Alcoa Inc. (AA)

Free Cash Flow to Equity (FCFE)

Alcoa Inc., FCFE calculation

USD $ in millions

12 months ended	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Net income (loss) attributable to Alcoa	191	611	254	(1,151)	(74)
Net (income) loss attributable to noncontrolling interests	(29)	194	138	61	221
Net noncash charges	1,260	1,647	1,582	1,357	1,865
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments	78	(249)	280	1,112	(911)
Cash provided from operations	1,500	2,203	2,254	1,379	1,101
Net change in short-term borrowings, original maturities of three months or less	(10)	(31)	(44)	(292)	583
Net change in commercial paper	(224)	224	–	(1,535)	–
Additions to debt, original maturities greater than three months	972	1,256	1,126	1,049	2,253
Debt issuance costs	(5)	(17)	(6)	(17)	(56)
Payments on debt, original maturities greater than three months	(1,489)	(1,194)	(1,757)	(156)	(204)
Capital expenditures	(1,261)	(1,287)	(1,015)	(1,617)	(3,413)
Free cash flow to equity (FCFE)	(517)	1,154	558	(1,189)	264

Item	Description	The company
FCFE	Free cash flow to equity is the cash flow available to Alcoa Inc.'s equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.	Alcoa Inc.'s FCFE increased from 2010 to 2011 but then declined significantly from 2011 to 2012.

Alcoa Inc., current P/FCFE

	Alcoa Inc.	Basic Materials
No. shares of common stock outstanding	1,069,326,205
Selected Financial Data (USD $)
Free cash flow to equity (FCFE) (in millions)	(517)
FCFE per share	-0.48
Current share price (P)	8.54
Ratio
P/FCFE	–	20.16

If company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.

Otherwise, if company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Alcoa Inc., P/FCFE calculation

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
No. shares of common stock outstanding¹	1,069,326,205	1,066,107,670	1,062,689,340	1,020,277,257	801,774,739
Selected Financial Data (USD $)
Free cash flow to equity (FCFE) (in millions)²	(517)	1,154	558	(1,189)	264
FCFE per share⁴	-0.48	1.08	0.53	-1.17	0.33
Share price^1, 3	9.32	10.28	17.52	13.61	6.75
P/FCFE, Comparison to Industry
Alcoa Inc.⁵	–	9.50	33.37	–	20.50
Industry, Basic Materials	21.28	13.97	24.06	37.27	15.01

¹ Data adjusted for splits and stock dividends.

³ Close price on the filing date of Alcoa Inc.'s Annual Report.

2012 Calculations

⁴ FCFE per share = FCFE ÷ No. shares of common stock outstanding
-517,000,000 ÷ 1,069,326,205 = -0.48

⁵ P/FCFE = Share price ÷ FCFE per share
= 9.32 ÷ -0.48 = –

Ratio	Description	The company
P/FCFE	Price to free cash flow to equity is cash valuation indicator of stockholders' equity.	Alcoa Inc.'s P/FCFE ratio declined from 2010 to 2011 and from 2011 to 2012.