Alcoa 2007 Revenues, Income and Cash From Operations Highest in Company's History

Alcoa (NYSE: AA) today announced it achieved record results in revenues, income from continuing operations and cash from operations for the full year 2007. Revenues for 2007 were $30.7 billion, compared to $30.4 billion in 2006. Annual income from continuing operations rose to $2.6 billion, or $2.95 per diluted share, for 2007, a 19 percent increase compared to $2.2 billion, or $2.47, in 2006. And, cash from operations for 2007 increased 21 percent to more than $3.1 billion from $2.6 billion in 2006.

"For the second year in a row, Alcoa has achieved company all-time records in revenues, income from continuing operations and cash generation, said Alain Belda, Alcoa Chairman and CEO. "We battled substantially higher material input and energy costs, and currency impacts while simultaneously continuing to execute on the largest capital investment program in our history.

"We have invested in new plants, expanded production at others, modernized operations, renegotiated long-term power agreements, and built new energy facilities to extend our energy access at competitive rates, while also continuing to invest in growth markets such as Brazil, China and Russia, Belda said.

"These actions, combined with portfolio and cash flow management, our share repurchase program, conservative leverage, and our commitment to sustainability delivered results now, and will continue to generate quality profitable growth for decades, added Belda. "In 2007, Alcoans delivered yet again. This is what builds a stronger Company for our stakeholders.

Fourth quarter income from continuing operations was $624 million, or $0.74. Included in the results are a favorable restructuring adjustment and a tax benefit totaling $323 million or $0.38 per share, almost all of which stems from the recent agreement to sell the packaging and consumer businesses. Income from continuing operations in the 2006 fourth quarter was $258 million, or $0.29, and $558 million, or $0.64, in the third quarter 2007.

Net income for the fourth quarter 2007 was $632 million, or $0.75, which includes the restructuring adjustment and the benefit from the agreement to sell the packaging and consumer business. Net income for the fourth quarter 2006 was $359 million, or $0.41, and $555 million, or $0.63, in the 2007 third quarter.

Revenues for the 2007 fourth quarter were $7.4 billion, compared to $7.8 billion a year ago as a result of lower LME prices and the exclusion of results from the soft alloy extrusion business which is now part of a joint venture. The soft alloy extrusion business had revenues of approximately $560 million in the fourth quarter of 2006.

Cash Generation, ROC, and Growth

Cash from operations in the fourth quarter 2007 was $643 million, bringing full-year cash from operations to more than $3.1 billion, compared to $2.6 billion in 2006 and helping to keep the Company's debt-to-capital ratio within its targeted range at 30.2 percent.

The Company's trailing 12-month return on capital (ROC) was 16.1 percent, excluding investments in growth projects. Including investments in growth projects, ROC stands at 12.7 percent, well above the cost of capital.

In 2007, the Company completed major growth projects, including its first greenfield smelter in 20 years in Iceland, a new anode plant in Mosjoen, Norway, and its third flat-rolled products facility in China (Kunshan). In addition, major progress was made on several other growth projects including the Juruti bauxite mine, the expansion of the Bohai rolling mill in China, and expansion of the Sao Luis alumina refinery.

The Company made significant progress to extend the life of existing facilities through renegotiating long-term power agreements including those in Massena, NY and Wenatchee, WA in 2007. The Company also continued investments in Brazil including the Serra do Facao hydroelectric project to further increase its self-sufficiency there.

The Company is now operating primary aluminum production at a run rate of approximately four million metric tons per year.

The Company made major progress in 2007 on its portfolio management plan. During the year, the Company reached agreement to sell its packaging and consumer businesses; divested the automotive castings business; monetized its stake in Chalco to enable redeployment of capital into other value-adding options, including projects in China; and formed a joint venture with Sapa for its soft alloy extrusion business.

In 2007, Alcoa also increased its share repurchase program from 10 percent to 25 percent of outstanding shares and increased its dividend by 13 percent during the year. Through the end of the fourth quarter the Company has repurchased 68 million shares, or approximately eight percent of shares outstanding, as part of its share repurchase program, leaving approximately 150 million shares, or 18 percent of shares outstanding, remaining within the authorization.

Segment and Other Results

(all comparisons on a sequential quarter basis, unless noted)

Alumina - After-tax operating income (ATOI) was $205 million, a decrease of $10 million, or five percent, from the prior quarter. System production increased by a net of 80 kmt as Suralco, San Ciprian and Pinjarra set quarterly production records and Jamalco continued its recovery from Hurricane Dean. However, higher freight and energy costs and unfavorable currency offset production gains.

Primary Metals -- ATOI was $196 million, down $87 million, or 31 percent, compared to the prior quarter. The majority of the decrease resulted from lower LME prices and unfavorable currency. These items were partially offset by the recovery at the Rockdale and Tennessee smelters and a three percent production increase. The company purchased approximately 55 kmt of primary metal for internal use.

Flat-Rolled Products - ATOI was a loss of $16 million for the quarter, down $77 million from the prior quarter. Weak performance in Russia and China accounted for 50 percent of the ATOI decline in the quarter. For Russia specifically, the increased loss was due to higher operational and energy costs and unfavorable currency. The remaining decline in the segment's ATOI is mostly due to general market weakness in the U.S. and Europe flat-rolled businesses, weaker product mix, and de-stocking by aerospace customers. Finally, results for the Australian flat-rolled business declined following restructuring last quarter that is designed to reduce headcount and simplify product mix. In addition, the weakening U.S. dollar has had a negative impact in this business.

Extruded and End Products - ATOI was $16 million, up $3 million, or 23 percent, from the prior quarter. Market and operating conditions were comparable to the prior quarter with margin improvements accounting for the increase.

Engineered Solutions - ATOI was $58 million or essentially flat to the prior quarter ATOI of $60 million. Improvements from the wire harness business restructuring offset the weaker market conditions in forgings and investment castings. On a year over year basis, the Fastening Systems and Power & Propulsion (Howmet) businesses had outstanding years with ATOI up 36 percent and 47 percent, respectively.

Packaging & Consumer -- ATOI was $56 million, up $20 million, or 56 percent, from the prior quarter. The normal seasonal decrease in the closures business was offset by seasonal improvements in the consumer products business. With the pending sale, depreciation was ceased in the segment leading to a positive impact of approximately $20 million.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on January 9th 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."

About Alcoa

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, through its growing position in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, structures and building systems. The Company has 107,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

Forward Looking Statement

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 intention or obligation, other than as required by law, to update or revise any forward-looking statements. 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 London Metal Exchange-based prices for primary aluminum, alumina and other products; (b) material adverse changes in the markets served by Alcoa, including the transportation, building, construction, distribution, packaging, industrial gas turbine and other markets; (c) Alcoa's inability to mitigate impacts from unfavorable currency fluctuations or from increased energy, transportation and raw materials costs or other cost inflation; (d) Alcoa's inability to achieve the level of cash generation, return on capital improvement, cost savings, or earnings or revenue growth anticipated by management; (e) Alcoa's inability to complete its growth projects and integration of acquired facilities as planned and by targeted completion dates; (f) unfavorable changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (g) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (h) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2006, Forms 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007, 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)
	ÂÂ
	Quarter ended
	December 31,			ÂÂ	September 30,			ÂÂ	December 31,
	2006				2007				2007
Sales	$	7,840			$	7,387			$	7,387
									ÂÂ
Cost of goods sold (exclusive of expenses below)		6,132				5,910				6,153
Selling, general administrative, and other expenses		367				365				383
Research and development expenses		63				64				78
Provision for depreciation, depletion, and amortization		325				338				309
Goodwill impairment charge		-				133				-
Restructuring and other charges		554				444				(14	)
Interest expense		93				151				81
Other income, net	ÂÂ	(49	)		ÂÂ	(1,731	)		ÂÂ	(78	)
Total costs and expenses		7,485				5,674				6,912
									ÂÂ
Income from continuing operations before taxes on income		355				1,713				475
(Benefit) provision for taxes on income	ÂÂ	(1	)		ÂÂ	1,079	ÂÂ		ÂÂ	(213	)
Income from continuing operations before minority interests' share		356				634				688
Less: Minority interests' share	ÂÂ	98	ÂÂ		ÂÂ	76	ÂÂ		ÂÂ	64	ÂÂ
									ÂÂ
Income from continuing operations		258				558				624
									ÂÂ
Income (loss) from discontinued operations	ÂÂ	101	ÂÂ		ÂÂ	(3	)		ÂÂ	8	ÂÂ
									ÂÂ
NET INCOME	$	359	ÂÂ		$	555	ÂÂ		$	632	ÂÂ
									ÂÂ
Earnings (loss) per common share:
Basic:
Income from continuing operations	$	.30			$	.64			$	.74
Income (loss) from discontinued operations	ÂÂ	.11	ÂÂ		ÂÂ	-	ÂÂ		ÂÂ	.01	ÂÂ
Net income	$	.41	ÂÂ		$	.64	ÂÂ		$	.75	ÂÂ
Diluted:
Income from continuing operations	$	.29			$	.64			$	.74
Income (loss) from discontinued operations	ÂÂ	.12	ÂÂ		ÂÂ	(.01	)		ÂÂ	.01	ÂÂ
Net income	$	.41	ÂÂ		$	.63	ÂÂ		$	.75	ÂÂ
									ÂÂ
Average number of shares used to compute:
Basic earnings per common share		867,331,378				867,664,875				837,404,682
Diluted earnings per common share		873,059,079				877,700,035				845,831,650
									ÂÂ
Shipments of aluminum products (metric tons)		1,399,000				1,328,000				1,336,000

Alcoa and subsidiaries
Statement of Consolidated Income (unaudited), continued
(in millions, except per-share, share, and metric ton amounts)
	ÂÂ
	Year ended
	December 31,
	2006			ÂÂ	2007
Sales	$	30,379			$	30,748
					ÂÂ
Cost of goods sold (exclusive of expenses below)		23,318				24,248
Selling, general administrative, and other expenses		1,402				1,472
Research and development expenses		213				249
Provision for depreciation, depletion, and amortization		1,280				1,268
Goodwill impairment charge		-				133
Restructuring and other charges		543				399
Interest expense		384				401
Other income, net	ÂÂ	(193	)		ÂÂ	(1,913	)
Total costs and expenses		26,947				26,257
					ÂÂ
Income from continuing operations before taxes on income		3,432				4,491
Provision for taxes on income	ÂÂ	835	ÂÂ		ÂÂ	1,555	ÂÂ
Income from continuing operations before minority interests' share		2,597				2,936
Less: Minority interests' share	ÂÂ	436	ÂÂ		ÂÂ	365	ÂÂ
					ÂÂ
Income from continuing operations		2,161				2,571
					ÂÂ
Income (loss) from discontinued operations	ÂÂ	87	ÂÂ		ÂÂ	(7	)
					ÂÂ
NET INCOME	$	2,248	ÂÂ		$	2,564	ÂÂ
					ÂÂ
Earnings (loss) per common share:
Basic:
Income from continuing operations	$	2.49			$	2.98
Income (loss) from discontinued operations	ÂÂ	.10	ÂÂ		ÂÂ	-	ÂÂ
Net income	$	2.59	ÂÂ		$	2.98	ÂÂ
Diluted:
Income from continuing operations	$	2.47			$	2.95
Income (loss) from discontinued operations	ÂÂ	.10	ÂÂ		ÂÂ	-	ÂÂ
Net income	$	2.57	ÂÂ		$	2.95	ÂÂ
					ÂÂ
Average number of shares used to compute:
Basic earnings per common share		868,819,955				860,771,021
Diluted earnings per common share		874,963,528				869,459,078
					ÂÂ
Common stock outstanding at the end of the period		867,739,544				827,401,800
					ÂÂ
Shipments of aluminum products (metric tons)		5,545,000				5,393,000

Alcoa and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
	ÂÂ				ÂÂ
ÂÂ		December 31, 2006 (a)				December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents		$	506			$	483
Receivables from customers, less allowances of $68 in 2006 and $72 in 2007			2,788				2,602
Other receivables			301				451
Inventories			3,380				3,326
Prepaid expenses and other current assets		ÂÂ	1,378	ÂÂ		ÂÂ	1,224	ÂÂ
Total current assets		ÂÂ	8,353	ÂÂ		ÂÂ	8,086	ÂÂ
						ÂÂ
Properties, plants, and equipment			27,689				31,601
Less: accumulated depreciation, depletion, and amortization		ÂÂ	13,682	ÂÂ		ÂÂ	14,722	ÂÂ
Properties, plants, and equipment, net		ÂÂ	14,007	ÂÂ		ÂÂ	16,879	ÂÂ
Goodwill			4,885				4,806
Investments			1,718				2,038
Other assets			3,939				4,046
Assets held for sale		ÂÂ	4,281	ÂÂ		ÂÂ	2,948	ÂÂ
Total assets		$	37,183	ÂÂ		$	38,803	ÂÂ
						ÂÂ
LIABILITIES
Current liabilities:
Short-term borrowings		$	462			$	569
Commercial paper			340				856
Accounts payable, trade			2,407				2,787
Accrued compensation and retirement costs			949				943
Taxes, including taxes on income			851				644
Other current liabilities			1,360				1,165
Long-term debt due within one year		ÂÂ	510	ÂÂ		ÂÂ	202	ÂÂ
Total current liabilities		ÂÂ	6,879	ÂÂ		ÂÂ	7,166	ÂÂ
Commercial paper			1,132				-
Long-term debt, less amount due within one year			4,777				6,371
Accrued pension benefits			1,540				1,098
Accrued postretirement benefits			2,956				2,753
Other noncurrent liabilities and deferred credits			2,002				1,943
Deferred income taxes			762				545
Liabilities of operations held for sale		ÂÂ	704	ÂÂ		ÂÂ	451	ÂÂ
Total liabilities		ÂÂ	20,752	ÂÂ		ÂÂ	20,327	ÂÂ
						ÂÂ
MINORITY INTERESTS		ÂÂ	1,800	ÂÂ		ÂÂ	2,460	ÂÂ
						ÂÂ
SHAREHOLDERS' EQUITY
Preferred stock			55				55
Common stock			925				925
Additional capital			5,817				5,774
Retained earnings			11,066				13,039
Treasury stock, at cost			(1,999	)			(3,440	)
Accumulated other comprehensive loss		ÂÂ	(1,233	)		ÂÂ	(337	)
Total shareholders' equity		ÂÂ	14,631	ÂÂ		ÂÂ	16,016	ÂÂ
Total liabilities and equity		$	37,183	ÂÂ		$	38,803	ÂÂ

(a) The Consolidated Balance Sheet as of December 31, 2006 has been
    reclassified to reflect the movement of the automotive castings
    and packaging and consumer businesses to held for sale in the
    third quarter of 2007.

Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
	ÂÂ
		Year ended December 31,
		2006 (b)			ÂÂ	2007
CASH FROM OPERATIONS
Net income		$	2,248			$	2,564
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion, and amortization			1,280				1,269
Deferred income taxes			(68	)			248
Equity income, net of dividends			(89	)			(116	)
Goodwill impairment charge			-				133
Restructuring and other charges			543				399
Gains from investing activities - asset sales			(25	)			(1,800	)
Provision for doubtful accounts			22				15
(Income) loss from discontinued operations			(87	)			7
Minority interests			436				365
Stock-based compensation			72				97
Excess tax benefits from stock-based payment arrangements			(17	)			(79	)
Other (c)			(222	)			(81	)
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
(Increase) decrease in receivables			(109	)			517
(Increase) decrease in inventories			(509	)			186
(Increase) in prepaid expenses and other current assets			(175	)			(129	)
(Decrease) increase in accounts payable and accrued expenses			(285	)			79
Increase (decrease) in taxes, including taxes on income (c)			30				(169	)
Cash received on long-term aluminum supply contract			-				93
Pension contributions			(397	)			(322	)
Net change in noncurrent assets and liabilities			(41	)			(172	)
(Increase) decrease in net assets held for sale		ÂÂ	(44	)		ÂÂ	8	ÂÂ
CASH PROVIDED FROM CONTINUING OPERATIONS			2,563				3,112
CASH PROVIDED FROM (USED FOR) DISCONTINUED OPERATIONS		ÂÂ	4	ÂÂ		ÂÂ	(1	)
CASH PROVIDED FROM OPERATIONS		ÂÂ	2,567	ÂÂ		ÂÂ	3,111	ÂÂ
						ÂÂ
FINANCING ACTIVITIES
Net change in short-term borrowings			126				94
Net change in commercial paper			560				(617	)
Additions to long-term debt			29				2,050
Debt issuance costs			-				(126	)
Payments on long-term debt			(36	)			(873	)
Common stock issued for stock compensation plans			155				835
Excess tax benefits from stock-based payment arrangements			17				79
Repurchase of common stock			(290	)			(2,496	)
Dividends paid to shareholders			(523	)			(590	)
Dividends paid to minority interests			(400	)			(368	)
Contributions from minority interests		ÂÂ	342	ÂÂ		ÂÂ	474	ÂÂ
CASH USED FOR FINANCING ACTIVITIES		ÂÂ	(20	)		ÂÂ	(1,538	)
						ÂÂ
INVESTING ACTIVITIES
Capital expenditures			(3,201	)			(3,636	)
Capital expenditures of discontinued operations			(4	)			-
Proceeds from the sale of assets			372				183
Additions to investments			(58	)			(131	)
Sales of investments			35				2,011
Net change in short-term investments and restricted cash			(4	)			3
Other		ÂÂ	19	ÂÂ		ÂÂ	(55	)
CASH USED FOR INVESTING ACTIVITIES		ÂÂ	(2,841	)		ÂÂ	(1,625	)
						ÂÂ
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		ÂÂ	38	ÂÂ		ÂÂ	29	ÂÂ
Net change in cash and cash equivalents			(256	)			(23	)
Cash and cash equivalents at beginning of year		ÂÂ	762	ÂÂ		ÂÂ	506	ÂÂ
CASH AND CASH EQUIVALENTS AT END OF YEAR		$	506	ÂÂ		$	483	ÂÂ

(b) The Statement of Consolidated Cash Flows for the year ended
    December 31, 2006 has been reclassified to reflect the movement
    of the automotive castings and packaging and consumer
    businesses to held for sale in the third quarter of 2007.

ÂÂ

(c) A reclassification of $53 related to income taxes was made in
    the Statement of Consolidated Cash Flows for the year ended
    December 31, 2006 to conform to the current period presentation.

Alcoa and subsidiaries       Segment Information (unaudited) (dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt])
				ÂÂ				ÂÂ			ÂÂ			ÂÂ				ÂÂ				ÂÂ
	4Q06				2006				1Q07			2Q07			3Q07				4Q07				2007
Alumina:
Alumina production (kmt)		3,790				15,128				3,655			3,799			3,775				3,855				15,084
Third-party alumina shipments (kmt)		2,084				8,420				1,877			1,990			1,937				2,030				7,834
Third-party sales	$	711			$	2,785			$	645		$	712		$	664			$	688			$	2,709
Intersegment sales	$	550			$	2,144			$	579		$	587		$	631			$	651			$	2,448
Equity income (loss)	$	1			$	(2	)		$	1		$	-		$	(1	)		$	1			$	1
Depreciation, depletion, and amortization	$	56			$	192			$	56		$	62		$	76			$	73			$	267
Income taxes	$	115			$	428			$	100		$	102		$	89			$	49			$	340
After-tax operating income (ATOI)	$	259	ÂÂ	ÂÂ	$	1,050	ÂÂ	ÂÂ	$	260	ÂÂ	$	276	ÂÂ	$	215	ÂÂ	ÂÂ	$	205	ÂÂ	ÂÂ	$	956
																							ÂÂ
Primary Metals:
Aluminum production (kmt)		908				3,552				899			901			934				959				3,693
Third-party aluminum shipments (kmt)		556				2,087				518			565			584				624				2,291
Alcoa's average realized price per metric ton of aluminum	$	2,766			$	2,665			$	2,902		$	2,879		$	2,734			$	2,646			$	2,784
Third-party sales	$	1,698			$	6,171			$	1,633		$	1,746		$	1,600			$	1,597			$	6,576
Intersegment sales	$	1,524			$	6,208			$	1,477		$	1,283		$	1,171			$	1,063			$	4,994
Equity income	$	18			$	82			$	22		$	18		$	11			$	6			$	57
Depreciation, depletion, and amortization	$	97			$	395			$	95		$	102		$	102			$	111			$	410
Income taxes	$	180			$	726			$	214		$	196		$	80			$	52			$	542
ATOI	$	480	ÂÂ	ÂÂ	$	1,760	ÂÂ	ÂÂ	$	504	ÂÂ	$	462	ÂÂ	$	283	ÂÂ	ÂÂ	$	196	ÂÂ	ÂÂ	$	1,445
																							ÂÂ
Flat-Rolled Products:
Third-party aluminum shipments (kmt)		564				2,273				568			583			602				574				2,327
Third-party sales	$	2,127			$	8,297			$	2,275		$	2,344		$	2,309			$	2,243			$	9,171
Intersegment sales	$	66			$	246			$	60		$	63		$	59			$	59			$	241
Equity loss	$	(1	)		$	(2	)		$	-		$	-		$	-			$	-			$	-
Depreciation, depletion, and amortization	$	55			$	219			$	55		$	55		$	58			$	55			$	223
Income taxes	$	(2	)		$	68			$	26		$	33		$	31			$	5			$	95
ATOI	$	62	ÂÂ	ÂÂ	$	255	ÂÂ	ÂÂ	$	62	ÂÂ	$	93	ÂÂ	$	61	ÂÂ	ÂÂ	$	(16	)	ÂÂ	$	200
																							ÂÂ
Extruded and End Products:
Third-party aluminum shipments (kmt)		203				877				213			146			78				69				506
Third-party sales	$	1,070			$	4,419			$	1,175		$	965		$	563			$	543			$	3,246
Intersegment sales	$	25			$	99			$	42		$	26		$	13			$	7			$	88
Equity income (loss)	$	-			$	-			$	-		$	9		$	(2	)		$	7			$	14
Depreciation, depletion, and amortization	$	31			$	118			$	9		$	10		$	11			$	9			$	39
Income taxes	$	2			$	18			$	11		$	29		$	5			$	9			$	54
ATOI	$	27	ÂÂ	ÂÂ	$	60	ÂÂ	ÂÂ	$	34	ÂÂ	$	46	ÂÂ	$	13	ÂÂ	ÂÂ	$	16	ÂÂ	ÂÂ	$	109
																							ÂÂ
Engineered Solutions:
Third-party aluminum shipments (kmt)		30				139				31			30			27				24				112
Third-party sales	$	1,346			$	5,456			$	1,449		$	1,478		$	1,407			$	1,391			$	5,725
Equity loss	$	(5	)		$	(4	)		$	-		$	-		$	-			$	-			$	-
Depreciation, depletion, and amortization	$	44			$	169			$	41		$	42		$	46			$	43			$	172
Income taxes	$	(15	)		$	101			$	44		$	47		$	38			$	11			$	140
ATOI	$	73	ÂÂ	ÂÂ	$	331	ÂÂ	ÂÂ	$	93	ÂÂ	$	105	ÂÂ	$	60	ÂÂ	ÂÂ	$	58	ÂÂ	ÂÂ	$	316
																							ÂÂ
Packaging and Consumer:
Third-party aluminum shipments (kmt)		46				169				35			40			37				45				157
Third-party sales	$	837			$	3,235			$	736		$	837		$	828			$	887			$	3,288
Equity income	$	1			$	1			$	-		$	-		$	-			$	-			$	-
Depreciation, depletion, and amortization	$	32			$	124			$	30		$	30		$	29			$	-			$	89
Income taxes	$	11			$	33			$	7		$	17		$	17			$	27			$	68
ATOI	$	26	ÂÂ	ÂÂ	$	95	ÂÂ	ÂÂ	$	19	ÂÂ	$	37	ÂÂ	$	36	ÂÂ	ÂÂ	$	56	ÂÂ	ÂÂ	$	148

Alcoa and subsidiaries       Segment Information (unaudited), continued (in millions)
				ÂÂ				ÂÂ				ÂÂ				ÂÂ				ÂÂ				ÂÂ
Reconciliation of ATOI to consolidated net income:	4Q06				2006				1Q07				2Q07				3Q07				4Q07				2007
Total segment ATOI	$	927			$	3,551			$	972			$	1,019			$	668			$	515			$	3,174
Unallocated amounts (net of tax):
Impact of LIFO		(66	)			(170	)			(27	)			(16	)			10				9				(24	)
Interest income		14				58				11				9				10				10				40
Interest expense		(61	)			(250	)			(54	)			(56	)			(98	)			(53	)			(261	)
Minority interests		(98	)			(436	)			(115	)			(110	)			(76	)			(64	)			(365	)
Corporate expense		(82	)			(317	)			(86	)			(101	)			(101	)			(100	)			(388	)
Restructuring and other charges		(386	)			(379	)			(18	)			21				(311	)			1				(307	)
Discontinued operations		101				87				(11	)			(1	)			(3	)			8				(7	)
Other	ÂÂ	10	ÂÂ	ÂÂ	ÂÂ	104	ÂÂ	ÂÂ	ÂÂ	(10	)	ÂÂ	ÂÂ	(50	)	ÂÂ	ÂÂ	456	ÂÂ	ÂÂ	ÂÂ	306	ÂÂ	ÂÂ	ÂÂ	702	ÂÂ
Consolidated net income	$	359	ÂÂ	ÂÂ	$	2,248	ÂÂ	ÂÂ	$	662	ÂÂ	ÂÂ	$	715	ÂÂ	ÂÂ	$	555	ÂÂ	ÂÂ	$	632	ÂÂ	ÂÂ	$	2,564	ÂÂ
																											ÂÂ
The difference between certain segment financial information totals and consolidated financial information is in Corporate.

Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (in millions)
								ÂÂ
Bloomberg Return on Capital (1)									Bloomberg Return on Capital, Excluding Growth Investments (1)
													ÂÂ
	Year ended									Year ended
	December 31,									December 31,
	2006			ÂÂ	2007					2006				2007
														ÂÂ
Net income	$	2,248			$	2,564			Net income	$	2,248			$	2,564
														ÂÂ
Minority  interests		436				365			Minority  interests ÂÂ		436				365
														ÂÂ
Interest  expense									Interest  expense
(after tax)	ÂÂ	291	ÂÂ		ÂÂ	262	ÂÂ		(after tax)	ÂÂ	291	ÂÂ		ÂÂ	262	ÂÂ
														ÂÂ
Numerator	$	2,975	ÂÂ		$	3,191	ÂÂ		Numerator		2,975				3,191
														ÂÂ
									Net losses of growth investments (2)	ÂÂ	74	ÂÂ		ÂÂ	91	ÂÂ
														ÂÂ
									Adjusted numerator	$	3,049	ÂÂ		$	3,282	ÂÂ
														ÂÂ
Average Balances									Average  Balances
Short-term  borrowings	$	386			$	516			Short-term  borrowings	$	386			$	516
Short-term debt		284				356			Short-term debt		284				356
Commercial  paper		1,192				1,164			Commercial  paper		1,192				1,164
Long-term debt		5,027				5,574			Long-term debt		5,027				5,574
Preferred stock		55				55			Preferred stock		55				55
Minority interests		1,583				2,130			Minority  interests		1,583				2,130
Common  equity (3)	ÂÂ	13,947	ÂÂ		ÂÂ	15,269	ÂÂ		Common  equity (3)	ÂÂ	13,947	ÂÂ		ÂÂ	15,269	ÂÂ
														ÂÂ
Denominator	$	22,474	ÂÂ		$	25,064	ÂÂ		Denominator		22,474				25,064
														ÂÂ
									Capital projects in progress and capital base of growth investments (2)	ÂÂ	(3,655	)		ÂÂ	(4,620	)
														ÂÂ
									Adjusted denominator	$	18,819	ÂÂ		$	20,444	ÂÂ
														ÂÂ
Return on capital		13.2	%			12.7	%		Return on capital, excluding growth investments		16.2	%			16.1	%

Return on capital, excluding growth investments is a non-GAAP
financial measure. Management believes that this measure is
meaningful to investors because it provides greater insight with
respect to the underlying operating performance of the company's
productive assets. The company has significant growth investments
underway in its upstream and downstream businesses, as previously
noted, with expected completion dates over the next several years.
As these investments generally require a period of time before they
are productive, management believes that a return on capital
measure excluding these growth investments is more representative
of current operating performance.

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(1) The Bloomberg Methodology calculates ROC based on the trailing
    four quarters. Average balances are calculated as (December
    2007 ending balance + December 2006 ending balance) divided by
    2 for the year ending December 31, 2007, and (December 2006
    ending balance + December 2005 ending balance) divided by 2 for
    the year ending December 31, 2006.

(2) For all periods presented, growth investments include Russia
    and Bohai. Kunshan is also included as a growth investment for
    the year ending December 31, 2007.

(3) Calculated as total shareholders' equity less preferred stock.