% and 14% higher than those for the respective 1993 periods. However, alumina revenues declined 8% and 2% from the respective 1993 periods, due to a 15% drop in prices. The price decline is primarily due to an oversupply of alumina brought on by aluminum production curtailments. Chemicals revenues rose 15% and 5%, respectively, from 1993 quarter and year-to-date levels, principally due to higher shipments in Europe and the Far East. 2. Aluminum Processing Segment
Third quarter ended Nine months ended ------------------- ----------------- September 30 September 30 ------------ ------------ Product classes 1994 1993 1994 1993 - --------------- ---- ---- ---- ---- Revenues Flat-rolled products $ 801 $ 742 $ 2,340 $ 2,215 Aluminum ingot 260 202 704 757 Engineered products 487 386 1,335 1,143 Other aluminum products 121 110 345 326 ------ ------ ------ ------ Total $ 1,669 $ 1,440 $ 4,724 $ 4,441 Shipments (000 metric tons) Flat-rolled products 345 319 1,020 933 Aluminum ingot 172 163 517 608 Engineered products 115 96 321 282 Other aluminum products 19 27 54 62 ------ ------ ------ ------ Total 651 605 1,912 1,885
Flat-rolled products - The majority of revenues and shipments for flat-rolled products are derived from rigid container sheet (RCS). Shipments of RCS in the 1994 third quarter were comparable to the 1993 quarter. This level of shipments is in contrast to the second quarter 1994 when shipments grew 7% compared to the 1993 second quarter. Third quarter 1994 shipments were adversely affected by a fire at Alcoa's Warrick Operations on July 8. The mill resumed operations on August 12. Year-to-date, RCS shipments were up 1% over the 1993 period. Revenues from RCS declined 4% and 2%, respectively, from the 1993 third quarter and nine-month periods, reflecting the impact of lower prices. Sheet and plate shipments in the 1994 third quarter and year-to- date periods rose 41% and 30%, respectively, from the 1993 periods. Business remains strong in the commercial and distribution markets, particularly those related to plate products. Revenues grew by 40% and 18% over the respective 1993 periods due primarily to the volume growth. Revenues from other flat-rolled products, including sheet and foil used in a variety of industrial applications, rose 37% from the first nine months of 1993. Most of the increase relates to Alcoa-Kofem Kft., which experienced an 84% increase in shipments and 86% higher revenues. Aluminum ingot - Ingot shipments for the 1994 third quarter were up 6% from the 1993 quarter on the strength of higher shipments by Aluminio. Year-to-date, shipments were 15% lower than those in the 1993 period, reflecting the lower production levels brought about by idled capacity. Realized ingot prices in 1994 increased 9% from 1993 but the impact was more than offset by lower volumes. Aluminum ingot prices continue to rise due to increasing demand for aluminum and reductions in aluminum production worldwide. Engineered products - These products include extrusions used in the transportation and construction markets, aluminum forgings, and wire, rod and bar. Revenues from the sale of engineered products increased 26% in the 1994 third quarter on a 20% increase in shipments. Average prices increased approximately 5% for the quarter. Year-to-date, revenues and shipments were up 17% and 14%, respectively. Shipments of wheels for both trucks and automobiles continued at record levels with an increase of 40% over the 1993 periods. Wheel shipments and revenues were positively affected by strong consumer demand for automobiles and trucks. Revenues were up 36% from the 1993 third quarter and 37% year-to-date. Realized prices in 1994 were down slightly from those in 1993. Current data indicates that shipment growth is slowing from these record levels. Sales of extruded products continued to improve with a 23% increase in shipments and a 10% increase in prices from the 1993 quarter. Revenues were up 36% from the 1993 quarter. Wire, rod and bar revenues increased 32% and 16%, respectively, from the 1993 quarter and nine-month period. The increase in the quarter was due to a 27% rise in shipments, and a 4% increase in prices. Shipments in the nine-month period were up 14% from the 1993 period while prices increased 2%. Other aluminum products - Shipments of other aluminum products during the 1994 nine-month period decreased 11% from 1993. This is the result of a 49% decline in scrap shipments in the 1994 third quarter. Revenues rose 9% and 6% in the 1994 third quarter and nine-month periods, due primarily to a 25% increase in aluminum powder revenues. 3. Non-Aluminum Segment Revenues for the Non-Aluminum segment were $527 in the 1994 third quarter, up 28% from $413 in the 1993 quarter. Year-to-date, this segment had revenues of $1,451 compared to $1,218 in 1993. The increases are largely due to growth in sales of wire harnesses and fiber optic products, computer components manufactured by Alcoa Electronic Packaging, building materials and plastic closures. Cost of Goods Sold Cost of goods sold increased $261.8, or 15%, from the 1993 third quarter. Year-to-date, the increase was $452.6, or 9%. The increases reflect higher volumes for most products, particularly flat-rolled and engineered products, partly offset by improved cost performance. Cost of goods sold as a percentage of revenues in the 1994 third quarter was comparable to the 1993 ratio. Year- to-date, the 1994 ratio was 79.3% or .6 percentage points higher than in 1993. The higher ratio in 1994 is primarily due to lower prices and changes in product mix. Cost of goods sold in the 1994 third quarter and year-to-date periods included $21.1 of additional LIFO inventory costs due to an increase in the projected LIFO index for the year. The increase is principally due to higher purchased metal costs, and was partially offset by LIFO inventory profits of $16.6. Other Income & Expenses Other income was up $34.1 and $12.0 from the year-ago quarter and nine-month periods primarily because of favorable exchange adjustments and higher interest income. Exchange gains and interest income increased $10.1 and $15.1, respectively, in the 1994 quarter. Both of these items were affected by the issuance of the real, Brazil's new currency, which is a significant part of Brazil's anti-inflation program. Selling, general and administrative expenses increased $16.8 and $26.2 from the year-ago quarter and nine-month periods largely because of higher selling and employee benefit expenses at Aluminio. Interest expense was up $5.5 from the 1993 third quarter and $16.5 year-to-date, primarily due to higher borrowings by Aluminio, higher short-term interest rates and higher average commercial paper borrowings outstanding during the 1994 periods. Capitalized interest for the 1994 nine-month period was $1.1 compared to $2.6 in 1993. The estimated effective tax rate for 1994 is 30.5%. The difference between this rate and the U.S. statutory rate of 35% is primarily due to taxes on foreign income. Minority interests' share of income from operations rose 15% from the 1993 third quarter and declined 19% year-to-date. The increase is due primarily to improvements at Aluminio. Year-to- date results reflect the lower earnings by AofA. Environmental Matters Alcoa continues to participate in environmental assessments and cleanups at a number of locations, including operating facilities and their adjoining property; at previously owned or operated facilities; and at Superfund and other waste sites. Alcoa records a liability for environmental remediation costs and/or damages when a cleanup program or liability becomes probable and the costs/damages can be reasonably estimated. As assessments and cleanups proceed, these liabilities are adjusted based on progress in determining the extent of remedial actions and the related costs and damages. The liability can change substantially due to factors such as the nature or extent of contamination, changes in remedial requirements and technological improvements. For example, there are certain matters, including several related to alleged natural resource damage or alleged off- site contaminated sediments, where investigations are ongoing. It is not possible to determine the outcomes or to estimate with any degree of certainty the ranges of potential costs for these matters. Alcoa's remediation reserve balance at the end of the 1994 third quarter was $341 and reflects Alcoa's most probable cost to remediate identified environmental conditions for which costs can be reasonably estimated. About a third of the reserve relates to Alcoa's Massena, N.Y. plant site. Remediation expenditures charged to the reserve during the 1994 nine-month period were $60. Expenditures included those currently mandated as well as those not required by any regulatory authority or third party. Included in ongoing operating expenses are the recurring costs of managing hazardous substances and pollution. Alcoa estimates that these costs will be about 2% of cost of goods sold in 1994. Liquidity and Capital Resources Cash from Operations Cash from operations during the 1994 nine-month period was $802.4, $466 higher than in the 1993 period. The higher cash was generated primarily by a decrease in working capital, particularly inventory and prepaid expenses. A reduction in tax liabilities also increased cash from operations. Financing Activities The reduction in minority interests in the 1994 nine-month period consists primarily of a $50 redemption of preferred stock of Alcoa International Holdings Company (AIHC) and $39 for the acquisition of a minority partner's interest in a production facility. Payments on long-term debt in the first nine months of 1994 exceeded additions by $364. The net decrease in long-term debt is primarily due to reductions in U.S. commercial paper borrowings and liquidation of AofA's short-term investments with the proceeds used to pay down its commercial paper. In the 1994 first quarter, Alcoa issued $250 of 5.75% notes due 2001 and redeemed $225 face value of discounted debentures. The unamortized discount was $108 at the time of redemption. Debt as a percentage of invested capital was 18% at September 30, 1994 compared with 22% at year-end 1993. Alcoa entered into a one billion dollar five-year Revolving Credit Facility on July 1, 1994. This replaced the previous $750 Revolving Credit Facility. The new facility will be used to back Alcoa's commercial paper program. Investing Activities Investing activities during the 1994 nine-month period consisted primarily of capital expenditures and a reduction in short-term investments, excluding cash equivalents. Capital expenditures for the 1994 nine-month period were $394, down from $510.9 in 1993. Capital expenditures were mostly for sustaining operations but included some capacity-enhancing expenditures. Alcoa continues to focus on improving its manufacturing processes with a minimum of capital spending. Short-term investments, excluding cash equivalents, decreased by $237.6, primarily by AofA, which used the proceeds to pay down its long-term debt. Alcoa and subsidiaries Summarized consolidated financial data for Alcoa Aluminio S.A., a Brazilian subsidiary effectively owned 59% by Alcoa, follow.
(unaudited) September 30 December 31 ------------ ----------- 1994 1993 ---- ---- Cash and short-term investments $ 77.9 $ 160.2 Other current assets 314.4 283.7 Properties, plants and equipment, net 918.7 870.8 Other assets 166.2 207.8 -------- -------- Total assets 1,477.2 1,522.5 -------- -------- Current liabilities 347.5 372.7 Long-term debt (1) 258.1 322.5 Other liabilities 33.0 35.9 -------- -------- Total liabilities 638.6 731.1 -------- -------- Net assets $ 838.6 $ 791.4 ======== ======== (1) Held by Alcoa Brazil Holdings Company - $22.5
(unaudited) (unaudited) Third quarter ended Nine months ended September 30 September 30 ------------ ------------ 1994 1993 1994 1993 ---- ---- ---- ---- Revenues $ 240.3 $ 177.6 $ 615.3 $ 498.7 Costs and expenses (205.8) (160.9) (538.1) (456.0) Translation and exchange 12.3 (2.8) (3.0) (7.2) adjustments Income tax expense (10.1) (1.6) (12.6) (1.7) ------ ------ ------ ------ Net income $ 36.7 $ 12.3 $ 61.6 $ 33.8 ====== ====== ====== ====== Alcoa's share of net income $ 21.7 $ 7.3 $ 36.3 $ 19.9 ====== ====== ====== ======
Alcoa and subsidiaries Summarized consolidated financial data for AofA, a 51%-owned subsidiary of Alcoa International Holdings Company, both of which are included in Alcoa's consolidated financial statements, follow.
(unaudited) September 30 December 31 ------------ ----------- 1994 1993 ---- ---- Cash and short-term investments $ 86.6 $ 350.3 Other current assets 407.4 425.7 Properties, plants and equipment, net 1,532.3 1,430.1 Other assets 101.0 85.7 ------- ------- Total assets 2,127.3 2,291.8 ------- ------- Current liabilities 223.0 399.7 Long-term debt 149.9 302.0 Other liabilities 367.8 332.7 ------- ------- Total liabilities 740.7 1,034.4 ------- ------- Net assets $ 1,386.6 $ 1,257.4 ======= =======
(unaudited) (unaudited) Third quarter ended Nine months ended September 30 September 30 ------------ ------------ 1994 1993 1994 1993 ---- ---- ---- ---- Revenues (1) $ 390.6 $ 408.8 $1,100.8 $1,245.9 Costs and expenses (321.2) (306.1) (896.1) (940.2) Translation and exchange 0.2 2.6 2.2 6.1 adjustments Income tax expense(2) (14.8) (34.7) (59.0) (60.0) ------- ------- ------- ------- Net income $ 54.8 $ 70.6 $ 147.9 $ 251.8 ======= ======= ======= ======= Alcoa's share of net income $ 27.9 $ 36.0 $ 75.4 $ 128.4 ======= ======= ======= ======= (1) Revenues from Alcoa and its subsidiaries, the terms of which were established by negotiations between the parties, follow. Third quarter ended September 30: 1994 - $10.0, 1993 - $5.6 Nine months ended September 30: 1994 - $23.7, 1993 - $36.7 (2) The 1993 nine-month period includes a $51.5 tax benefit associated with a change in the Australian corporate tax rate.
PART II - OTHER INFORMATION Item 1. Legal Proceedings Environmental Matters As previously reported, on April 26, 1994, the Company received a proposed consent order, No. R-6-1465-94-04, from the New York State Department of Environmental Conservation related to alleged violations of certain state water quality standards at Alcoa's Massena, New York Operations. Pursuant to a consent order dated September 20, 1994, Alcoa has agreed to pay a civil penalty in the amount of $99,999, of which all but $60,000 is being held in abeyance pending completion of certain remedial activities. The Company paid the $60,000 in early October. This matter has been terminated. As previously reported, in September 1993 EPA Region V issued an administrative complaint to Alcoa's Cleveland, Ohio Works alleging improper use and disposal of PCBs and failure to obtain an EPA identification number for PCB disposal activities. The matter was resolved by consent agreement and consent order dated August 2, 1994. The Company was assessed a civil penalty in the amount of $75,773 which was paid in August 1994. Other Matters On August 24, 1994 the United States Department of Justice (DOJ) issued a Civil Investigative Demand (CID) requesting information regarding the Company's primary aluminum production in 1993 and 1994 and decisions made by the Company to reduce production levels in 1993. The Company is gathering documents and preparing interrogatory answers in order to comply with the DOJ request. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 11. Computation of Earnings per Common Share 12. Computation of Ratio of Earnings to Fixed Charges 15. Independent Accountants' letter regarding unaudited financial information 27. Financial Data Schedule (b) No reports on Form 8-K were filed by Alcoa during the quarter covered by this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALUMINUM COMPANY OF AMERICA November 9, 1994 By /s/ JAN H. M. HOMMEN Date Jan H. M. Hommen Executive Vice President and Chief Financial Officer (Principal Financial Officer) November 9, 1994 By /s/ EARNEST J. EDWARDS Date Earnest J. Edwards Vice President and Controller (Chief Accounting Officer) EXHIBITS Page 11. Computation of Earnings per Common Share 18 12. Computation of Ratio of Earnings to Fixed Charges 19 15. Independent Accountants' letter regarding unaudited 20 financial information 27. Financial Data Schedule EX-11 2 Alcoa and subsidiaries EXHIBIT 11 Computation of Earnings (Loss) per Common Share For the nine months ended September 30 (in millions, except share amounts)
1994 1993 ---------- ---------- 1. Income (loss) applicable to common stock before extraordinary loss * $ 73.6 $ 90.1 2. Weighted average number of common shares outstanding during the period 88,818,784 87,470,006 3. Primary earnings (loss) per common share before extraordinary loss (1 divided by 2) $.83 $ 1.03 4. Fully diluted earnings (loss) before extraordinary loss (1) $73.6 $ 90.1 5. Shares issuable under compensation plans 8,582 8,750 6. Shares issuable upon exercise of dilutive outstanding stock options (treasury stock method) 554,781 230,467 7. Fully diluted shares (2 + 5 + 6) 89,382,147 87,709,223 8. Fully diluted earnings (loss) per common share before extraordinary loss (4 divided by 7) $.82 $ 1.03 * After preferred dividend requirement
EX-12 3 Alcoa and subsidiaries EXHIBIT 12 Computation of Ratio of Earnings to Fixed Charges For the nine months ended September 30, 1994 (in millions, except ratio)
1994 ---- Earnings: Income before taxes on income $ 289.9 Minority interests' share of earnings of majority- owned subsidiaries without fixed charges - Equity income (25.0) Fixed charges 105.3 Proportionate share of income (loss) of 50%-owned persons (5.9) Distributed income of less than 50%-owned persons - Amortization of capitalized interest 16.5 ------ Total earnings $ 380.8 Fixed Charges: Interest expense: Consolidated $ 81.5 Proportionate share of 50%-owned persons 5.5 ------ 87.0 ------ Amount representative of the interest factor in rents: Consolidated 18.0 Proportionate share of 50%-owned persons .3 ------ 18.3 ------ Fixed charges added to earnings 105.3 ------ Interest capitalized: Consolidated 1.1 Proportionate share of 50%-owned persons - ------ 1.1 ------ Preferred stock dividend requirements of majority-owned subsidiaries 10.3 ------ Total fixed charges $ 116.7 ====== Ratio of earnings to fixed charges 3.26 ======
EX-15 4 EXHIBIT 15 October 7, 1994 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 RE: Aluminum Company of America 1. Form S-8 (Registration No. 33-24846) Alcoa Savings Plan for Salaried Employees 2. Form S-8 (Registration No. 33-22346) Long Term Stock Incentive Plan 3. Form S-3 (Registration No. 33-877) Aluminum Company of America Debt Securities and Warrants to Purchase Debt Securities 4. Form S-3 (Registration No. 33-49997) Aluminum Company of America Debt Securities and Warrants to Purchase Debt Securities, Preferred Stock and Common Stock Ladies and gentlemen: We are aware that our report dated October 7, 1994, accompanying interim financial information of Aluminum Company of America (Alcoa) and subsidiaries for the three- month period ended September 30, 1994, is incorporated by reference in the registration statements referred to above. Pursuant to Rule 436 (c) under the Securities Act of 1933, this report should not be considered as part of a registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. Very truly yours, /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. EX-27 5
5 1,000 9-MOS DEC-31-1993 SEP-30-1994 314,900 8,300 1,433,500 41,900 1,193,400 3,416,200 14,175,600 7,671,200 11,323,500 2,149,600 1,240,800 89,200 0 55,800 3,463,400 11,323,500 7,262,500 7,336,700 5,762,600 5,762,600 499,900 0 81,500 289,900 88,400 75,100 0 (67,900) 0 7,200 .07 .07
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