Alcoa 1997 Annual Report Download - page 37

.62
1.09 1.12
.79
1.13
Free Ca s h Flow to De bt
tim es cove red
97
96
95
94
93
Th e free ca sh flow to
debt ra tio im proved s ignif-
ica n tly in 1997 d u e t o
bet te r op era t in g resu lt s
a n d lower levels of lon g-
term d eb t.
693 671
713
747 735
757
612
887
996
912
■Ca p it a l Expen d it u res
■ Dep recia t ion
Ca p ita l Ex p e n d itu re s a n d De p re cia tion
m illion s of d olla rs
95 96 979493
Cap ita l exp en ditu re s
for 1997 inclu ded a n ew
a u tom ot ive sh eet facility,
exp a n sion s to forged w h eel
fa cilit ies in Clevela n d
a n d Hu n gary a n d th e con -
stru ction of t h e n ew Alcoa
Corp ora te Cen ter.
35
$912, com p a red w ith $996 in 1996 an d $887 in 1995. Of t h e tot a l
expen dit u res in 1997, 29% r elated to capacit y exp an sion , in cludin g
for ge d wh e el p r odu ct ion in t h e U.S. a n d Eu r op e a lon g w it h au t om o -
t ive sh e et p r odu ct ion in t h e U.S. Als o in clu d ed a re cos t s of n e w a n d
exp a n de d fac ilit ies for e nv ir on m e nt a l con t r ol in on goin g op e rat ion s
tot a lin g $94 in 1997, $68 in 1996 an d $54 in 1995.
Alcoa rece ived $265 in 1997 from th e sale of asset s in clu din g
it s Ca ra dco, Arct ek, Alcoa Com p osit es, Norcold , Day ton Tech n olo gie s
a n d Rich m on d , In d ia na fac ilit ie s. Als o in clu de d wa s t h e s ale of
a m ajor it y in te rest in Alcoa’s Bra zilian cable bu s in ess. In 1996,
Alcoa r ece ive d $83 fr om t h e s ale of AofA’s r olle d p r odu ct s d ivis ion
t o Kaa l Au st ra lia .
Acqu is it ion s accou nted for $302 of inve st in g cash out flow s
du r in g 1996 a n d in clu de d t h e p u r ch a s e of Alu m ix in It a ly a n d Alca n’s
ext ru sion op erat ion s in Brazil. The com p any also pu rcha sed t he
rem a in in g 49.9% in te rest in Alcoa-Ko¨ fe´m in Hu n ga r y.
Su b s equ en t Eve n t s
In Ja n u a r y 1998, Alco a is s u e d $ 300 of 6.75% b o n d s d u e 2028. T h e n e t
p rocee ds w er e u s ed for ge n er al cor p orat e p u r p os es.
On Febr u a r y 6, 1998, Alcoa com p let ed it s acqu isit ion of In es pa l,
S.A. of Ma dr id , Sp a in . Alco a p a id $210 in ca sh a n d a ssu m e d $200 of
de bt in exch a n ge fo r s u b st a n t ia lly a ll of In e s p a l’s bu s in e ss es. In esp a l
is an int egrate d a lu m in u m p rodu ce r w ith 1997 reve nu e s of $1,100.
Th e a cqu isit ion in clu de d a n a lu m in a refin e r y, t h r ee a lu m in u m
sm elte rs, t h re e a lu m in u m r ollin g facilit ies, t w o e xt r u s ion p lan ts,
a n a d m in ist r at ive ce nt er a n d relat ed s ale s office s in Eu r op e .
On Febr u a r y 25, 1998, Alcoa a n d t h e gover n m e nt of Br it ish Colu m -
b ia , Can ada , s ign e d a m e m o ra n du m of u n de rst a n d in g t o p r oce e d
w ith a fea sibilit y st u dy for t h e con st r u ct ion of a 250,000 m t p er yea r
p r im ar y a lu m inu m sm elt er. Th e st u dy w ill be com p let ed n o late r
t h an De ce m b er 31, 1998. If t h e st u dy p rodu ce s a favora ble r esu lt ,
con st r u ct ion cou ld st ar t in 1999 a n d w ou ld r ep res en t a n in ve st m e nt
of ap prox im ately $850.
Ye a r 20 0 0 Is s u e
Th e com p a n y, a s sist ed by ou t s ide con su lt s, h a s con du ct ed a de t ailed
r ev iew of it s ad m in is t ra t ive a n d p r oce ss con t r ol com p u te r s ys te m s
t o ide n t if y a r ea s t h a t a r e a ffe ct e d b y t h e ‘‘Year 2000’’ is su e . T h e Ye ar
2000 is su e is t h e resu lt of com p u te r p rogr am s b ein g w r it te n u s in g
t wo d igit s (ra th e r t h an fou r) t o defin e t h e a pplicable yea r. T h is cou ld
resu lt in com putat ion al er rors a s dates are com par ed across t he
ce n t u r y b ou n d a r y.
A det ailed im plem e ntat ion pla n h as been develop ed to m anage
a n d r e s olve t h e is s u e s id e n t ified in t h e rev iew. T h e pla n in clu de s
t h e m od ifica t ion of ex ist in g syste m s a s well as t h e pu rch a se of n ew
soft ware. It also requ ire s th at each system be au dited aft e r th e m odi-
ficat ion s are com plete to en su re com plian ce w ith Yea r 2000 requ ire-
m en t s. Em ploye es of t h e com p an y a s w ell a s ou t side r es ou rce s h ave
be en a s sign e d to t h e com plet ion of t h e im p lem en t at ion pla n . T he
tot a l cost of p u rch a s in g n ew s oft w ar e a n d a lte r in g t h e ap plicable
p rogr am co de s is est im a te d t o be bet w ee n $50 a n d $75 for 1998. T h e
com p an y is cu r ren t ly a sse ss ing th e im p act of th e im plem en t at ion
plan on it s 1999 op erat ion s.