Alcoa Reports 4th Quarter 2008 Results

* Loss From Continuing Operations of $929 million, or $1.16 per share, Including
$708 Million, or $0.88 per share, of Restructuring, Impairment and Special
Charges;
* Cash From Operations in 4th Quarter $608 Million;
* Historic 56% Price Decline in Last Five Months and Sharp Drop in Orders Impact
Quarter;
* Workforce Reduced by 15,000; Salary and Hiring Freeze
* Extensive Restructuring, Production Cuts, Divestitures to Address Downturn
Impact Results;
* Company Liquidity Remains Solid

NEW YORK--(Business Wire)--
Alcoa (NYSE: AA) today reported its fourth quarter 2008 results which include
the impact of an historic decline in metal prices; weak end markets; and
restructuring, impairment, and other special charges for its previously
announced actions to curtail production, reduce costs, and streamline its
portfolio.

Income from continuing operations for the fourth quarter 2008 showed a loss of
$929 million, or $1.16 per share, which includes restructuring, impairment, and
other special charges of $708 million or $0.88 per share. Results were driven by
a 35 percent decline in aluminum prices in the quarter, (a 56 percent decline
from July) and a sharp drop in demand, particularly from the automotive,
commercial transportation and building and construction sectors. Income from
continuing operations in the fourth quarter 2007 was $638 million, or $0.75 per
share, and was $306 million, or $0.37 per share, in the third quarter 2008.

Net income for the fourth quarter 2008 was a loss of $1.19 billion or $1.49 per
share, which includes restructuring, impairment and other special charges of
$920 million ($212 million is included in discontinued operations) or $1.15 per
share, 80 percent of which is non-cash. Net income for the fourth quarter 2007
was $632 million, or $0.75 per share, and net income for the third quarter of
2008 was $268 million, or $0.33 per share.

"We are taking wide-ranging measures to address the economic downturn," said
Klaus Kleinfeld, President and CEO of Alcoa. "We have streamlined our portfolio
to focus on businesses where Alcoa is the recognized leader, curtailed
production to adjust to weakened demand, reduced global headcount, and achieved
significant savings in key raw materials.

"By moving quickly to address the market decline, we are using Alcoa`s strategic
flexibility and solid liquidity to address the continuing economic uncertainty
and emerge even stronger when the economy recovers," said Kleinfeld.

Discontinued operations for the fourth quarter 2008 had a loss of $262 million,
or $0.33 per share, representing the results of operations for the Electrical
and Electronic Solutions business as well as charges for previously announced
headcount reductions and asset impairments related to the intention to sell the
business. In the third quarter 2008, discontinued operations had a loss of $38
million, or $0.04 per share. The Engineered Products and Solutions segment does
not reflect the Electrical and Electronic Solutions business in its results for
the fourth quarter 2008 and all prior periods.

Revenues for the fourth quarter 2008 were $5.7 billion, down from $7.0 billion
in the third quarter 2008 and $6.1 billion in the fourth quarter 2007 after
excluding divested businesses.

Revenues for the full year 2008 were $26.9 billion and income from continuing
operations was a profit of $229 million, or $0.28 per share, primarily
reflecting the impact of restructuring, impairment, and other special charges.

Referring to the accomplishments of 2008, Kleinfeld noted, "The improvements we
made in 2008 solidified the strategic fundamentals of the Company, which
provided the flexibility to act swiftly when the economy began to fall and the
staying power to maintain our competitive lead through this historic economic
downturn."

During 2008, Alcoa had a number of accomplishments that prepared the Company for
the challenges of 2009 and the opportunities of the future. The Company secured
favorable long-term power commitments for nearly half its smelting capacity. Its
downstream business, Engineered Products and Solutions, had record results with
a 23 percent annual increase in after-tax operating income (ATOI). It shaped its
portfolio to focus on its strengths -- successfully exiting the Packaging and
Consumer business and executing a cash-free swap to exit the soft alloy
extrusion business and gain ownership of two smelters, making Alcoa the largest
aluminum producer in the world. For the seventh consecutive year Alcoa was
chosen for the Dow Sustainability Index. And the Company enters 2009 with an
increase in its short-term debt capacity of almost 60 percent.

Cash from operations in the fourth quarter 2008 was $608 million and the Company
has $762 million of cash on hand. Additionally, Alcoa expanded its 364-day
revolving credit facility to $1.9 billion in the quarter. Alcoa`s $5.2 billion
of aggregate revolving credit facilities support its commercial paper program
and provide significant liquidity in 2009.

Capital expenditures for the quarter were $1.0 billion, with 57% percent
dedicated to growth projects. The Company`s debt-to-capital ratio stood at 42.5
percent at the end of the quarter.

Looking to the future, Kleinfeld said, "Once the economy stabilizes, the global
megatrends - demographics, urbanization and environmental stewardship - will all
drive opportunities for our core products. Aluminum has the ideal combination of
strength, light weight and infinite recyclability to help countries rebuild
their infrastructures for the 21st century. We are extremely well positioned to
seize those opportunities."

Segment Results

Alumina

ATOI was $162 million, a decrease of $44 million, or 21 percent, from the prior
quarter. Slightly lower production resulted from curtailment effects at Point
Comfort which were partially offset by record output in Australia and Sao Luis.
Lower market pricing offset favorable impacts from a stronger U.S. dollar, lower
energy costs, and benefits associated with the continued recovery from the
natural gas disruption in Western Australia.

The Company is on track to complete its expansion of the Sao Luis refinery and
the new Juruti bauxite mine in Brazil. Those expansions will begin to deliver
positive cash flow to the Company late in 2009. When finished, Juruti and Sao
Luis will contribute to Alcoa`s world-class mining and refining system, moving
Alcoa into the lowest-cost quartile of the global cost curve.

Primary Metals

ATOI was a loss of $101 million, a $398 million decrease compared to the prior
quarter. Unprecedented LME price erosion of 56 percent over the second half of
the year led to a sequential 28 percent decrease in realized prices. The
benefits of a stronger U.S. dollar, lower energy costs, and continued
operational improvements in the Fjardaal smelter only partially offset effects
of the market price decline. The segment purchased approximately 47,000 mt of
primary metal for internal use.

Production decreased by 40,000 metric tons mainly due to the previously
announced full curtailment of the Rockdale smelter and commencement of the full
750,000 mt reduction of smelting capacity across Alcoa`s global system.

Flat-Rolled Products

ATOI was a loss of $98 million, a decrease of $127 million from the prior
quarter. Market declines were evident in nearly all end markets as lower
industrial demand and supply chain adjustments, along with the global economic
slowdown, reduced non-can sheet shipments by 20 percent. Additionally, the
Boeing strike had a $10 million negative effect on the results. Start-up costs
for the Company`s investment in the Bohai hot mill were $9 million in the
quarter, while costs related to the planned divestiture of the Company`s Global
Foil business were $12 million.

Engineered Products and Solutions

The segment ended 2008 with record annual ATOI. For the quarter, ATOI was $65
million, a decrease of $68 million, or 51 percent, from the prior quarter. Lower
volume was the driver of the decline as the broad-based market erosion impacted
most businesses serving the aerospace, commercial transportation, and commercial
construction markets.

The results of Alcoa`s Electrical and Electronic Solutions business were removed
from the segment for all periods due to its classification as discontinued
operations.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on Monday,
January 12, 2009 to present the quarter's results. The meeting will be webcast
via alcoa.com. Call information and related details are available at
www.alcoa.com under "Invest."

Forward Looking Statements

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. Alcoa disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information, future
events or otherwise, except as required by applicable law. Important factors
that could cause actual results to differ materially from those in the
forward-looking statements include: (a) material adverse changes in economic or
aluminum industry conditions generally, including global supply and demand
conditions and fluctuations in London Metal Exchange-based prices for primary
aluminum and other products; (b) material adverse changes in the markets served
by Alcoa, including automotive and commercial transportation, aerospace,
building and construction, distribution, packaging, and industrial gas turbine
markets; (c) Alcoa`s inability to achieve the level of cost reductions, cash
generation or conservation, return on capital improvement, improvement in
profitability and margins, or strengthening of operations anticipated by
management in connection with its restructuring activities; (d) continued
volatility or deterioration in the financial markets, including disruptions in
the commercial paper, capital and credit markets; (e) Alcoa`s inability to
mitigate impacts from increased energy, transportation and raw materials costs,
including caustic soda, calcined coke and natural gas, or from other cost
inflation; (f) Alcoa`s inability to complete its joint venture or growth
projects or achieve efficiency improvements at newly constructed or acquired
facilities as planned and by targeted completion dates; (g) unfavorable changes
in laws, governmental regulations or policies, foreign currency exchange rates
or competitive factors in the countries in which Alcoa operates; (h) significant
legal proceedings or investigations adverse to Alcoa, including environmental,
product liability, safety and health and other claims; and (i) the other risk
factors summarized in Alcoa`s Form 10-K for the year ended December 31, 2007,
Forms 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September
30, 2008 and other reports filed with the Securities and Exchange Commission.

Alcoa and subsidiaries

Statement of Consolidated Income (unaudited)

(in millions, except per-share, share, and metric ton amounts)

Quarter ended
December 31, September 30, December 31,
2007 (a) 2008 (a) 2008
Sales $ 7,032 $ 6,970 $ 5,688

Cost of goods sold (exclusive of expenses below) 5,791 5,648 5,277
Selling, general administrative, and other expenses 377 275 273
Research and development expenses 76 61 61
Provision for depreciation, depletion, and amortization 312 311 292
Restructuring and other charges (13 ) 38 863
Interest expense 81 96 125
Other (income) expenses, net (79 ) 15 (36 )
Total costs and expenses 6,545 6,444 6,855

Income (loss) from continuing operations before taxes on income 487 526 (1,167 )
(Benefit) provision for taxes on income (215 ) 136 (238 )
Income (loss) from continuing operations before minority interests` share 702 390 (929 )
Less: Minority interests` share 64 84 -

Income (loss) from continuing operations 638 306 (929 )

Loss from discontinued operations (6 ) (38 ) (262 )

NET INCOME (LOSS) $ 632 $ 268 $ (1,191 )

Earnings (loss) per common share:
Basic:
Income (loss) from continuing operations $ 0.76 $ 0.38 $ (1.16 )
Loss from discontinued operations (0.01 ) (0.05 ) (0.33 )
Net income (loss) $ 0.75 $ 0.33 $ (1.49 )

Diluted:
Income (loss) from continuing operations $ 0.75 $ 0.37 $ (1.16 )
Loss from discontinued operations - (0.04 ) (0.33 )
Net income (loss) $ 0.75 $ 0.33 $ (1.49 )

Average number of shares used to compute:
Basic earnings per common share 837,404,682 807,570,516 800,317,368
Diluted earnings per common share 845,831,650 815,207,909 800,317,368

Shipments of aluminum products (metric tons) 1,336,000 1,342,000 1,375,000

(a) The Statement of Consolidated Income for the quarters ended December 31, 2007 and September 30, 2008 were reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued
operations in the fourth quarter of 2008.

Alcoa and subsidiaries

Statement of Consolidated Income (unaudited), continued

(in millions, except per-share, share, and metric ton amounts)

Year ended
December 31,
2007 (b) 2008
Sales $ 29,280 $ 26,901

Cost of goods sold (exclusive of expenses below) 22,803 22,175
Selling, general administrative, and other expenses 1,444 1,167
Research and development expenses 238 246
Provision for depreciation, depletion, and amortization 1,244 1,234
Restructuring and other charges 268 939
Interest expense 401 407
Other income, net (1,920 ) (59 )
Total costs and expenses 24,478 26,109

Income from continuing operations before taxes on income 4,802 792
Provision for taxes on income 1,623 342
Income from continuing operations before minority interests` share 3,179 450
Less: Minority interests` share 365 221

Income from continuing operations 2,814 229

Loss from discontinued operations (250 ) (303 )

NET INCOME (LOSS) $ 2,564 $ (74 )

Earnings (loss) per common share:
Basic:
Income from continuing operations $ 3.27 $ 0.28
Loss from discontinued operations (0.29 ) (0.37 )
Net income (loss) $ 2.98 $ (0.09 )

Diluted:
Income from continuing operations $ 3.23 $ 0.28
Loss from discontinued operations (0.28 ) (0.37 )
Net income (loss) $ 2.95 $ (0.09 )

Average number of shares used to compute:
Basic earnings per common share 860,771,021 810,496,653
Diluted earnings per common share 869,459,078 817,853,749

Common stock outstanding at the end of the period 827,401,800 800,317,368

Shipments of aluminum products (metric tons) 5,393,000 5,481,000

(b) The Statement of Consolidated Income for the year ended December 31, 2007 was reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth quarter of
2008.

Alcoa and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)

December 31, December 31,

2007 (c)
2008
ASSETS
Current assets:
Cash and cash equivalents $ 483 $ 762
Receivables from customers, less allowances of $68 in 2007 and $65 in 2008 2,381 1,883
Other receivables 427 708
Inventories 3,084 3,238
Fair value of hedged aluminum 73 586
Prepaid expenses and other current assets 1,126 973
Total current assets 7,574 8,150

Properties, plants, and equipment 30,645 31,301
Less: accumulated depreciation, depletion, and amortization 14,104 13,846
Properties, plants, and equipment, net 16,541 17,455
Goodwill 4,799 4,981
Investments 2,038 1,915
Deferred income taxes 1,587 2,688
Other assets 2,438 2,386
Assets held for sale 3,826 247
Total assets $ 38,803 $ 37,822

LIABILITIES
Current liabilities:
Short-term borrowings $ 563 $ 478
Commercial paper 856 1,535
Accounts payable, trade 2,644 2,518
Accrued compensation and retirement costs 994 866
Taxes, including taxes on income 623 378
Fair value of derivative contracts 286 461
Other current liabilities 869 987
Long-term debt due within one year 202 56
Total current liabilities 7,037 7,279
Long-term debt, less amount due within one year 6,371 8,509
Accrued pension benefits 1,098 2,941
Accrued postretirement benefits 2,753 2,730
Other noncurrent liabilities and deferred credits 1,866 1,580
Deferred income taxes 545 321
Liabilities of operations held for sale 657 130
Total liabilities 20,327 23,490

MINORITY INTERESTS 2,460 2,597

SHAREHOLDERS' EQUITY
Preferred stock 55 55
Common stock 925 925
Additional capital 5,774 5,850
Retained earnings 13,039 12,400
Treasury stock, at cost (3,440 ) (4,326 )
Accumulated other comprehensive loss (337 ) (3,169 )
Total shareholders' equity 16,016 11,735
Total liabilities and equity $ 38,803 $ 37,822

(c) The Consolidated Balance Sheet as of December 31, 2007 was reclassified to reflect the movement of the Electrical and Electronic Solutions, Global Foil, Cast Auto Wheels, and Transportation Products Europe businesses
to held for sale in the fourth quarter of 2008.

Alcoa and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)

Year ended
December 31,
2007 (d) 2008
CASH FROM OPERATIONS
Net income (loss) $ 2,564 $ (74 )
Adjustments to reconcile net income (loss) to cash from operations:
Depreciation, depletion, and amortization 1,245 1,234
Deferred income taxes 311 (261 )
Equity income, net of dividends (116 ) (48 )
Restructuring and other charges 268 939
Gains from investing activities - asset sales (1,806 ) (50 )
Provision for doubtful accounts 14 31
Loss from discontinued operations 250 303
Minority interests 365 221
Stock-based compensation 97 94
Excess tax benefits from stock-based payment arrangements (79 ) (15 )
Other (81 ) (362 )
Changes in assets and liabilities, excluding effects of acquisitions,
divestitures, and foreign currency translation adjustments:
Decrease in receivables 501 150
Decrease (increase) in inventories 169 (353 )
(Increase) in prepaid expenses and other current assets (134 ) (97 )
Increase in accounts payable, trade 177 21
(Decrease) in accrued expenses (79 ) (288 )
(Decrease) increase in taxes, including taxes on income (185 ) 28
Cash received on long-term aluminum supply contract 93 -
Pension contributions (322 ) (523 )
Net change in noncurrent assets and liabilities (201 ) 135
Decrease in net assets held for sale 24 16
CASH PROVIDED FROM CONTINUING OPERATIONS 3,075 1,101
CASH PROVIDED FROM DISCONTINUED OPERATIONS 36 133
CASH PROVIDED FROM OPERATIONS 3,111 1,234

FINANCING ACTIVITIES
Net change in short-term borrowings 94 (96 )
Net change in commercial paper (617 ) 679
Additions to long-term debt 2,050 2,253
Debt issuance costs (126 ) (56 )
Payments on long-term debt (873 ) (204 )
Common stock issued for stock compensation plans 835 177
Excess tax benefits from stock-based payment arrangements 79 15
Repurchase of common stock (2,496 ) (1,082 )
Dividends paid to shareholders (590 ) (556 )
Dividends paid to minority interests (368 ) (295 )
Contributions from minority interests 474 643
CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES (1,538 ) 1,478

INVESTING ACTIVITIES
Capital expenditures (3,614 ) (3,413 )
Capital expenditures of discontinued operations (22 ) (25 )
Acquisitions, net of cash acquired (15 ) (276 )
Acquisitions of minority interests (3 ) (141 )
Proceeds from the sale of assets and businesses 183 2,710
Additions to investments (131 ) (1,303 )
Sales of investments 2,011 72
Other (34 ) (34 )
CASH USED FOR INVESTING ACTIVITIES (1,625 ) (2,410 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 29 (23 )
Net change in cash and cash equivalents (23 ) 279
Cash and cash equivalents at beginning of year 506 483
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 483 $ 762

(d) The Statement of Consolidated Cash Flows for the year ended December 31,
2007 was reclassified to reflect the movement of the Electrical and
Electronic Solutions business to held for sale and discontinued
operations and the Global Foil, Cast Auto Wheels, and Transportation
Products Europe businesses to held for sale, all of which occurred in the
fourth quarter of 2008.

Alcoa and subsidiaries

Segment Information (unaudited) (1)

(dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt])

4Q07 2007 1Q08 2Q08 3Q08 4Q08 2008
Alumina:
Alumina production (kmt) 3,855 15,084 3,870 3,820 3,790 3,776 15,256
Third-party alumina shipments (kmt) 2,030 7,834 1,995 1,913 2,010 2,123 8,041
Third-party sales $ 688 $ 2,709 $ 680 $ 717 $ 805 $ 722 $ 2,924
Intersegment sales $ 651 $ 2,448 $ 667 $ 766 $ 730 $ 640 $ 2,803
Equity income $ 1 $ 1 $ 2 $ 2 $ 2 $ 1 $ 7
Depreciation, depletion, and amortization $ 73 $ 267 $ 74 $ 67 $ 68 $ 59 $ 268
Income taxes $ 49 $ 340 $ 57 $ 67 $ 91 $ 62 $ 277
After-tax operating income (ATOI) $ 205 $ 956 $ 169 $ 190 $ 206 $ 162 $ 727

Primary Metals:
Aluminum production (kmt) 959 3,693 995 1,030 1,011 971 4,007
Third-party aluminum shipments (kmt) 624 2,291 665 750 704 807 2,926
Alcoa`s average realized price per metric ton of aluminum $ 2,646 $ 2,784 $ 2,801 $ 3,058 $ 2,945 $ 2,125 $ 2,714
Third-party sales $ 1,597 $ 6,576 $ 1,877 $ 2,437 $ 2,127 $ 1,580 $ 8,021
Intersegment sales $ 1,063 $ 4,994 $ 1,105 $ 1,108 $ 1,078 $ 636 $ 3,927
Equity income (loss) $ 6 $ 57 $ 9 $ 10 $ 1 $ (18 ) $ 2
Depreciation, depletion, and amortization $ 111 $ 410 $ 124 $ 128 $ 131 $ 120 $ 503
Income taxes $ 52 $ 542 $ 116 $ 131 $ 29 $ (104 ) $ 172
ATOI $ 196 $ 1,445 $ 307 $ 428 $ 297 $ (101 ) $ 931

Flat-Rolled Products:
Third-party aluminum shipments (kmt) 600 2,441 610 591 580 515 2,296
Third-party sales $ 2,436 $ 9,932 $ 2,492 $ 2,525 $ 2,488 $ 2,058 $ 9,563
Intersegment sales $ 71 $ 283 $ 77 $ 77 $ 58 $ 37 $ 249
Depreciation, depletion, and amortization $ 59 $ 244 $ 60 $ 63 $ 54 $ 55 $ 232
Income taxes $ 7 $ 107 $ 22 $ 23 $ 21 $ (17 ) $ 49
ATOI $ (15 ) $ 204 $ 41 $ 55 $ 29 $ (98 ) $ 27

Engineered Products and Solutions (2):
Third-party aluminum shipments (kmt) 49 207 48 49 45 40 182
Third-party sales $ 1,311 $ 5,251 $ 1,395 $ 1,498 $ 1,451 $ 1,258 $ 5,602
Depreciation, depletion, and amortization $ 38 $ 146 $ 37 $ 37 $ 38 $ 37 $ 149
Income taxes $ 29 $ 177 $ 57 $ 72 $ 57 $ 23 $ 209
ATOI $ 77 $ 409 $ 140 $ 165 $ 133 $ 65 $ 503

Packaging and Consumer (3):
Third-party aluminum shipments (kmt) 45 157 19 - - - 19
Third-party sales $ 887 $ 3,288 $ 497 $ 19 $ - $ - $ 516
Depreciation, depletion, and amortization $ - $ 89 $ - $ - $ - $ - $ -
Income taxes $ 27 $ 68 $ 10 $ - $ - $ - $ 10
ATOI $ 56 $ 148 $ 11 $ - $ - $ - $ 11

Alcoa and subsidiaries

Segment Information (unaudited), continued

(in millions)

Reconciliation of ATOI to consolidated net income: 4Q07 2007 1Q08 2Q08 3Q08 4Q08 2008
Total segment ATOI $ 519 $ 3,162 $ 668 $ 838 $ 665 $ 28 $ 2,199
Unallocated amounts (net of tax):
Impact of LIFO 9 (24 ) (31 ) (44 ) (5 ) 73 (7 )
Interest income 10 40 9 12 10 4 35
Interest expense (53 ) (261 ) (64 ) (57 ) (63 ) (81 ) (265 )
Minority interests (64 ) (365 ) (67 ) (70 ) (84 ) (1 ) (222 )
Corporate expense (100 ) (388 ) (82 ) (91 ) (77 ) (78 ) (328 )
Restructuring and other charges 8 (201 ) (30 ) (1 ) (25 ) (637 ) (693 )
Discontinued operations (6 ) (250 ) 4 (7 ) (38 ) (262 ) (303 )
Other 309 851 (104 ) (34 ) (115 ) (237 ) (490 )
Consolidated net income $ 632 $ 2,564 $ 303 $ 546 $ 268 $ (1,191 ) $ (74 )

The difference between certain segment totals and consolidated amounts is in Corporate.

(1) In the first quarter of 2008, management approved a realignment of
Alcoa's reportable segments to better reflect the core businesses in
which Alcoa operates and how it is managed. This realignment consisted of
eliminating the Extruded and End Products segment and realigning its
component businesses as follows: the building and construction systems
business is reported in the Engineered Products and Solutions segment;
the hard alloy extrusions business and the Russian extrusions business
are reported in the Flat-Rolled Products segment; and the remaining
segment components, consisting primarily of the equity investment/income
of Alcoa's interest in the Sapa AB joint venture, and the Latin American
extrusions business, are reported in Corporate. Additionally, the Russian
forgings business was moved from the Engineered Products and Solutions
segment to the Flat-Rolled Products segment, where all Russian operations
are now reported. Prior period amounts were reclassified to reflect the
new segment structure. Also, the Engineered Solutions segment was renamed
the Engineered Products and Solutions segment.

(2) Prior period segment information for Engineered Products and Solutions
was reclassified to reflect the movement of the Electrical and Electronic
Solutions business to discontinued operations in the fourth quarter of
2008.

(3) On February 29, 2008, Alcoa completed the sale of its packaging and
consumer businesses to Rank Group Limited. In the 2008 second quarter,
Alcoa received regulatory and other approvals for a small number of
locations that did not close in the 2008 first quarter. Also, in the 2008
third quarter, one final remaining location was transferred to Rank. The
Packaging and Consumer segment no longer contains any operations.

Alcoa and subsidiaries

Calculation of Financial Measures (unaudited)

(in millions)

Third-party Sales
Quarter ended
December 31, Septem Decemb
2007 (a) ber er 31,
30, 2008
2008
(a)

Alcoa $ 7,032 $ 6,970 $ 5,688

Divested businesses (b) 905 - -

Alcoa, excluding divested businesses $ 6,127 $ 6,970 $ 5,688

Third-party sales excluding divested businesses is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding divested businesses since they are no longer reflective of Alcoa`s continuing operations.

(a) Third-party sales for the quarters ended December 31, 2007 and September 30, 2008 were reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth
quarter of 2008.

(b) Divested businesses include the businesses within the Packaging and Consumer segment, certain U.S. locations of the Soft Alloy Extrusions business that were not contributed to the Sapa AB joint venture, and the
Automotive Castings business.

Alcoa
Investor Contact:
Greg T. Aschman, 212-836-2674
or
Media Contact:
Kevin G. Lowery, 412-553-1424
Mobile 724-422-7844

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