SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 10, 2000
ALCOA INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-3610 25-0317820
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858
(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)
Item 5. Other Events.
The Registrant issued the following press releases on January 10, 2000:
Alcoa's Earnings Surge 24% Year-to-Year,
Exceed $1 Billion for the First Time
PITTSBURGH, January 10, 2000 -- Alcoa announced today that
for the first time in its 110-year history, the company had over
a billion-dollars in earnings for the year.
For the year 1999, Alcoa's net income was $1.054 billion, or
$2.82 per diluted share, up 24% from $853 million, or $2.42 per
share for 1998.
"Alcoa's excellent performance in 1999 reflects the growing
success of Alcoans worldwide in aligning our processes and systems
with the Alcoa Business System," said CEO Alain Belda. "Our
processes are more efficient, with improved cycle time, less waste,
and reduced inventories as we strive to produce what the customer
wants, when it's wanted."
<TABLE>
<CAPTION>
Fourth Quarter Year
1999 1998 %Change 1999 1998 %Change
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $4,253.1 $4,198.8 1% $16,322.8 $15,339.8 6%
Net Income 333.9 218.3 53 1,054.1 853.0 24
Earnings
per share $ .89 $.59 51 $2.82 $2.42 17
Debt as a % of
Invested Capital 28.3% 31.7% (11)
(dollars in millions, except for share amounts)
</TABLE>
Net income for the 1999 fourth quarter was $333.9 million, or
89 cents per diluted share, up 53% from $218.3 million, or 59 cents
per share, for the 1998 fourth quarter.
Revenues for the 1999 fourth quarter were $4.3 billion, compared
with $4.2 billion in the year ago quarter. For the full year 1999,
revenues were a record $16.3 billion, compared with $15.3 billion for
1998.
"We continued to make progress on our $1.1 billion cost-reduction
initiative," noted CEO Belda. At the end of 1999, the company had
achieved $728 million in annualized cost savings towards its $1.1 billion
target. Announced in mid-1998, this aggressive target is to be achieved
by January 1, 2001. The quarterly run rate at the end of the 1999
fourth quarter was $182 million, compared with $159 million for the
1999 third quarter.
Results for the 1999 fourth quarter were affected positively by
$31 million, or 8 cents per share, related to LIFO inventory reductions
which are tangible results coming from the Alcoa Production System, and
a decrease in Alcoa's effective tax rate from 32% to 29.9% for the year
as a result of a decrease in the Australian income tax rate. The quarter
was affected negatively by an uptick in administrative costs which is
substantially attributable to higher acquisition expenses and incentive
accruals for exceptional performance.
Return on shareholders' equity was 17.2% for 1999 and 16.3% for 1998.
Founded in 1888, Alcoa is the world's leading producer of aluminum
and alumina and a major participant in all segments of the industry:
mining, refining, smelting, fabricating and recycling. Alcoa serves
customers worldwide in the packaging, automotive, aerospace, construction
and other markets with a great variety of fabricated and finished
products. The company has 250 operating locations in 31 countries.
Alcoa Inc. (NYSE: AA)
Financial and operating data for Alcoa and its subsidiaries follow.
<TABLE>
<CAPTION>
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Fourth quarter
-------------------------------
For the period ended December 31 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Sales $4,253.1 $4,198.8
Other income 45.9 55.4
4,299.0 4,254.2
Cost of goods sold 3,147.8 3,262.8
Selling, general administrative and other expenses 254.7 251.2
Research and development expenses 36.6 47.2
Provision for depreciation and depletion 224.4 238.3
Interest expense 42.0 57.9
3,705.5 3,857.4
Income from operations before taxes on income 593.5 396.8
Provision for taxes on income 151.1 120.9
Income from operations 442.4 275.9
Less: Minority interests' share (108.5) (57.6)
NET INCOME $333.9 $218.3
Earnings per common share:
Basic $0.91 $0.59
Diluted $0.89 $0.59
Average number of shares used to compute:
Basic earnings per common share 366,913,979 366,838,176
Diluted earnings per common share 375,375,259 369,341,168
Translation and exchange adjustments included
in net income $2.8 $(3.8)
Shipments of aluminum products (metric tons) 1,129,000 1,174,000
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL REPORT
Alcoa and subsidiaries
(in millions except share and ton amounts)
(UNAUDITED)
Twelve months
For the period ended December 31 1999 1998
<S> <C> <C>
Sales $16,322.8 $15,339.8
Other income 123.6 149.6
16,446.4 15,489.4
Cost of goods sold 12,535.5 11,933.4
Selling, general administrative and
other expenses 851.2 782.5
Research and development expenses 128.0 128.4
Provision for depreciation and depletion 887.6 842.4
Interest expense 195.2 197.9
14,597.5 13,884.6
Income from operations before taxes
on income 1,848.9 1,604.8
Provision for taxes on income 552.8 513.5
Income from operations 1,296.1 1,091.3
Less: Minority interests' share (242.0) (238.3)
Net Income $1,054.1 $853.0
Earnings per common share:
Basic $2.87 $2.44
Diluted $2.82 $2.42
Average number of shares used to compute:
Basic earnings per common share 366,944,365 349,113,644
Diluted earnings per common share 373,644,872 351,616,636
Shares outstanding at end of period 367,748,998 366,809,078
Translation and exchange adjustments included
in net income $(8.3) $(8.0)
Shipments of aluminum products (metric tons) 4,478,000 3,951,000
</TABLE>
<TABLE>
<CAPTION>
ALCOA 4th QUARTER SUPPLEMENTAL INFORMATION
Consolidated
Revenues 4Q98 1Q99 2Q99 3Q99 4Q99 1999
<S> <C> <C> <C> <C> <C> <C>
Alumina and
chemicals 452.7 420.3 455.8 473.9 492.0 1,842.0
Primary metals 629.8 533.7 518.6 559.9 628.7 2,240.9
Flat-rolled
products 1,291.8 1,269.6 1,257.6 1,273.0 1,312.3 5,112.5
Engineered
products 978.8 942.3 939.3 917.1 929.6 3,728.3
Other 839.4 812.8 861.1 828.4 890.5 3,392.8
Total 4,192.5 3,978.7 4,032.4 4,052.3 4,253.1 16,316.5
Consolidated Shipments (KMT's)
Alumina and
chemicals 1,783 1,664 1,836 1,814 1,740 7,054
Primary metals 441 370 354 335 383 1,442
Flat-rolled
products 479 487 496 496 503 1,982
Engineered
products 240 258 249 249 233 989
Other 14 17 18 20 10 65
Total Aluminum 1,174 1,132 1,117 1,100 1,129 4,478
Average realized
price - Primary 0.64 0.63 0.64 0.71 0.72 0.67
</TABLE>
<TABLE>
<CAPTION>
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
ASSETS December 31 December 31
1999 1998
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (includes cash of $67.4 in
1999 and $131.1 in 1998) $ 236.9 $ 342.2
Short-term investments 76.8 39.4
Receivables from customers, less allowances:
1999-$58.0; 1998-$61.4 2,199.5 2,163.2
Other receivables 164.6 171.0
Inventories 1,618.4 1,880.5
Deferred income taxes 232.9 198.0
Prepaid expenses and other current assets 270.9 230.8
--------- ---------
Total current assets 4,800.0 5,025.1
--------- ---------
Properties, plants and equipment, at cost 18,435.6 18,224.5
Less, accumulated depreciation, depletion and
Amortization 9,302.7 9,091.0
--------- ---------
Net properties, plants and equipment 9,132.9 9,133.5
--------- ---------
Goodwill, net of accumulated amortization of $220.5 in
1999 and $179.3 in 1998 1,328.4 1,414.1
Other assets 1,804.5 1,889.8
--------- ---------
Total assets $17,065.8 $17,462.5
========= =========
LIABILITIES
Current liabilities:
Short-term borrowings $ 342.7 $ 431.0
Accounts payable, trade 1,218.9 1,044.3
Accrued compensation and retirement costs 582.5 553.2
Taxes, including taxes on income 368.2 431.3
Other current liabilities 423.6 627.4
Long-term debt due within one year 67.4 181.1
--------- ---------
Total current liabilities 3,003.3 3,268.3
--------- ---------
Long-term debt, less amount due within one year 2,656.9 2,877.0
Accrued postretirement benefits 1,720.2 1,840.1
Other noncurrent liabilities and deferred credits 1,472.8 1,587.1
Deferred income taxes 437.0 358.1
--------- ---------
Total liabilities 9,290.2 9,930.6
--------- ---------
MINORITY INTERESTS 1,457.9 1,476.0
--------- ---------
CONTINGENT LIABILITIES - -
SHAREHOLDERS' EQUITY
Preferred stock 55.8 55.8
Common stock 394.7 394.7
Additional capital 1,703.7 1,675.9
Retained earnings 6,061.4 5,305.1
Treasury stock, at cost (1,259.6) (1,028.7)
Accumulated other comprehensive loss (638.3) (346.9)
--------- ---------
Total shareholders' equity 6,317.7 6,055.9
--------- ---------
Total liabilities and shareholders' equity $17,065.8 $17,462.5
========= =========
</TABLE>
Alcoa Announces 33% Increase in Base Dividend, 2-for-1 Stock Split
PITTSBURGH, January 10, 2000 - Alcoa today announced that its
Board of Directors approved a base quarterly dividend increase of
33.3%, to 25 cents per common share from 18.75 cents per share.
For a full year, base dividends will now total $1.00 compared with
75 cents before the increase.
The company also announced that it will maintain its variable
dividend, linked directly to financial performance. The variable
dividend is 30% of the company's annual earnings when these
earnings exceed a threshold. The threshold is changed to $3.00
per basic share from $2.25 per share. The variable dividend is
paid in the following year in four equal quarterly installments
with the base quarterly dividends.
Under the new policy, the Board declared a quarterly common
stock dividend of 25 cents per share that is payable on
February 25, 2000, to shareholders of record at the close of
business on February 4, 2000. The 2000 dividend, based on the
new formula, is a 24% increase from the 1999 dividend payment.
The directors also voted a regular dividend of 93.75 cents
per share on Alcoa's $3.75 cumulative preferred stock, payable
April 1, 2000 to shareholders of record on March 10, 2000.
2-for-1 Stock Split
The Board declared a two-for-one split of Alcoa's common
stock. The stock split is subject to approval of Alcoa share-
holders who must approve an amendment to the company's articles
to increase the authorized shares of common stock at Alcoa's
annual meeting on May 12, 2000. Shareholders of record on
May 26, 2000, will receive an additional common share for each
share held, which will be distributed on June 9, 2000.
Commitment to Stock Repurchase Program
Alcoa restated its commitment to its previously authorized
share repurchase program which it announced last year. Because
of restrictions imposed by U.S. securities laws, the company
has not repurchased its shares since October and is precluded
from doing so until after the Reynolds shareholder meeting
scheduled for February 11, 2000. It is Alcoa's intention to
restart the stock repurchase program at that time.
In addition to the foregoing press releases, Alcoa
reiterated that it is targeting, and plans to achieve, cost and
efficiency savings of approximately $200 million (pre-tax) by
the end of the second year after the closing of the stock-for-stock
merger transaction with Reynolds Metals Company. The projected
cost synergies, approximately half of which are anticipated for
the first year after closing, will be in addition to Alcoa's
ongoing $1.1 billion (pre-tax) cost-reduction program.
SIGNATURE
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 following authorized officer.
ALCOA INC.
By /s/Richard B. Kelson
Date: January 10, 2000 Richard B. Kelson
Executive Vice President
and Chief Financial Officer
