The company monetized its investment in Chalco. The book gain on the sale was $1.14 billion, or $1.30 per share. The discrete taxes are generated by the one-time German tax rate change as well as adjustments generated by the filing of the company’s 2006 U.S. return.

The company incurred incremental stock option expense as employees exercised legacy reload options during the quarter.

- These expenses were incremental to the normal amortization and they are non-cash in nature. Reload options have not been granted since ''03.
- The primary curtailment and start up costs include the impact of Rockdale, Tennessee, Iceland and Jamaica, as well as a one-time charge for bauxite mine development of $13 million.

Currency translation amounted to $34 million and the company also incurred $17 million in mark-to-market losses on metal hedge positions.

Alcoa hedges fixed price customer sales in the downstream to eliminate commodity price risk. Most of these hedges qualify for hedge accounting, but sales that don''t have firm volume commitments are subject to mark-to-market accounting. These charges are non-cash and are closed out and offset when the customer shipments are actually made. They have been immaterial in the previous two quarters of this year.

The reported effective tax rate for the quarter was 63%.

The most significant impact on the reported rate is driven by the non-deductibility of goodwill in the packaging and consumer business. The total book value, including the goodwill, would provide a marginal pretax loss on the anticipated transaction; however, when computing taxes, the book basis is reduced by the goodwill generating a gain and a tax on that gain. What you end up with is a tax cost on the loss which distorts the overall rate.

There''s also a difference between book taxes and cash taxes. The company can utilize ANT credit carryforwards and pension contributions, to name a couple, in order to mitigate its cash taxes. Once you pull out these restructuring and discrete items, you end up with an operational effective tax rate of approximately 29% for the full year.

The most significant takeaway from these detailed descriptions is that the operating results were not only impacted by currency, higher energy and seasonality, but that there were a host of transaction and unusual costs resident in the results. Looking ahead, many will either be completely eliminated or will materially diminish over the next two quarters.

Segment Results

For the alumina segment, ATOI decreased $61 million.

- The majority of the sequential decrease was driven by cost inflation, primarily energy, of $17 million; the impact of a weaker U.S. dollar; and decreased volume, primarily due to Hurricane Dean.
- In addition, there was a $9 million one-time technology fee received last quarter, not repeated and a one-time charge for bauxite mine development of $13 million.
- For the fourth quarter, the company anticipates a 2% to 3% increase in production, but pressure from fuel, oil and natural gas prices is expected to continue.

Sequentially primary metal''s ATOI decreased $179 million due to the following:

The LME cash price on a one-month lag decreased $149 a ton sequentially, while the Midwest premium decreased $13 a ton. An exaggerated decline drives the earnings sensitivity beyond its normal range.

Costs associated with bringing the Rockdale and Tennessee smelters back to full capacity were $29 million.

Iceland''s start-up costs for the quarter were $29 million. The third quarter was negatively impacted by seasonal energy of $13 million and currency, principally the euro, real and the Australian dollar.

Looking forward to the fourth quarter, the company anticipates Iceland start-up costs close to the same level as the third quarter.

The Rockdale and Tennessee smelters should be fully online by the end of the year, and therefore with lower associated costs.

Flat rolled products ATOI decreased 34% on a sequential basis.

The majority of the decrease was due to normal seasonality, plus a destocking of distributor inventories which adversely affected the shipment mix at the businesses in both the U.S. and Europe. The remainder was due to pre-operating costs at the Bohai mill. Looking forward, the management expects to see the destocking by distributors and overall market softness to continue to the fourth quarter.

The engineered solutions segment, excluding the AFL performance, again delivered outstanding results.