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December 18, 2001

Alcoa Announces Expected Fourth Quarter 2001 Results

PITTSBURGH--December 18, 2001-- Alcoa reaffirmed today that it will take a special charge for its strategic restructuring, which will total approximately $225 million after taxes in the fourth quarter of 2001. “By optimizing our manufacturing system, Alcoa will emerge better equipped to meet customer needs, while positioning for stronger profitability in 2002 and the years ahead,” said Alain Belda, Chairman and CEO of Alcoa.

In this quarter, Alcoa will also incur costs of approximately $60 million before taxes, primarily as a result of persistently weak economic conditions. A significant portion of those losses involves Alcoa customers who have become insolvent and are not expected to meet the full terms of their contracts, and other long-term contracts and claims.

In addition, the financial impact associated with the power failure at Alcoa’s Warrick, Indiana plant earlier this month will be approximately $45 million before taxes. Those losses, for restarting the smelter and procuring replacement power and metal, will be incurred over this quarter and the next. That amount falls below Alcoa's insurance deductibles, which rose dramatically this September. The company expects that production capacity at Warrick will be fully restored by the end of the second quarter. Warrick has nameplate capacity of 300,000 metric tons per year.

“The fourth quarter has proven to be extremely challenging as a result of lower volumes, depressed metal prices, and overall weak downstream markets,” said Mr. Belda. As a result, the company expects earnings per diluted share to be approximately $.10 for the fourth quarter of 2001, excluding the special $225 million after tax (approximately $0.26 per share) restructuring charge.

“The strategic restructuring, coupled with efficiencies generated by the Alcoa Business System, and our strong balance sheet will help the company achieve future sustained savings and profitable growth,” said Mr. Belda.

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.

Editorial Contact:
Jake Siewert
212-836-2733

Investor Relations:
Charles D. McLane Jr.
212-836-2674