9867 Alcoa 98 AR P1-24 Gac227
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“Our safety performance was already at a world leading level when we started working on it 11years ago. Since then, we’ve improved it by 85%.” Paul O’Neill Chairman, Alcoa “Alcoa has this quaint notion that when earnings go up, shareholders should get a direct benefit.” David Pauly Bloomberg “The Alcoa Business System “Alcoa is years ahead of its and Alcoa Production System… competitors in pursuing provide the company with the most effective business the platform and infrastructure strategy in the industry.” to sustain top-line growth through Thomas Van Leeuwen Credit Suisse First Boston acquisitions, and bottom-line “Alcoa is the premier company growth by continuous cost reduction by a long shot, and they continue and performance improvements.” to demonstrate their strength, Leanne Baker/John Rutledge notwithstanding weakness in the Salomon Smith Barney commodity market.” James Rudolph Fahnstock & Co. “One of the things others have noted that is a very 1998 important asset for Alcoa Annual is that we do what we say.” Report “The company continues Paul O’Neill to display an almost unique Chairman, Alcoa aptitude to grow its earnings in a dismal metal price environment.” Richard Aldrich “There is still a lot to do, but Lehman Brothers Inc. I believe that 1998 was a watershed year for Alcoa.” Alain Belda President, Alcoa Where we are now is a result of a continuing InIndexdex accumulation of improvements that we’ve A F P ‘‘ AAccountingccounting po policieslicies 4 433 FFinancialinancial da datata PPensionension p planslans 5 500 … AAccountingccounting st standardsandards chan changesges 4 444 bbalancealance sheetsheet 4040 PPostretirementostretirement b benefitsenefits 5 500 been working on for a long time building the AAcquisitionscquisitions 2 29,9, 3 36,6, 4 444 cascashh fl flowsows 4 411 PPreferredreferred sto stockck 4 42,2, 4 466 AAluminalumina an andd c chemicalshemicals s segmentegment 111-year1-year summa summaryry 5 544 PPretaxretax pr profitofit o onn r revenuesevenues 5 544 wall one brick at a time. 3030,, 4 477 hhighlightsighlights 1 PPrice/earningsrice/earnings (P(P/E)/E) raratiotio 1 AAluminalumina pr productionoduction 2 29*9* inincomecome st statementatement 3 399 PrPrimaryimary m metalsetals s segmentegment 30,30, 4 477 Paul O’Neill, Chairman, Alcoa AAluminumluminum capacitycapacity 5454 nnotesotes 43- 43-5353 PProperties,roperties, p plantslants an andd AAluminumluminum productproduct shipmentsshipments qquarterlyuarterly 5 53,3, 6 644 eequipmentquipment 4 455 3030*,*, 31,31, 32,32, 5 544 seselectedlected fi five-yearve-year 2 288 PPublicationsublications 6 633 ’’ AAluminumluminum productionproduction 5454 ssharehare a activityctivity 42 Alcoa at a Glance AAnnualnnual m meetingeeting 6363 sshareholders'hareholders' e equityquity 4 422 Q QuaQuarterlyrterly da datata 53,53, 6 644 • World’s leading producer of primary aluminum, AAuditudit C Committeeommittee r reporteport 3838 FFinancialinancial instrumentsinstruments 5151 AAuditor'suditor's reportreport 38 FFinancialinancial summary,summary, 1 11-year1-year 5 544 R fabricated aluminum, and alumina. FFinancinginancing activitiesactivities 3 355 RRealizedealized pr pricesices forfor a aluminumluminum B FFixedixed a assetsssets 4 455 BBalancealance sh sheeteet 4 400 iningotgot 2 28,8, 30*,30*, 3131 • Active in all major segments of the industry: FFlat-rolledlat-rolled p productsroducts segmentsegment 3 31,1, 4 477 RResearchesearch andand developmentdevelopment 32,32, 3939 BBoardoard o off d directorsirectors 6060 FForeignoreign currencycurrency 3 33,3, 44,44, 5151 mining, refining, smelting, fabricating, and recycling. BBookook v valuealue 5454 RRetainedetained e earningsarnings 4 422 Contents RReturneturn o onn in investedvested c capitalapital 5 544 • Providing customers in the packaging, automotive, aerospace, BBusinessusiness u unitsnits 6 622 G GeGeographicographic a arearea i informationnformation 1* 1*,, 4 499 RReturneturn o onn s shareholders'hareholders' equityequity 1 1,, 2 Letter to Shareholders construction and other markets with a variety of fabricated C GGlossarylossary 6 611 5454,, 63*63* 5 News/98 CCapitalapital e expendituresxpenditures 36 36*,*, 5 544 ReRevenuesvenues and finished products. CCapitalapital re resourcessources 3 355 H bbyy ge geographicographic a arearea 1 1*,*, 49 25 Financials CCashash fl flowow 3 35*,5*, 3 36,6, 3 37,7, 4 411 HHealthealth c careare b benefitsenefits 5 500 bbyy ma marketrket 1* 26 Trends in Major Markets • Nonaluminum businesses include packaging machinery, CCashash f fromrom o operationsperations 3 35*,5*, 4 411 bbyy s segmentegment 2 29*,9*, 30-32,30-32, 4 477 56 Worldwide Operations CCommonommon sto stockck I RRiskisk factorsfactors 3 333 vinyl siding, plastic bottles and closures, and electrical distribution IIncomencome s statementtatement 3 399 60 Officers bbookook v valuealue 1 1,, 5 544 systems for cars and trucks. ddividendsividends 1 1,, 2 28,8, 5 54,4, 6 63,3, 64*64* IIncomencome t taxesaxes 3 33,3, 4 499 S 60 Directors IIntangiblesntangibles 4 43,3, 4 466 SSegmentegment i informationnformation 2 29-32,9-32, 49 • Vital statistics: 24 business units, 103,500 employees, 215 operating eearningsarnings perper shareshare 1 1,, 2 28,8, 4 46,6, 5 544 61 Glossary mamarketrket v valuealue insid insidee f frontront co cover*ver* IInterestnterest co costssts 3 32,2, 4 43,3, 5 511 SSelectedelected fi financialnancial da datata 2 288 62 Business Units locations in 31 countries, $15.3 billion in revenues quarterlyquarterly m marketarket p pricesrices 6 644 IInterestnterest co coverageverage r ratioatio 1 SeSellinglling andand g generaleneral administrativeadministrative 63 Shareholder Information ssharehare activityactivity 42 InventoriesInventories 43,43, 4545 exexpensespenses 3 32,2, 5 544 • Values.Alcoa’s values begin with integrity, respect for our people, InvestingInvesting activitiesactivities 3636 ShShareare a activityctivity 4 422 65 Index shasharesres outstandingoutstanding 1,1, 4 42,2, 54,54, 6 644 stostockck o optionsptions 4 44,4, 4 466 ShShareholderareholder i informationnformation 6363 their safety and health, and for the environment within which L ddividendividend r reinvestmenteinvestment 6 633 stockstock sp splitlit 4 444 LLeaseease e expensexpense 5 511 we live and work.We are committed to maintaining our values ComprehensiveComprehensive incomeincome 4242 ddividendsividends 1 1,, 2 28,8, 5 54,4, 6 63,3, 6 64*4* LLetteretter to sha shareholdersreholders 2 rereturnturn o onn e equityquity 5 54,4, 6 63*3* Front Cover: CostCost ofof goo goodsds soldsold 3 322 LLiabilitiesiabilities Manuel Plaza wherever we operate around the world, and to striving for serservicesvices 6 644 CurrentCurrent ratioratio 1 cocontingentntingent 4 466 San Ciprián, Spain SShareholders,hareholders, n numberumber o off 1 1,, 5 54,4, 6 644 excellence in everything we do. nnoncurrentoncurrent 4 466 Back Cover: D ShShareholders'areholders' e equityquity 4 422 LIFO 4343,, 4 455 Hua Ya Quan DDebtebt ShSharesares o outstandingutstanding 4 422 Shanghai, China llong-termong-term 3 35*,5*, 36 36,, 4 455 LiLiquidityquidity 3 355 SShipmentshipments o off a aluminumluminum aass p percentercent o off c capitalapital 1 1,, 3 35*5* M prproductsoducts 3 30*,0*, 3 31,1, 3 32,2, 5 544 DDepreciationepreciation ex expensepense 3 36*,6*, 4 43,3, 4 477 SpSpecialecial itemsitems 31,31, 32,32, 4545 MManagement'sanagement's r reporteport 3 388 TTrademarksrademarks in thi thiss r report:eport: … … DDerivativeserivatives 33,33, 43 43,, 5 511 StStockock informationinformation 6363 Value Continues to Climb Even When Ingot Prices Fall MMarketarket i informationnformation 1*,1*, 26*,26*, 27*27* AlAlcoacoaா anandd t thehe A Alcoalcoa DiDirectorsrectors 6 600 SSeeee a alsolso CommonCommon stockstock Market Value of Common Stock MinMinorityority interestsinterests 4646 ccorporateorporate s symbolymbol ar aree DiDividendvidend reinvestmentreinvestment 6 633 SStocktock o optionsptions 4 44,4, 4 466 $1,000 $1.25 rregisteredegistered trademarkstrademarks o off 13.7 DDividendsividends 1 1,, 28,28, 5 54,4, 6 63,3, 6 64*4* N StStockock s splitplit 44 AAlcoalcoa I Inc.nc. NNews/98ews/98 5 - -2424 SStocktock t transferransfer agen agentsts 6 644 E 800 1.00 EEarningsarnings perper c commonommon shareshare 1 1,, O T EEditor:ditor: B Bonitaonita C Cersosimoersosimo 2828,, 4 46,6, 5 544 OOfficersfficers 60-6 60-611 TaTaxesxes 3 33,3, 4 499 TThehe F Financials:inancials: R Randallandall K Killeenilleen OOperatingperating l locationsocations 5 56-596-59 CContributors:ontributors: D Darlenearlene J Johnson,ohnson, 600 .75 EEmployees,mployees, nu numbermber of 1 1,, 3 33*,3*, TTreasuryreasury sha sharesres 4 422 5353*,54*, 54 OOperatingperating r resultsesults 2 29-329-32 EEmiliomilio R Ruocco,uocco, J Joyceoyce Sal Saltzmantzman EEngineeredngineered p productsroducts segmentsegment 31,31, OOtherther i incomencome 3 333 W DeDesign:sign: A Arnoldrnold S Saksaks A Associatesssociates millions WWorldwideorldwide o operationsperations 5 56-596-59 400 .50 47 OOtherther s segmentegment 3 32,2, 4 477 PPhotohoto p pageage 5 5:: C Courtesyourtesy o off 4.1 EEnvironmentalnvironmental e expendituresxpenditures PPPGPG I Industriesndustries *C*Charthart ingot price per pound 3434,, 4 43,3, 5 522 EEditorialditorial c consulting:onsulting: A Alanlan V VanDineanDine 200 .25 ExExportport s salesales 4 477 FFinancialinancial t typography:ypography: EExtraordinaryxtraordinary l lossesosses 28 HHamiltonamilton P Phototypehototype PPrinting:rinting: G Graphicraphic A Artsrts C Centerenter 87 88