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, 2002 Commission File Number 1-3610
ALCOA INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0317820
(State of incorporation) (I.R.S. Employer Identification No.)
201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858
(Address of principal executive offices) (Zip Code)
Office of Investor Relations 212-836-2674
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 April 19, 2002, 846,646,553 shares of common stock, par value
$1.00 per share, of the Registrant were outstanding.
A07-15200
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements.
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
March 31 December 31
ASSETS 2002 2001
------------- ------------
Current assets:
Cash and cash equivalents $ 569 $ 512
Short-term investments 48 15
Receivables from customers, less allowances of
$115 in 2002 and $129 in 2001 2,659 2,577
Other receivables 251 288
Inventories (F) 2,413 2,531
Deferred income taxes 404 410
Prepaid expenses and other current assets 489 459
------- -------
Total current assets 6,833 6,792
------- -------
Properties, plants and equipment, at cost 22,739 22,536
Less: accumulated depreciation, depletion and
amortization 10,740 10,554
------- -------
Net properties, plants and equipment 11,999 11,982
------- -------
Goodwill (C) 5,832 5,733
Other assets (C) 3,748 3,848
------- -------
Total assets $28,412 $28,355
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings $ 78 $ 142
Accounts payable, trade 1,626 1,630
Accrued compensation and retirement costs 784 889
Taxes, including taxes on income 876 903
Other current liabilities 1,304 1,336
Long-term debt due within one year 134 103
------- -------
Total current liabilities 4,802 5,003
------- -------
Long-term debt, less amount due within one year 6,825 6,388
Accrued postretirement benefits 2,482 2,513
Other noncurrent liabilities and deferred credits 1,852 1,968
Deferred income taxes 575 556
------- -------
Total liabilities 16,536 16,428
------- -------
MINORITY INTERESTS 1,357 1,313
------- -------
COMMITMENTS AND CONTINGENCIES (G)
SHAREHOLDERS' EQUITY
Preferred stock 56 56
Common stock 925 925
Additional capital 6,099 6,114
Retained earnings 7,480 7,517
Treasury stock, at cost (2,751) (2,706)
Accumulated other comprehensive loss (H) (1,290) (1,292)
------- -------
Total shareholders' equity 10,519 10,614
------- -------
Total liabilities and equity $28,412 $28,355
======= =======
The accompanying notes are an integral part of the financial statements.
2
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share amounts)
First quarter ended
March 31
--------
2002 2001
---------- ----------
Sales $ 4,983 $ 6,176
Cost of goods sold 4,044 4,713
Selling, general administrative and other
expenses 278 323
Research and development expenses 51 49
Provision for depreciation, depletion and
amortization (C) 261 321
Interest expense 75 115
Other income, net (55) (92)
------- -------
4,654 5,429
Income before taxes on income 329 747
Provision for taxes on income 104 247
------- -------
Income from operations 225 500
Less: Minority interests' share 41 96
------- -------
Income before accounting change 184 404
Cumulative effect of accounting change
for goodwill(C) 34 -
-------- -------
NET INCOME $ 218 $ 404
======== =======
EARNINGS PER SHARE (I)
Basic (before cumulative effect) $ .22 $ .47
======== =======
Basic cumulative effect of accounting change $ .04 $ -
-------- -------
Basic (after cumulative effect) $ .26 $ .47
======== ========
Diluted (before cumulative effect) $ .22 $ .46
======== =======
Diluted cumulative effect of accounting change $ .04 $ -
-------- -------
Diluted (after cumulative effect) $ .26 $ .46
======== =======
Dividends paid per common share $ .150 $ .150
======== =======
The accompanying notes are an integral part of the financial statements.
3
Alcoa and subsidiaries
Condensed Statement of Consolidated Cash Flows (unaudited)
(in millions)
Three months ended
March 31
--------
2002 2001
---------- ----------
CASH FROM OPERATIONS
Net income $ 218 $ 404
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion and amortization 263 324
Change in deferred income taxes (7) 5
Equity income, net of dividends 4 4
Gains from investing activities - sale of assets - (47)
Minority interests 41 96
Accounting change (C) (34) -
Other (16) (9)
Changes in assets and liabilities, excluding effects of acquisitions and
divestitures:
(Increase) reduction in receivables (33) 166
Reduction (increase) in inventories 110 (202)
Increase in prepaid expenses and other
current assets (66) (222)
Reduction in accounts payable and accrued expenses (227) (260)
(Reduction) increase in taxes, including taxes on income (42) 209
Net change in noncurrent assets and liabilities 26 (126)
------ ------
CASH PROVIDED FROM OPERATIONS 237 342
------ ------
FINANCING ACTIVITIES
Net changes to short-term borrowings (65) (1,014)
Common stock issued for stock compensation plans 34 134
Repurchase of common stock (105) (276)
Dividends paid to shareholders (127) (130)
Dividends paid to minority interests - (139)
Net change in commercial paper 480 -
Additions to long-term debt 17 208
Payments on long-term debt (29) (434)
------ ------
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES 205 (1,651)
------ ------
INVESTING ACTIVITIES
Capital expenditures (238) (241)
Acquisitions, net of cash acquired (E) (105) (76)
Proceeds from the sale of assets 23 1,777
Additions to investments (10) (44)
Changes in short-term investments (33) 23
Changes in minority interests (10) -
Other (7) (9)
------ ------
CASH (USED FOR) PROVIDED FROM INVESTING ACTIVITIES (380) 1,430
------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (5) (15)
------ ------
Net change in cash and cash equivalents 57 106
Cash and cash equivalents at beginning of year 512 315
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 569 $ 421
====== ======
The accompanying notes are an integral part of the financial statements.
4
Notes to Condensed Consolidated Financial Statements
(dollars and shares in millions, except per-share amounts)
A. Basis of Presentation - The Condensed Consolidated Financial Statements are
unaudited. These statements include all adjustments, consisting of normal
recurring accruals, considered necessary by management to fairly present the
results of operations, financial position and cash flows. The results reported
in these Condensed Consolidated Financial Statements are not necessarily
indicative of the results that may be expected for the entire year.
This Form 10-Q report should be read in conjunction with Alcoa's annual
report on Form 10-K for the year ended December 31, 2001.
B. Special Items - During 2001, Alcoa recorded charges of $566 ($355 after tax
and minority interests) as a result of a restructuring plan based on a strategic
review of the company's primary products and fabricating businesses aimed at
optimizing and aligning its manufacturing systems with customer needs, while
positioning the company for stronger profitability. The charge of $566 consisted
of a charge of $212 ($114 after tax and minority interests) in the second
quarter of 2001 and a charge of $354 ($241 after tax and minority interests) in
the fourth quarter of 2001. These charges consisted of asset write-downs,
employee termination and severance costs related to workforce reductions of
approximately 10,400 employees, and other exit costs related to the shutdown of
facilities. The second quarter charge was primarily due to actions taken in
Alcoa's primary products businesses because of economic and competitive
conditions. These actions included the shutdown of three facilities in the U.S.
Alcoa expects to complete these actions by mid-2002. The fourth quarter charge
was primarily due to actions taken in Alcoa's fabricating businesses. These
actions include the shutdown of 15 facilities in the U.S. and Europe. Alcoa
expects to complete these actions by the end of 2002. The results of operations
related to these facilities were not material. For further details on the
restructuring plan, see Note B to the audited financial statements contained in
the Annual Report on Form 10-K for the year ended December 31, 2001.
The reserve balances and related cash payments consisted of:
Employee
Asset Termination and
Write-downs Severance Costs Other Total
- ---------------------------------------------------------------------------------------------------------------------
2001:
Total restructuring
charges $ 372 $ 178 $ 16 $ 566
Cash payments (3) (32) (5) (40)
Noncash charges* (288) - - (288)
- ---------------------------------------------------------------------------------------------------------------------
Reserve balance at
December 31, 2001 $ 81 $ 146 $ 11 $ 238
- ---------------------------------------------------------------------------------------------------------------------
2002:
Cash payments (7) (17) (4) (28)
- ---------------------------------------------------------------------------------------------------------------------
Reserve balance at
March 31, 2002 $ 74 $ 129 $ 7 $ 210
- ---------------------------------------------------------------------------------------------------------------------
* Adjusted
As of March 31, 2002, approximately 5,200 of the 10,400 employees had
been terminated. The workforce reductions under the restructuring plan consisted
of hourly and salaried employees at various manufacturing facilities-primarily
located outside of the U.S.-due to weak market conditions and the shutdowns of
several manufacturing facilities.
C. Recently Adopted Accounting Standards - Alcoa adopted Statement of Financial
Accounting Standards (SFAS) No. 141, "Business Combinations" which requires that
the purchase method of accounting be applied to all business combinations after
June 30, 2001. SFAS No. 141 also established criteria for recognition of
intangible assets and goodwill. Effective January 1, 2002, Alcoa adopted SFAS
No. 142 "Goodwill and Other Intangible Assets." Under this standard, goodwill
and intangibles with indefinite useful lives are no longer amortized. This
standard also requires, at a minimum, an annual assessment of the carrying value
of goodwill and intangibles with indefinite useful lives.
5
If the carrying value of goodwill or an intangible asset exceeds its fair value,
an impairment loss shall be recognized. A discounted cash flow model was used to
determine the fair value of Alcoa's businesses for purposes of testing goodwill
for impairment. The discount rate used was based on a risk-adjusted weighted
average cost of capital for each business.
The effects of adopting the new standards on net income and diluted
earnings per share for the three-month periods ended March 31, 2002 and 2001
follow.
Net Income Diluted EPS
---------- -----------
2002 2001 2002 2001
---- ---- ---- ----
Net income $ 218 $ 404 $ .26 $ .46
Less: cumulative effect income
from accounting change for
goodwill (34) - (.04) -
------- ------- ------- -------
Income, excluding cumulative
effect 184 404 .22 .46
Add: goodwill amortization - 44 - .05
------- ------- ------- -------
Income excluding cumulative
effect in 2002 and goodwill
amortization in 2001 $ 184 $ 448 $ .22 $ .51
======= ======= ======= =======
The cumulative effect adjustment recognized upon adoption of these new
standards was $34 (after tax), consisting of income from the write-off of
negative goodwill from prior acquisitions of $49, offset by a $15 write-off for
the impairment of goodwill in the automotive business resulting from a change in
the criteria for the measurement of impairments from an undiscounted to a
discounted cash flow method. Net income for the quarter ended March 31, 2001
would have been $44, or five cents per share, higher if goodwill amortization
had been discontinued effective January 1, 2001. Net income for the full year of
2001 would have been $171, or 20 cents per share, higher if goodwill had been
discontinued effective January 1, 2001.
Changes to goodwill and intangible assets during the quarter ended
March 31, 2002, including the effects of adopting these new accounting
standards, follow.
Goodwill Intangible assets
Balance at December 31, 2001, net of
accumulated amortization $ 5,733 $ 674
Intangible assets reclassified to goodwill 28 (28)
Write-off of goodwill recognized in
cumulative effect adjustment (15) -
Additions during the period 101 -
Translation and other adjustments (15) (6)
Amortization expense - (16)
-------- -------
Balance at March 31, 2002, net of
accumulated amortization $ 5,832 $ 624
======== =======
In accordance with the provisions of these new standards, on January 1,
2002, Alcoa transferred $28 (after tax) of customer base intangibles, initially
recorded in the Reynolds acquisition, to goodwill (Packaging and Consumer
segment). Goodwill also increased $101 during the period related to several
immaterial acquisitions (primarily in the Other group, and the Engineered
Products and Packaging and Consumer segments) and adjustments to preliminary
purchase price allocations from prior periods.
Intangible assets, which are included in other assets, totaled $624,
net of accumulated amortization of $321, at March 31, 2002. Of this amount, $169
represents intangibles with indefinite useful lives, consisting of trade names
which are not being amortized under SFAS No. 142. The remaining intangibles
relate to customer relationships, computer software, patents and licenses.
Amortization expense for intangible assets is expected to range from
approximately $65 to $40 each year between 2003 and 2007.
Effective January 1, 2002, Alcoa adopted SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." This statement amends previous
accounting and disclosure requirements for impairments and disposals
6
of long-lived assets. The provisions of this new standard are generally to be
applied prospectively.
D. Recently Issued Accounting Standards - In June 2001, the Financial Accounting
Standards Board issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement establishes standards for accounting for
obligations associated with the retirement of tangible long-lived assets. Alcoa
must adopt this standard on January 1, 2003. Management is currently assessing
the details of the standard and is preparing a plan of implementation.
E. Acquisitions - During the first quarter of 2002, Alcoa completed several
immaterial acquisitions for a total of approximately $105 in cash. Pro-forma
results of the company, assuming the acquisitions had been made at the beginning
of each period presented, would not be materially different from the results
reported.
In March 2002, Alcoa entered into an agreement to acquire Ivex Packaging
Corporation for $21.50 per share for each outstanding share of Ivex, excluding
Ivex's 48.2% interest in the common stock of Packaging Dynamics Corporation. The
total enterprise value of the acquisition, including the assumption of debt, is
approximately $790. Ivex is a leading manufacturer of specialty plastic
packaging for the food, electronic, medical and retail markets. It will become
part of Alcoa's packaging and consumer business. The transaction is subject to
the approval of Ivex shareholders and customary regulatory approvals. This
transaction is expected to be completed in the second quarter of 2002.
F. Inventories
March 31 December 31
2002 2001
----------- -----------
Finished goods $ 624 $ 691
Work in process 773 734
Bauxite and alumina 399 410
Purchased raw materials 456 531
Operating supplies 161 165
--------- ---------
$ 2,413 $ 2,531
========= =========
Approximately 50% of total inventories at March 31, 2002, was valued on a
LIFO basis. If valued on an average cost basis, total inventories would have
been $613 and $605 higher at March 31, 2002 and December 31, 2001, respectively.
G. Commitments and Contingencies - Various lawsuits, claims and proceedings have
been or may be instituted or asserted against Alcoa, including those pertaining
to environmental, product liability, and safety and health matters. While the
amounts claimed may be substantial, the ultimate liability cannot now be
determined because of the considerable uncertainties that exist. Therefore, it
is possible that results of operations or liquidity in a particular period could
be materially affected by certain contingencies. However, based on facts
currently available, management believes that the disposition of matters that
are pending or asserted will not have a materially adverse effect on the
financial position of the company.
Alcoa Aluminio S.A. (Aluminio) is a participant in several hydroelectric
construction projects in Brazil for purposes of increasing its energy self-
sufficiency and providing a long-term, low-cost source of power for its
facilities. As a participant in Machadinho, one of its hydroelectric
construction projects in Brazil, Aluminio has guaranteed up to 36% of the
project's total debt of approximately $315. Beginning in the first quarter of
2002, Aluminio is committed to taking a share of the output of the completed
project for 30 years at cost, including cost of financing the project. In the
event that other participants in this project fail to fulfill their financial
responsibilities, Aluminio may be required to fund a portion of the deficiency.
In accordance with the agreement, if Aluminio funds any such deficiency, its
participation and share of the output from the project will increase
proportionately.
7
Aluminio also entered into agreements to participate in four additional
hydroelectric construction projects in Brazil that are scheduled to be completed
at various dates ranging from 2005 to 2008. Aluminio's share of the output from
the hydroelectric facilities, when completed, ranges from 20% to 39.5%. Total
costs for all four projects are estimated at $1,400, with Aluminio's share of
total project costs totaling approximately 30%. The plans for financing these
projects have not yet been finalized. Aluminio may be required to provide
guarantees of project financing or commit to additional investments as these
projects progress. At March 31, 2002, Aluminio had provided $13 of guarantees on
two of the hydroelectric construction projects in the form of performance bonds.
Aluminio accounts for its investments in these hydroelectric projects on
the equity method. Aluminio's investment in these projects was $115 and $108 at
March 31, 2002, and December 31, 2001, respectively.
In January 2002, Alcoa raised its equity stake in Elkem ASA, a Norwegian
metals producer, above 40% which, under Norwegian law, required Alcoa to
initiate an unconditional cash tender offer for the remaining outstanding shares
of Elkem. Under the tender offer that expired in February 2002, Alcoa acquired
additional shares, raising its total equity stake in Elkem to 40.2%.
H. Comprehensive Income
First quarter ended
March 31
---------
2002 2001
------- --------
Net income $ 218 $ 404
Other comprehensive income (loss):
Changes in:
Unrealized gain/loss on available-for-sale
securities 19 -
Minimum pension liability (31) -
Unrealized translation adjustments (31) (238)
Unrecognized gains/(losses) on derivatives 45 (123)
------- -------
Comprehensive income $ 220 $ 43
======= =======
I. Earnings Per Share - The details of basic and diluted EPS follow.
First quarter ended
March 31
--------
2002 2001
------- -------
Income before cumulative effect $ 184 $ 404
Less: Preferred stock dividends - -
------- -------
Income available to common stockholders before
cumulative effect $ 184 $ 404
Cumulative effect of accounting change 34 -
Income available to common stockholders after
cumulative effect $ 218 $ 404
Average shares outstanding - basic 847 865
Effect of dilutive securities:
Shares issuable upon exercise of dilutive outstanding
stock options 7 9
------- -------
Average shares outstanding - diluted 854 874
Basic EPS (before cumulative effect) $ .22 $ .47
======= =======
Basic EPS (after cumulative effect) $ .26 $ .47
======= =======
Diluted EPS (before cumulative effect) $ .22 $ .46
======= =======
Diluted EPS (after cumulative effect) $ .26 $ .46
======= =======
Options to purchase 30 shares of common stock at an average exercise price
of $40.00 were outstanding as of March 31, 2002 but were not included in the
computation of diluted EPS because the option exercise price was greater than
the average market price of the common shares.
J. Reclassifications - Certain amounts have been reclassified to conform to
current year presentation.
8
K. Segment Information - The following details sales and after-tax
operating income (ATOI) for each reportable segment for the three-month
periods ended March 31, 2002 and 2001. Also included below are the balances
of goodwill at March 31, 2002, as well as goodwill amortization expense for
the period ended March 31, 2001 for each reportable segment. For more
information on segments, see Management's Discussion and Analysis and the
segment disclosures included in Alcoa's Form 10-K for the year ended
December 31, 2001.
Segment Information: Alumina Flat- Engi- Pack-
& Chem- Primary Rolled neered aging &
March 31, 2002 icals Metals Products Products Consumer Other Total
Sales:
Third-party sales $ 425 $ 764 $ 1,156 $ 1,396 $ 624 $ 618 $4,983
Intersegment sales 229 878 15 8 - - 1,130
------- ------ ------- ------- ------ ------ ------
Total sales $ 654 $1,642 $ 1,171 $ 1,404 $ 624 $ 618 $6,113
======= ====== ======= ======= ====== ====== ======
After-tax operating
income $ 65 $ 143 $ 61 $ 51 $ 28 $ 7 $ 355
======= ====== ======= ======= ====== ====== ======
Goodwill(1) $ 27 $ 929 $ 145 $ 2,316 $ 364 $ 343 $4,124
======= ====== ======= ======= ====== ====== ======
March 31, 2001
Sales:
Third-party sales $ 547 $ 967 $ 1,343 $ 1,593 $ 646 $1,080 $6,176
Intersegment sales 283 867 16 9 - - 1,175
------- ------ ------- ------- ------ ------ ------
Total sales $ 830 $1,834 $ 1,359 $ 1,602 $ 646 $1,080 $7,351
======= ====== ======= ======= ====== ====== ======
After-tax operating
income $ 166 $ 294 $ 65 $ 40 $ 43 $ 50 $ 658
====== ====== ======= ======= ====== ====== ======
Goodwill
amortization
included in ATOI(2) $ - $ (5) $ 1 $ (15) $ (4) $ (10) $ (33)
====== ====== ======= ======= ====== ====== ======
(1) Goodwill balances by segment at December 31, 2001, are as follows:
Alumina & Chemicals $35, Primary Metals $929, Flat-Rolled Products $145,
Engineered Products $2,312, Packaging & Consumer $331 and Other $271.
Goodwill of $1,708 and $1,710 at March 31, 2002, and December 31, 2001,
respectively, is included in corporate.
(2) Goodwill amortization of $(11) is included in corporate.
The following table reconciles segment information to consolidated totals.
First quarter ended
March 31
--------
2002 2001
------ -----
Total after-tax operating income $ 355 $ 658
Impact of intersegment profit eliminations (3) 4
Unallocated amounts (net of tax):
Interest income 10 8
Interest expense (49) (75)
Minority interests (41) (96)
Corporate expense (58) (66)
Accounting change (C) 34 -
Other (30) (29)
------ ------
Consolidated net income $ 218 $ 404
====== ======
9
Report of Independent Accountants
- ---------------------------------
To the Shareholders and Board of Directors
Alcoa Inc. (Alcoa)
We have reviewed the accompanying unaudited condensed consolidated balance
sheet of Alcoa and subsidiaries as of March 31, 2002, and the related unaudited
condensed statements of consolidated income and cash flows for the three-month
periods ended March 31, 2002 and 2001. 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 accompanying unaudited condensed consolidated interim
financial statements referred to above for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Alcoa and subsidiaries as of December 31, 2001, 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 9, 2002, 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, 2001 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
As discussed in Note C to the unaudited condensed consolidated financial
statements, Alcoa changed its method of accounting for goodwill and other
intangible assets effective January 1, 2002.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
April 5, 2002
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(dollars in millions, except per share amounts and ingot prices; shipments in
thousands of metric tons (mt))
Certain statements in this report under this caption and elsewhere relate to
future events and expectations and, as such, constitute forward-looking
statements. Forward-looking statements include those containing such words as
"anticipates," "believes," "estimates," "expects," "hopes," "targets," "should,"
"will," "will likely result," "forecast," "outlook," "projects" or similar
expressions. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of Alcoa to be different from those expressed or implied in the
forward-looking statements. For a discussion of some of the specific factors
that may cause such a difference, see Note G to the financial statements; the
disclosures included below under Segment Information, Market Risks and
Environmental Matters; and the Business section in Alcoa's Form 10-K for the
year ended December 31, 2001.
Results of Operations
First quarter ended
March 31
--------
2002 2001
------ ----
Sales $ 4,983 $ 6,176
Net income $ 218 $ 404
Income (excluding cumulative effect adjustment
in 2002 and goodwill amortization in 2001) $ 184 $ 448
Basic earnings per common share
(after cumulative effect) $ .26 $ .47
Diluted earnings per common share
(after cumulative effect) $ .26 $ .46
Shipments of aluminum products (mt) 1,259 1,320
Shipments of alumina (mt) 1,825 2,031
Alcoa's average realized ingot price $ .66 $ .77
Average 3-month LME price $ .63 $ .71
Earnings Summary
Net income in the 2002 first quarter was $218, or 26 cents per diluted
share, a decline of 46% from 2001 first quarter net income of $404, or 46 cents
per share. The first quarter of 2002 was significantly affected by lower
realized prices for alumina and aluminum, which declined 20% and 14%,
respectively. In addition, lower volumes due to a significant decline in year-
over-year end-market demand contributed to the decrease in earnings for the
quarter. Net income for the 2002 first quarter included income of $34, or four
cents per share, from the cumulative effect of the change in accounting for
goodwill under SFAS No. 142. This income is primarily the result of the write-
off of negative goodwill from prior acquisitions. In addition to this one-time
cumulative effect adjustment, goodwill is no longer amortized under this
accounting standard, which resulted in a positive impact of $44, or five cents
per share, in the 2002 first quarter compared with the year ago period.
Continued cost reductions also contributed positively to the quarterly results.
First quarter 2002 sales decreased 19% from the 2001 first quarter to
$4,983. This decrease primarily resulted from lower shipments and lower realized
prices for alumina and aluminum, as overall weak market conditions across all
business segments continued. The dispositions of Thiokol and Reynolds' metal
distribution business (RASCO) accounted for approximately one-third of the
decline in sales. The lack of power sales in the 2002 first quarter also
contributed to the decrease in sales.
Annualized return on shareholders' equity was 7.2% for the 2002 first
quarter, compared with 13.8% for the 2001 period. The decrease was primarily due
to lower earnings in the 2002 quarter.
Cost of goods sold (COGS) decreased $669 from the prior year first quarter,
or 14%. The decrease reflects lower volumes, the dispositions of Thiokol and
RASCO, and ongoing cost reductions generated by productivity and purchasing cost
savings, somewhat offset by an increase in costs of $20
11
associated with the power failure and related restart of capacity at the
company's Warrick, Indiana smelter. COGS as a percentage of sales in the 2002
first quarter was 81.2% versus 76.3% in the 2001 first quarter. The higher ratio
in 2002 was due to lower volumes and lower prices.
Selling and general administrative expenses (S&GA) were down $45 from the
2001 first quarter due to lower spending and employee costs, lower bad debt
expense and bad debt recoveries, and the dispositions of Thiokol and RASCO. S&GA
as a percentage of sales was 5.6% for the 2002 first quarter, up slightly from
5.2% in the 2001 first quarter.
Interest expense was down $40 from the 2001 first quarter due to lower
average interest rates, which decreased approximately two percentage points.
The income tax provision of 31.5% differs from the statutory rate and the
2001 first quarter rate of 33% primarily because of taxes on foreign income and
the impact of ceasing goodwill amortization.
Other income decreased $37 from the 2001 first quarter due to the absence
of $47 in net gains on asset sales recognized in the 2001 first quarter and a
restructuring at Elkem, Alcoa's partner in Norway, that resulted in a $16
decrease in equity income. These decreases were partly offset by $28 related to
several favorable nonoperating gains.
Minority interests' share of income from operations decreased $55 from the
2001 first quarter. The decrease was primarily due to lower earnings at Alcoa
World Alumina and Chemicals (AWAC), Alcoa Fujikura Ltd. (AFL) and Alcoa Aluminio
(Aluminio).
Segment Information
I. Alumina and Chemicals
First quarter ended
March 31
--------
2002 2001
------- ------
Alumina production 3,112 3,330
Third-party alumina shipments 1,825 2,031
Third-party sales $ 425 $ 547
Intersegment sales 229 283
------- ------
Total sales $ 654 $ 830
======= ======
After-tax operating income $ 65 $ 166
======= ======
Third-party sales for this segment decreased 22% from the 2001 first
quarter primarily due to lower prices and lower volumes. Realized prices for
alumina decreased 20%, while third-party alumina shipments decreased 10%.
Intersegment sales decreased 19% due to lower prices and the curtailments of
alumina production at Point Comfort and aluminum production capacity at smelters
in the northwestern U.S.
ATOI for this segment decreased 61% from $166 in the 2001 first quarter to
$65 in the 2002 first quarter. Over three-quarters of the decrease was due to
lower realized prices and lower volumes. Higher material costs also contributed
to the decrease in ATOI.
Alumina demand is anticipated to remain at current levels. Prices are
expected to show a slight improvement.
12
II. Primary Metals
First quarter ended
March 31
--------
2002 2001
------- -------
Aluminum production 841 917
Third-party aluminum shipments 503 476
Third-party sales $ 764 $ 967
Intersegment sales 878 867
------- -------
Total sales $ 1,642 $ 1,834
======= =======
After-tax operating income $ 143 $ 294
======= =======
Third-party sales for the 2002 first quarter decreased 21% due to lower
realized prices as well as the absence of power sales resulting from production
curtailments in plants located in the northwestern U.S. in 2001. Alcoa's average
realized third-party price for ingot declined 14%, from 77 cents per pound in
the 2001 first quarter to 66 cents per pound in the 2002 first quarter.
Primary Metals first quarter 2002 ATOI decreased $151 or 51% from the 2001
quarter. The decrease was primarily due to lower realized prices; the absence of
power sales, net of power and other contractually required costs and the impact
of lost aluminum sales, which contributed $35 to ATOI in the first quarter of
2001; and costs incurred for a power outage at Alcoa's Warrick, Ind. smelter,
offset somewhat by cost savings.
Alcoa recently announced various capacity curtailments and restarts. After
these adjustments, Alcoa will have approximately 575,000 mt per year of idle
capacity.
III. Flat-Rolled Products
First quarter ended
March 31
--------
2002 2001
-------- -------
Third-party aluminum shipments 439 470
Third-party sales $ 1,156 $ 1,343
Intersegment sales 15 16
-------- -------
Total sales $ 1,171 $ 1,359
======== =======
After-tax operating income $ 61 $ 65
======== =======
Third-party flat-rolled product sales for the 2002 first quarter decreased
14% from the comparable 2001 quarter, driven by lower prices, primarily in
Europe, and 7% lower volumes, as well as a weaker product mix in sheet and plate
in the U.S.
ATOI for the Flat-Rolled Products segment fell 6% in the 2002 first quarter
from the corresponding 2001 quarter primarily due to lower volumes and lower
prices in Europe, as well as a weaker product mix in sheet and plate in the U.S.
These unfavorable impacts were partially offset by favorable pricing, lower
energy costs and productivity improvements in rigid container sheet.
Demand in the beverage can business is anticipated to remain relatively
strong. We anticipate continued weak market conditions for aerospace.
13
IV. Engineered Products
First quarter ended
March 31
--------
2002 2001
------- -------
Third-party aluminum shipments 228 254
Third-party sales $ 1,396 $ 1,593
Intersegment Sales 8 9
------- -------
Total sales $ 1,404 $ 1,602
======= =======
After-tax operating income $ 51 $ 40
======= =======
Engineered Products third-party sales decreased 12% in the 2002 first
quarter over the corresponding 2001 quarter due to continued weak market
conditions in both Europe and the U.S., resulting in lower volumes which
contributed to approximately three-quarters of the revenue decline.
ATOI for the segment increased 28% in the 2002 first quarter versus the
corresponding 2001 period. The increase was primarily due to productivity cost
savings resulting from continuing Alcoa Business System (ABS) implementations as
well as the absence of $15 in goodwill amortization in the first quarter of
2002. These increases were partially offset by a decline in volumes due to
continued weakness in the aerospace market.
We anticipate continued weak market conditions for aerospace and some
improvement within the automotive and commercial transportation sectors. We
expect seasonal increases in the building and construction business, while the
industrial gas turbine market is expected to decline.
V. Packaging and Consumer
First quarter ended
March 31
--------
2002 2001
------- -------
Third-party aluminum shipments 31 42
Third-party sales $ 624 $ 646
After-tax operating income $ 28 $ 43
First quarter third-party sales for this segment decreased $22 compared
with the first quarter of 2001, due primarily to lower volumes and prices in
Latin America and the flexible packaging business, offset somewhat by increased
sales in closures.
Segment ATOI was $28 in the 2002 first quarter, down $15 over the
comparable 2001 period. This decrease was primarily due to lower volumes and
lower equity income in Latin America, partly offset by cost improvements in the
consumer products business.
In the second quarter of 2002, a seasonal upturn is anticipated in both
the closures business, and packaging and consumer businesses. We expect the
Latin American packaging businesses to remain soft.
VI. Other
First quarter ended
March 31
--------
2002 2001
------- -------
Third-party aluminum shipments 58 78
Third-party sales $ 618 $ 1,080
After-tax operating income $ 7 $ 50
Third-party sales for this group were $618 in the 2002 first quarter,
down 43% from the 2001 first quarter. Approximately three-quarters of the
decrease was due to the divestitures of Thiokol and RASCO in 2001, while the
remaining decrease was due to a decrease in volume in the AFL telecommunications
business.
14
ATOI for this group in the 2002 first quarter was $7 compared with $50
in the year ago first quarter. This decrease was due to the absence of gains of
$32 from the sales of Alcoa Proppants Inc. and Alcoa's interest in a Latin
American cable business that were recognized in the first quarter of 2001, lower
volumes in the telecommunications business and the sale of Thiokol. Offsetting
these negative factors were cost, volume and pricing improvements in the
building products business; cost improvements in the automotive business; and
the absence of $10 in goodwill amortization in the first quarter of 2002.
We expect continued depressed business conditions within the
telecommunications industry that will negatively impact this group. Seasonal
increases are anticipated in the residential building and construction market,
along with a slight increase in the automotive market.
Reconciliation of ATOI to Consolidated Net Income
Items required to reconcile ATOI to consolidated net income include: corporate
adjustments to eliminate any remaining profit or loss between segments; the
after-tax impact of interest income and expense at the statutory rate; minority
interests; corporate expense, comprised of the general administrative and
selling expenses of operating the corporate headquarters and other global
administrative facilities along with depreciation on corporate-owned assets;
accounting change; and other, which includes the impact of LIFO, differences
between estimated tax rates used in the segments and the corporate effective tax
rate, and other nonoperating items such as foreign exchange.
The significant changes in the reconciling items between ATOI and
consolidated net income from the 2001 first quarter to the 2002 first quarter
consisted of: a decrease in interest expense of $26 due to lower interest rates;
a decrease of $55 in minority interests' share of income due to lower earnings
at AWAC, AFL and Aluminio; and income of $34 recognized as a result of the
cumulative effect of the accounting change for goodwill.
Market Risks
In addition to the risks inherent in its operations, Alcoa is exposed to
financial, market, political and economic risks. The following discussion
provides additional detail regarding Alcoa's exposure to the risks of changing
commodity prices, foreign exchange rates and interest rates.
Derivatives
Alcoa's commodity and derivative activities are subject to the management,
direction and control of the Strategic Risk Management Committee (SRMC). SRMC is
composed of the chief executive officer, the chief financial officer and other
officers and employees that the chief executive officer selects. SRMC reports to
the Board of Directors on the scope of its derivative activities.
All of the aluminum and other commodity contracts, as well as various
types of derivatives, are held for purposes other than trading. They are used
primarily to mitigate uncertainty and volatility, and cover underlying
exposures. The company is not involved in energy trading activities or weather
derivatives or to any material extent in other nonexchange commodity trading
activities.
Commodity Price Risks - Alcoa is a leading global producer of aluminum ingot and
aluminum fabricated products. As a condition of sale, customers often require
Alcoa to enter into long-term fixed-price commitments. These commitments expose
Alcoa to the risk of fluctuating aluminum prices between the time the order is
committed and the time the order is shipped.
Alcoa's aluminum commodity risk management policy is to manage, through
the use of futures and options contracts, the aluminum price risk associated
with a portion of its fixed price firm commitments. At March 31, 2002, these
contracts totaled approximately 603,000 mt with a fair value loss of
approximately $17 (pre-tax).
Alcoa sells products to various third parties at prices that are
influenced by changes in LME aluminum prices. From time to time, the company
15
may elect to sell forward a portion of its anticipated primary aluminum and
alumina production to reduce the risk of fluctuating market prices on these
sales. Toward this end, Alcoa may enter into short positions using futures and
options contracts. At March 31, 2002, these contracts totaled 29,000 mt. The
fair value of these contracts at March 31, 2002 was not material. These
contracts act to fix a portion of the sales price related to these sales
contracts.
Alcoa purchases certain other commodities, such as natural gas, fuel
oil and electricity, for its operations and may enter into futures and options
contracts to eliminate volatility in the price of these commodities. None of
these contracts were material at March 31, 2002.
Financial Risk
Currencies - Alcoa is subject to significant exposure from fluctuations in
foreign currencies. Foreign currency exchange contracts are used to hedge the
variability in cash flows from the forecasted payment or receipt of currencies
other than the functional currency. These contracts cover periods commensurate
with known or expected exposures, generally within three years. The fair value
of these contracts was a loss of approximately $74 (pre-tax) at March 31, 2002.
Interest Rates - Alcoa uses interest rate swaps to help maintain a reasonable
balance between fixed- and floating-rate debt and to keep financing costs as low
as possible. The company has entered into pay floating, receive fixed interest
rate swaps to change the interest rate risk exposure of its outstanding debt.
The fair value of these swaps was a gain of approximately $15 (pre-tax) at March
31, 2002.
Material Limitations - The disclosures with respect to commodity prices and
foreign exchange risk do not take into account the underlying anticipated
purchase obligations and the underlying transactional foreign exchange
exposures. If the underlying items were included in the analysis, the gains or
losses on the futures and options contracts may be offset. Actual results will
be determined by a number of factors that are not under Alcoa's control and
could vary significantly from those factors disclosed.
Alcoa is exposed to credit loss in the event of nonperformance by
counterparties on the above instruments, as well as credit or performance risk
with respect to its hedged customers' commitments. Although nonperformance is
possible, Alcoa does not anticipate nonperformance by any of these parties.
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. In addition, various master netting
arrangements are in place with counterparties to facilitate settlement of gains
and losses on these contracts.
Environmental Matters
Alcoa continues to participate in environmental assessments and cleanups at a
number of locations. These include approximately 31 owned or operating
facilities and adjoining properties, approximately 28 previously owned or
operating facilities and adjoining properties and approximately 91 Superfund and
other waste sites. A liability is recorded for environmental remediation costs
or damages when a cleanup program becomes probable and the costs or damages can
be reasonably estimated.
As assessments and cleanups proceed, the liability is adjusted based on
progress made in determining the extent of remedial actions and related costs
and damages. The liability can change substantially due to factors such as the
nature and extent of contamination, changes in remedial requirements and
technological changes. Therefore, it is not possible to determine the outcomes
or to estimate with any degree of accuracy the potential costs for certain of
these matters. For example, there are issues related to Alcoa's Massena, New
York and Point Comfort, Texas sites where investigations are ongoing and where
natural resource damage or off-site contaminated sediments have been alleged.
The following discussion provides additional details regarding the current
status of certain sites.
16
MASSENA. Alcoa has been conducting investigations and studies of the
Grasse River, adjacent to Alcoa's Massena, New York plant site, under order from
the U.S. Environmental Protection Agency (EPA) issued under the Comprehensive
Environmental Response, Compensation and Liability Act, also known as Superfund.
Sediments and fish in the river contain varying levels of polychlorinated
biphenyl (PCB).
In the fourth quarter of 1999, Alcoa submitted an Analysis of
Alternatives Report to the EPA. This report identified potential courses of
remedial action related to the PCB contamination of the river. The EPA indicated
to Alcoa that it believed additional remedial alternatives needed to be included
in the Analysis of Alternatives Report. During 2000 and 2001, Alcoa completed
certain studies and investigations on the river, including pilot tests of
sediment-capping techniques and other remediation technologies. In February
2002, Alcoa submitted a revised draft Analysis of Alternatives Report to the EPA
based on these additional evaluations and included additional remedial
alternatives required by the EPA. The additional alternatives required by the
EPA involve removal of more sediment than was included in the 1999 Analysis of
Alternatives Report. The range of costs associated with the remedial
alternatives evaluated in the 2002 report is between $2 and $525. Alcoa believes
that several of those alternatives, involving the largest amounts of sediment
removal, should not be selected for the Grasse River remedy. Alcoa believes the
alternatives that should be selected are those ranging from monitored natural
recovery ($2) to a combination of moderate dredging and capping ($90). A reserve
of $2 has been recorded for any probable losses, as no one of the alternatives
is more likely to be selected than any other.
Portions of the St. Lawrence River system adjacent to a former Reynolds
plant are also contaminated with PCB, and during 2001, Alcoa substantially
completed a dredging remedy for the St. Lawrence River. Further analysis of the
condition of the sediment is being performed. Any required additional dredging
or capping of residual contamination is likely to be completed during the 2003
construction season. The most probable cost of any such additional remediation
is fully reserved.
Alcoa is aware of natural resource damage claims that may be asserted
by certain federal, state and tribal natural resource trustees at these
locations.
POINT COMFORT/LAVACA BAY. Since 1990, Alcoa has undertaken
investigations and evaluations concerning alleged releases of mercury from its
Point Comfort, Texas facility into the adjacent Lavaca Bay pursuant to a
Superfund order from the EPA. In March 1994, the EPA listed the "Alcoa (Point
Comfort)/Lavaca Bay Site" on the National Priorities List. In December 2001, the
EPA issued its Record of Decision (ROD) selecting the final remedial approach
for the site, which is fully reserved. The company is negotiating a Consent
Order with the EPA under which it will undertake to implement the remedy. The
company and certain federal and state natural resource trustees, who previously
served Alcoa with notice of their intent to file suit to recover damages for
alleged loss or injury of natural resources in Lavaca Bay, have cooperatively
identified restoration alternatives and approaches for Lavaca Bay. The cost of
such restoration is reserved and Alcoa anticipates negotiating a Consent Decree
with the trustees under which it will implement the restoration.
TROUTDALE, OREGON. In 1994, the EPA added Reynolds' Troutdale, Oregon
primary aluminum production plant to the National Priorities List of Superfund
sites. Alcoa is cooperating with the EPA and, under a September 1995 consent
order, is working with the EPA to identify cleanup solutions for the site.
Following curtailment of active production operations and based on further
evaluation of remedial options, the company has determined the most probable
cost of cleanup. This amount has been fully reserved. The company anticipates a
final ROD to be issued by the EPA in 2002.
SHERWIN, TEXAS. In connection with the sale of the Sherwin alumina
refinery in Texas, which was required to be divested as part of the Reynolds
merger in 2000, Alcoa has agreed to retain responsibility for the remediation of
certain properties, including former waste disposal areas. The most probable
cost of such remediation has been evaluated and is fully reserved.
17
Based on the above, it is possible that Alcoa's results of operations,
in a particular period, could be materially affected by matters relating to
these sites. However, based on facts currently available, management believes
that adequate reserves have been provided and that the disposition of these
matters will not have a materially adverse effect on the financial position or
liquidity of the company.
Alcoa's remediation reserve balance at March 31, 2002 was $430 (of
which $72 was classified as a current liability) and reflects the most probable
costs to remediate identified environmental conditions for which costs can be
reasonably estimated. Remediation costs charged to the reserve in the 2002 first
quarter were $10. They include expenditures currently mandated, as well as those
not required by any regulatory authority or third party.
Included in annual operating expenses are the recurring costs of
managing hazardous substances and environmental programs. These costs are
estimated to be about 2% of cost of goods sold.
Liquidity and Capital Resources
Cash from Operations
Cash from operations for the 2002 first quarter totaled $237, compared with $342
in the 2001 period. The decrease of $105, or 31%, resulted primarily from a
decrease in net income due to lower volumes and lower realized prices, somewhat
offset by a net decrease in working capital requirements.
Financing Activities
Financing activities provided $205 of cash in the 2002 first quarter, compared
with $1,651 used in the 2001 period. The change in cash in the 2002 period is
primarily due to the following: a decrease in share repurchases of the company's
common stock, using $105 to repurchase 2,874,100 shares in the 2002 first
quarter versus $276 used to repurchase 7,829,100 shares in the 2001 first
quarter; lack of dividend payments to minority interests in the 2002 period
versus $139 paid in the 2001 period; and an increase in commercial paper
borrowings of $480 during the 2002 period. The significant use of cash in the
2001 period was due to debt repayments that were funded by the proceeds from the
sales of Worsley, Sherwin and Longview, which were operations that were required
to be divested from the Reynolds merger.
Investing Activities
Investing activities used $380 of cash during the 2002 first quarter, compared
with cash provided of $1,430 in the 2001 period. The change in cash of $1,810
between periods is primarily due to dispositions of assets required to be
divested from the Reynolds merger which returned $1,777 in the 2001 period.
Critical Accounting Policies
A summary of the company's significant accounting policies is included in Note A
to the audited consolidated financial statements contained in the Annual Report
on Form 10-K for the year ended December 31, 2001. Management believes that the
application of these policies on a consistent basis enables the company to
provide the users of the financial statements with useful and reliable
information about the company's operating results and financial condition.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make judgments,
estimates and assumptions regarding uncertainties that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses. Areas of
uncertainty that require judgments, estimates and assumptions include the
accounting for derivatives, environmental and tax matters as well as the annual
testing of goodwill for impairment. Management uses historical experience and
all available information to make these judgments and estimates and actual
results will inevitably differ from those estimates and assumptions that are
used to prepare the company's financial statements at any given time. Despite
these inherent limitations, management believes that Management's Discussion and
Analysis and the financial statements and footnotes provide a meaningful and
fair perspective of the company. A discussion of the judgments and uncertainties
associated with accounting for derivatives and environmental
18
matters can be found in the Market Risks and Environmental Matters sections of
Management's Discussion and Analysis.
Recently Issued Accounting Standards
In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations." This statement establishes
standards for accounting for obligations associated with the retirement of
tangible long-lived assets. Alcoa must adopt this standard on January 1, 2003.
Management is currently assessing the details of the standard and is preparing a
plan of implementation.
19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In February 2002, the Maryland Department of the Environment notified Eastalco
Aluminum Company, an Alcoa subsidiary, of its determination that Eastalco had
violated the state ambient fluoride standard and primary aluminum maximum
achievable control technology (MACT) emission, parametric and reporting
standards and was seeking an administrative penalty for the violations. Eastalco
has taken the necessary steps to be in continuous compliance since the
non-compliance incidents occurred and has agreed to pay a civil penalty of
$125,000.
As previously reported, in October 1998, Region V of the EPA referred various
alleged environmental violations at Alcoa's Lafayette, Indiana operations to the
civil division of the U.S. Department of Justice (DOJ). The alleged violations
related to water permit exceedances as reported on monthly discharge monitoring
reports. Alcoa and the DOJ entered into a tolling agreement to suspend the
statute of limitations related to the alleged violations in order to facilitate
settlement discussions with the DOJ and EPA. The parties have been able to reach
settlement and a consent decree concluding this matter was executed in January
2002. The consent decree was approved by the court and filed as a matter of
record in the first quarter. The decree requires penalty payment of $550,000,
which has been paid, and various remedial activities.
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of Alcoa shareholders held on April 19, 2002, Joseph T.
Gorman, Sir Ronald Hampel and John P. Mulroney were re-elected Directors of
Alcoa for a term of three years. Votes cast for Mr. Gorman were 702,595,161 and
votes withheld were 13,389,018; votes cast for Sir Hampel were 706,815,604 and
votes withheld were 9,168,575; and votes cast for Mr. Mulroney were 706,923,150
and votes withheld were 9,061,029.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
12. Computation of Ratio of Earnings to Fixed Charges
15. Letter regarding unaudited interim financial information
(b) Reports on Form 8-K. During the first quarter of 2002, Alcoa filed with
the Securities and Exchange Commission a Form 8-K, dated March 18, 2002,
reporting under Item 5 that Alcoa had announced that it had entered into an
agreement to acquire Ivex Packaging Corporation.
20
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.
Alcoa Inc.
April 26, 2002 By /s/ RICHARD B. KELSON
----------------------- ----------------------------
Date Richard B. Kelson
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
April 26, 2002 By /s/ TIMOTHY S. MOCK
------------------------- ----------------------------
Date Timothy S. Mock
Vice President - Alcoa Business
Support Services and Controller
(Chief Accounting Officer)
21
EXHIBITS
--------
12. Computation of Ratio of Earnings to Fixed Charges
15. Letter regarding unaudited interim financial information
22