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, 1995 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 May 10, 1995, 178,152,055 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 1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (includes cash of $101.9 in
1995 and $177.5 in 1994)(a) $ 718.3 $ 619.2
Short-term investments(a) 6.5 5.5
Receivables from customers, less allowances:
1995-$40.0; 1994-$37.4 1,722.9 1,440.6
Receivable from WMC, net - 366.9
Other receivables 249.2 182.5
Inventories (b) 1,408.3 1,144.2
Deferred income taxes 237.2 235.6
Prepaid expenses and other current assets 191.8 158.7
-------- --------
Total current assets 4,534.2 4,153.2
-------- --------
Properties, plants and equipment, at cost 14,525.9 14,502.3
Less, accumulated depreciation, depletion and
amortization 7,925.7 7,812.9
-------- --------
Net properties, plants and equipment 6,600.2 6,689.4
-------- --------
Other assets 1,595.9 1,510.6
-------- --------
Total assets $12,730.3 $12,353.2
======== ========
LIABILITIES
Current liabilities:
Short-term borrowings $ 290.7 $ 261.9
Accounts payable, trade 799.6 739.3
Accrued compensation and retirement costs 326.4 363.9
Taxes, including taxes on income 328.2 393.0
Provision for layoffs and impairments 69.1 84.4
Other current liabilities 763.5 557.0
Long-term debt due within one year 135.0 154.0
-------- --------
Total current liabilities 2,712.5 2,553.5
-------- --------
Long-term debt, less amount due within one year 1,041.7 1,029.8
Accrued postretirement benefits 1,842.8 1,850.5
Other noncurrent liabilities and deferred credits 1,018.6 1,011.8
Deferred income taxes 271.4 220.6
-------- --------
Total liabilities 6,887.0 6,666.2
-------- --------
MINORITY INTERESTS 1,769.9 1,687.8
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock 55.8 55.8
Common stock 178.9 178.7
Additional capital 665.3 663.5
Translation adjustment (78.9) (68.6)
Retained earnings 3,286.1 3,173.9
Unfunded pension obligation (5.9) (4.0)
Treasury stock, at cost (27.9) (.1)
-------- --------
Total shareholders' equity 4,073.4 3,999.2
-------- --------
Total liabilities and shareholders' equity $12,730.3 $12,353.2
======== ========
(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
----------
1995 1994
---- ----
<S> <C> <C>
REVENUES
Sales and operating revenues $3,009.8 $2,221.6
Other income 19.7 7.5
------- -------
3,029.5 2,229.1
------- -------
COSTS AND EXPENSES
Cost of goods sold and operating expenses 2,178.8 1,747.9
Selling, general administrative and other
expenses 167.8 140.2
Research and development expenses 32.0 31.7
Provision for depreciation, depletion and
amortization 170.7 173.4
Interest expense 24.9 25.5
Taxes other than payroll and severance
taxes 33.0 28.4
Special items (c) - 79.7
------- -------
2,607.2 2,226.8
------- -------
EARNINGS
Income before taxes on income 422.3 2.3
Provision for taxes on income (d) 143.3 .8
------- -------
Income from operations 279.0 1.5
Less: Minority interests' share (85.2) (41.9)
------- -------
Income (loss) before extraordinary loss 193.8 (40.4)
Extraordinary loss on debt prepayment,
net of $40.4 tax benefit (e) - (67.9)
------- -------
NET INCOME (LOSS) $ 193.8 $ (108.3)
======= =======
Earnings (loss) per common share: (f)
Before extraordinary loss $ 1.08 $ (.23)
Extraordinary loss - (.38)
------- -------
Earnings (loss) per common share $ 1.08 $ (.61)
======= =======
Dividends paid per common share $ .225 $ .20
======= =======
(see accompanying notes)
</TABLE>
Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
<TABLE>
<CAPTION>
Three months ended
March 31
--------
1995 1994
--------- ----------
<S> <C> <C>
CASH FROM OPERATIONS
Net income $ 193.8 $ (108.3)
Adjustments to reconcile net income to cash from
operations:
Depreciation, depletion and amortization 172.0 177.5
Reduction of assets to net realizable value - 32.8
Increase (reduction) in deferred income taxes 39.8 (97.0)
Equity (income) losses before additional taxes, net of
dividends (15.1) .5
Provision for special items - 46.9
(Gains) from financing and investing activities (3.1) (1.4)
Book value of asset disposals 5.2 6.1
Extraordinary loss - 67.9
Minority interests 85.2 41.9
Other 4.2 16.7
Increase in receivables (241.3) (51.5)
(Increase) reduction in inventories (279.0) 5.0
Increase in prepaid expenses and other current assets (34.5) (9.0)
Increase (reduction) in accounts payable and accrued
expenses 183.4 (46.9)
Reduction in taxes, including taxes on income (61.4) (45.7)
Payment of amortized interest on deep discount bonds - (8.6)
Net change in noncurrent assets and liabilities (5.1) 9.2
-------- ---------
CASH FROM OPERATIONS 44.1 36.1
-------- ---------
FINANCING ACTIVITIES
Net changes in short-term borrowings 29.3 (30.7)
Common stock issued and treasury stock sold 2.0 23.9
Repurchase of common stock (27.8) -
Dividends paid to shareholders (41.0) (36.0)
Dividends paid to minority interests (5.1) (20.2)
Additions to long-term debt 47.2 357.1
Payments on long-term debt (54.8) (291.1)
-------- ---------
CASH FROM (USED FOR) FINANCING ACTIVITIES (50.2) 3.0
-------- ---------
INVESTING ACTIVITIES
Capital expenditures (151.3) (117.5)
Additions to investments (7.1) (1.3)
Net change in short-term investments (.9) 13.0
Changes in minority interests 36.6 (2.5)
Loan to WMC (121.8) -
Net proceeds from Alcoa/WMC transaction 366.9 -
Other - receipts 4.0 1.8
- payments (16.0) (15.2)
-------- ---------
CASH USED FOR INVESTING ACTIVITIES 110.4 (121.7)
-------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (5.2) 6.6
-------- ---------
CHANGES IN CASH
Net change in cash and cash equivalents 99.1 (76.0)
Cash and cash equivalents at beginning of year 619.2 411.7
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 718.3 $ 335.7
(see accompanying notes)
</TABLE>
Notes to Consolidated Financial Statements
(in millions, except share amounts)
Notes:
(a) Summarized consolidated financial data for Alcoa
Aluminio S.A. (Aluminio) and Alcoa of Australia
Limited (AofA) begin on page 13.
(b) Inventories consisted of:
March 31 December 31
1995 1994
----------- -----------
Finished goods $ 304.5 $ 249.6
Work in process 557.2 456.1
Bauxite and alumina 217.8 195.2
Purchased raw materials 211.5 131.0
Operating supplies 117.3 112.3
------- -------
$1,408.3 $1,144.2
======= =======
Approximately 55.7% of total inventories at March 31,
1995 was valued on a LIFO basis. If valued on an
average cost basis, total inventories would have been
$726.9 and $691.9 higher at March 31, 1995 and
December 31, 1994, respectively.
(c) The special charge of $79.7 in the 1994 first quarter
was for closing a forgings and extrusion plant in
Vernon, California. The charge included $32.8 for
asset write-offs and $46.9 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 1995
estimated effective tax rate of 34% 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 first quarter of
$67.9, or 38 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 178,669,937 in 1995
and 177,247,646 in 1994. Fully diluted earnings per
common share are not stated since the dilution is
not material.
Per share amounts for 1994 have been restated to
reflect the two-for-one stock split which occurred
in February, 1995.
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, 1994.
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 March 31, 1995, the
unaudited statements of consolidated income for the three-
month periods ended March 31, 1995 and 1994, and
consolidated cash flows for the three-month periods ended
March 30, 1995 and 1994, which are included in Alcoa's
Form 10-Q for the period ended March 31, 1995. 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,
1994, 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, 1995, 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, 1994, 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
April 7, 1995
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.
<TABLE>
<CAPTION>
First quarter ended
March 31
--------
1995 1994
---- ----
<S> <C> <C>
Sales and operating revenues $3,009.8 $2,221.6
Income before extraordinary loss 193.8 (40.4)
Net income 193.8 (108.3)
Earnings per common share (1)
Before extraordinary loss 1.08 (.23)
Net income 1.08 (.61)
Shipments of aluminum products (2) 654 600
<FN>
(1) Per share amounts for 1994 have been restated to reflect the two-
for-one stock split which occurred in February, 1995.
(2) In thousands of metric tons
</TABLE>
Overview
Alcoa earned $193.8, or $1.08 per common share, for the first
quarter of 1995. This compares with a loss of $108.3 or
61 cents per share, in the 1994 first quarter, which included
after-tax charges of $117.9, or 66 cents per share. Revenues
reached a quarterly record of $3,010 compared with $2,222 for
the 1994 quarter, while shipments increased 9% to
654,000 metric tons (mt).
The two charges included in the 1994 first quarter were: a
special charge of $50.0 ($79.7 pretax), or 28 cents per share,
for closing a forgings and extrusion plant in Vernon, Cali-
fornia; and an extraordinary loss of $67.9, or 38 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.
Alcoa of Australia Limited's (AofA) pretax income from
operations of $120 for the quarter increased 42% from the
comparable 1994 period primarily because of higher shipments
and prices for ingot and flat-rolled products and higher
prices for alumina.
In Brazil, Alcoa Aluminio's (Aluminio) first quarter 1995
pretax income from operations was $59.6, an increase of
$48.4 over the 1994 period. Revenues grew by 78% due to
higher prices for all aluminum products. Also, higher ship-
ments for packaging and non-aluminum conductor products
contributed to the strong increase in revenues and profits.
Revenue and shipment data for Alcoa's operations, divided
into three segments, follow.
<TABLE>
<CAPTION>
First quarter ended March 31 Revenues Shipments (000 metric tons)
---------------------------- -------- ---------------------------
Segment 1995 1994 1995 1994
------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1. Alumina and chemicals (1) $ 399 $ 361 1,453 1,598
------ ------ ----- -----
2. Aluminum processing:
Flat-rolled products 1,081 723 374 321
Engineered products 598 389 125 92
Aluminum ingot 256 211 140 167
Other aluminum products 80 106 15 20
----- ----- ----- -----
2,015 1,429 654 600
----- ----- ----- -----
3. Non-Aluminum 596 432
----- -----
Total $3,010 $2,222
====== ======
<FN>
(1) Shipment figures represent alumina only.
</TABLE>
A discussion of each segment follows.
1. Alumina and Chemicals Segment
Total revenues for this segment was $399 in the 1995 first
quarter, an increase of 11% from the comparable 1994 quarter.
Alumina shipments were 9% lower than those in the 1994 first
quarter. The decline in shipments was offset by a 14%
increase in prices. Alumina price increases have been
spurred by increases in the price and demand for primary
aluminum.
In December 1994, Alcoa and Western Mining Corporation
Limited (WMC) entered into a transaction to combine ownership
of their respective worldwide bauxite, alumina and inorganic
chemicals businesses into a group of companies (the Enter-
prise) owned 60% by Alcoa and 40% by WMC. As part of the
agreement, Alcoa acquired an additional 9% interest in AofA,
bringing its total interest to 60%. During the 1995 first
quarter, the Enterprise produced 2,390 mt of alumina. Of
this amount, 1,453 was shipped to third-party customers.
Revenues from chemicals products rose 30% from the 1994
first quarter, principally due to higher overall prices and
increased shipments in Europe and Latin America.
2. Aluminum Processing Segment
Flat-rolled products - Total flat-rolled products revenue
was up 50% from the 1994 first quarter. The improvement was
due to a 28% rise in prices combined with a 17% increase in
shipments. The majority of revenues and shipments for flat-
rolled products are derived from sales of rigid container
sheet (RCS) for beverage cans. RCS revenues were up 68% over
the 1994 first quarter, due to a 37% increase in prices,
which had been severely depressed over the last several
years, and a 23% increase in shipments. The shipment
increase is a result of growth in the use of the aluminum
beverage can. Consumer demand for aluminum cans in 1994
increased 8.2% over 1993 levels, driven by increased sales
of soft drinks.
Sheet and plate shipments and prices rose 19% and 13%,
respectively, from the 1994 period. As a result, revenues
grew by 35% .
Revenues from other flat-rolled products, including sheet and
foil used in a variety of industrial applications, rose 12%
from the first three months of 1994. Prices increased 22%,
while shipments fell 8%.
Engineered products - Engineered 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 54% in the 1995 first quarter
on a 36% increase in shipments. Average prices increased
approximately 13% for the quarter.
Sales of extruded products continued their upward trend with
a 27% increase in shipments and a 22% increase in prices from
the 1994 quarter. Revenues were up 55% from the 1994 quarter,
with notable improvement by Alcoa Kofem and Aluminio.
Shipments of forged aluminum wheels for both trucks and
automobiles continued at strong levels with an increase of
17% over the 1994 period. Demand is especially high within
the truck market. Wheel revenues were up 21% from the 1994
first quarter.
Wire, rod and bar revenues and prices increased 33% and 20%,
respectively, from the 1994 first quarter. An 11% increase
in shipments also had a favorable impact on revenue.
Aluminum ingot - Ingot revenues and prices were up 21% and
45%, respectively, from the 1994 first quarter. The increase
in prices was offset by a 17% drop in shipments. Alcoa is
currently operating its U.S. smelters at approximately 70% of
nameplate capacity, and has no current plans to restart idled
capacity. As a result, ingot shipments have declined.
Aluminum ingot prices ended the quarter at approximately
85 cents per pound on the London Metal Exchange (LME).
Alcoa's average realized price per pound for aluminum ingot
in the 1995 first quarter was 83 cents compared with 57 cents
in the 1994 quarter.
Other aluminum products - The major products in this category
include aluminum closures and the sale of aluminum scrap.
Revenue decreased 25% in the 1995 first quarter, primarily
due to a 20% decrease in closure prices and a 6% decline in
shipments. Scrap revenues were up 8%, reflecting increased
prices partially offset by a 44% decrease in shipments as
more scrap was used for internal purposes.
3. Non-Aluminum Segment
Revenues for the Non-Aluminum segment were $596 in the 1995
first quarter, up 38% from the 1994 quarter. The increase is
due to higher sales at Alcoa Fujikura Limited (AFL), which
includes Michels GmbH, a producer of automotive electrical
system components, beginning in January 1995. Michels
added $41 in sales to the AFL group during the first quarter
of 1995. Also, sales at Alcoa Electronic Packaging, a
producer of computer components, increased 58% over the 1994
first quarter. Sales of building products and plastic
closures also showed strong growth over the 1994 quarter.
Cost of Goods Sold
Cost of goods sold increased $430.9, or 25%, from the 1994
first quarter. The increase reflects higher volumes for most
products, particularly flat-rolled and engineered products.
Higher costs for purchased aluminum and raw materials, partly
offset by improved cost performance, were also factors. Cost
of goods sold as a percentage of revenues in the 1995 first
quarter was 72.4% versus 78.7% in the 1994 first quarter. The
lower ratio in 1995 is primarily due to higher prices and
their impact on revenues.
Other Income & Expenses
Other income was up $12.2 from the 1994 first quarter
primarily due to increased equity and interest income, partly
offset by an increase in trading and exchange losses. Equity
income increased due to strong results at Norsk Alcoa.
Interest income increased 33% over the 1994 first quarter due
to an increase in funds available for investment and an
increase in interest rates. Exchange losses increased from
$5.9 in the first quarter of 1994 to $10.4 in the 1995
period. Most of the increase was due to continuing exchange
losses from Alcoa's Mexican operations due to the continued
devaluation of the peso relative to the U.S. dollar.
Selling, general and administrative expenses increased $27.6,
or 20%, from the year-ago quarter due to higher salary and
benefits expenses and higher advertising costs for building
products. A comparison of the 1995 first quarter to the 1994
fourth quarter reflects a 4% decrease in these costs. The
decrease was due to higher year-end costs, along with reduced
travel and consulting charges in the 1995 period.
Interest expense was down $.6 from the 1994 first quarter,
due to lower borrowings by AofA, partially offset by higher
borrowing by AFL, the proceeds of which were used to finance
the Michels acquisition.
The estimated effective tax rate for 1995 is 34%. 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
103% from the 1994 first quarter. The increase is due
primarily to improved earnings, particularly at AofA,
Aluminio and Alcoa Kofem.
Commodity Risks
Alcoa is a leading global producer of aluminum ingot and
fabricated products. Aluminum ingot is an internationally
priced, sourced and traded commodity. The principal trading
market for ingot is the LME. Alcoa participates in this
market by buying and selling forward portions of its aluminum
requirements and output.
In 1994, the company had entered into longer-term contracts
with a variety of customers in the U.S. for the supply of
approximately 1.5 million mt of aluminum products over the
next several years. As a hedge against the economic risk
associated with these contracts, Alcoa entered into long
positions using principally futures and options contracts.
At both December 31, 1994 and March 31, 1995, these contracts
totaled approximately 1.4 million mt. These contracts limit
the unfavorable effect of price increases on metal purchases
and likewise limit the favorable effect from price declines.
The futures and options contracts are with creditworthy
counterparties and are further supported by cash, treasury
bills, or irrevocable letters of credit issued by carefully
chosen banks, as appropriate.
In addition, Alcoa had 14,000 mt of LME contracts outstanding
at year-end 1994 that cover fixed-price commitments to supply
customers with metal from internal sources. At March 31,
1995, such contracts totaled 108,000 mt. Accounting
convention requires that these contracts be marked-to-market.
Alcoa purchases other commodities, such as natural gas and
copper, for its operations and enters into forward contracts
to eliminate volatility in the prices of such products.
None of these contracts are material.
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 1995
first quarter was $310 and reflects Alcoa's most probable
cost to remediate identified environmental conditions for
which costs can be reasonably estimated. Approximately 28%
of the reserve relates to Alcoa's Massena, N.Y. plant site.
Remediation expenditures charged to the reserve during the
1995 three-month period were $11. 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 1995.
Liquidity and Capital Resources
Cash from Operations
Cash from operations during the 1995 first quarter totaled
$44.1, a slight increase from the 1994 level. Earnings,
including non-cash items, provided $451; however, higher
receivables and inventories more than offset the increased
earnings.
Financing Activities
Financing activities used $50.2 of cash in the first quarter.
This includes $27.8 used to repurchase 721,600 shares of the
company's common stock as Alcoa reactivated its stock purchase
program during the quarter. Dividends paid to shareholders
were $41.0 in the 1995 three month period, an increase of
$5.0 over the 1994 period due to an increase in the common
stock dividend of two and one-half cents per share.
Payments on long-term debt in the first three months of 1995
exceeded additions by $7.6. Also, an increase in short-term
borrowings for general corporate purposes provided cash of
$29.3. Debt as a percentage of invested capital of 15.1% was
comparable with the 15.3% recorded at year-end 1994.
Investing Activities
Capital expenditures for the 1995 period were $151.3, up from
$117.5 in the 1994 first quarter. Capital expenditures were
mostly for sustaining operations. Alcoa continues to focus
on improving its manufacturing processes with a minimum of
capital spending. As a result of the formation of a world-
wide bauxite, alumina and alumina-based chemicals business,
WMC paid Alcoa a net amount of $366.9 in January 1995. Alcoa
in turn loaned WMC $121.8 in January 1995. The loan is due
on demand and carries an interest rate of LIBOR plus 10 basis
points.
Alcoa and subsidiaries
Summarized consolidated financial data for Aluminio, a
Brazilian subsidiary effectively owned 59% by Alcoa, follow.
<TABLE>
<CAPTION>
(unaudited)
March 31 December 31
-------- -----------
1995 1994
---- ----
<S> <C> <C>
Cash and short-term investments $ 93.7 $ 34.5
Other current assets 369.6 376.4
Properties, plants and equipment, net (1) 796.9 929.0
Other assets 117.8 161.8
------- -------
Total assets 1,378.0 1,501.7
------- -------
Current liabilities 358.2 415.2
Long-term debt (2) 203.6 222.2
Other liabilities 31.6 33.3
------- -------
Total liabilities 593.4 670.7
------- -------
Net assets $ 784.6 $ 831.0
======= =======
(unaudited)
First quarter ended
March 31
1995 1994
Revenues $ 313.2 $ 176.2
Costs and expenses (256.4) (158.4)
Translation and exchange adjustments 2.8 (6.6)
Income tax expense (7.5) (1.0)
------- -------
Net income $ 52.1 $ 10.2
======= =======
Alcoa's share of net income $ 30.7 $ 6.0
======= =======
<FN>
(1) Effective January 1, 1995, the portion of Aluminio's operations
included in the WMC transaction were transferred to a new Alcoa
subsidiary which is not included in Aluminio's consolidated
financials. Likewise, Aluminio's closure operations outside of
Brazil were transferred to another Alcoa subsidiary effective
March 1, 1995.
(2) Held by Alcoa Brazil Holdings Company - $22.5
</TABLE>
Alcoa and subsidiaries
Summarized consolidated financial data for AofA, an
Australian subsidiary, follow. At January 1, 1995, Alcoa's
ownership interest in AofA increased from 51% to 60%.
<TABLE>
<CAPTION>
(unaudited)
March 31 December 31
-------- -----------
1995 1994
---- ----
<S> <C> <C>
Cash and short-term investments $ 101.6 $ 88.2
Other current assets 510.8 484.9
Properties, plants and equipment, net 1,537.8 1,645.3
Other assets 103.6 102.5
------- -------
Total assets 2,253.8 2,320.9
------- -------
Current liabilities 261.2 317.9
Long-term debt 169.3 150.2
Other liabilities 369.3 382.6
------- -------
Total liabilities 799.8 850.7
------- -------
Net assets $ 1,454.0 $ 1,470.2
======= =======
(unaudited)
First quarter ended
March 31
--------
1995 1994
---- ----
Revenues (1) $ 428.8 $ 360.8
Costs and expenses (308.8) (276.4)
Translation and exchange
adjustments - .9
Income tax expense (38.4) (28.2)
------- -------
Net income $ 81.6 $ 57.1
======= =======
Alcoa's share of net income $ 49.0 $ 29.1
======= =======
<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: 1995 - $9.6, 1994 - $8.0
</TABLE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, Alcoa and Alcoa Specialty Chemicals,
Inc., a subsidiary, are defendants in a case filed by
Aluminum Chemicals, Inc., et al., in the District Court of
Harris County, Texas. Plaintiffs allege claims for breach
of fiduciary duty, fraud, interference with contractual and
business relations, breach of contract, conversion, misappro-
priation of trade secrets, deceptive trade practices and
civil conspiracy in connection with a former partnership,
Alcoa-Coastal Chemicals. This matter was settled on March 8,
1995. All claims were dismissed by an Agreed Order of
Dismissal with Prejudice entered April 3, 1995.
On March 27, 1995, the United States Department of Justice
(DOJ) issued a Civil Investigative Demand requesting informa-
tion regarding pricing policies on aluminum rigid container
sheet in 1994 and 1995. Alcoa 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
May 11, 1995 By /s/ JAN H. M. HOMMEN
Date Jan H. M. Hommen
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
May 11, 1995 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
Alcoa and subsidiaries EXHIBIT 11
<TABLE>
<CAPTION>
Computation of Earnings (Loss) per Common Share
For the three months ended March 31
(in millions, except share amounts)
1995 1994
----------- -----------
<S> <C> <C>
1. Income (loss) applicable to common stock
before extraordinary loss * $193.3 $(40.9)
2. Weighted average number of common shares
outstanding during the period 178,669,937 177,247,646
3. Primary earnings (loss) per common share
before extraordinary loss (1 divided by 2) $1.08 $(.23)
4. Fully diluted earnings (loss) before
extraordinary loss (1) $193.3 $(40.9)
5. Shares issuable under compensation plans 31,113 17,086
6. Shares issuable upon exercise of dilutive
outstanding stock options (treasury stock
method) 759,199 643,554
7. Fully diluted shares (2 + 5 + 6) 179,460,249 177,908,286
8. Fully diluted earnings (loss) per common
share before extraordinary loss (4
divided by 7) $1.08 $(.23)
Per share amounts for 1994 have been restated to reflect the two-for-one stock
split which occurred in February, 1995.
<FN>
* After preferred dividend requirement
</TABLE>
EXHIBIT 12
Alcoa and subsidiaries
<TABLE>
<CAPTION>
Computation of Ratio of Earnings to Fixed Charges
For the three months ended March 31, 1995
(in millions, except ratio)
1995
----
<S> <C>
Earnings:
Income before taxes on income $ 422.3
Minority interests' share of earnings of majority-
owned subsidiaries without fixed charges -
Equity income (20.1)
Fixed charges 32.4
Proportionate share of income (loss) of 50%-owned
persons 20.1
Distributed income of less than 50%-owned persons -
Amortization of capitalized interest 6.7
-------
Total earnings $ 461.4
Fixed Charges:
Interest expense:
Consolidated $ 24.9
Proportionate share of 50%-owned persons 2.0
-------
26.9
-------
Amount representative of the interest factor in rents:
Consolidated 5.4
Proportionate share of 50%-owned persons .1
-------
5.5
-------
Fixed charges added to earnings 32.4
-------
Interest capitalized:
Consolidated .4
Proportionate share of 50%-owned persons -
-------
.4
-------
Preferred stock dividend requirements of
majority-owned subsidiaries 4.0
-------
Total fixed charges $ 36.8
=======
Ratio of earnings to fixed charges 12.5
=======
</TABLE>
EXHIBIT 15
April 7, 1995
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 April 7, 1995,
accompanying interim financial information of Aluminum
Company of America (Alcoa) and subsidiaries for the three-
month period ended March 31, 1995, 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.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 718,300
<SECURITIES> 6,500
<RECEIVABLES> 1,722,900
<ALLOWANCES> 40,000
<INVENTORY> 1,408,300
<CURRENT-ASSETS> 4,534,200
<PP&E> 14,525,900
<DEPRECIATION> 7,925,700
<TOTAL-ASSETS> 12,730,300
<CURRENT-LIABILITIES> 2,712,500
<BONDS> 1,176,700
<COMMON> 178,900
0
55,800
<OTHER-SE> 3,838,700
<TOTAL-LIABILITY-AND-EQUITY> 12,730,300
<SALES> 3,009,800
<TOTAL-REVENUES> 3,029,500
<CGS> 2,178,800
<TOTAL-COSTS> 2,178,800
<OTHER-EXPENSES> 167,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,900
<INCOME-PRETAX> 422,300
<INCOME-TAX> 143,300
<INCOME-CONTINUING> 193,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193,800
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
