This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Alcoa Inc. (AA: chart) on January 9, 2007.

Management:

Chairman and Chief Executive Officer: Alain Belda
Director of Investor Relations: Tony Thene
Executive Vice President and Chief Financial Officer: Charles McLane

Key Investors Issues

- EPS were 75 cents a share compared to 41 cents a share last year.
- Net income was $632 million, up from $359 million a year ago.
- Revenue fell to $7.39 billion from $7.84 billion a year ago.

Second Quarter Highlights

In November, global days of consumption on reported stocks decreased to just under 25 days, 3 days lower than a year ago thereby remaining at historic lows.

Weaker market conditions, particularly those in North America and Europe had a negative impact on results. Aerospace businesses continue to be negatively impacted by supply-chain de-stocking as the industry caught up to demand in the second half of the year.

The non-residential building and construction market remained strong in spite of the prevailing uncertainty in the credit market, and the decline of select new projects in the second half of the year.

Duty industrial turbine build rates have been on a steady path of recovery since 2004, primarily driven by increased power demand in Europe, the Middle East and Asia.

Income from continuing operations was $624 million, or 74 cents per share.

Included in the results are restructuring adjustments and a tax benefit totaling $323 million or 38 cents per share, almost all of which stems from the recent agreement to sell the Packaging business.

Taxes were lower than anticipated as the company will be selling a combination of assets, plus the shares of stock in subsidiaries, versus the originally anticipated asset sale. This will allow including a portion of the associated goodwill in tax basis.

The combined financials of the transactions are now as follows:

- $2.7 billion sales price;
- $268 million, or 31 cents per share net loss;
- Approximately $100 million in anticipated cash taxes.

Revenue was $7.4 billion.

- Cash from operations was $643 million on the back of a strong working capital performance.
- Debt to capital currently stands at 30.2%.
- The company continues to exceed the cost of capital with an ROC of 12.7%.

COGS as a percent of revenue was up 330 basis points sequentially, primarily due to decreased price and higher energy costs.

- SG&A was up, largely driven by the seasonal increase in marketing expenses for the Packaging segment.
- Interest expense was down $70 million, due to the elimination of debt issuance costs associated with the Alcan bid.
- The effective tax was a negative 44.8% which includes the previously mentioned tax benefit associated with the sale of the Packaging and Consumer businesses.

The company is experiencing cost increase for key input items such as freight, caustic and carbon, as well as continuing rising energy costs.