Revenue, Earnings Improve Year-Over-Year

4Q 2011 Highlights

• Loss from continuing operations of $193 million, or $0.18 per share;
  excluding special items, loss from continuing operations of $34
  million, or $0.03 per share
• Revenue of $6 billion, down 7 percent sequentially, up 6 percent from
  4Q 2010
• Cash from operations of $1.14 billion, up $653 million from 3Q 2011
• Record low days working capital
• Free cash flow of $656 million
• Cash on hand of $1.9 billion
• 531,000 metric tons of capacity closed or curtailed to improve
  competitive position
• Forecasting 7 percent growth in global aluminum demand and a global
  aluminum supply deficit in 2012

2011 Full-Year Highlights

• Revenue of $25 billion, up 19 percent over 2010
• Income from continuing operations of $614 million, or $0.55 per share,
  more than double 2010 results; excluding special items, income from
  continuing operations of $812 million, or $0.72 per share
• Cash from operations of $2.2 billion
• Free cash flow of $906 million
• Debt-to-capital ratio 35 percent

NEW YORK–Alcoa (NYSE:AA) today reported a loss from continuing operations of $193
million, or $0.18 per share, in fourth quarter 2011 on restructuring
charges associated with the closure and curtailment of high-cost
production capacity, lower aluminum prices, and continued market
weakness. Excluding the net negative impact of restructuring and other
special items, the loss from continuing operations was $34 million, or
$0.03 per share.

The fourth quarter 2011 loss compares to income from continuing
operations of $172 million, or $0.15 per share, in third quarter 2011,
and income of $258 million, or $0.24 per share, reported in fourth
quarter 2010.

For the full-year 2011, Alcoa reported income from continuing operations
of $614 million, or $0.55 per share, more than double 2010 results. The
Company ended the year in a strong cash position, with $1.9 billion cash
on hand.

“Alcoa turned in solid performance in a volatile year by responding
quickly to changing market conditions and relentlessly managing cash. We
stayed focused on growth and took aggressive action to cut costs,
improve our competitiveness, and strengthen our balance sheet,” said
Alcoa Chairman and CEO Klaus Kleinfeld.

“For 2012, we expect global aluminum demand to grow 7 percent and are
forecasting a global deficit in primary aluminum supply.”

Alcoa’s growth projection is ahead of the 6.5 percent rate required to
meet the Company’s forecast of a doubling in global aluminum demand
between 2010 and 2020. Aluminum demand grew 10 percent in 2011 on top of
13 percent growth seen in 2010.

Alcoa also projects that growing demand for aluminum, combined with
market-related production cutbacks, will result in a global aluminum
industry deficit of 600,000 metric tons in 2012.

Alcoa projects global growth in the aerospace (10-11 percent),
automotive (3-8 percent), commercial transportation (2-5 percent),
packaging (2-3 percent), and building and construction (4-5 percent)
markets.

Fourth Quarter 2011

Revenue for fourth quarter 2011 was $6 billion, down 7 percent from the
$6.4 billion reported in third quarter 2011, but up 6 percent over
fourth quarter 2010 revenue of $5.7 billion.

Sequentially, fourth quarter revenues were lower, primarily due to
continued European weakness brought on by the sovereign debt crisis and
resulting global market uncertainty. Realized pricing declined for both
alumina (down 9 percent) and aluminum (down 12 percent). Results were
also affected by lower revenues in packaging (down 17 percent),
industrial products (down 15 percent), building and construction (down
15 percent), commercial transportation (down 8 percent), and automotive
(down 2 percent) compared to third quarter 2011. Aerospace revenue grew
(up 5 percent) over the sequential quarter, as did revenue in the
industrial gas turbine market.

Fourth quarter 2011 net loss was $191 million, or $0.18 per share,
compared to income of $172 million, or $0.15 per share, in third quarter
2011 and $258 million, or $0.24 per share, in fourth quarter 2010.
Adjusted EBITDA in fourth quarter 2011 was $445 million.

Included in the fourth quarter loss were $159 million of
restructuring-related charges, primarily associated with the closure or
curtailment of high-cost smelting production capacity, of which
approximately 60 percent is non-cash. Another $26 million in charges
associated with discrete income tax items and uninsured losses were
offset by the positive impact of mark-to-market changes on certain
energy contracts and the sale of land in Australia.

Despite deteriorating prices and market conditions in the fourth
quarter, Alcoa turned in outstanding performance against the Company’s
financial targets. Alcoa generated $656 million in free cash flow in the
quarter, four times better than results from the sequential quarter,
while cash from operations was $1.14 billion. Alcoa improved liquidity
in fourth quarter 2011, with cash on hand rising 46 percent to $1.9
billion compared to third quarter 2011. The Company ended the fourth
quarter with days working capital at 27, a record low and 3 days lower
than 2010.

As previously announced, Alcoa plans to close or curtail 531,000 metric
tons, or 12 percent, of its system smelting capacity to improve the
Company’s competitive position.

Curtailments at Alcoa’s smelters in Portovesme, Italy, and La Coruña and
Avilés, Spain, represent 240,000 metric tons, or 5 percent, of Alcoa’s
global capacity. The previously announced closing of Alcoa’s smelter in
Alcoa, Tennessee, and two lines at the Company’s Rockdale, Texas,
smelter, account for another 291,000 metric tons of capacity reduction.

In addition to the closures and curtailments, Alcoa will aggressively
accelerate actions to reduce the cost of raw materials used by its
Primary Products business and will adjust capacity across the Company’s
global refining system to reflect internal demand as well as prevailing
market conditions.

2011 Full-Year

For the year 2011, revenue was $25 billion, compared to $21 billion in
2010. Income from continuing operations was $614 million, or $0.55 per
share, in 2011 compared with $262 million, or $0.25 per share, in 2010.
In 2011, income from continuing operations includes special items
resulting in a net negative impact of $198 million, or $0.17 per share,
compared with special items resulting in a net negative impact of $297
million, or $0.29 per share, in 2010. Excluding the impact of special
items, income from continuing operations was $812 million, or $0.72 per
share, for 2011.

Full-year 2011 net income was $611 million, or $0.55 per share, compared
to $254 million, or $0.24 per share, in 2010.

Alcoa turned in strong performance against all of its financial targets
in 2011. Capital spending for 2011 was $1.3 billion, 86 percent of the
target. For the year, Alcoa invested $249 million in the Company’s joint
venture in Saudi Arabia, 62 percent of the target. The Saudi project
continues on-time and on-budget, with first production in the smelter
and rolling mill scheduled for 2013.

Alcoa finished 2011 with a debt-to-capital ratio of 35 percent,
consistent with the targeted range of 30 to 35 percent. Debt-to-capital
was negatively impacted by the annual measurement of the Company’s
pension plan liability, due to a significantly lower discount rate.

Alcoa also generated $906 million in free cash flow for the year, $2.2
billion in cash from operations, and ended the year with $1.9 billion
cash on hand.

Segment Information

Alumina

After-tax operating income (ATOI) in the fourth quarter was $125
million, up 92 percent compared to $65 million in fourth quarter 2010,
but a decrease of $29 million, or 19 percent, compared to third quarter
2011. Adjusted EBITDA fell $82 million to $229 million, a sequential
decrease of 26 percent. Fourth quarter results were negatively impacted
by lower pricing. Increased raw materials costs were offset by improved
productivity, lower energy costs, and positive currency impact. The sale
of land in Australia contributed $30 million to segment ATOI. Alumina
production in the fourth quarter was a record 4.18 million metric tons.

Primary Metals

ATOI in the fourth quarter was a negative $32 million, a decrease of
$210 million over fourth quarter 2010 and a decrease of $142 million
from third quarter 2011. Adjusted EBITDA fell $201 million to $71
million. Third-party realized metal prices decreased 12 percent
sequentially on declining London Metal Exchange (LME) cash prices. Lower
LME and cost increases offset positive currency impacts and productivity
gains compared to third quarter 2011.

Flat-Rolled Products

Third-party revenue in the fourth quarter was $1.7 billion, up 4 percent
from the year ago quarter and down 14 percent sequentially. ATOI for the
fourth quarter was $26 million, down 51 percent, or $27 million, from
fourth quarter 2010 and down 57 percent, or $34 million, from third
quarter 2011. Sequentially, the declining performance was driven by
seasonal volume declines in North America and Russia and continued
weakness in the European market. Performance was also unfavorably
impacted by credit losses for several customers.

Engineered Products and Solutions

Revenue in the fourth quarter was $1.4 billion, up 12 percent over the
year ago quarter and essentially flat sequentially. ATOI in the fourth
quarter was $122 million, up 8 percent, or $9 million, from fourth
quarter 2010 and down 12 percent, or $16 million, from third quarter
2011. Sequentially, decreased ATOI was mainly driven by cost increases
and unfavorable product mix, partially offset by productivity
improvements.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on January 9, 2012 to present the quarter and full-year 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 of primary and fabricated
aluminum, as well as the world’s largest miner of bauxite and refiner of
alumina. In addition to inventing the modern-day aluminum industry,
Alcoa innovation has been behind major milestones in the aerospace,
automotive, packaging, building and construction, commercial
transportation, consumer electronics, and industrial markets over the
past 120 years. Among the solutions Alcoa markets are flat-rolled
products, hard alloy extrusions, and forgings, as well as Alcoa® wheels,
fastening systems, precision and investment castings, and building
systems in addition to its expertise in other light metals such as
titanium and nickel-based super alloys. Sustainability is an integral
part of Alcoa’s operating practices and the product design and
engineering it provides to customers. Alcoa has been a member of the Dow
Jones Sustainability Index for 10 consecutive years and approximately 75
percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 61,000 people in 31
countries across the world. More information can be found at www.alcoa.com.

Forward-Looking Statements

This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“estimates,” “expects,” “forecasts,” “outlook,” “plans,” “predicts,”
“projects,” “should,” “targets,” “will” or other words of similar
meaning. All statements that reflect Alcoa’s expectations, assumptions
or projections about the future other than statements of historical fact
are forward-looking statements, including, without limitation, forecasts
concerning global demand for aluminum, end market conditions, or other
trend projections, targeted financial results or operating performance,
and statements about Alcoa’s strategies, objectives, goals, targets,
outlook, and business and financial prospects. Forward-looking
statements are subject to a number of known and unknown risks,
uncertainties, and other factors and are not guarantees of future
performance. Important factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements include: (a) material adverse changes in aluminum industry
conditions, including global supply and demand conditions and
fluctuations in London Metal Exchange-based prices for primary aluminum,
alumina, and other products, and fluctuations in indexed-based and spot
prices for alumina; (b) deterioration in global economic and financial
market conditions generally; (c) unfavorable changes in the markets
served by Alcoa, including automotive and commercial transportation,
aerospace, building and construction, distribution, packaging, and
industrial gas turbine; (d) the impact of changes in foreign currency
exchange rates on costs and results, particularly the Australian dollar,
Brazilian real, Canadian dollar, and Euro; (e) increases in energy
costs, including electricity, natural gas, and fuel oil, or the
unavailability or interruption of energy supplies; (f) increases in the
costs of other raw materials, including aluminum fluoride, caustic soda
or carbon products; (g) Alcoa’s inability to achieve the level of
revenue growth, cash generation, cost savings, improvement in
profitability and margins, fiscal discipline, or strengthening of
competitiveness and operations (including moving its refining and
smelting businesses down on the industry cost curve and increasing
revenues in its Flat-Rolled Products and Engineered Products and
Solutions segments), anticipated from its restructuring programs,
productivity improvement, cash sustainability, and other initiatives;
(h) Alcoa’s inability to realize expected benefits from newly
constructed, expanded or acquired facilities or from international joint
ventures as planned and by targeted completion dates, including the
joint venture in Saudi Arabia or the upstream operations in Brazil;
(i) political, economic, and regulatory risks in the countries in which
Alcoa operates or sells products, including unfavorable changes in laws
and governmental policies, civil unrest, and other events beyond Alcoa’s
control; (j) the outcome of contingencies, including legal proceedings,
government investigations, and environmental remediation; (k) the
business or financial condition of key customers, suppliers, and
business partners; (l) changes in tax rates or benefits; and (m) the
other risk factors summarized in Alcoa’s Form 10-K for the year ended
December 31, 2010, Forms 10-Q for the quarters ended March 31, 2011,
June 30, 2011, and September 30, 2011, and other reports filed with the
Securities and Exchange Commission. 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.

Alcoa and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share, share, and metric ton amounts)
	Quarter ended
	December 31,				September 30,			December 31,
	2010				2011			2011
Sales	$	5,652			$	6,419		$	5,989
Cost of goods sold (exclusive of expenses below)		4,538				5,290			5,228
Selling, general administrative, and other expenses		282				261			268
Research and development expenses		50				47			48
Provision for depreciation, depletion, and amortization		371				376			367
Restructuring and other charges		(12	)			9			232
Interest expense		118				125			125
Other (income) expenses, net		(43	)			31			(40	)
Total costs and expenses		5,304				6,139			6,228
Income (loss) from continuing operations before  income taxes		348				280			(239	)
Provision (benefit) for income taxes		56				55			(74	)
Income (loss) from continuing operations		292				225			(165	)
Income from discontinued operations		–				–			2
Net income (loss)		292				225			(163	)
Less: Net income attributable to noncontrolling  interests		34				53			28
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA	$	258			$	172		$	(191	)
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON  SHAREHOLDERS:
Income (loss) from continuing operations	$	258			$	172		$	(193	)
Income from discontinued operations		–				–			2
Net income (loss)	$	258			$	172		$	(191	)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON  SHAREHOLDERS:
Basic:
Income (loss) from continuing operations	$	0.25			$	0.16		$	(0.18	)
Income from discontinued operations		–				–			–
Net income (loss)	$	0.25			$	0.16		$	(0.18	)
Diluted:
Income (loss) from continuing operations	$	0.24			$	0.15		$	(0.18	)
Income from discontinued operations		–				–			–
Net income (loss)	$	0.24			$	0.15		$	(0.18	)
Average number of shares used to compute:
Basic earnings per common share		1,021,697,163				1,064,226,988			1,064,363,032
Diluted earnings per common share		1,119,285,945				1,164,085,935			1,064,363,032
Shipments of aluminum products (metric tons)		1,218,000				1,277,000			1,280,000

Alcoa and subsidiaries
Statement of Consolidated Operations (unaudited), continued
(in millions, except per-share, share, and metric ton amounts)
	Year ended
	December 31,
	2010				2011
Sales	$	21,013			$	24,951
Cost of goods sold (exclusive of expenses below)		17,174				20,480
Selling, general administrative, and other expenses		961				1,027
Research and development expenses		174				184
Provision for depreciation, depletion, and amortization		1,450				1,479
Restructuring and other charges		207				281
Interest expense		494				524
Other expenses (income), net		5				(87	)
Total costs and expenses		20,465				23,888
Income from continuing operations before income taxes		548				1,063
Provision for income taxes		148				255
Income from continuing operations		400				808
Loss from discontinued operations		(8	)			(3	)
Net income		392				805
Less: Net income attributable to noncontrolling interests		138				194
NET INCOME ATTRIBUTABLE TO ALCOA	$	254			$	611
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON  SHAREHOLDERS:
Income from continuing operations	$	262			$	614
Loss from discontinued operations		(8	)			(3	)
Net income	$	254			$	611
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON  SHAREHOLDERS:
Basic:
Income from continuing operations	$	0.25			$	0.58
Loss from discontinued operations		–				(0.01	)
Net income	$	0.25			$	0.57
Diluted:
Income from continuing operations	$	0.25			$	0.55
Loss from discontinued operations		(0.01	)			–
Net income	$	0.24			$	0.55
Average number of shares used to compute:
Basic earnings per common share		1,017,828,406				1,061,039,969
Diluted earnings per common share		1,024,713,554				1,160,695,735
Common stock outstanding at the end of the period		1,022,025,965				1,064,412,066
Shipments of aluminum products (metric tons)		4,757,000				5,037,000

Alcoa and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
	December 31,				December 31,
	2010 (a)				2011
ASSETS
Current assets:
Cash and cash equivalents	$	1,543			$	1,939
Receivables from customers, less allowances of $46 in both  2010 and 2011		1,591				1,571
Other receivables		326				371
Inventories		2,584				2,899
Prepaid expenses and other current assets		875				933
Total current assets		6,919				7,713
Properties, plants, and equipment		37,670				37,820
Less: accumulated depreciation, depletion, and amortization		17,487				18,404
Properties, plants, and equipment, net		20,183				19,416
Goodwill		5,122				5,251
Investments		1,340				1,626
Deferred income taxes		3,184				3,546
Other noncurrent assets		2,545				2,568
Total assets	$	39,293			$	40,120
LIABILITIES
Current liabilities:
Short-term borrowings	$	92			$	62
Commercial paper		–				224
Accounts payable, trade		2,331				2,692
Accrued compensation and retirement costs		932				985
Taxes, including income taxes		461				438
Other current liabilities		1,204				1,167
Long-term debt due within one year		231				445
Total current liabilities		5,251				6,013
Long-term debt, less amount due within one year		8,842				8,640
Accrued pension benefits		2,923				3,261
Accrued other postretirement benefits		2,615				2,583
Other noncurrent liabilities and deferred credits		2,576				2,428
Total liabilities		22,207				22,925
EQUITY
Alcoa shareholders’ equity:
Preferred stock		55				55
Common stock		1,141				1,178
Additional capital		7,087				7,561
Retained earnings		11,149				11,629
Treasury stock, at cost		(4,146	)			(3,952	)
Accumulated other comprehensive loss		(1,675	)			(2,627	)
Total Alcoa shareholders’ equity		13,611				13,844
Noncontrolling interests		3,475				3,351
Total equity		17,086				17,195
Total liabilities and equity	$	39,293			$	40,120

(a)		The Consolidated Balance Sheet as of December 31, 2010 was revised to reflect the movement of the Global Foil business (one remaining plant located in Brazil) from held for sale classification in the fourth quarter of 2011. Management is no longer committed to a plan to sell the location and has refocused their efforts to drive higher profitability and is considering expanding the functionality of the plant so that it can manufacture certain products aimed at capturing new growth in Brazil.

Alcoa and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
	Year ended
	December 31,
	2010 (d)					2011
CASH FROM OPERATIONS
Net income	$	392				$	805
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion, and amortization		1,451					1,481
Deferred income taxes		(287	)				(181	)
Equity income, net of dividends		(22	)				(26	)
Restructuring and other charges		207					281
Net gain from investing activities – asset sales		(9	)				(41	)
Loss from discontinued operations		8					3
Stock-based compensation		84					83
Excess tax benefits from stock-based payment arrangements		(1	)				(6	)
Other		151					53
Changes in assets and liabilities, excluding effects of acquisitions,  divestitures, and foreign currency translation adjustments:
(Increase) in receivables		(102	)				(115	)
(Increase) in inventories		(217	)				(339	)
Decrease in prepaid expenses and other current assets		27					74
Increase in accounts payable, trade		328					394
(Decrease) in accrued expenses		(239	)				(38	)
Increase in taxes, including income taxes		503					118
Pension contributions		(113	)				(336	)
(Increase) in noncurrent assets		(83	)				(154	)
Increase in noncurrent liabilities		183					147
(Increase) in net assets held for sale		(7	)				–
CASH PROVIDED FROM CONTINUING OPERATIONS		2,254					2,203
CASH PROVIDED FROM (USED FOR) DISCONTINUED OPERATIONS		7					(10	)
CASH PROVIDED FROM OPERATIONS		2,261					2,193
FINANCING ACTIVITIES
Net change in short-term borrowings		(44	)				(31	)
Net change in commercial paper		–					224
Additions to long-term debt		1,126					1,256
Debt issuance costs		(6	)				(17	)
Payments on long-term debt		(1,757	)				(1,194	)
Proceeds from exercise of employee stock options		13					37
Excess tax benefits from stock-based payment arrangements		1					6
Dividends paid to shareholders		(125	)				(131	)
Distributions to noncontrolling interests		(256	)				(257	)
Contributions from noncontrolling interests		162					169
Acquisitions of noncontrolling interests		(66	)				–
CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES		(952	)				62
INVESTING ACTIVITIES
Capital expenditures		(1,015	)				(1,287	)
Acquisitions, net of cash acquired (b)		(72	)				(240	)
Proceeds from the sale of assets and businesses (c)		4					38
Additions to investments		(352	)				(374	)
Sales of investments		141					54
Other		22					(43	)
CASH USED FOR INVESTING ACTIVITIES		(1,272	)				(1,852	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH  EQUIVALENTS		25					(7	)
Net change in cash and cash equivalents		62					396
Cash and cash equivalents at beginning of year		1,481					1,543
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	1,543				$	1,939

(b)		Acquisitions, net of cash acquired for the year ended December 31, 2010 includes a cash inflow for cash received as a result of post-closing adjustments related to the acquisition of a BHP Billiton subsidiary that holds interests in four bauxite mines and one refining facility in the Republic of Suriname, which was completed on July 31, 2009.
(c)		Proceeds from the sale of assets and businesses for the year ended December 31, 2011 includes a cash outflow for cash paid to settle claims filed in 2010 against Alcoa by Platinum Equity (buyer of the wire harness and electrical portion of the former Electrical and Electronic Solutions business) in an insolvency proceeding in Germany. Proceeds from the sale of assets and businesses for the year ended December 31, 2010 includes a cash outflow for cash paid to settle former customer contracts of the divested Electrical and Electronic Solutions and Automotive Castings businesses.
(d)		The Statement of Consolidated Cash Flows for the year ended December 31, 2010 was revised to reflect the movement of the Global Foil business (one remaining plant located in Brazil) from held for sale classification in the fourth quarter of 2011. Management is no longer committed to a plan to sell the location and has refocused their efforts to drive higher profitability and is considering expanding the functionality of the plant so that it can manufacture certain products aimed at capturing new growth in Brazil.

Alcoa and subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt])
	4Q10				2010				1Q11				2Q11				3Q11				4Q11				2011
Alumina:
Alumina production (kmt)		4,119				15,922				4,024				4,144				4,140				4,178				16,486
Third-party alumina shipments (kmt)		2,433				9,246				2,206				2,378				2,256				2,378				9,218
Third-party sales	$	759			$	2,815			$	810			$	926			$	879			$	847			$	3,462
Intersegment sales	$	585			$	2,212			$	633			$	723			$	751			$	620			$	2,727
Equity income (loss)	$	3			$	10			$	3			$	22			$	2			$	(2	)		$	25
Depreciation, depletion, and amortization	$	107			$	406			$	103			$	112			$	117			$	112			$	444
Income taxes	$	14			$	60			$	44			$	60			$	42			$	33			$	179
After-tax operating income (ATOI)	$	65			$	301			$	142			$	186			$	154			$	125			$	607
Primary Metals:
Aluminum production (kmt)		913				3,586				904				945				964				962				3,775
Third-party aluminum shipments (kmt)		743				2,845				698				724				754				805				2,981
Alcoa’s average realized price per metric  ton of aluminum	$	2,512			$	2,356			$	2,682			$	2,830			$	2,689			$	2,374			$	2,636
Third-party sales	$	1,970			$	7,070			$	1,980			$	2,145			$	2,124			$	1,991			$	8,240
Intersegment sales	$	692			$	2,597			$	839			$	922			$	798			$	633			$	3,192
Equity income (loss)	$	–			$	1			$	1			$	(1	)		$	(4	)		$	(3	)		$	(7	)
Depreciation, depletion, and amortization	$	140			$	571			$	141			$	142			$	137			$	136			$	556
Income taxes	$	81			$	96			$	53			$	55			$	21			$	(37	)		$	92
ATOI	$	178			$	488			$	202			$	201			$	110			$	(32	)		$	481
Flat-Rolled Products:
Third-party aluminum shipments (kmt)		411				1,658				446				473				454				407				1,780
Third-party sales	$	1,623			$	6,277			$	1,892			$	2,085			$	1,974			$	1,691			$	7,642
Intersegment sales	$	48			$	180			$	69			$	62			$	48			$	39			$	218
Equity loss	$	–			$	–			$	–			$	–			$	–			$	(3	)		$	(3	)
Depreciation, depletion, and amortization	$	65			$	238			$	58			$	60			$	61			$	58			$	237
Income taxes	$	20			$	92			$	33			$	35			$	26			$	10			$	104
ATOI	$	53			$	220			$	81			$	99			$	60			$	26			$	266
Engineered Products and Solutions:
Third-party aluminum shipments (kmt)		50				197				55				57				56				53				221
Third-party sales	$	1,215			$	4,584			$	1,247			$	1,370			$	1,373			$	1,355			$	5,345
Equity income	$	–			$	2			$	1			$	–			$	–			$	–			$	1
Depreciation, depletion, and amortization	$	38			$	154			$	38			$	41			$	40			$	39			$	158
Income taxes	$	53			$	195			$	62			$	72			$	67			$	59			$	260
ATOI	$	113			$	415			$	130			$	149			$	138			$	122			$	539
Reconciliation of ATOI to consolidated  net income (loss) attributable to Alcoa:
Total segment ATOI	$	409			$	1,424			$	555			$	635			$	462			$	241			$	1,893
Unallocated amounts (net of tax):
Impact of LIFO		3				(16	)			(24	)			(27	)			2				11				(38	)
Interest expense		(76	)			(321	)			(72	)			(106	)			(81	)			(81	)			(340	)
Noncontrolling interests		(34	)			(138	)			(58	)			(55	)			(53	)			(28	)			(194	)
Corporate expense		(94	)			(291	)			(67	)			(76	)			(76	)			(71	)			(290	)
Restructuring and other charges		8				(134	)			(6	)			(22	)			(7	)			(161	)			(196	)
Discontinued operations		–				(8	)			(1	)			(4	)			–				2				(3	)
Other		42				(262	)			(19	)			(23	)			(75	)			(104	)			(221	)
Consolidated net income (loss)  attributable to Alcoa	$	258			$	254			$	308			$	322			$	172			$	(191	)		$	611

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

Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(dollars in millions)
Adjusted EBITDA Margin	Quarter ended
	December 31, 2010				September 30, 2011				December 31, 2011
Net income (loss) attributable to Alcoa	$	258			$	172			$	(191	)
Add:
Net income attributable to noncontrolling interests		34				53				28
Income from discontinued operations		–				–				(2	)
Provision (benefit) for income taxes		56				55				(74	)
Other (income) expenses, net		(43	)			31				(40	)
Interest expense		118				125				125
Restructuring and other charges		(12	)			9				232
Provision for depreciation, depletion, and amortization		371				376				367
Adjusted EBITDA	$	782			$	821			$	445
Sales	$	5,652			$	6,419			$	5,989
Adjusted EBITDA Margin		13.8	%			12.8	%			7.4	%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to
Sales minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses;
and Provision for depreciation, depletion, and amortization. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because Adjusted EBITDA provides
additional information with respect to Alcoa’s operating performance and
the Company’s ability to meet its financial obligations. The Adjusted
EBITDA presented may not be comparable to similarly titled measures of
other companies.

Free Cash Flow		Quarter ended								Year ended
		September 30, 2011				December 31, 2011				December 31, 2011
Cash provided from operations		$	489			$	1,142			$	2,193
Capital expenditures			(325	)			(486	)			(1,287	)
Free cash flow		$	164			$	656			$	906

Free Cash Flow is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because management reviews cash
flows generated from operations after taking into consideration capital
expenditures due to the fact that these expenditures are considered
necessary to maintain and expand Alcoa’s asset base and are expected to
generate future cash flows from operations. It is important to note that
Free Cash Flow does not represent the residual cash flow available for
discretionary expenditures since other non-discretionary expenditures,
such as mandatory debt service requirements, are not deducted from the
measure.

Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions, except per-share amounts)
Adjusted (Loss) Income			Quarter ended									Year ended
			December 31, 2011									December 31, 2011
			Loss				Diluted EPS					Income				Diluted EPS
Net (loss) income attributable to Alcoa			$	(191	)		$	(0.18	)			$	611			$	0.55
Income (loss) from discontinued operations				2									(3	)
(Loss) income from continuing operations attributable to Alcoa				(193	)			(0.18	)				614				0.55
Restructuring and other charges				155									181
Discrete tax items*				12									2
Other special items**				(8	)								15
(Loss) income from continuing operations attributable to Alcoa –  as adjusted			$	(34	)			(0.03	)			$	812				0.72

Income (loss) from continuing operations attributable to Alcoa – as
adjusted is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because management reviews the
operating results of Alcoa excluding the impacts of restructuring and
other charges, discrete tax items, and other special items
(collectively, “special items”). There can be no assurances that
additional special items will not occur in future periods. To compensate
for this limitation, management believes that it is appropriate to
consider both Income (loss) from continuing operations attributable to
Alcoa determined under GAAP as well as Income (loss) from continuing
operations attributable to Alcoa – as adjusted.

* Discrete tax items include the following:

• for the quarter ended December 31, 2011, charges for a tax rate change
  in Hungary and a tax law change regarding the utilization of net
  operating losses in Italy ($8), a charge related to the 2010 change in
  the tax treatment of federal subsidies received related to
  prescription drug benefits provided under certain retiree health
  benefit plans ($7), and a net benefit for other miscellaneous items
  ($3); and
• for the year ended December 31, 2011, charges for a tax rate change in
  Hungary and a tax law change regarding the utilization of net
  operating losses in Italy ($8), a charge related to the 2010 change in
  the tax treatment of federal subsidies received related to
  prescription drug benefits provided under certain retiree health
  benefit plans ($7), a net benefit for adjustments made related to the
  filing of 2010 tax returns in various jurisdictions ($5), and a net
  benefit for other miscellaneous items ($8).

** Other special items include the following:

• for the quarter ended December 31, 2011, a gain on the sale of land in
  Australia ($18), uninsured losses, including costs related to flood
  damage to a plant in Pennsylvania caused by Hurricane Irene, ($14),
  favorable mark-to-market changes in certain power derivative contracts
  ($8), and the write off of inventory related to the permanent closure
  of a smelter in the U.S. ($4); and
• for the year ended December 31, 2011, favorable mark-to-market changes
  in certain power derivative contracts ($36), a net charge comprised of
  expenses for the early repayment of Notes set to mature in 2013 due to
  the premiums paid under the tender offers and call option and gains
  from the termination of related “in-the-money” interest rate swaps
  ($32), uninsured losses, including costs related to flood damage to a
  plant in Pennsylvania caused by Hurricane Irene, ($25), a gain on the
  sale of land in Australia ($18), costs related to acquisitions of the
  aerospace fastener business of TransDigm Group Inc. and full ownership
  of carbothermic smelting technology from ORKLA ASA ($8), and the write
  off of inventory related to the permanent closure of a smelter in the
  U.S. ($4).

Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
Segment Measures	Alumina										Primary Metals
Adjusted EBITDA	Quarter ended
	September 30, 2011					December 31, 2011					September 30, 2011				December 31, 2011
After-tax operating income (ATOI)	$	154				$	125				$	110			$	(32	)
Add:
Depreciation, depletion, and  amortization		117					112					137				136
Equity (income) loss		(2	)				2					4				3
Income taxes		42					33					21				(37	)
Other		–					(43	)				–				1
Adjusted EBITDA	$	311				$	229				$	272			$	71

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for
depreciation, depletion, and amortization. Net margin is equivalent to
Sales minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development expenses;
and Provision for depreciation, depletion, and amortization. The Other
line in the table above includes gains/losses on asset sales and other
nonoperating items. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because
Adjusted EBITDA provides additional information with respect to Alcoa’s
operating performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.