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January 9, 2006

Alcoa Announces Annual Income from Continuing Operations of $1.23 Billion, or $1.40 per share; Highest Annual Revenues in Company History

NEW YORK--(BUSINESS WIRE)--Jan. 9, 2006--Alcoa (NYSE:AA):



Highlights:

-- Income from continuing operations of $1.23 billion, or $1.40 per share, for 2005;

-- Annual revenues increased 13 percent to an all-time record of $26.2 billion;

-- Progress executing upstream and downstream growth projects to build share in attractive growth markets;

-- Fourth quarter 2005 income from continuing operations of $210 million, or $0.24, including a net negative impact of $93 million, or $0.11;

-- Strong quarterly performance in alumina and primary metals with segment ATOI improving 17 and 44 percent respectively over third quarter;

-- Debt-to-capital ratio of 30.8 percent at year-end, within target range despite investments in aggressive growth strategy.

Alcoa (NYSE: AA) announced today that its 2005 income from continuing operations was $1.23 billion, or $1.40 per diluted share, as the company took action to partially mitigate $878 million in impacts from raw materials, energy, and other cost inflation.

For the fourth quarter, income from continuing operations was $210 million, or $0.24. Profitability was eroded by negative impacts totaling $93 million, or $0.11, including: lowered production at refineries in Jamaica and Texas due to the Gulf Coast hurricanes; an unplanned outage at the Portland, Australia smelter; the impact of strikes on operations at Spanish plants; restructuring costs for plant closings and layoffs; mark-to-market losses on metal and metal-related activities; and integration costs for the newly acquired facilities in Russia; partially offset by a favorable legal settlement for power costs. Income from continuing operations was $0.33 in the third quarter of 2005, and $0.39 in the fourth quarter of 2004.

"Entering 2005, we anticipated significant pressures from rising input, energy costs and other cost inflation, but actual increases were even higher, nearly $900 million for the year," said Alain Belda, Alcoa Chairman and CEO.

"To meet that challenge, we took aggressive action, passing through significant price increases to downstream customers, improving our mix of value-added products, continuing productivity gains, and lowering taxes. That management action helped offset cost pressures and drove the top-line to the highest level in Alcoa's 117-year history," said Belda. "In the year ahead, we don't foresee the same sharp spikes on input prices, and our initiatives will gain further momentum to offset inflation and improve the bottom line.

"As we enter 2006, the vast majority of our primary metal production will benefit from the highest metal prices in more than 15 years," Belda added. "And we are working to secure future growth in attractive markets with customers around the world."

Net income in the quarter was $224 million, or $0.26, compared to $289 million, or $0.33, in the previous quarter, and $268 million, or $0.30, in the fourth quarter of 2004.

Annual revenues climbed 13 percent to $26.2 billion, the highest in the company's history. Revenues for the fourth quarter rose approximately 12 percent compared to the fourth quarter of 2004, driven by higher metal prices and strength in the aerospace market.

Balance Sheet Overview

Cash from operations in the quarter was $1 billion, helping lower the company's debt to capital ratio to 30.8 percent at year's end, down from 31.5 percent in the third quarter. In addition to that, the company completed the sale of Southern Graphic Systems for $408 million in cash in the quarter.

For the year, cash from operations was $1.7 billion, including the impact of a discretionary $300 million contribution to the company's pension plans. Annual capital expenditures were $2.1 billion, primarily used to fund growth projects.

After excluding spending on growth projects, the company's return on capital for the year was 9.5 percent. Including those investments, the company's return on capital stood at 8.3 percent.

Update on Growth Projects

"We have the most aggressive growth strategy in the industry and the best growth projects around the world. We continue to achieve the highest returns in the industry, generating the cash we need to fund our growth and maintain a strong balance sheet," said Belda.

In addition to negotiations and feasibility studies underway in Trinidad, Ghana and Guinea, the company has a comprehensive array of growth projects that are moving ahead in refining, smelting and downstream, including:

Refining

Refining growth is focused on capturing Alcoa's unique advantage of multiple options to build low-capital cost brownfield expansions of existing low operating cost facilities:

-- Alumar refinery expansion - The expansion will add 2.1 million metric tons per year ("mtpy") in capacity, bringing the low-cost refinery's total capacity to 3.5 million metric tons. Work began this quarter and the expansion is expected to be completed by the first half of 2008. This project includes creation of a bauxite mine near Juruti in Para state, which will initially produce 2.6 million mtpy of bauxite to supply the expansion.

-- Pinjarra efficiency upgrade - The project will expand the low-cost Pinjarra refinery by 657,000 mtpy to more than 4.2 million mtpy. It is scheduled to be completed in the first quarter of 2006.

-- Jamalco expansion - The Company's Alcoa World Alumina and Chemicals (AWAC) affiliate plans to expand the refinery in Clarendon, Jamaica by 1.5 million mtpy, more than doubling the refinery's capacity to approximately 2.8 million mtpy.

Smelting

Growth development work includes greenfield and brownfield smelting projects utilizing globally competitive energy sources.

-- Alumar smelter expansion - The expansion will add 63,000 mtpy to 433,000 mtpy in total. Approximately 50 percent was completed in November 2005, and the remainder is scheduled to be finished by the end of the first quarter of 2006.

-- Alcoa Fjardaal in Iceland - The company continued progress building its first greenfield smelter in 20 years, which is now approximately 40 percent complete. The 346,000 mtpy smelter is on-schedule to produce its first metal in April 2007.

-- Mosjoen, Norway anode plant - Work to build a carbon plant together with Elkem, our partners in Norway, began in the third quarter 2004 and is expected to be completed in time to ramp-up to full production in parallel with Fjardaal in late 2007.

-- Warrick, Indiana power self-generation - The company began construction work to continue its ability to self-generate power to fuel its Warrick, IN smelter and rolling mill while lowering costs through an environmental upgrade. As part of this project the company purchased the rights to mine coal in nearby Friendsville, IL.

-- Modernization of Pocos de Caldas smelter - Initial work began to upgrade this Brazilian smelter with world-class environmental controls to lower emissions and costs, and improve operational efficiency.

-- Aviles, and La Coruna, Spain Soderberg modernizations - The Aviles modernization project is approximately 40 percent complete and is scheduled to be fully operational in the second quarter of 2007. La Coruna is scheduled to be completed in the second quarter of 2008.

Fabricating and Downstream Growth

Growth work is underway to expand the company's position and lower its costs in fabricating and downstream businesses:

-- Final approval from the Ministry of Commerce in China was received and the new joint venture was formed with China International Trust & Investment (CITIC), Alcoa's equity partner in Bohai Aluminum, to produce aluminum rolled products at the Bohai plant in Qinghuangdao, China. Alcoa anticipates having the expansion commissioned by 2008.

-- To serve customers in the aerospace market, the company is expanding its heat-treated sheet and plate capacity by 50 percent. The expansion is expected to be completed by the end of next year at plants in Davenport, Iowa USA; Kitts Green, UK; Fusina, Italy; and Belaya Kalitva, Russia.

-- Alcoa Fastening Systems business is creating two new 50,000 square-foot manufacturing sites in the Suzhou Industrial Park in China, 100 km from Shanghai, to support rapidly growing commercial aviation and railway/rail car production and sub-assembly in that market.

-- Continued integration of the recently acquired Belaya Kalitva and Samara plants in the Russian Federation. The plants have already begun the process of servicing North American automotive customers and have made additional progress to qualify products for key customers in the aerospace and commercial transportation markets.

Segment and Other Results

(all comparisons on a sequential quarter basis, unless noted)

Alumina - After-tax operating income ("ATOI") was $183 million, up 17 percent from the third quarter. Stronger overall shipments and higher pricing drove the result. Higher maintenance, energy and caustic soda costs negatively affected the segment by $18 million. Alumina production for the quarter was 3,706 thousand metric tons ("kmt"), compared to 3,688 kmt in the third quarter of 2005, with increases coming from the Western Australian operations.

Primary Metals - Segment ATOI increased by $74 million, or 44 percent, to $242 million largely due to higher metal prices and a favorable legal settlement related to power costs. Total shipments declined as the company purchased less primary metal for internal use. Purchases for the quarter were 164 kmt, down from 189 kmt in the third quarter. Primary metal production for the quarter was 900 kmt, down slightly from third quarter production of 904 kmt. Increased production from the Alumar expansion was offset by the outage at the Portland smelter. Third party realized metal prices increased $214 to $2,177 per ton. The mark-to-market impact on metal and metal-related activity is not recognized in the segment results.

Flat Rolled Products - ATOI for the segment decreased $19 million to $62 million. Strong productivity improvements and favorable aerospace mix were offset by raw material and energy cost increases, seasonally lower can sheet volumes, along with higher Russian losses. Aerospace demand remained strong.

Extruded and End Products - Seasonal declines in residential and commercial building and construction coupled with overall weak market conditions in soft alloy extrusions drove ATOI down by $26 million.

Engineered Solutions - ATOI for the segment increased to $45 million, up 41 percent, driven by continued strong performance from the Industrial Castings and Forged Products business, Fastening Systems and Wheel Products business. Product launch costs at AFL Automotive began to abate in the quarter.

Packaging and Consumer - Segment ATOI declined $8 million to $20 million in the quarter. The usual seasonal strength in the consumer products business was offset by higher raw material costs, largely hurricane related.

ATOI to Net Income Reconciliation

The largest variance in reconciling items was in the "other" line item. The sequential change in the "other" line item is related to higher LIFO cost, the gain on the sale of the railroad business in the third quarter, and the mark-to-market losses on metal and metal-related activity.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on January 9th to present the quarter's results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under "Invest."

About Alcoa

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 42 countries and has been named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

Forward Looking Statement

Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in economic or aluminum industry conditions generally, including global supply and demand conditions and prices for primary aluminum, alumina and other products; (b) material adverse changes in the markets served by Alcoa, including the transportation, building, construction, distribution, packaging, industrial gas turbine and other markets; (c) Alcoa's inability to achieve the level of cost savings, productivity improvements or earnings growth anticipated by management, whether due to significant increases in energy, raw materials or employee benefits costs, labor disputes or other factors; (d) Alcoa's inability to realize the full extent of the expected savings or benefits from its restructuring activities or to complete such activities in accordance with its planned timetable; (e) Alcoa's inability to complete its expansion projects and investment activities outside the U.S. as planned and by targeted completion dates, or to assure that the anticipated integration costs at its recently acquired Russian facilities will not exceed its estimates; (f) unfavorable changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (g) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (h) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2004, Forms 10-Q for the quarters ended March 31, 2005, June 30, 2005, and September 30, 2005 and other reports filed with the Securities and Exchange Commission.

Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share, and metric ton amounts)

                                           Quarter ended
                              December 31  September 30   December 31
                               2004 (a)        2005          2005
                             ------------- ------------- -------------
Sales                        $      5,979  $      6,566  $      6,669

Cost of goods sold                  4,839         5,405         5,459
Selling, general
 administrative, and other
 expenses                             327           317           362
Research and development
 expenses                              53            51            50
Provision for depreciation,
 depletion, and amortization          306           321           316
Restructuring and other
 charges                                1             7            27
Interest expense                       72            96            78
Other income, net                     (69)          (92)           (5)
                             ------------- ------------- -------------
    Total costs and expenses        5,529         6,105         6,287

Income from continuing
 operations before taxes on
 income                               450           461           382
Provision for taxes on income          62           112            92
                             ------------- ------------- -------------
Income from continuing
 operations before minority
 interests' share                     388           349           290
Less:  Minority interests'
 share                                 48            59            80
                             ------------- ------------- -------------

Income from continuing
 operations                           340           290           210

(Loss) income from
 discontinued operations              (72)           (1)           16

Cumulative effect of
 accounting change                      -             -            (2)
                             ------------- ------------- -------------

NET INCOME                   $        268  $        289  $        224
                             ============= ============= =============

Earnings (loss) per common
 share:
  Basic:
    Income from continuing
     operations              $        .39  $        .33  $        .24
    (Loss) income from
     discontinued operations         (.08)            -           .02
    Cumulative effect of
     accounting change                  -             -             -
                             ------------- ------------- -------------
      Net income             $        .31  $        .33  $        .26
                             ============= ============= =============

  Diluted:
    Income from continuing
     operations              $        .39  $        .33  $        .24
    (Loss) income from
     discontinued operations         (.09)            -           .02
    Cumulative effect of
     accounting change                  -             -             -
                             ------------- ------------- -------------
      Net income             $        .30  $        .33  $        .26
                             ============= ============= =============

Average number of shares used
 to compute:
  Basic earnings per common
   share                      870,608,606   872,515,797   871,135,611
  Diluted earnings per common
   share                      877,423,613   876,583,063   874,617,798

Shipments of aluminum
 products (metric tons)         1,266,000     1,424,000     1,388,000



Alcoa and subsidiaries
Condensed Statement of Consolidated Income (unaudited)
(in millions, except per-share, share and metric ton amounts)


                                               Twelve months ended
                                            December 31   December 31
                                             2004 (a)        2005
                                           ------------- -------------
Sales                                      $     23,236  $     26,159

Cost of goods sold                               18,469        21,217
Selling, general administrative, and other
 expenses                                         1,252         1,352
Research and development expenses                   182           194
Provision for depreciation, depletion, and
 amortization                                     1,189         1,265
Restructuring and other charges                     (21)          339
Interest expense                                    271           339
Other income, net                                  (271)         (480)
                                           ------------- -------------
    Total costs and expenses                     21,071        24,226

Income from continuing operations before
 taxes on income                                  2,165         1,933
Provision for taxes on income                       543           441
                                           ------------- -------------
Income from continuing operations before
 minority interests' share                        1,622         1,492
Less:  Minority interests' share                    245           259
                                           ------------- -------------

Income from continuing operations                 1,377         1,233

(Loss) income from discontinued operations          (67)            2

Cumulative effect of accounting change                -            (2)
                                           ------------- -------------

NET INCOME                                 $      1,310  $      1,233
                                           ============= =============

Earnings (loss) per common share:
  Basic:
    Income from continuing operations      $       1.58  $       1.41
    Loss from discontinued operations              (.08)            -
    Cumulative effect of accounting change            -             -
                                           ------------- -------------
      Net income                           $       1.50  $       1.41
                                           ============= =============

  Diluted:
    Income from continuing operations      $       1.57  $       1.40
    Loss from discontinued operations              (.08)            -
    Cumulative effect of accounting change            -             -
                                           ------------- -------------
      Net income                           $       1.49  $       1.40
                                           ============= =============

Average number of shares used to compute:
  Basic earnings per common share           869,906,895   871,721,392
  Diluted earnings per common share         877,449,161   876,897,531

Common stock outstanding at the end of the
 period                                     870,980,083   870,268,513

Shipments of aluminum products (metric
 tons)                                        5,120,000     5,503,000

(a) Prior periods financial statements have been reclassified to
    reflect the imaging and graphic communications business in
    discontinued operations in 2005.



Alcoa and subsidiaries
Condensed Consolidated Balance Sheet (unaudited)
(in millions)


                                               December 31 December 31
                                                 2004 (b)     2005
                                               ----------- -----------
ASSETS
Current assets:
  Cash and cash equivalents                       $   457     $   762
  Receivables from customers, less allowances:
   $86 in 2004 and $80 in 2005                      2,694       2,916
  Other receivables                                   256         427
  Inventories                                       2,968       3,452
  Deferred income taxes                               279         197
  Prepaid expenses and other current assets           788       1,036
                                               ----------- -----------
     Total current assets                           7,442       8,790
                                               ----------- -----------

Properties, plants and equipment, at cost          25,569      27,017
Less: accumulated depreciation, depletion and
 amortization                                      13,244      13,854
                                               ----------- -----------
Net properties, plants and equipment               12,325      13,163
                                               ----------- -----------
Goodwill                                            6,412       6,249
Investments                                         2,066       1,370
Other assets                                        3,822       4,090
Assets held for sale                                  542          34
                                               ----------- -----------
     Total assets                                 $32,609     $33,696
                                               =========== ===========

LIABILITIES
Current liabilities:
  Short-term borrowings                           $   267     $   300
  Commercial paper                                    630         912
  Accounts payable, trade                           2,218       2,661
  Accrued compensation and retirement costs         1,013       1,102
  Taxes, including taxes on income                  1,018         874
  Other current liabilities                         1,073       1,461
  Long-term debt due within one year                   57          58
                                               ----------- -----------
     Total current liabilities                      6,276       7,368
                                               ----------- -----------
Long-term debt, less amount due within one year     5,345       5,279
Accrued pension benefits                            1,513       1,500
Accrued postretirement benefits                     2,150       2,105
Other noncurrent liabilities and deferred
 credits                                            1,727       1,823
Deferred income taxes                                 789         875
Liabilities of operations held for sale                93           8
                                               ----------- -----------
     Total liabilities                             17,893      18,958
                                               ----------- -----------

MINORITY INTERESTS                                  1,416       1,365
                                               ----------- -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock                                        55          55
Common stock                                          925         925
Additional capital                                  5,775       5,721
Retained earnings                                   8,636       9,344
Treasury stock, at cost                            (1,926)     (1,899)
Accumulated other comprehensive loss                 (165)       (773)
                                               ----------- -----------
     Total shareholders' equity                    13,300      13,373
                                               ----------- -----------
     Total liabilities and equity                 $32,609     $33,696
                                               =========== ===========

(b) Prior periods financial statements have been reclassified to
    reflect the imaging and graphic communications business in
    discontinued operations in 2005.



Alcoa and subsidiaries
Condensed Statement of Consolidated Cash Flows (unaudited)
(in millions)


                                                       Year ended
                                                       December 31
                                                   2004 (c)    2005
                                                   --------- ---------
CASH FROM OPERATIONS
Net income                                          $ 1,310   $ 1,233
Adjustments to reconcile net income to cash from
 operations:
   Depreciation, depletion, and amortization          1,197     1,267
   Change in deferred income taxes                      (95)      (16)
   Equity (income) loss, net of dividends               (54)       35
   Noncash restructuring and other charges              (21)      339
   Net gain on early retirement of debt and
    interest rate swaps                                 (58)        -
   Gains from investing activities - sale of assets     (44)     (406)
   Provision for doubtful accounts                       24        20
   Loss (income) from discontinued operations            67        (2)
   Minority interests                                   245       259
   Accounting changes                                     -         2
   Other                                                 80         5
Changes in assets and liabilities, excluding
 effects of acquisitions and divestitures:
   Increase in receivables                              (94)     (483)
   Increase in inventories                             (397)     (526)
   Increase in prepaid expenses and other current
    assets                                              (93)       (3)
   Increase in accounts payable and accrued
    expenses                                            118       691
   Increase (decrease) in taxes, including taxes on
    income                                              113       (93)
   Cash paid on early retirement of debt and
    interest rate swaps                                 (52)        -
   Cash paid on long-term aluminum supply contract        -       (93)
   Pension contributions                               (101)     (383)
   Net change in noncurrent assets and liabilities     (137)     (169)
   Net change in net assets held for sale               145         -
                                                   --------- ---------
      CASH PROVIDED FROM CONTINUING OPERATIONS        2,153     1,677
      CASH PROVIDED FROM (USED FOR) DISCONTINUED
       OPERATIONS                                        46        (1)
                                                   --------- ---------
      CASH FROM OPERATIONS                            2,199     1,676
                                                   --------- ---------

FINANCING ACTIVITIES
Net changes to short-term borrowings                    213         5
Common stock issued for stock compensation plans         83        72
Repurchase of common stock                              (67)     (108)
Dividends paid to shareholders                         (524)     (524)
Dividends paid to minority interests                   (119)      (75)
Net change in commercial paper                          630       282
Additions to long-term debt                             180       278
Payments on long-term debt                           (1,921)     (254)
                                                   --------- ---------
      CASH USED FOR FINANCING ACTIVITIES             (1,525)     (324)
                                                   --------- ---------

INVESTING ACTIVITIES
Capital expenditures                                 (1,143)   (2,138)
Acquisition of AFL minority interest                      -      (176)
Acquisitions, net of cash acquired                       (2)     (262)
Proceeds from the sale of assets                        392       505
Sale of investments                                       -     1,081
Change in short-term investments and restricted
 cash                                                    30        (8)
Other                                                   (79)      (37)
                                                   --------- ---------
      CASH USED FOR INVESTING ACTIVITIES               (802)   (1,035)
                                                   --------- ---------

      EFFECT OF EXCHANGE RATE CHANGES ON CASH             9       (12)
                                                   --------- ---------
Net change in cash and cash equivalents                (119)      305
Cash and cash equivalents at beginning of year          576       457
                                                   --------- ---------
      CASH AND CASH EQUIVALENTS AT END OF PERIOD    $   457   $   762
                                                   ========= =========

(c) Prior periods financial statements have been reclassified to
    reflect the imaging and graphic communications business in
    discontinued operations in 2005.



Alcoa and subsidiaries
Segment Information (unaudited) (a)
(in millions, except metric ton amounts and realized prices)


Consolidated Third-
 Party Revenues:    4Q04    2004   1Q05   2Q05   3Q05   4Q05    2005
                   ------ ------- ------ ------ ------ ------ --------
 Alumina           $  536 $ 1,975 $  505 $  533 $  531 $  561 $ 2,130
 Primary Metals     1,039   3,806  1,089  1,124  1,204  1,281   4,698
 Flat-Rolled
  Products          1,502   5,962  1,655  1,763  1,679  1,739   6,836
 Extruded and End
  Products            976   3,974  1,037  1,153  1,092  1,022   4,304
 Engineered
  Solutions         1,159   4,603  1,241  1,286  1,246  1,275   5,048
 Packaging and
  Consumer (3)        764   2,923    708    827    806    798   3,139
----------------------------------------------------------------------
    Total (1)      $5,976 $23,243 $6,235 $6,686 $6,558 $6,676 $26,155
======================================================================

Consolidated
 Intersegment
 Revenues:          4Q04    2004   1Q05   2Q05   3Q05   4Q05    2005
                   ------ ------- ------ ------ ------ ------ --------
 Alumina           $  390 $ 1,418 $  393 $  439 $  424 $  451 $ 1,707
 Primary Metals     1,129   4,335  1,303  1,215  1,108  1,182   4,808
 Flat-Rolled
  Products             18      89     34     36     29     29     128
 Extruded and End
  Products             13      54     14     19     14     17      64
 Engineered
  Solutions             -       -      -      -      -      -       -
 Packaging and
  Consumer              -       -      -      -      -      -       -
----------------------------------------------------------------------
    Total          $1,550 $ 5,896 $1,744 $1,709 $1,575 $1,679 $ 6,707
======================================================================

Consolidated Third-
 Party Shipments
 (Kmt):             4Q04    2004   1Q05   2Q05   3Q05   4Q05    2005
                   ------ ------- ------ ------ ------ ------ --------
  Alumina           2,213   8,062  1,923  1,951  2,017  1,966   7,857
  Primary Metals      482   1,882    487    520    590    557   2,154
  Flat-Rolled
   Products           493   2,046    509    560    543    544   2,156
  Extruded and End
   Products           210     895    221    237    224    212     894
  Engineered
   Solutions           35     133     39     38     36     35     148
  Packaging and
   Consumer            46     164     34     46     31     40     151
----------------------------------------------------------------------
    Total Aluminum  1,266   5,120  1,290  1,401  1,424  1,388   5,503
======================================================================

Alcoa's average
 realized price-
 Primary (mt)      $1,942 $ 1,867 $2,042 $1,977 $1,963 $2,177 $ 2,044
======================================================================

After-Tax Operating
 Income (ATOI):     4Q04    2004   1Q05   2Q05   3Q05   4Q05    2005
                   ------ ------- ------ ------ ------ ------ --------
 Alumina           $  177 $   632 $  161 $  182 $  156 $  183 $   682
 Primary Metals       198     808    225    187    168    242     822
 Flat-Rolled
  Products             59     246     75     70     81     62     288
 Extruded and End
  Products (2)         (2)     73     10     20     23     (3)     50
 Engineered
  Solutions            41     211     59     60     32     45     196
 Packaging and
  Consumer             30     141     16     41     28     20     105
----------------------------------------------------------------------
    Total          $  503 $ 2,111 $  546 $  560 $  488 $  549 $ 2,143
======================================================================

Reconciliation of
 ATOI to
 consolidated net
 income (3):        4Q04    2004   1Q05   2Q05   3Q05   4Q05    2005
                   ------ ------- ------ ------ ------ ------ --------
  Total ATOI       $  503 $ 2,111 $  546 $  560 $  488 $  549 $ 2,143
  Impact of
   intersegment
   profit
   adjustments         18      52     17    (16)    (2)    38      37
  Unallocated
   amounts (net of
   tax):
    Interest income     6      26      7      9     12     14      42
    Interest
     expense          (46)   (176)   (51)   (56)   (62)   (51)   (220)
    Minority
     interests        (48)   (245)   (60)   (60)   (59)   (80)   (259)
    Corporate
     expense          (78)   (283)   (69)   (73)   (82)   (88)   (312)
    Restructuring
     and other
     charges           (1)     23    (30)  (172)    (5)   (19)   (226)
    Discontinued
     operations       (72)    (67)    (7)    (6)    (1)    16       2
    Other             (14)   (131)   (93)   274      -   (155)     26
----------------------------------------------------------------------
  Consolidated net
   income          $  268 $ 1,310 $  260 $  460 $  289 $  224 $ 1,233
======================================================================

(a) Segment information for all prior periods has been reclassified to
    reflect the change in segments due to a global realignment within
    the company, effective January 2005.

(1) The difference between the segment total and consolidated
    third-party revenues is in Corporate.

(2) The first quarter 2005 ATOI amount has been modified to correct a
    tax adjustment that should have been reflected in Corporate.

(3) Prior periods segment information has been reclassified to reflect
    the imaging and graphic communications business in discontinued
    operations in 2005.



Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions)


                 Return on Capital
                                     Trailing
                                  Four Quarters
                               --------------------
Net Income                                 $ 1,233

Minority Interest                              259

Interest Expense                               261
                               --------------------
(After taxes of 23%)

Numerator (Sum Total)                      $ 1,753

Russia Net Income Impact                        69
                               --------------------

Adjusted Net Income                        $ 1,822

Average Balances (1)
Short Term Borrowings                      $ 1,112
Long Term Borrowings                         5,312
Preferred Equity                                55
Minority Interest                            1,391
Common Equity                               13,282
                               --------------------

Denominator (Sum Total)                    $21,152
                               --------------------

Capital projects in progress &
 Russia Capital Base                        (1,913)
                               --------------------

Adjusted Capital Base                      $19,239

Return on Capital                              9.5%

(1) Calculated as (December 2004 ending balance + December 2005 ending
    balance) divided by 2.