UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 17, 2009
ALCOA INC.
(Exact name of Registrant as specified in its charter)
| Pennsylvania | 1-3610 | 25-0317820 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
| 390 Park Avenue, New York, New York | 10022-4608 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Office of Investor Relations 212-836-2674
Office of the Secretary 212-836-2732
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
The presentation attached as Exhibit 99 was prepared by Alcoa Inc. and is available on its Internet website at http://www.alcoa.com under “Invest.”
* * * * *
The information in this Current Report on Form 8-K is being furnished in accordance with the provisions of General Instruction B.2 of Form 8-K.
Forward-Looking Statements
Certain statements in the presentation attached as Exhibit 99 relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “believes,” “estimates,” “expects,” “goal,” “hopes,” “intends,” “plans,” “targets,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects” or other words of similar meaning. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in economic or aluminum industry conditions generally, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices for primary aluminum, alumina and other products; (b) material adverse changes in the markets served by Alcoa, including automotive and commercial transportation, aerospace, building and construction, distribution, packaging, and industrial gas turbine markets; (c) Alcoa’s inability to achieve the level of cost reductions, cash generation or conservation, return on capital improvement, improvement in profitability and margins, or strengthening of operations anticipated by management in connection with its restructuring, portfolio streamlining and liquidity strengthening actions; (d) continued volatility or deterioration in the financial markets, including disruptions in the commercial paper, capital and credit markets; (e) Alcoa’s inability to mitigate impacts from increased energy, transportation and raw materials costs, including caustic soda, calcined petroleum coke and natural gas, or from other cost inflation; (f) Alcoa’s inability to complete its Brazilian growth and portfolio streamlining projects or achieve efficiency improvements at newly constructed or acquired facilities as planned and by targeted completion dates; (g) unfavorable changes in laws, governmental regulations or policies, foreign currency exchange rates or competitive factors in the countries in which Alcoa operates; (h) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (i) the other risk factors summarized in Alcoa’s Form 10-K for the year ended December 31, 2008 and other reports filed with the Securities and Exchange Commission.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
The following is furnished as an exhibit to this report:
| 99 | Alcoa Inc. Presentation dated March 2009. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ALCOA INC. | ||||
| By: | /s/ J. Michael Schell | |||
| Name: | J. Michael Schell | |||
| Title: | Executive Vice President – Business Development and Law | |||
Date: March 17, 2009
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EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99 |
Alcoa Inc. Presentation dated March 2009. |
4
 Presentation March 2009 Exhibit 99 |
 2 Forward Looking Statements Today’s discussion may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Alcoa’s actual results or actions may differ materially from those projected in the forward-looking statements. For a summary of the specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to Alcoa’s Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission. |
 3 Highlights Comprehensive plan to optimize cost structure Proposed actions strengthen world class market positions – Bauxite mining #1 – Alumina refining #1 – Smelting capacity #1 – Downstream businesses #1 / #2 Broad-based management commitment to plan execution Complementary offerings and reduced dividend further enhance financial flexibility Attractive long-term aluminum fundamentals Businesses with #1 / #2 market share will account for 90% of Alcoa's overall revenue |
 4 Accelerated portfolio actions Curtailments Headcount reduction Managing Along the Three Strategic Priorities Strategic Priority “Downturn Actions” Profitable Growth Value Creation Disciplined Execution Leverage technology Market share growth Procurement savings Corporate overhead reduction Line-item quantification Clear accountability Cash and profitability focus Capital spend reduction Ongoing business improvement Attractive asset values globally Longer-Term Opportunities Portfolio optimization Return focused Competitive cost structure Balance sheet strength |
 5 Getting Ahead of the Curve Since July 2008, Alcoa has implemented a number of actions to reduce cost and
preserve/strengthen financial flexibility 7/11/08 Downsized Electrical and Electronic Solutions Honduran & Mexican operations through headcount reduction of 1,240 9/30/08 Curtailed 150,000 mt at Rockdale smelter and further reduced headcount by 660 in addition to 160 in June 10/7/08 Announced halt of all non-critical capital spend 10/23/08 Reduced production at Point Comfort refinery by 25% (550,000 mt) 11/10/08 Curtailed additional 350,000 mt aluminum production over global smelting system 1/6/09 Announced initial actions to address economic downturn 9/17/08 Suspended share repurchase program 10/6/08 Downsized Power & Propulsion through headcount reduction of 250 12/22/08 Cash-free swap of soft alloy extrusion share for Elkem smelter share Today Taking decisive action to reposition Alcoa |
 6 Managing for Value Creation – Repositioning Alcoa Procurement Efficiencies Capex Reductions Working Capital Initiatives Completing existing growth capex in 2009 Reducing to maintenance levels in 2010 Metrics to maintain and control at the business unit level Improvement levers for Inventory, A/R and A/P Leverage market environment Joint business / procurement effort BENEFITS Expanded Action Plans Initiatives Total Financial Impact >$2,000M cost savings by 2010 $850M of capex in 2010 $800M cash improvement in 2009 Overhead Rationalizations Phase I: 20% Reduction Phase II: Zero Based Budgeting Match to footprint $400M cost savings by 2010 Improved cash generation Lower, more competitive cost structure Increased operating leverage |
 7 Over $2 billion of Procurement Savings Reduction Targets by Spend Category 2009E 2010E 5% 29% 34% 8% 21% 6% 7% 15% 6% 4% 5% 18% 2% 2% 1% 4% Business Unit Metals Transportation Non Smelter Energy Corporate Services & IT Indirect – Maintenance Repair & Overhaul Indirect – Services Strategic Raw Material – Flat Rolled Products Strategic Raw Material – Alumina and Primary Metals |
 8 Procurement Success in Key Inputs Average 2H’08 Target Year-End 2009 Lowest Price Achieved -48% -58% Target Year-End 2009 Lowest Price Achieved -23% -37% Average 2H’08 Alcoa Global Caustic Price ($ / dry mt) ($ / mt) ~$100M targeted cost savings in 2010 ~$300M targeted cost savings in 2010 ~10% of refining costs ~13% of smelting costs Alcoa Global Coke Price |
 9 100% 80% 2008A 2010E $400M of Savings in Overhead Rationalizations Streamlined Footprint Headcount reductions Consolidation of workflow Benefit reductions Renegotiation of 3 rd party contracts Reduction in travel Elimination of consulting ~$400M |
 10 Total Capex $850 $1,800 $3,438 2008A 2009E 2010E 2010 Capital Expenditures of $850M -48% ($ in millions) Completion of growth initiatives enables capex reductions — Juruti bauxite mine — São Luís refining Investments in 1 quartile facilities from 2004-2009 better position Alcoa for the upturn — Juruti bauxite mine — 1,700 kmt additional refining capacity (1) — 407 kmt additional smelting capacity (2) — China, Russia, Engineered Products & Solutions -53% (1) 600 kmtpa at Pinjarra and 1,100 kmt at São Luís (2) 63 kmtpa at São Luís and 344 kmt at Fjarðaál Key Opportunities st |
 11 Working Capital Reduction of $800M ~$800M increase in cash in 2009 Targeting Reduction Through Benchmarking -28% Total working capital (Days) Days Reduction Inventory (Days) Accounts Receivable (Days) Accounts Payable (Days) 100% 72% Dec '08A Dec '09E |
 12 Improving global cost positions Negotiating power contracts Headcount reductions Lowering raw material costs Operational Initiatives Strengthen Core Businesses Alumina and Primary Metals Flat Rolled Products Engineered Products and Solutions Leading franchises in challenged end-markets Poised to leverage market positions Rationalization of capacity World-class technologies with leading market positions Significant incremental value creation opportunities Portfolio optimization |
 13 62% 68% 75% 100% 3Q '08A Target 1Q '09E 1Q '09E 4Q '09E 60% 71% 75% 100% 3Q '08A Target 1Q '09E 1Q '09E 4Q '09E ~30th ~50th Improving Global Cost Positions Cost of Aluminum Produced Cost of Alumina Produced -32% -38% (Cash Cost $ / mt) (Cash Cost $ / mt) Current global cost curve position (percentile) Note: Decrease in each chart represents the average cost point for that
quarter -29% -40% |
 14 Historically Consistent Refining EBITDA / MT Margins Refining EBITDA / MT Note: Refining EBITDA is the sum of after-tax operating income, income
taxes and depreciation, depletion and amortization less equity income for
Alumina. Please refer to reconciliation in appendix -49% 8 months $50 $47 $73 $64 $45 $52 $71 $75 $111 $104 $83 $1,362 $1,365 $1,549 $1,447 $1,350 $1,433 $1,719 $1,900 $2,570 $2,572 $2,638 $1,312 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Refining EBITDA / mt Average LME aluminum price / mt |
 15 Historically Consistent Smelting EBITDA / MT Margins Smelting EBITDA / MT Note: Smelting EBITDA is the sum of after-tax operating income, income
taxes and depreciation, depletion and amortization less equity income for
Primary Metals. Please refer to reconciliation in appendix $290 $324 $499 $463 $335 $333 $412 $425 $788 $634 $400 $1,362 $1,365 $1,549 $1,447 $1,350 $1,433 $1,719 $1,900 $2,570 $2,572 $1,312 $2,638 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Smelting EBITDA / mt Average LME aluminum price / mt -49% 8 months |
 16 Rolled Products: Strength in Attractive Mid-Stream Sectors Packaging/Can Sheet Aerospace Sheet, Plate & Hard Alloy Lithographic Sheet Marine Plate Automotive Brazing Hard Alloy, Oil & Gas |
 17 Alcoa Power and Propulsion #1 in Turbine Airfoils for Aerospace #1 in Airfoils for Industrial Gas Turbines #1 producer of Aluminum Structural Forgings #1 producer in Aluminum Truck Wheels #1 in Aerospace Fastening Systems Successful acquisition integration Broadest range of patented & proprietary products Share gain through superior products, customer engagement and regional expansion Continuous operational productivity improvement Annual Growth (04-08) Sales 14% p.a.
Net Margin 27% p.a. Note: Financial results indexed – 2004 = 100 Annual Growth (04-08) Sales 14% p.a.
Net Margin 44% p.a. Engineered Products and Solutions Poised for Further Value Creation Alcoa Fastening Systems Sales Net Margin 2004A 2008A Sales Net Margin 2004A 2008A |
 18 Long Term Outlook Remains Positive (1) Source: Alcoa analysis Environment • Total energy consumption to increase by 54% until 2025 – >60% from developing countries • Person Transport rates +40% by 2030 • Greenhouse gas regulation Light Weight High Strength Durable Highly Conductive Non- Corrosive Malleable Recyclable Relative Price 37 70 2008 2018 Demographics Urbanization Aluminum Benefits Aluminum Demand (million mt) (1) Mega Trends (1) Global population • 2006: 6.6 billion • 2025: 7.9 billion • 2050: 9.1 billion Aluminum Outlook Population living in cities • 2006: > 50% • 2030: > 60% 6% CAGR |
 19 Financial Plan Enhances Flexibility Capital markets transactions 150 million shares of common equity ($860 million at 3/13/09 closing price) $250 million convertible notes Quarterly dividend cut to $0.03 per share – conserves over $400 million of cash annually Shining Prospect joint venture unwind to generate over $1 billion in net proceeds
Strengthens Balance Sheet and Positions Alcoa to Capitalize on Strategic Opportunities |
 20 Pro Forma Balance Sheet / Liquidity Overview Capitalization Summary Liquidity Snapshot (1) Per Alcoa 10-K for the period ended December 31, 2008 (2) Pro forma for the financing plan, including $855 million of remaining net proceeds
from the unwind of the Shining Prospect JV and additional debt incurred of
$565 million as of March 13, 2009 Up to $5.2 billion of liquidity $1.9 billion 364-day facility $3.3 billion 5-year facility Manageable near-term debt maturities $56 million maturing in 2009 $511 million maturing in 2010 Pro Forma 12/31/2008 (1) 12/31/2008 (2) Short-term debt $2,013 $650 Long-term debt 8,565 8,565 Convertible debt – 250 Total debt $10,578 $9,465 Minority interest $2,597 $2,597 Shareholders' equity 11,735 12,564 Total capitalization $24,910 $24,626 Debt to capitalization 42.5% 38.4% |
 21 Cash Flow and Balance Sheet Impacts Reposition Alcoa Operational Financial Procurement Efficiencies >$2,000M cost savings by 2010 Overhead Rationalizations $400M cost savings by 2010 Capex Reductions $850M annual capex post 2009 Working Capital Initiatives $800M improvement in cash in 2009 Equity and Equity-Linked Financings >$1,100M gross proceeds Dividend Reduction >$400M annual cash savings Asset Dispositions $1,100M net proceeds |
 22 Highlights Comprehensive plan to optimize cost structure Proposed actions strengthen world class market positions – Bauxite mining #1 – Alumina refining #1 – Smelting capacity #1 – Downstream businesses #1 / #2 Broad-based management commitment to plan execution Complementary offerings and reduced dividend further enhance financial flexibility Attractive long-term aluminum fundamentals Businesses with #1 / #2 market share will account for 90% of Alcoa's overall revenue |
 |
 24 Reconciliation of Refining EBITDA / MT ($ in millions) Alumina 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 After-tax operating income (ATOI) $318 $307 $585 $471 $315 $415 $632 $682 $1,050 $956 $727 Add: Depreciation, depletion, and amortization 159 161 163 144 139 147 153 172 192 267 268 Equity (income) loss (1) – (3) (1) (1) – (1) – 2 (1) (7) Income taxes 174 159 279 184 130 161 240 246 428 340 277 EBITDA $650 $627 $1,024 $798 $583 $723 $1,024 $1,100 $1,672 $1,562 $1,265 Production (thousand metric tons) (kmt) 12,938 13,273 13,968 12,527 13,027 13,841 14,343 14,598 15,128 15,084 15,256 EBITDA/Production $50 $47 $73 $64 $45 $52 $71 $75 $111 $104 $83 EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a
substitute for net earnings (loss), operating earnings (loss), ATOI, cash flow provided by
operating activities or other income or cash flow data prepared in accordance with GAAP.
However, Alcoa’s management believes that EBITDA may provide additional information with respect to the Company’s performance or ability to meet its financial obligations. The ratio of EBITDA to production
is an additional measure of financial performance. Because EBITDA excludes some, but not all,
items that affect net earnings and may vary among companies, the EBITDA presented by Alcoa may
not be comparable to similarly titled measures of other companies. |
 25 Reconciliation of Smelting EBITDA / MT ($ in millions) Primary Metals 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 After-tax operating income (ATOI) $372 $535 $1,000 $905 $650 $657 $808 $822 $1,760 $1,445 $931 Add: Depreciation, depletion, and amortization 176 216 311 327 300 310 326 368 395 410 503 Equity (income) loss (27) (42) (50) (52) (44) (55) (58) 12 (82) (57) (2) Income taxes 196 214 505 434 266 256 314 307 726 542 172 EBITDA $717 $923 $1,766 $1,614 $1,172 $1,168 $1,390 $1,509 $2,799 $2,340 $1,604 Production (thousand metric tons) (kmt) 2,471 2,851 3,539 3,488 3,500 3,508 3,376 3,554 3,552 3,693 4,007 EBITDA/Production $290 $324 $499 $463 $335 $333 $412 $425 $788 $634 $400 EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not
be considered as a substitute for net earnings (loss), operating earnings
(loss), ATOI, cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, Alcoa’s management believes that EBITDA may provide
additional information with respect to the Company’s performance or
ability to meet its financial obligations. The ratio of EBITDA to production is an additional measure of financial performance. Because EBITDA excludes some, but not all, items that affect net earnings
and may vary among companies, the EBITDA presented by Alcoa may not be
comparable to similarly titled measures of other companies. |