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October 4, 2001

Alcoa Posts $339 Million in Earnings, Overcoming Lower Prices, Weak Markets and Reduced Production

PITTSBURGH--(BUSINESS WIRE)--Oct. 4, 2001--Alcoa today reported net income of $339 million (39 cents per diluted share) for the third quarter of 2001 compared with net income of $368 million (42 cents per share) for the 2000 third quarter.

For the first nine months of 2001, net income was $1,050 million ($1.21 per share). Before special charges of $114 million (13 cents per share), net income was $1,164 million ($1.34 per share). For the comparable 2000 period, net income was $1,092 million ($1.35 per share).

Revenues for the 2001 third quarter were $5.5 billion compared with $6.3 billion for the 2000 third quarter. Revenues for the first nine months of 2001 were $17.7 billion compared with $16.4 billion for the first nine months of 2000.

"Alcoa's continuing success in reducing costs and managing what is in our control helped to lessen the combined negative impact of lower prices, weak end markets in the U.S. and Europe, and production cutbacks in refining and smelting," said Chairman and Chief Executive Officer Alain Belda.

The three-month LME price for primary aluminum fell five cents a pound, or 7%, during the third quarter. Compared with the third quarter of 2000, the LME three-month average skidded eight cents a pound, or 11%.

In Europe, Alcoa's revenues declined more than 15% from the second quarter as a result of softness in several end markets -- transportation, building and construction, and industrial products -- while U.S. markets did not recover from their second quarter weakness.
    From second quarter levels, total alumina shipments dipped 3% and total primary aluminum shipments dropped 11% as a result of recent capacity curtailments. Alcoa currently has 710,000 metric tons of idle capacity in its smelting operations, mainly related to energy shortages in the Northwest U.S. and Brazil. Alcoa's total worldwide smelting capacity is 4.1 million metric tons per year (mtpy); its total worldwide alumina capacity is 13.6 mtpy.

"We are on target to meet our 2003 cost-cutting goal, which is helping us to partially offset the negative impact of lower demand and prices," continued Mr. Belda. "We are confident that we will achieve the $1.0 billion in cost savings." At the end of the 2001 third quarter, the company had achieved $348 million in annualized cost savings towards its 2003 target. The quarterly run rate at the end of the quarter was $87 million, compared with $63 million for the 2001 second quarter

"We expect market weakness to continue in the fourth quarter," noted Mr. Belda. "The tragic events in the U.S. last month and their potential impact on Alcoa's businesses are of particular concern. While the total effect on our markets and prices remains uncertain, we are dedicated to managing the company for profitability and growth, and we will continue to rigorously control costs, capital expenditures and working capital through the Alcoa Business System."

Alcoa said that it has been active in its stock repurchase program, buying back 9.7 million shares in the third quarter. Year-to-date, Alcoa has repurchased 36.1 million shares, offsetting share issuances for employee benefit programs, for a net decrease of 15.7 million shares. The stock repurchase authorization of 50 million shares currently has 40.7 million shares remaining.

Return on shareholders' equity for the 2001 nine-month period, annualized, was 12.6% compared with 17% for the year-ago period.

Quarterly Analyst Meeting; Facility Tour

Alcoa's quarterly analyst meeting will be at 4:00 p.m. EDST on Tuesday, October 16, 2001. The meeting will be webcast via alcoa.com.
    On November 1 and 2, analysts and media will tour the company's Howmet casting facility in Hampton, Virginia. At that time, presentations will be posted on alcoa.com.

Founded in 1888, Alcoa is the world's leading producer of aluminum and alumina, and a major participant in all segments of the industry: mining, refining, smelting, fabricating and recycling. Alcoa serves customers worldwide in the packaging, consumer, automotive, aerospace, construction and other markets with a great variety of fabricated and finished products. The company has 142,000 employees in 37 countries.

Alcoa (NYSE: AA)

Alcoa financial and operating data follow.

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 the company's inability to achieve the level of cost savings or productivity improvements anticipated by management, including possible increases in the cost of doing business resulting from war or terrorist activities; and other risk factors summarized in Alcoa's SEC reports.

FINANCIAL REPORT
                        Alcoa and subsidiaries
              (in millions, except share and ton amounts)
                              (UNAUDITED)

                                                   Third quarter
For the period ended September 30              2001             2000 
                                             -------          -------

Sales                                        $ 5,511          $ 6,298
                                             -------          -------

Cost of goods sold                             4,228            4,798
Selling, general administrative
    and other expenses                           273              314
Research and development expenses                 47               47
Provision for depreciation, depletion
    and amortization                             309              350
Special items                                      -                -
Interest expense                                  85              141
Other expense (income),net                         3              (46)
                                             -------          -------
                                               4,945            5,604

 Income from operations before
  taxes on income                                566              694
 Provision for taxes on income                   175              235
                                             -------          -------
         Income from operations                  391              459

Less: Minority interests' share                   52               91
                                             -------          -------

 Income before cumulative effect                 339              368
   Cumulative effect of accounting
     change for revenue recognition                -                - 
                                             -------          -------
NET INCOME                                   $   339          $   368

Earnings per common share:
    Basic                                    $  0.40          $  0.42

    Diluted                                  $  0.39          $  0.42



Average number of shares  used to compute:

   Basic earnings per common share       855,782,046      866,117,400
   Diluted earnings per common share     864,386,294      874,231,221

Translation and exchange adjustments
    included in net income                  $    (31)      $      (18)
Shipments of aluminum 
  products (metric tons)                   1,212,000        1,419,000




                           FINANCIAL REPORT
                        Alcoa and subsidiaries
              (in millions, except share and ton amounts)
                              (UNAUDITED)

                                                Nine months ended     
For the period ended September 30              2001            2000(a)
                                             -------          -------

Sales                                        $17,678          $16,376
                                             -------          -------
Cost of goods sold                            13,548           12,328
Selling, general administrative
    and other expenses                           922              813
Research and development expenses                151              134
Provision for depreciation depletion
    and amortization                             939              865
Special items                                    212                -
Interest expense                                 293              287
Other income,net                                (196)            (139)
                                             -------          -------
                                              15,869           14,288

 Income from operations before
   taxes on income                             1,809            2,088
 Provision for taxes on income                   579              710
                                             -------          -------
   Income from operations                      1,230            1,378

Less: Minority interests' share                  180              281
                                             -------          -------
 Income before cumulative effect               1,050            1,097
   Cumulative effect of accounting
     change for revenue recognition                -               (5)
                                             -------          -------
NET INCOME                                   $ 1,050          $ 1,092

Earnings per common share:
    Basic                                    $  1.22          $  1.36

    Diluted                                  $  1.21          $  1.35

Average number of shares
 used to compute:
   Basic earnings per common share       860,901,124      799,000,417
   Diluted earnings per common share     870,105,171      808,485,161

Translation and exchange adjustments
    included in net income                  $      9       $      (15)
Shipments of aluminum
    products (metric tons)                 3,824,000        3,913,000

Return on average shareholders' equity          12.6%            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 $16,398; Income from operations $1,381; Net
    income $1,100; Earnings per share basic $1.37 and diluted $1.36


                       Alcoa and subsidiaries
                 Condensed Consolidated Balance Sheet
                            (in millions)

                                            (unaudited)
                                           September 30    December 31
                                                2001           2000
                                           ------------    -----------
ASSETS
Current assets:
Cash and cash equivalents                     $    472       $    315
Short-term investments                              12             56
Receivables from customers,
  less allowances:
  $90 in 2001 and $69 in 2000                    2,905          3,461
Other receivables                                  300            354
Inventories                                      2,847          2,703
Deferred income taxes                              370            385
Prepaid expenses and other
 current assets                                    587            304
                                               -------        -------
     Total current assets                        7,493          7,578

Properties, plants and
 equipment, at cost                             22,165         22,600
Less, accumulated depreciation,
 depletion and amortization                     10,150          9,750
                                               -------        -------
Net properties, plants and equipment            12,015         12,850
                                               -------        -------
Goodwill, net of accumulated
  amortization of $478 in
  2001 and $344 in 2000                          5,754          6,003
Other assets, including assets
 held for sale                                   3,407          5,260
                                               -------        -------
     Total assets                              $28,669        $31,691
                                               =======        =======
LIABILITIES
Current liabilities:
Short-term borrowings                           $   87        $ 2,719
Accounts payable, trade                          1,626          1,876
Accrued compensation and
 retirement costs                                  808            928
Taxes, including taxes on income                   747            702
Other current liabilities                        1,500          1,302
Long-term debt due within one year                 216            427
                                                ------         ------
     Total current liabilities                   4,984
Long-term debt, less amount due
 within one year                                 6,114          4,987
Accrued postretirement benefits                  2,532          2,719
Other noncurrent liabilities and
 deferred credits                                2,176          2,126
Deferred income taxes                              780            969
                                                ------         ------
     Total liabilities                          16,586         18,755
                                                ------         ------
MINORITY INTERESTS                               1,265          1,514
                                                ------         ------
CONTINGENT LIABILITIES                               -              -

SHAREHOLDERS' EQUITY
Preferred stock                                     56             56
Common stock                                       925            925
Additional capital                               6,116          5,927
Retained earnings                                7,658          7,127
Treasury stock, at cost                         (2,618)        (1,717)
Accumulated other comprehensive loss            (1,319)          (896)
                                               -------        -------
  Total shareholders' equity                    10,818         11,422
                                               -------        -------
  Total liabilities and equity                 $28,669        $31,691
                                               =======        =======


Consolidated Third-Party 
Revenues                     1Q00       2Q00      3Q00      4Q00
                             ----       ----      ----      ----
Alumina and Chemicals         540        515       529       524
Primary Metals                611        852     1,049     1,244
Flat-Rolled Products        1,404      1,394     1,361     1,287
Engineered Products         1,053      1,296     1,586     1,536
Packaging and Consume         203        524       631       726
Other                         698        988     1,142     1,243
                              ---        ---     -----     -----
Total                       4,509      5,569     6,298     6,560



Consolidated Third-Party       
Revenues                     2000       1Q01      2Q01      3Q01
                             ----       ----      ----      ----
Alumina and Chemicals       2,108        547       490       454
Primary Metals              3,756        967       972       808
Flat-Rolled Products        5,446      1,343     1,255     1,219
Engineered Products         5,471      1,593     1,582     1,514
Packaging and Consume       2,084        646       701       671
Other                       4,071      1,080       991       845
                            -----     ------       ---       ---
Total                      22,936      6,176     5,991     5,511


Consolidated Intersegment
Revenues                     1Q00       2Q00      3Q00      4Q00
                             ----       ----      ----      ----
Alumina and Chemicals         250        274       294       286
Primary Metals                850        832       936       886
Flat-Rolled Products           13         29        29        26
Engineered Products            13         15        18        16
Packaging and Consumer          0          0         0         0
Other                           0          0         0         0
                                -          -         -         -
Total                       1,126      1,150     1,277     1,214


Consolidated Intersegment
Revenues                     2000       1Q01      2Q01      3Q01
                             ----       ----      ----      ----
Alumina and Chemicals       1,104        283       275       246
Primary Metals              3,504        867       887       839
Flat-Rolled Products           97         16        15        20
Engineered Products            62          9         8         9
Packaging and Consumer          0          0         0         0
Other                           0          0         0         0
                                -          -         -         -
Total                       4,767      1,175     1,185     1,114



Consolidated Third-Party 
Shipments  (KMT's)           1Q00       2Q00      3Q00      4Q00
                             ----       ----      ----      ----
Alumina and Chemicals       1,833      1,801     1,893     1,945
Primary Metals                339        493       574       665
Flat-Rolled Products          507        504       492       457
Engineered Products           266        282       258       255
Packaging and Consumer          2         32        37        48
Other                          19         50        58        60
                               --         --        --        --
Total Aluminum              1,133      1,361     1,419     1,485

Average realized price  
-Primary                     0.79       0.74      0.77      0.77
                   
     
Consolidated Third-Party 
Shipments  (KMT's)           2000       1Q01      2Q01      3Q01
                             ----       ----      ----      ----
Alumina and Chemicals       7,472      2,031     1,730     1,789
Primary Metals              2,071        476       494       448
Flat-Rolled Products        1,960        470       450       442
Engineered Products         1,061        254       242       232
Packaging and Consumer        119         42        41        33
Other                         187         78        65        57
                              ---         --        --        --
Total Aluminum              5,398      1,320     1,292     1,212
                         
Average realized price
-Primary                     0.77       0.77      0.73      0.71



After-Tax Operating Income   1Q00       2Q00      3Q00      4Q00
                             ----       ----      ----      ----
Alumina and Chemicals         155        140       146       144
Primary Metals                227        225       254       294
Flat-Rolled Products           73         74        83        69
Engineered Products            53         62        49        46
Packaging and Consumer         17         35        38        41
Other                          30         46        39        49
                               --         --        --        --
Total                         555        582       609       643



After-Tax Operating Income   2000       1Q01      2Q01      3Q01
                             ----       ----      ----      ----
Alumina and Chemicals         585        166       130       115
Primary Metals              1,000        294       264       216
Flat-Rolled Products          299         65        74        59
Engineered Products           210         40        60        62
Packaging and Consumer        131         43        47        47
Other                         164         50        45         4
                              ---         --        --         -
Total                       2,389        658       620       503
                           


Reconciliation of after-tax 
operating income to
consolidated net income      1Q00       2Q00      3Q00      4Q00
                             ----       ----      ----      ----


Total after-tax 
operating income              555        582       609       643

Elimination of 
intersegment (profit) loss     19        (10)        7         8

Unallocated amounts
(net of tax)
Interest income                 7         19         4        10
Interest expense              (33)       (69)      (85)      (91)
Minority interest            (105)       (85)      (90)     (100)
Corporate expense             (56)       (51)      (66)      (54)
Special items                   -          -         -         - 
Other                         (40)        (9)      (11)      (24)
                             ----       ----      ----      ---- 
Consolidated net income       347        377       368       392 


Reconciliation of after-tax
operating income to        
consolidated net income      2000       1Q01      2Q01      3Q01
                             ----       ----      ----      ----
Total after-tax
operating income            2,389        658       620       503

Elimination of                      
intersegment (profit) loss     24          4        (8)      (14)

Unallocated amounts
(net of tax)
Interest income                40          8        12        10
Interest expense             (278)       (75)      (61)      (55)
Minority interest            (380)       (96)      (32)      (52)
Corporate expense            (227)       (66)      (66)      (45)
Special items                   -          -      (148)        - 
Other                         (84)       (29)      (10)       (8)
                             ----      -----     -----      ---- 
Consolidated net income     1,484        404       307       339