Alcoa (NYSE:AA):
Highlights:
- Income from continuing operations of $558 million, or $0.64 per share, a three percent increase from a year ago.
- Revenues of $7.4 billion.
- Board increases authorization to repurchase shares to 25 percent of outstanding shares, up from previously authorized 10 percent.
- Chalco sale and upcoming packaging and automotive castings sales to provide cash and flexibility to enhance shareholder value.
- Debt-to-capital stands at 29 percent.
- Trailing 12-month ROC stands at 11.8 percent including significant growth investments; excluding investments in growth, ROC is 14.6 percent.
- Quarterly results impacted by Chalco gain, restructuring and impairment charges, currency, seasonality, metal prices, higher energy costs and softening markets.
Alcoa (NYSE:AA) today reported third quarter income from continuing operations of $558 million, or $0.64 per diluted share. Third quarter income from continuing operations increased three percent from $540 million, or $0.62, in the third quarter of 2006. Income from continuing operations was $716 million, or $0.81, in the second quarter of 2007.
As a result of the Company's strong capital structure and healthy cash flows, Alcoa's Board of Directors has authorized the repurchase of up to 25 percent of the company's outstanding common stock, or approximately 217 million shares. Under the earlier repurchase program, 43 million shares, or approximately five percent, had already been repurchased by the end of the third quarter, leaving the company with authorization to buy back approximately 174 million shares.
"The Chalco sale, combined with proceeds from the upcoming sales of our packaging and auto castings businesses, give us a strong balance sheet, increased flexibility to ramp-up share repurchases, and deliver greater shareholder value," said Alcoa Chairman and CEO Alain Belda.
Net income for the third quarter of 2007 was $555 million, or $0.63, compared to $537 million, or $0.61, in the third quarter of 2006 and $715 million, or $0.81, in the 2007 second quarter. Third quarter results were impacted by the Chalco sale, charges associated with planned asset sales and restructuring, higher petroleum and energy costs, seasonality, lower metal prices and softness in the North American economy.
In the first nine months of 2007, net income was $1.93 billion, or $2.20, compared with $1.89 billion, or $2.16, in 2006. Year-to-date income from continuing operations was $1.95 billion compared with $1.90 billion in 2006.
Revenues for the quarter were $7.4 billion, compared with $7.6 billion in 2006 and $8.1 billion in the 2007 second quarter. This quarter's results were primarily impacted by the exclusion of the company's soft alloy extrusion business as a result of forming a joint venture with Sapa in June, lower metal prices, seasonality and softness in the North American markets.
"Macroeconomic drivers such as the weakening US dollar, higher petroleum costs, and market softness in North America impacted the quarter," said Belda. "Despite these challenges, we have established all-time records for revenue, net income, earnings per share and cash from operations in the first nine months of the year," added Belda.
Cash from operations for the quarter was $592 million, including the impact of approximately $200 million in contributions to the company's pension plans. Year-to-date, cash from operations was $2.47 billion, including pension contributions.
Capital expenditures for the quarter were $941 million, with 66 percent dedicated to growth projects. Year-to-date, the company has invested $1.74 billion in growth projects, or 67 percent of capital expenditures.
The company's debt-to-capital ratio at the end of the third quarter of 2007 stood at 29 percent, the lowest since 1999.
The Company's trailing 12-month return on capital (ROC) stands at 11.8 percent including significant investments in growth projects and construction work in progress; excluding investments in growth and construction work in progress, ROC is 14.6 percent.
Segment and Other Results
Alumina - After tax operating income (ATOI) was $215 million, a decrease of $61 million, or 22 percent, from the prior quarter. System production decreased by a net of 24 kmt as production increases throughout the system offset much of the loss in Jamaica due to Hurricane Dean. Higher energy costs, the weakening US dollar and hurricane damages also impacted the quarter.
Primary Metals - ATOI was $283 million, down $179 million, or 39 percent, compared to the prior quarter. The ATOI decrease resulted from lower LME prices and premiums, unfavorable energy and currency, Iceland start-up costs and continued curtailment costs at Rockdale and Tennessee. Third-party realized metal prices decreased $145 per metric ton, or 5 percent, to $2,734 per ton. Primary metal production for the quarter increased 33 kmt to 934 kmt. The Company purchased approximately 58 kmt of primary metal for internal use as part of its strategy to sell value-added products.
Flat-Rolled Products - ATOI was $61 million, down $32 million, or 34 percent, from the prior quarter and up $13 million, or 27 percent, from the year ago quarter. The decrease in ATOI from the prior quarter was primarily due to seasonally lower volumes and unfavorable product mix.
Extruded and End Products - ATOI was $13 million, down $33 million from the prior quarter and down $3 million from the year ago quarter. The decrease from the prior quarter is primarily related to the soft alloy extrusion businesses for which no depreciation was recorded in the second quarter while the assets were held for sale. Additionally, these businesses were impacted by normal seasonality. The majority of the Company's soft alloy extrusions business became part of the Sapa joint venture on June 1, 2007. The global hard alloy extrusions and building and construction systems business remained strong.
Engineered Solutions - ATOI was $60 million, down $45 million, or 43 percent, from the prior quarter and down $15 million, or 20 percent, from the year ago quarter. The 2007 third quarter results were impacted by normal seasonality and increased weakness in the automotive industry. In addition, a one-time inventory charge as part of restructuring our automotive business and a German tax rate change impacted the segment.
Packaging and Consumer - ATOI was $36 million, up $12 million, or 50 percent, from the year ago quarter and down one million, or three percent, from the prior quarter. On a sequential basis, productivity improvements offset most of the expected seasonal decline. The significant improvement over the prior year quarter was due to productivity gains across all businesses.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on October 9th to present the quarter's results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under "Invest."
Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, structures and building systems. The company has 116,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com
Forward Looking Statement
Certain statements in this release relate to future events and expectations, and as such constitute forward-looking statements involving known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Alcoa disclaims any intention or obligation, other than as required by law, to update or revise any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in global economic or aluminum industry conditions generally, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices for primary aluminum and other products; (b) material adverse changes in the markets served by Alcoa, including the packaging, transportation, distribution, building and construction, aerospace, industrial gas turbine and other markets; (c) Alcoa's inability to implement successfully its strategy for growth or its productivity, cost-reduction or capital structure enhancement initiatives; (d) Alcoa's inability to realize the full extent of the expected savings or benefits from its restructuring activities, to complete such activities in accordance with its planned timetable, or to assure that subsequent developments do not cause the actual charges to exceed the estimated charges; (e) changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (f) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (g) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2006, Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007, and other reports filed with the Securities and Exchange Commission.
Alcoa and subsidiaries | |||||||||
Condensed Statement of Consolidated Income (unaudited) | |||||||||
(in millions, except per-share, share, and metric ton amounts) | |||||||||
 | |||||||||
Quarter ended | |||||||||
September 30, | June 30, | September 30, | |||||||
 | 2006 |  |  | 2007 |  |  | 2007 |  | |
Sales | $ | 7,631 | $ | 8,066 | $ | 7,387 | |||
 | |||||||||
Cost of goods sold (exclusive of expenses below) | 6,015 | 6,178 | 5,910 | ||||||
Selling, general administrative, and other expenses | 326 | 367 | 365 | ||||||
Research and development expenses | 53 | 55 | 64 | ||||||
Provision for depreciation, depletion, and amortization | 325 | 317 | 338 | ||||||
Goodwill impairment charge | - | - | 133 | ||||||
Restructuring and other charges | (3 | ) | (57 | ) | 444 | ||||
Interest expense | 101 | 86 | 151 | ||||||
Other income, net | Â | (48 | ) | Â | (60 | ) | Â | (1,731 | ) |
Total costs and expenses | 6,769 | 6,886 | 5,674 | ||||||
 | |||||||||
Income from continuing operations before taxes on income | 862 | 1,180 | 1,713 | ||||||
Provision for taxes on income | Â | 213 | Â | Â | 354 | Â | Â | 1,079 | Â |
Income from continuing operations before minority interests' share | 649 | 826 | 634 | ||||||
Less: Minority interests' share | Â | 109 | Â | Â | 110 | Â | Â | 76 | Â |
 | |||||||||
Income from continuing operations | 540 | 716 | 558 | ||||||
 | |||||||||
Loss from discontinued operations | Â | (3 | ) | Â | (1 | ) | Â | (3 | ) |
 | |||||||||
NET INCOME | $ | 537 | Â | $ | 715 | Â | $ | 555 | Â |
 | |||||||||
Earnings (loss) per common share: | |||||||||
Basic: | |||||||||
Income from continuing operations | $ | .62 | $ | .82 | $ | .64 | |||
Loss from discontinued operations | Â | - | Â | Â | - | Â | Â | - | Â |
Net income | $ | .62 | Â | $ | .82 | Â | $ | .64 | Â |
Diluted: | |||||||||
Income from continuing operations | $ | .62 | $ | .81 | $ | .64 | |||
Loss from discontinued operations | Â | (.01 | ) | Â | - | Â | Â | (.01 | ) |
Net income | $ | .61 | Â | $ | .81 | Â | $ | .63 | Â |
 | |||||||||
Average number of shares used to compute: | |||||||||
Basic earnings per | 867,589,707 | 872,978,729 | 867,664,875 | ||||||
Diluted earnings per | 873,494,404 | 882,742,445 | 877,700,035 | ||||||
 | |||||||||
Shipments of aluminum products (metric tons) | 1,396,000 | 1,364,000 | 1,328,000 |
Alcoa and subsidiaries | ||||||
Condensed Statement of Consolidated Income (unaudited), continued | ||||||
(in millions, except per-share, share, and metric ton amounts) | ||||||
 | ||||||
Nine months ended | ||||||
September 30, | ||||||
 | 2006 |  |  | 2007 |  | |
Sales | $ | 22,539 | $ | 23,361 | ||
 | ||||||
Cost of goods sold (exclusive of expenses below) | 17,186 | 18,095 | ||||
Selling, general administrative, and other expenses | 1,035 | 1,089 | ||||
Research and development expenses | 150 | 171 | ||||
Provision for depreciation, depletion, and amortization | 955 | 959 | ||||
Goodwill impairment charge | - | 133 | ||||
Restructuring and other charges | (11 | ) | 413 | |||
Interest expense | 291 | 320 | ||||
Other income, net | Â | (144 | ) | Â | (1,835 | ) |
Total costs and expenses | 19,462 | 19,345 | ||||
 | ||||||
Income from continuing operations before taxes on income | 3,077 | 4,016 | ||||
Provision for taxes on income | Â | 836 | Â | Â | 1,768 | Â |
Income from continuing operations before minority interests' share | 2,241 | 2,248 | ||||
Less: Minority interests' share | Â | 338 | Â | Â | 301 | Â |
 | ||||||
Income from continuing operations | 1,903 | 1,947 | ||||
 | ||||||
Loss from discontinued operations | Â | (14 | ) | Â | (15 | ) |
 | ||||||
NET INCOME | $ | 1,889 | Â | $ | 1,932 | Â |
 | ||||||
Earnings (loss) per common share: | ||||||
Basic: | ||||||
Income from continuing operations | $ | 2.19 | $ | 2.24 | ||
Loss from discontinued operations | Â | (.02 | ) | Â | (.02 | ) |
Net income | $ | 2.17 | Â | $ | 2.22 | Â |
Diluted: | ||||||
Income from continuing operations | $ | 2.17 | $ | 2.22 | ||
Loss from discontinued operations | Â | (.01 | ) | Â | (.02 | ) |
Net income | $ | 2.16 | Â | $ | 2.20 | Â |
 | ||||||
Average number of shares used to compute: | ||||||
Basic earnings per common share | 869,241,174 | 869,245,090 | ||||
Diluted earnings per common share | 875,472,002 | 877,964,737 | ||||
 | ||||||
Common stock outstanding at the end of the period | 867,077,839 | 852,046,355 | ||||
 | ||||||
Shipments of aluminum products (metric tons) | 4,146,000 | 4,057,000 |
Alcoa and subsidiaries Condensed Consolidated Balance Sheet (unaudited) (in millions) | |||||||
 | |||||||
 | December 31, | September 30, 2007 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 506 | $ | 1,314 | |||
Receivables from customers, less allowances of $68 in 2006 and $72 in 2007 | 2,788 | 2,976 | |||||
Other receivables | 301 | 364 | |||||
Inventories | 3,380 | 3,311 | |||||
Fair value of derivative contracts | 295 | 140 | |||||
Prepaid expenses and other current assets | Â | 1,083 | Â | Â | 1,289 | Â | |
Total current assets | Â | 8,353 | Â | Â | 9,394 | Â | |
 | |||||||
Properties, plants, and equipment | 27,689 | 30,660 | |||||
Less: accumulated depreciation, depletion, and amortization | Â | 13,682 | Â | Â | 14,527 | Â | |
Properties, plants, and equipment, net | Â | 14,007 | Â | Â | 16,133 | Â | |
Goodwill | 4,885 | 4,793 | |||||
Investments | 1,718 | 1,981 | |||||
Other assets | 3,939 | 3,853 | |||||
Assets held for sale | Â | 4,281 | Â | Â | 3,044 | Â | |
Total assets | $ | 37,183 | Â | $ | 39,198 | Â | |
 | |||||||
LIABILITIES | |||||||
Current liabilities: | |||||||
Short-term borrowings | $ | 462 | $ | 575 | |||
Commercial paper | 340 | 356 | |||||
Accounts payable, trade | 2,407 | 2,649 | |||||
Accrued compensation and retirement costs | 949 | 977 | |||||
Taxes, including taxes on income | 851 | 1,524 | |||||
Other current liabilities | 1,360 | 1,268 | |||||
Long-term debt due within one year | Â | 510 | Â | Â | 198 | Â | |
Total current liabilities | Â | 6,879 | Â | Â | 7,547 | Â | |
Commercial paper | 1,132 | - | |||||
Long-term debt, less amount due within one year | 4,777 | 6,332 | |||||
Accrued pension benefits | 1,566 | 1,311 | |||||
Accrued postretirement benefits | 2,956 | 2,840 | |||||
Other noncurrent liabilities and deferred credits | 2,002 | 1,959 | |||||
Deferred income taxes | 762 | 534 | |||||
Liabilities of operations held for sale | Â | 678 | Â | Â | 437 | Â | |
Total liabilities | Â | 20,752 | Â | Â | 20,960 | Â | |
 | |||||||
MINORITY INTERESTS | Â | 1,800 | Â | Â | 2,324 | Â | |
 | |||||||
SHAREHOLDERS' EQUITY | |||||||
Preferred stock | 55 | 55 | |||||
Common stock | 925 | 925 | |||||
Additional capital | 5,817 | 5,760 | |||||
Retained earnings | 11,066 | 12,405 | |||||
Treasury stock, at cost | (1,999 | ) | (2,510 | ) | |||
Accumulated other comprehensive loss | Â | (1,233 | ) | Â | (721 | ) | |
Total shareholders' equity | Â | 14,631 | Â | Â | 15,914 | Â | |
Total liabilities and equity | $ | 37,183 | Â | $ | 39,198 | Â | |
 | |||||||
(a) The Condensed Consolidated Balance Sheet as of December 31, |
Alcoa and subsidiaries Condensed Statement of Consolidated Cash Flows (unaudited) (in millions) | |||||||
 | |||||||
Nine months ended | |||||||
 | 2006 (b | ) |  |  | 2007 |  | |
CASH FROM OPERATIONS | |||||||
Net income | $ | 1,889 | $ | 1,932 | |||
Adjustments to reconcile net income to cash from operations: | |||||||
Depreciation, depletion, and amortization | 955 | 959 | |||||
Deferred income taxes | (78 | ) | 518 | ||||
Equity income, net of dividends | (65 | ) | (79 | ) | |||
Goodwill impairment charge | - | 133 | |||||
Restructuring and other charges | (11 | ) | 413 | ||||
Gains from investing activities - asset sales | (11 | ) | (1,772 | ) | |||
Provision for doubtful accounts | 16 | 13 | |||||
Loss from discontinued operations | 14 | 15 | |||||
Minority interests | 338 | 301 | |||||
Stock-based compensation | 57 | 83 | |||||
Excess tax benefits from stock-based payment arrangements | (16 | ) | (77 | ) | |||
Other (c) | (181 | ) | (33 | ) | |||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: | |||||||
(Increase) decrease in receivables | (287 | ) | 224 | ||||
(Increase) decrease in inventories | (518 | ) | 184 | ||||
(Increase) in prepaid expenses and other current assets | (200 | ) | (100 | ) | |||
(Decrease) in accounts payable and accrued expenses | (460 | ) | (145 | ) | |||
Increase in taxes, including taxes on income (c) | 270 | 341 | |||||
Cash received on long-term aluminum supply contract | - | 93 | |||||
Pension contributions | (344 | ) | (297 | ) | |||
Net change in noncurrent assets and liabilities | (28 | ) | (188 | ) | |||
(Increase) in net assets held for sale | Â | (106 | ) | Â | (49 | ) | |
CASH PROVIDED FROM CONTINUING OPERATIONS | 1,234 | 2,469 | |||||
CASH USED FOR DISCONTINUED OPERATIONS | Â | - | Â | Â | (1 | ) | |
CASH PROVIDED FROM OPERATIONS | Â | 1,234 | Â | Â | 2,468 | Â | |
 | |||||||
FINANCING ACTIVITIES | |||||||
Net change in short-term borrowings | 86 | 102 | |||||
Net change in commercial paper | 1,281 | (1,116 | ) | ||||
Additions to long-term debt | 20 | 2,049 | |||||
Debt issuance costs | - | (126 | ) | ||||
Payments on long-term debt | (32 | ) | (848 | ) | |||
Common stock issued for stock compensation plans | 141 | 819 | |||||
Excess tax benefits from stock-based payment arrangements | 16 | 77 | |||||
Repurchase of common stock | (290 | ) | (1,548 | ) | |||
Dividends paid to shareholders | (392 | ) | (447 | ) | |||
Dividends paid to minority interests | (281 | ) | (310 | ) | |||
Contributions from minority interests | Â | 64 | Â | Â | 369 | Â | |
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES | Â | 613 | Â | Â | (979 | ) | |
 | |||||||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (2,054 | ) | (2,615 | ) | |||
Capital expenditures of discontinued operations | (4 | ) | - | ||||
Proceeds from the sale of assets | 19 | 87 | |||||
Additions to investments | (52 | ) | (123 | ) | |||
Sales of investments | 7 | 1,981 | |||||
Net change in short-term investments and restricted cash | (3 | ) | (23 | ) | |||
Other | Â | 15 | Â | Â | (13 | ) | |
CASH USED FOR INVESTING ACTIVITIES | Â | (2,072 | ) | Â | (706 | ) | |
 | |||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | Â | 25 | Â | Â | 25 | Â | |
Net change in cash and cash equivalents | (200 | ) | 808 | ||||
Cash and cash equivalents at beginning of year | Â | 762 | Â | Â | 506 | Â | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 562 | Â | $ | 1,314 | Â | |
 | |||||||
(b) The Condensed Statement of Consolidated Cash Flows for the nine | |||||||
 | |||||||
(c) A reclassification of $53 related to income taxes was made in |
Alcoa and subsidiaries | ||||||||||||||||||||||
Segment Information (unaudited) | ||||||||||||||||||||||
(dollars in millions, except realized prices; production and shipments in thousands of metric tons (kmt)) | ||||||||||||||||||||||
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1Q06 | 2Q06 | 3Q06 | 4Q06 | Â | 2006 | Â | 1Q07 | 2Q07 | 3Q07 | |||||||||||||
Alumina: | ||||||||||||||||||||||
Alumina production (kmt) | 3,702 | 3,746 | 3,890 | 3,790 | 15,128 | 3,655 | 3,799 | 3,775 | ||||||||||||||
Third-party alumina shipments (kmt) | 2,023 | 2,108 | 2,205 | 2,084 | 8,420 | 1,877 | 1,990 | 1,937 | ||||||||||||||
Third-party sales | $ | 628 | $ | 713 | $ | 733 | $ | 711 | $ | 2,785 | $ | 645 | $ | 712 | $ | 664 | ||||||
Intersegment sales | $ | 555 | $ | 515 | $ | 524 | $ | 550 | $ | 2,144 | $ | 579 | $ | 587 | $ | 631 | ||||||
Equity (loss) income | $ | (1 | ) | $ | - | $ | (2 | ) | $ | 1 | $ | (2 | ) | $ | 1 | $ | - | $ | (1 | ) | ||
Depreciation, depletion, and amortization | $ | 43 | $ | 46 | $ | 47 | $ | 56 | $ | 192 | $ | 56 | $ | 62 | $ | 76 | ||||||
Income taxes | $ | 93 | $ | 112 | $ | 108 | $ | 115 | $ | 428 | $ | 100 | $ | 102 | $ | 89 | ||||||
After-tax operating income (ATOI) | $ | 242 | Â | $ | 278 | Â | $ | 271 | Â | $ | 259 | Â | $ | 1,050 | Â | $ | 260 | $ | 276 | $ | 215 | Â |
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Primary Metals: | ||||||||||||||||||||||
Aluminum production (kmt) | 867 | 882 | 895 | 908 | 3,552 | 899 | 901 | 934 | ||||||||||||||
Third-party aluminum shipments (kmt) | 488 | 508 | 535 | 556 | 2,087 | 518 | 565 | 584 | ||||||||||||||
Alcoa's average realized price per metric ton of aluminum | $ | 2,534 | $ | 2,728 | $ | 2,620 | $ | 2,766 | $ | 2,665 | $ | 2,902 | $ | 2,879 | $ | 2,734 | ||||||
Third-party sales | $ | 1,408 | $ | 1,589 | $ | 1,476 | $ | 1,698 | $ | 6,171 | $ | 1,633 | $ | 1,746 | $ | 1,600 | ||||||
Intersegment sales | $ | 1,521 | $ | 1,696 | $ | 1,467 | $ | 1,524 | $ | 6,208 | $ | 1,477 | $ | 1,283 | $ | 1,171 | ||||||
Equity income | $ | 20 | $ | 28 | $ | 16 | $ | 18 | $ | 82 | $ | 22 | $ | 18 | $ | 11 | ||||||
Depreciation, depletion, and amortization | $ | 96 | $ | 102 | $ | 100 | $ | 97 | $ | 395 | $ | 95 | $ | 102 | $ | 102 | ||||||
Income taxes | $ | 197 | $ | 209 | $ | 140 | $ | 180 | $ | 726 | $ | 214 | $ | 196 | $ | 80 | ||||||
ATOI | $ | 445 | Â | $ | 489 | Â | $ | 346 | Â | $ | 480 | Â | $ | 1,760 | Â | $ | 504 | $ | 462 | $ | 283 | Â |
 | ||||||||||||||||||||||
Flat-Rolled Products: | ||||||||||||||||||||||
Third-party aluminum shipments (kmt) | 562 | 579 | 568 | 564 | 2,273 | 568 | 583 | 602 | ||||||||||||||
Third-party sales | $ | 1,940 | $ | 2,115 | $ | 2,115 | $ | 2,127 | $ | 8,297 | $ | 2,275 | $ | 2,344 | $ | 2,309 | ||||||
Intersegment sales | $ | 49 | $ | 66 | $ | 65 | $ | 66 | $ | 246 | $ | 60 | $ | 63 | $ | 59 | ||||||
Equity loss | $ | - | $ | (1 | ) | $ | - | $ | (1 | ) | $ | (2 | ) | $ | - | $ | - | $ | - | |||
Depreciation, depletion, and amortization | $ | 50 | $ | 57 | $ | 57 | $ | 55 | $ | 219 | $ | 55 | $ | 55 | $ | 58 | ||||||
Income taxes | $ | 26 | $ | 25 | $ | 19 | $ | (2 | ) | $ | 68 | $ | 26 | $ | 33 | $ | 31 | |||||
ATOI | $ | 66 | Â | $ | 79 | Â | $ | 48 | Â | $ | 62 | Â | $ | 255 | Â | $ | 62 | $ | 93 | $ | 61 | Â |
 | ||||||||||||||||||||||
Extruded and End Products: | ||||||||||||||||||||||
Third-party aluminum shipments (kmt) | 223 | 231 | 220 | 203 | 877 | 213 | 146 | 78 | ||||||||||||||
Third-party sales | $ | 1,038 | $ | 1,165 | $ | 1,146 | $ | 1,070 | $ | 4,419 | $ | 1,175 | $ | 965 | $ | 563 | ||||||
Intersegment sales | $ | 23 | $ | 31 | $ | 20 | $ | 25 | $ | 99 | $ | 42 | $ | 26 | $ | 13 | ||||||
Equity income (loss) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 9 | $ | (2 | ) | |||||
Depreciation, depletion, and amortization | $ | 28 | $ | 30 | $ | 29 | $ | 31 | $ | 118 | $ | 9 | $ | 10 | $ | 11 | ||||||
Income taxes | $ | 1 | $ | 8 | $ | 7 | $ | 2 | $ | 18 | $ | 11 | $ | 29 | $ | 5 | ||||||
ATOI | $ | - | Â | $ | 17 | Â | $ | 16 | Â | $ | 27 | Â | $ | 60 | Â | $ | 34 | $ | 46 | $ | 13 | Â |
 | ||||||||||||||||||||||
Engineered Solutions: | ||||||||||||||||||||||
Third-party aluminum shipments (kmt) | 37 | 38 | 34 | 30 | 139 | 31 | 30 | 27 | ||||||||||||||
Third-party sales | $ | 1,360 | $ | 1,405 | $ | 1,345 | $ | 1,346 | $ | 5,456 | $ | 1,449 | $ | 1,478 | $ | 1,407 | ||||||
Equity income (loss) | $ | - | $ | - | $ | 1 | $ | (5 | ) | $ | (4 | ) | $ | - | $ | - | $ | - | ||||
Depreciation, depletion, and amortization | $ | 40 | $ | 42 | $ | 43 | $ | 44 | $ | 169 | $ | 41 | $ | 42 | $ | 46 | ||||||
Income taxes | $ | 37 | $ | 44 | $ | 35 | $ | (15 | ) | $ | 101 | $ | 44 | $ | 47 | $ | 38 | |||||
ATOI | $ | 83 | Â | $ | 100 | Â | $ | 75 | Â | $ | 73 | Â | $ | 331 | Â | $ | 93 | $ | 105 | $ | 60 | Â |
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Packaging and Consumer: | ||||||||||||||||||||||
Third-party aluminum shipments (kmt) | 40 | 44 | 39 | 46 | 169 | 35 | 40 | 37 | ||||||||||||||
Third-party sales | $ | 749 | $ | 834 | $ | 815 | $ | 837 | $ | 3,235 | $ | 736 | $ | 837 | $ | 828 | ||||||
Equity income | $ | - | $ | - | $ | - | $ | 1 | $ | 1 | $ | - | $ | - | $ | - | ||||||
Depreciation, depletion, and amortization | $ | 31 | $ | 31 | $ | 30 | $ | 32 | $ | 124 | $ | 30 | $ | 30 | $ | 29 | ||||||
Income taxes | $ | 5 | $ | 9 | $ | 8 | $ | 11 | $ | 33 | $ | 7 | $ | 17 | $ | 17 | ||||||
ATOI | $ | 8 | Â | $ | 37 | Â | $ | 24 | Â | $ | 26 | Â | $ | 95 | Â | $ | 19 | $ | 37 | $ | 36 | Â |
Alcoa and subsidiaries | ||||||||||||||||||||||||
Segment Information (unaudited), continued | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
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Reconciliation of ATOI to consolidated net income: | 1Q06 | 2Q06 | 3Q06 | 4Q06 | Â | 2006 | Â | 1Q07 | 2Q07 | 3Q07 | ||||||||||||||
Total segment ATOI | $ | 844 | $ | 1,000 | $ | 780 | $ | 927 | $ | 3,551 | $ | 972 | $ | 1,019 | $ | 668 | ||||||||
Unallocated amounts (net of tax): | ||||||||||||||||||||||||
Impact of LIFO(1) | (36 | ) | (49 | ) | (19 | ) | (66 | ) | (170 | ) | (27 | ) | (16 | ) | 10 | |||||||||
Interest income | 11 | 10 | 23 | 14 | 58 | 11 | 9 | 10 | ||||||||||||||||
Interest expense | (60 | ) | (63 | ) | (66 | ) | (61 | ) | (250 | ) | (54 | ) | (56 | ) | (98 | ) | ||||||||
Minority interests | (105 | ) | (124 | ) | (109 | ) | (98 | ) | (436 | ) | (115 | ) | (110 | ) | (76 | ) | ||||||||
Corporate expense | (89 | ) | (82 | ) | (64 | ) | (82 | ) | (317 | ) | (86 | ) | (101 | ) | (101 | ) | ||||||||
Restructuring and other charges | (1 | ) | 6 | 2 | (386 | ) | (379 | ) | (18 | ) | 21 | (311 | ) | |||||||||||
Discontinued operations | (6 | ) | (5 | ) | (3 | ) | 101 | 87 | (11 | ) | (1 | ) | (3 | ) | ||||||||||
Other | Â | 50 | Â | Â | 51 | Â | Â | (7 | ) | Â | 10 | Â | Â | 104 | Â | Â | (10 | ) | Â | (50 | ) | Â | 456 | Â |
Consolidated net income | $ | 608 | Â | $ | 744 | Â | $ | 537 | Â | $ | 359 | Â | $ | 2,248 | Â | $ | 662 | Â | $ | 715 | Â | $ | 555 | Â |
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(1) Certain amounts for the first and second quarter of 2006 have | ||||||||||||||||||||||||
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Certain amounts for the first and second quarter of 2006 included | ||||||||||||||||||||||||
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The difference between certain segment financial information totals |
Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (in millions) | ||||||||||||||
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Bloomberg Return on Capital(1) | Â | Bloomberg Return on Capital, Excluding Growth Investments(1) | ||||||||||||
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Twelve months ended | Twelve months ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||
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Net income | $ | 2,113 | $ | 2,291 | Net income | $ | 2,113 | $ | 2,291 | |||||
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Minority | 418 | 399 | Minority | 418 | 399 | |||||||||
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Interest | Interest | |||||||||||||
 (after tax) |  | 272 |  |  | 246 |  |  (after tax) |  | 272 |  |  | 246 |  | |
 | ||||||||||||||
Numerator | $ | 2,803 | Â | $ | 2,936 | Â | Numerator | 2,803 | 2,936 | |||||
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Net losses of | Â | 85 | Â | Â | 57 | Â | ||||||||
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Adjusted numerator | $ | 2,888 | Â | $ | 2,993 | Â | ||||||||
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Average | Average | |||||||||||||
Short-term | $ | 349 | $ | 497 | Short-term | $ | 349 | $ | 497 | |||||
Short-term | 449 | 525 | Short-term | 449 | 525 | |||||||||
Commercial | 1,678 | 1,275 | Commercial | 1,678 | 1,275 | |||||||||
Long-term | 4,915 | 5,390 | Long-term | 4,915 | 5,390 | |||||||||
Preferred | 55 | 55 | Preferred | 55 | 55 | |||||||||
Minority | 1,416 | 1,927 | Minority | 1,416 | 1,927 | |||||||||
Common | Â | 14,120 | Â | Â | 15,255 | Â | Common | Â | 14,120 | Â | Â | 15,255 | Â | |
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Denominator | $ | 22,982 | Â | $ | 24,924 | Â | Denominator | 22,982 | 24,924 | |||||
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Capital | Â | (2,540 | ) | Â | (4,430 | ) | ||||||||
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Adjusted | $ | 20,442 | Â | $ | 20,494 | Â | ||||||||
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Return on capital | 12.2 | % | 11.8 | % | Return on | 14.1 | % | 14.6 | % | |||||
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Return on capital, excluding growth investments is a non-GAAP | ||||||||||||||
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(1) The Bloomberg Methodology calculates ROC based on the trailing | ||||||||||||||
(2) For all periods presented, growth investments include Russia | ||||||||||||||
(3) Calculated as total shareholders' equity less preferred stock. |
Alcoa and subsidiaries | ||||||||
Calculation of Financial Measures (unaudited), continued | ||||||||
(in millions) | ||||||||
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Days of Working Capital | Quarter ended | |||||||
September 30, 2006 (a) | Â | June 30, 2007 (a) | Â | September 30, 2007 | ||||
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Receivables from customers, less allowances | $ | 2,802 | $ | 2,991 | $ | 2,976 | ||
Add: Inventories | 3,363 | 3,216 | 3,311 | |||||
Less: Accounts payable, trade | Â | 2,209 | Â | 2,388 | Â | 2,649 | ||
Working Capital | $ | 3,956 | $ | 3,819 | $ | 3,638 | ||
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Sales | $ | 7,631 | $ | 8,066 | $ | 7,387 | ||
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Days of Working Capital | 47.7 | 43.1 | 45.3 | |||||
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Days of Working Capital = Working Capital divided by (Sales/number | ||||||||
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(a) Certain financial information for the quarters ended |