NEW YORK–(BUSINESS WIRE)–Alcoa (NYSE: AA) today announced first quarter 2008 income from continuing operations of $303 million, or $0.37 per diluted share, versus $624 million, or $0.74 per share in the fourth quarter of 2007. Excluding restructuring and tax impacts, income from continuing operations was $361 million or $0.44 per share, up 20 percent on a comparable basis from the prior quarter, which included a favorable restructuring adjustment and tax benefits totaling $323 million or $0.38 per share. First quarter 2007 income from continuing operations excluding restructuring and tax impacts was $691 million, or $0.79.

Three of four business segments achieved significant after-tax operating income (ATOI) increases from the fourth quarter of 2007, with segment ATOI up 42 percent excluding packaging. Earnings for the first quarter were compressed by higher input and energy costs, and the impact of a weaker U.S. dollar. Currency negatively impacted results by $68 million or $0.08 per share on a sequential basis, as the U.S. dollar deteriorated against most major currencies.

Net income for the quarter was $303 million, or $0.37. Net income was $632 million, or $0.75 in the fourth quarter of 2007 and $662 million, or $0.75 in the first quarter of 2007.

Revenues for the 2008 first quarter were $7.4 billion, flat from the previous quarter, but a six percent increase excluding the revenue of the packaging and consumer business, which was sold in February 2008. Fourth quarter 2007 revenues were $7.4 billion, and revenues were $7.9 billion in the first quarter of 2007.

“We have generated strong returns in the face of challenging economic conditions and three of our segments – primary, flat-rolled and engineered products and solutions – achieved substantial ATOI growth,” said Alain Belda, Alcoa Chairman and CEO. “Upstream margins were squeezed by higher energy costs and a weaker U.S. dollar, but the global market remains tight and prices are near historic highs, primarily driven by demand in Asia, especially China.

“Our engineered products and solutions business delivered its strongest quarter ever, driven by robust aerospace and industrial gas turbine sales and productivity improvements,” said Belda. “Market fundamentals remain strong and we are well positioned to boost returns when the North American and European economies rebound.”

Cost of goods sold as a percent of revenues was 79.9 percent, a 340 basis point improvement versus the fourth quarter of 2007.

The Company funded numerous growth investments in the quarter including the new Juruti bauxite mine and Sao Luis refinery in Brazil; the strategic investment with Chinalco in Rio Tinto plc; and the acquisition of two aerospace fastening companies. In the quarter, capital expenditures were $748 million, 60 percent of which was devoted to growth projects. In addition, the Company repurchased approximately 14 million shares in the first quarter of 2008 under its approved share re-purchase authorization.

The Company’s debt-to-capital ratio stood at 31.5 percent at the end of the quarter, within the Company’s target range. The Company’s 12-month trailing ROC stood at 10.7 percent at the end of the first quarter 2008, following significant growth investments. Excluding investments in growth, the Company’s ROC was 13.5 percent.

In any event, here’s a quick recap of the week’s events!

• 10/9: The market began reaching all time highs. The NASDAQ reached a 6.75 year new high while the Dow Jones and S&P hit new absolute highs.
• 10/11: The market began hitting new highs in the morning. Around the 14:00 EST sell block, a report was released stating Baidu (BIDU) may only meet, not exceed, expectations for this coming earnings report. That sent all of tech into a selling frenzy erasing gains within 15 minutes. The reaction appeared to stabilize toward the end of the trading day but the damage was done.

This week has quite a bit of the Dow Jones reporting coupled with options expiration week. From what I’ve learned in the past, I don’t think I’ll be investing any new funds this coming week since action is usually pinned at certain strike prices.

I’ve made an important decision regarding my portfolio. I’ve come to the conclusion that I’ve done well with options trading and as a result will focus more on options than common stock with my portfolio. So far the results have been promising but it could have been luck more than anything else. We’ll see what happens when the market begins to stabilize instead of lineally rise.

Although I’m focusing more on options plays, I’ve still found a need to diversify out of the tech sector. In addition to my favorite calls with EMC Corp. (EMC), I’ve included calls from Bank of America (BAC) and Ford (F). I tried to game the Alcoa (AA) earnings last week but that ended up as a wash so those options will most likely expire worthless. The same goes for the Micron Technology (MU) calls.

Yes, that percentage on my return is correct. To date, I have made a 183% return on my deposited investment. Granted, it’s not a complex calculation on ROI, but it helps set the tone for what I’ve accomplished so far. The margin in my account has helped boost some of my earnings which shows how margin can be useful if used properly.

Next week is going to be heavy on earnings. Remember that implied volatility on calls/puts for a single strike price will increase and decrease on those expectations. Play it safe!

Starting today, I’ll be taking submissions for the Twenty Something Finances blog carnival. This is the first time I’ll be hosting a blog carnival so I’d really appreciate it if you all could submit an article and show everyone that not all twenty something adults are as reckless with our paychecks as some think! We can discuss the blog carnival later this week! Good luck!

NEW YORK–(BUSINESS WIRE)–Alcoa (NYSE:AA):

Highlights:

• Income from continuing operations of $558 million, or $0.64 per share, a three percent increase from a year ago.
• Revenues of $7.4 billion.
• Board increases authorization to repurchase shares to 25 percent of outstanding shares, up from previously authorized 10 percent.
• Chalco sale and upcoming packaging and automotive castings sales to provide cash and flexibility to enhance shareholder value.
• Debt-to-capital stands at 29 percent.
• Trailing 12-month ROC stands at 11.8 percent including significant growth investments; excluding investments in growth, ROC is 14.6 percent.
• Quarterly results impacted by Chalco gain, restructuring and impairment charges, currency, seasonality, metal prices, higher energy costs and softening markets.

Alcoa (NYSE:AA) today reported third quarter income from continuing operations of $558 million, or $0.64 per diluted share. Third quarter income from continuing operations increased three percent from $540 million, or $0.62, in the third quarter of 2006. Income from continuing operations was $716 million, or $0.81, in the second quarter of 2007.

As a result of the Company’s strong capital structure and healthy cash flows, Alcoa’s Board of Directors has authorized the repurchase of up to 25 percent of the company’s outstanding common stock, or approximately 217 million shares. Under the earlier repurchase program, 43 million shares, or approximately five percent, had already been repurchased by the end of the third quarter, leaving the company with authorization to buy back approximately 174 million shares.

“The Chalco sale, combined with proceeds from the upcoming sales of our packaging and auto castings businesses, give us a strong balance sheet, increased flexibility to ramp-up share repurchases, and deliver greater shareholder value,” said Alcoa Chairman and CEO Alain Belda.

Net income for the third quarter of 2007 was $555 million, or $0.63, compared to $537 million, or $0.61, in the third quarter of 2006 and $715 million, or $0.81, in the 2007 second quarter. Third quarter results were impacted by the Chalco sale, charges associated with planned asset sales and restructuring, higher petroleum and energy costs, seasonality, lower metal prices and softness in the North American economy.

In the first nine months of 2007, net income was $1.93 billion, or $2.20, compared with $1.89 billion, or $2.16, in 2006. Year-to-date income from continuing operations was $1.95 billion compared with $1.90 billion in 2006.

Revenues for the quarter were $7.4 billion, compared with $7.6 billion in 2006 and $8.1 billion in the 2007 second quarter. This quarter’s results were primarily impacted by the exclusion of the company’s soft alloy extrusion business as a result of forming a joint venture with Sapa in June, lower metal prices, seasonality and softness in the North American markets.

“Macroeconomic drivers such as the weakening US dollar, higher petroleum costs, and market softness in North America impacted the quarter,” said Belda. “Despite these challenges, we have established all-time records for revenue, net income, earnings per share and cash from operations in the first nine months of the year,” added Belda.

Cash from operations for the quarter was $592 million, including the impact of approximately $200 million in contributions to the company’s pension plans. Year-to-date, cash from operations was $2.47 billion, including pension contributions.

Capital expenditures for the quarter were $941 million, with 66 percent dedicated to growth projects. Year-to-date, the company has invested $1.74 billion in growth projects, or 67 percent of capital expenditures.

The company’s debt-to-capital ratio at the end of the third quarter of 2007 stood at 29 percent, the lowest since 1999.

The Company’s trailing 12-month return on capital (ROC) stands at 11.8 percent including significant investments in growth projects and construction work in progress; excluding investments in growth and construction work in progress, ROC is 14.6 percent.

Segment and Other Results

Alumina – After tax operating income (ATOI) was $215 million, a decrease of $61 million, or 22 percent, from the prior quarter. System production decreased by a net of 24 kmt as production increases throughout the system offset much of the loss in Jamaica due to Hurricane Dean. Higher energy costs, the weakening US dollar and hurricane damages also impacted the quarter.

Primary Metals – ATOI was $283 million, down $179 million, or 39 percent, compared to the prior quarter. The ATOI decrease resulted from lower LME prices and premiums, unfavorable energy and currency, Iceland start-up costs and continued curtailment costs at Rockdale and Tennessee. Third-party realized metal prices decreased $145 per metric ton, or 5 percent, to $2,734 per ton. Primary metal production for the quarter increased 33 kmt to 934 kmt. The Company purchased approximately 58 kmt of primary metal for internal use as part of its strategy to sell value-added products.

Flat-Rolled Products – ATOI was $61 million, down $32 million, or 34 percent, from the prior quarter and up $13 million, or 27 percent, from the year ago quarter. The decrease in ATOI from the prior quarter was primarily due to seasonally lower volumes and unfavorable product mix.

Extruded and End Products – ATOI was $13 million, down $33 million from the prior quarter and down $3 million from the year ago quarter. The decrease from the prior quarter is primarily related to the soft alloy extrusion businesses for which no depreciation was recorded in the second quarter while the assets were held for sale. Additionally, these businesses were impacted by normal seasonality. The majority of the Company’s soft alloy extrusions business became part of the Sapa joint venture on June 1, 2007. The global hard alloy extrusions and building and construction systems business remained strong.

Engineered Solutions – ATOI was $60 million, down $45 million, or 43 percent, from the prior quarter and down $15 million, or 20 percent, from the year ago quarter. The 2007 third quarter results were impacted by normal seasonality and increased weakness in the automotive industry. In addition, a one-time inventory charge as part of restructuring our automotive business and a German tax rate change impacted the segment.

Packaging and Consumer – ATOI was $36 million, up $12 million, or 50 percent, from the year ago quarter and down one million, or three percent, from the prior quarter. On a sequential basis, productivity improvements offset most of the expected seasonal decline. The significant improvement over the prior year quarter was due to productivity gains across all businesses.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on October 9th to present the quarter’s results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under “Invest.”

Alcoa is the world’s leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa’s businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, structures and building systems. The company has 116,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

Forward Looking Statement

Certain statements in this release relate to future events and expectations, and as such constitute forward-looking statements involving known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Alcoa disclaims any intention or obligation, other than as required by law, to update or revise any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in global economic or aluminum industry conditions generally, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices for primary aluminum and other products; (b) material adverse changes in the markets served by Alcoa, including the packaging, transportation, distribution, building and construction, aerospace, industrial gas turbine and other markets; (c) Alcoa’s inability to implement successfully its strategy for growth or its productivity, cost-reduction or capital structure enhancement initiatives; (d) Alcoa’s inability to realize the full extent of the expected savings or benefits from its restructuring activities, to complete such activities in accordance with its planned timetable, or to assure that subsequent developments do not cause the actual charges to exceed the estimated charges; (e) changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (f) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (g) the other risk factors summarized in Alcoa’s Form 10-K for the year ended December 31, 2006, Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007, and other reports filed with the Securities and Exchange Commission.