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January 8, 1999

Alcoa Dividend Increased; Share Repurchase Authorized; Stock Split

PITTSBURGH--January 8, 1999-- Paul O'Neill, Chairman and CEO of Alcoa, announced today that Alcoa's Board of Directors has approved:
» a 50% increase in the company's base quarterly dividend;
» a 10 million share repurchase program, pre-split; and
» a 2-for-1 stock split.

Commenting on the measures approved today by Alcoa's Board, Paul O'Neill said, "These changes reflect our conviction that we have achieved a new base level of operating performance and that further major improvements will be realized this year and into the future as we aggressively implement the Alcoa Business System and the Alcoa Production System in our worldwide operations."

Dividend Increased
The Board approved two changes in the company's common stock dividend policy: a 50% increase in the company's base quarterly dividend and an increase in the threshold on the variable dividend.

The base quarterly dividend is increased to 37.5 cents per common share on a pre-split basis (the base dividend was 25 cents per share). For a full year, base dividends will now total $1.50 compared with $1.00 before the increase. The variable dividend, which is linked directly to financial performance, is 30% of the company's annual earnings when these earnings exceed a threshold of $4.50 per share on a pre-split basis (the previous threshold was $3.00 per share). The variable dividend is paid in the following year in four equal quarterly installments with the base quarterly dividends.

Under the new policy, the Board declared a quarterly common stock dividend of 40.25 cents per share, on a pre-split basis, that is payable on February 25, 1999, to shareholders of record at the close of business on February 8, 1999. This includes the new base dividend and a variable dividend.

Earnings per share for 1998 were $4.87 on a pre-split basis, resulting in a variable dividend of 11 cents. The variable dividend will be paid in four installments of 2.75 cents per share on a pre-split basis during 1999, with payment and record dates the same as those for base quarterly dividends.

The directors also voted a regular dividend of 93.75 cents per share on Alcoa's $3.85 cumulative preferred stock, payable April 1, 1999 to shareholders of record on March 12, 1999.

Share Repurchase Authorized
In addition, the Board authorized 10 million shares of Alcoa common stock, on a pre-split basis, to be repurchased by the company. Alcoa will from time to time buy back shares of the company's outstanding common stock with open- market purchases. The stock will be used for employee benefits plans and other corporate purposes.

2-for-1 Stock Split
The Board also declared a two-for-one split of Alcoa's common stock. The new stock will be distributed on February 25 to shareholders of record at the close of business on February 8.

The stock was split to encourage a wider distribution of Alcoa common stock. Following the stock split, Alcoa will have approximately 367 million common shares outstanding.