Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/ x / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 /FEE REQUIRED/
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-3610
ALUMINUM COMPANY OF AMERICA
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0317820
(State of incorporation) (I.R.S. Employer Identification No.)
425 Sixth Avenue, Alcoa Building, Pittsburgh, Pennsylvania 15219-1850
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number--area code 412
Investor Relations------------553-3042
Office of the Secretary------553-4707
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $1.00 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
As of March 1, 1994 there were 88,808,611 shares of common stock,
par value $1.00, of the Registrant outstanding. The aggregate market
value of such shares, other than shares held by persons who may be
deemed affiliates of the Registrant, was approximately $6,609 million.
Documents incorporated by reference.
Parts I and II of this Form 10-K incorporate by reference certain
information from the registrant's 1993 Annual Report to Shareholders.
Part III of this Form 10-K incorporates by reference the registrant's
Proxy Statement dated March 4, 1994, except for the performance graph
and Compensation Committee Report.
ALUMINUM COMPANY OF AMERICA
Unless the context otherwise requires, Alcoa or the Company means
Aluminum Company of America and all subsidiaries consolidated for the
purposes of its financial statements.
PART I
Item 1. Business.
Alcoa is the world's largest integrated aluminum company, engaged
in the production and sale of primary aluminum and semi-fabricated and
finished aluminum products. It was formed in 1888 under the laws of
the Commonwealth of Pennsylvania. Alcoa produces and sells alumina and
alumina-based chemicals, a variety of other finished products, and
components and systems for a multitude of applications. These products
are used primarily by packaging, transportation (including aerospace,
automotive, rail and shipping), building and industrial customers
worldwide. Alcoa has operating and sales locations in over 20
countries.
Discussion of Alcoa's operations and properties by its three
business segments follows.
The Alumina and Chemicals segment includes the production and sale
of bauxite, alumina and alumina-based chemicals, and related
transportation services.
The Aluminum Processing segment includes the production and sale
of molten metal, ingot, and aluminum products that are flat-rolled,
engineered or finished. Also included are power, transportation and
other services.
The Non-Aluminum Products segment includes the production and sale
of electrical, ceramic, plastic, vinyl, and composite materials
products, manufacturing equipment, gold, magnesium and steel and
titanium forgings.
Most aluminum facilities located in the United States (U.S.) are
owned by the parent company. Alcoa of Australia Limited (AofA) and
Alcoa Aluminio S.A. (Aluminio) in Brazil are the two largest operating
subsidiaries.
Alcoa serves a variety of customers in a number of markets.
Consolidated revenues from these markets are:
(dollars in millions)
Revenues by Market 1993 1992 1991
- ------------------ ---- ---- ----
Packaging $2,606 $2,803 $2,554
Alumina and Chemicals 1,437 1,422 1,496
Transportation 1,397 1,526 1,569
Building and Construction 1,299 1,190 1,167
Distributor and Other 1,274 1,215 1,356
Aluminum Ingot 1,042 1,336 1,742
------ ------ ------
Total Sales and Operating Revenues $9,055 $9,492 $9,884
====== ====== ======
Segment and geographic area financial information are presented in
Note K to the Financial Statements.
Competition
The markets for most aluminum products are highly competitive.
Price, quality and service are the principal competitive factors in
most of these markets. Where aluminum products compete with other
materials, the diverse characteristics of aluminum are also a
significant factor, particularly its light weight and recyclability.
The competitive conditions are discussed later for each of the
Company's major product classes.
The Company is examining all aspects of its operations and
activities and is redesigning them where necessary to enhance
effectiveness and achieve cost reductions. Alcoa believes that its
competitive position is enhanced by its improved processes, extensive
facilities and willingness and ability to commit capital where
necessary to meet growth in important markets, and by the capability of
its employees. Research and development, and an increased emphasis on
internal technology transfer, has led to improved product quality,
enhanced production techniques, new product development and cost
control.
The dissolution of the Soviet Union and the lack of a mechanism to
successfully integrate its economy with market economies significantly
contributed to a global oversupply of aluminum in recent years. Prior
to 1991 former Soviet aluminum producers primarily served internal
markets. The internal market weakened substantially after the collapse
of the Soviet Union. To earn hard currency, former Soviet aluminum
producers began exporting significant quantities of aluminum. These
exports caused an imbalance in demand and supply and resulted in severe
downward pressure on aluminum prices.
In late 1993, discussions among the governments of six major
primary aluminum producing nations were initiated to address the global
aluminum supply situation. A multi-government accord was reached among
Australia, Canada, the European Union (EU), Norway, Russia and the U.S.
in late January 1994 under which the Russian industry will reduce its
annual aluminum exports by 500,000 metric tons per year for up to two
years, the EU will refrain from renewing import quotas on Russian ingot
when the quotas expire at the end of February 1994, and certain of the
participating governments will create a fund to assist in the
modernization of the Russian industry. The accord recognizes that
there is currently an excess of supply of between 1.5 and 2.0 million
metric tons of annual production.
In February 1994, Alcoa announced that it would reduce primary
aluminum production in its U.S. operations by an additional 100,000
metric tons per year. AofA separately announced a reduction of 25,000
metric tons at its Point Henry smelter in Geelong, Australia. Also,
the joint venture smelter in Portland, State of Victoria in which AofA
owns a 45% interest announced a reduction of 26,000 metric tons.
Suriname Aluminum Company (Suralco), a wholly-owned subsidiary,
announced a reduction of 3,000 metric tons that will continue until
world aluminum supply is in better balance with demand. These
reductions are in addition to Alcoa's indefinite curtailments during
1993 of 310,000 metric tons of U.S. smelting production.
Other Risk Factors
In addition to the risks inherent in the Company's business and
operations as described in this Form 10-K, the Company is exposed
generally to financial, market, political, business and economic risks
in connection with its worldwide operations.
Major Interests Outside the United States
Alcoa International Holdings Company (AIHC), a subsidiary, holds
most of the Company's investments in Australia, Hungary, India, Japan,
Mexico, the Netherlands and Norway, and several wholly owned
subsidiaries that act as sales representatives and distributors outside
the U.S. for products produced by various Alcoa operations. In 1988
AIHC issued $250 million of voting preferred stock which represents 25%
of its total voting stock. The preferred stock is held by unaffiliated
third parties.
AofA, owned 51% by AIHC, operates integrated aluminum facilities
in Australia, including mining, refining, smelting and fabricating
facilities. More than half of AofA's 1993 revenues were derived from
alumina, and the balance was derived principally from primary aluminum,
rigid container sheet (RCS) and gold.
Alcoa Brazil Holdings Company (ABHC), owned 79% by the Company,
holds Alcoa's interest in Aluminio, an integrated aluminum producer in
Brazil. Aluminio operates mining, refining, smelting and fabricating
facilities at various locations in Brazil. More than 20% of Aluminio's
1993 revenues were derived from primary aluminum, and exports accounted
for approximately one-third of its revenues. Aluminio is owned 75% by
ABHC; Alcoa's effective ownership in Aluminio is 59%.
Alumina and Chemicals Segment
Bauxite, aluminum's principal raw material, is refined into
alumina through a chemical process and is then smelted into primary
aluminum. Approximately half of the Company's alumina production in
1993 was sold to third parties. The Company sells alumina-based
chemicals to customers in a broad spectrum of industries for use in
refractories, ceramics, abrasives, chemicals processing and other
specialty applications.
Bauxite
Most of the bauxite mined and alumina produced by the Company,
except by AofA, is further processed into aluminum.
The Company has long-term contracts to purchase bauxite mined by a
partially-owned entity in the Republic of Guinea. The current
contracts expire in 1995. Alcoa is negotiating new agreements that are
expected to be completed in 1994. This bauxite services most of the
requirements of Alcoa's Point Comfort, Texas alumina refinery. Suralco
mines bauxite in Suriname under rights which expire after the year
2000. Suralco also holds a minority interest in a bauxite mining joint
venture managed by the majority owner, Billiton, an affiliate of the
Royal Dutch/Shell Group (Shell). Bauxite from both mining operations
serves Suralco's share of the refinery in Suriname referred to below.
AofA's bauxite mineral leases expire in 2003. Renewal options
allow AofA to extend the leases until 2045. The natural gas
requirements of the refineries are supplied primarily under a contract
with the State Energy Commission of Western Australia. The contract
expires in 2005 and imposes minimum purchase requirements.
Bauxite mining rights in Jamaica expire after the year 2020.
These rights are owned by the joint venture with the government of
Jamaica referred to in the next section.
Alumina
Alumina, a commodity, is sold by Alcoa principally from its
operations in Australia, Jamaica and Suriname. Most of the alumina
supply contracts are negotiated on the basis of agreed volumes over a
multi-year time period to assure a continuous supply of alumina to the
smelters which receive the alumina. Most alumina is sold under
contracts where prices are negotiated periodically or are based on
formulas related to aluminum ingot market prices or to production
costs. An imbalance of alumina demand and supply has resulted in
declining alumina prices.
AofA is the world's largest and one of the lowest cost producers
of alumina. Its three alumina plants, located in Kwinana, Pinjarra and
Wagerup in Western Australia, have in the aggregate an annual rated
capacity of approximately 6.1 million metric tons. Most of AofA's
alumina is sold under supply contracts to a number of customers
worldwide.
An Alcoa subsidiary owns 55% of the 1.6 million metric ton per
year alumina refinery in Paranam, Suriname and operates the plant.
Billiton holds the remaining 45%.
An Alcoa subsidiary and a corporation owned by the government of
Jamaica are equal participants in a joint venture, managed by the
subsidiary, that owns an alumina refinery in Clarendon Parish, Jamaica.
Annual alumina capacity at the Clarendon refinery will be increased
from 800,000 to approximately 1,000,000 metric tons in the next several
years.
Aluminio is the operator of the Alumar Consortium (Alumar), a cost-
sharing and production-sharing venture which owns a large refining and
smelting project near the northern coastal city of Sao Luis, Maranhao,
Brazil. The alumina refinery has an annual capacity of 1,000,000
metric tons, and is owned 54% by Aluminio, 36% by a Billiton affiliate
of Shell and 10% by an affiliate of Alcan Aluminium Limited (Alcan). A
majority of the alumina production is consumed at the smelter.
The sale of Shell's Billiton affiliates in Brazil and Suriname to
Gencor of South Africa is pending.
Aluminio holds a 13.2% interest in Mineracao Rio Do Norte S.A.
(MRN), a mining company which is jointly owned by affiliates of Alcan,
Billiton, Companhia Brasileira de Aluminio, Companhia Vale do Rio Doce,
Norsk Hydro and Reynolds Metals Company. Aluminio purchases bauxite
from MRN under a long-term supply contract.
At Pocos de Caldas, Minas Gerais, Brazil, Aluminio mines bauxite
and operates a refinery which produces alumina, primarily for its Pocos
de Caldas smelter.
Industrial Chemicals
Alcoa sells industrial chemicals to customers in a broad spectrum
of markets for use in refractories, ceramics, abrasive chemicals
processing and other specialty applications.
A variety of industrial chemicals, principally alumina-based
chemicals, are produced or processed at plants in Bauxite, Arkansas;
Ft. Meade, Florida; Dalton, Georgia; Lake Charles and Vidalia,
Louisiana; Nashville, Tennessee; Point Comfort, Texas; Kwinana,
Australia; Pocos de Caldas, Brazil; Ludwigshafen, Germany; Iwakuni and
Naoetsu, Japan; and Moerdijk and Rotterdam, in The Netherlands.
Aluminum fluoride, used in aluminum smelting, is produced from
fluorspar or fluosilicic acid at Point Comfort and Ft. Meade.
An expansion of facilities for drying alumina trihydrate at Point
Comfort was completed in 1993. Alumina trihydrate is used extensively
in petrochemical processing, water treatment and a variety of other
applications.
The Company and AofA are cooperating to market alumina-based and
other chemicals in Asia and other regional chemical markets. The
Company purchased a minority equity interest in Australian Fused
Materials, Ltd. (AFM) in 1993. AFM manufactures and markets fused
alumina as well as other chemicals for Australian, Asian and other
regional markets. Fused alumina is used in the manufacture of
refractories.
In 1993 the Company and The Associated Cement Companies Ltd. of
Bombay, India formed a joint venture to import, process and market
tabular alumina and alumina-based chemicals for the refractory and
ceramic industries in India. The venture plans to build a processing
plant in Falta, West Bengal which is scheduled for completion in 1994.
Aluminum Processing Segment
Revenues and shipments for the principal classes of products in
the aluminum processing segment are as follows:
(dollars in millions)
1993 1992 1991
---- ---- ----
Revenues:
Aluminum ingot $1,042 $1,336 $1,742
Flat-rolled products 2,974 3,189 3,107
Engineered products 1,528 1,527 1,612
Other aluminum products 430 465 500
------ ------ ------
Total $5,974 $6,517 $6,961
====== ====== ======
(metric tons in thousands)
Shipments:
Aluminum ingot 841 1,023 1,179
Flat-rolled products 1,271 1,323 1,172
Engineered products 379 353 353
Other aluminum products 89 98 132
----- ----- -----
Total 2,580 2,797 2,836
===== ===== =====
Aluminum Ingot
Primary aluminum ingot is a traded commodity and prices are
established by market forces of demand and supply, including available
levels of inventories. The Company's sales of primary aluminum to
third parties are generally made at prices determined by reference to
published trading prices adjusted for availability of the product.
Alcoa has a metal trading operation responsible for hedging
programs that are designed to minimize the effects of price volatility
on the Company and its customers for primary aluminum in the
international commodity markets as well as price exposure to aluminum
scrap, including used beverage cans.
The Company smelts primary aluminum from alumina obtained
principally from the alumina refineries discussed earlier. Smelters
are located at Warrick, Indiana; Massena, New York; Badin, North
Carolina; Alcoa, Tennessee; Rockdale, Texas; Wenatchee, Washington;
Point Henry and Portland, Australia; Pocos de Caldas and Sao Luis,
Brazil; and Paranam, Suriname. Alcoa's consolidated annual rated
primary aluminum capacity at these smelters is approximately 1.9
million metric tons. When operating at capacity, the Company's
smelters more than satisfy the primary aluminum requirements of the
Company's fabricating operations. Purchases of aluminum scrap
(principally used beverage cans), supplemented by purchases of ingot
when necessary, satisfy any additional aluminum requirements. Most of
the Company's primary aluminum production in 1993 was delivered to
other Alcoa operations for alloying and/or further fabricating.
The joint venture smelter at Portland, Victoria, with an annual
rated capacity of 320,000 metric tons, is owned 45% by AofA, 25% by the
State of Victoria, 10% by the First National Resource Trust, 10% by the
China International Trust and Investment Corporation, and 10% by
Marubeni Aluminium Australia Pty., Ltd. (Portland Smelter
Participants). A subsidiary of AofA operates the smelter. Each
participant is required to contribute to the cost of operations and
construction in proportion to its interests in the venture and is
entitled to its proportionate share of the output. Alumina is supplied
by AofA. The Portland site can accommodate additional smelting
capacity.
The Alumar Consortium aluminum smelter at Sao Luis, Brazil has an
annual rated capacity of 328,000 metric tons. Aluminio receives about
54% of the primary aluminum production.
During 1993 and early 1994, Alcoa indefinitely idled approximately
410,000 metric tons of annual rated primary aluminum capacity in the
U.S. Smelters located in Indiana, North Carolina, Tennessee, Texas and
Washington were affected. AofA separately announced a 25,000 metric
tons capacity reduction at its Point Henry smelter. The joint venture
smelter at Portland, in which AofA owns a 45% interest, announced a
26,000 metric tons production reduction. Suralco reduced annual
primary aluminum production by 3,000 metric tons. See "Competition"
above.
The Company utilizes electric power, natural gas and other forms
of energy in its refining, smelting and processing operations.
Aluminum is produced from alumina by an electrolytic process requiring
large amounts of electric power. Electric power accounts over time for
approximately 30% of the Company's primary aluminum costs. The Company
generates approximately 40% of the power used at its smelters
worldwide. Most firm power purchase contracts tie prices to aluminum
prices or to prices based on various indices.
Over 40% of the power for the Point Henry smelter is generated by
AofA using its extensive brown coal deposits. The balance of the
power, and power for the Portland, Victoria smelter, is available under
contracts with the State Electricity Commission of Victoria. Power
prices are tied by formula to aluminum prices. The State Government of
Victoria has announced its desire to renegotiate the power contract for
the Portland smelter. AofA and the Portland Smelter Participants have
informed the State that they are willing to discuss ways to improve the
operational aspects of the power contract.
Electric power for Alumar's Sao Luis smelter is purchased from the
government-controlled power grid in Brazil at a small discount from the
applicable industrial tariff price and is protected by a cap based on
the London Metal Exchange price of aluminum. Aluminio's Pocos de
Caldas smelter purchases firm and interruptible power from the
government-controlled electric utility. Aluminio has prepaid all of
the Pocos de Caldas facility's electricity requirements through
January 1, 1996.
Over 50% of the power requirements for Alcoa's U.S. smelters is
generated by the Company and the remainder is purchased from others
under long-term contracts. More than 10% of the self-generated power
results from the Company's entitlement to a fixed percentage of the
output from a hydroelectric power facility located in the northwestern
United States.
The Company generates substantially all of the power used at its
Warrick smelter using coal reserves near the smelter that should
satisfy requirements through the late 1990s. Lignite is used to
generate power for the Rockdale, Texas smelter. Company-owned
generating units supply about half of the total requirements and the
balance is purchased from a dedicated power plant under a contract
which expires not earlier than 2011. See "Environmental" below.
In connection with the electric power generated for the aluminum
smelters at Alcoa, Tennessee and Badin, North Carolina, two
subsidiaries of the Company own and operate hydroelectric facilities
subject to Federal Energy Regulatory Commission licenses effective
until 2005 and 2008, respectively. For the Tennessee plant, the
Company also purchases firm and interruptible power from the Tennessee
Valley Authority under a contract which expires in 2000. For the Badin
plant, the Company purchases additional power under an evergreen
contract providing for specified periods of notice before termination
by either party.
The purchased power contract for the Massena smelter expires not
earlier than 2003 but may be terminated by the Company with one year's
notice.
Alcoa has two principal power contracts for its Wenatchee smelter.
The contract from the power output entitlement referred to above
expires in 2011. The contract with Bonneville Power Administration
(BPA) expires in 2001 and includes 25% interruptible power. Power
restrictions may occur when precipitation is below normal. A BPA power
restriction resulted in the indefinite closure of one potline at
Wenatchee in early 1993. Alcoa chose not to restart the potline after
the restriction was lifted due to low ingot prices. Beginning in 1995,
a portion of the power supplied under the entitlement contract will be
replaced by power purchased from the local public utility district.
Additional power also may be purchased from the district.
Although not included in the revenues by market or revenues and
shipments tables above or in the rated primary aluminum capacity figure
above, the Company reports equity earnings from its interest in two
primary aluminum smelters in Norway. Elkem Aluminium ANS, 50% owned by
Norsk Alcoa A/S, a subsidiary, is a partnership that owns and operates
the smelters.
Flat-Rolled Products
The Company's flat-rolled products serve three principal markets:
light gauge sheet products serve principally the packaging market, and
sheet and plate products serve principally the transportation and
building and construction markets.
Alcoa employs its own sales force for most products sold in the
packaging market. Most of the packaging revenues in 1993 were derived
from rigid container sheet (RCS) sold to can companies to make beverage
and food cans, and can ends. The number of RCS customers in the U.S.
is relatively small, in part because the number of can companies has
been shrinking. Use of aluminum beverage cans continues to increase,
particularly in Asia, Europe and South America where per capita
consumption remains relatively low. Aluminum foil and non-RCS
packaging sheet are sold principally in the packaging markets.
Aluminum's diverse characteristics, particularly its light weight
and recyclability, are significant factors in packaging markets where
alternatives such as steel, plastic and glass are competitive
materials. Leadership in the packaging markets is maintained by
improving processes and facilities, as well as by providing research
and technical support to customers.
Light gauge aluminum sheet and foil products are manufactured at
several locations. RCS is produced at Warrick, Indiana; Alcoa,
Tennessee; Point Henry, Australia; Moka, Japan (a joint venture
facility); and Swansea, Wales. Light gauge sheet and foil are produced
at Lebanon, Pennsylvania and foil also is produced at Davenport, Iowa.
Light gauge sheet and foil products are manufactured by Aluminio at
Recife, Brazil. Can recycling or remelt facilities are located at or
near the Indiana, Tennessee and Wales plants.
In 1993 the Company recycled approximately 268,000 metric tons of
used aluminum beverage cans, which are an important source of metal for
RCS. The cost of used beverage cans declined in 1992 and 1993 as
primary aluminum prices dropped. Recycling aluminum conserves raw
materials, reduces litter and saves energy - about 95% of the energy
needed to produce aluminum from bauxite. Also, recycling capacity
costs much less than new primary aluminum capacity.
The Company has a joint venture with Kobe Steel, Ltd. (Kobe) in
Japan. The venture, KSL Alcoa Aluminum Company, Ltd. (KAAL), completed
construction of a cold rolling mill at Moka, Japan and began commercial
operations in 1993. It manufactures and sells RCS in Japan and other
Asian countries. AIHC holds a 50% interest in KAAL. Alcoa supplies
aluminum to the joint venture.
Sheet and plate products principally serve aerospace, automotive,
lithographic, railroad, ship building, building and construction,
defense and other industrial and consumer markets. The Company
maintains its own sales forces for most of these products.
Differentiation of material properties, price and service are
significant competitive factors. Aluminum's diverse characteristics
are important in these markets, where competitive materials include
steel and plastics for automotive and building applications; magnesium,
titanium, composites and plastics for aerospace and defense
applications; and wood and vinyl in building and construction
applications.
The Company's largest sheet and plate plant is located at
Davenport, Iowa. It produces products requiring special alloying, heat
treating and other processing, some of which are unique or proprietary.
A distribution center was opened in Paal, Belgium during late 1993 to
serve European sheet and plate markets.
Alcoa continues to develop alloys and products for aerospace
applications, such as new aluminum alloys for application in the Boeing
777 aircraft. A research and development effort also has resulted in
the commercial development of a series of aluminum and aluminum-lithium
alloys which offer significant weight savings over traditional
materials for aerospace and defense applications.
The Company participates in a joint venture with an affiliate of
Akzo N.V., a chemical company based in The Netherlands, to perform
research and development and to produce fiber-metal laminates made of
aluminum and resins reinforced with advanced fibers for the aircraft
industry.
The Company and Kobe also have established two additional joint
venture companies, one in the United States and one in Japan, to serve
the transportation industry. The initial emphasis of the new companies
is on expanding the use of aluminum sheet products in passenger cars
and light trucks.
In late 1992 AIHC acquired a 50.1% interest in Kofem Kft., a
subsidiary of the government-owned Hungarian Aluminium Industrial
Corporation (Hungalu). The new venture, Alcoa-Kofem Kft. (A-K),
produces common alloy flat and coiled sheet, soft alloy extrusions and
end products for the building, construction, food and agricultural
markets in central and western Europe. A-K will invest up to $146
million, including part of AIHC's initial investment, over the next
five years for product quality and environmental and safety upgrades at
the A-K facility. Alcoa is providing technological and operational
expertise to A-K.
Engineered Products
Engineered products principally include extrusion and tube, wire,
rod and bar, forgings, aluminum building products, aluminum memory disk
blanks and other products which are sold in a wide range of markets,
but principally in the transportation market.
Aluminum extrusions and tube are produced principally at six U.S.
locations. The Chandler, Arizona plant produces hard alloy extrusions
and tube; the Vernon, California plant produces hard alloy extrusions
and tube; the Lafayette, Indiana plant produces a broad range of common
and hard alloy extrusions and tube; the Baltimore, Maryland plant
produces large press extrusions; and plants at Tifton, Georgia and
Delhi, Louisiana produce common alloy extrusions.
In late 1993 Alcoa and VAW Aluminium AG (VAW) formed a joint
venture to produce and market high strength aluminum extrusions, tube
and rod to principally serve European transportation and defense
markets. An Alcoa subsidiary owns 60% and VAW owns 40% of the venture
which is called Alcoa VAW Hannover Presswerk GmbH & Co. KG and is
located in Hannover, Germany.
Alcoa's Delhi facility will supply Toyota Motor Company (Toyota)
with extruded aluminum front and rear bumpers for the 1995 Toyota
Avalon to be assembled at Georgetown, Kentucky. The bumpers were
jointly designed by Alcoa and Toyota.
A 50-50 limited partnership formed with Kobe in 1991 to
manufacture and market aluminum tube for photoreceptors for North
American markets will cease manufacturing operations in early 1994 and
is expected to be dissolved later in the year.
Alcoa Construction Products produces and markets residential
aluminum siding and other aluminum building products. These products
are sold principally to distributors and jobbers.
Aluminum forgings are produced at Cleveland, Ohio; Vernon,
California; and Bologne, France. Forgings are sold principally in the
aerospace, defense and transportation markets. Forged aluminum wheels
for truck, bus and automotive markets are produced at Cleveland, Ohio.
Mechanical-grade redraw rod, wire and cold-finished rod and bar
are produced at Massena and are sold to distributors and customers for
a variety of applications in the building and transportation markets.
Aluminum extruded products are manufactured by a subsidiary of
Aluminio in Argentina and at several Aluminio locations in Brazil.
Other Aluminum Products
Alcoa Automotive Structures GmbH was formed in 1991 to produce
aluminum components and sub-assemblies for aluminum automotive
spaceframes. Aluminum spaceframes represent a significant departure
from the traditional method and material used to manufacture primary
auto body structures. In 1993 Alcoa completed construction and began
operating a unique multi-million dollar plant in Soest, Germany to
supply aluminum spaceframe products to its first customer, Audi AG. In
1994 Audi will market its new A8 luxury sedan, the first automobile to
utilize a complete aluminum spaceframe body structure. The A8 is a
result of a 10 year development effort between Alcoa and Audi and is
constructed with spaceframes, components and sub-assemblies produced by
Alcoa. Alcoa continues to cooperate with several automobile
manufacturers in Europe, North America and Japan to develop new
aluminum products for automotive market applications.
Alcoa produces aluminum closures for bottles at Richmond, Indiana;
Worms, Germany; Tokyo, Japan; and near Barcelona, Spain.
The Company sells aluminum scrap and produces and markets aluminum
paste, particles, flakes and atomized powder.
Subsidiaries of Alcoa Nederland Holding B.V. (ANH) produce
extrusions, common alloy sheet products and certain finished products
such as automated greenhouse systems, as well as fabricated products
such as aluminum windows and aluminum ceiling systems. In early 1993
ANH acquired a 100% interest in Compri-Aluminium B.V. (Compri). Compri
manufactures, sells and installs aluminum and steel building products
in Belgium and The Netherlands.
Alutodo, S.A. de C.V., a subsidiary, buys and sells aluminum and
aluminum products through distribution centers at several locations in
Mexico.
Non-Aluminum Products Segment
Alcoa produces plastic closures for bottles at Crawfordsville,
Indiana; Olive Branch, Mississippi; Buenos Aires, Argentina; Sao Paulo,
Brazil; Santiago, Chile; Bogota, Colombia; Tellig, Germany; Tokyo,
Japan; Saltillo, Mexico; and near Barcelona, Spain. Alcoa participates
in a joint venture with Al Zayani Investments W.L.L. of Bahrain, known
as Gulf Closures W.L.L., to manufacture plastic beverage container
closures for markets in the Middle East. Production at Manama, Bahrain
began in 1993. Alcoa's worldwide closure businesses are coordinated
from Indianapolis, Indiana. The use of plastic closures has surpassed
that of aluminum closures for beverage containers in the U.S. and is
gaining momentum in other countries.
The Company manufactures packaging equipment and machinery,
principally for producing and decorating metal cans and can ends. In
addition, the Company manufactures a line of equipment for applying
plastic or aluminum closures to beverage containers. Alcoa also owns a
minority interest in a company which sells food packaging machinery
that fills and seals metal and multi-layered polymer and paper
containers.
Alcoa Fujikura Ltd. (AFL), owned 51% by Alcoa and 49% by Fujikura
Ltd. of Japan, produces and markets automotive electrical distribution
systems, as well as fiber optic products and systems for selected
electric utilities and telecommunications markets. AFL continues to be
a Q-1 supplier to Ford Motor Company and is now supplying electrical
distribution systems to Subaru (in the U.S.), Auto Alliance, Inc.
(Mazda-Ford joint venture) and PACCAR Inc. In 1993 AFL acquired the
remaining interest in the Stribel group of companies, which are
European manufacturers of electromechanical and electronic components
for the European automotive market.
Alcoa Construction Product's principal product for building and
construction markets is vinyl siding. Other non-aluminum building
products include vinyl windows, window lineal systems, shutters and
building accessories and wood windows and patio doors.
Norcold and Stolle Products Division manufactures recreational
vehicle refrigerators, and auto parts and appliance control panels.
A subsidiary, Alcoa Electronic Packaging, Inc. (AEP), produces
ceramic packages used to hold integrated circuits for electronic
equipment. During 1993 AEP increased shipments of several parts to a
key customer. AEP currently is working with several potential
customers to broaden its market base in 1994. Production capacity is
being increased to respond to these opportunities.
Alcoa Composites, Inc., a subsidiary, principally designs and
manufactures composite parts and structures for aerospace and
transportation applications.
Facilities to recover gold from AofA's mining leases in Western
Australia were constructed, and mined gold was first poured, in 1988.
Production has been declining since 1990, and the gold deposit is
expected to be depleted by 1997.
Magnesium is produced by the Company in Addy, Washington, from
minerals in the area owned by the Company. Alcoa uses magnesium for
certain aluminum alloys. Recycling is also a source of aluminum-
magnesium alloys. Due to world magnesium market conditions the Company
reduced magnesium production during 1993. Third party sales of
magnesium are continuing.
Titanium and steel forgings are produced at Cleveland, Ohio and
Bologne, France and are sold principally in aerospace markets.
Aluminio owns and operates a chain of retail construction
materials outlets in Brazil.
Alcoa's wholly owned subsidiaries own and develop luxury
residential/resort communities in South Carolina and Florida; the
remaining properties are being actively marketed.
Research and Development
The Company, a technological leader in the aluminum industry,
engages in research and development (R&D) programs which include basic
and applied research and process and product development. The research
activities are principally conducted at Alcoa Technical Center (ATC),
near Pittsburgh, Pennsylvania. Several subsidiaries and divisions
conduct their own R&D programs as do many plants. Expenditures for
such activities were $130 million in 1993, $212 million in 1992 and
$252 million in 1991. Most of the 1993 decrease was related to Alcoa
Electronic Packaging which moved to production status in 1993, and to
program reductions at ATC. Substantially all R&D activities are funded
by the Company and its various units. The Company's strategy has been
to focus its R&D expenditures on specific programs related to existing
businesses, and this will lead to lower R&D expenditures in 1994.
Environmental
Alcoa's Environmental Policy confirms its commitment to operate
worldwide in a manner which protects the environment and the health of
employees and of the citizens of the communities where the Company has
an impact.
The Company engages in a continuing effort to develop and
implement modern technology and policies to meet environmental
objectives. Approximately $76 million was spent during 1993 for new or
expanded facilities for environmental control. Capital expenditures
for such facilities will approximate $56 million in 1994. The costs of
operating these facilities are not included in these figures.
Remediation expenses being incurred by the Company at many of its
facilities and at certain sites involved in proceedings under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA or Superfund) and other sites are increasing. See
Environmental Matters on page 17 in the Annual Report to Shareholders,
and Item 3 - "Legal Proceedings" below.
Alcoa's operations, like those of others in manufacturing
industries, have in recent years become subject to increasingly
stringent legislation and regulations to protect human health and the
environment. This trend is expected to continue. Compliance with new
laws, regulations or policies could require substantial expenditures by
the Company in addition to those referenced above.
Environmental requirements also may affect the marketing of
certain products manufactured by the Company. For example, legislation
imposing deposits on beverage containers including aluminum cans has
been passed in a number of states and is being considered elsewhere.
Federal and state regulations, such as U.S. Food and Drug
Administration regulations and California Proposition 65 affect the
manufacture of materials to be used in food and beverage containers.
The Coalition of Northeastern Governors (CONEG) model law (as enacted
by several states) governing the use or presence of certain materials
may impact the manufacture of certain packages or packaging components
for foods and beverages. A proposed directive similar to the CONEG
legislation is under consideration by the Commission of the European
Union.
Environmental laws and regulations are important both to the
Company and to the communities where it operates. The Company supports
the use of sound scientific research and realistic risk criteria to
analyze environmental and human health effects and to develop effective
laws and regulations in all countries where it operates. Alcoa
recognizes that recycling and waste reduction offer real solutions to
the solid waste problem and it continues vigorously to pursue efforts
in these areas.
Employees
During 1993 the Company employed an average of approximately
63,400 people worldwide. New three-year labor agreements covering the
majority of the Company's U.S. production workers were ratified in mid-
1993. Major provisions included: an increase in base wages effective
in 1993 and an additional base wage increase in 1995; a managed health
care program; a pay for performance plan that aligns the variable pay
component with the location's goals and overall corporate financial
performance; and changes in the factor used to calculate pension
benefits. Also, agreement was reached on principles to guide joint
labor-management development of a location-specific, business-based
outsourcing process.
Wages for employees in Australia are covered by agreements which
are negotiated under guidelines established by a national industrial
relations authority.
Wages for both hourly and salaried employees in Brazil are
negotiated annually in compliance with government guidelines. Each
Aluminio location, however, has established a separate compensation
package for its employees which includes real wage increases and
certain employee welfare plans.
Item 2. Properties.
See "Item 1 - Business." Alcoa believes that its facilities,
substantially all of which are owned, are suitable and adequate for its
operations.
Item 3. Legal Proceedings.
In the ordinary course of its business, Alcoa is involved in a
number of lawsuits and claims, both actual and potential, including
some which it has asserted against others. While the amounts claimed
may be substantial, the ultimate liability cannot now be determined
because of the considerable uncertainties that exist. It is possible
that results of operations or liquidity in a particular period could be
materially affected by certain contingencies. Management believes,
however, that the disposition of matters that are pending or asserted
will not have a materially adverse effect on the financial position of
the Company
Environmental Matters
Alcoa is involved in proceedings under the Superfund or analogous
state provisions regarding the usage, disposal, storage or treatment of
hazardous substances at a number of sites in the U.S. The Company has
committed to participate, or is engaged in negotiations with Federal or
state authorities relative to its alleged liability for participation,
in clean-up efforts at several such sites.
In response to a unilateral order issued under Section 106 of
CERCLA by the U.S. Environmental Protection Agency (EPA) Region II
regarding releases of hazardous substances, including polychlorinated
biphenyls (PCBs) into the Grasse River near its Massena, New York
facility, Alcoa proposed during 1993 to EPA that it engage in certain
remedial activities in the Grasse River for the removal and appropriate
disposal of certain river sediments. EPA has accepted the proposal in
principle; however, it is deciding certain critical details, such as
how removed sediments will be managed.
Representatives of various Federal and state agencies and a Native
American tribe, acting in their capacities as trustees for natural
resources, have asserted that Alcoa may be liable for loss or damage to
such resources under Federal and state law based on Alcoa's operations
at its Massena, New York facility. While formal proceedings have not
been instituted, the Company is actively investigating these claims.
In June 1993 EPA published notice of its intent to include
portions of Lavaca Bay and Alcoa's Point Comfort Operations on the
Superfund National Priorities List (NPL). Alcoa provided comments to
that proposal in August 1993 as part of the administrative record. In
December 1993, Alcoa and EPA Region VI agreed to commence negotiations
for an administrative consent order under which Alcoa would implement a
comprehensive remedial investigation and feasibility study for the
proposed NPL site. These negotiations, which include Alcoa, EPA, the
State of Texas and certain Federal and state natural resources
trustees, are now ongoing. These Federal and state natural resources
trustees have served Alcoa with notice of their intent to file suit to
recover damages for alleged loss, injury or destruction of natural
resources in Lavaca Bay, adjacent to the Point Comfort Operations, and
to recover the costs for performing the assessment of such alleged
damages. Alcoa and representatives of the trustees have entered into a
series of agreements that provide for implementation of various studies
of Lavaca Bay and its resources. These same parties have entered into
several tolling agreements that suspend any applicable statute of
limitations period.
The Stolle Corporation (Stolle), a subsidiary, disclosed to the
Ohio Environmental Protection Agency that it had previously managed
hazardous waste at its Sidney, Ohio diversified products plant in a
manner which may not meet regulatory requirements then applicable. In
December 1993, the Ohio Attorney General contacted Stolle to discuss
potential resolution of alleged violations. Discussions are expected
to begin in late March or early April 1994.
In September 1993 EPA Region V issued an administrative complaint
to Alcoa's Cleveland, Ohio Works alleging improper use and disposal of
PCBs and failure to obtain an EPA identification number for PCB
disposal activities. The complaint cites the applicable maximum
statutory penalties for these alleged violations and assesses a fine of
$197,000. Settlement negotiations are ongoing.
Other Matters
Alcoa was named as one of several defendants in a number of
lawsuits filed as a result of the Sioux City, Iowa DC-10 plane crash in
1989. The plaintiffs claim that Alcoa fabricated the titanium fan disk
involved in the alleged engine failure of the plane from a titanium
forging supplied by a third party. Twenty-two of the 117 cases are
still pending; the other 95 have been settled without participation by
Alcoa. While Alcoa is covered by the releases given by the plaintiffs
in the settled cases, Alcoa remains subject to claims for contribution
from the defendants who have actually paid the settlements. In some of
the cases, punitive damages of $5 million are sought from each
defendant.
Alcoa and a subsidiary were notified in September 1991 by the
Department of Justice (DOJ) of its investigation regarding criminal
violations of antitrust laws in the small press, hard alloy extrusion
industry. On March 5, 1993, Alcoa and the subsidiary received an
antitrust grand jury Investigation subpoena requiring production of
documents relating to pricing of small press, hard alloy extrusions.
Alcoa and its subsidiary have provided the documentation requested.
Employees of Alcoa and the subsidiary have been called to testify
before the grand jury.
In February 1992 Alcoa received a Civil Investigative Demand (CID)
from the DOJ to determine whether there might be a violation of the
Sherman Act or the Clayton Act as a result of Alcoa's acquisition from
Halethorpe Extrusions, Inc. of assets relating to the production of
extruded aluminum products. The DOJ also advised Alcoa that it
intended to issue a CID to Pimalco, Inc., a wholly owned subsidiary, in
connection with the same acquisition. The investigation was concluded
in early 1993, and no charges were brought against the Company.
Aura Systems, Inc. has filed suit against Alcoa and Alcoa
Packaging Machinery, Inc. and various other defendants alleging
violations of the federal antitrust laws. The suit, which seeks an
unspecified amount of damages, was transferred to the U.S. District
Court for the District of Colorado in the third quarter. The suit was
dismissed in December 1993.
In October 1992 Alcoa Composites, Inc. was served with a subpoena
requiring the production of certain documentary material to the U.S.
government in connection with an investigation to determine whether
criminal violations of federal defense procurement laws or regulations
occurred with respect to the subsidiary's subcontract to manufacture
helicopter blades for the U.S. Army. The subsidiary is responding to
the subpoena. The Company does not have sufficient information at this
time to ascertain whether any violations may have taken place or
whether any grounds exist for naming the subsidiary in any proceeding
which may be initiated as a result of the investigation. The Company
continues to provide information to the U.S. government.
In December 1992 Alcoa initiated a lawsuit against nearly one-
hundred different insurance carriers that provided Alcoa with insurance
coverage for various periods between the years 1956 and 1985. The suit
asks the court to declare that these insurance companies are required,
under the terms of the policies issued, to reimburse monies spent by
Alcoa in the past or future for environmental liabilities that have
arisen in recent years.
On December 21, 1992, Alcoa was named as a defendant in KML
Leasing v. Rockwell Standard Corporation filed in the U.S. District
Court for the District of Oklahoma on behalf of 7,317 Aero Commander,
Rockwell Commander and Gulfstream Commander aircraft owners. The
complaint alleges defects in certain wingspars manufactured by Alcoa.
Alcoa's aircraft builders products liability insurance carrier has
assumed defense of the matter. In May 1993, Alcoa received a
reservation of rights letter from its insurance carrier which purports
to reserve its rights with respect to a majority of the types of
damages claimed. Alcoa is challenging the reservation.
In December 1993 Alcoa was served with a subpoena from the
Antitrust Division of the DOJ to produce documents to a Federal grand
jury sitting in Philadelphia. The grand jury is investigating pricing
practices in the used beverage container and aluminum scrap markets.
The Company is cooperating with the DOJ.
Alcoa and Alcoa Specialty Chemicals, Inc., a subsidiary, are
defendants in a case filed by Aluminum Chemicals, Inc., et al. in the
District Court of Harris County, Texas. In an Eighth Amended Petition
filed in December 1993, the plaintiffs allege claims for breach of
fiduciary duty, fraud, interference with contractual and business
relations, breach of contract, conversion, misappropriation of trade
secrets, deceptive trade practices and civil conspiracy in connection
with a former partnership, Alcoa-Coastal Chemicals. The plaintiffs are
seeking lost profits and other compensatory damages in excess of $100
million, and punitive damages. The court already has granted several
motions, including motions for partial summary judgment in favor of
defendants. Additional motions are pending or contemplated. Alcoa and
its subsidiary intend to file a counterclaim seeking damages. The case
is currently scheduled for trial in July 1994.
In late 1993, Alcoa Fujikura, Ltd. (AFL), a subsidiary, was
notified by the U.S. Customs Service (USCS) that it is the subject of
an investigation regarding the proper marking of country of origin on
wire harnesses produced in Mexico from 1986 to 1989. The USCS
investigation focuses on AFL's administration of an approved waiver
process pertaining to parts for production as well as importation of
wire harnesses for sale as repair parts through 1993. AFL is
cooperating with USCS.
In December 1993, the European Union Competition Office and German
Cartel Office began an investigation of the competitive practices of
Alcoa Chemie, GmbH., a subsidiary, in the tabular alumina business in
Germany. The subsidiary is cooperating with the investigation.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's security
holders during the fourth quarter of 1993.
Item 4A. Executive Officers of the Registrant.
The names, ages, positions and areas of responsibility of the
executive officers of the Registrant as of March 1, 1994 are listed
below.
Paul H. O'Neill, 58, Chairman of the Board and Chief Executive
Officer. Mr. O'Neill became a director of Alcoa in 1986 and was
elected Chairman of the Board and Chief Executive Officer effective in
June 1987. Before joining Alcoa, Mr. O'Neill had been an officer since
1977 and President and a director since 1985 of International Paper
Company.
Alain J. P. Belda, 50, Executive Vice President (effective March
15, 1994). Mr. Belda was President of Alcoa Aluminio S.A. in Brazil
from 1979 to March 1994. He was elected Vice President of Alcoa in
1982 and, in 1989, was given responsibility for all of Latin America
(other than Suriname). In August 1991 he was named President - Latin
America for the Company. In his new assignment Mr. Belda will work
with 10 Alcoa business unit presidents.
George E. Bergeron, 52, Vice President and President - Rigid
Packaging Division. Mr. Bergeron was named President - Alcoa Closure
Systems International in 1982 and was elected Vice President and
General Manager - Rigid Packaging Division in July 1990. He assumed
his current responsibilities in August 1991.
Peter R. Bridenbaugh, 53, Executive Vice President - Science,
Technology, Engineering, Environment, Safety and Health. Dr.
Bridenbaugh became Director, Alcoa Laboratories in 1983. He was
elected Vice President Research and Development in 1984. He assumed
his current responsibilities in 1991.
John L. Diederich, 57, Executive Vice President - Chairman's
Counsel. Mr. Diederich was elected Managing Director of Alcoa of
Australia Limited and Vice President of Alcoa in 1982. He was named
Vice President - Metals and Chemicals in July 1986 and was elected a
Group Vice President in October 1986. He assumed his current
responsibilities in 1991.
Richard L. Fischer, 57, Executive Vice President - Chairman's
Counsel. Mr. Fischer was elected Vice President and General Counsel in
1983 and became a Senior Vice President in 1984. From 1985 through
1989 he also had responsibility for Government and Public Affairs. He
was given additional responsibilities in 1986 for Corporate Development
and in 1989 for the Company's expansion activities in Europe and Asia.
He assumed his current responsibilities in 1991.
Ronald R. Hoffman, 59, Executive Vice President - Human Resources,
Quality, and Communications. Mr. Hoffman, an officer since 1975, was
named Vice President - Flat Rolled Products in 1979. He was elected a
Group Vice President in 1984 and was given responsibility for the
Company's Packaging Systems group in 1986. He assumed his current
responsibilities in 1991.
R. Lee Holz, 58, Vice President and General Counsel. Mr. Holz, an
attorney with the Company since 1960, was named Assistant General
Counsel in 1974 and Senior Assistant General Counsel in 1983. He was
elected to his current position in 1991.
Jan H. M. Hommen, 50, Executive Vice President and Chief Financial
Officer. Mr. Hommen was Financial Director of Alcoa Nederland until
1979 when he was elected Assistant Treasurer - Corporate Finance of
Alcoa. He was elected Treasurer in August 1986 and Vice President and
Treasurer in December 1986. He was elected to his current position in
1991.
Robert F. Slagle, 53, Vice President and Managing Director - Alcoa
of Australia Limited. Mr. Slagle was elected Treasurer in 1982 and
Vice President in 1984. In 1986, he was named Vice President -
Industrial Chemicals and, in 1987, was named Vice President -
Industrial Chemicals and U.S. Alumina Operations. Mr. Slagle was named
Vice President - Raw Materials, Alumina and Industrial Chemicals in
1989 and Managing Director - Alcoa of Australia Limited in 1991.
G. Keith Turnbull, 58, Executive Vice President - Strategic
Analysis/Planning and Information. Dr. Turnbull was appointed
Assistant Director of Alcoa Laboratories in 1980. He was named
Director - Technology Planning in 1982 and Vice President - Technology
Planning in 1986. In 1991 he was elected to his current position.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
Dividend per share data, high and low prices per share and the
principal exchanges on which the Company's common stock is traded are
set forth on page 34 of the 1993 Annual Report to Shareholders (the
Annual Report) and are incorporated herein by reference.
At February 7, 1994 (the record date for the Company's 1994 annual
shareholders meeting) there were approximately 55,000 Alcoa
shareholders, including both record holders and an estimate of the
number of individual participants in security position listings.
Item 6. Selected Financial Data.
The comparative columnar table showing selected financial data for
the Company is set forth on page 15 of the Annual Report and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Management's review and comments on the consolidated financial
statements are set forth on pages 14 through 17 of the Annual Report
and are incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Company's consolidated financial statements, the notes thereto
and the report of the independent public accountants are set forth on
pages 18 through 27 of the Annual Report and are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information regarding Directors is contained under the caption
"Board of Directors" on pages 4 through 6 of the Registrant's
definitive Proxy Statement dated March 4, 1994 (the Proxy Statement)
and is incorporated herein by reference.
The information regarding executive officers is set forth in Part
I, Item 4A under "Executive Officers of the Registrant."
The information with respect to this item required by Item 405 of
Regulation S-K is incorporated by reference from the Company's 1994
Proxy Statement.
Item 11. Executive Compensation.
This information is contained under the caption "Compensation of
executive officers" on pages 8 through 12 of the Proxy Statement. The
performance graph and Compensation Committee Report shall not be deemed
to be "filed".
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
This information is contained under the caption "Security
ownership" on page 8 of the Proxy Statement and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions.
This information is contained under the caption "Certain
relationships and related transactions" on page 7 of the Proxy
Statement and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
(a) The Company's consolidated financial statements, the notes
thereto and the report of the independent public accountants are set
forth on pages 18 through 27 of the Annual Report and are incorporated
herein by reference.
With the exception of the aforementioned information and the
information incorporated by reference in Part II hereof, the Annual
Report is not to be deemed filed as part of this report.
The following report and additional financial data should be read
in conjunction with the Company's consolidated financial statements in
the Annual Report:
Independent Accountant's Report of Coopers & Lybrand dated January
11, 1994, except for Note U for which the date is February 7,
1994, on the Company's consolidated financial statement schedules
filed as a part hereof for the fiscal years ended December 31,
1993, 1992 and 1991 and related consent dated March 9, 1994.
Schedules V, VI, VIII, IX and X for the fiscal years ended
December 31, 1993, 1992 and 1991 and Schedule VII as of December
31, 1993:
Schedule No. Schedule Title
V Properties, Plants and Equipment
VI Accumulated Depreciation, Depletion and Amortization
of Properties, Plants and Equipment
VII Guarantees of Securities of Other Issuers
VIII Valuation and Qualifying Accounts
IX Short-Term Borrowings
X Supplementary Income Statement Information
Schedules other than those referred to above are omitted because
they are not required or the information is included in the notes to
financial statements.
(b) Reports filed on Form 8-K. None was filed in the fourth
quarter of 1993.
(c) Exhibits.
Exhibit
Number Description*
3(i). Articles of the Registrant as amended, incorporated by
reference to exhibit 3(a) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993.
3(ii). By-Laws of the Registrant, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991.
10(a). Amended Long Term Stock Incentive Plan, effective January 1,
1992, incorporated by reference to exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10(b). Employees' Excess Benefit Plan, Plan A, incorporated by
reference to exhibit 10(b) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1980.
10(c). Incentive Compensation Plan, as amended effective January 1,
1993, incorporated by reference to exhibit 10(c) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(d). Employees' Excess Benefit Plan, Plan C, as amended and
restated effective January 1, 1989, incorporated by reference
to exhibit 10(d) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
10(e). Employees' Excess Benefit Plan, Plan D, as amended effective
October 30, 1992, incorporated by reference to exhibit 10(e)
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
10(f). Employment Agreement of Paul H. O'Neill, as amended through
February 25, 1993, incorporated by reference to exhibit 10(h)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1987 and exhibit 10(g) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990, and
exhibit 10(f)(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
10(g). Deferred Fee Plan for Directors, as amended effective
November 1, 1992, incorporated by reference to exhibit 10(h)
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
10(h). Stock Plan for Non-Employee Directors, as amended effective
July 17, 1992, incorporated by reference to exhibit 10(i) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(i). Fee Continuation Plan for Non-Employee Directors,
incorporated by reference to exhibit 10(k) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1989.
10(j). Deferred Compensation Plan, as amended effective October 30,
1992, incorporated by reference to exhibit 10(k) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(k). Summary of the Executive Split Dollar Life Insurance Plan,
dated November 1990, incorporated by reference to exhibit
10(m) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.
10(l). Form of Indemnity Agreement between the Company and
individual directors or officers, incorporated by reference
to exhibit 10(j) to the Company's Annual Report on Form
10-K for the year ended December 31, 1987.
11. Computation of Earnings per Common Share.
12. Computation of Ratio of Earnings to Fixed Charges.
13. Portions of Alcoa's 1993 Annual Report to Shareholders.
21. Subsidiaries and Equity Entities of the Registrant.
23. Consent of Independent Certified Public Accountants.
24. Power of Attorney for certain directors.
*Exhibit Nos. 10(a) through 10(d) are management contracts
or compensatory plans required to be filed as Exhibits to this Form
10-K.
Amendments and modifications to other Exhibits previously filed
have been omitted when in the opinion of the Registrant such Exhibits
as amended or modified are no longer material or, in certain instances,
are no longer required to be filed as Exhibits.
No other instruments defining the rights of holders of long-term
debt of the Registrant or its subsidiaries have been filed as exhibits
because no such instruments met the threshold materiality requirements
under Regulation S-K. The Registrant agrees, however, to furnish a
copy of any such instruments to the Commission upon request.
(d) Financial Statement Schedules.
To the Shareholders and Board of Directors
Aluminum Company of America
Our report on the consolidated financial statements of Aluminum
Company of America has been incorporated by reference in this Form 10-K
from page 18 of the 1993 Annual Report to Shareholders of Aluminum
Company of America. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedules listed under Item 14 of this Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the
information required to be included therein.
/s/Coopers & Lybrand
COOPERS & LYBRAND
600 Grant Street
Pittsburgh, Pennsylvania
January 11, 1994, except for Note U
for which the date is February 7, 1994
SCHEDULE V - PROPERTIES, PLANTS AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31
(In millions)
Col. A Col. B Col. C Col. D Col. E Col. F
------ ------ ------ ------ ------ ------
Balance at Other Balance
beginning Additions changes at end
Classification of period at cost Retirements add(deduct) of period
- -------------- ---------- --------- ----------- ----------- ---------
Year 1993:
Land and land rights,
including mines $ 228.8 $ 2.2 $ 5.2 $ 2.1 (C) $ 229.0
1.1 (D)
Structures 3,476.5 119.2 25.5 50.7 (C) 3,603.4
(17.5)(D)
Machinery and equipment 8,990.9 526.9 217.0 78.5 (C) 9,317.7
(61.6)(D)
Construction work in
progress 391.2 98.3 (B) .7 1.3 (C) 450.6
(39.5)(D)
--------- ------ ------ ------- ---------
$13,087.4 $746.6 $248.4 $ 15.1 $13,600.7
========= ====== ====== ======= =========
Year 1992:
Land and land rights,
including mines $ 226.2 $ 4.5 $ .3 $ (1.6)(D) $ 228.8
Structures 3,448.4 128.7 14.5 (18.7)(C) 3,476.5
(67.4)(D)
Machinery and equipment 8,689.0 719.4 248.5 (22.9)(C) 8,990.9
(146.1)(D)
Construction work in
progress 541.4 (72.1)(B) 1.2 (.8)(C) 391.2
(75.9)(D)
(.2)(E)
--------- ------ ------ ------- ---------
$12,905.0 $780.5 $264.5 $(333.6) $13,087.4
========= ====== ====== ======= =========
Year 1991:
Land and land rights,
including mines $ 235.6 $ 3.2 $ 1.1 $ (1.0)(C) $ 226.2
(10.5)(D)
Structures 3,537.9 110.6 12.2 (8.4)(C) 3,448.4
(179.5)(D)
Machinery and equipment 8,676.8 568.4 215.6 (24.4)(C) 8,689.0
(316.8)(D)
.6 (E)
Construction work in
progress 469.1 159.0(B) 17.2 .4 (C) 541.4
(68.0)(D)
(1.9)(E)
--------- ------ ------ ------- ---------
$12,919.4 $841.2 $246.1 $(609.5) $12,905.0
========= ====== ====== ======= =========
NOTES: (A) Depreciation is recorded principally on the straight-
line method at rates ranging from 1% to 33%
(B) Net increase (decrease) during the period
(C) Sales or acquisition of subsidiaries
(D) Transfers and foreign currency translation adjustments
(E) Adjustments to net realizable value
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTIES, PLANTS AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31
(In millions)
Col. A Col. B Col. C Col. D Col. E Col. F
------ ------ ------ ------ ------ ------
Additions
Balance at charged to Other Balance
beginning costs and changes at end
Classification of period expenses Retirements add(deduct) of period
- -------------- ---------- ---------- ----------- ----------- ---------
Year 1993:
Land and land rights,
including mines $ 31.4 $ 2.2 $ - $ - $ 33.6
Structures 1,775.4 121.6 22.0 2.9 (A) 1,866.0
(6.0)(B)
(5.9)(C)
Machinery and equipment 4,864.8 546.1 205.2 13.9 (A) 5,194.3
3.2 (B)
(28.5)(C)
-------- ------ ------ ------- --------
$6,671.6 $669.9(D) $227.2 $ (20.4) $7,093.9
======== ====== ====== ======= ========
Year 1992:
Land and land rights,
including mines $ 29.3 $ 2.2 $ - $ .5 (B) $ 31.4
(.6)(C)
Structures 1,688.6 121.7 13.8 (4.8)(A) 1,775.4
17.9 (B)
(34.2)(C)
Machinery and equipment 4,601.0 556.3 235.0 (6.0)(A) 4,864.8
27.0 (B)
(78.5)(C)
-------- ------ ------ ------- --------
$6,318.9 $680.2 (D) $248.8 $ (78.7) $6,671.6
======== ====== ====== ======== ========
Year 1991:
Land and land rights,
including mines $ 28.9 $ 2.4 $ .1 $ (1.9)(C) $ 29.3
Structures 1,676.8 124.7 9.9 (3.6)(A) 1,688.6
(92.6)(C)
(6.8)(B)
Machinery and equipment 4,466.7 570.0 202.4 (7.4)(A) 4,601.0
(224.3)(C)
(1.6)(B)
-------- ------ ------ ------- --------
$6,172.4 $697.1 (D) $212.4 $(338.2) $6,318.9
======== ====== ====== ======= ========
NOTES: (A) Sale or acquisition of subsidiaries
(B) Adjustment to net realizable value
(C) Transfers and foreign currency translation adjustments
(D) A reconciliation to depreciation expense in the Income
Statement follows
1993 1992 1991
Schedule VI depreciation expense $669.9 $680.2 $697.1
Amortization of intangibles 35.0 25.2 22.8
Depreciation included in research and
development expense (12.2) (23.0) (22.0)
Income Statement depreciation expense $692.7 $682.4 $697.9
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
DECEMBER 31, 1993
(In millions)
Col. A Col. B Col. C Col. D Col. E Col. F Col. G
------ ------ ------ ------ ------ ------ ------
Nature of any default
Name of issuer Amount owned by issuer of securities
of securities Total by person Amount in guaranteed in
guaranteed by Title of issue amount or persons treasury principal, interest,
person for of each class guaranteed for which of issuer of sinking fund or
which statement of securities and statement securities Nature of redemption provisions,
is filed guaranteed outstanding is filed guaranteed guarantee or payment of dividends
- --------------- -------------- ----------- ------------ ------------ --------- -----------------------
Various Mortgages $2.7 None None Principal None
employees payable and interest
Entities Loans and notes 1.9 None None Principal None
previously and interest
owned
Others Loans and notes 1.6 None None Principal None
---- and interest
$6.2
====
NOTE: (A) The amount of interest guaranteed does not exceed $1 per
year.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31
(In millions)
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Additions
---------
Balance at Charged to Charged Balance
beginning costs and to other at end
Description of period expenses accounts Deductions of period
----------- ---------- ---------- -------- ---------- ---------
Allowance for doubtful accounts:
1993 $ 17.7 $ 19.2 $ (0.2)(A) $ 3.5(B) $ 33.2
1992 $ 17.3 $ 6.8 $ (3.1)(A) $ 3.3(B) $ 17.7
1991 $ 14.9 $ 13.3 $ 1.5 (A) $ 12.4(B) $ 17.3
Deferred income tax valuation allowance:
1993 $ 157.3 $ 52.7 - $ 38.6(D) $ 171.4
1992 $ 156.1(C) $ 1.2 - - $ 157.3
NOTES: (A) Collections on accounts previously written off,
acquisition of subsidiaries and foreign currency
translation adjustment
(B) Uncollectible accounts written off
(C) Represents the implementation of SFAS 109 effective
January 1, 1992
(D) Related primarily to utilization of tax loss carry forwards.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEAR ENDED DECEMBER 31
(In millions)
Col. A Col. B
------ ------
Charged to costs
Item and expenses
---- ----------------
Maintenance and repairs:
1993 $908.2
1992 $913.8
1991 $925.1
Taxes, other than payroll and income taxes:
1993 1992 1991
---- ---- ----
Real estate and personal property taxes $ 52.0 $ 51.3 $ 52.4
Other taxes 45.0 61.0 58.8
------ ------ ------
$ 97.0 $112.3 $111.2
====== ====== ======
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEAR ENDED DECEMBER 31
(In millions)
Col. A Col. B Col. C Col. D Col. E Col. F
------ ------ ------ ------ ------ ------
Maximum Average Weighted
Category of Weighted amount amount average
aggregate Balance at average outstanding outstanding interest
short-term end of interest during the during the rate during
borrowings (A) period rate period period (B) the period(C)
- -------------- ---------- -------- ----------- ----------- -------------
Year 1993:
Payable to banks $286.6 (F) $286.6 $178.9 (F)
Commercial paper (D) 75.9 3.4% 365.2 198.4 3.2%
------
$362.5
======
Year 1992:
Payable to banks $171.5 (G) $190.3 $162.6 (G)
Commercial paper (D) 242.7 3.4% 381.0 114.5 3.6%
------
$414.2
======
Year 1991:
Payable to banks $129.9 (H) $209.7 $132.2 (H)
Commercial paper (E) 40.3 12.5% 64.7 22.9 9.6%
------
$170.2
======
NOTES: (A) Terms range from demand to 270 days
(B) Computed by calculating an arithmetical average of
month-end borrowings during the year
(C) Computed by dividing interest expense applicable to the
debt by average borrowings outstanding
(D) Aluminum Company of America and Alcoa of Australia
short-term borrowings
(E) Alcoa of Australia short-term borrowings
(F) Individual rates ranged from 3.7% to 23.5%, with a
weighted average of 5.5% for the period and 5.8% at
year-end
(G) Individual rates ranged from 3.9% to 10.9%, with a
weighted average of 6.6% for the period and 5.7% at
year-end
(H) Individual rates ranged from less than 1% to 12.3%, with
a weighted average of 7.8% for the period and 7.4% at
year-end
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
ALUMINUM COMPANY OF AMERICA
March 11, 1994 By /s/Earnest J. Edwards
Earnest J. Edwards
Vice President and Controller
(Also signing as Principal
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/Paul H. O'Neill Chairman of the Board March 11, 1994
Paul H. O'Neill and Chief Executive Officer
(Principal Executive Officer
and Director)
/s/Jan H. M. Hommen Executive Vice President and March 11,1994
Jan H. M. Hommen Chief Financial Officer
(Principal Financial Officer)
Kenneth W. Dam, John P. Diesel, Joseph T. Gorman, Judith M. Gueron,
John P. Mulroney, Sir Arvi Parbo, Forrest N. Shumway and Franklin A.
Thomas, each as a Director, on March 11, 1994, by Barbara S. Jeremiah,
their Attorney-in-Fact.*
*By /s/Barbara S. Jeremiah
Barbara S. Jeremiah
Attorney-in-Fact
EXHIBIT INDEX
Exhibit
Number Description
3(i). Articles of the Registrant as amended, incorporated by
reference to exhibit 3(a) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993.
3(ii). By-Laws of the Registrant, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991.
10(a). Amended Long Term Stock Incentive Plan, effective January 1,
1992, incorporated by reference to exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10(b). Employees' Excess Benefit Plan, Plan A, incorporated by
reference to exhibit 10(b) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1980.
10(c). Incentive Compensation Plan, as amended effective January 1,
1993, incorporated by reference to exhibit 10(c) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(d). Employees' Excess Benefit Plan, Plan C, as amended and
restated effective January 1, 1989, incorporated by reference
to exhibit 10(d) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
10(e). Employees' Excess Benefit Plan, Plan D, as amended effective
October 30, 1992, incorporated by reference to exhibit 10(e)
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
10(f). Employment Agreement of Paul H. O'Neill, as amended through
February 25, 1993, incorporated by reference to exhibit 10(h)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1987 and exhibit 10(g) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990, and
exhibit 10(f)(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
10(g). Deferred Fee Plan for Directors, as amended effective
November 1, 1992, incorporated by reference to exhibit 10(h)
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
10(h). Stock Plan for Non-Employee Directors, as amended effective
July 17, 1992, incorporated by reference to exhibit 10(i) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(i). Fee Continuation Plan for Non-Employee Directors,
incorporated by reference to exhibit 10(k) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1989.
10(j). Deferred Compensation Plan, as amended effective October 30,
1992, incorporated by reference to exhibit 10(k) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10(k). Summary of the Executive Split Dollar Life Insurance Plan,
dated November 1990, incorporated by reference to exhibit
10(m) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.
10(l). Form of Indemnity Agreement between the Company and
individual directors or officers, incorporated by reference
to exhibit 10(j) to the Company's Annual Report on Form
10-K for the year ended December 31, 1987.
11. Computation of Earnings per Common Share.
12. Computation of Ratio of Earnings to Fixed Charges.
13. Portions of Alcoa's 1993 Annual Report to Shareholders.
21. Subsidiaries and Equity Entities of the Registrant.
23. Consent of Independent Certified Public Accountants.
24. Power of Attorney for certain directors.