UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) | |
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of October 21, 2004, 870,478,696 shares of common stock, par value $1.00 per share, of the Registrant were outstanding.
PART I – FINANCIAL INFORMATION
Item 1. – Financial Statements.
Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)
| September 30 2004 |
December 31 2003 |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 561 | $ | 576 | ||||
| Receivables from customers, less allowances of $97 in 2004 and $105 in 2003 |
3,013 | 2,559 | ||||||
| Other receivables |
224 | 351 | ||||||
| Inventories (G) |
2,995 | 2,554 | ||||||
| Deferred income taxes |
225 | 267 | ||||||
| Prepaid expenses and other current assets |
779 | 502 | ||||||
| Total current assets |
7,797 | 6,809 | ||||||
| Properties, plants, and equipment, at cost |
25,132 | 24,883 | ||||||
| Less: accumulated depreciation, depletion, and amortization |
12,880 | 12,342 | ||||||
| Net properties, plants, and equipment |
12,252 | 12,541 | ||||||
| Goodwill |
6,575 | 6,549 | ||||||
| Other assets |
5,642 | 5,320 | ||||||
| Assets held for sale (E) |
42 | 492 | ||||||
| Total assets |
$ | 32,308 | $ | 31,711 | ||||
| LIABILITIES |
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| Current liabilities: |
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| Short-term borrowings |
$ | 44 | $ | 56 | ||||
| Accounts payable, trade |
2,416 | 1,982 | ||||||
| Accrued compensation and retirement costs |
1,042 | 952 | ||||||
| Taxes, including taxes on income |
956 | 701 | ||||||
| Other current liabilities |
1,074 | 881 | ||||||
| Long-term debt due within one year |
497 | 523 | ||||||
| Total current liabilities |
6,029 | 5,095 | ||||||
| Long-term debt, less amount due within one year (B) |
6,108 | 6,693 | ||||||
| Accrued postretirement benefits |
2,178 | 2,220 | ||||||
| Other noncurrent liabilities and deferred credits |
3,274 | 3,390 | ||||||
| Deferred income taxes |
790 | 805 | ||||||
| Liabilities of operations held for sale (E) |
12 | 93 | ||||||
| Total liabilities |
18,391 | 18,296 | ||||||
| MINORITY INTERESTS |
1,362 | 1,340 | ||||||
| COMMITMENTS AND CONTINGENCIES (H) |
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| SHAREHOLDERS’ EQUITY |
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| Preferred stock |
55 | 55 | ||||||
| Common stock |
925 | 925 | ||||||
| Additional capital |
5,788 | 5,831 | ||||||
| Retained earnings |
8,367 | 7,850 | ||||||
| Treasury stock, at cost |
(1,956 | ) | (2,017 | ) | ||||
| Accumulated other comprehensive loss (I) |
(624 | ) | (569 | ) | ||||
| Total shareholders’ equity |
12,555 | 12,075 | ||||||
| Total liabilities and equity |
$ | 32,308 | $ | 31,711 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
2
Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share amounts)
| Third quarter ended September 30 |
Nine months ended September 30 |
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| 2004 |
2003 |
2004 |
2003 |
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| Sales (N) |
$ | 5,975 | $ | 5,310 | $ | 17,718 | $ | 15,900 | ||||||||
| Cost of goods sold |
4,787 | 4,204 | 13,992 | 12,642 | ||||||||||||
| Selling, general administrative, and other expenses |
315 | 303 | 974 | 942 | ||||||||||||
| Research and development expenses |
44 | 47 | 132 | 147 | ||||||||||||
| Provision for depreciation, depletion, and amortization |
300 | 291 | 902 | 878 | ||||||||||||
| Restructuring and other charges (F) |
4 | 1 | (22 | ) | — | |||||||||||
| Interest expense |
67 | 75 | 200 | 243 | ||||||||||||
| Other income, net (K) |
(53 | ) | (42 | ) | (200 | ) | (135 | ) | ||||||||
| Total costs and expenses |
5,464 | 4,879 | 15,978 | 14,717 | ||||||||||||
| Income from continuing operations before taxes on income |
511 | 431 | 1,740 | 1,183 | ||||||||||||
| Provision for taxes on income (L) |
142 | 92 | 493 | 300 | ||||||||||||
| Income from continuing operations before minority interests’ share |
369 | 339 | 1,247 | 883 | ||||||||||||
| Less: Minority interests’ share |
71 | 54 | 194 | 188 | ||||||||||||
| Income from continuing operations |
298 | 285 | 1,053 | 695 | ||||||||||||
| Loss from discontinued operations (E) |
(15 | ) | (5 | ) | (11 | ) | (1 | ) | ||||||||
| Cumulative effect of accounting change (M) |
— | — | — | (47 | ) | |||||||||||
| NET INCOME |
$ | 283 | $ | 280 | $ | 1,042 | $ | 647 | ||||||||
| EARNINGS (LOSS) PER SHARE (J) |
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| Basic: |
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| Income from continuing operations |
$ | .34 | $ | .33 | $ | 1.21 | $ | .82 | ||||||||
| Loss from discontinued operations |
(.02 | ) | — | (.01 | ) | — | ||||||||||
| Cumulative effect of accounting change |
— | — | — | (.06 | ) | |||||||||||
| Net income |
$ | .32 | $ | .33 | $ | 1.20 | $ | .76 | ||||||||
| Diluted: |
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| Income from continuing operations |
$ | .34 | $ | .33 | $ | 1.20 | $ | .82 | ||||||||
| Loss from discontinued operations |
(.02 | ) | — | (.01 | ) | — | ||||||||||
| Cumulative effect of accounting change |
— | — | — | (.06 | ) | |||||||||||
| Net income |
$ | .32 | $ | .33 | $ | 1.19 | $ | .76 | ||||||||
| Dividends paid per common share |
$ | .15 | $ | .15 | $ | .45 | $ | .45 | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
3
Alcoa and subsidiaries
Condensed Statement of Consolidated Cash Flows (unaudited)
(in millions)
| Nine months ended September 30 |
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| 2004 |
2003 |
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| CASH FROM OPERATIONS |
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| Net income |
$ | 1,042 | $ | 647 | ||||
| Adjustments to reconcile net income to cash from operations: |
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| Depreciation, depletion, and amortization |
908 | 889 | ||||||
| Change in deferred income taxes |
(78 | ) | (2 | ) | ||||
| Equity income, net of dividends |
(49 | ) | (60 | ) | ||||
| Noncash restructuring and other charges (F) |
(22 | ) | — | |||||
| Net gain on early retirement of debt and interest rate swap settlements (B) |
(58 | ) | — | |||||
| Gains from investing activities - sale of assets |
(7 | ) | (16 | ) | ||||
| Provision for doubtful accounts |
19 | 7 | ||||||
| Loss from discontinued operations (E) |
11 | 1 | ||||||
| Accounting change (M) |
— | 47 | ||||||
| Minority interests |
194 | 188 | ||||||
| Other |
28 | 84 | ||||||
| Changes in assets and liabilities, excluding effects of acquisitions and divestitures: |
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| Increase in receivables |
(358 | ) | (56 | ) | ||||
| (Increase) reduction in inventories |
(458 | ) | 36 | |||||
| (Increase) reduction in prepaid expenses and other current assets |
(135 | ) | 7 | |||||
| Increase (reduction) in accounts payable and accrued expenses |
406 | (212 | ) | |||||
| Increase (reduction) in taxes, including taxes on income |
225 | (124 | ) | |||||
| Cash paid on early retirement of debt and interest rate swap settlements (B) |
(52 | ) | — | |||||
| Cash received on long-term aluminum supply contract |
— | 440 | ||||||
| Net change in noncurrent assets and liabilities |
(211 | ) | (110 | ) | ||||
| Net change in net assets held for sale |
2 | (30 | ) | |||||
| CASH PROVIDED FROM CONTINUING OPERATIONS |
1,407 | 1,736 | ||||||
| CASH USED FOR DISCONTINUED OPERATIONS |
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