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January 8, 2002

Alcoa Better Positioned To Achieve Long-Term Cost Reduction and Return on Capital Goals, Despite Current Weak Demand and Depressed Prices

PITTSBURGH--(BUSINESS WIRE)--Jan. 8, 2002--Alcoa today announced earnings for the 2001 fourth quarter of $99 million, or $0.11 per diluted share, excluding a special after tax charge of $241 million, or $0.28 per share for a strategic restructuring announced in November. Including the special charge, Alcoa had a net loss for the quarter of $142 million, or $0.17 per share. For the 2000 fourth quarter, net income was $392 million, or $0.45 per share.

For the year 2001, earnings were $1.263 billion, or $1.46 per share, excluding special after tax charges of $355 million, or $0.41 cents per share. Including special charges, net income was $908 million, or $1.05 per share. For the year 2000 net income was $1.484 billion, or $1.80 per share.

"We are not satisfied with these results," said Alain Belda, Chairman and CEO. "We are confident that the restructuring of our primary and fabricating businesses, coupled with our continued focus on implementing the Alcoa Business System and our commitment to grow the company, will enable us to resume sustainable savings and profitable growth in 2002 and beyond."

Revenues for the 2001 fourth quarter were $5.2 billion, compared with $6.6 billion in the year ago quarter. For the full year 2001, revenues matched the 2000 record of $22.9 billion.

The fourth quarter 2001 special charge reflects work associated with Alcoa's previously announced strategic review aimed at optimizing and aligning the company's manufacturing system with customer needs, while positioning Alcoa for stronger profitability. The quarter also included net costs of $72 million, before tax, associated with customer bad debts and claims, net contract losses and settlements, and the power failure at the company's Warrick, Indiana smelter. The remainder of the loss for restarting the potlines at Warrick will be primarily incurred in the first quarter 2002.

Alcoa's cost reductions in the fourth quarter were affected by lower volumes associated with persistently weak markets, and restructuring activities in the company's fabricating businesses. The company has achieved $348 million in annual cost savings towards its 2003 target of $1 billion. The impact of the restructuring activities will begin to contribute to costs savings in the first quarter of 2002.

"Although the near term business climate remains challenging, we are confident that we will achieve the two key financial goals we established for 2003: $1 billion in cost savings and entering the top quintile of ROC performance for S&P Industrials," said Mr. Belda.

Quarterly Analysts Meeting

Alcoa's quarterly analysts' meeting and conference call will be at 4:00 p.m. EST on January 23, 2002. The meeting will be web cast via alcoa.com.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina. It is active in all major aspects of the industry - technology, mining, refining, smelting, fabricating and recycling.

NYSE (AA)

Financial and operating data for Alcoa and its subsidiaries 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)

                                                    Fourth quarter
                                                    --------------
For the period ended December 31                  2001          2000
                                                  ----          ----

Sales                                          $  5,181      $  6,560

Cost of goods sold                                4,309         5,014
Selling, general administrative
 and other expenses                                 354           295
Research and development expenses                    52            60
Provision for depreciation, depletion
 and amortization                                   314           342
Special items                                       354            -
Interest expense                                     78           140
Other income, net                                  (112)          (15)
                                                --------      --------

                                                  5,349         5,836

   Income (loss) from operations before
    taxes on income                                (168)          724
   Benefit (provision) for taxes on income           54          (232)
                                                --------      --------
   Income (loss) from operations                   (114)          492

Less: Minority interests' share                      28           100
                                                --------      --------

   Income (loss) before cumulative effect          (142)          392
   Cumulative effect of accounting
    change for revenue recognition                   -             -
                                                --------      --------

NET INCOME (LOSS)                              $   (142)     $    392

Earnings (Loss) per common share:
   Basic                                       $  (0.17)     $   0.45
   Diluted                                     $  (0.17)     $   0.45

Average number of shares used to compute:
   Basic earnings per common share          848,675,958   865,152,223
   Diluted earnings per common share        854,997,916   872,352,602

Translation and exchange adjustments
 included in net income                        $    (11)     $     (4)

Shipments of aluminum
 products (metric tons)                       1,170,000     1,485,000


                           FINANCIAL REPORT
                        Alcoa and subsidiaries
              (in millions, except share and ton amounts)
                              (UNAUDITED)
                                                 Twelve months ended
                                                 -------------------
For the period ended December 31                  2001          2000
                                                  ----          ----

Sales                                          $ 22,859      $ 22,936

Cost of goods sold                               17,857        17,342
Selling, general administrative
 and other expenses                               1,276         1,108
Research and development expenses                   203           194
Provision for depreciation, depletion
 and amortization                                 1,253         1,207
Special items                                       566            -
Interest expense                                    371           427
Other income, net                                  (308)         (154)
                                                --------      --------

                                                 21,218        20,124

   Income from operations before
    taxes on income                               1,641         2,812
   Provision for taxes on income                   (525)         (942)
                                                --------      --------
   Income from operations                         1,116         1,870

Less: Minority interests' share                     208           381
                                                --------      --------

   Income before cumulative effect                  908         1,489
   Cumulative effect of accounting
    change for revenue recognition                   -             (5)
                                                --------      --------

NET INCOME                                     $    908      $  1,484

Earnings per common share:
   Basic                                       $   1.06      $   1.82
   Diluted                                     $   1.05      $   1.80

Average number of shares used to compute:
   Basic earnings per common share          857,990,395   814,229,329
   Diluted earnings per common share        866,561,053   823,172,824

Shares outstanding at the end of period     847,581,876   865,517,240

Translation and exchange adjustments
 included in net income                        $     (2)     $     (8)

Shipments of aluminum
 products (metric tons)                       4,994,000     5,398,000

Return on average shareholders' equity              8.3%         16.8%


Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)

                                             (unaudited)
                                             December 31   December 31
ASSETS                                          2001          2000
                                             -----------   -----------
ASSETS
Current assets:
Cash and cash equivalents                     $    512      $    315
Short-term investments                              15            56
Receivables from customers, less allowances:
 $129 in 2001 and $69 in 2000                    2,577         3,461
Other receivables                                  288           354
Inventories                                      2,531         2,703
Deferred income taxes                              410           385
Prepaid expenses and other current assets          459           304
                                              ---------     ---------
   Total current assets                          6,792         7,578

Properties, plants and equipment, at cost       22,536        22,600
Less: accumulated depreciation, depletion
 and amortization                               10,554         9,750
                                              ---------     ---------
Net properties, plants and equipment            11,982        12,850
                                              ---------     ---------
Goodwill, net of accumulated amortization
 of $524 in 2001 and $344 in 2000                5,733         6,003
Other assets, including assets held for sale     3,848         5,260
                                              ---------     ---------
   Total assets                               $ 28,355      $ 31,691
                                              =========     =========
LIABILITIES
Current liabilities:
Short-term borrowings                         $    142      $  2,719
Accounts payable, trade                          1,630         1,876
Accrued compensation and retirement costs          889           928
Taxes, including taxes on income                   903           702
Other current liabilities                        1,336         1,302
Long-term debt due within one year                 225           427
                                              ---------     ---------
   Total current liabilities                     5,125         7,954
Long-term debt, less amount
 due within one year                             6,266         4,987
Accrued postretirement benefits                  2,513         2,719
Other noncurrent liabilities
 and deferred credits                            1,968         2,126
Deferred income taxes                              556           969
                                              ---------     ---------
   Total liabilities                            16,428        18,755
                                              ---------     ---------

MINORITY INTERESTS                               1,313         1,514
                                              ---------     ---------

CONTINGENT LIABILITIES                              -             -

SHAREHOLDERS' EQUITY
Preferred stock                                     56            56
Common stock                                       925           925
Additional capital                               6,114         5,927
Retained earnings                                7,517         7,127
Treasury stock, at cost                         (2,706)       (1,717)
Accumulated other comprehensive loss            (1,292)         (896)
                                              ---------     ---------
   Total shareholders' equity                   10,614        11,422
                                              ---------     ---------
   Total liabilities and equity               $ 28,355      $ 31,691
                                              =========     =========


Consolidated Third-
Party Revenues         4Q00   2000   1Q01   2Q01   3Q01   4Q01   2001
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   524  2,108    547    490    454    417  1,908
Primary Metals        1,244  3,756    967    972    808    685  3,432
Flat-Rolled Products  1,287  5,446  1,343  1,255  1,219  1,182  4,999
Engineered Products   1,536  5,471  1,593  1,582  1,514  1,409  6,098
Packaging and Consumer  726  2,084    646    701    671    702  2,720
Other                 1,243  4,071  1,080    991    845    786  3,702
                      -----  -----  -----  -----  -----  -----  -----
Total                 6,560 22,936  6,176  5,991  5,511  5,181 22,859

Consolidated
Intersegment Revenues  4Q00   2000   1Q01   2Q01   3Q01   4Q01   2001
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   286  1,104    283    275    246    217  1,021
Primary Metals          886  3,504    867    887    839    707  3,300
Flat-Rolled Products     26     97     16     15     20     13     64
Engineered Products      16     62      9      8      9      9     35
Packaging and Consumer    0      0      0      0      0      0      0
Other                     0      0      0      0      0      0      0
                      -----  -----  -----  -----  -----  -----  -----
Total                 1,214  4,767  1,175  1,185  1,114    946  4,420

Consolidated Third-
Party Shipments
(KMT's)                4Q00   2000   1Q01   2Q01   3Q01   4Q01   2001
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals 1,945  7,472  2,031  1,730  1,789  1,667  7,217

Primary Metals          665  2,071    476    494    448    455  1,873
Flat-Rolled Products    457  1,960    470    450    442    456  1,818
Engineered Products     255  1,061    254    242    232    204    932
Packaging and Consumer   48    119     42     41     33     27    143
Other                    60    187     78     65     57     28    228
                      -----  -----  -----  -----  -----  -----  -----
Total Aluminum        1,485  5,398  1,320  1,292  1,212  1,170  4,994

Average realized price
-Primary               0.77   0.77   0.77   0.73   0.71   0.65   0.72

After-Tax Operating
Income                 4Q00   2000   1Q01   2Q01   3Q01   4Q01   2001
                       ----   ----   ----   ----   ----   ----   ----
Alumina and Chemicals   144    585    166    130    115     60    471
Primary Metals          294  1,000    294    264    216    131    905
Flat-Rolled Products     69    299     65     74     59     64    262
Engineered Products      46    210     40     60     62     11    173
Packaging and Consumer   41    131     43     47     47     48    185
Other                    49    164     50     45      4    (52)    47
                      -----  -----  -----  -----  -----  -----  -----
Total                   643  2,389    658    620    503    262  2,043

Reconciliation of
after-tax operating
income to consolidated
net income             4Q00   2000   1Q01   2Q01   3Q01   4Q01   2001
                       ----   ----   ----   ----   ----   ----   ----
Total after-tax
 operating income       643  2,389    658    620    503    262  2,043
Impact of intersegment
 profit eliminations      8     24      4     (8)   (14)    (2)   (20)
Unallocated amounts
(net of tax):
Interest income          10     40      8     12     10     10     40
Interest expense        (91)  (278)   (75)   (61)   (55)   (51)  (242)
Minority interests     (100)  (381)   (96)   (32)   (52)   (28)  (208)
Corporate expense       (54)  (227)   (66)   (66)   (45)   (84)  (261)
Special items             -      -      -   (148)     -   (249)  (397)
Other                   (24)   (83)   (29)   (10)    (8)     -    (47)
                      -----  -----  -----  -----  -----  -----  -----
Consolidated net income 392  1,484    404    307    339   (142)   908