Alcoa 1998 Annual Report Download - page 31

94 95 96 97 98
10,195 10,578 10,644 11,048
12,938
Alumina Production
thousands of metric tons
3.5 3.4 3.4
13.3
13.1
4.1 4.2 4.9
1.9 2.1
3.1
1.6 1.6
2.1
2.0 2.0
1.8
15.3
Alumina and Chemicals
Primary Metals
Engineered Products
Flat-rolled Products
Other
Revenues by Segment
billions of dollars
96 97 98
29
Results of Operations
(dollars in millions, except share amounts and ingot prices; shipments in
thousands of metric tons (mt); all per-share amounts have been restated
to reflect the two-for-one stock split declared on January 8, 1999)
Earnings Summary
Alcoa’s 1998 financial highlights include:
.Net income of $853, 6% above 1997;
.Aluminum shipments of 3,951 mt, up 34% over 1997;
.Revenues of $15,340, driven by the record volumes noted
above; and
.Return on average shareholders’ equity of 16.3%.
Improved financial results for 1998 relative to 1997 were the
result of higher volumes, aided in part by the Alumax and Inespal
acquisitions, and continued operating improvements. Partially
offsetting these positive factors were lower overall aluminum and
alumina prices and the impact of higher debt levels.
Alcoa’s financial results for 1997 also were strong, as summarized
below:
.Netincomeof$805($761beforespecialitems)was56%above
1996;
.Aluminum shipments of 2,956 mt were the second highest in
company history and 4% above 1996;
.Revenues of $13,319 increased 2% from 1996; and
.Return on average shareholders’ equity rose 56% to 18.1%.
Alcoa’s 1997 financial performance came in spite of the fact that
fabricated aluminum and alumina prices were lower than 1996 and
well below historic highs. Revenues increased 2% above 1996 levels,
as higher volumes more than offset the loss of revenues related to
the sale of noncore businesses.
Segment Information
In 1998, Alcoa adopted SFAS 131, ‘‘Disclosures about Segments of an
Enterprise and Related Information.’’ Alcoa’s operations consist of
four worldwide segments: Alumina and chemicals, Primary metals,
Flat-rolled products and Engineered products. Alcoa’s management
reporting system measures the after-tax operating income
(ATOI) of
each segment. Nonoperating items, such as interest income, interest
expense, foreign exchange gains/losses and minority interest, are
excluded from segment profit. In addition, certain expenses, such
as corporate general administrative expenses, depreciation and
amortization on corporate assets and certain special items, are not
included in segment results. Segment assets exclude cash, cash
equivalents, short-term investments and all deferred taxes.
Segment assets also exclude corporate items such as fixed assets,
LIFO reserve, goodwill allocated to corporate and other amounts.
Segment
ATOI totaled $1,303 in 1998 compared with $1,265
in 1997 and $858 in 1996. See Note O to the financial statements
for additional information. The following discussion provides
shipment, revenue and
ATOI data for each segment for the years
1996 through 1998.