Alcoa Reports Strong 2nd Quarter 2008 Results; Higher Volume and Pricing Offset Input Cost Pressures
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NEW YORK--(BUSINESS WIRE)--
Alcoa (NYSE: AA) today announced that strong revenue growth in its second quarter 2008 led to an 80 percent increase in profitability compared with the first quarter of 2008. The Company reported net income of $546 million, or $0.66 per diluted share compared with $303 million or $0.37 per share in first quarter 2008. Higher input costs impacting the entire aluminum industry were offset by higher volume and stronger pricing. Net income in the second quarter of 2007 was $715 million or $0.81.
Revenues for the quarter increased to $7.6 billion from $7.4 billion in the first quarter of 2008 driven by higher volumes and prices. All of the Company's operating segments achieved higher revenues in the quarter. Revenues in the second quarter of 2007 were $6.8 billion excluding divested businesses, and including divested businesses were $8.1 billion.
All of the Company's operating segments achieved double-digit after-tax operating income (ATOI) increases over the prior quarter. The Company's downstream Engineered Products and Solutions segment again achieved an all-time quarterly ATOI record.
The strong quarterly results were achieved despite a negative after-tax impact of $39 million, or $0.05 per share, associated with the previously announced gas pipeline explosion in Western Australia and power disruptions at the Rockdale, TX smelter because of unreliable power supply.
"Each of our operating groups grew their topline this quarter, but more importantly they achieved profitable growth as they achieved strong ATOI increases," said Klaus Kleinfeld, Alcoa Chief Executive Officer. "Higher prices for our products and increased volumes more than offset the increased input costs facing the entire industry.
"All of our businesses are focused on continuing to drive profitable growth through disciplined execution and using all of the levers of Alcoa in order to maximize shareowner value," said Kleinfeld.
Cash from operations in the second quarter was $1.0 billion, an approximately $1.3 billion improvement from first quarter 2008, driven by higher profits and improved working capital management. Significant improvement was achieved in days working capital outstanding. On a year over year basis, days working capital improved 6.4 days, and on a sequential basis, 5.7 days. The Company's cash generation helped to fund its growth programs. In the quarter, capital expenditures were $796 million, 52 percent of which was devoted to growth projects. Cash from operations in the 2007 second quarter was $1.3 billion.
The Company's debt-to-capital ratio stood at 30.6 percent at the end of the quarter, well within its targeted range. The Company's 12-month trailing return on capital (ROC) stood at 12.1 percent at the end of the second quarter, excluding investments in growth. Including those investments, ROC was 9.4 percent.
The Company's share repurchase program continued in the quarter. On a year-to-date basis, the Company repurchased 18.3 million shares bringing total repurchases to 10 percent against the Board authorized level of up to a maximum of 25 percent of shares outstanding.
Segment and Other Results
Alumina
ATOI was $190 million, an increase of $21 million, or 12 percent, from the prior quarter. Higher pricing more than offset adverse currency effects and higher material costs. As previously announced, an explosion at a natural gas supplier in Western Australia impacted profitability by $17 million.
Primary Metals
ATOI was $428 million, up $121 million, or 39 percent, compared to the prior quarter. Record quarterly smelting production levels were set at more than one million metric tons as the Iceland smelter reached full capacity during the period. Higher LME prices more than offset cost pressures for raw materials, currency, and energy. Power disruptions at the Rockdale smelter required an increase in electricity purchases at market rates and impacted income by $22 million in the period. This segment purchased approximately 52 kmt of primary metal for internal use.
Flat-Rolled Products
ATOI was $55 million, up $14 million, or 34 percent, from the prior quarter. Improved Russia results and productivity gains more than offset lower volumes caused by North American and European market weakness and higher energy and transportation costs.
Engineered Products and Solutions
ATOI was a record $157 million, up $19 million, or 14 percent, from the prior quarter. Record revenue was also achieved despite some sluggish end markets. Volumes increased in the aerospace, industrial gas turbine, commercial building and construction, and commercial transportation markets.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on July 8, 2008 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."
About Alcoa
Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined, through its active and growing participation 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(R) wheels, fastening systems, precision and investment castings, and building systems. The Company has 97,000 employees in 34 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 Statements
Certain statements in this release 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. 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 and other products; (b) material adverse changes in the markets served by Alcoa, including the transportation, aerospace, building and construction, distribution, packaging, industrial gas turbine and other markets; (c) Alcoa's inability to mitigate impacts from energy supply interruptions or from unfavorable currency fluctuations or from increased energy, transportation and raw materials costs or other cost inflation; (d) Alcoa's inability to achieve the level of cash generation, return on capital improvement, cost savings, or earnings or revenue growth anticipated by management; (e) Alcoa's inability to complete its growth projects or achieve efficiency improvements at newly constructed or acquired facilities as planned and by targeted completion dates; (f) unfavorable changes in laws, governmental regulations or policies, foreign currency exchange rates or competitive factors in the countries in which Alcoa operates; (g) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (h) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2007, Form 10-Q for the quarter ended March 31, 2008, and other reports filed with the Securities and Exchange Commission.
Alcoa and subsidiaries
Statement of Consolidated Income (unaudited)
(in millions, except per-share, share, and metric ton amounts)
Quarter ended
----------------------------------------
June 30, March 31, June 30,
2007 2008 2008
------------- ------------ -------------
Sales $ 8,066 $ 7,375 $ 7,620
Cost of goods sold (exclusive
of expenses below) 6,178 5,892 6,090
Selling, general
administrative, and other
expenses 367 328 306
Research and development
expenses 55 66 64
Provision for depreciation,
depletion, and amortization 317 319 321
Restructuring and other
charges (57) 38 2
Interest expense 86 99 87
Other (income) expenses, net (60) 58 (97)
------------- ------------ -------------
Total costs and expenses 6,886 6,800 6,773
Income from continuing
operations before taxes on
income 1,180 575 847
Provision for taxes on income 354 205 231
------------- ------------ -------------
Income from continuing
operations before minority
interests' share 826 370 616
Less: Minority interests'
share 110 67 70
------------- ------------ -------------
Income from continuing
operations 716 303 546
Loss from discontinued
operations (1) - -
------------- ------------ -------------
NET INCOME $ 715 $ 303 $ 546
============= ============ =============
Earnings (loss) per common
share:
Basic:
Income from continuing
operations $ 0.82 $ 0.37 $ 0.67
Loss from discontinued
operations - - -
------------- ------------ -------------
Net income $ 0.82 $ 0.37 $ 0.67
============= ============ =============
Diluted:
Income from continuing
operations $ 0.81 $ 0.37 $ 0.66
Loss from discontinued
operations - - -
------------- ------------ -------------
Net income $ 0.81 $ 0.37 $ 0.66
============= ============ =============
Average number of shares
used to compute:
Basic earnings per
common share 872,978,729 817,892,681 815,990,095
Diluted earnings per
common share 882,742,445 825,301,487 825,387,079
Shipments of aluminum products
(metric tons) 1,364,000 1,357,000 1,407,000
Alcoa and subsidiaries
Statement of Consolidated Income (unaudited), continued
(in millions, except per-share, share, and metric ton amounts)
Six months ended
June 30,
---------------------------
2007 2008
------------- -------------
Sales $ 15,974 $ 14,995
Cost of goods sold (exclusive of expenses
below) 12,185 11,982
Selling, general administrative, and other
expenses 724 634
Research and development expenses 107 130
Provision for depreciation, depletion, and
amortization 621 640
Restructuring and other charges (31) 40
Interest expense 169 186
Other income, net (104) (39)
------------- -------------
Total costs and expenses 13,671 13,573
Income from continuing operations before
taxes on income 2,303 1,422
Provision for taxes on income 689 436
------------- -------------
Income from continuing operations before
minority interests' share 1,614 986
Less: Minority interests' share 225 137
------------- -------------
Income from continuing operations 1,389 849
Loss from discontinued operations (12) -
------------- -------------
NET INCOME $ 1,377 $ 849
============= =============
Earnings (loss) per common share:
Basic:
Income from continuing operations $ 1.59 $ 1.04
Loss from discontinued operations (0.01) -
------------- -------------
Net income $ 1.58 $ 1.04
============= =============
Diluted:
Income from continuing operations $ 1.58 $ 1.03
Loss from discontinued operations (0.02) -
------------- -------------
Net income $ 1.56 $ 1.03
============= =============
Average number of shares used to
compute:
Basic earnings per common share 871,174,885 817,218,002
Diluted earnings per common share 879,625,327 825,598,896
Common stock outstanding at the end of
the period 876,432,795 815,303,690
Shipments of aluminum products (metric
tons) 2,729,000 2,764,000
Alcoa and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
December 31, June 30,
2007 2008
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $ 483 $ 815
Receivables from customers, less allowances
of $72 in 2007 and $65 in 2008 2,602 3,063
Other receivables 451 458
Inventories 3,326 3,813
Prepaid expenses and other current assets 1,224 1,393
------------ -----------
Total current assets 8,086 9,542
------------ -----------
Properties, plants, and equipment 31,601 33,953
Less: accumulated depreciation, depletion, and
amortization 14,722 15,576
------------ -----------
Properties, plants, and equipment, net 16,879 18,377
------------ -----------
Goodwill 4,806 5,184
Investments 2,038 3,353
Other assets 4,046 4,251
Assets held for sale 2,948 19
------------ -----------
Total assets $ 38,803 $ 40,726
============ ===========
LIABILITIES
Current liabilities:
Short-term borrowings $ 569 $ 609
Commercial paper 856 1,199
Accounts payable, trade 2,787 3,121
Accrued compensation and retirement costs 943 909
Taxes, including taxes on income 644 489
Other current liabilities 1,165 1,268
Long-term debt due within one year 202 47
------------ -----------
Total current liabilities 7,166 7,642
------------ -----------
Long-term debt, less amount due within one
year 6,371 6,782
Accrued pension benefits 1,098 1,271
Accrued postretirement benefits 2,753 2,695
Other noncurrent liabilities and deferred
credits 1,943 2,123
Deferred income taxes 545 635
Liabilities of operations held for sale 451 17
------------ -----------
Total liabilities 20,327 21,165
------------ -----------
MINORITY INTERESTS 2,460 2,859
------------ -----------
SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,774 5,827
Retained earnings 13,039 13,607
Treasury stock, at cost (3,440) (3,852)
Accumulated other comprehensive (loss) income (337) 140
------------ -----------
Total shareholders' equity 16,016 16,702
------------ -----------
Total liabilities and equity $ 38,803 $ 40,726
============ ===========
Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
Six months ended
June 30,
-------------------
2007 (a) 2008
---------- --------
CASH FROM OPERATIONS
Net income $ 1,377 $ 849
Adjustments to reconcile net income to cash from
operations:
Depreciation, depletion, and amortization 621 640
Deferred income taxes 46 (188)
Equity income, net of dividends (72) (46)
Restructuring and other charges (31) 40
Gains from investing activities - asset sales (1) (9)
Provision for doubtful accounts 1 4
Loss from discontinued operations 12 -
Minority interests 225 137
Stock-based compensation 51 70
Excess tax benefits from stock-based payment
arrangements (36) (15)
Other (68) (18)
Changes in assets and liabilities, excluding
effects of acquisitions, divestitures, and foreign
currency translation adjustments:
(Increase) in receivables (51) (102)
Decrease (increase) in inventories 218 (336)
(Increase) in prepaid expenses and other current
assets (102) (126)
(Decrease) increase in accounts payable, trade (76) 205
(Decrease) in accrued expenses (35) (219)
(Decrease) increase in taxes, including taxes on
income (92) 52
Cash received on long-term aluminum supply
contract 93 -
Pension contributions (91) (67)
Net change in noncurrent assets and liabilities (40) (168)
(Increase) decrease in net assets held for sale (72) 16
---------- --------
CASH PROVIDED FROM CONTINUING OPERATIONS 1,877 719
CASH USED FOR DISCONTINUED OPERATIONS (1) -
---------- --------
CASH PROVIDED FROM OPERATIONS 1,876 719
---------- --------
FINANCING ACTIVITIES
Net change in short-term borrowings 67 30
Net change in commercial paper (1,034) 343
Additions to long-term debt 2,035 432
Debt issuance costs (126) (6)
Payments on long-term debt (387) (190)
Common stock issued for stock compensation plans 428 176
Excess tax benefits from stock-based payment
arrangements 36 15
Repurchase of common stock (253) (605)
Dividends paid to shareholders (297) (280)
Dividends paid to minority interests (204) (117)
Contributions from minority interests 217 299
---------- --------
CASH PROVIDED FROM FINANCING ACTIVITIES 482 97
---------- --------
INVESTING ACTIVITIES
Capital expenditures (1,674) (1,544)
Acquisitions, net of cash acquired (15) (276)
Acquisitions of minority interests - (94)
Proceeds from the sale of assets and businesses - 2,636
Additions to investments (56) (1,237)
Sales of investments 27 5
Net change in short-term investments and restricted
cash 3 (3)
Other 1 (17)
---------- --------
CASH USED FOR INVESTING ACTIVITIES (1,714) (530)
---------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 18 46
---------- --------
Net change in cash and cash equivalents 662 332
Cash and cash equivalents at beginning of year 506 483
---------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,168 $ 815
========== ========
(a) The Statement of Consolidated Cash Flows for the six months
ended June 30, 2007 was reclassified to reflect the movement of
the automotive castings and packaging and consumer businesses
to held for sale in the third quarter of 2007.
Alcoa and subsidiaries
Segment Information (unaudited) (1)
(dollars in millions, except realized prices; production and shipments
in thousands of metric tons (kmt))
1Q07 2Q07 3Q07 4Q07 2007 1Q08 2Q08
------ ------ ------- ------- ------- ------ ------
Alumina:
Alumina
production (kmt) 3,655 3,799 3,775 3,855 15,084 3,870 3,820
Third-party
alumina
shipments (kmt) 1,877 1,990 1,937 2,030 7,834 1,995 1,913
Third-party sales $ 645 $ 712 $ 664 $ 688 $ 2,709 $ 680 $ 717
Intersegment
sales $ 579 $ 587 $ 631 $ 651 $ 2,448 $ 667 $ 766
Equity income
(loss) $ 1 $ - $ (1) $ 1 $ 1 $ 2 $ 2
Depreciation,
depletion, and
amortization $ 56 $ 62 $ 76 $ 73 $ 267 $ 74 $ 67
Income taxes $ 100 $ 102 $ 89 $ 49 $ 340 $ 57 $ 67
After-tax
operating income
(ATOI) $ 260 $ 276 $ 215 $ 205 $ 956 $ 169 $ 190
======================================================================
Primary Metals:
Aluminum
production (kmt) 899 901 934 959 3,693 995 1,030
Third-party
aluminum
shipments (kmt) 518 565 584 624 2,291 665 750
Alcoa's average
realized price
per metric ton
of aluminum $2,902 $2,879 $2,734 $2,646 $ 2,784 $2,801 $3,058
Third-party sales $1,633 $1,746 $1,600 $1,597 $ 6,576 $1,877 $2,437
Intersegment
sales $1,477 $1,283 $1,171 $1,063 $ 4,994 $1,105 $1,108
Equity income $ 22 $ 18 $ 11 $ 6 $ 57 $ 9 $ 10
Depreciation,
depletion, and
amortization $ 95 $ 102 $ 102 $ 111 $ 410 $ 124 $ 128
Income taxes $ 214 $ 196 $ 80 $ 52 $ 542 $ 116 $ 131
ATOI $ 504 $ 462 $ 283 $ 196 $ 1,445 $ 307 $ 428
======================================================================
Flat-Rolled
Products:
Third-party
aluminum
shipments (kmt) 597 612 632 600 2,441 610 591
Third-party sales $2,467 $2,535 $2,494 $2,436 $ 9,932 $2,492 $2,525
Intersegment
sales $ 65 $ 77 $ 70 $ 71 $ 283 $ 77 $ 77
Depreciation,
depletion, and
amortization $ 60 $ 61 $ 64 $ 59 $ 244 $ 60 $ 63
Income taxes $ 31 $ 37 $ 32 $ 7 $ 107 $ 22 $ 23
ATOI $ 60 $ 97 $ 62 $ (15) $ 204 $ 41 $ 55
======================================================================
Engineered
Products and
Solutions:
Third-party
aluminum
shipments (kmt) 55 52 51 49 207 48 49
Third-party sales $1,676 $1,715 $1,662 $1,666 $ 6,719 $1,772 $1,873
Depreciation,
depletion, and
amortization $ 41 $ 41 $ 44 $ 45 $ 171 $ 42 $ 42
Income taxes $ 49 $ 52 $ 46 $ 17 $ 164 $ 56 $ 70
ATOI $ 105 $ 119 $ 82 $ 76 $ 382 $ 138 $ 157
======================================================================
Packaging and
Consumer (2):
Third-party
aluminum
shipments (kmt) 35 40 37 45 157 19 -
Third-party sales $ 736 $ 837 $ 828 $ 887 $ 3,288 $ 497 $ 19
Depreciation,
depletion, and
amortization $ 30 $ 30 $ 29 $ - $ 89 $ - $ -
Income taxes $ 7 $ 17 $ 17 $ 27 $ 68 $ 10 $ -
ATOI $ 19 $ 37 $ 36 $ 56 $ 148 $ 11 $ -
======================================================================
Alcoa and subsidiaries
Segment Information (unaudited), continued
(in millions)
Reconciliation of ATOI
to consolidated net
income: 1Q07 2Q07 3Q07 4Q07 2007 1Q08 2Q08
------ ------ ------ ------ ------- ----- -----
Total segment ATOI $ 948 $ 991 $ 678 $ 518 $3,135 $666 $830
Unallocated amounts
(net of tax):
Impact of LIFO (27) (16) 10 9 (24) (31) (44)
Interest income 11 9 10 10 40 9 12
Interest expense (54) (56) (98) (53) (261) (64) (57)
Minority
interests (115) (110) (76) (64) (365) (67) (70)
Corporate expense (86) (101) (101) (100) (388) (82) (91)
Restructuring and
other charges (18) 21 (311) 1 (307) (30) (2)
Discontinued
operations (11) (1) (3) 8 (7) - -
Other 14 (22) 446 303 741 (98) (32)
----------------------------------------------------------------------
Consolidated net
income $ 662 $ 715 $ 555 $ 632 $2,564 $303 $546
======================================================================
The difference between certain segment totals and consolidated amounts
is in Corporate.
(1) In the first quarter of 2008, management approved a realignment
of Alcoa's reportable segments to better reflect the core
businesses in which Alcoa operates and how it is managed. This
realignment consisted of eliminating the Extruded and End
Products segment, and realigning its component businesses as
follows: the building and construction systems business is
reported in the Engineered Products and Solutions segment; the
hard alloy extrusions business and the Russian extrusions
business are reported in the Flat-Rolled Products segment; and
the remaining segment components, consisting primarily of the
equity investment/income of Alcoa's interest in the Sapa AB
joint venture, and the Latin American extrusions business, are
reported in Corporate. Additionally, the Russian forgings
business was moved from the Engineered Products and Solutions
segment to the Flat-Rolled Products segment, where total
Russian operations are now reported. Prior period amounts were
reclassified to reflect the new segment structure. Also, the
Engineered Solutions segment was renamed the Engineered
Products and Solutions segment.
(2) On February 29, 2008, Alcoa completed the sale of its packaging
and consumer businesses to Rank Group Limited. In the 2008
second quarter, Alcoa received regulatory and other approvals
for a small number of locations that did not close in the 2008
first quarter. There is only one remaining location that has
not yet transferred to Rank, but this transaction is expected
to close in the 2008 third quarter. Following the transfer of
this location, the Packaging and Consumer segment will no
longer contain any operations.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions)
Bloomberg Return on Capital (1) Bloomberg Return on Capital,
Excluding Growth Investments (1)
Twelve months ended Twelve months ended
June 30, June 30,
-------------------- -------------------
2007 2008 2007 2008
-------------------- -------------------
Net income $ 2,273 $ 2,036 Net income $ 2,273 $ 2,036
Minority Minority
interests 432 277 interests 432 277
Interest Interest
expense (after expense (after
tax) 270 267 tax) 270 267
-------------------- -------------------
Numerator $ 2,975 $ 2,580 Numerator 2,975 2,580
--------------------
Net losses of
growth
investments(3) 51 118
-------------------
Adjusted
numerator $ 3,026 $ 2,698
-------------------
Average Average
Balances Balances
Short-term Short-term
borrowings $ 451 $ 568 borrowings $ 451 $ 568
Short-term debt 359 352 Short-term debt 359 352
Commercial Commercial
paper 1,169 819 paper 1,169 819
Long-term debt 5,709 6,523 Long-term debt 5,709 6,523
Preferred stock 55 55 Preferred stock 55 55
Minority Minority
interests 1,809 2,502 interests 1,809 2,502
Common Common
equity(2) 15,571 16,712 equity(2) 15,571 16,712
-------------------- -------------------
Denominator $ 25,123 $ 27,531 Denominator 25,123 27,531
--------------------
Capital
projects in
progress and
capital base
of growth
investments(3) (4,521) (5,289)
-------------------
Adjusted
denominator $ 20,602 $ 22,242
-------------------
Return on
capital,
excluding
Return on growth
capital 11.8% 9.4% investments 14.7% 12.1%
Return on capital, excluding growth investments is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides greater insight with respect to the underlying operating performance of the company's productive assets. The company has significant growth investments underway in its upstream and downstream businesses, as previously noted, with expected completion dates over the next several years. As these investments generally require a period of time before they are productive, management believes that a return on capital measure excluding these growth investments is more representative of current operating performance.
(1) The Bloomberg Methodology calculates ROC based on the trailing
four quarters. Average balances are calculated as (June 2008
ending balance + June 2007 ending balance) divided by 2 for the
twelve months ended June 30, 2008, and (June 2007 ending
balance + June 2006 ending balance) divided by 2 for the twelve
months ended June 30, 2007.
(2) Calculated as total shareholders' equity less preferred stock.
(3) For all periods presented, growth investments include Russia,
Bohai, and Kunshan.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
Days of Working Capital Quarter ended
----------------------------
June 30, March 31, June 30,
2007 (a) 2008 2008
--------- --------- --------
Receivables from customers, less
allowances $ 2,991 $ 3,048 $ 3,063
Add: Inventories 3,216 3,679 3,813
Less: Accounts payable, trade 2,388 2,895 3,121
--------- --------- --------
Working Capital $ 3,819 $ 3,832 $ 3,755
Sales $ 8,066 $ 7,375 $ 7,620
Packaging and Consumer, Soft Alloy
Extrusions, and Auto Castings 1,309 497 19
--------- --------- --------
Adjusted Sales (b) $ 6,757 $ 6,878 $ 7,601
Days of Working Capital 51.4 50.7 45.0
Days of Working Capital = Working Capital divided by (Adjusted
Sales/number of days in the quarter)
(a) Certain financial information for the quarter ended June 30,
2007 was reclassified to reflect the movement of the automotive
castings and packaging and consumer businesses to held for sale
in the third quarter of 2007.
(b) Adjusted Sales is a non-GAAP financial measure and is being
used to calculate Days of Working Capital to be consistent with
the fact that the working capital components of the
above-mentioned divested businesses were classified as held for
sale, and, therefore, are not included in the Working Capital
amounts above.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
Third-party Sales
Quarter ended
------------------------------------------
June 30, March 31, June 30,
2007 2008 2008
------------- -------------- -------------
Alcoa $ 8,066 $ 7,375 $ 7,620
Divested businesses (a) 1,309 497 19
------------- -------------- -------------
Alcoa, excluding divested
businesses $ 6,757 $ 6,878 $ 7,601
============= ============== =============
Third-party sales excluding divested businesses is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding divested businesses since they are no longer reflective of Alcoa's continuing operations.
(a) Divested businesses include the businesses within the Packaging
and Consumer segment for all periods presented. For the quarter
ended June 30, 2007, divested also include the Soft Alloy
Extrusions and Automotive Castings businesses.
Source: Alcoa
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