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UNITED STATES
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
For The Fiscal Year Ended December 31, 2001
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)
Registrant's telephone numbers:
Investor Relations------------(212) 836-2674
Office of the Secretary------(412) 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 January 22, 2002 there were 847,586,916 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 $27 billion.
Documents incorporated by reference.
Parts I, II and IV of this Form 10-K incorporate by reference certain
information from the registrant's 2001 Annual Report to Shareholders (Annual
Report). Part III of this Form 10-K incorporates by reference certain
information from the registrant's definitive Proxy Statement dated February 15,
2002 (Proxy Statement).
TABLE OF CONTENTS
Page(s)
-------
Part I
- ------
Item 1. Business.................................................... 3-14
Item 2. Properties.................................................. 14-17
Item 3. Legal Proceedings........................................... 17-20
Item 4. Submission of Matters to a Vote of Security Holders......... 20
Item 4A. Executive Officers of the Registrant........................ 20-21
Part II
- -------
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 21
Item 6. Selected Financial Data..................................... 21
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.. 21
Item 8. Financial Statements and Supplementary Data................. 21
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 22
Part III
- --------
Item 10. Directors and Executive Officers of the Registrant.......... 22
Item 11. Executive Compensation...................................... 22
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters............ 22
Item 13. Certain Relationships and Related Transactions.............. 22
Part IV
- -------
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K....................................... 22-29
Signatures ............................................................ 30
Note on Incorporation by Reference
In this Form 10-K, selected items of information and data are incorporated by
reference to portions of the Annual Report. Any reference in this report to
disclosures in the Annual Report shall constitute incorporation by reference of
that specific disclosure into this Form 10-K.
2
ALCOA INC.
Formed in 1888 under the laws of the Commonwealth of Pennsylvania, Alcoa Inc.
(formerly Aluminum Company of America) has its registered office in Pittsburgh,
Pennsylvania. In this report, unless the context otherwise requires, Alcoa or
the "company" means Alcoa Inc. and all subsidiaries consolidated for the
purposes of its financial statements.
PART I
Item 1. Business.
Overview
- --------
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum
and alumina, and is active in all major aspects of the industry: technology,
mining, refining, smelting, fabricating and recycling. Alcoa serves customers
worldwide in the packaging, consumer, automotive, aerospace and other
transportation, building and construction, industrial products and distribution
markets. Related businesses include packaging machinery, precision castings,
vinyl siding, plastic bottles and closures, fiber optic cables and electrical
distribution systems for cars and trucks.
Alcoa's operations consist of five worldwide segments: Alumina and Chemicals,
Primary Metals, Flat-Rolled Products, Engineered Products and Packaging and
Consumer. Other Alcoa businesses that are not included in one of these five
segments are reported as "Other."
Alcoa operates in 38 countries. While North America remains its largest market,
the company has doubled its revenues in Europe over the past four years. Asia
and Latin America present opportunities for substantial growth. Alcoa has been a
component of the Dow Jones Industrial Average since 1959.
Description of the Business
- ---------------------------
Information describing Alcoa's businesses can be found in the Annual Report at
the indicated pages:
Item Page(s)
Discussion of Recent Business Developments:
Letter to Shareholders................................................. 1-4*
News Briefs 2001--Alliances, Acquisitions and Divestitures............. 18-20*
Notes to Consolidated Financial Statements
Note C. Acquisitions and Divestitures.............................. 51-52
Segment Reviews:
Business Descriptions, Principal Products, Principal Markets,
Methods of Distribution, Seasonality and Dependence Upon Customers:
Alumina and Chemicals.................................................. 36-37*
Primary Metals......................................................... 37*
Flat-Rolled Products................................................... 37*
Engineered Products.................................................... 38*
Packaging and Consumer................................................. 38*
Other.................................................................. 38-39*
Financial Information about Segments and Financial Information about
Geographic Areas:
Note L. Segment and Geographic Area Information........................ 54-55
*Excluding captions, charts, diagrams and related notes.
3
Structure of Certain Operations
- -------------------------------
The company's Alumina and Chemicals segment primarily consists of a series of
affiliated operating entities referred to as Alcoa World Alumina and Chemicals
(AWAC). Generally, Alcoa owns 60% and WMC Limited (WMC), an Australian mining
and minerals processing company, owns 40% of these entities. The one exception
to that general structure is Alcoa of Australia Limited (AofA), where WMC owns
39.25% with QBE holding the remaining 0.75%. For more information on AWAC, see
Exhibit Nos. 10(a) through 10(e) to this report.
Alcoa owns 59.1% of Alcoa Aluminio S.A. (Aluminio), an integrated aluminum
producer in Brazil. Aluminio operates mining, refining, smelting and fabricated
products facilities at various locations in Brazil. The remaining 40.9% of
Aluminio is principally held through direct and indirect ownership by companies
controlled by the Camargo Correa Group, a leading contractor and industrial
conglomerate in Brazil.
Bauxite Interests
- -----------------
Aluminum is one of the most plentiful metals in the earth's crust. Aluminum is
produced primarily from bauxite, an ore containing aluminum in the form of
aluminum oxide, commonly referred to as alumina. Aluminum is made by extracting
alumina from bauxite and then removing oxygen from the alumina. Alcoa processes
most of the bauxite that it mines into alumina. The company obtains bauxite from
reserves held by AWAC, from the company's interests in Brazil, from related
third parties under long-term contracts and from unrelated third parties under
short-term contracts. In 2001, Alcoa consumed 30.8 million metric tons (mt) of
bauxite from its own reserves, 4.2 million mt from related third parties and 2.1
million mt from unrelated third parties. Alcoa's present sources of bauxite are
sufficient to meet the forecasted requirements of its alumina refining
operations for the foreseeable future. The following table provides information
regarding the company's bauxite interests:
Alcoa Active/1/ Bauxite Interests
Holder of Mining Rights Expiration Date
Country Project (% Held) of Mining Rights
- ---------------------------------------------------------------------------------------------------------------
Australia Darling Range Mines AofA (100%) 2044
- ---------------------------------------------------------------------------------------------------------------
Brazil Pocos de Caldas Aluminio (100%) 2017/2/
- ---------------------------------------------------------------------------------------------------------------
Guinea Boke Compagnie des Bauxites de Guinea (CBG)/3/ (100%) 2038/4/
- ---------------------------------------------------------------------------------------------------------------
Jamaica Clarendon/Manchester Plateau Alcoa Minerals of Jamaica, L.L.C./5/ (50%) 2028
Clarendon Alumina Production Ltd./6/ (50%)
- ---------------------------------------------------------------------------------------------------------------
Suriname Lelydorp BHP Billiton (76%) 2032/7/
Suralco/5/ (24%)
- ---------------------------------------------------------------------------------------------------------------
Moengo Suralco (100%) 2032/7/
- ---------------------------------------------------------------------------------------------------------------
/1/ Alcoa also has interests at the following locations that are bauxite
reserves or do not currently produce bauxite: Cape Bougainville and Mitchell
Plateau (Australia), Juruti (Brazil), and Kaimangrasi, Klaverblad and Nassau
(Suriname). Aluminio holds an 8.6% interest, Abalco S.A. (Abalco) (part of AWAC)
holds a 4.6% interest and Alcoa holds a 5% interest in Mineracao Rio do Norte
S.A. (MRN), a mining company jointly owned with affiliates of Alcan, Companhia
Brasileira de Aluminio, Companhia Vale do Rio Doce, BHP Billiton and Norsk
Hydro. MRN owns the Trombetas bauxite-mining project in Brazil. Aluminio and
Abalco purchase bauxite from MRN under long-term supply contracts. Alcoa has
agreed to purchase bauxite from the Trombetas project through 2019. In 2001,
Alcoa sold its 50% interest in a bauxite-mining project called Aroaima Bauxite
Company Ltd. in the Berbice region of Guyana to the Guyanan government.
4
/2/Brazilian mineral legislation does not establish the duration of mining
concessions. The concession remains in force until the complete exhaustion of
the deposit. Based on proven bauxite reserves and the anticipated needs of the
Pocos alumina refinery, Aluminio estimates that bauxite will last until 2017.
/3/Alcoa owns a 43% interest in Halco (Mining), Inc. Halco owns 51% and the
Guinean government owns 49% of CBG, which has the exclusive right through 2038
to develop and mine bauxite in a 10,000 square-mile area in northwestern Guinea.
/4/Alcoa has a bauxite purchase contract with CBG that will provide Alcoa with
bauxite through 2011.
/5/This Alcoa entity is part of AWAC and therefore is owned 60% by Alcoa and 40%
by WMC.
/6/Clarendon Alumina Production Ltd. is a wholly owned subsidiary of the
Government of Jamaica.
/7/Proven bauxite reserves are expected to last at least through 2023.
Alumina Refining Facilities and Capacity
- ----------------------------------------
Alcoa is the world's leading producer of alumina. Alcoa's alumina refining
facilities and its worldwide alumina capacity are shown in the following table:
Alumina Refining Capacity
Alcoa
Nameplate Consolidated
Owners Capacity/1/ Capacity/2/
Country Facility (% of Ownership) (000 MTPY) (000 MTPY)
- -----------------------------------------------------------------------------------------------------------------------------
Australia Kwinana AofA (100%) 2,000 2,000
- -----------------------------------------------------------------------------------------------------------------------------
Pinjarra AofA (100%) 3,400 3,400
- -----------------------------------------------------------------------------------------------------------------------------
Wagerup AofA (100%) 2,300 2,300
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Brazil Pocos de Caldas Aluminio (100%) 300 300
- -----------------------------------------------------------------------------------------------------------------------------
Abalco S.A./3/ (18.9%)
Alcan/4/ (10%)
Aluminio (35.1%)
Alumar BHP Billiton/4/ (36%) 1,330 718
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Alcoa Minerals of Jamaica, L.L.C./3/ (50%)
Jamaica Jamalco Clarendon Alumina Production Ltd./5/ (50%) 1,000 500
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Spain San Ciprian Alumina Espanola, S.A./3/ (100%) 1,330 1,330
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
BHP Billiton/4/ (45%)
Suriname Suralco Suralco Aluminum Company, L.L.C./3/ (55%) 1,900 1,045
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Point Comfort, Tex. Alcoa World Alumina, L.L.C/3/ (100%) 2,305/6/ 2,305/6/
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 15,865 13,898
- -----------------------------------------------------------------------------------------------------------------------------
/1/Nameplate capacity is an estimate based on design capacity and normal
operating efficiencies and does not necessarily represent maximum possible
production.
/2/The figures in this column reflect Alcoa's share of production from these
facilities. For sites owned by AWAC entities and Aluminio, Alcoa takes 100% of
the production from these facilities.
/3/This entity is part of AWAC and therefore is owned 60% by Alcoa and 40% by
WMC (or an affiliate).
/4/The named company or an affiliate holds this interest.
/5/Clarendon Alumina Production Ltd. is a wholly owned subsidiary of the
Government of Jamaica.
/6/In 2001, Alcoa announced that it was reducing the operating rate at Point
Comfort to between 1.6 -1.9 million mt per year (mtpy).
5
Primary Aluminum Facilities and Capacity
- ----------------------------------------
The company's primary aluminum smelters and their respective capacities are
shown in the following table:
Alcoa Worldwide Smelting Capacity
Alcoa
Nameplate Consolidated
Owners Capacity/1/ Capacity/2/
Country Facility (% of Ownership) (000 MTPY) (000 MTPY)
- -------------------------------------------------------------------------------------------------------------------------------
Australia Point Henry AofA (100%) 185 185
- -------------------------------------------------------------------------------------------------------------------------------
Portland AofA (55%)
CITIC (22.5%)
Marubeni (22.5%) 345 190
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Brazil Pocos de Caldas Aluminio (100%) 93 93
- -------------------------------------------------------------------------------------------------------------------------------
Sao Luis (Alumar) Aluminio (53.66%)
BHP Billiton (46.34%) 370 199
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Canada Baie-Comeau, Que. Alcoa (100%) 420 420
- -------------------------------------------------------------------------------------------------------------------------------
Becancour, Que. Alcoa (74.95%)
Aluminium Pechiney (25.05%) 390 292
- -------------------------------------------------------------------------------------------------------------------------------
Deschambault, Que. Alcoa (100%) 240 240
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Italy Fusina Alcoa (100%) 44 44
- -------------------------------------------------------------------------------------------------------------------------------
Portovesme Alcoa (100%) 146 146
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Spain Aviles Alcoa (100%) 83 83
- -------------------------------------------------------------------------------------------------------------------------------
La Coruna Alcoa (100%) 81 81
- -------------------------------------------------------------------------------------------------------------------------------
San Ciprian Alcoa (100%) 196 196
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Evansville, Ind. (Warrick)/3/ Alcoa (100%) 309 309
- -------------------------------------------------------------------------------------------------------------------------------
Frederick, Md. (Eastalco) Alcoa (61%)
Mitsui & Co. Ltd. (39%) 192 117
- -------------------------------------------------------------------------------------------------------------------------------
Badin, N.C. Alcoa (100%) 120 120
- -------------------------------------------------------------------------------------------------------------------------------
Massena, N.Y. Alcoa (100%) 130 130
- -------------------------------------------------------------------------------------------------------------------------------
St. Lawrence, N.Y. Alcoa (100%) 125 125
- -------------------------------------------------------------------------------------------------------------------------------
Troutdale, Ore./4/ Alcoa (100%) 121 121
- -------------------------------------------------------------------------------------------------------------------------------
Mount Holly, S.C. Alcoa (50.33%)
Century Aluminum Company (49.67%) 212 107
- -------------------------------------------------------------------------------------------------------------------------------
Alcoa, Tenn. Alcoa (100%) 210 210
- -------------------------------------------------------------------------------------------------------------------------------
Rockdale, Tex. Alcoa (100%) 340 340
- -------------------------------------------------------------------------------------------------------------------------------
Ferndale, Wash. (Intalco) Alcoa (61%)
Mitsui & Co. Ltd. (39%) 278 170
- -------------------------------------------------------------------------------------------------------------------------------
Wenatchee, Wash. Alcoa (100%) 227 227
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,857 4,145
- -------------------------------------------------------------------------------------------------------------------------------
/1/Nameplate capacity is an estimate based on design capacity and normal
operating efficiencies and does not necessarily represent maximum possible
production.
/2/The figures in this column include the minority interests in facilities owned
by AofA and Aluminio. Alcoa takes 100% of the production from these facilities.
/3/In December 2001, the Warrick smelter lost approximately two-thirds of its
capacity due to the failure of the on-site generating station. The company
expects that capacity will be fully restored by the end of the second quarter of
2002.
/4/In 2000, Alcoa curtailed all production at the Troutdale, Oregon smelter.
6
Alcoa owns interests in the following primary aluminum facilities that are
accounted for on the equity or cost basis method. The capacity associated with
these facilities is not included in Alcoa's consolidated capacity.
Nameplate
Owners Capacity+
Country Facility (% of Ownership) (000 MTPY)
- -----------------------------------------------------------------------------------------------------------------------------
Germany Hamburg Alcoa (33.33%)
Austria Metall AG (33.33%)
VAW AG (33.33%) 120
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Ghana Tema Alcoa (10%)
Kaiser (90%) 200
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Nigeria Alscon++ Alcoa (10%)
Federal Government of Nigeria (70%)
Ferrostaal AG (20%) 97
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Norway Lista Alcoa (50%)
Elkem A/S (50%) 90
- -----------------------------------------------------------------------------------------------------------------------------
Mosjoen Alcoa (50%)
Elkem A/S (50%) 120
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Venezuela Alcasa Alcoa (7.31%)
CVG and Japanese Interests (92.69%) 210
- -----------------------------------------------------------------------------------------------------------------------------
+Nameplate capacity is an estimate based on design capacity and normal operating
efficiencies and does not necessarily represent maximum possible production.
++Alcoa is entitled to purchase all but 40,000 mt of the production of the
Alscon smelter. Only about one-half of the smelter has been built and only about
one-half of the completed portions have been operated. The smelter has been
idled since mid-1999. Alcoa is negotiating with the shareholders of Alscon for
an amicable disengagement from the Alscon project.
Production at primary aluminum smelters in the Northwest U.S. and in Brazil was
curtailed in 2001 due to energy shortages or the unavailability of energy at
competitive prices. Recently, the smelters in Brazil have restarted some of the
previously curtailed production. Alcoa currently has approximately 634,500 mtpy
of idled smelting capacity out of a worldwide consolidated primary aluminum
capacity of 4,145,000 mtpy.
Energy
- ------
Alcoa produces aluminum from alumina by an electrolytic process requiring large
amounts of electric power. Electric power accounts for approximately 25% of the
company's primary aluminum costs. Alcoa generates approximately 25% of the power
used at its smelters worldwide, and generally purchases the remainder under
long-term arrangements. The paragraphs below summarize the sources of power and
material long-term power arrangements for Alcoa's smelters.
North America - Electricity
For its 14 North American smelters, the company (largely through its wholly-
owned subsidiary, Alcoa Power Generating Inc. (APGI)) generates approximately
25% of the power requirements, and generally purchases the remainder under long-
term contracts. APGI owns and operates two hydroelectric projects consisting of
eight dams under Federal Energy Regulatory Commission licenses, which are up for
renewal in 2005 and 2008.
In the Pacific Northwest, Alcoa obtains approximately 10% of the self-generated
power from its entitlement through 2011 to a fixed percentage of the output from
Chelan County Public Utility District's
7
Rocky Reach hydroelectric power facility located in the State of Washington for
use in Alcoa's Wenatchee smelter. In addition, Alcoa has a contract through 2006
with the Bonneville Power Administration (BPA) that serves part of the Wenatchee
smelter, as well as the Intalco and Troutdale smelters. Several contractual
provisions allow power supply restrictions when power is in short supply.
The company generates substantially all of the power used at its Warrick smelter
using nearby coal reserves. A 1996 coal supply contract satisfies 40% of the
smelter's fuel requirements through 2006. Short-term contracts of less than two
years satisfy the remainder of the fuel requirements. In April 2001, under the
terms of an operating agreement, the company assumed operation of the power
plants that supply the Warrick smelter from Southern Indiana Gas & Electric
Company until at least 2008.
The Rockdale smelter uses lignite supplied by the company's Sandow Mine to
generate power. The company has applied for permits to open a new lignite mine,
the Three Oaks Mine, on land it owns or controls adjacent to its existing Sandow
Mine. Company-owned generating units supply about one-half of the total
requirements of the smelter. Texas Utilities Company supplies the balance
through a long-term power contract expiring in 2013.
APGI facilities provide electric power for the aluminum smelters at Alcoa,
Tennessee and Badin, North Carolina. The Tennessee smelter also purchases firm
and interruptible power from the Tennessee Valley Authority under a contract
that extends to 2010. APGI entered into a long-term arrangement with Aquila
Energy Marketing Corporation (Aquila), which expires in mid-2005. Under the
terms of the agreement, APGI sells to Aquila all of the capacity and energy
produced at its hydroelectric units near Badin and Aquila supplies all of the
power requirements of the Badin smelter.
In the Northeast, the purchased power (primarily hydroelectric) contracts for
the Massena and St. Lawrence, New York smelters expire not earlier than 2003,
and will be extended for an additional 10 years upon the successful relicensing
by the New York Power Authority of one of its hydroelectric projects. The
company, however, may terminate either of these contracts with one year's
notice.
The Lauralco and Becancour smelters located in Quebec purchase electricity under
long-term contracts with Hydro-Quebec which expire in 2014, subject to certain
extension provisions. The smelter located in Baie Comeau, Quebec purchases
approximately 60% of its power needs under a long-term contract with Hydro-
Quebec which expires in 2014 and receives a portion of its power needs from a
40%-owned hydroelectric generating company, Manicouagan Power Company.
The Eastalco smelter located in Frederick, Maryland and the Mt. Holly smelter in
South Carolina purchase electricity under long-term contracts that expire in
2003 and 2005, respectively, subject to certain extension provisions.
Australia - Electricity
Power is generated from extensive brown coal deposits covered by a long-term
mineral lease held by AofA, and that power currently provides approximately 40%
of the electricity for the company's smelter in Point Henry, Victoria. The State
Electricity Commission of Victoria, under contracts with AofA, provides the
remaining power for this smelter and all power for the Portland smelter.
Brazil - Electricity
The Alumar smelter has an agreement through 2004 to purchase electric power from
Central Eletricas do Norte, the government controlled electric utility.
Aluminio has a purchase agreement with Central Eletricas de Minas Gerais S.A.
(CEMIG) through September 2002 to supply energy to the Pocos de Caldas smelter.
It will purchase power for the smelter from Brazilian sources after the
expiration of the CEMIG contract.
8
Aluminio participates in a consortium that has recently completed the
construction of the Machadinho hydroelectric power plant in southern Brazil.
Aluminio will receive a share of the output of the plant, which has begun
operations in 2002. At full operation, Aluminio expects its share to be
sufficient to supply approximately one-half of the power requirements for the
Pocos de Caldas smelter.
In 2001, Aluminio entered into agreements to participate in four additional
hydroelectric construction projects in Brazil that are scheduled to be completed
at various dates ranging from 2005 to 2008. Aluminio's share of the output from
the hydroelectric facilities, when completed, ranges from 20% to 39.5%. Total
costs for all four projects are estimated at $1.4 billion, with Aluminio's share
of total project costs totaling approximately 30%. The plans for financing these
projects have not yet been finalized. Aluminio may be required to provide
guarantees of project financing or commit to additional investments as these
projects progress. At December 31, 2001, Aluminio had provided $13 million of
guarantees on two of the hydroelectric construction projects in the form of
performance bonds.
Europe - Electricity
The company purchases electricity for its Portovesme, Italy and Fusina, Italy
smelters from ENEL, Italy's state-owned utility, under contracts expiring in
2005.
The company's smelters at San Ciprian, La Coruna and Aviles, Spain purchase
electricity from the government-controlled power grid at the lowest applicable
industrial tariff rate under contracts expiring in 2013.
Minority Interests - Electricity
The smelters in Germany, Ghana, Nigeria, Norway and Venezuela, in which Alcoa
has only an equity stake and is not the operational manager, have made a variety
of long-term electricity purchase arrangements, under the managing partner or
entity. These contracts are up for renewal at various times, the majority of
them in the period from 2011 to 2020.
Canada & U.S. - Natural Gas
The company generally procures natural gas on a competitively bid basis from a
variety of sources including producers in the gas production areas and
independent gas marketers. For Alcoa's larger consuming locations in Canada and
the U.S., the gas commodity as well as interstate pipeline transportation is
procured to provide increased flexibility and reliability. Contract pricing for
gas is typically based on a published industry index or NYMEX price.
Sources and Availability of Raw Materials
- -----------------------------------------
The major purchased raw materials in 2001 for each of the company's segments are
listed below.
Alumina & Chemicals Primary Metals
- ------------------- --------------
bauxite alumina
electricity calcined petroleum coke
natural gas liquid pitch
caustic soda aluminum fluoride
silicon carbide electricity
calcined petroleum coke natural gas
cathode blocks
9
Flat-Rolled Products Engineered Products
- -------------------- -------------------
primary aluminum (rolling ingot) primary aluminum (billet)
commercial metals electricity
used beverage cans natural gas
aluminum scrap nickel
electricity cobalt
natural gas titanium
coatings
alloying materials
Packaging & Consumer Other
- -------------------- -----
aluminum copper
natural gas polyvinyl chloride compound
polypropylene fiber
polyvinyl chloride aluminum tape
polyethylene
Other materials generally are purchased from third party suppliers under
competitively priced supply contracts or bidding arrangements. The company
believes that the raw materials necessary to its business are and will continue
to be available.
Joint Ventures and Investments
- ------------------------------
The company's principal alliances and joint ventures are included in its
"upstream" operating segments (alumina and chemicals and primary metals) as
shown in the tables above relating to those segments.
Alcoa's other significant joint ventures and investments are as follows:
Alcoa Fujikura Ltd. Alcoa Fujikura Ltd. (AFL) is owned 51% by Alcoa and 49% by
Fujikura International. AFL produces and markets electronic and electrical
distribution systems for the automotive industry, as well as fiber optic
products and systems for selected electric utilities, telecommunications, cable
television and datacom markets. AFL subsidiaries provide EF&I (engineer, furnish
and install) services to the telecom and CATV industries.
Alcoa Kobe Transportation Products, Inc. and Kobe Alcoa Transportation Products
Ltd. These joint ventures are owned 50% by Alcoa and 50% by Kobe Steel, Ltd.
(Kobe). The focus of these ventures, consisting of one company in the U.S. and
one in Japan, is to expand the use of aluminum sheet products in passenger cars
and light trucks. As a result of a restructuring of the venture in January 2000,
the U.S. company will focus on research and development efforts, while the
Japanese company will continue to engage in commercial (manufacturing, marketing
and sales) as well as research and development efforts, to serve the
transportation industry.
Alcoa (Shanghai) Aluminum Products Company Limited. Alcoa (Shanghai) Aluminum
Products Company Limited is owned 60% by Alcoa and 40% by Shanghai Light
Industry Equipment (Group) Co., Ltd. It produces aluminum foil products in
Shanghai, China.
Bohai Aluminum Industries Ltd. This venture is owned 32.48% by Alcoa, 37.36% by
Shortridge Ltd. and 30.16% by China International Trust & Investment
Corporation. The venture produces aluminum foil and aluminum extrusions in
Qinghuangdao, China.
10
Chalco. A joint venture to be formed by Alcoa and Aluminum Corporation of China
Limited (Chalco) will be owned 50% by Alcoa and 50% by Chalco. In November 2001,
Alcoa entered into a strategic alliance with Chalco. Under this alliance, the
parties will form the joint venture at Chalco's facility at Pingguo, which is
one of the most efficient alumina and aluminum production facilities in China.
Alcoa will transfer management, operational and technical expertise, and best
practices to Chalco. As part of the alliance, Alcoa has become a strategic
investor in Chalco's global offering and listing on the New York Stock Exchange
and The Stock Exchange of Hong Kong. Alcoa's investment is 8% of the outstanding
shares. In connection with its investment, Alcoa is entitled to one seat on
Chalco's board of directors. Aluminum Corporation of China, or Chinalco, the
parent company of Chalco, will remain the largest shareholder in Chalco.
Elkem Aluminium ANS. This Norwegian partnership is owned 50% by Alcoa and 50% by
Elkem ASA, with Elkem as managing partner. The partnership is the second largest
aluminum producer in Norway and operates two plants: Mosjoen and Lista. These
facilities supply extrusion billets, rolling ingots and foundry ingots to
leading rolling mills, extrusion plants and foundries in Europe.
Integris Metals, Inc. Integris Metals, Inc. is owned 50% by Alcoa and 50% by BHP
Billiton. In November 2001, Alcoa and BHP Billiton merged Alcoa's metals
distribution business, Reynolds Aluminum Supply Company (RASCO), and BHP
Billiton Group's North American metals distribution business, Vincent Metal
Goods in the U.S. and Atlas Ideal Metals in Canada. Integris Metals serves
markets such as transportation, general manufacturing, machinery and equipment
and building and construction. The company provides aluminum, stainless steel,
carbon steel, copper, brass and nickel in a variety of forms and it offers a
full range of processing services.
Kaal Australia Pty. Ltd. Kaal Australia Pty. Ltd. is owned 50% by Alcoa and 50%
by Kobe. It owns and operates rolling mills at Point Henry and Yennora,
Australia. These mills produce rigid container sheet (RCS) for the Australian
and Asian markets and general sheet and foil for the Australian market. AofA
supplies Kaal Australia's Point Henry rolling mill with molten aluminum.
KSL Alcoa Aluminum Company, Ltd. This joint venture is owned 50% by Alcoa and
50% by Kobe. It produces RCS for markets in Japan and other Asian countries. In
connection with this venture, Alcoa has a long-term contract to supply metal to
Kobe.
Latas de Aluminio, S. A. Latas de Aluminio, S.A. (Latasa) is owned 37% by Alcoa,
39% by Bradesco Seguros, S.A., 12% by J. P. Morgan International Capital
Corporation, and 12% by others. Latasa, which is managed by Alcoa, manufactures
and recycles aluminum beverage cans in Brazil and owns subsidiaries in other
South American countries that also manufacture and recycle aluminum beverage
cans.
Shibazaki Seisakusho Limited. Shibazaki Seisakusho Limited is owned 50.5% by
Alcoa, 20.3% by Furukawa Electric Co., Ltd. and the remainder by the public and
the Shibazaki family. Shibazaki manufactures and markets plastic and aluminum
closures and packaging equipment in Japan.
Yunnan Aluminum Processing Factory. This joint venture is owned 56% by Alcoa and
44% by Yunnan Aluminum Processing Factory. It produces aluminum foil products in
Kunming, China.
Patents and Trademarks
- ----------------------
The company believes that its domestic and international patent and trademark
assets provide it with a significant competitive advantage. The company's rights
under its patents, as well as the products made and sold under them, are
important to the company as a whole and, to varying degrees, important to each
business segment. The patents owned by Alcoa generally concern particular
products or
11
manufacturing techniques. Alcoa's business is not, however, materially dependent
on patents, and no individual patent is of material importance to any segment.
The company has a number of domestic and international registered trademarks
that have significant recognition at the consumer level, and others that have
significant recognition within the markets that are served. Examples include
Alcoa and the Alcoa Symbol for aluminum products, Howmet metal castings, Huck
fasteners, Kawneer building panels, Presto storage bags, Cut-Rite wax paper,
Reynolds plastic wrap and Reynolds Wrap aluminum foil. The company's rights
under its trademarks are important to the company as a whole and, to varying
degrees, important to each business segment.
Competitive Conditions
- ----------------------
Alcoa is the world's leading producer of alumina, primary aluminum and
fabricated aluminum. Alcoa is subject to highly competitive conditions in all
aspects of its aluminum and non-aluminum businesses. Competitors include a
variety of both U.S. and non-U.S. companies in all major markets. Price, quality
and service are the principal competitive factors in Alcoa's markets. Where
aluminum products compete with other materials -- such as steel and plastics for
automotive and building applications; magnesium, titanium, composites and
plastics for aerospace and defense applications; steel, plastics and glass for
packaging applications; and wood and vinyl for building and construction
applications -- aluminum's diverse characteristics, particularly its light
weight, recyclability and flexibility, are also significant factors. For the
Packaging and Consumer Products segment, which markets products under Alcoa's
brand names, brand recognition and brand loyalty also play a role.
Research and Development
- ------------------------
Alcoa, a technology leader in the aluminum industry, engages in research and
development programs that include process and product development, and basic and
applied research. Alcoa conducts these activities within its businesses and at
the Alcoa Technical Center near Pittsburgh. Expenditures for R&D activities were
$203 million in 2001, $194 million in 2000 and $128 million in 1999.
Each of the major process and product areas within the company has a Technology
Management Review Board (TMRB) consisting of members from various worldwide
locations. Each TMRB is responsible for formulating and communicating a
technology strategy for the corresponding product and process area, developing
and managing the technology portfolio and ensuring the global transfer of
technology.
During 2001 the company continued work on new developments in inert anode
technology and the pursuit of patent protection in jurisdictions throughout the
world related to these advanced smelting technologies. The company completed a
test of the technology in a single pot, and plans to further test the technology
in a complete potline in an existing commercial facility. Also during 2001 the
company developed improved fabricating techniques for inert anode assemblies and
enhanced fabricating capacity consistent with the planned requirements for
testing during 2002. If the technology proves to be commercially feasible, the
company believes that it will be able to convert its existing potlines to this
new technology, resulting in significant operating cost savings. The new
technology would also generate environmental benefits by reducing and
eliminating certain emissions. No timetable has been established for commercial
use.
Environmental Matters
- ---------------------
Information relating to environmental matters is included in four areas of the
Annual Report: under Management's Discussion and Analysis of Financial Condition
and Results of Operations, under the heading "Environmental Matters" on pages 40
and 41 and under the heading "Liquidity and Capital Resources--Investing
Activities" on page 42, in Note A to the financial statements under the caption
"Environmental Expenditures" on page 49 and in Note T to the financial
statements on pages 60-61.
12
Employees
- ---------
Total worldwide employment at year-end 2001 was 129,000 people.
On October 12, 2001, the United Steelworkers of America ratified a new five-year
labor agreement that covers 19 locations in the United States and about 12,000
employees. The contract is effective from June 1, 2001 through May 31, 2006.
During 2001, Alcoa announced work force reductions primarily in North America
and Europe of 10,400 employees. The company expects these reductions to be
completed by the end of 2002.
Cautionary Statements under the Private Securities Litigation Reform Act of 1995
- --------------------------------------------------------------------------------
Forward-Looking Statements
This report contains (and oral communications made by Alcoa may contain)
forward-looking statements which may be identified by their use of words like
"plans," "expects," "anticipates," "intends," "estimates," "forecasts," "will,"
"outlook" or other words of similar meaning. All statements that address Alcoa's
expectations or projections about the future, including statements about Alcoa's
strategy for growth, cost reduction goals, expenditures and financial results,
are forward-looking statements. Forward-looking statements are based on Alcoa's
estimates, assumptions and expectations of future events and are subject to a
number of risks and uncertainties. Alcoa cannot guarantee that these estimates,
assumptions and expectations are accurate or will be realized. Alcoa disclaims
any intention or obligation (other than as required by law) to update or revise
any forward-looking statements.
Risk Factors
In addition to the factors discussed elsewhere in this report and in
Management's Discussion and Analysis in the Annual Report, the following are
some of the important factors that could cause Alcoa's actual results to differ
materially from those projected in any forward-looking statements:
. Alcoa is a leading global producer of alumina, aluminum ingot and
aluminum fabricated products. The aluminum industry is highly
cyclical, with prices subject to worldwide market forces of supply and
demand and other influences. Prices can be volatile. Although Alcoa
uses contractual arrangements with customers, as well as forward,
futures and options contracts, to manage its exposure to the
volatility of London Metal Exchange-based prices, and is product and
segment diversified, Alcoa's results of operations could be affected
by material adverse changes in economic or aluminum industry
conditions generally or in the markets served by Alcoa, including the
transportation, building, construction, distribution and packaging
markets.
. Alcoa consumes substantial amounts of energy in its operations.
Although Alcoa generally expects to meet the energy requirements for
its alumina refineries and primary aluminum smelters from internal
sources or from long-term contracts, the following could affect
Alcoa's results of operations:
. significant increases in electricity costs rendering smelter
operations uneconomic;
. the unavailability of electrical power due to droughts; or
. interruptions in energy supply due to equipment failure or other
causes.
. Alcoa's ability to grow earnings will be affected by increases in the
cost of raw materials, including caustic soda, calcined petroleum coke
and resins, in addition to energy. Alcoa may not
13
be able to offset fully the effects of higher raw material costs
through price increases or productivity improvements.
. As part of its strategy for growth, Alcoa has made and may continue to
make acquisitions and divestitures and form strategic alliances. There
can be no assurance that these will be completed or beneficial to
Alcoa.
. Alcoa has investments and activities in numerous countries outside the
U.S. and in emerging markets, including China, Brazil, India, Korea
and Mexico. Changes in the laws or governmental policies in the
countries in which Alcoa operates could affect its business in such
countries and Alcoa's results of operations. In addition, economic
factors, including inflation and fluctuations in foreign currency
exchange rates and interest rates, and competitive factors in the
countries could affect Alcoa's revenues, expenses and results of
operations.
. The markets for most aluminum products are highly competitive. In
addition, aluminum competes with other materials, such as steel,
plastics and glass, among others, for various applications in Alcoa's
key markets. The willingness of customers to accept substitutions for
the products sold by Alcoa, the ability of large customers to exert
leverage in the marketplace to affect the pricing for certain
fabricated aluminum products, such as can sheet, or other developments
by or affecting Alcoa's competitors or customers could affect Alcoa's
results of operations.
. A significant downturn in the business or financial condition of a key
customer or customers supplied by Alcoa could affect Alcoa's results
of operations in a particular period.
. Alcoa has undertaken and may continue to undertake productivity and
cost-reduction initiatives to improve performance, including
deployment of company wide business process models, such as the Alcoa
Business System and the Alcoa Enterprise Business Solution, an
initiative designed to build a common global infrastructure across
Alcoa for data, processes and supporting software. There can be no
assurance that these initiatives will be completed or beneficial to
Alcoa or that any estimated cost savings from such activities will be
realized.
. Alcoa is working on new developments in advanced smelting process
technologies, including inert anode technology. There can be no
assurance that such technologies will be commercially feasible or
beneficial to Alcoa.
. Alcoa's operations worldwide are subject to numerous complex and
increasingly stringent environmental laws and regulations. The costs
of complying with such environmental laws and regulations, including
participation in assessments and cleanups of sites, as well as
internal voluntary programs, are significant and will continue to be
so for the foreseeable future. Alcoa's results of operations or
liquidity in a particular period could be affected by certain
environmental matters, including remediation costs and damages related
to several sites.
. Alcoa's results of operations or liquidity in a particular period
could be affected by significant legal proceedings or investigations
adverse to Alcoa, including product liability, safety and health and
other claims.
The above list of important factors is not inclusive or necessarily in order of
importance.
Item 2. Properties.
Alcoa has facilities under the following segments and in the following
geographic areas:
14
ALUMINA AND CHEMICALS
Bauxite: See the chart in the Bauxite Interests section on page 4.
-------
Alumina: See the chart in the Alumina Refining Facilities and Capacity
-------
section on page 5.
Alumina Chemicals: United States: 7 locations in 6 states
----------------- Europe: 3 locations in 3 countries
South America: 2 locations
Asia: 3 locations in 2 countries
Australia: 2 locations
PRIMARY METALS
See the chart in the Primary Aluminum Facilities and Capacity section
on page 6.
FLAT-ROLLED PRODUCTS
Sheet and Plate: United States: 11 locations in 10 states
--------------- Europe: 10 locations in 7 countries
South America: 1 location
Asia: 1 location
Australia: 2 locations
Foil Products: United States: 4 locations in 3 states
------------- Europe: 2 locations
South America: 1 location
Asia: 2 locations
Australia: 1 location
Can Reclamation: United States: 1 location
--------------- Europe: 1 location
South America: 1 location
Australia: 1 location
ENGINEERED PRODUCTS
Aerospace: United States: 21 locations in 14 states
--------- Canada: 2 locations in 2 provinces
Europe: 9 locations in 3 countries
Asia: 1 location
Auto Components: United States: 6 locations in 5 states
--------------- Canada: 1 location
Europe: 6 locations in 4 countries
South America: 3 locations in 2 countries
Architectural Extrusions: United States: 12 locations in 10 states
------------------------ Canada: 2 locations in 2 provinces
Europe: 11 locations in 6 countries
South America: 8 locations in 3 countries
Castings: United States: 17 locations in 12 states
-------- Canada: 3 locations in 2 provinces
Europe: 10 locations in 6 countries
South America: 1 location
Asia: 1 location
15
Extrusion, Tube: United States: 16 locations in 15 states
--------------- Europe: 18 locations in 6 countries
South America: 9 locations in 4 countries
Fasteners: United States: 14 locations in 10 states
--------- Europe: 2 locations
Australia: 1 location
PACKAGING AND CONSUMER
Consumer Products: United States: 7 locations in 5 states
----------------- Europe: 3 locations
South America: 1 location
Flexible Packaging: United States: 8 locations in 4 states
------------------ Europe: 1 location
Closures, Machinery: United States: 8 locations in 7 states
------------------- Europe: 7 locations in 6 countries
South America: 9 locations in 6 countries
Mexico: 2 locations
Asia: 6 locations in 6 countries
Graphics: United States: 20 locations in 15 states
-------- Canada: 3 locations in 1 province
Mexico: 1 location
Foodservice Packaging: United States: 7 locations in 6 states
--------------------- Canada: 1 location
South America: 1 location
OTHER
AFL
---
Automotive: United States: 6 locations in 4 states
---------- Canada: 1 location
Europe: 9 locations in 7 countries
Mexico: 6 locations
South America: 2 locations in 2 countries
Telecommunications: United States: 14 locations in 13 states
------------------ Europe: 1 location
Mexico: 1 location
Auto Engineering: United States: 8 locations in 5 states
---------------- Europe: 2 locations
Building Products: United States: 5 locations in 5 states
-----------------
Other: United States: 24 locations in 15 states
----- Canada: 1 location
Europe: 4 locations in 2 countries
South America: 18 locations in 6 countries
Australia: 1 location
16
Alcoa's corporate center is located at 201 Isabella Street, Pittsburgh,
Pennsylvania 15212-5858. Alcoa's global office is located at 390 Park Avenue,
New York, New York 10022-4608.
Alcoa does lease some of its facilities; however, it is the opinion of
management that the leases do not affect the continued use of the properties nor
their values. AFL and Southern Graphic Systems, Inc. lease most of their
facilities.
Alcoa believes that its facilities are suitable and adequate for its operations.
Although no title examination of properties owned by Alcoa has been made for the
purpose of this report, the company knows of no material defects in title to any
such properties. See Notes A, E and Q to the financial statements for
information on properties, plants and equipment and lease expense.
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 that 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 material 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.
Since 1989, Alcoa has been conducting investigations and studies of the Grasse
River, adjacent to Alcoa's Massena, New York plant site, under order from the
U.S. Environmental Protection Agency (EPA) issued under Section 106 of the
Comprehensive Environmental Response, Compensation and Liability Act, also known
as Superfund. Sediments and fish in the river contain varying levels of
polychlorinated biphenyl (PCB). In the fourth quarter of 1999, Alcoa submitted
an Analysis of Alternatives Report to the EPA. This Report identified potential
courses of remedial action related to the PCB contamination of the river. The
EPA indicated to Alcoa that it believed additional remedial alternatives needed
to be included in the Analysis of Alternatives Report. During 2000 and 2001,
Alcoa completed certain studies and investigations on the river, including pilot
tests of sediment capping techniques and other remediation technologies. In
February 2002, Alcoa submitted a revised draft Analysis of Alternatives Report
based on these additional evaluations and included additional remedial
alternatives required by the EPA. The additional alternatives required by the
EPA involve removal of more sediment than was included in the 1999 Analysis of
Alternatives Report. The range of costs associated with the remedial
alternatives evaluated in the 2002 Report is between $2 million and $525
million. Alcoa believes that several of those alternatives, involving the
largest amounts of sediment removal, should not be selected for the Grasse River
remedy. Alcoa believes the alternatives that should be selected are those
ranging from monitored natural recovery ($2 million) to a combination of
moderate dredging and capping ($90 million). A reserve of $2 million has been
recorded for any potential losses, as no one of the alternatives is more likely
to be selected than any other.
Representatives of various U.S. federal and state agencies and a Native American
tribe, acting in their capacities as trustees for natural resources, have
asserted that Alcoa and Reynolds may be liable for loss or damage to such
resources under federal and state law based on Alcoa's and Reynolds' operations
at their Massena, New York and St. Lawrence, New York facilities. While formal
proceedings have not been instituted, the company continues to actively
investigate these claims.
17
Since 1990 Alcoa has undertaken investigations and evaluations concerning
alleged releases of mercury from its Point Comfort, Texas facility into the
adjacent Lavaca Bay pursuant to a Superfund order from the EPA. In March 1994,
the EPA listed the "Alcoa (Point Comfort)/Lavaca Bay Site" on the National
Priorities List, and Alcoa and Region VI of the EPA entered into an
administrative order on consent, EPA docket no. 6-11-94, concerning the site.
The administrative order required the company to conduct a remedial
investigation and feasibility study under EPA oversight. Following submission by
the company of all required information, in December 2001, the EPA issued its
Record of Decision (ROD) for the site. That ROD selected the final remedial
approach for the site. The cost of such remedy is fully reserved. The company is
negotiating a Consent Decree with the United States under which it will
undertake to implement the remedy. The company and certain federal and state
natural resource trustees, who previously served Alcoa with notice of their
intent to file suit to recover damages for alleged loss or injury of natural
resources in Lavaca Bay, have cooperatively identified restoration alternatives
and approaches for Lavaca Bay. The cost of such restoration is reserved and
Alcoa anticipates negotiating a Consent Decree with the trustees under which it
will implement the restoration.
In October 1998, Region V of the EPA referred various alleged environmental
violations at Alcoa's Lafayette, Indiana operations to the civil division of the
U.S. Department of Justice (DOJ). The alleged violations relate to water permit
exceedances as reported on monthly discharge monitoring reports. Alcoa and the
DOJ entered into a tolling agreement to suspend the statute of limitations
related to the alleged violations in order to facilitate settlement discussions
with the DOJ and EPA. The parties have been able to reach settlement and a
consent decree concluding this matter was executed in January 2002.
In July 2001, the Louisiana Department of Environmental Quality (DEQ) filed an
administrative law proceeding, docket no. 2001-5918-EQ, against Discovery
Aluminas, Inc. (Discovery), an Alcoa subsidiary, and Waste Management, Inc.
(Waste Management) seeking civil penalties for alleged infractions of DEQ's
hazardous waste regulations. Both Discovery and Waste Management have denied the
allegations and formal discovery is proceeding.
In 1994, the EPA added Reynolds' Troutdale, Oregon primary aluminum production
plant to the National Priorities List of Superfund sites. Alcoa is cooperating
with the EPA and, pursuant to a September 1995 consent order, docket number
1094-01-19-106, between Reynolds and EPA Region 10, is working with the EPA to
identify cleanup solutions for the site. The EPA is expected to issue its ROD
during 2002. Following curtailment of active production operations and based on
a further evaluation of remedial options, the company has determined the most
probable cost of cleanup. This amount has been fully reserved.
On October 24, 2001, the Texas Natural Resource Conservation Commission (TNRCC)
approved an Agreed Order concerning Alcoa's Point Comfort Operations. The Agreed
Order required corrective actions and fines for various violations of the Clean
Air Act that were self-reported to the TNRCC by Alcoa. The Order required
payment of a fine of $145,000. In lieu of one-half of the fine, Alcoa agreed to
purchase a hazardous material response vehicle for the Calhoun County Local
Emergency Planning Committee. TNRCC deferred an additional $36,000 fine
contingent upon completion of the terms of the Order.
On December 26, 2001, three citizens groups filed an action in the U.S. District
Court for the Western District of Texas against Alcoa. The groups alleged that
activities conducted in the mid-1980s at the Alcoa power plant in Rockdale,
Texas triggered various requirements under the Clean Air Act and the Texas Clean
Air Act and that the plant did not comply with those requirements. The groups
also alleged that the plant violated opacity limits. On January 29, 2002, the
company filed its answer to the complaint denying the allegations. In addition,
on January 9, 2002, the TNRCC issued a Notice of Enforcement and EPA Region VI
issued a Notice of Violation against Alcoa. Neither constitutes final agency
action. Nevertheless, both notices asserted that activities conducted in the
mid-1980s at the Alcoa power plant
18
in Rockdale, Texas triggered requirements under the Clean Air Act and/or the
Texas Clean Air Act and that the plant did not comply with those requirements.
The company is engaged in settlement negotiations with the TNRCC and EPA.
To meet the terms of a newly issued decision by the Western Australia Minister
for the Environment amending the license regulating emissions from the Wagerup
alumina refinery, AWAC is required to implement projects to reduce emissions of
odors and nitrogen oxides at the Wagerup facility by June 30, 2002. If the
Wagerup facility does not complete the projects by that date, Wagerup's alumina
production must be reduced by approximately 6% to the production limits of the
prior license until the projects are completed. AWAC is working diligently to
meet the new standards by the June 30 deadline.
Other Matters
- -------------
Alcoa initiated a lawsuit in King County, Washington in December 1992 against
nearly 100 insurance companies that provided insurance coverage for
environmental property damage at Alcoa plant sites between the years 1956 and
1985. The trial for the first three sites concluded in October 1996 with a jury
verdict partially in Alcoa's favor and an award of damages to Alcoa. In its
post-trial decisions, the trial court substantially reduced the amount that
Alcoa will be able to recover from its insurers on the three test sites. Alcoa
appealed these rulings to the Washington Court of Appeals, which certified the
appeal to the Washington Supreme Court. Alcoa prevailed on significant portions
of the appeal and the matter is currently set for trial in June 2003.
Along with various asbestos manufacturers, distributors and premises users,
Alcoa and/or its subsidiaries are defendants in several hundred active
individual lawsuits filed on behalf of persons alleging injury predominantly
(98%) as a result of occupational exposure to asbestos at various company
facilities. In addition to the above cases, an Alcoa subsidiary has been
routinely named, along with a large common group of industrial companies, in a
standardized complaint utilized by one particular law firm where the company's
involvement is not evident. Since 1999, about seven thousand such complaints
have been filed. To date, Alcoa's subsidiary has been dismissed from almost
every case (99.8%) that was actually placed in line for trial. Alcoa, its
subsidiaries and acquired companies, all have had numerous insurance policies
over the years that provide coverage for asbestos based claims. Many of these
policies provide layers of coverage for varying periods of time and for varying
locations. Alcoa believes that between its reserves and insurance it is
adequately covered for its known asbestos exposures. For the period from 1997
through the end of 2001, Alcoa's net out-of-pocket costs in payments on asbestos
claims has averaged a little over $1 million per year. The costs of defense and
settlement have not been and are not expected to be material to the financial
condition of the company.
In July 1999, Alcoa Aluminio S.A. received notice that an administrative
proceeding was commenced by Brazil's Secretary of Economic Law of the Ministry
of Justice against Brazilian producers of primary aluminum, including Alcoa
Aluminio. The suit alleges collusive action in the pricing of primary aluminum
in violation of Brazilian antitrust law. Alcoa Aluminio has presented its
defense and is awaiting the decision of the Secretary of Economic Law. If the
Secretary of Economic Law determines that the antitrust law was violated, then
the action may be further prosecuted by the Administrative Council of Economic
Defense. Brazilian law provides for civil and criminal sanctions for violations
of antitrust law, including fines ranging from 1% to 30% of a company's revenue
during the last fiscal year.
On October 15, 1999, Victoria Shaev, who represents that she is an Alcoa
shareholder, filed a purported derivative action on behalf of the company in the
U.S. District Court for the Southern District of New York, naming as defendants
the company, each member of Alcoa's Board of Directors, certain officers of the
company and PricewaterhouseCoopers LLP, Alcoa's independent accountants. The
shareholder did not make a demand on the company prior to filing this lawsuit.
Under relevant law, this demand is required. The lawsuit alleges, among other
things, that Alcoa's proxy statement dated March 8, 1999 contained materially
false and misleading representations and omissions concerning the company's
proposed Alcoa Stock Incentive Plan and that the shareholder approval of the
plan, based upon these alleged representations and omissions, was defective. The
plaintiff sought to invalidate the shareholder approval of the plan and enjoin
its implementation. She also requested that Alcoa pay the costs and
disbursements of the action, including the fees of her accountants, counsel and
experts. On March 19, 2001, the court granted without prejudice the defendants'
motion to dismiss the plaintiff's claims. On May 31, 2001, Ms. Shaev served an
amended complaint making the same allegations as in the previous complaint but
styling the complaint as a class action on behalf of the shareholders. The
19
company served a motion to dismiss on June 25, 2001. The issues have been
briefed and argued. The parties are awaiting the court's decision.
A purported class action was filed on February 14, 2002 in the U.S. District
Court for the Northern District of Ohio against the company and the
International UAW, on behalf of 400 African-American employees of Cleveland
Works, alleging discrimination in Cleveland's apprenticeship program. Plaintiffs
seek certification of the class, declaratory and injunctive relief, lost wages,
entry into apprenticeship programs, compensatory and punitive damages and costs
and expenses of litigation. The complaint has not yet been served on the
company.
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 2001.
Item 4A. Executive Officers of the Registrant.
The names, ages, positions and areas of responsibility of the executive officers
of the company as of February 15, 2002 are listed below.
Alain J. P. Belda, 58, Director, Chairman of the Board and Chief Executive
Officer. Mr. Belda was elected to Alcoa's Board of Directors in September 1998
and became Chairman in January 2001. He has been Chief Executive Officer since
May 1999. He was President and Chief Executive Officer from May 1999 to January
2001, and President and Chief Operating Officer from January 1997 to May 1999.
He served as Vice Chairman from 1995 to 1997. Mr. Belda and Ricardo E. Belda,
Executive Vice President - Alcoa and Group President, Alcoa Europe, are
brothers.
Ricardo E. Belda, 57, Executive Vice President - Alcoa and Group President,
Alcoa Europe. He was elected to his current position in November 2001. Mr. Belda
was named President - Alcoa Europe in March 2000 and elected a Vice President of
Alcoa in May 2000. He was named President of Alcoa Nederland B.V. in 1995 and
took on responsibility for Extrusions and End Products for all of Europe in
1997.
L. Patrick Hassey, 56, Executive Vice President and Group President, Alcoa
Industrial Components. Alcoa Industrial Components includes Howmet, Huck, Alcoa
Automotive, Alcoa Wheels and Forged Products. Mr. Hassey was elected to his
current position in May 2000. He was appointed President - Alcoa Europe in
November 1997. He was elected a Vice President of Alcoa and was named
President -Aerospace/Commercial Rolled Products Division in November 1991.
Robert S. Hughes, II, 57, Executive Vice President - Alcoa and Group President,
Alcoa Allied Products. He was elected to his current position in July 2001. He
also continues to lead Alcoa Fujikura Ltd. where he has been Chairman, Chief
Executive Officer and President since 1996. He was elected a Vice President of
Alcoa in 1997.
Richard B. Kelson, 55, Executive Vice President and Chief Financial Officer;
Chief Compliance Officer. He was elected to his current position in July 2001.
Mr. Kelson has been Executive Vice President and Chief Financial Officer since
May 1997. He was Executive Vice President and General Counsel from May 1994 to
1997.
William E. Leahey, Jr., 52, Executive Vice President - Alcoa and Group
President, Packaging, Consumer, Construction & Distribution. He was elected to
his current position in September 2001. Mr. Leahey joined Alcoa in May 2000 as
Vice President - Alcoa and Group President, Packaging, Consumer, Construction &
Distribution following Alcoa's merger with Reynolds Metals Company. He was
Executive Vice President and Chief Financial Officer of Reynolds since 1998;
Senior Vice President of Reynolds' global can business in 1997 and Vice
President and General Manager of Reynolds' Can Division from 1993 to 1997.
Timothy S. Mock, 59, Vice President, Alcoa Business Support Services and
Controller. He was elected to his current position in November 2001. He was
elected Vice President, Controller in September 1999;
20
was President of Alcoa Automotive Structures from 1998 to 1999 and was Managing
Director of Alcoa Italia S.p.A. following Alcoa's acquisition of Alumix, S.p.A.
from 1996 to 1998.
G. John Pizzey, 56, Executive Vice President and Group President, Alcoa Primary
Products. Alcoa Primary Products includes the Alumina and Chemicals segment and
the Primary Metals segment. Mr. Pizzey was elected to his current position in
July 2001. Mr. Pizzey was named Group President, Alcoa Primary Products in June
2000; was President of Primary Metals in 1997, President, Alcoa World Alumina in
1998 and took on additional responsibility for chemicals in August 1999. He has
been a Vice President of Alcoa since 1996.
Lawrence R. Purtell, 54, Executive Vice President and General Counsel. Mr.
Purtell joined Alcoa and was elected to his current position in November 1997.
Prior to joining Alcoa, Mr. Purtell was Senior Vice President, General Counsel
and Corporate Secretary of Koch Industries, Inc.
The company's executive officers are elected or appointed to serve until the
next annual meeting of the Board of Directors (held in conjunction with the
annual meeting of shareholders) except in the case of earlier death, resignation
or removal.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Dividend per share data, high and low prices per share, the principal exchanges
on which the company's common stock is traded, and the estimated number of
holders of common stock are set forth on page 66 of the Annual Report and are
incorporated by reference.
Item 6. Selected Financial Data.
The comparative table showing selected financial data for the company is on page
33 of the Annual Report and is incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Management's review and comments on the consolidated financial statements are on
pages 34 through 43 of the Annual Report and are incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information regarding quantitative and qualitative disclosures about market
risk is on pages 39 through 40 of the Annual Report and is incorporated by
reference.
Item 8. Financial Statements and Supplementary Data.
The company's consolidated financial statements, the notes thereto, selected
quarterly financial data and the report of the independent accountants are on
pages 44 through 61 of the Annual Report and are incorporated by reference.
21
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 captions "Board of
Directors" and "Item 1-Election of Directors" on pages 6 through 12 of the Proxy
Statement and is incorporated by reference.
The information regarding executive officers is set forth in Part I, Item 4A of
this report under "Executive Officers of the Registrant."
The information required by Item 405 of Regulation S-K is contained under the
caption "Section 16(a) Beneficial Ownership Reporting Compliance" on page 15 of
the Proxy Statement and is incorporated by reference.
Item 11. Executive Compensation.
This information is contained under the captions "Directors' Compensation" on
page 6, "Stock Performance Graph" on page 15, "Executive Compensation" on pages
18 through 27, and "Change in Control" on page 28 of the Proxy Statement. Such
information (other than the Stock Performance Graph and Report of the
Compensation Committee, which shall not be deemed to be "filed") is incorporated
by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The information required by Item 403 of Regulation S-K is contained under the
captions "Stock Ownership of Certain Beneficial Owners" and "Stock Ownership of
Directors and Executive Officers" on pages 13 through 14 of the Proxy Statement
and is incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
This information is contained under the caption "Transactions with Directors'
Companies" on page 6 of the Proxy Statement and is incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The consolidated financial statements, financial statement schedule and
exhibits listed below are filed as part of this report.
22
(1) The company's consolidated financial statements, the notes thereto and
the report of the independent accountants are on pages 44 through 61 of the
Annual Report and are incorporated by reference.
(2) The following report and schedule should be read with the company's
consolidated financial statements in the Annual Report:
Report of PricewaterhouseCoopers LLP dated January 9, 2002 on the company's
financial statement schedule filed as a part hereof for the fiscal years
ended December 31, 2001, 2000 and 1999.
Schedule II - Valuation and Qualifying Accounts For the Years Ended
December 31, 2001, 2000 and 1999.
(3) Exhibits
Exhibit
Number Description *
- ------ -----------
2(a). Agreement and Plan of Merger among the company, Omega Acquisition
Corp. and Cordant Technologies Inc. dated as of March 14, 2000,
incorporated by reference to exhibit 12(d)(1) to the Tender Offer
Statement on Schedule TO filed by the company and Omega
Acquisition Corp. on March 20, 2000.
2(b). Agreement and Plan of Merger among the company, HMI Acquisition
Corp. and Howmet International Inc. dated as of June 2, 2000,
incorporated by reference to exhibit 12(d)(5) to Amendment No. 5
to the Tender Offer Statement on Schedule TO filed by the company
and HMI Acquisition Corp. on June 5, 2000.
3(a). 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, 2000.
3(b). By-Laws of the Registrant as amended, incorporated by reference
to exhibit 3(b) to the company's Annual Report on Form 10-K for
the year ended December 31, 1998.
4(a). Articles. See Exhibit 3(a) above.
4(b). By-Laws. See Exhibit 3(b) above.
4(c). Form of Indenture, dated as of September 30, 1993, between Alcoa
and J. P. Morgan Trust Company, N.A. (formerly Chase Manhattan
Trust Company, N.A.), as successor Trustee (undated form of
Indenture incorporated by reference to exhibit 4(a) to
Registration Statement No. 33-49997 on Form S-3).
10(a). Alcoa's Summary of the Key Terms of the AWAC Agreements,
incorporated by reference to exhibit 99.2 to the company's
Current Report on Form 8-K, dated November 28, 2001.
10(b). Charter of the Strategic Council executed December 21, 1994,
incorporated by reference to exhibit 99.3 to the company's
Current Report on Form 8-K, dated November 28, 2001.
23
10(c). Amended and Restated Limited Liability Company Agreement of Alcoa
Alumina & Chemicals, L.L.C. dated as of December 31, 1994,
incorporated by reference to exhibit 99.4 to the company's
Current Report on Form 8-K, dated November 28, 2001.
10(d). Shareholders Agreement dated May 10, 1996 between Alcoa
International Holdings Company and WMC Limited, incorporated by
reference to exhibit 99.5 to the company's Current Report on Form
8-K, dated November 28, 2001.
10(e). Side Letter of May 16, 1995 clarifying transfer restrictions,
incorporated by reference to exhibit 99.6 to the company's
Current Report on Form 8-K, dated November 28, 2001.
10(f). Amended and Extended Revolving Credit Agreement (364-Day), dated
as of April 27, 2001, incorporated by reference to exhibit 10(n)
to the company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2001.
10(g). Amended and Restated Revolving Credit Agreement (Five-Year),
dated as of April 27, 2001, incorporated by reference to exhibit
10(o) to the company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.
10(h). Revolving Credit Agreement (Five-Year), dated as of August 14,
1998, incorporated by reference to exhibit 10(o) to the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
10(i). Alcoa Stock Acquisition Plan, effective January 1, 1999,
incorporated by reference to exhibit 10(a) to the company's
Annual Report on Form 10-K for the year ended December 31, 1999.
10(i)(1). Amendments to Alcoa Stock Acquisition Plan, effective September
1, 2000, incorporated by reference to exhibit 10(a)(1) to the
company's Annual Report on Form 10-K for the year ended December
31, 2000.
10(j). Employees' Excess Benefit Plan, Plan A, incorporated by reference
to exhibit 10(b) to the company's Annual Report on Form 10-K
(Commission file number 1-3610) for the year ended December 31,
1980.
10(j)(1). Amendments to Employees' Excess Benefit Plan, Plan A, effective
January 1, 2000, incorporated by reference to exhibit 10(b)(1) to
the company's Annual Report on Form 10-K for the year ended
December 31, 2000.
10(k). 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 (Commission file number 1-3610) for
the year ended December 31, 1992.
10(l). Employees' Excess Benefit Plan, Plan C, as amended and restated
in 1994, effective January 1, 1989, incorporated by reference to
exhibit 10(d) to the company's Annual Report on Form 10-K
(Commission file number 1-3610) for the year ended December 31,
1994.
24
10(l)(1). Amendments to Employees' Excess Benefit Plan, Plan C, effective
January 1, 2000, incorporated by reference to exhibit 10(d)(1) to
the company's Annual Report on Form 10-K for the year ended December
31, 2000.
10(m). 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 (Commission file number 1-3610)
for the year ended December 31, 1992 and exhibit 10(e)(1) to the
company's Annual Report on Form 10-K (Commission file number 1-3610)
for the year ended December 31, 1994.
10(n). Deferred Fee Plan for Directors, as amended effective July 9, 1999,
incorporated by reference to exhibit 10(g)(1) to the company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
10(o). Restricted Stock Plan for Non-Employee Directors, as amended
effective March 10, 1995, incorporated by reference to exhibit 10(h)
to the company's Annual Report on Form 10-K (Commission file number
1-3610) for the year ended December 31, 1994.
10(o)(1). Amendment to Restricted Stock Plan for Non-Employee Directors,
effective November 10, 1995, incorporated by reference to exhibit
10(h)(1) to the company's Annual Report on Form 10-K (Commission
file number 1-3610) for the year ended December 31, 1995.
10(p). Fee Continuation Plan for Non-Employee Directors, incorporated by
reference to exhibit 10(k) to the company's Annual Report on Form
10-K (Commission file number 1-3610) for the year ended December 31,
1989.
10(p)(1). Amendment to Fee Continuation Plan for Non-Employee Directors,
effective November 10, 1995, incorporated by reference to exhibit
10(i)(1) to the company's Annual Report on Form 10-K (Commission
file number 1-3610) for the year ended December 31, 1995.
10(q). 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 (Commission file number 1-3610) for the year
ended December 31, 1992.
10(q)(1). Amendments to Deferred Compensation Plan, effective January 1, 1993,
February 1, 1994 and January 1, 1995, incorporated by reference to
exhibit 10(j)(1) to the company's Annual Report on Form 10-K
(Commission file number 1-3610) for the year ended December 31,
1994.
10(q)(2). Amendment to Deferred Compensation Plan, effective June 1, 1995,
incorporated by reference to exhibit 10(j)(2) to the company's
Annual Report on Form 10-K (Commission file number 1-3610) for the
year ended December 31, 1995.
10(q)(3). Amendment to Deferred Compensation Plan, effective November 1, 1998,
incorporated by reference to exhibit 10(j)(3) to the company's
Annual Report on Form 10-K for the year ended December 31, 1999.
25
10(q)(4). Amendments to Deferred Compensation Plan, effective January 1, 1999,
incorporated by reference to exhibit 10(j)(4) to the company's
Annual Report on Form 10-K for the year ended December 31, 1999.
10(q)(5). Amendments to Deferred Compensation Plan, effective January 1, 2000,
incorporated by reference to exhibit 10(j)(5) to the company's
Annual Report on Form 10-K for the year ended December 31, 2000.
10(r). 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 (Commission file number 1-3610)
for the year ended December 31, 1990.
10(s). Dividend Equivalent Compensation Plan, effective February 3, 1997,
incorporated by reference to exhibit 10(l) to the company's Annual
Report on Form 10-K (Commission file number 1-3610) for the year
ended December 31, 1996.
10(t). 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 (Commission file number 1-
3610) for the year ended December 31, 1987.
10(u). Alcoa Stock Incentive Plan, effective June 1, 1999, incorporated by
reference to exhibit 10(p)(1) to the company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999.
10(v). Alcoa Supplemental Pension Plan for Senior Executives, effective
January 1, 1999, incorporated by reference to exhibit 10(q) to the
company's Annual Report on Form 10-K for the year ended December 31,
1998.
10(v)(1). Amendments to Alcoa Supplemental Pension Plan for Senior Executives,
effective January 1, 2000, incorporated by reference to exhibit
10(q)(1) to the company's Annual Report on Form 10-K for the year
ended December 31, 2000.
10(w). Deferred Fee Estate Enhancement Plan for Directors, effective July
10, 1998, incorporated by reference to exhibit 10(r) to the
company's Annual Report on Form 10-K for the year ended December 31,
1998.
10(x). Alcoa Deferred Compensation Estate Enhancement Plan, effective July
10, 1998, incorporated by reference to exhibit 10(s) to the
company's Annual Report on Form 10-K for the year ended December 31,
1998.
10(x)(1). Amendments to Alcoa Deferred Compensation Estate Enhancement Plan,
effective January 1, 2000, incorporated by reference to exhibit
10(s)(1) to the company's Annual Report on Form 10-K for the year
ended December 31, 1999.
10(x)(2). Amendments to Alcoa Deferred Compensation Estate Enhancement Plan,
effective January 1, 2000, incorporated by reference to exhibit
10(s)(2) to the company's Annual Report on Form 10-K for the year
ended December 31, 2000.
10(y). 2001 PLUS Performance Plan, effective 2001.
10(z). Alcoa Inc. Change in Control Severance Plan.
26
12. Computation of Ratio of Earnings to Fixed Charges.
13. Portions of Alcoa's 2001 Annual Report to Shareholders.
21. Subsidiaries and Equity Entities of the Registrant.
23. Consent of Independent Accountants.
24. Power of Attorney for certain directors.
*Exhibit Nos. 10(i) through 10(z) 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.
(b) Reports on Form 8-K. During the fourth quarter of 2001, Alcoa filed three
reports on Form 8-K with the Securities and Exchange Commission, all of which
reported matters under Item 5:
(1) a Form 8-K dated November 19, 2001, reporting Alcoa's
announcement of restructuring charges;
(2) a Form 8-K dated November 28, 2001, reporting on certain matters
between Alcoa and WMC Limited and their existing alliance known
as Alcoa World Alumina and Chemicals; and
(3) a Form 8-K dated December 6, 2001, reporting that Alcoa had
completed the offering and sale of $1,500,000,000 principal
amount of notes in an underwritten public offering.
27
Report of Independent Accountants on
Financial Statement Schedule
To the Shareholders and Board of Directors
of Alcoa Inc. (Alcoa)
Our audits of the consolidated financial statements referred to in our report
dated January 9, 2002 appearing in the 2001 Annual Report to Shareholders of
Alcoa (which report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
600 Grant Street
Pittsburgh, Pennsylvania
January 9, 2002
28
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31
(in millions)
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Additions
---------
Balance at Charged to Charged to
beginning of costs and other Balance at
Description Period expenses accounts (A) Deductions (B) end of period
----------- ------ -------- ------------ -------------- -------------
Allowance for doubtful accounts:
2001 $ 69 $ 58 $ 7(A) $ 5(B) $ 129
2000 $ 58 $ 9 $ 11(A) $ 9(B) $ 69
1999 $ 61 $ 10 $ (5)(A) $ 8(B) $ 58
Income tax valuation allowance:
2001 $ 165 $ 50 $ (7)(A) $ 7(C) $ 201
2000 $ 134 $ 27 $ 30(A) $ 26(C) $ 165
1999 $ 135 $ 12 $ 6(A) $ 19(C) $ 134
Notes: (A) Collections on accounts previously written off,
acquisition/divestiture of subsidiaries and foreign currency
translation adjustments.
(B) Uncollectible accounts written off.
(C) Related primarily to utilization of tax loss carryforwards.
29
SIGNATURES
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.
ALCOA INC.
March 4, 2002 By /s/ Timothy S. Mock
--------------------------
Timothy S. Mock
Vice President, Alcoa Business
Support Services 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/ Alain J.P. Belda Chairman of the Board March 4, 2002
- --------------------------
Alain J. P. Belda and Chief Executive Officer
(Principal Executive Officer
and Director)
/s/ Richard B. Kelson Executive Vice President and March 4, 2002
- --------------------------
Richard B. Kelson Chief Financial Officer; Chief
Compliance Officer
(Principal Financial Officer)
Kathryn S. Fuller, Joseph T. Gorman, Judith M. Gueron, Sir Ronald Hampel, John
P. Mulroney, Henry B. Schacht, Franklin A. Thomas and Marina v.N. Whitman, each
as a Director, on March 4, 2002, by Donna C. Dabney, their Attorney-in-Fact.*
*By /s/ Donna C. Dabney
----------------------
Donna C. Dabney
Attorney-in-Fact
30