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July 6, 2001

Excluding Charges, Alcoa's Earnings Set New Record

PITTSBURGH--(BUSINESS WIRE)--July 6, 2001--Alcoa (NYSE:AA) today reported record quarterly earnings of $429 million (49 cents per diluted share), before special charges of $114 million (13 cents per share) for the second quarter of 2001. After the special charges, second quarter net income was $315 million (36 cents per share). For the 2000 second quarter, net income was $377 million (47 cents per share).

Earnings for the first half of 2001 were $833 million (95 cents per share) before the special charges. With the charges, net income was $719 million (82 cents per share). For the comparable 2000 period, net income was $724 million (93 cents per share.)

"These are outstanding results, particularly in the face of lower prices for alumina and aluminum ingot; continuing market weakness in passenger automotive, truck trailer and industrial products in the U.S.; and curtailment of smelting and refining production," said Chairman and CEO Alain Belda.

"Helping to counter these negatives, Alcoa employees continue to manage what is in their control, extract synergies from acquired companies and stay focused on the future," said Mr. Belda. At the end of the 2001 second quarter, the company had achieved $252 million in annualized cost savings against it $1.0 billion 2003 target. The quarterly run rate at the end of the quarter was $63 million, compared with $31 million for the 2001 first quarter.

Revenues were $6.0 billion for the 2001 second quarter, versus $5.6 billion in the year-ago quarter. For the first half of 2001, revenues were $12.2 billion, compared with $10.1 billion in the 2000 period.

Alcoa noted that revenues from the sale of power continued to cover the financial losses associated with the production curtailments in the U.S. Pacific Northwest.

Proceeds from the sale of Thiokol Propulsion were used to lower debt and repurchase common shares. Alcoa's debt to invested capital ratio dropped from 38.6% at the end of 2000 to 34% at June 30, 2001. Under the company's stock repurchase program, net shares were reduced by seven million through the end of the 2001 second quarter. Total outstanding shares at June 30 were 858 million. A gain of $38 million (before tax) on the sale of Thiokol in the current quarter was comparable to asset sales of $47 million (before tax) in the previous quarter.

Return on shareholders' equity for the 2001 first half, annualized, was 14.2%, before special items, compared with 17% in the first half of 2000. After the special items, the return for the 2001 first half was 13.2%.

Second Quarter 2001 Special Charges

Alcoa stated that the special charges of $212 million (before tax) taken in the second quarter are part of its ongoing segment review to optimize assets and lower costs. Included in the special charges are the following:

-- A charge of $179 million, before tax and minority interest, due to actions Alcoa has taken in its Primary Products businesses (within the Alumina and Chemical Segment and the Primary Metals Segment) because of economic and competitive conditions. These actions include the shutdown of the company's magnesium plant in Addy, Washington and closing both the company's alumina refinery on St. Croix, U.S. Virgin Islands and its smelter in Suriname. The refinery, which had a capacity of 600,000 mtpy, has been idle since January 2001; the smelter, which had a capacity of 30,000 mtpy, has been idle since March 1999. In addition, the charge includes the closure of a chemical plant located in Louisiana, which has been idle since December 2000. The refinery, smelter and chemical plant are part of Alcoa World Alumina and Chemicals, which is 60% owned by Alcoa;

-- A charge of $17 million, before tax, related to the closing of MetalSpectrum which was previously announced; and

-- The remainder of the charge ($16 million before tax) for labor reductions at various manufacturing facilities due to weak market conditions mentioned above.

Quarterly Analysts' Meeting

Alcoa's quarterly analysts' meeting will be at 4:00 p.m. EDST on Thursday, July 19, 2001. The meeting will be web cast via alcoa.com.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum, and alumina and participates in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Alcoa serves customers worldwide in the packaging, consumer, automotive, aerospace, construction and distribution markets. The company has 142,000 employees in 37 countries.

Certain statements relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks, uncertainties and other factors 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 other risk factors summarized in Alcoa's SEC reports.

FINANCIAL REPORT
                        Alcoa and subsidiaries
              (in millions except share and ton amounts)
                              (UNAUDITED)
                                                     Second quarter
                                                     --------------
For the period ended June 30                        2001         2000
                                                    ----         ----

Sales                                          $   5,991    $   5,569

Cost of goods sold                                 4,607        4,216
Selling, general administrative
 and other expenses                                  314          272
Research and development expenses                     55           48
Provision for depreciation,
 depletion and amortization                          309          290
Interest expense                                      93           95
Special items                                        212            -
Other income,net                                    (107)         (52)
                                               ---------    ---------

                                                   5,483        4,869

   Income from operations before taxes on income     508          700
Provision for taxes on income                        161          238
                                               ---------    ---------
      Income from operations                         347          462

Less: Minority interests' share                       32           85
                                               ---------    ---------

   Income before cumulative effect                   315          377
      Cumulative effect of accounting
      Change for revenue recognition                   -            -
                                               ---------    ---------

NET INCOME                                     $     315    $     377

Earnings per common share:
   Basic                                       $    0.37    $    0.47
   Diluted                                     $    0.36    $    0.47


Average number of shares used to compute:
   Basic earnings per common share           861,633,715  796,962,243
   Diluted earnings per common share         872,074,474  804,964,628

Translation and exchange adjustments
 included in net income                        $      26    $       0
Shipments of aluminum products (metric tons)   1,292,000    1,361,000



                           FINANCIAL REPORT
                        Alcoa and subsidiaries
              (in millions except share and ton amounts)
                              (UNAUDITED)
                                                    Six months ended
                                                    ----------------
For the period ended June 30                        2001       2000(a)
                                                    ----       ----

Sales                                          $  12,167    $  10,078

Cost of goods sold                                 9,320        7,530
Selling, general administrative
 and other expenses                                  637          499
Research and development expenses                    104           87
Provision for depreciation depletion
 and amortization                                    630          515
Interest expense                                     208          146
Special items                                        212            -
Other income, net                                   (199)         (93)
                                               ---------    ---------

                                                  10,912        8,684

   Income from operations before taxes on income   1,255        1,394
Provision for taxes on income                        408          475
                                               ---------    ---------
      Income from operations                         847          919

Less: Minority interests' share                      128          190
                                               ---------    ---------

   Income before cumulative effect                   719          729
      Cumulative effect of accounting
      Change for revenue recognition                   -           (5)
                                               ---------    ---------

NET INCOME                                     $     719    $     724

Earnings per common share:
   Basic                                       $    0.83    $    0.94
   Diluted                                     $    0.82    $    0.93

Average number of shares used to compute:
   Basic earnings per common share           863,462,208  770,119,801
   Diluted earnings per common share         873,156,282  780,233,133

Translation and exchange adjustments
 included in net income                        $      40    $       3
Shipments of aluminum products (metric tons)   2,612,000    2,494,000

Return on average shareholders' equity              13.2%        17.0%

(a) The amounts have been restated for the effects of the change in
accounting for revenue recognition. Amounts originally reported were
as follows: Sales $10,100; Income from operations $1,398; Net income
$732; Earnings per share basic $.95 and diluted $.94



Alcoa and Subsidiaries
Condensed Consolidated Balance Sheet
(in millions)

                                               (unaudited)
                                                 June 30   December 31
                                                   2001        2000
                                               ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents                      $    439      $    315
Short-term investments                               13            56
Receivables from customers, less allowances:
 $71 in 2001 and $69 in 2000                      3,027         3,461
Other receivables                                   310           354
Inventories                                       2,790         2,703
Deferred income taxes                               346           385
Prepaid expenses and other current assets           499           304
                                               --------      --------
   Total current assets                           7,424         7,578

Properties, plants and equipment, at cost        22,028        22,600
Less, accumulated depreciation,
 depletion and amortization                      10,033         9,750
                                               --------      --------
Net properties, plants and equipment             11,995        12,850
                                               --------      --------
Goodwill, net of accumulated amortization of
 $433 in 2001 and $344 in 2000                    5,763         6,003
Other assets, including assets held for sale      3,303         5,260
                                               --------      --------
   Total assets                                $ 28,485      $ 31,691
                                               ========      ========
LIABILITIES
Current liabilities:
Short-term borrowings                          $    101      $  2,719
Accounts payable, trade                           1,648         1,876
Accrued compensation and retirement costs           749           928
Taxes, including taxes on income                    689           702
Other current liabilities                         1,329         1,302
Long-term debt due within one year                  217           427
                                               --------      --------
   Total current liabilities                      4,733         7,954
Long-term debt, less amount due within one year   6,031         4,987
Accrued postretirement benefits                   2,561         2,719
Other noncurrent liabilities
 and deferred credits                             2,111         2,126
Deferred income taxes                               748           969
                                               --------      --------
   Total liabilities                             16,184        18,755
                                               --------      --------

MINORITY INTERESTS                                1,251         1,514
                                               --------      --------

CONTINGENT LIABILITIES                                -             -

SHAREHOLDERS' EQUITY
Preferred stock                                      56            56
Common stock                                        925           925
Additional capital                                6,109         5,927
Retained earnings                                 7,541         7,127
Treasury stock, at cost                          (2,341)       (1,717)
Accumulated other comprehensive loss             (1,240)         (896)
                                               --------      --------
   Total shareholders' equity                    11,050        11,422
                                               --------      --------
   Total liabilities and shareholders' equity  $ 28,485      $ 31,691
                                               ========      ========



Consolidated Third-Party Revenues

                        1Q00   2Q00   3Q00   4Q00   2000   1Q01   2Q01
                        ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals    540    515    529    524  2,108    547    490
Primary Metals           611    852  1,049  1,244  3,756    967    972
Flat-Rolled Products   1,404  1,394  1,361  1,287  5,446  1,343  1,255
Engineered Products    1,053  1,296  1,586  1,536  5,471  1,593  1,582
Packaging and Consumer   203    524    631    726  2,084    646    701
Other                    698    988  1,142  1,243  4,071  1,080    991
                       -----  -----  -----  -----  -----  -----  -----
Total                  4,509  5,569  6,298  6,560 22,936  6,176  5,991


Consolidated Intersegment Revenues

                        1Q00   2Q00   3Q00   4Q00   2000   1Q01   2Q01
                        ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals    250    274    294    286  1,104    283    275
Primary Metals           850    832    936    886  3,504    867    887
Flat-Rolled Products      13     29     29     26     97     16     15
Engineered Products       13     15     18     16     62      9      8
Packaging and Consumer     0      0      0      0      0      0      0
Other                      0      0      0      0      0      0      0

Total                  1,126  1,150  1,277  1,214  4,767  1,175  1,185


Consolidated Third-Party Shipments (KMT's)

                        1Q00   2Q00   3Q00   4Q00   2000   1Q01   2Q01
                        ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals  1,833  1,801  1,893  1,945  7,472  2,031  1,730

Primary Metals           339    493    574    665  2,071    476    494
Flat-Rolled Products     507    504    492    457  1,960    470    450
Engineered Products      266    282    258    255  1,061    254    242
Packaging and Consumer     2     32     37     48    119     42     41
Other                     19     50     58     60    187     78     65
                       -----  -----  -----  -----  -----  -----  -----
Total Aluminum         1,133  1,361  1,419  1,485  5,398  1,320  1,292

Average realized price
-Primary                0.79   0.74   0.77   0.77   0.77   0.77   0.73


After-Tax Operating Income

                        1Q00   2Q00   3Q00   4Q00   2000   1Q01   2Q01
                        ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals    155    140    146    144    585    166    130
Primary Metals           227    225    254    294  1,000    294    272
Flat-Rolled Products      73     74     83     69    299     65     74
Engineered Products       53     62     49     46    210     40     60
Packaging and Consumer    17     35     38     41    131     43     47
Other                     30     46     39     49    164     50     45
                       -----  -----  -----  -----  -----  -----  -----
Total                    555    582    609    643  2,389    658    628


Reconciliation of after-tax
 operating income to consolidated
 net income: After-Tax Operating Income

                       1Q00   2Q00   3Q00   4Q00   2000   1Q01   2Q01
                       ----   ----   ----   ----   ----   ----   ----
Total after-tax
 operating income       555    582    609    643  2,389    658    628
Elimination of
 intersegment (profit)
 loss                    19    (10)     7      8     24      4     (8)
Unallocated amounts
 (net of tax) Interest
 income                   7     19      4     10     40      8     12
Interest expense        (33)   (69)   (85)   (91)  (278)   (75)   (61)
Minority interest      (105)   (85)   (90)  (100)  (380)   (96)   (32)
Corporate expense       (56)   (51)   (66)   (54)  (227)   (66)   (66)
Special items             -      -      -      -      -      -   (148)
Other                   (40)    (9)   (11)   (24)   (84)   (29)   (10)
                       -----  -----  -----  -----  -----  -----  -----
Consolidated
 net income             347    377    368    392  1,484    404    315