Cash from operations was $592 million after a $206 million pension contribution.

- On a year-to-date basis, Alcoa achieved all-time highs and income from continuing operations, earnings per share, revenue and cash from operations.
- Debt-to-capital currently stands at 29%.
- The company continues to exceed the cost of capital with an ROC of 11.8%.
- Excluding all growth investments, return on capital stands at 14.6%.

The company took significant strides in executing on its portfolio strategy by monetizing the Chalco investment and by reaching decisions on the sale of the packaging and consumer business and the auto casting business. In addition, Alcoa has initiated significant restructuring plans for its AFL business. The net impact of these activities will give the company flexibility in its capital structure.

Even with the current cost pressures, Alcoa achieved a sequential net productivity increase of $13 million, predominantly in the downstream segments.

Energy costs were up $32 million sequentially, primarily in the upstream segments. The weakening of the U.S. dollar continues to play a significant role in operating results, increasing the cost of the company’s non-U.S. manufacturing base.

Sequentially, the following currency has appreciated against the U.S. dollar:

- Australian dollar 2%;
- Brazilian real 4%;
- Euro 2%;
- Canadian dollar 5%.

On a year-over-year basis:

- the Australian dollar was up 12%,
- the real 13%;
- the euro 8%;
- the C-dollar 7%.

The impact of seasonality across all downstream segments was $59 million and will be detailed as the company moves through the segments.

- On a one-month lag basis, the LME cash price was down $149 a ton, resulting in a sequential decrease of $135 million.
- Finally, the Chalco sale was equal to $1.14 billion in net earnings, or $1.30 per share.

Looking at 2007 versus 2006 year-to-date, unfavorable currency drove profitability down by roughly $100 million after tax.

- In addition, input costs have increased year over year.
- Coke, pitch, natural gas, fuel oil and ocean freight have all risen between 20% and 40%.

Revenues were impacted not just from lower LME prices but also from the formation of the joint venture of the company’s soft-alloy extrusion business.

The elimination of those revenues reduced quarterly sales by approximately $400 million. The income is now recorded as equity income and reported in the extruded and end product segment. The starting point is income from continuing operations of $558 million, or 64 cents per share.

Restructuring is essentially comprised of four components:

- The loss on the anticipated packaging and consumer sale is $604 million, $389 million of which relates to taxes. Alcoa has committed to sell this business in late ''07 or early ''08.
- The pre-tax charge for the anticipated loss on the sale was approximately $215 million. - In addition, there will be a tax charge associated with the non-deductibility of goodwill. - The after-tax loss in the sale of auto castings is $51 million. The company is currently working through a definitive agreement with the purchaser and anticipates closing that sale by the end of the year.

The AFL restructuring charge is $189 million.

- The charge consists of an impairment of goodwill totaling $93 million and a restructuring charge of $96 million associated with the reduction of workforce and plant closures.
- The company we took a charge on our Australian roll product assets of $11 million, all related to severance costs. The design is to significantly narrow the product lines to ensure profitability and returns in the future.

The majority of the Alcan transaction costs this quarter stemmed from the immediate amortization of the cost of the credit facility.