ALI: Alcoa Inc: Alcoa Reports Fourth Quarter Income From Continuing Operations of $0.21 Per Share; Income of $0.06 Per Share

  ALI: Alcoa Inc: Alcoa Reports Fourth Quarter Income From Continuing
  Operations of $0.21 Per Share; Income of $0.06 Per Share Excluding Special
  Items

UK Regulatory Announcement

  Company Ends 2012 in Strong Liquidity Position; Record Results in Mid and
                                  Downstream

        Forecasting 7 Percent Growth in Global Aluminum Demand in 2013

4Q 2012 Highlights

  *Income from continuing operations of $242 million, or $0.21 per share;
    excluding special items, income from continuing operations of $64 million,
    or $0.06 per share
  *Revenue of $5.9 billion, up 1 percent sequentially, down 2 percent from 4Q
    2011
  *Cash from operations of $933 million, up $670 million from 3Q 2012
  *Free cash flow of $535 million
  *Strong liquidity with cash on hand of $1.9 billion
  *Record low 24 days working capital
  *Record results in Global Rolled Products, Engineered Products & Solutions
  *Forecasting 7 percent growth in global aluminum demand in 2013

Full-Year 2012 Highlights

  *Income from continuing operations of $191 million, or $0.18 per share;
    excluding special items, income from continuing operations of $262
    million, or $0.24 per share
  *Revenue of $23.7 billion, down 5 percent from 2011, on lower LME pricing
  *Cash from operations of $1.5 billion
  *Free cash flow of $236 million
  *Debt-to-capital ratio 35 percent; Net debt-to-capital ratio 30 percent
  *Debt of $8.8 billion; Net debt of $7 billion, lowest level since 2006
  *Record results in Global Rolled Products, Engineered Products & Solutions
  *531,000 metric tons of smelting capacity taken offline to improve
    competitive position

LONDON

Alcoa (NYSE:AA) today reported income from continuing operations of $242
million, or $0.21 per share, in fourth quarter 2012. Excluding the net
positive impact of special items, income from continuing operations was $64
million, or $0.06 per share.

Fourth quarter 2012 income compares to a loss from continuing operations of
$143 million in third quarter 2012, and a loss of $193 million in fourth
quarter 2011.

For the full-year 2012, Alcoa reported income from continuing operations of
$191 million, or $0.18 per share, compared with $614 million, or $0.55 per
share, in 2011. Year-on-year the realized aluminum price fell 12 percent,
equating to roughly $1 billion in market impact.

Despite low aluminum prices, Alcoa generated full-year income and met all of
its cash sustainability targets for the fourth consecutive year, ending 2012
in a strong cash position. The Company delivered $1.3 billion in productivity
and overhead improvements, reduced days working capital by three days, and
ended the year in a strong liquidity position with net debt at its lowest
level since 2006 and $1.9 billion cash on hand.

“Alcoa hit record profitability in our mid and downstream businesses, and
continued to drive efficiency in our upstream businesses in the fourth
quarter, all while cutting debt and maintaining our cash position,” said Klaus
Kleinfeld, Alcoa Chairman and Chief Executive Officer.

“We overcame volatile metal prices and global economic instability to deliver
on our targets for the fourth year in a row. We enter 2013 in a strong
position to maximize profitable growth.”

In 2013, Alcoa sees global aluminum demand growth of 7 percent, up from 6
percent in 2012 and ahead of the 6.5 percent rate required to meet the
Company’s forecast of a doubling in global aluminum demand between 2010 and
2020. Aluminum demand grew 10 percent in 2011 on top of 13 percent growth in
2010.

In 2013, Alcoa projects global growth in the aerospace (9-10 percent),
automotive (1-4 percent), commercial transportation (2-7 percent), packaging
(2-3 percent), building and construction (4-5 percent), and industrial gas
turbine (3-5 percent) markets.

Fourth Quarter 2012

Alcoa reported fourth quarter 2012 net income of $242 million, or $0.21 per
share, compared to a net loss of $143 million, or $0.13 per share, in third
quarter 2012 and $191 million, or $0.18 per share, in fourth quarter 2011.
Adjusted EBITDA in fourth quarter 2012 was $597 million, an increase of $315
million over third quarter 2012 and an increase of $152 million over fourth
quarter 2011.

Special items in fourth quarter 2012 delivered a net gain of $178 million,
primarily associated with the closing of the Tapoco Hydroelectric Project
asset sale, which resulted in a $161 million after-tax gain. Another $78
million in gains, including those associated with discrete income tax items
and the positive impact of mark-to-market changes on certain energy contracts,
were mostly offset by the negative impact of restructuring, primarily related
to plant curtailments and asset impairments, and the Massena, New York site
fire.

Revenue for fourth quarter 2012 was $5.9 billion, up 1 percent compared with
third quarter 2012, but down 2 percent compared with fourth quarter 2011
revenue of $6 billion.

Sequentially, the higher fourth quarter revenues were primarily due to
improved realized pricing for aluminum (up 5 percent).

Alcoa delivered outstanding results across all businesses in the fourth
quarter. Alcoa’s Primary Metals business delivered After-Tax Operating Income
(ATOI) of $316 million in the fourth quarter, up $348 million over fourth
quarter 2011 despite a 2 percent drop in realized metal prices. Fourth quarter
2012 ATOI was favorably impacted by the closing of the Tapoco asset sale. At
the end of fourth quarter 2012, Global Primary Products had moved down the
smelting cost curve by 4 percentage points.

The Company’s midstream and downstream businesses continued to turn in record
performance, hitting new profitability highs. Global Rolled Products achieved
record fourth quarter ATOI of $69 million, up $43 million year-on-year, and
record fourth quarter adjusted EBITDA per metric ton of $344. Engineered
Products and Solutions delivered record fourth quarter ATOI of $137 million,
up 12 percent year-on-year, and achieved record fourth quarter adjusted EBITDA
margin of 17.7 percent, the fourth consecutive quarter a year-over-year record
was established.

Alcoa ended the quarter with strong cash results. The Company generated $535
million in free cash flow in the quarter, with cash from operations of $933
million, up $670 million sequentially. Alcoa also maintained its strong
liquidity position, ending the quarter with cash on hand of $1.9 billion.

Following the record low in days working capital achieved in each quarter
throughout 2012, the Company also achieved an all-time low for the fourth
quarter at 24 days, three days lower than the previous fourth quarter record
set in 2011, and 19 days lower than fourth quarter 2008. This is the 13th
successive quarter the Company has demonstrated year-over-year improvement.

In fourth quarter 2012, the debt-to-capital ratio stood at 34.8 percent, 130
basis points lower than the sequential quarter, while net debt-to-capital
stood at 29.7 percent.

2012 Full-Year

For the year 2012, revenue was $23.7 billion, compared to $25 billion in 2011.
Income from continuing operations was $191 million, or $0.18 per share, in
2012 compared with $614 million, or $0.55 per share, in 2011. Excluding the
impact of special items, income from continuing operations was $262 million,
or $0.24 per share, for 2012, compared to $812 million, or $0.72 per share,
for 2011.

Full-year 2012 net income was $191 million, or $0.18 per share, compared to
$611 million, or $0.55 per share, in 2011.

Alcoa’s midstream and downstream businesses achieved record performance in
2012 with ATOI of $358 million and $612 million, respectively. Adjusted EBITDA
per metric ton for Global Rolled Products was a full-year record at $390, 66
percent higher than the 10-year average and 19 percent higher than 2011.
Engineered Products and Solutions ended the year with a record annual adjusted
EBITDA margin of 19.2 percent, more than double where it was 10 years ago.

Alcoa turned in strong performance against its financial targets in 2012,
delivering strong cash results in a challenging market. Despite a drop in both
realized alumina prices and realized aluminum prices year-on-year, and $561
million in cash contributions to the pension plan, the Company generated $1.5
billion in cash from operations and $236 million of free cash flow in 2012. At
the same time, Alcoa reduced net debt by over $450 million to its lowest level
since 2006 ($7 billion), while maintaining a strong cash position of $1.9
billion.

Alcoa ended 2012 with a debt-to-capital ratio of 34.8 percent, within its 30
to 35 percent target range.

Alcoa exceeded its productivity and overhead target for 2012, delivering $1.3
billion in productivity and overhead improvements, 52 percent more than
target.

Capital spending for 2012 was $1.26 billion, $89 million below the annual
target. For the year, capital expenditures and cash investment in the Saudi
Arabia joint venture were approximately $1.4 billion, more than $270 million
below the 2012 target.

Sustainable improvements in days working capital reached an all-time low of 24
days. This reflects a year-over-year improvement of 3 days, twice Alcoa’s
target of 1.5 days.

Alcoa has taken significant action in the past four years to protect its
investment grade rating and is in a stronger financial position today than
2008. Through a disciplined approach to capital spending and focus on
liquidity in the past four years, the Company has generated $5 billion in
productivity gains, reduced working capital by 19 days, contributed stock to
the pension plan two of the last four years, and successfully monetized
assets.

In addition, Alcoa has taken action to manage its debt maturity schedule.
Excluding 2014 convertible debt, bond maturities have been minimized to $422
million over the next four years.

Alcoa has now completed its planned closure or curtailment of 531,000 metric
tons, or 12 percent, of its highest-cost system smelting capacity, further
improving the Company’s competitive position.

Segment Information

Alumina

ATOI in the fourth quarter was $41 million, up $50 million sequentially and
down $84 million from fourth quarter 2011. The sequential increase was driven
by continued productivity gains and positive London Metal Exchange (LME)-based
pricing, somewhat offset by a slower rise in Alumina Price Index-pricing.

Primary Metals

ATOI in the fourth quarter was $316 million, up sequentially from negative $14
million, and up from negative $32 million in fourth quarter 2011. The $330
million sequential improvement was driven primarily by the closing of the
Tapoco Hydroelectric Project asset sale, productivity gains within the
segment, and positive LME-based pricing. Third-party realized price in the
fourth quarter was $2,325 per metric ton, up 5 percent sequentially, but down
2 percent year-on-year.

Global Rolled Products

ATOI in the fourth quarter was $69 million, down from $98 million in the third
quarter of 2012, but up from $26 million in fourth quarter 2011, a 165 percent
year-on-year improvement. Sequentially, seasonal volume declines in packaging
were somewhat offset by productivity improvements. The $43 million
year-on-year improvement was driven by volume, productivity gains, and better
price and mix, somewhat offset by cost increases. Global Rolled Products had
record fourth quarter ATOI and adjusted EBITDA per metric ton. Days working
capital was a record at 30 days, an improvement of 8 days compared with fourth
quarter 2011.

Engineered Products and Solutions

ATOI in the fourth quarter was $137 million, down $23 million sequentially and
up $15 million, or 12 percent, year-on-year. Sequentially, cost increases and
unfavorable volume and price/mix were somewhat offset by continued
productivity improvements. The year-on-year improvement was driven primarily
by productivity gains, partially offset by cost increases.

Alba Update

Alcoa is actively negotiating with the Department of Justice (DOJ) and the
Securities and Exchange Commission (SEC) to reach a resolution of their
investigations of the Alba matter; however, we have not reached any agreement
with either agency. Given the uncertainty regarding whether a settlement can
be reached and, if reached, on what terms, we are not able to estimate a range
of reasonably possible loss with regard to any such settlement. If a
settlement of the government investigations is reached, we believe that the
settlement amount would be material to Alcoa’s results of operations for the
relevant fiscal period. If a settlement cannot be reached, Alcoa will proceed
to trial with the DOJ and the SEC and under those circumstances is unable to
predict an outcome or to estimate its reasonably possible loss. There can be
no assurance that the final outcome of the government’s investigations will
not have a material adverse effect on Alcoa.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
January 8, 2013 to present the quarter and full-year 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’s leading producer of primary and fabricated aluminum, as
well as the world’s largest miner of bauxite and refiner of alumina. In
addition to inventing the modern-day aluminum industry, Alcoa innovation has
been behind major milestones in the aerospace, automotive, packaging, building
and construction, commercial transportation, consumer electronics and
industrial markets over the past 125 years. Among the solutions Alcoa markets
are flat-rolled products, hard alloy extrusions, and forgings, as well as
Alcoa® wheels, fastening systems, precision and investment castings, and
building systems in addition to its expertise in other light metals such as
titanium and nickel-based super alloys. Sustainability is an integral part of
Alcoa’s operating practices and the product design and engineering it provides
to customers. Alcoa has been a member of the Dow Jones Sustainability Index
for 11 consecutive years and approximately 75 percent of all of the aluminum
ever produced since 1888 is still in active use today. Alcoa employs
approximately 61,000 people in 31 countries across the world. For more
information, visit www.alcoa.com and follow @Alcoa on Twitter at
twitter.com/Alcoa.

Forward-Looking Statements

This release contains statements that relate to future events and expectations
and as such constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include those containing such words as “anticipates,” “expects,” “forecasts,”
“goal,” “outlook,” “plans,” “projects,” “should,” “targets,” “will,” or other
words of similar meaning. All statements that reflect Alcoa’s expectations,
assumptions or projections about the future other than statements of
historical fact are forward-looking statements, including, without limitation,
forecasts concerning global demand for aluminum, end market conditions, growth
opportunities for aluminum in automotive, aerospace, and other applications,
or other trend projections, targeted financial results or operating
performance, and statements about Alcoa’s strategies, outlook, and business
and financial prospects. Forward-looking statements are subject to a number of
known and unknown risks, uncertainties, and other factors and are not
guarantees of future performance. Important factors that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements include: (a) material adverse changes in aluminum
industry conditions, including global supply and demand conditions and
fluctuations in London Metal Exchange-based prices for primary aluminum,
alumina, and other products, and fluctuations in indexed-based and spot prices
for alumina; (b) deterioration in global economic and financial market
conditions generally; (c) unfavorable changes in the markets served by Alcoa,
including aerospace, automotive, commercial transportation, building and
construction, packaging, and industrial gas turbine; (d) the impact of changes
in foreign currency exchange rates on costs and results, particularly the
Australian dollar, Brazilian real, Canadian dollar, euro, and Norwegian
kroner; (e) increases in energy costs, including electricity, natural gas, and
fuel oil, or the unavailability or interruption of energy supplies; (f)
increases in the costs of other raw materials, including calcined petroleum
coke, caustic soda, and liquid pitch; (g) Alcoa’s inability to achieve the
level of revenue growth, cash generation, cost savings, improvement in
profitability and margins, fiscal discipline, or strengthening of
competitiveness and operations (including moving its refining and smelting
businesses down on the industry cost curves and increasing revenues in its
Global Rolled Products and Engineered Products and Solutions segments),
anticipated from its restructuring programs, productivity improvement, cash
sustainability, and other initiatives; (h) Alcoa’s inability to realize
expected benefits from newly constructed, expanded or acquired facilities or
from international joint ventures as planned and by targeted completion dates,
including the joint venture in Saudi Arabia or the upstream operations and
investments in hydropower projects in Brazil; (i) political, economic, and
regulatory risks in the countries in which Alcoa operates or sells products,
including unfavorable changes in laws and governmental policies, civil unrest,
and other events beyond Alcoa’s control; (j) the outcome of contingencies,
including legal proceedings, government investigations, and environmental
remediation; (k) the business or financial condition of key customers,
suppliers, and business partners; (l) changes in tax rates or benefits; (m)
adverse changes in discount rates or investment returns on pension assets; (n)
the impact of cyber attacks and potential information technology or data
security breaches; and (o) the other risk factors summarized in Alcoa’s Form
10-K for the year ended December 31, 2011, Forms 10-Q for the quarters ended
March 31, 2012, June 30, 2012 and September 30, 2012, and other reports filed
with the Securities and Exchange Commission. 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.


Alcoa and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share, share, and metric ton amounts)
                   
                     Quarter ended
                     December 31,       September 30,      December 31,
                     2011                2012                2012
Sales                $ 5,989             $ 5,833             $ 5,898
                                                             
Cost of goods sold
(exclusive of          5,228               5,266               4,968
expenses below)
Selling, general
administrative,        268                 234                 277
and other expenses
Research and
development            48                  51                  56
expenses
Provision for
depreciation,          367                 366                 362
depletion, and
amortization
Restructuring and      232                 2                   60
other charges
Interest expense       125                 124                 120
Other income, net     (40           )    (2            )    (345          )
Total costs and        6,228               6,041               5,498
expenses
                                                             
(Loss) income from
continuing             (239          )     (208          )     400
operations before
income taxes
(Benefit)
provision for         (74           )    (33           )    143           
income taxes
                                                             
(Loss) income from
continuing             (165          )     (175          )     257
operations
Income from
discontinued          2                 –                 –             
operations
                                                             
Net (loss) income      (163          )     (175          )     257
                                                             
Less: Net income
(loss)
attributable to       28                (32           )    15            
noncontrolling
interests
                                                             
NET (LOSS) INCOME
ATTRIBUTABLE TO      $ (191          )   $ (143          )   $ 242           
ALCOA
                                                             
AMOUNTS
ATTRIBUTABLE TO
ALCOA COMMON

SHAREHOLDERS:
(Loss) income from
continuing           $ (193          )   $ (143          )   $ 242
operations
Income from
discontinued          2                 –                 –             
operations
Net (loss) income    $ (191          )   $ (143          )   $ 242           
                                                             
EARNINGS PER SHARE
ATTRIBUTABLE TO
ALCOA COMMON

SHAREHOLDERS:
Basic:
(Loss) income from
continuing           $ (0.18         )   $ (0.13         )   $ 0.23
operations
Income from
discontinued          –                 –                 –             
operations
Net (loss) income    $ (0.18         )   $ (0.13         )   $ 0.23          
                                                             
Diluted:
(Loss) income from
continuing           $ (0.18         )   $ (0.13         )   $ 0.21
operations
Income from
discontinued          –                 –                 –             
operations
Net (loss) income    $ (0.18         )   $ (0.13         )   $ 0.21          
                                                             
Average number of
shares used to
compute:
Basic earnings per     1,064,363,032       1,067,000,575       1,067,197,166
common share
Diluted earnings       1,064,363,032       1,067,000,575       1,167,549,803
per common share
                                                             
Shipments of
aluminum products      1,280,000           1,317,000           1,280,000
(metric tons)
                                                                             


Alcoa and subsidiaries
Statement of Consolidated Operations (unaudited), continued
(in millions, except per-share, share, and metric ton amounts)
                                       
                                         Year ended
                                         December 31,
                                         2011               2012
Sales                                    $ 24,951            $ 23,700
                                                             
Cost of goods sold (exclusive of           20,480              20,486
expenses below)
Selling, general administrative, and       1,027               997
other expenses
Research and development expenses          184                 197
Provision for depreciation, depletion,     1,479               1,460
and amortization
Restructuring and other charges            281                 87
Interest expense                           524                 490
Other income, net                         (87           )    (341          )
Total costs and expenses                   23,888              23,376
                                                             
Income from continuing operations          1,063               324
before income taxes
Provision for income taxes                255               162           
                                                             
Income from continuing operations          808                 162
Loss from discontinued operations         (3            )    –             
                                                             
Net income                                 805                 162
                                                             
Less: Net income (loss) attributable      194               (29           )
to noncontrolling interests
                                                             
NET INCOME ATTRIBUTABLE TO ALCOA         $ 611              $ 191           
                                                             
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON
SHAREHOLDERS:
Income from continuing operations        $ 614               $ 191
Loss from discontinued operations         (3            )    –             
Net income                               $ 611              $ 191           
                                                             
EARNINGS PER SHARE ATTRIBUTABLE TO
ALCOA COMMON

SHAREHOLDERS:
Basic:
Income from continuing operations        $ 0.58              $ 0.18
Loss from discontinued operations         (0.01         )    –             
Net income                               $ 0.57             $ 0.18          
                                                             
Diluted:
Income from continuing operations        $ 0.55              $ 0.18
Loss from discontinued operations         –                 –             
Net income                               $ 0.55             $ 0.18          
                                                             
Average number of shares used to
compute:
Basic earnings per common share            1,061,039,969       1,066,650,500
Diluted earnings per common share          1,160,695,735       1,076,478,519
                                                             
Common stock outstanding at the end of     1,064,412,066       1,067,211,953
the period
                                                             
Shipments of aluminum products (metric     5,037,000           5,197,000
tons)
                                                                             

                                                               
Alcoa and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
                                                                  
                                                  December 31,   December 31,
                                                   2011           2012
ASSETS
Current assets:
Cash and cash equivalents                          $  1,939       $  1,861
Receivables from customers, less allowances of        1,571          1,322
$46 in 2011 and $39 in 2012
Other receivables                                     371            405
Inventories                                           2,899          2,825
Prepaid expenses and other current assets            933          1,328   
Total current assets                                 7,713        7,741   
                                                                  
Properties, plants, and equipment                     37,608         38,137
Less: accumulated depreciation, depletion, and       18,326       19,190  
amortization
Properties, plants, and equipment, net               19,282       18,947  
Goodwill                                              5,157          5,170
Investments                                           1,626          1,860
Deferred income taxes                                 3,546          3,738
Other noncurrent assets                              2,796        2,707   
Total assets                                       $  40,120     $  40,163  
                                                                  
LIABILITIES
Current liabilities:
Short-term borrowings                              $  62          $  53
Commercial paper                                      224            –
Accounts payable, trade                               2,692          2,692
Accrued compensation and retirement costs             985            1,058
Taxes, including income taxes                         438            389
Other current liabilities                             1,167          1,283
Long-term debt due within one year                   445          465     
Total current liabilities                            6,013        5,940   
Long-term debt, less amount due within one year       8,640          8,311
Accrued pension benefits                              3,261          3,746
Accrued other postretirement benefits                 2,583          2,603
Other noncurrent liabilities and deferred            2,428        3,056   
credits
Total liabilities                                    22,925       23,656  
                                                                  
EQUITY
Alcoa shareholders’ equity:
Preferred stock                                       55             55
Common stock                                          1,178          1,178
Additional capital                                    7,561          7,560
Retained earnings                                     11,629         11,689
Treasury stock, at cost                               (3,952  )      (3,881  )
Accumulated other comprehensive loss                 (2,627  )     (3,418  )
Total Alcoa shareholders' equity                     13,844       13,183  
Noncontrolling interests                             3,351        3,324   
Total equity                                         17,195       16,507  
Total liabilities and equity                       $  40,120     $  40,163  
                                                                             


Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)

                                                    Year ended
                                                     December 31,
                                                     2011         2012
CASH FROM OPERATIONS
Net income                                           $ 805          $ 162
Adjustments to reconcile net income to cash from
operations:
Depreciation, depletion, and amortization              1,481          1,462
Deferred income taxes                                  (181   )       (105   )
Equity (income) loss, net of dividends                 (26    )       2
Restructuring and other charges                        281            87
Net gain from investing activities – asset sales       (41    )       (321   )
Loss from discontinued operations                      3              –
Stock-based compensation                               83             67
Excess tax benefits from stock-based payment           (6     )       (1     )
arrangements
Other                                                  53             89
Changes in assets and liabilities, excluding
effects of acquisitions, divestitures, and foreign
currency translation adjustments:
(Increase) decrease in receivables                     (115   )       117
(Increase) decrease in inventories                     (339   )       96
Decrease (increase) in prepaid expenses and other      74             (49    )
current assets
Increase (decrease) in accounts payable, trade         394            (22    )
(Decrease) in accrued expenses                         (38    )       (97    )
Increase in taxes, including income taxes              118            15
Pension contributions                                  (336   )       (561   )
(Increase) in noncurrent assets                        (154   )       (13    )
Increase in noncurrent liabilities                    147          572    
CASH PROVIDED FROM CONTINUING OPERATIONS               2,203          1,500
CASH USED FOR DISCONTINUED OPERATIONS                 (10    )      (3     )
CASH PROVIDED FROM OPERATIONS                         2,193        1,497  
                                                                    
FINANCING ACTIVITIES
Net change in short-term borrowings (original          (31    )       (10    )
maturities of three months or less)
Net change in commercial paper                         224            (224   )
Additions to debt (original maturities greater         1,256          1,072
than three months)
Debt issuance costs                                    (17    )       (5     )
Payments on debt (original maturities greater than     (1,194 )       (1,589 )
three months)
Proceeds from exercise of employee stock options       37             12
Excess tax benefits from stock-based payment           6              1
arrangements
Dividends paid to shareholders                         (131   )       (131   )
Distributions to noncontrolling interests              (257   )       (95    )
Contributions from noncontrolling interests           169          171    
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES    62           (798   )
                                                                    
INVESTING ACTIVITIES
Capital expenditures                                   (1,287 )       (1,261 )
Acquisitions, net of cash acquired                     (240   )       –
Proceeds from the sale of assets and businesses        38             615
Additions to investments                               (374   )       (300   )
Sales of investments                                   54             31
Net change in restricted cash                          (4     )       87
Other                                                 (39    )      69     
CASH USED FOR INVESTING ACTIVITIES                    (1,852 )      (759   )
                                                                    
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH      (7     )      (18    )
EQUIVALENTS
Net change in cash and cash equivalents                396            (78    )
Cash and cash equivalents at beginning of year        1,543        1,939  
CASH AND CASH EQUIVALENTS AT END OF YEAR             $ 1,939       $ 1,861  
                                                                             


Alcoa and subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized prices; production and shipments in thousands of metric tons
[kmt])

               4Q11       2011        1Q12       2Q12       3Q12       4Q12       2012
Alumina:
Alumina
production       4,178       16,486       4,153       4,033       4,077       4,079       16,342
(kmt)
Third-party
alumina          2,378       9,218        2,293       2,194       2,368       2,440       9,295
shipments
(kmt)
Third-party    $ 847       $ 3,462      $ 775       $ 750       $ 764       $ 803       $ 3,092
sales
Intersegment   $ 620       $ 2,727      $ 617       $ 576       $ 575       $ 542       $ 2,310
sales
Equity (loss)  $ (2    )   $ 25         $ 1         $ 1         $ 2         $ 1         $ 5
income
Depreciation,
depletion, and $ 112       $ 444        $ 114       $ 114       $ 120       $ 107       $ 455
amortization
Income taxes   $ 33        $ 179        $ (1    )   $ (6    )   $ (22   )   $ 2         $ (27    )
After-tax
operating      $ 125     $ 607      $ 35      $ 23      $ (9    )  $ 41      $ 90     
income (ATOI)
                                                                                        
Primary
Metals:
Aluminum
production       962         3,775        951         941         938         912         3,742
(kmt)
Third-party
aluminum         805         2,981        771         749         768         768         3,056
shipments
(kmt)
Alcoa’s
average
realized price $ 2,374     $ 2,636      $ 2,433     $ 2,329     $ 2,222     $ 2,325     $ 2,327
per metric ton
of aluminum
Third-party    $ 1,991     $ 8,240      $ 1,944     $ 1,804     $ 1,794     $ 1,890     $ 7,432
sales
Intersegment   $ 633       $ 3,192      $ 761       $ 782       $ 691       $ 643       $ 2,877
sales
Equity loss    $ (3    )   $ (7     )   $ (2    )   $ (9    )   $ (5    )   $ (11   )   $ (27    )
Depreciation,
depletion, and $ 136       $ 556        $ 135       $ 133       $ 130       $ 134       $ 532
amortization
Income taxes   $ (37   )   $ 92         $ (13   )   $ (19   )   $ (19   )   $ 157       $ 106
ATOI           $ (32   )  $ 481      $ 10      $ (3    )  $ (14   )  $ 316     $ 309    
                                                                                        
Global Rolled
Products:
Third-party
aluminum         407         1,780        452         484         483         448         1,867
shipments
(kmt)
Third-party    $ 1,691     $ 7,642      $ 1,845     $ 1,913     $ 1,849     $ 1,771     $ 7,378
sales
Intersegment   $ 39        $ 218        $ 44        $ 44        $ 42        $ 33        $ 163
sales
Equity loss    $ (3    )   $ (3     )   $ (1    )   $ (2    )   $ (1    )   $ (2    )   $ (6     )
Depreciation,
depletion, and $ 58        $ 237        $ 57        $ 57        $ 57        $ 58        $ 229
amortization
Income taxes   $ 10        $ 104        $ 49        $ 43        $ 44        $ 31        $ 167
ATOI           $ 26      $ 266      $ 96      $ 95      $ 98      $ 69      $ 358    
                                                                                        
Engineered
Products and
Solutions:
Third-party
aluminum         53          221          58          59          53          52          222
shipments
(kmt)
Third-party    $ 1,355     $ 5,345      $ 1,390     $ 1,420     $ 1,367     $ 1,348     $ 5,525
sales
Equity income  $ –         $ 1          $ –         $ –         $ –         $ –         $ –
Depreciation,
depletion, and $ 39        $ 158        $ 40        $ 39        $ 39        $ 40        $ 158
amortization
Income taxes   $ 59        $ 260        $ 72        $ 77        $ 79        $ 69        $ 297
ATOI           $ 122     $ 539      $ 155     $ 160     $ 160     $ 137     $ 612    
                                                                                        
Reconciliation
of ATOI to
consolidated
net (loss)
income
attributable
to Alcoa:
Total segment  $ 241       $ 1,893      $ 296       $ 275       $ 235       $ 563       $ 1,369
ATOI
Unallocated
amounts (net
of tax):
Impact of LIFO   11          (38    )     –           19          (7    )     8           20
Interest         (81   )     (340   )     (80   )     (80   )     (81   )     (78   )     (319   )
expense
Noncontrolling   (28   )     (194   )     (5    )     17          32          (15   )     29
interests
Corporate        (71   )     (290   )     (64   )     (69   )     (62   )     (87   )     (282   )
expense
Restructuring
and other        (161  )     (196   )     (7    )     (10   )     (2    )     (56   )     (75    )
charges
Discontinued     2           (3     )     –           –           –           –           –
operations
Other           (104  )   (221   )   (46   )   (154  )   (258  )   (93   )   (551   )
Consolidated
net (loss)
income         $ (191  )  $ 611      $ 94      $ (2    )  $ (143  )  $ 242     $ 191    
attributable
to Alcoa
                                                                                                 

The difference between certain segment totals and consolidated amounts is in
Corporate.

                                                        
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(dollars in millions)
                                                             
                   Quarter ended                             Year ended
Adjusted           December      September     December      December       December
EBITDA Margin      31,         30,         31,           31,          31,
                   2011          2012          2012          2011           2012
                                                                            
Net (loss)
income             $ (191  )     $ (143  )     $ 242         $ 611          $ 191
attributable
to Alcoa
                                                                            
Add:
Net income                                                                     
(loss)
attributable                                                                   
to
noncontrolling       28            (32   )       15            194            (29    )
interests
(Income) loss                                                            
from
discontinued         (2    )       –             –             3              –
operations
(Benefit)
provision for        (74   )       (33   )       143           255            162
income taxes
Other income,        (40   )       (2    )       (345  )       (87    )       (341   )
net
Interest             125           124           120           524            490
expense
Restructuring
and other            232           2             60            281            87
charges
Provision for                                                             
depreciation,
depletion, and                                                         
amortization
                     367           366           362           1,479          1,460
                                                                            
Adjusted           $ 445        $ 282        $ 597        $ 3,260       $ 2,020  
EBITDA
                                                                            
Sales              $ 5,989       $ 5,833       $ 5,898       $ 24,951       $ 23,700
                                                                            
Adjusted             7.4   %       4.8   %       10.1  %       13.1   %       8.5    %
EBITDA Margin
                                                                                     

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to Sales
minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses; and
Provision for depreciation, depletion, and amortization. Adjusted EBITDA is a
non-GAAP financial measure. Management believes that this measure is
meaningful to investors because Adjusted EBITDA provides additional
information with respect to Alcoa’s operating performance and the Company’s
ability to meet its financial obligations. The Adjusted EBITDA presented may
not be comparable to similarly titled measures of other companies.

                                                     
                 Quarter ended                            Year ended
Free Cash        December      September     December     December       December
Flow             31,         30,         31,          31,          31,
                 2011          2012          2012         2011           2012
                                                                         
Cash from        $ 1,142       $  263        $ 933        $ 2,193        $ 1,497
operations
                                                                         
Capital           (486  )       (302 )      (398 )      (1,287 )      (1,261 )
expenditures
                                                                         
                                                                         
Free cash        $ 656        $  (39  )     $ 535       $ 906         $ 236    
flow
                                                                                  

Free Cash Flow is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because management reviews cash flows
generated from operations after taking into consideration capital expenditures
due to the fact that these expenditures are considered necessary to maintain
and expand Alcoa’s asset base and are expected to generate future cash flows
from operations. It is important to note that Free Cash Flow does not
represent the residual cash flow available for discretionary expenditures
since other non-discretionary expenditures, such as mandatory debt service
requirements, are not deducted from the measure.


Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions, except per-share amounts)

                Quarter ended          Year ended
Adjusted          December 31,             December 31,            December 31,
Income            2012                     2011                      2012
                  Income     Diluted     Income      Diluted    Income      Diluted
                               EPS                       EPS                       EPS
                                                                                   
Net income
attributable      $ 242        $  0.21     $  611       $  0.55     $  191       $  0.18
to Alcoa
                                                                                   
Loss from
discontinued       –                       (3  )                   –   
operations
                                                                                   
                                                                                      
Income from
continuing
operations          242           0.21         614          0.55         191          0.18
attributable
to Alcoa
                                                                                   
Restructuring
and other           54                         181                       73
charges
                                                                                   
Discrete tax        (58  )                     2                         (22 )
items*
                                                                                   
Other special      (174 )                   15                     20  
items**
                                                                                   
Income from
continuing
operations        $ 64           0.06     $  812         0.72     $  262         0.24
attributable
to Alcoa – as
adjusted
                                                                                      

Income from continuing operations attributable to Alcoa – as adjusted is a
non-GAAP financial measure. Management believes that this measure is
meaningful to investors because management reviews the operating results of
Alcoa excluding the impacts of restructuring and other charges, discrete tax
items, and other special items (collectively, “special items”). There can be
no assurances that additional special items will not occur in future periods.
To compensate for this limitation, management believes that it is appropriate
to consider both Income from continuing operations attributable to Alcoa
determined under GAAP as well as Income from continuing operations
attributable to Alcoa – as adjusted.

* Discrete tax items include the following:

  *for the quarter ended December 31, 2012, a benefit related to the interim
    period treatment of losses in jurisdictions for which no tax benefit was
    recognized during the nine months ended September 30, 2012 ($39); a
    benefit for a capital loss on an investment ($13); and a net benefit for
    other miscellaneous items ($6);
  *for the year ended December 31, 2012, a benefit for a capital loss on an
    investment ($13); a benefit as a result of including the then anticipated
    gain from the sale of the Tapoco Hydroelectric Project in the calculation
    of the estimated annual effective tax rate applied to the results for the
    nine months ended September 30, 2012 ($12); a charge related to prior year
    U.S. taxes on certain depletable assets ($8); and a net benefit for other
    miscellaneous items ($5); and
  *for the year ended December 31, 2011, charges for a tax rate change in
    Hungary and a tax law change regarding the utilization of net operating
    losses in Italy ($8); a charge related to the 2010 change in the tax
    treatment of federal subsidies received related to prescription drug
    benefits provided under certain retiree health benefit plans ($7); a net
    benefit for adjustments made related to the filing of 2010 tax returns in
    various jurisdictions ($5); and a net benefit for other miscellaneous
    items ($8).

** Other special items include the following:

  *for the quarter ended December 31, 2012, a gain on the sale of the Tapoco
    Hydroelectric Project ($161: $275 is included in the Primary Metals
    segment and $(114) is included in Corporate); a net favorable change in
    certain mark-to-market energy derivative contracts ($12); interest income
    on an escrow deposit ($8); and uninsured losses related to fire damage to
    the cast house at the Massena, NY location ($7);
  *for the year ended December 31, 2012, a gain on the sale of the Tapoco
    Hydroelectric Project ($161: $275 is included in the Primary Metals
    segment and $(114) is included in Corporate); a net increase in the
    environmental reserve related to the Grasse River remediation in Massena,
    NY, remediation at two former locations, East St. Louis, IL and Sherwin,
    TX, and two new remediation projects at the smelter sites in Baie Comeau,
    Quebec, Canada and Mosjøen, Norway ($133); a litigation reserve ($33);
    uninsured losses related to fire damage to the cast house at the Massena,
    NY location ($28); interest income on an escrow deposit ($8); and a net
    favorable change in certain mark-to-market energy derivative contracts
    ($5); and
  *for the year ended December 31, 2011, a net favorable change in certain
    mark-to-market energy derivative contracts ($36); a net charge comprised
    of expenses for the early repayment of Notes set to mature in 2013 due to
    the premiums paid under the tender offers and call option and gains from
    the termination of related “in-the-money” interest rate swaps ($32);
    uninsured losses, including costs related to flood damage to a plant in
    Pennsylvania caused by Hurricane Irene, ($25); a gain on the sale of land
    in Australia ($18); costs related to acquisitions of the aerospace
    fastener business of TransDigm Group Inc. and full ownership of
    carbothermic smelting technology from ORKLA ASA ($8); and the write off of
    inventory related to the permanent closure of a smelter in the U.S. ($4).


Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)

                             Quarter ended
Days Working Capital           December 31,   September 30,   December 31,
                               2011             2012              2012
                                                                  
Receivables from               $    1,571       $    1,619        $    1,322
customers, less allowances
Add: Deferred purchase             –               81               71
price receivable^*
Receivables from
customers, less                     1,571            1,700             1,393
allowances, as adjusted
Add: Inventories                    2,899            2,973             2,825
Less: Accounts payable,            2,692           2,590            2,692
trade
Working Capital                $    1,778       $    2,083        $    1,526
                                                                  
Sales                          $    5,989       $    5,833        $    5,898
                                                                  
Days Working Capital                27               33                24
                                                                       

Days Working Capital = Working Capital divided by (Sales/number of days in the
quarter).

* The deferred purchase price receivable relates to an arrangement to sell
certain customer receivables to a financial institution on a
recurring basis. Alcoa is adding back this receivable for the purposes of
the Days Working Capital calculation.

                              
                                 December 31, 2012
Net Debt-to-Capital              Debt-to-         Cash and        Net Debt-to-
                                 Capital        Cash          Capital
                                                  Equivalents
                                                                  
Total Debt
Short-term borrowings            $  53
Commercial paper                     –
Long-term debt due within            465
one year
Long-term debt, less amount        8,311  
due within one year
Numerator                        $   8,829        $   1,861       $  6,968
                                                                  
Total Capital
Total debt                       $   8,829
Total equity                       16,507 
Denominator                      $   25,336       $   1,861       $  23,475
                                                                  
                                                                  
Ratio                                34.8   %                        29.7    %
                                                                             

Net debt-to-capital is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because management assesses Alcoa’s
leverage position after factoring in available cash that could be used to
repay outstanding debt.

                                                                                 
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions, except per metric ton amounts)
                                                                                      
Segment                                                        Global Rolled          Engineered Products
Measures        Alumina                Primary Metals        Products              and
                                                                                      Solutions
                Quarter ended          Quarter ended         Quarter   Year       Quarter    Year
Adjusted                                                       ended      ended       ended       ended
EBITDA          September   December    September   December   December   December    December    December
                30,        31,         30,        31,        31,       31,         31,        31,
                2012        2012        2012        2012       2012       2012        2012        2012
                                                                                                  
After-tax
operating       $ (9    )   $ 41        $  (14  )   $ 316      $    69    $ 358       $ 137       $ 612
income (ATOI)
                                                                                                  
Add:
Depreciation,                                                                                
depletion,
and                                                                                          
amortization
                  120         107          130        134           58      229         40          158
Equity                                                                                     
(income) loss
                  (2    )     (1    )      5          11            2       6           –           –
Income taxes      (22   )     2            (19  )     157           31      167         69          297
Other            (1    )    (4    )     2        (423 )       –      (2    )    (7    )    (8    )
                                                                                                  
Adjusted        $ 86       $ 145      $  104     $ 195     $    160   $ 758      $ 239      $ 1,059 
EBITDA
                                                                                                  
Production                                         
(thousand
metric tons)                                       
(kmt)
                  4,077       4,079        938        912
                                                                                                  
                                               
Adjusted
EBITDA /                                       
Production ($
per metric                                     
ton)
                $ 21        $ 36        $  111      $ 214
                                                                                                  
                                                                           
Total
shipments                                                                  
(thousand
metric tons)                                                               
(kmt)
                                                                    465     1,943
                                                                                                  
                                                                         
Adjusted
EBITDA /                                                                 
Total
shipments ($                                                             
per metric
ton)                                                                     

                                                               $    344   $ 390
                                                                                                  
Total sales                                                                           $ 1,348     $ 5,525
                                                                                                  
Adjusted                                                                                               
EBITDA Margin
                                                                                        18    %     19    %
                                                                                                          

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to Sales
minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses; and
Provision for depreciation, depletion, and amortization. The Other line in the
table above includes gains/losses on asset sales and other nonoperating items.
Adjusted EBITDA is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because Adjusted EBITDA provides additional
information with respect to Alcoa’s operating performance and the Company’s
ability to meet its financial obligations. The Adjusted EBITDA presented may
not be comparable to similarly titled measures of other companies.

Alcoa
Investor Contact
Kelly Pasterick, 212-836-2674
or
Media Contact
Libby Archell, 212-836-2719

Contact:

Alcoa