8-KOther EventsExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Corporate Update (Mar 23, 2005)

Filed March 23, 2005For Securities:HWM

Summary

Alcoa Inc. (now Howmet Aerospace Inc.) announced on March 22, 2005, a significant divestiture and a restructuring initiative. The company has agreed to sell its 46.5% stake in Elkem ASA to Orkla ASA for approximately $870 million in cash. This transaction is expected to result in an after-tax gain of approximately $180 million, with proceeds slated for debt reduction, capital expansions, and restructuring expenses. The company also announced plans for significant operational restructuring, anticipating after-tax charges of $20-$25 million in the first quarter of 2005. These measures aim to streamline operations under a new global business structure, leading to an estimated annualized savings of $45 million and the reduction of approximately 2,000 positions.

Key Highlights

  • 1Alcoa Inc. to sell its 46.5% stake in Elkem ASA for approximately $870 million in cash.
  • 2Expected after-tax gain of $180 million from the Elkem ASA sale, with settlement anticipated in Q2 2005.
  • 3Proceeds from the sale will be used for debt repayment, capital expansions, and restructuring costs.
  • 4Announced restructuring plans impacting North American, European, and South American locations.
  • 5Anticipates first quarter 2005 after-tax restructuring charges between $20-$25 million.
  • 6Restructuring involves reducing approximately 2,000 positions over the next twelve months.
  • 7Expected annualized savings of approximately $45 million from the restructuring initiatives.

Frequently Asked Questions

Alcoa Inc. expects to receive approximately $870 million in cash for its stake in Elkem ASA. This transaction is projected to yield an after-tax gain of approximately $180 million, with the gain recognized in the second quarter of 2005. A loss of $50 million, comprising a $43 million tax impact and $7 million in transaction costs, will be recognized in the first quarter of 2005.

The proceeds from the sale of the Elkem ASA stake are earmarked for strategic uses, including paying down debt, funding upstream capital expansions, and covering certain restructuring expenses for existing operations.

Alcoa is implementing restructuring plans across its North American, European, and South American operations to streamline its global business structure. These plans are expected to result in after-tax charges of $20-$25 million in Q1 2005, the reduction of about 2,000 positions over the next year, and annualized savings of approximately $45 million.

The settlement of the Elkem ASA transaction is expected to occur on April 5, 2005. The restructuring charges of $20-$25 million are anticipated for the first quarter of 2005, with additional charges possible in the second quarter as further initiatives are identified.