MARCH 2010

Alcoa revenues up 18 percent in 2009, but still not profitable

Alcoa announced it finished its fourth quarter 2009 free cash flow positive, the first such quarterly achievement since the second quarter of 2008 when the economic downturn began to impact results. The Company is ahead of its key financial goals for 2009, including being free cash flow neutral by the end of the year. In the fourth quarter of 2009, Alcoa generated free cash flow of $761 million, a $947 million improvement from the third quarter of 2009 driven by strong cash from operations performance of $1.1 billion, a $940 million increase from the third quarter of 2009. The Company also surpassed targets for each of its Cash Sustainability Program initiatives in 2009, a major contributor to the strong cash performance.

The fourth quarter of 2009 showed a loss from continuing operations of $266 million, or $0.27 per share. The results include net charges for restructuring, special items and discrete tax items of $275 million, or $0.28 per share. The third quarter of 2009 had income from continuing operations of $73 million, or $0.07 per share. The fourth quarter of 2008 showed a loss from continuing operations of $929 million, or $1.16 per share.

Net income for the fourth quarter 2009 was a loss of $277 million, or $0.28 per share. Net income for the third quarter 2009 was $77 million, or $0.08 per share, and net income for the fourth quarter of 2008 was a loss of $1.19 billion, or $1.49 per share.

Revenues for the fourth quarter 2009 were $5.4 billion, an 18 percent increase from the third quarter of 2009. Revenues in the fourth quarter 2008 were $5.7 billion.

The Company reduced overhead by $412 million, more than 200 percent of the 2009 target. Procurement spending was reduced by $2 billion in 2009, $500 million above the target for the year. Reductions in working capital generated more than $1.3 billion in cash or more than $500 million above the 2009 target of $800 million.

Cash from operations in the quarter was $1.1 billion compared with $184 million in the third quarter of 2009 and $608 million in the fourth quarter of 2008. The Company finished the fourth quarter of 2009 with $1.5 billion of cash on hand. The Company’s debt-to-capital ratio stood at 38.6 percent at the end of the quarter, a 390 basis point improvement from a year ago. During the year, Alcoa reduced its total debt by $759 million from the end of 2008.

For the full year 2009, revenues were $18.4 billion, compared to $26.9 billion in 2008. Income from continuing operations for 2009 showed a loss of $985 million, or $1.06 per share, compared with income of $229 million, or $0.27 per share, in 2008. The full year 2009 showed a net loss of $1.15 billion, or $1.23 per share, compared to a net loss of $74 million, or $0.10 per share, in 2008.