EX-99.2 3 dex992.htm SLIDES PRESENTED DURING ALCOA INC. THIRD QUARTER 2010 EARNINGS CALL

Slides presented during Alcoa Inc. third quarter 2010 earnings call

3   Quarter 2010 Earnings Conference

October 7, 2010

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Exhibit 99.2

rd

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Forward-Looking Statements

Today’s

discussion

may

include

“forward-looking

statements”

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995.

Such

statements

relate

to

future

events

and

expectations

and

involve

known

and

unknown

risks

and

uncertainties.

Alcoa’s

actual

results

or

actions

may

differ

materially

from

those

projected

in

the

forward-looking

statements.

For

a

summary

of

the

specific

risk

factors

that

could

cause

results

to

differ

materially

from

those

expressed

in

the

forward-looking

statements,

please

refer

to

Alcoa’s

Form

10-K

for

the

year

ended

December

31,

2009,

Form

10-Q

for

the

quarters

ended

March

31,

2010,

June

30,

2010

and

other

reports

filed

with

the

Securities

and

Exchange

Commission.

2

Chuck McLane

Executive Vice President and Chief Financial Officer

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3   Quarter 2010

Financial Overview

Income

from

Continuing

Operations

of

$61

million,

or

$0.06

per

share.

Restructuring and other special items totaled $35 million, or $0.03 per share.

Revenue up 2% sequentially,

15% versus 3Q’09

Adjusted EBITDA of $602 million, 11% Margin

Free Cash Flow of $176 million

Cash Sustainability targets on track

Debt balance reduced by $491 million, extended debt maturity profile

Debt to Capital of 35.7%,

270 basis points lower sequentially

4

rd

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Revenue Change by Market

3%

(14%)

10%

10%

(2%)

5%

11%

(7%)

2%

(1%)

6%

24%

9%

49%

18%

(24%)

(10%)

27%

35%

24%

3Q’10 Third Party Revenue

Sequential

Change

Year-Over-Year

Change

5

14%

3%

7%

5%

4%

2%

14%

5%

14%

32%

Aerospace

Automotive

B&C

Comm. Transport

Industrial Products

IGT

Packaging

Distribution/Other

Alumina

Primary Metals

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Sequential Income Statement Summary

$ Millions

2Q’10

3Q’10

Change

Sales

$5,187

$5,287

$100

Cost of Goods Sold

$4,210

$4,413

$203

COGS % Sales

81.2%

83.5%

2.3 % pts.

Selling, General Administrative, Other

$208

$232

$24

SGA % Sales

4.0%

4.4%

0.4 % pts.

Restructuring and Other Charges

$30

$2

($28)

Effective Tax Rate

25.0%

(81.7%)

NA

Income from Continuing Operations

$137

$61

($76)

Income Per Diluted Share

$0.13

$0.06

($0.07)

6

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$ Millions

After-Tax & Non-

Controlling Interests

Earnings

Per Share

Income Statement

Classification

Segment

Restructuring

$1

Restructuring

Corporate

Discrete Tax Items

$38

Taxes

Corporate

Special Items:

($74)

Sao Luis Recovery Costs

($23)

Cost of Goods Sold

Alumina

Aviles Flood Impact

($13)

Revenue, COGS &

Other Income/Expense

Primary Metals

& Corporate

Debt Tender Offer

($9)

Interest Expense

Corporate

Mark-to-Market Derivatives

($29)

Other Income/Expense

Corporate

Total

($35)

($0.03)

3   Quarter Restructuring and Special Items

7

rd

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3   Quarter 2010 vs. 2   Quarter 2010

Earnings Bridge

Income from Continuing Operations excluding Restructuring & Special Items ($ millions)

8

See appendix for reconciliation

$139

($54)

$35

($28)

$13

($9)

$96

rd

nd

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Alumina

3   Quarter Highlights

4   Quarter Outlook

3   Quarter Business Conditions

9

3Q 09

2Q 10

3Q 10

Production (kmt)

3,614

3,890

4,047

3   Party Shipments (kmt)

2,191

2,264

2,423

3   Party Revenue ($MM)

530

701

717

ATOI ($MM)

65

94

70

-

Realized third-party alumina price down 5%

-

Negative currency impact of $26 million resulting

from weaker USD against Australian dollar

-

Higher production and equipment costs at Sao Luis

adversely impacted results by $25 million

-

Impact of tax rate change in Brazil of $42 million

-

Pricing to follow two-month lag on LME

-

Continued benefits from cash sustainability

initiatives

-

Production projected to increase 150 KMT

3   Quarter Performance Bridge

$ Millions

$94

$70

($24)

$15

($26)

$13

($19)

($25)

$42

rd

rd

rd

rd

rd

th

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Primary Metals

3    Quarter Highlights

3   Quarter Business Conditions

4   Quarter Outlook

10

3Q 09

2Q 10

3Q 10

Production (kmt)

881

893

891

3   Party Shipments (kmt)

698

699

708

3   Party Revenue ($MM)

1,362

1,710

1,688

3   Party Price ($/MT)

1,972

2,309

2,261

ATOI ($MM)

(8)

109

78

-

Realized pricing down 2% sequentially

-

Lower alumina and LME-linked power costs based

on quarter lag

-

Negative currency impact of $5 million

-

Cash sustainability initiatives offset increases in

raw material costs

-

Higher non-LME linked energy costs of $3 million

-

Pricing to follow 15-day lag to LME

-

Production expected to increase 25 KMT as

Aviles ramps-up

-

Continued productivity benefits from cash

sustainability initiatives

-

Expect higher carbon product costs

3   Quarter Performance Bridge

$ Millions

$109

($5)

($8)

$78

($31)

$5

($3)

$2

$9

rd

rd

rd

th

rd

rd

rd

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Flat Rolled Products

11

4   Quarter Outlook

3   Quarter Business Conditions

3   Quarter Highlights

ATOI  $ Millions

3Q 09

2Q 10

3Q 10

Flat Rolled Products,

excl Russia, China & Other

37

71

61

Russia, China & Other

(27)

0

5

Total ATOI

10

71

66

-

Higher volumes in Russia, North America, and

China

-

Tennessee fire negatively impacted quarter by

$3 million 

-

Russia profitable for second consecutive quarter

-

Continued strong demand in most regions offset by

normal seasonal declines in the North American

packaging business

-

Pricing and mix remain strong

-

Higher energy costs expected

-

Minimal impact expected from the Tennessee fire

3   Quarter Performance Bridge

$ Millions

$71

($1)

$18

$3 

$1

($19)

($7)

$66

rd

rd

rd

th

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Engineered Products and Solutions

3   Quarter Business Conditions

4   Quarter Outlook

3   Quarter Highlights

12

-

Seasonal impact from customer year-end

shutdowns

-

Continued benefits from cash sustainability

initiatives

$ Millions

3Q 09

2Q 10

3Q 10

3   Party Revenue

1,128

1,122

1,173

ATOI

75

107

114

Adjusted EBITDA % of

Revenue

13%

17%

18%

3   Quarter Performance Bridge

$ Millions

$107

($7)

$8

$1

$9

($4)

$114

rd

rd

rd

th

rd

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3   Quarter 2010 Cash Flow Overview

13

See appendix for free cash flow reconciliation

3Q’10 FCF

$176 million

$843 million

of cash

($ Millions)

3Q'09

2Q'10

3Q'10

Net Income

$124

$170

$109

DD&A

342

364

358

Change in Working Capital

100

(422)

213

Pension Contributions

(33)

(22)

(26)

Taxes / Other Adjustments

(349)

210

(262)

Cash From Operations

$184

$300

$392

Dividends to Shareholders

(30)

(31)

(31)

Change in Debt

(284)

35

(555)

Distributions to  Noncontrolling Interest

(14)

(41)

(41)

Contributions from Noncontrolling Interest

74

37

57

Other Financing Activities

0

3

(4)

Cash From Financing Activities

($254)

$3

($574)

Capital Expenditures

(370)

(213)

(216)

Other Investing Activities

646

(33)

(128)

Cash From Investing Activities

$276

($246)

($344)

Debt-to-Cap

at 35.7%

rd

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We Are Focused on Driving Shareholder Value

14

*Procurement reduction

of $2.5 billion

Overhead reduction of

$500 million

Capital expenditures of

$1.25 billion

Days Working Capital

reduction of 2 days

*Procurement and other productivity

Responding Rapidly

Tennessee hot mill

operational

Aviles ramping-up to

93kmt run-rate by year-

end

Sao Luis at 2.9 MMT run

rate; going to 3.5 MMT

run rate by year-end

Meeting Targets

New baseline

performance levels in

Flat Rolled and EPS

groups

Strengthened balance

sheet

FCF Positive

Driving Results

Klaus Kleinfeld

Chairman and Chief Executive Officer

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Market Conditions in 2010

Alcoa End Markets: Current Assessment of 2010 vs. 2009 Conditions

Source: Alcoa analysis

16

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1.6

0.9

10%

2010 Projected Primary Aluminum Consumption by Region (in mmt)

2010 Demand Growth Forecast at 13% Versus 2009

Russia

Brazil

Asia w/o China

North America

Europe

China

2009 vs. 2010

Projected Growth Rates

2010 Estimated

Consumption

-15%

-15%

-5%

16.5

4%

-5%

1.0

16%

*Other

7%

-2%

*Other consists of: Middle East, Latin America ex Brazil and Rest of World

39.6

2009

Actual

2010

Forecast

21%

17

Source: Alcoa Analysis

6%

2009 Global Demand Growth

Rate:  -6%

2010 Global Demand Growth

Rate 13%

(2010 ex China:  8%)

4%

6%

India

2.9

-15%

14%

0%

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0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

Midwest

Japan

Europe

Consumption Driving Inventory Decline & High Premiums

LME at 40

days

Non-LME at

19days

59 days of

consumption

18

Global

Inventories

4 Days Lower

vs. 2Q’10

$119 / MT

$192 / MT

$141 / MT

Regional Premiums Near All-Time Highs

Global Inventories Falling

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2010 Annualized Production (thru Aug)

24,090

Demand

(23,070)

Net Surplus

1,020

Exports to China, Net

(200)

Net Surplus

820

China

Western World

2010 Primary Aluminum Surplus Reduced By 180 KMT

2010 Annualized Production (thru July)

16,500

Demand

(16,500)

Imports from West, Net

200

Net Surplus

200

Surplus

Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI

19

Surplus

2010E Aluminum Supply / Demand Balance (in kmt)

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2010E Alumina Supply / Demand Balance (in kmt)

Source: Alcoa estimates, CRU, CNIA, IAI

Balanced

2010 Global Alumina in Balance

China

Western World

20

2010 Annualized Production

28,250

Imports from Western World

4,200

Supply

32,450

Demand

(32,000)

(Deficit) / Surplus

450

2010 Annualized Production

50,500

Exports to China

(4,200)

Supply

46,300

Demand 

(46,500)

(Deficit) / Surplus

(200)

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Continued Value Creation From The Alumina Leader

Alumina financial and strategic overview

Adjusted EBITDA  per Metric Ton

21

LME

Adjusted EBITDA/MT

100%

110%

95%

105%

Alcoa 3   Party Alumina Sales Price % LME

–

Sao Luis to reach full capacity by year-end

–

Record production in 2010

–

Unparalleled growth potential

–

Ma’aden, lowest cost refinery online in 2014

–

Current capacity of 18.1 MMT

Alcoa:  The Alumina Leader

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

72

62

44

48

68

75

110

104

81

20

48

1,549

1,447

1,350

1,433

1,719

1,900

2,570

2,641

2,572

1,664

2,116

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

Average =

~$70/MT

rd

Alcoa Logo

487

460

321

336

418

398

784

626

392

(159)

280

1,549

1,447

1,350

1,433

1,719

1,900

2,570

2,641

2,572

1,664

2,116

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

Driving Primary Metal To A New Profitability Level

Primary Metals financial and strategic overview

Adjusted EBITDA  per Metric Ton

LME

Adjusted EBITDA/MT

22

–

Optimizing smelter portfolio; reducing costs

–

Ma’aden, lowest cost smelter online in 2013

–

Improving cost curve position

Alcoa:  Poised For Profitable Growth

Average =

~$410/MT

Global Leader

Power To Grow

Lowering Cost

4.5 MMT of

Capacity

85% of Power

Secured Until 2025

Ma’aden

+185KMT

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Rolled Products Positioned to Substantially Improve Returns

Flat Rolled Products financial and strategic overview

Adjusted EBITDA & Adjusted EBITDA % Sales

23

573

541

495

479

531

620

536

498

254

224

413

Adjusted EBITDA $Millions

Adjusted EBITDA % Sales

YTD 2010 3   Party Sales by Market

80%

Utilization

11%

11%

11%

10%

9%

9%

6%

5%

3%

4%

9%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

Distribution

15%

Automotive

7%

B&C

5%

Commercial

Transport

5%

Industrial     

/Other

14%

Packaging

43%

Aerospace

11%

rd

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Aerospace

47%

IGT

11%

B&C

19%

Commercial

Transport

13%

Automotive

4%

Other

6%

EPS Strong Platform for Profitable Growth

Engineered Products & Solutions financial and strategic overview

Adjusted EBITDA & Adjusted EBITDA % Sales

24

368

436

287

356

495

536

676

783

922

630

559

Adjusted EBITDA $Millions

Adjusted EBITDA % Sales

YTD 2010 3   Party Sales by Market

70%

Utilization

65%

Utilization

11%

11%

8%

9%

12%

11%

12%

13%

15%

13%

17%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

rd

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Aggressively Pursuing 2010 Operational Targets

Procurement

Overhead

$500

Total Capex

$1,250

Working Capital

35

2010 Cash Sustainability Operational Targets and Actual Performance

$ Millions

$431

$785

42

$ Millions

$ Millions

Days Working Capital

$2,500

$2,154

2010

YTD

2010

Target

2010

YTD

2010

Target

2010

YTD

2010

Target

3Q’10

2010

Target

Procurement and other productivity  

Total Capex

includes investments in Ma’aden

project

25

1

2

2

1

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Alcoa Lives Its Values Every Day

26

Total Recordable Incident Rate

Lost Workday Incident Rate

Sustainability Leadership

9

th

Consecutive Year

Safety Incident Rate History and Significant Accreditations in 2010

Best Ever Safety Performance

Ranked Third of 339 Companies

Named to World & North American

Indexes

Alcoa Primary Aluminum Certified

3.86

3.57

2.26

2.03

1.85

1.48

1.40

1.50

1.42

1.32

1.30

0.29

0.31

0.19

0.19

0.13

0.13

0.11

0.15

0.14

0.15

0.09

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Alcoa Logo

Alcoa Is Driving Value Today And Over The Long-Term

27

–

Repositioned

Alcoa

driving growth and

profitability

–

Lean lessons

learned in

downturn

now

sustainable

practices

–

Disciplined execution

underlies all Alcoa

activities

–

Focus on driving

shareholder returns

Alcoa: Driving Value

Alcoa Performance Strengthening

(Adjusted EBITDA Margin)

20%

17%

15%

14%

15%

14%

19%

16%

12%

2%

13%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

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****************

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****************

**********

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Annual Sensitivity Summary

29

Currency Annual Net Income Sensitivity

+/-

10% versus USD

Australian $

+/-

$75 million

Brazilian

$

+/-

$50 million

Euro €

+/-

$40 million

Canadian $

+/-

$35 million

+/-

$100/MT = +/-

$200

million

LME Aluminum Annual Net Income Sensitivity

Alcoa Logo

Effective Tax Rate

Effective tax rate, excluding discrete tax items is a non-GAAP financial measure.  Management believes that the Effective tax rate, excluding

discrete tax items is meaningful to investors because it provides a view of Alcoa’s operational tax rate.

30

$ Millions

1Q’10

2Q’10

3Q’10

YTD’10

(Loss) income from continuing operations before income taxes

($88)

$228

$60

$200

Provision for income taxes

$84

$57

($49)

$92

Effective tax rate as reported

(95.5%)

25.0%

(81.7%)

46.0%

Discrete tax provisions:

Medicare Part-D

$79

--

$79

Transaction-related and other items

$33

($16)

($38)

($21)

Discrete tax items attributable to Noncontrolling Interest

($30)

($30)

Subtotal -

Discrete tax (benefits) provisions

$112

($16)

($68)

$28

(Benefit) Provision for income taxes excluding discrete tax (benefits) provisions

($28)

$73

$19

$64

Effective tax rate excluding discrete tax (benefits) provisions

31.8%

32.0%

31.7%

32.0%

Alcoa Logo

Reconciliation of ATOI to Consolidated Net (Loss) Income

Attributable to Alcoa

31

(in millions)

1Q09

2Q09

3Q09

4Q09

2009

1Q10

2Q10

3Q10

   Total segment ATOI

$   

(143)

$   

(132)

$    

142 

$    (101)

$   

(234)

$     306 

$     381 

$     328 

   Unallocated amounts (net of tax):

      Impact of LIFO

29

39

80

87

235

(14)

(3)

(2)

      Interest income

1

8

(1)

4

12

3

3

3

      Interest expense

(74)

(75)

(78)

(79)

(306)

(77)

(77)

(91)

      Noncontrolling interests

(10)

5

(47)

(9)

(61)

(22)

(34)

(48)

      Corporate expense

(71)

(70)

(71)

(92)

(304)

(67)

(59)

(71)

      Restructuring and other charges

(46)

(56)

(3)

(50)

(155)

(122)

(21)

1

      Discontinued operations

(17)

(142)

4

(11)

(166)

(7)

(1)

–

      Other

(166)

(31)

51

(26)

(172)

(201)

(53)

(59)

   Consolidated net (loss) income attributable to

Alcoa

$    (497)

$    (454)

$       77

$    (277)

$ (1,151)

$    (201)

$     136

$       61

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Reconciliation of Adjusted Income

32

(in millions)

Quarter ended

June 30,

2010

September 30,

2010

Net income

attributable to Alcoa

$     136  

$       61  

Loss from

discontinued

operations

        (1)

         –

Income from

continuing

operations

attributable to Alcoa

137

61

Restructuring and

other charges

20

(1)

Discrete tax items*

(16)

(38)

Special items**

        (2)

       74

Income from

continuing

operations

attributable to Alcoa

– as adjusted

$     139

$       96

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 special

items.  There can be no assurances that additional restructuring and other charges, discrete tax items, and 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 September 30, 2010, a benefit for the reversal of a valuation allowance related to net operating losses of an

international subsidiary that are now realizable due to a settlement with a tax authority ($41); a charge for a tax rate change in Brazil ($11); and a benefit for the recovery of a portion

of the unfavorable impact included in the quarter ended March 31, 2010 related to unbenefitted losses in Russia, China, and Italy ($8); and, for the quarter ended June 30, 2010, a

benefit for a change in a Canadian provincial tax law permitting tax returns to be filed in U.S. dollars ($24), a charge based on settlement discussions of several matters with

international taxing authorities ($18), and a benefit for the recovery of a portion of the unfavorable impact included in the quarter ended March 31, 2010 related to unbenefitted

losses in Russia, China, and Italy ($10).

** Special items include the following: for the quarter ended September 30, 2010, unfavorable mark-to-market changes in derivative contracts ($29), recovery costs associated with

the São Luís, Brazil facility due to a power outage and failure of a ship unloader in the first half of 2010 ($23), restart costs and lost volumes related to a June 2010 flood at the

Avilés smelter in Spain ($13), and a net charge for the early repayment of Notes set to mature in 2011 through 2013 due to the premiums paid under the tender offers and call

option (partially offset by gains from the termination of related in-the-money interest rate swaps) ($9); and, for the quarter ended June 30, 2010, favorable mark-to-market changes

in derivative contracts ($22), a charge for costs associated with the potential strike and successful execution of a new agreement with the USW ($13), and a charge related to an

unfavorable decision in Alcoa’s lawsuit against Luminant related to the Rockdale, TX facility ($7).

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Reconciliation of Free Cash Flow

33

Quarter 

ended

Nine months

ended

(in millions)

September 30,

2010

Cash provided from operations

$ 

   392

$     891

Capital expenditures

    (216)

    (650)

Free cash flow

$     176

$     241

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. 

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Reconciliation of Alcoa Adjusted EBITDA

34

($ in millions)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

3Q10

2010 YTD

Net income (loss)

attributable to

Alcoa

$  1,484

$     908

$     420

$     938

$  1,310

$  1,233

$  2,248

$  2,564

$      (74)

$ (1,151)

$       61

$        (4)

Add:

Net income

attributable to

noncontrolling

interests

306

205

181

212

233

259

436

365

221

61

48

104

Cumulative effect

of accounting

changes

5

–

(34)

47

–

2

–

–

–

–

–

–

(Income) loss from

discontinued

operations

(73)

5

101

–

27

50

(22)

250

303

166

–

8

Provision (benefit)

for income taxes

859

524

307

367

546

464

853

1,623

342

(574)

(49)

92

Other (income)

expenses, net

(136)

(295)

(175)

(278)

(266)

(478)

(236)

(1,920)

(59)

(161)

43

48

Interest expense

427

371

350

314

271

339

384

401

407

470

139

376

Restructuring and

other charges

      (1)

      530

      398

      (28)

      (29)

      266

      507

      268

      939

      237

      2

      219

Provision for

depreciation,

depletion, and

amortization

   1,123

   1,144

   1,037

   1,110

   1,142

   1,227

   1,252

   1,244

   1,234

   1,311

      358

   1,079

Adjusted Earnings

before interest,

taxes,

depreciation, and

amortization

(EBITDA)

$  3,994

$  3,392

$  2,585

$  2,682

$  3,234

$  3,362

$  5,422

$  4,795

$  3,313

$     359

$     602

$  1,922

Sales

$19,947

$19,906

$17,691

$18,879

$21,370

$24,149

$28,950

$29,280

$26,901

$18,439

$  5,287

$15,361

Adjusted

EBITDA/Sales

(Adjusted EBITDA

Margin)

20%

17%

15%

14%

15%

14%

19%

16%

12%

2%

11%

13%

Alcoa’s definition of Adjusted EBITDA 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.

Alcoa Logo

Reconciliation of Alumina Adjusted EBITDA

35

($ in millions)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 YTD

After-tax operating

income (ATOI)

$     585

$     471

$     315

$     415

$     632

$     682

$  1,050

$     956

$     727

$     112

$     236

Add:

Depreciation,

depletion, and

amortization

163

144

139

147

153

172

192

267

268

292

299

Equity (income) loss

(3)

(1)

(1)

–

(1)

–

2

(1)

(7)

(8)

(7)

Income taxes

      279

      184

      130

      161

      240

      246

      428

      340

      277

       (22)

       46

Other

       (12)

       (17)

       (14)

       (55)

       (46)

         (8)

         (6)

          2

       (26)

       (92)

         (2)

Adjusted Earnings

before interest,

taxes, depreciation,

and amortization

(EBITDA)

$  1,012

$     781

$     569

$     668

$     978

$  1,092

$  1,666

$  1,564

$  1,239

$     282

$     572

Production

(thousand metric

tons) (kmt)

13,968

12,527

13,027

13,841

14,343

14,598

15,128

15,084

15,256

14,265

11,803

Adjusted

EBITDA/Production

($ per metric ton)

72

62

44

48

68

75

110

104

81

20

48

Alcoa’s definition of Adjusted EBITDA 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 Logo

Reconciliation of Primary Metals Adjusted EBITDA

36

($ in millions)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 YTD

After-tax operating

income (ATOI)

$  1,000

$     905

$     650

$     657

$     808

$     822

$  1,760

$  1,445

$     931

$    (612)

$     310

Add:

Depreciation,

depletion, and

amortization

311

327

300

310

326

368

395

410

503

560

431

Equity (income) loss

(50)

(52)

(44)

(55)

(58)

12

(82)

(57)

(2)

26

(1)

Income taxes

      505

      434

      266

      256

      314

      307

      726

      542

      172

     (365)

        15

Other

       (41)

         (8)

       (47)

        12

        20

       (96)

       (13)

       (27)

       (32)

     (176)

         (6)

Adjusted Earnings

before interest,

taxes, depreciation,

and amortization

(EBITDA)

$  1,725

$  1,606

$  1,125

$  1,180

$  1,410

$  1,413

$  2,786

$  2,313

$  1,572

$    (567)

$     749

Production

(thousand metric

tons) (kmt)

3,539

3,488

3,500

3,508

3,376

3,554

3,552

3,693

4,007

3,564

2,673

Adjusted

EBITDA/Production

($ per metric ton)

     487

     460

     321

     336

     418

     398

     784

     626

     392

    (159)

     280

Alcoa’s definition of Adjusted EBITDA 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 Logo

Reconciliation of Flat-Rolled Products Adjusted EBITDA

37

($ in millions)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 YTD

After-tax operating

income (ATOI)

$     296

$     253

$     225

$     222

$     254

$     278

$     233

$     178

$        (3)

$      (49)

$     167

Add:

Depreciation,

depletion, and

amortization

153

167

184

190

200

220

223

227

216

227

173

Equity (income) loss

(3)

2

4

1

1

–

2

–

–

–

–

Income taxes

      126

      124

        90

        71

        75

      121

        58

        92

        35

        48

        72

Other

          1

         (5)

         (8)

         (5)

          1

          1

        20

          1

          6

         (2)

          1

Adjusted Earnings

before interest,

taxes, depreciation,

and amortization

(EBITDA)

$     573

$     541

$     495

$     479

$     531

$     620

$      536

$     498

$     254

$     224

$     413

Total sales

$  5,167

$  4,868

$  4,571

$  4,768

$  6,042

$  7,081

$  8,610

$  9,597

$  9,184

$  6,182

$  4,786

Adjusted

EBITDA/Total sales

11%

11%

  11%

10%

9%

9%

6%

5%

3%

4%

9%

Alcoa’s definition of Adjusted EBITDA 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 Logo

Reconciliation of Engineered Products and Solutions

Adjusted EBITDA

38

($ in millions)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

3Q09

2Q10

3Q10

2010

YTD

After-tax operating

income (ATOI)

$     125

$     189

$       63

$     124

$     156

$     271

$     365

$     435

$     533

$     315

$       75

$     107

$     114

$     302

Add:

Depreciation,

depletion, and

amortization

165

186

150

166

168

160

152

163

165

177

41

38

37

116

Equity (income)

loss

(1)

–

–

–

–

–

6

–

–

(2)

(1)

–

(1)

(2)

Income taxes

79

61

39

55

65

116

155

192

222

139

33

48

63

142

Other

–

–

35

11

106

(11)

(2)

(7)

2

1

2

–

1

1

Adjusted Earnings

before interest,

taxes,

depreciation, and

amortization

(EBITDA)

$     368

$     436

$     287

$     356

$     495

$     536

$      676

$     783

$     922

$     630

$     150

$     193

$     214

$     559

Total sales

$  3,386

$  4,141

$  3,492

$  3,905

$  4,283

$  4,773

$  5,428

$  5,834

$  6,199

$  4,689

$  1,128

$  1,122

$  1,173

$  3,369

Adjusted

EBITDA/Total

sales

11%

11%

8%

9%

12%

11%

12%

13%

15%

13%

13%

17%

18%

17%

Alcoa’s definition of Adjusted EBITDA 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.