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April 5, 2002

Alcoa Announces 2002 First Quarter Results: Benefits of Prior Restructuring, ABS and Cost Savings Help Offset Weak Aluminum Demand

PITTSBURGH--(BUSINESS WIRE)--April 5, 2002--Alcoa Inc. (NYSE:AA) today announced net income for the 2002 first quarter of $218 million, or 26 cents per diluted share. Alcoa earned $404 million, or 46 cents per diluted share, in the 2001 first quarter.

Alcoa lost $142 million, or 17 cents per share, in the fourth quarter of 2001. Included in the fourth quarter is a special after tax charge of $241 million, or 28 cents per share, for a strategic restructuring in the company's manufacturing system.

"The near-term operating climate remains challenging, and we continue to focus on managing what is in our control," said Chairman and CEO Alain Belda. "As demand for aluminum strengthens, we will capture the efficiencies generated by last year's strategic restructuring of our operations and the continued deployment of the Alcoa Business System (ABS)."

Net income for the 2002 first quarter includes income of $34 million, or 4 cents per share, from the cumulative effect of the change in accounting for goodwill required by the adoption of FASB 142. The income is primarily the result of the write-off of negative goodwill generated by acquiring assets below book value, demonstrating Alcoa's disciplined approach to acquisitions. In addition to this one-time adjustment, goodwill will no longer be amortized under the new accounting standard. This change had a positive impact of $44 million, or 5 cents per share, in the first quarter compared with the year ago quarter.

A restructuring at Elkem, the company's partner in Norway, and charges associated with the power failure at Alcoa's Warrick, Ind., smelter had negative one-time impacts on net income in the 2002 first quarter. The negative impacts were nearly offset by favorable non-operating gains. The net effect of these items was a charge of 1 cent per share in the quarter.

Comparing the first quarter of 2002 with the first quarter of 2001, the company stated that the average three-month LME price for primary aluminum declined by 7.5 cents per pound, or 11%. The company also stated that this quarter was negatively effected by a significant decline in year over year end market demand. The decline in both price and demand dampened the benefits derived from ongoing cost reduction efforts.

At the end of the 2002 first quarter, Alcoa had achieved $436 million in annualized cost savings and remains on target to achieve its $1.0 billion 2003 goal. The run rate at the end of the quarter was $109 million, compared with $87 million in the prior quarter. Capital expenditures were held to $238 million in the first quarter.

Alcoa continues to have 635,000 metric tons (mt) of aluminum production idled on a base capacity of 4.1 million mt.

Quarterly Analysts' Meeting

Alcoa's quarterly analysts' meeting and conference call will be at 4:00 p.m. EDT on Thursday, April 25, 2002. The meeting will be webcast via alcoa.com.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry. Alcoa's aluminum products and components are used worldwide in aircraft, automobiles, beverage cans, buildings, chemicals, sports and recreation, and a wide variety of industrial and consumer applications, including such Alcoa consumer brands as Alcoa(R) wheels, Reynolds Wrap(R) aluminum foil, and Baco(R) household wraps. Among its related businesses are precision castings, vinyl siding, closures, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 38 countries.

Alcoa Inc. (NYSE: AA)

Editor's Note: The Alcoa Business System is Alcoa's worldwide performance standard. It is an integrated set of systems, tools and language organized to encourage unencumbered transfer of knowledge across businesses and borders. It focuses on serving customer demand by emphasizing the elimination of all waste and making what the customer wants, when the customer wants it.

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

                                             First quarter ended
                                                  March 31
                                                  --------
                                           2002              2001
                                           ----              ----

Sales                                 $       4,983     $       6,176

Cost of goods sold                            4,044             4,713
Selling, general administrative
 and other expenses                             278               323
Research and development expenses                51                49
Provision for depreciation,
 depletion and amortization                     261               321
Interest expense                                 75               115
Other income, net                               (55)              (92)
                                      -------------     -------------

                                              4,654             5,429

   Income before taxes on income                329               747
Provision for taxes on income                   104               247
                                      -------------     -------------
Income from operations                          225               500

Less:  Minority interests' share                 41                96
                                      -------------     -------------

   Income before accounting change              184               404

Cumulative effect of accounting
 change for goodwill                             34              --
                                      -------------     -------------

NET INCOME                            $         218     $         404
                                      =============     =============

Earnings per common share:
   Basic (before cumulative effect)   $        0.22     $        0.47
   Basic (after cumulative effect)    $        0.26     $        0.47

   Diluted (before cumulative effect) $        0.22     $        0.46
   Diluted (after cumulative effect)  $        0.26     $        0.46

Average number of shares used 
 to compute:
   Basic earnings per common share      847,105,553       865,440,328
   Diluted earnings per common share    854,151,135       874,197,629

Common stock outstanding
 at the end of the period               846,809,997       864,060,712

Shipments of aluminum products
 (metric tons)                            1,259,000         1,320,000

Return on average shareholders' equity          7.2%             13.8%



Alcoa and subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
                                            (unaudited)
                                              March 31     December 31
                                                2002           2001
ASSETS                                        -------        -------
Current assets:
Cash and cash equivalents                     $   569        $   512
Short-term investments                             48             15
Receivables from customers,
 less allowances:
 $115 in 2002 and $129 in 2001                  2,659          2,577
Other receivables                                 251            288
Inventories                                     2,413          2,531
Deferred income taxes                             404            410
Prepaid expenses and other
 current assets                                   489            459
                                              -------        -------
     Total current assets                       6,833          6,792

Properties, plants and equipment,
 at cost                                       22,739         22,536
Less: accumulated depreciation,
 depletion and amortization                    10,740         10,554
                                              -------        -------
Net properties, plants and equipment           11,999         11,982
                                              -------        -------
Goodwill                                        5,832          5,733
Other assets                                    3,748          3,848
                                              -------        -------
     Total assets                             $28,412        $28,355
                                              =======        =======

LIABILITIES
Current liabilities:
Short-term borrowings                         $    78        $   142
Accounts payable, trade                         1,626          1,630
Accrued compensation and retirement
 costs                                            784            889
Taxes, including taxes on income                  876            903
Other current liabilities                       1,304          1,336
Long-term debt due within one year                134            103
                                              -------        -------
     Total current liabilities                  4,802          5,003
Long-term debt, less amount due
 within one year                                6,825          6,388
Accrued postretirement benefits                 2,482          2,513
Other noncurrent liabilities and
 deferred credits                               1,852          1,968
Deferred income taxes                             575            556
                                              -------        -------
     Total liabilities                         16,536         16,428
                                              -------        -------

MINORITY INTERESTS                              1,357          1,313
                                              -------        -------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock                                    56             56
Common stock                                      925            925
Additional capital                              6,099          6,114
Retained earnings                               7,480          7,517
Treasury stock, at cost                        (2,751)        (2,706)
Accumulated other comprehensive loss           (1,290)        (1,292)
                                              -------        -------
     Total shareholders' equity                10,519         10,614
                                              -------        -------
     Total liabilities and equity             $28,412        $28,355
                                              =======        =======


Consolidated 
Third-Party 
Revenues          1Q01      2Q01    3Q01     4Q01     2001     1Q02
                  ----      ----    ----     ----     ----     ----
Alumina and
 Chemicals          547      490      454      417    1,908      425
Primary Metals      967      972      808      685    3,432      764
Flat-Rolled
 Products         1,343    1,255    1,219    1,182    4,999    1,156
Engineered
 Products         1,593    1,582    1,514    1,409    6,098    1,396
Packaging and
 Consumer           646      701      671      702    2,720      624
Other             1,080      991      845      786    3,702      618
                 -------   ------   ------   ------   ------   ------
Total             6,176    5,991    5,511    5,181   22,859    4,983

Consolidated 
Intersegment 
Revenues          1Q01     2Q01     3Q01     4Q01     2001     1Q02
                  ----     ----     ----     ----     ----     ----
Alumina and
 Chemicals          283      275      246      217    1,021      229
Primary Metals      867      887      839      707    3,300      878
Flat-Rolled 
 Products            16       15       20       13       64       15
Engineered 
 Products             9        8        9        9       35        8
Packaging and
 Consumer             0        0        0        0        0        0
Other                 0        0        0        0        0        0
                  -----    -----    -----    -----    -----    ----- 
Total             1,175    1,185    1,114      946    4,420    1,130

Consolidated 
Third-Party 
Shipments (KMT's) 1Q01     2Q01     3Q01     4Q01     2001     1Q02
                  ----     ----     ----     ----     ----     ----
Alumina and 
 Chemicals        2,031    1,730    1,789    1,667    7,217    1,825

Primary Metals      476      494      448      455    1,873      503
Flat-Rolled 
 Products           470      450      442      456    1,818      439
Engineered 
 Products           254      242      232      204      932      228
Packaging and 
 Consumer            42       41       33       27      143       31
Other                78       65       57       28      228       58
                  -----    -----    -----    -----    -----    ----- 
Total Aluminum    1,320    1,292    1,212    1,170    4,994    1,259

Average realized
 price
-Primary           0.77     0.73     0.71     0.65     0.72     0.66

After-Tax 
Operating Income  1Q01     2Q01     3Q01     4Q01     2001    1Q02(1)
                  ----     ----     ----     ----     ----    ----
Alumina and
 Chemicals          166      130      115       60      471       65
Primary Metals      294      264      216      131      905      143
Flat-Rolled
 Products            65       74       59       64      262       61
Engineered
 Products            40       60       62       11      173       51
Packaging and
 Consumer            43       47       47       48      185       28
Other                50       45        4      (52)      47        7
                  -----    -----    -----    -----    -----    -----
Total               658      620      503      262    2,043      355

Reconciliation of 
after-tax operating
income to consolidated 
net income        1Q01     2Q01     3Q01     4Q01     2001     1Q02
                  ----     ----     ----     ----     ----     ----

Total after-tax
 operating
 income             658      620      503      262    2,043      355
Impact of
 intersegment profit
 eliminations         4       (8)     (14)      (2)     (20)      (3)
Unallocated
 amounts (net 
 of tax):
Interest income       8       12       10       10       40       10
Interest expense    (75)     (61)     (55)     (51)    (242)     (49)
Minority interests  (96)     (32)     (52)     (28)    (208)     (41)
Corporate expense   (66)     (66)     (45)     (84)    (261)     (58)
Special items        --     (148)      --     (249)    (397)      --
Accounting change    --       --       --       --       --       34
Other               (29)     (10)      (8)      --      (47)     (30)
                 ------   ------   ------   ------   ------   ------
Consolidated
 net income         404      307      339     (142)     908      218

(1) Under the provisions of SFAS No. 142, goodwill is no longer
amortized. This resulted in a positive impact to segment ATOI results
as follows: Primary $5, Flat-Rolled Products ($1), Engineered 
Products $15, Packaging and Consumer $4, and Other $10.