01—Abstract
Summary
Summary of the 10-K/A filed July 30, 1997. Cited figures are marked; the original filing is the authoritative source.
This 10-K for Aluminum Company of America (Alcoa Inc., now Howmet Aerospace) covers fiscal 1996 and was filed July 30, 1997.
Net income fell to $514.9 milliona, or $2.94 per share, from $790.5 million, or $4.43 per share, in 1995. Income before unusual items was $637.2 million versus $800.6 million. Sales and operating revenues were a record $13.06 billion, up 4%, mostly from the Alcoa Fujikura acquisition.
The earnings decline was driven mainly by a 6% drop in realized aluminum prices, partly offset by higher alumina prices, and smelters ran at 81% of rated capacity. Special charges of $198.9 millionb ($122.3 million after tax and minority interests) were taken, including workforce reduction costs tied to a plan to cut administrative expenses by $300 million annually. Cash from operations fell to $1.28 billion from $1.71 billion.
Capital expenditures were $996 millionc, and acquisitions cost $302 million, including Alumix in Italy and Alcan's extrusion operations in Brazil. Total assets were $13.45 billion and long-term debt rose to $1.69 billion. Debt as a percentage of invested capital rose to 21.8% from 16.7%.
The company repurchased 5,402,500 shares for $317 milliond, and the 1996 dividend was $1.33 per share, including a $0.43 bonus dividend. Management noted a $240 million advance payment to be received in 1997 under a long-term alumina supply agreement with China's CNNC. Management also disclosed a pending Letter of Intent to acquire the main aluminum businesses of Spain's Inespal, expected to close before the end of 1997.
02—Key points
Key Highlights
- Net income of $514.9 million ($2.94 per share) in 1996, down from $790.5 million ($4.43 per share) in 1995
- Record sales and operating revenues of $13.06 billion, up 4%, driven mainly by the Alcoa Fujikura acquisition
- Realized aluminum price fell to $0.73 per pound from $0.81, while smelters operated at 81% of rated capacity
- Special charges of $198.9 million, including workforce reduction costs tied to a $300 million annual administrative expense reduction target
- Cash from operations declined to $1.28 billion from $1.71 billion; capital expenditures were $996 million
- Debt as a percentage of invested capital rose to 21.8% from 16.7%, with long-term debt at $1.69 billion
- Pending acquisition of the main aluminum businesses of Spain's Inespal, expected to be final before the end of 1997
03—Questions
Frequently Asked Questions
Why did earnings decline in 1996 despite record revenues?
The decline was primarily due to a 6% drop in Alcoa's realized price per pound for aluminum products, partially offset by higher alumina prices. Operating profit before special items fell to $1,350 million from $1,435 million, and special charges of $198.9 million further reduced net income.
How did the company's debt and cash position change in 1996?
Long-term debt rose to $1,689.8 million from $1,215.5 million, and debt as a percentage of invested capital increased to 21.8% from 16.7%. Cash and cash equivalents fell to $598.1 million from $1,055.6 million, and cash from operations dropped to $1,278.9 million from $1,712.5 million.
What is the outlook for shareholder returns?
The company repurchased 5,402,500 shares for $317.2 million in 1996 and paid $1.33 per share in dividends, including a $0.43 bonus dividend based on 1995 earnings. The filing states shareholders will not receive a bonus dividend in 1997 because 1996 earnings did not exceed $3.00 per share.
What major transactions were announced that could affect future results?
A Letter of Intent was signed to acquire the main sectors of Inespal, S.A.'s aluminum businesses, which had 1996 revenues of $1.1 billion, with completion expected before the end of 1997. In addition, a long-term alumina supply agreement with CNNC will bring a $240 million advance payment to AWAC in 1997.
04—Continue