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 March 31, 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.)
1501 Alcoa Building, Pittsburgh, Pennsylvania 15219
(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 May 10, 1994, 88,821,515, 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)
<TABLE>
<CAPTION>
(unaudited)
March 31 December 31
ASSETS 1994 1993
----------- -----------
<S> <C> <C>
Current assets:
Cash (a) $ 51.3 $ 58.0
Short-term investments, (all cash equivalents except $233.4 in
1994 and $243.6 in 1993)(a) 517.8 597.3
Receivables from customers, less allowances:
1994-$31.8; 1993-$33.2 1,269.0 1,218.7
Other receivables 218.2 211.3
Inventories (b) 1,229.3 1,227.2
Prepaid expenses and other current assets 408.8 390.0
-------- --------
Total current assets 3,694.4 3,702.5
-------- --------
Properties, plants and equipment, at cost 13,787.9 13,600.7
Less, accumulated depreciation, depletion and amortization 7,321.4 7,093.9
-------- --------
Net properties, plants and equipment 6,466.5 6,506.8
-------- --------
Other assets 1,457.2 1,387.6
-------- --------
Total assets $11,618.1 $11,596.9
-------- --------
LIABILITIES
Current liabilities:
Short-term borrowings $ 333.8 $ 362.5
Accounts payable, trade 627.0 596.3
Accrued compensation and retirement costs 293.1 288.0
Taxes, including taxes on income 266.0 364.3
Provision for layoffs and impairments 159.9 128.8
Other current liabilities 258.5 302.2
Long-term debt due within one year 97.5 50.8
-------- --------
Total current liabilities 2,035.8 2,092.9
-------- --------
Long-term debt, less amount due within one year 1,559.9 1,432.5
Accrued postretirement benefits 1,845.7 1,845.2
Other noncurrent liabilities and deferred credits 1,011.3 1,022.2
Deferred income taxes 251.7 231.1
-------- --------
Total liabilities 6,704.4 6,623.9
-------- --------
MINORITY INTERESTS 1,452.1 1,389.2
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock 55.8 55.8
Common stock 88.8 88.8
Additional capital 716.9 715.9
Translation adjustment (154.0) (188.5)
Retained earnings 2,761.5 2,946.1
Unfunded pension obligation (7.3) (7.0)
Treasury stock, at cost (.1) (27.3)
-------- --------
Total shareholders' equity 3,461.6 3,583.8
-------- --------
Total liabilities and equity $11,618.1 $11,596.9
-------- --------
(see accompanying notes)
</TABLE>
Alcoa and subsidiaries
Statement of Consolidated Income (unaudited)
(in millions, except per share amounts)
<TABLE>
<CAPTION>
First Quarter ended
March 31
------------------------
1994 1993
------- --------
<S> <C> <C>
REVENUES
Sales and operating revenues $2,221.6 $2,109.6
Other income, principally interest 7.5 20.7
------- -------
2,229.1 2,130.3
------- -------
COSTS AND EXPENSES
Cost of goods sold and operating expenses 1,747.9 1,634.7
Selling, general administrative and other expenses 140.2 140.3
Research and development expenses 31.7 34.8
Provision for depreciation, depletion and amortization 173.4 168.9
Interest expense 25.5 20.9
Taxes other than payroll and severance taxes 28.4 24.1
Special items (c) 79.7 -
------- -------
2,226.8 2,023.7
EARNINGS
Income before taxes on income 2.3 106.6
Provision for taxes on income (d) .8 42.1
------- -------
Income from operations 1.5 64.5
Less: Minority interests' share (41.9) (36.9)
------- -------
Income (loss) before extraordinary loss (40.4) 27.6
Extraordinary loss on debt prepayment, net of $40.4 tax benefit (e) (67.9) -
------- -------
NET INCOME (LOSS) $ (108.3) $ 27.6
------- -------
Earnings (loss) per common share: (f)
Before extraordinary loss $ (.46) $ .31
Extraordinary loss (.76) -
------- -------
Earnings (loss) per common share $ (1.22) $ .31
Dividends paid per common share $ .40 $ .40
(see accompanying notes)
</TABLE>
Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
<TABLE>
<CAPTION>
Three months ended
March 31
-----------------------
1994 1993
------- -------
<S> <C> <C>
CASH FROM OPERATIONS
Net income (loss) $ (108.3) $ 27.6
Adjustments to reconcile net income (loss) to cash from operations: -
Depreciation, depletion and amortization 177.5 177.3
Reduction of assets to net realizable value 32.8 -
Change in deferred income taxes (97.0) (14.4)
Equity earnings before additional taxes, net of dividends .5 (.1)
Provision for special items 46.9 -
Gains (losses) from financing and investing activities (1.4) .3
Book value of asset disposals 6.1 4.3
Extraordinary loss 67.9 -
Minority interests 41.9 36.9
Other 16.7 (3.7)
(Increase) reduction in receivables (51.5) 138.6
(Increase) reduction in inventories 5.0 (147.8)
(Increase) reduction in prepaid expenses and other current assets (9.0) 9.9
Reduction in accounts payable and accrued expenses (46.9) (13.1)
Reduction in taxes, including taxes on income (45.7) (50.9)
Payment of amortized interest on deep discount bonds (8.6) -
Net change in noncurrent assets and liabilities 9.2 6.1
------- -------
CASH FROM OPERATIONS 36.1 171.0
FINANCING ACTIVITIES
Net changes in short-term borrowings (30.7) 62.8
Common stock issued and treasury stock sold 23.9 (2.4)
Changes in minority interests (2.5) (3.6)
Dividends paid to shareholders (36.0) (34.3)
Dividends paid to minority interests (20.2) (51.2)
Additions to long-term debt 357.1 15.8
Payments on long-term debt (291.1) (1.4)
------- -------
CASH FROM (USED FOR) FINANCING ACTIVITIES .5 (14.3)
------- -------
INVESTING ACTIVITIES
Capital expenditures (117.5) (187.7)
Additions to investments (1.3) (8.8)
Net change in short-term investments, excluding cash equivalents 13.0 -
Other - receipts 1.8 .8
- payments (15.2) (15.0)
------- -------
CASH USED FOR INVESTING ACTIVITIES (119.2) (210.7)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 6.6 7.4
CHANGES IN CASH ------- -------
Net change in cash and cash equivalents (76.0) (46.6)
Cash and cash equivalents at beginning of year 411.7 548.2
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 335.7 $ 501.6
------- -------
(see accompanying notes)
<FN>
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 12.
(b) Inventories consisted of:
March 31 December 31
1994 1993
Finished goods $ 309.6 $ 317.3
Work in process 464.4 415.7
Bauxite and alumina 194.1 165.9
Purchased raw materials 131.2 188.2
Operating supplies 130.0 140.1
------- -------
$1,229.3 $1,227.2
------- -------
Approximately 56.2% of total inventories at March 31,1994 was
valued on a LIFO basis. If valued on an average cost basis,
total inventories would have been $624.8 and $623.9 higher
at March 31, 1994 and December 31, 1993, respectively.
(c) The special charges of $79.7 in the 1994 period were for
closing a forgings and extrusion plant in Vernon, California.
The charge includes $32.9 for asset write-offs and $46.8, most
of which is for 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 33% 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 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) Primary earnings per common share are computed by
subtracting preferred dividend requirements from net
income, and dividing that amount by the weighted average
number of common shares outstanding during each period.
The average number of shares used to compute primary
earnings per common share was 88,623,823 in 1994 and
86,313,339 in 1993. Fully diluted earnings per common
share are not stated since the dilution is not material.
</TABLE>
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,
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 March 31, 1994, the unaudited
statements of consolidated income for the three-month periods
ended March 31, 1994 and 1993, and consolidated cash flows for
the three-month periods ended March 31, 1994 and 1993, which are
included in Alcoa's Form 10-Q for the period ended March 31, 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 modifi-
cations 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 11, 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
COOPERS & LYBRAND
Pittsburgh, Pennsylvania
April 8, 1994
Management's Discussion and Analysis of the
Results of Operations and Financial Condition
(dollars in millions, except share amounts)
Results of Operations
The principal income and operating data follow.
<TABLE>
<CAPTION>
First Quarter
ended March 31
--------------
1994 1993
---- ----
<S> <C> <C>
Sales and operating revenues $2,221.6 $2,109.6
Income (loss) before extraordinary loss (40.4) 27.6
Net income (loss) (108.3) 27.6
Earnings (loss) per common share
Before extraordinary loss (.46) .31
Net income (loss) (1.22) .31
Shipments of aluminum products (1) 600 610
<FN>
(1) in thousands of metric tons
</TABLE>
Overview
Alcoa earned $9.6, or 10 cents per common share, for the first
quarter of 1994 before one-time after-tax charges of $117.9.
After charges, the company had a loss of $108.3, or $1.22 per
share.
The two charges included in the 1994 first quarter 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 7% debentures due 2011 that carried an
effective interest rate of 14.7%. The Vernon charge includes
$20.6 for asset write-offs and $29.4, most of which is for
severance costs. The closure was necessary because Alcoa could
not obtain union contract concessions to offset financial losses
caused by declining levels of business and by competitors with
lower total compensation costs. Estimated annual after tax
savings from the closure are $8.
First quarter 1994 earnings before special charges were $18 lower
than those in the 1993 period. The decline was primarily due to
lower prices for fabricated products and alumina and a shift in
exchange adjustments from a gain to a loss. These were partly
offset by improved cost performance and a more favorable product
mix.
Pretax earnings from Alcoa of Australia (AofA) declined 6% from
the 1993 first quarter. The decrease was primarily due to lower
prices for all products, partly offset by higher alumina
shipments and lower unit production costs.
In Brazil, Alcoa Aluminio's (Aluminio) first quarter 1994 pretax
income from operations was $11.2 compared with $7.5 in the 1993
quarter. The improvement reflects higher sales of closures and
better operating performance for primary and extruded aluminum
products, partly offset by higher exchange losses. Inflation
continues to be high in Brazil, averaging approximately 40% per
month during the 1994 quarter.
Alumina and Chemicals Segment
Total revenues for the Alumina and Chemicals segment were $361 in
the 1994 first quarter, up 12% from the 1993 quarter. Alumina
shipments were up 30% , but prices for this product fell 10%.
The oversupply of alumina is expected to continue well into 1995,
and there is little expectation of improvement of alumina prices
in the near term.
Aluminum Processing Segment
<TABLE>
<CAPTION>
First quarter ended March 31
----------------------------
Product classes 1994 1993
---- ----
<S> <C> <C>
Revenues
Flat-rolled products $ 723 $ 657
Aluminum ingot 211 277
Engineered products 389 362
Other aluminum products 106 101
----- -----
Total $1,429 $1,397
Shipments (000 metric tons)
Flat-rolled products 321 285
Aluminum ingot 167 220
Engineered products 92 89
Other aluminum products 20 16
----- -----
Total 600 610
</TABLE>
Flat-rolled products - Shipments and revenues for this product
class were up 13% and 10%, respectively, from the 1993 first
quarter. The increases are primarily due to Alcoa-Kofem (Kofem),
for which no activity was reflected in the 1993 period. Alcoa
acquired a 50.1% interest in Kofem in late 1992. Kofem's results
were fully integrated into Alcoa's financial records during the
second quarter of 1993. Kofem's first quarter 1994 revenues were
$52.
Rigid container sheet (RCS) accounts for the majority of revenues
and shipments for this product class. RCS shipments were 3%
lower than in the 1993 quarter, primarily due to a 28% drop in
shipments by Alcoa Manufacturing Great Britain (AGB). However,
revenues increased 4%, mainly due to a better product mix. There
was significantly less fabrication of customer metal in the 1994
quarter.
Sheet and plate shipments increased 19% from those in the 1993
quarter. Higher shipments of commercial products more than
offset a decline in shipments to aerospace markets. However,
revenues declined slightly reflecting a 17% decrease in prices.
Aluminum Ingot - Both ingot shipments and revenues dropped 24%
from the 1993 first quarter and reflect the lower production
levels brought about due to idled capacity. Prices in the 1994
period were about even with those in the 1993 period.
Alcoa has completed its plans announced in February 1994 to
reduce additional primary aluminum output in the U.S., Australia
and Suriname. Primary aluminum production in the U.S. was
reduced by 100,000 metric tons (mt) per year. AofA reduced
production by 25,000 mt at its Point Henry smelter in Geelong,
Australia and 26,000 mt at the Portland, Australia smelter.
AofA has a 45% interest in the Portland smelter. Suriname
Aluminum Company reduced production by 3,000 mt.
Engineered Products - These products include extrusions used in
the transportation and construction markets; aluminum forgings
and wheels; wire, rod and bar; and automobile bumpers. First
quarter 1994 shipments grew 3% from the 1993 period. Although
prices on many products declined from the 1993 quarter, the
higher shipments resulted in an 8% increase in revenues.
Revenues from aluminum wheels were up 46% in the 1994 first
quarter primarily due to a 51% increase in shipments which
reflects the continued strong growth of this business. Shipments
of wheels have increased each quarter since 1991.
Shipments of extruded products increased 6% over the year-ago
quarter resulting from higher shipments in Latin America and
Europe, partly offset by lower U.S. shipments. In spite of the
increased shipments, revenues were 3% lower than the first
quarter of 1993 due to an 8% decline in prices.
Revenues for wire, rod and bar were down 12% from the 1993 first
quarter since production of aluminum rod at Alcoa's Rockdale,
Texas plant was discontinued at the end of 1993.
Other aluminum products - Revenues for other aluminum products
grew 5% from the 1993 quarter due to a 28% increase in scrap
shipments.
Non-Aluminum Segment
First quarter 1994 revenues from the Non-Aluminum segment were
$430.2, up 10% from the 1993 quarter. The increase reflects
higher sales of plastic closures in Latin America, growth of
fiber-optic cable sales, and higher shipments by Alcoa Electronic
Packaging.
Cost of sales
Cost of goods sold increased $113.2, up 7% from the 1993 first
quarter. The increase reflects higher volumes for alumina and
non-aluminum products, and a higher value-added mix in aluminum
products, partly offset by improved cost performance, including
labor costs. Cost of goods sold as a percentage of revenues was
78.7% in 1994 compared to 77.5% in 1993. The higher ratio in
1994 is mostly due to lower prices.
Other income & expenses
Other income declined $13.2 from the 1993 first quarter,
primarily due to unfavorable exchange adjustments. The 1994
quarter reflected a loss of $5.9 while the 1993 quarter had gains
of $8.3.
Research and development expenses in 1994 declined $3.1 from the
year-ago quarter largely because of program reductions at Alcoa
Technical Center.
Interest expense rose $4.6 from the 1993 first quarter, primarily
due to higher Aluminio borrowings and increased commercial paper
borrowings. Capitalized interest in the 1994 and 1993 first
quarters was $.4 and $.8, respectively.
The estimated effective tax rate for 1994 is 33%. 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 increased
$5.0 from the 1993 first quarter, reflecting higher earnings at
Alcoa Fujikura.
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. Also, see Environmental Matters on
page 14.
Alcoa's remediation reserve balance at the end of the 1994
first quarter was $414 and reflects Alcoa's most probable
cost to remediate identified environmental conditions for
which costs can be reasonably estimated. About a third of
this balance relates to Alcoa's Massena, N.Y. plant site.
Remediation expenditures charged to the reserve for the 1994
three-month period were $16. They include expenditures
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 1.5% of cost of
goods sold.
Liquidity and Capital Resources
Cash from Operations
Cash from operations during the first quarter of 1994 was $36,
$135 lower than in the 1993 period. The difference consists
primarily of additional working capital requirements of $85 and
lower 1994 earnings .
Financing Activities
Dividends paid to shareholders were $36 in the 1994 first
quarter. Dividends paid to minority interests were $20.2 and
included $18.4 paid by Aluminio. A dividend of $42.3, normally
paid by AofA during the first quarter, was not paid until April.
Minority interests share of the dividend was $20.7. Alcoa's
subsidiary, Alcoa International Holdings Company, received $21.6
of the AofA dividend.
Additions to long-term debt in the 1994 first quarter exceeded
payments by $66. The major items affecting debt were the
issuance of $250 of 5.75% notes due 2001 and the redemption of
$225 of discounted debentures that occurred early in the quarter.
Debt as a percentage of invested capital was 24% at March 31,
1994 compared to 22% at year-end 1993.
Investing Activities
Investing activities during the 1994 first quarter consisted
primarily of capital expenditures of $117.5, which were down
$70.2 from the 1993 first quarter. 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.
Alcoa and subsidiaries
Summarized consolidated financial data for Alcoa Aluminio S.A., a
Brazilian subsidiary effectively owned 59% by Alcoa, follow.
<TABLE>
<CAPTION>
(in millions)
------------------------
(unaudited)
March 31 December 31
-------- -----------
1994 1993
---- ----
<S> <C> <C>
Cash and short-term investments $ 148.3 $ 160.2
Other current assets 295.3 283.7
Properties, plants and equipment, net 870.6 870.8
Other assets 190.0 207.8
------- -------
Total assets 1,504.2 1,522.5
------- -------
Current liabilities 394.4 372.7
Long-term debt (1) 271.7 322.5
Other liabilities 36.5 35.9
------- -------
Total liabilities 702.6 731.1
------- -------
Net assets $ 801.6 $ 791.4
------- -------
(unaudited)
First quarter Ended
March 31
---------------------
1994 1993
---- ----
Revenues $ 176.2 $ 155.6
Costs and expenses (158.4) (144.9)
Translation and exchange adjustments (6.6) (3.2)
Income tax (expense) benefit (1.0) .8
------- -------
Net income $ 10.2 $ 8.3
------- -------
Alcoa's share of net income $ 6.0 $ 4.9
------- -------
<FN>
(1) Held by Alcoa Brazil Holdings Company - $22.5
</TABLE>
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.
<TABLE>
<CAPTION>
(in millions)
--------------------------
(unaudited)
March 31 December 31
1994 1993
-------- --------
<S> <C> <C>
Cash and short-term investments $ 278.1 $ 350.3
Other current assets 401.6 425.7
Properties, plants and equipment, net 1,468.2 1,430.1
Other assets 94.3 85.7
------- -------
Total assets 2,242.2 2,291.8
------- -------
Current liabilities 233.5 399.7
Long-term debt 307.0 302.0
Other liabilities 350.8 332.7
------- -------
Total liabilities 891.3 1,034.4
------- -------
Net assets $ 1,350.9 $ 1,257.4
------- -------
(unaudited)
First Quarter ended
March 31
-----------------------
1994 1993
------ ------
Revenues (1) $ 360.8 $ 385.2
Costs and expenses (276.4) (297.2)
Translation and exchange adjustments .9 2.6
Income tax (expense) benefit (28.2) (34.9)
------- -------
Net income $ 57.1 $ 55.7
------- -------
Alcoa's share of net income $ 29.1 $ 28.4
<FN>
(1) Revenues from Alcoa and its subsidiaries, the terms of which
were established by negotiations between the parties, follow.
First quarter ended March 31: 1994 - $8.0, 1993 - $ 22.8.
</TABLE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Environmental Matters
In March 1994 the United States Environmental Protection Agency
(EPA) included the "Alcoa (Point Comfort)/Lavaca Bay" site on the
National Priorities List (NPL). The site includes portions of
Alcoa's Point Comfort, Texas bauxite refining operations and
portions of Lavaca Bay, Texas, adjacent to Alcoa's plant. On
March 31, 1994, Alcoa and Region VI of the EPA entered into an
administrative order on consent, EPA Docket No. 6-11-94,
concerning the Alcoa (Point Comfort)/Lavaca Bay site. The
administrative order requires Alcoa to conduct a remedial
investigation and feasibility study at the site overseen by the
EPA. Work under the administrative order has commenced. Certain
federal and state natural resource trustees previously served
Alcoa with notice of their intent to file suit to recover damages
for alleged loss, injury or destruction of natural resources in
Lavaca Bay and to recover the costs for performing the assessment
of such alleged damages. Alcoa and representatives of the
trustees have entered into several agreements that suspend any
applicable statute of limitations period, the latest of which
extends the suspension period until April 30, 1994.
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. The proposed consent order alleges that the
Company permitted suspended solids in excess of the New York
State standard to be discharged into the Grasse River adjoining
the Massena Operations. The proposed consent order would assess
a civil penalty in the amount of $125,000 and would require the
adoption of certain remedial actions to prevent a recurrence of
the alleged violations. The Company is conducting an
investigation of the matter and preparing a response.
Other Matters
As part of an ongoing investigation, Alcoa Fujikura Ltd. (AFL), a
subsidiary, received formal notice in March 1994 that the United
States Custom Service (USCS) is contemplating issuance of a claim
for monetary penalties and marking duties against AFL for
allegedly fraudulent importations from Mexico of automotive
wiring harnesses into the U.S. from July 1986 through December
1991. The allegations focus on various requirements for country
of origin marking of such imports and on AFL's activities in
connection with an approved process for waiving such
requirements. AFL is cooperating with the USCS and plans to
respond to the formal notice.
Item 6. Exhibits and Reports on Form 8-K.
(b) Alcoa filed a Report on Form 8-K, dated February 7, 1994,
with the Securities and Exchange Commission consisting of a press
release concerning reduction of primary aluminum production in
its U. S. operations. Alcoa also filed a Report on Form 8-K,
dated March 15, 1994, consisting of a press release concerning
the closing of its Vernon, California plant.
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
May 12, 1994 By /s/ JAN H. M. HOMMEN
Date Jan H. M. Hommen
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
May 12, 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 17
12. Computation of Ratio of Earnings to Fixed Charges 18
15. Independent Accountants' letter regarding unaudited 19
financial information
EXHIBIT 11
Alcoa and subsidiaries
Computation of Earnings (Loss) per Common Share
For the three months ended March 31
(in millions, except share amounts)
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
1. Income (loss) applicable to common stock before $ (40.9) $ 27.0
extraordinary loss *
2. Weighted average number of common shares 88,623,823 86,313,339
outstanding during the period
3. Primary earnings (loss) per common share before $(.46) $ .31
extraordinary loss (1 divided by 2)
4. Fully diluted earnings (loss) before extraordinary loss $(40.9) $ 27.0
(1)
5. Shares issuable under compensation plans 8,543 7,754
6. Shares issuable upon exercise of dilutive outstanding 321,777 265,929
stock options (treasury stock method)
7. Fully diluted shares (2 + 5 + 6) 88,954,143 86,587,022
8. Fully diluted earnings (loss) per common share before $(.46) $ .31
extraordinary loss (4 divided by 7)
<FOOTNOTE>
* After preferred dividend requirement
</TABLE>
Alcoa and subsidiaries EXHIBIT 12
Computation of Ratio of Earnings to Fixed Charges
For the three months ended March 31, 1994
(in millions, except ratio)
<TABLE>
<CAPTION>
1994
------
<S> <C>
Earnings:
Income before taxes on income $ 2.3
Minority interests' share of earnings of majority-
owned subsidiaries without fixed charges (3.2)
Equity income (4.0)
Fixed charges 33.4
Proportionate share of income (loss) of 50%-owned persons (3.6)
Distributed income of less than 50%-owned persons -
Amortization of capitalized interest 6.1
------
Total earnings $ 31.0
------
Fixed Charges:
Interest expense:
Consolidated $ 25.5
Proportionate share of 50%-owned persons 1.7
------
27.2
------
Amount representative of the interest factor in rents:
Consolidated 6.2
Proportionate share of 50%-owned persons -
------
6.2
------
Fixed charges added to earnings 33.4
------
Interest capitalized:
Consolidated .4
Proportionate share of 50%-owned persons -
------
.4
------
Preferred stock dividend requirements of
majority-owned subsidiaries 4.4
------
Total fixed charges $ 38.2
------
Ratio of earnings to fixed charges .81
------
</TABLE>
EXHIBIT 15
April 8, 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.
Dear Sirs:
We are aware that our report dated April 8, 1994,
accompanying interim financial information of Aluminum
Company of America (Alcoa) and subsidiaries for the three
month period ended March 31, 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
COOPERS & LYBRAND
