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<SEC-DOCUMENT>0000950132-01-000150.txt : 20010307
<SEC-HEADER>0000950132-01-000150.hdr.sgml : 20010307
ACCESSION NUMBER:		0000950132-01-000150
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		11
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010302

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALCOA INC
		CENTRAL INDEX KEY:			0000004281
		STANDARD INDUSTRIAL CLASSIFICATION:	PRIMARY PRODUCTION OF ALUMINUM [3334]
		IRS NUMBER:				250317820
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-03610
		FILM NUMBER:		1560751

	BUSINESS ADDRESS:	
		STREET 1:		201 ISABELLA ST
		STREET 2:		ALCOA CORPORATE CTR
		CITY:			PITTSBURGH
		STATE:			PA
		ZIP:			15212 5858
		BUSINESS PHONE:		4125532576

	MAIL ADDRESS:	
		STREET 1:		801 ISABELLA ST
		STREET 2:		ALCOA CORPORATE CTR
		CITY:			PITTSBURGH
		STATE:			PA
		ZIP:			15212 5858

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALUMINUM CO OF AMERICA
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K405
<TEXT>

<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

         [ X ]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR
         [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 1-3610

                                   ALCOA INC.
             (Exact name of registrant as specified in its charter)

              Pennsylvania                               25-0317820
         (State of incorporation)           (I.R.S. Employer Identification No.)

           201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858
  (Address of principal executive offices)                         (Zip code)

                        Registrant's telephone numbers:

                  Investor Relations------------(212) 836-2674
                  Office of the Secretary------(412) 553-4707

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class            Name of each exchange on which registered
    -------------------            -----------------------------------------
Common Stock, par value $1.00                New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X   No     .
                         ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of January 22, 2001 there were 866,339,457 shares of common stock, par value
$1.00, of the registrant outstanding.  The aggregate market value of such
shares, other than shares held by persons who may be deemed affiliates of the
registrant, was approximately $2.905 billion.

Documents incorporated by reference.

Parts I and II of this Form 10-K incorporate by reference certain information
from the registrant's 2000 Annual Report to Shareholders (Annual Report). Part
III of this Form 10-K incorporates by reference the registrant's Proxy Statement
dated February 22, 2001, except for the performance graph, Compensation
Committee Report, Audit Committee Report and Audit Committee Charter.
<PAGE>

                                  ALCOA INC.

Formed in 1888 under the laws of the Commonwealth of Pennsylvania, Alcoa Inc.
has its registered office in Pittsburgh, Pennsylvania. The name of the Company
was changed, effective January 1, 1999, from Aluminum Company of America to
Alcoa Inc. In this report, unless the context otherwise requires, Alcoa or the
Company means Alcoa Inc. and all subsidiaries consolidated for the purposes of
its financial statements.

                                    PART I

Item 1. Business

Overview
- --------

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum
and alumina, and is active in all major aspects of the industry: technology,
mining, refining, smelting, fabricating and recycling.  Alcoa serves customers
worldwide in the packaging, consumer, automotive and transportation, aerospace,
building and construction, industrial products and distribution markets.
Related Alcoa businesses include packaging machinery, precision castings, vinyl
siding, plastic bottles and closures, fiber optic cables and electrical
distribution systems for cars and trucks.

Alcoa has operating locations in 37 countries.  North America remains the
largest market for aluminum.  Europe, Asia and Latin America, however, present
opportunities for substantial growth in aluminum use.  To take advantage of
these growth opportunities, Alcoa has made acquisitions or formed joint ventures
and strategic alliances in key regional markets.


Recent Developments
- -------------------


Reynolds Metals Company
- -----------------------

In August 1999, Alcoa and Reynolds Metals Company (Reynolds) announced they had
reached a  definitive agreement to merge.  On May 3, 2000, after approval by the
U.S. Department of Justice  (DOJ), the European Commission and other regulatory
agencies, Alcoa and Reynolds completed their merger.  Under the agreement, Alcoa
issued approximately 135 million shares of its common stock to Reynolds
stockholders.  The transaction was valued at approximately $5.9 billion,
including debt assumed, and has been accounted for using the purchase method.

As part of the merger approval process, Alcoa agreed to divest the following
Reynolds operations:

       .  Reynolds' 56% stake in an alumina refinery at Worsley, Australia,
       .  Reynolds' 50% stake in an alumina refinery at Stade, Germany,
       .  100% of  Reynolds' alumina refinery at Sherwin, Texas and
       .  25% of  Reynolds' interest in an aluminum smelter at Longview,
          Washington.

On August 29, 2000, Alcoa and Billiton plc (Billiton) announced that they had
reached an agreement under which Billiton will acquire Reynolds Australia
Alumina, Ltd. LLC, which holds Reynolds' 56% interest in the Worsley alumina
refinery. The price was $1.49 billion and the sale closed in late January 2001.
Agreement between Alcoa and Billiton was reached following an auction process
that attracted bids from

                                       2
<PAGE>

a variety of aluminum industry participants. Before the closing, Worsley was
owned 56% by Alcoa, 30% by Billiton and 14% by Kobe Steel, Nissho Iwai and
Itochu.

On October 19, 2000, Alcoa reached an agreement to sell the Sherwin alumina
refinery located near Corpus Christi, Texas to BPU Reynolds, Inc., a private
investment company.  The sale to BPU Reynolds, Inc. was approved by the DOJ and
closed on December 31, 2000.

On December 27, 2000, Alcoa and Michigan Avenue Partners (MAP) announced an
agreement for MAP to acquire the 204,000 metric ton (mt) per year aluminum
smelter in Longview, Washington. The sale closed on February 27, 2001.

Negotiations to divest Reynolds' interests in an alumina refinery in Stade,
Germany are on-going and are expected to be concluded in the first quarter of
2001.


Cordant Technologies Inc. and Howmet International Inc.
- -------------------------------------------------------

On March 14, 2000, Alcoa and Cordant Technologies Inc. (Cordant) announced a
definitive agreement under which Alcoa would acquire all outstanding shares of
Cordant, a technology-based company serving global aerospace and industrial
markets.  In addition, on April 13, 2000, Alcoa announced plans to commence a
cash tender offer for all outstanding shares of Howmet International Inc.
(Howmet).  On April 18, 2000, Alcoa commenced a tender offer for all of the
shares of Howmet owned by the public (other than the 85% of the outstanding
shares owned by Cordant) and entered into a definitive agreement under which
Alcoa would acquire all publicly held shares of Howmet.

On May 25, 2000 and June 20, 2000, after approval by the DOJ and other
regulatory agencies and the satisfaction of certain other conditions,  Alcoa
completed the acquisition of Cordant and Howmet, respectively.  Under the merger
agreements, Alcoa paid $57 for each outstanding share of Cordant common stock
and $21 for each outstanding share of Howmet common stock not owned by Cordant.
The total value of the transactions was approximately $3.3 billion, including
the assumption of debt.  The transactions have been accounted for using the
purchase method.

On January 31, 2001, Alcoa and Alliant Techsystems Inc. (ATK) announced a
definitive agreement under which ATK will acquire Alcoa's Thiokol Propulsion
business for $685 million in cash.  The Thiokol Propulsion business was one of
three businesses acquired as part of the Cordant acquisition.  The transaction
is subject to customary regulatory approvals.


Alcoa's Financial Reporting Segments
- ------------------------------------

In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information," Alcoa
reports five worldwide segments: Alumina and Chemicals, Primary Metals,
Engineered Products, Flat-Rolled Products and Packaging and Consumer.  All of
the Company's products that do not fall into one of those five segments are
reported in the category entitled Other.  Alcoa revised its reporting segments
in the second quarter of 2000 to accommodate its new businesses associated with
the Reynolds and Cordant acquisitions.  See page 33 of the Annual Report for
information on market revenues.  See Note N to the Financial Statements for
information on segment and related geographic financial information.


I.  Alumina and Chemicals

The Alumina and Chemicals segment includes the production and sale of:

                                       3
<PAGE>

    .  bauxite
    .  alumina
    .  alumina-based chemicals used principally in industrial applications and
    .  transportation services for bauxite and alumina.

The segment consists of a group of companies and assets referred to as Alcoa
World Alumina and Chemicals (AWAC).  Alcoa owns 60% and WMC Limited (WMC) owns
40% of the AWAC group of companies.  AWAC has two businesses with distinct
product lines: Alcoa World Alumina (AWA) produces smelter grade alumina and
Alcoa World Chemicals (AWC) makes alumina-based chemicals.  AWA also has two
geographic regions: Alcoa World Alumina - Australia (AWA - Australia) and Alcoa
World Alumina - Atlantic (AWA - Atlantic).  Alcoa World Alumina - Australia is
the trading name for Alcoa of Australia Limited (AofA); all references
throughout this report will be to AWA - Australia instead of AofA.


Bauxite and Alumina
- -------------------

Bauxite is aluminum's principal raw material.  Alcoa refines bauxite into
alumina using a chemical process.  Alcoa processes most of the bauxite that it
mines into alumina.  All of the Company's active bauxite interests are part of
AWAC, except in Brazil and Guyana.

Alcoa is the world's leading producer of alumina.  The Company sells alumina
principally from operations in Australia, Jamaica and Suriname.  Alcoa sold
approximately 57% of its alumina production in 2000 under supply contracts to
third parties worldwide.  The Company consumed the remainder of its alumina
production in its smelting and industrial chemical operations.  Alcoa negotiates
most of its alumina supply contracts on the basis of agreed volumes over multi-
year periods to assure a continuous supply to the smelters.  The parties
negotiate the prices periodically.

Alcoa's present sources of bauxite and alumina are more than adequate to meet
the forecasted requirements of its primary aluminum production operations for
the foreseeable future.


Alcoa World Alumina - Australia

AWA - Australia's bauxite mineral lease is due for renewal in 2002.  Renewal
options allow AWA - Australia to extend the lease until 2044.

AWA - Australia's three alumina refineries, located in Kwinana, Pinjarra and
Wagerup, in Western Australia, have an aggregate annual capacity of 7.3 million.
This includes the Wagerup refinery that now has a rated capacity of 2.2 million
mt per year.

AWA - Australia meets most of the energy requirements of its Australian
refineries through a contract with the North West Shelf Gas Joint Venture.  The
contract extends through 2020.


Alcoa World Alumina - Atlantic

     Suriname

Suriname Aluminum Company, L.L.C. (Suralco) mines bauxite in Suriname under
rights that expire in 2032.  Suralco also holds a 24% minority interest in a
bauxite mining joint venture managed by the majority owner, an affiliate of
Billiton.  Bauxite from both mining operations serves Suralco's

                                       4
<PAGE>

share of a refinery in Suriname.  Suralco has proven new bauxite reserves that
will last at least through the year 2023.

Suralco owns 55% of a 1.7 million mt per year alumina refinery in Paranam,
Suriname and operates the plant.  An affiliate of Billiton holds the remaining
45% interest.

     Jamaica

Bauxite mining rights in Jamaica expire after the year 2020.  The bauxite mining
rights are held in a joint venture (Jamalco) with the Government of Jamaica.  In
January 2000, Jamalco entered into a cost-sharing and production-sharing joint
venture with Aluminum Partners of Jamaica to mine the bauxite.

An Alcoa subsidiary and a corporation owned by the Government of Jamaica are
equal participants in an alumina refinery in Clarendon Parish, Jamaica.  The
Alcoa subsidiary manages the joint venture.  The refinery's annual capacity is
approximately one million mt.

     South America

Alcoa owns 59% of Alcoa Aluminio S.A. (Aluminio).  Aluminio manages the
operation of the Alumar Consortium (Alumar), a cost-sharing and production-
sharing venture that owns a large refining and smelting project near Sao Luis,
in the northeastern state of Maranhao, Brazil.  For the refining project,
Aluminio owns 35.1% of Alumar, an affiliate of Billiton owns 36%, Abalco S.A.
(owned 60% by Alcoa and 40% by WMC) owns 18.9% and an affiliate of Alcan
Aluminium Limited (Alcan) owns 10%.

The Alumar refinery has an annual capacity of 1.25 million mt.  The smelter, at
Sao Luis, consumes most of this alumina production.

Aluminio holds an 8.6% interest, Abalco S.A. holds a 4.6% interest and Alcoa
(through the Reynolds acquisition) holds a 5% interest in Mineracao Rio do Norte
S.A. (MRN), a mining company jointly owned by affiliates of Alcan, Companhia
Brasileira de Aluminio, Companhia Vale do Rio Doce, Billiton and Norsk Hydro.
MRN owns the Trombetas bauxite mining project in Brazil.  Aluminio and Abalco
S.A. purchase bauxite from MRN under long-term supply contracts.  The Company
has agreed to purchase bauxite from the Trombetas project for the period 2000
through 2019.

In March 2000, the MRN board approved an expansion of bauxite mining production
from 11.0 million mt per year to 16.3 million mt per year.  The additional
production will start in January 2003.

Alcoa, through the Reynolds acquisition, also maintains an interest in other,
undeveloped bauxite deposits in the Juruti region of the Amazon River in Brazil.

At Pocos de Caldas, Brazil, Aluminio mines bauxite and operates a refinery.  The
refinery has an annual capacity of 275,000 mt and primarily supplies Aluminio's
nearby smelter.

Alcoa, through its Reynolds acquisition, is a 50% partner with the Guyanese
government in a bauxite mining project called Aroaima Bauxite Company Ltd. in
the Berbice region of Guyana.  Reynolds bought bauxite from the project in 2000
for use in the Sherwin alumina refinery, which has been divested.  Aroaima
Bauxite Company Ltd. will continue to supply the Sherwin refinery with bauxite
in 2001.

     Spain

Alcoa and a WMC affiliate hold 60% and 40% interests, respectively, in the
refinery at San Ciprian.  The refinery's current annual capacity is 1.1 million
mt.  A modernization plan for the San Ciprian plant will

                                       5
<PAGE>

increase alumina production capacity by 220,000 mt per year. Basic engineering
of the project has been completed and the work is expected to finish by April
2001.

     Africa

Alcoa owns a 43% interest (including Reynolds' 6% interest) in Halco (Mining),
Inc.  Halco owns 51% and the Guinean government owns 49% of Compagnie des
Bauxites de Guinee (CBG), which has the exclusive right through 2038 to develop
and mine bauxite in a 10,000 square-mile area in northwestern Guinea.  The
Company has a bauxite purchase contract with CBG that will provide the Company
with bauxite for the period 2000 through 2011.  This bauxite services most of
the requirements of the Pt. Comfort, Texas and San Ciprian, Spain alumina
refineries.

As part of the Reynolds acquisition, Alcoa also owns a 10% interest in the
Alumina Company of Guinea.

     United States

In November 2000, AWA announced that it would suspend operations at its alumina
refinery located on St. Croix, U.S. Virgin Islands, on January 31, 2001.  The
refinery has a nameplate capacity of 600,000 mt per year and ran at a production
rate of approximately 450,000 mt per year in 2000.    Based on supply available
from the Company's other refineries, the output from St. Croix is not needed at
this time.  Future production from St. Croix will be evaluated in light of
internal and external supply commitments or market conditions.

AWA owns an alumina refinery at Pt. Comfort, Texas with an annual capacity of
2.3 million mt.  In early February 2001, Alcoa announced that effective
immediately, it was reducing the operating rate at this refinery to between 1.6
to 1.9 million mt per year, in response to decreased external and internal
demand for alumina.  Production levels at this facility will be evaluated in
light of future supply commitments.  Based on supply available from the
Company's other refineries, the full output from Pt. Comfort is not needed at
this time.


Alcoa World Chemicals
- ---------------------

Alcoa sells industrial chemicals to customers in a broad spectrum of markets.
These markets include:


     .  refractories
     .  ceramics
     .  abrasives
     .  chemicals processing and
     .  other specialty applications.

Alcoa produces or processes industrial chemicals, principally alumina-based
chemicals, at the following locations.  Except for the plants located in Brazil,
all of the following facilities are part of AWC:

     .  Bauxite, Arkansas
     .  Dalton, Georgia
     .  Falta, India (joint venture)
     .  Ft. Meade, Florida
     .  Iwakuni and Naoetsu, Japan
     .  Kwinana and Rockingham, Australia
     .  Leetsdale, Pennsylvania
     .  Ludwigshafen, Germany
     .  Malakoff, Texas
     .  Moerdijk and Rotterdam, the Netherlands

                                       6
<PAGE>

     .  Pocos de Caldas and Salto, Brazil
     .  Port Allen and Vidalia, Louisiana
     .  Pt. Comfort, Texas and
     .  Qingdao, China.

Alcoa produces aluminum fluoride at two locations, Pt. Comfort and Ft. Meade,
both in the U.S.  At Pt. Comfort, the aluminum fluoride is produced from
fluorspar and at Ft. Meade it is produced from hydrofluosilic acid.  Aluminum
fluoride is used primarily in the aluminum smelting process.  In early February
2001, Alcoa announced that effective March 31, 2001, it will temporarily curtail
production of aluminum fluoride at Ft. Meade due to reduced demand for the
product.  Ft. Meade has a rated capacity of 24,000 mt per year and was operating
at approximately two-thirds of rated capacity.

In late 1998, AWC began construction of a facility in Qingdao, China to process
tabular alumina and other alumina-based materials for sale to the Chinese
refractory market.  This facility began operation in mid 2000.

AWC and PR Minerals, LLC formed a joint venture company named Great Lakes
Minerals, L.L.C.  The new company processes industrial mineral products,
primarily refractory aggregates such as calcined bauxite and brown fused
alumina.  A newly constructed processing facility in Wurtland, Kentucky began
operating in January 2000.


II.  Primary Metals

Alcoa has 16 wholly-owned primary aluminum smelters worldwide.  These smelters
are located at:

     .  Badin, North Carolina
     .  Massena, New York  (two smelters)
     .  Rockdale, Texas
     .  Alcoa, Tennessee
     .  Warrick County, Indiana
     .  Wenatchee, Washington
     .  Troutdale, Oregon
     .  Deschambault, Quebec, Canada
     .  Baie Comeau, Quebec, Canada
     .  Portovesme, Italy
     .  Fusina, Italy
     .  San Ciprian, Spain
     .  Aviles, Spain
     .  La Coruna, Spain and
     .  Paranam, Suriname.

Additionally, the Company has ownership interests in 14 other smelters, as
discussed in the following paragraphs.

The Company smelts primary aluminum from alumina obtained principally from its
alumina refineries.  Alcoa's consolidated primary aluminum capacity is
approximately 4.3 million mt per year.  When operating at capacity, Alcoa's
smelters satisfy most of the primary aluminum requirements of its fabricating
operations.  Alcoa operations used most of the Company's primary aluminum
production in 2000 for alloying and/or further fabricating.  Purchases of
aluminum scrap, principally used beverage cans, supplemented by purchases of
ingot when necessary, satisfy additional aluminum requirements.

                                       7
<PAGE>

From 1994 until 2000, Alcoa had 450,000 mt of its worldwide smelting capacity
idle because of an oversupply of ingot on world markets.  During 2000, Alcoa
restarted approximately 200,000 mt of its idled aluminum smelting capacity.
After closing the Troutdale, Oregon smelter and the temporary idlings at
Wenatchee and Ferndale, Washington discussed below, Alcoa currently has
approximately 500,000 mt of its worldwide smelting capacity idle.

In June 2000, Alcoa indefinitely closed the 121,000 mt per year smelter in
Troutdale, Oregon.  The smelter had been operating at a rate of 80,000 mt per
year.

In January 2001, Alcoa announced its intention to temporarily idle an additional
150,000 mt per year of capacity at its Wenatchee, Washington and Ferndale,
Washington smelters.  The curtailments are in response to the continuing energy
crisis in the Pacific Northwest.  Alcoa anticipates that the 80,000 mt per year
curtailment at the Wenatchee smelter is temporary.  As a result of this
curtailment, approximately 150 megawatts of power contracted for this smelter
will be made available to Bonneville Power Administration (BPA) to meet regional
demands for electricity and Alcoa will be compensated for this power.  The
adjustment in production at the Ferndale, Washington smelter will redistribute
contracted electricity over a four-month period from January through April 2001.
The Company anticipates a return to peak production in May.

In February 2001, Alcoa announced that it was curtailing 70,000 mt per year of
capacity at its Longview, Washington smelter effective immediately.  Power not
used due to the curtailment will be made available to BPA to help meet regional
electricity demands.  The decision to curtail production was in preparation for
the sale of Longview to MAP discussed earlier.

   North America - Production Facilities

As part of the Reynolds acquisition, Alcoa acquired a smelter located in Baie
Comeau, Quebec, Canada as well as three smelters in the United States: at
Massena, New York (the St. Lawrence facility); at Troutdale, Oregon (the idling
of which is noted above); and at Longview, Washington (the sale of the Longview
smelter to MAP is noted above). The Company is also entitled to a share of the
primary aluminum produced at four joint ventures in which Reynolds participates:
one in Quebec known as the Becancour joint venture (Becancour) (Alcoa was
previously participating in this joint venture as discussed below and has
increased its ownership percentage with the acquisition of Reynolds), one in
Hamburg, Germany, known as Hamburg Aluminum-Werk GmbH (HAW); a third in Ghana,
known as Volta Aluminum Company Limited (Ghana); and a fourth in Puerto Ordaz,
Venezuela known as the Alcasa smelter. All of these are discussed in greater
detail below.

Alcoa also has ownership interests in the following smelters:  Intalco, located
in Ferndale, Washington (61.00%); Eastalco, located in Frederick, Maryland
(61.00%); Mt. Holly, located in Goose Creek, South Carolina (50.33%); and
Becancour, located in Becancour, Quebec (74.95%).  A Japanese consortium, led by
a subsidiary of Mitsui & Co. Ltd., owns an aggregate 39% interest in each of the
Intalco and Eastalco facilities.  Century Aluminum Company, a publicly traded
U.S. corporation, owns 49.67% of Mt. Holly.  During 2000, Century Aluminum
Company acquired Sudelektra Holding AG's 23% interest in Mt. Holly.  As part of
the Reynolds acquisition, Alcoa acquired an additional 50% interest in
Becancour.  A subsidiary of Pechiney owns a 25.05% interest in Becancour and
operates the smelter.  Intalco, Eastalco, Mt. Holly and Becancour are all cost-
sharing and production-sharing joint ventures.

Alcoa also acquired Reynolds' interests in two carbon products manufacturing
facilities located in Lake Charles and Baton Rouge, Louisiana.  These facilities
have the capacity to produce 875,000 mt of calcined petroleum coke and 145,000
mt of carbon anodes annually.  The anodes are produced principally for
consumption at Alcoa's primary aluminum plant in Baie Comeau, Quebec.  The
calcined

                                       8
<PAGE>

petroleum coke is used by Alcoa's wholly-owned primary aluminum plants.
The Company also sells calcined petroleum coke worldwide to the aluminum and
titanium dioxide industries.

As a result of the Reynolds acquisition, the Company operates a commercial
hazardous waste treatment facility in Gum Springs, Arkansas for the treatment of
spent potliner resulting from the Company's and other producers' North American
aluminum reduction operations.  Regulations issued by the U.S. Environmental
Protection Agency (EPA) require the treatment of spent potliner to prescribed
standards prior to disposal.  The Gum Springs facility has the capacity to treat
120,000 short tons of spent potliner annually and is currently operating at
approximately 50% of capacity.  In July 1998, the U.S. Court of Appeals for the
District of Columbia struck down the treatment standards included in the then
current EPA regulations.  The EPA subsequently adopted temporary standards,
which are expected to continue in effect until final standards are adopted.  As
a result of EPA's 1997 decision to classify the facility's treated spent
potliner as hazardous waste, Reynolds submitted permit applications to state and
federal environmental authorities to allow it to operate the Gum Springs
facility's landfill as a hazardous waste landfill.  The required permit was
issued by the Arkansas Department of Environmental Quality on January 14, 2000.

   North America - Energy

Alcoa produces aluminum from alumina by an electrolytic process requiring large
amounts of electric power.  Electric power accounts for approximately 25% of the
Company's primary aluminum costs.  Alcoa generates approximately 25% of the
power used at its smelters worldwide.

The Company has entered into a 50/50 joint venture with C.C. Pace Resource
Management, LLC, an energy management and consulting company, which has formed
Pace Global Energy Services, LLC.  This company continues to provide a variety
of energy-related management and consulting services to Alcoa and to other
unaffiliated companies.

Effective January 1, 2000, the Company consolidated five wholly-owned utility
subsidiaries, Yadkin, Inc., Tapoco, Inc., Alcoa Generating Corporation, Long
Sault, Inc. and Colockum Transmission Company into a single entity, Alcoa Power
Generating Inc. (APGI).

The Company generates approximately 25% of the power requirements for its 14
North American smelters and generally purchases the remainder under long-term
contracts.  Alcoa obtains approximately 10% of the self-generated power from its
entitlement to a fixed percentage of the output from Chelan County Public
Utility District's Rocky Reach hydroelectric power facility located in the State
of Washington.

In addition, Alcoa has a contract with the BPA that services the Wenatchee,
Washington smelter, as well as the Intalco smelter in Ferndale, Washington, the
formerly-owned smelter in Longview, Washington and the Troutdale, Oregon
smelter. Several contractual provisions allow power supply restrictions when
power is in short supply.

The Company has generated substantially all of the power used at its Warrick,
Indiana smelter using nearby coal reserves.  A 1996 coal supply contract
satisfies 40% of the smelter's fuel requirements through 2006.  Short-term
contracts of less than two years satisfy the remainder of the fuel requirements.
Under the terms of an operating agreement, the Company is in the process of
assuming operation of the power plants (3 Company-owned and 1 shared) that
supply the Warrick smelter from Southern Indiana Gas & Electric Company.  The
transition will be completed by the end of the second quarter of 2001.

The Rockdale, Texas smelter uses lignite to generate power.  The Company has
applied for permits to open a new lignite mine, the Three Oaks Mine, on land it
owns or controls adjacent to its existing

                                       9
<PAGE>

Sandow lignite mine. Company-owned generating units supply about one-half of the
total requirements of the smelter. Texas Utilities Company supplies the balance
through a long-term power contract expiring in 2013.

APGI owns and operates hydroelectric facilities under Federal Energy Regulatory
Commission licenses.  These facilities provide electric power for the aluminum
smelters at Alcoa, Tennessee and Badin, North Carolina.  The Tennessee smelter
also purchases firm and interruptible power from the Tennessee Valley Authority
under a contract that extends to 2010.  In the fall of 2000, APGI entered into a
63-month long arrangement with Aquila Energy Marketing Corporation (Aquila)
under which APGI sells the capacity and energy produced at its hydroelectric
units near Badin to Aquila, and, in return, Aquila supplies the power
requirements of the Badin plant.

The purchased power (primarily hydroelectric) contract for the Massena, New York
smelter and for the newly acquired Reynolds St. Lawrence, New York smelter
expires not earlier than 2003.  The Company, however, may terminate either of
these contracts with one year's notice.

The Lauralco smelter located in Deschambault, Quebec purchases electricity under
a long-term contract that expires in 2014, subject to certain extension
provisions.

The smelter located in Baie Comeau, Quebec receives a portion of its power needs
from a 40%-owned hydroelectric generating company, Manicouagan Power Company,
and purchases the rest under long-term contract.

Intalco, Eastalco, Mt. Holly, and Becancour purchase electricity under long-term
contracts that expire in the years 2001, 2003, 2005 and 2014, respectively,
subject to certain extension provisions.  Except for Intalco, each facility's
contract is with a single supplier.  In late 1995, Intalco entered into a series
of new long-term power contracts with the BPA and British Columbia Power
Exchange Corporation to provide all of its electricity needs from September 1996
through 2001.  Under these contracts, Intalco's power costs are set at a fixed
rate.  Mt. Holly entered into a new electric power supply agreement in 1997,
while Eastalco amended its existing power supply agreement during the same year.

BPA supplies electricity to the Company (including the Company's share of the
Intalco smelter) in the Pacific Northwest.  The current Alcoa, Intalco and
Reynolds contracts with BPA expire on September 30, 2001.  A new contract, for
the period October 1, 2001 to September 30, 2006, has been entered into between
the Company and BPA.  That contract provides approximately half of the
historical usage of the Company's and the former Reynolds' Northwest aluminum
smelters, and the final pricing adjustment provisions have not yet been
finalized.

     Australia

AWA - Australia is a participant in a joint venture smelter at Portland, in the
State of Victoria, with an annual capacity of 345,000 mt.  The owners of the
smelter are:

     .  AWA - Australia (55% interest)
     .  the China International Trust and Investment Corporation (22.5%
        interest) and
     .  Marubeni Aluminium Australia Pty., Ltd. (22.5% interest).

AWA - Australia increased its ownership in the Portland smelter on September 15,
2000 from 45% to 55% by the purchase of Eastern Aluminum Limited.  The equity in
the Portland smelter was the only significant asset of this company

Each participant in this smelter contributes to the cost of operations and
construction in proportion to its interest in the venture.  Each participant
also then receives a proportionate share of the output.  AWA -

                                       10
<PAGE>

Australia supplies the alumina through individual commercially negotiated
contracts and operates the smelter.

Power is generated from extensive brown coal deposits covered by a long-term
mineral lease held by AWA - Australia, and that power currently provides
approximately 40% of the electricity for the Company's 180,000 mt per year
smelter in Point Henry, Victoria.  The State Electricity Commission of Victoria,
under contracts with AWA - Australia, provides the remaining power for this
smelter and all power for the Portland smelter.  Negotiations have been
finalized to permit power interruptibility at both Point Henry and Portland that
will contribute to accommodating peak demands in the power grid serving the
State of Victoria.

     Brazil

The Alumar smelter at Sao Luis, Brazil has an annual capacity of 365,000 mt.
Based on the cost-sharing and production-sharing structure, Aluminio receives
about 54% of the production from this smelter.  The alumina requirements for its
share of the smelter production are supplied from Aluminio's share of the nearby
refinery.  Aluminio purchases electric power from Central Eletricas do Norte
(Eletronorte), the government-controlled electric utility, at a small discount
from the applicable industrial tariff price.

In February 1999, Aluminio and Central Eletricas de Minas Gerais S.A. (CEMIG)
entered into a new power purchase agreement to supply energy to the Pocos de
Caldas smelter.  Similar to the previous agreement, Aluminio purchased the
plant's anticipated full power requirements for 38 months, beginning April 1999,
through a single payment based on the price of energy on the date of the
agreement.

Aluminio participates in a consortium that is building the new Machadinho
hydroelectric power plant in southern Brazil.  In early 1998, after all of the
necessary environmental and other approvals had been obtained, the consortium
began construction of the dam and related facilities.  At the end of 2000, the
project was more than 70% completed.  Aluminio will share in the output of the
plant beginning in 2002.  Aluminio expects its share to be sufficient to supply
approximately one-half of the power requirements for the Pocos de Caldas
smelter.

In May 2000, Aluminio, as part of a consortium, won the ability to explore a
hydroelectric power project known as Barra Grande.  The Barra Grande project is
located on the Pelotas river in southern Brazil.

     Europe

The Company's aluminum smelters at Portovesme and Fusina, Italy have a combined
annual capacity of 187,000 mt.  The owners of the Eurallumina refinery, located
on the island of Sardinia adjacent to the Portovesme smelter, supply
approximately 40% of the alumina for the smelters under an evergreen agreement.
The balance of the alumina requirements for the smelters is supplied by AWA.
ENEL, Italy's state-owned utility, supplies power for these smelters.

The Company also operates smelters at San Ciprian, La Coruna and Aviles, Spain,
with a combined annual capacity of 363,000 mt.  The San Ciprian refinery
supplies alumina, and the government-controlled power grid currently supplies
electric power at the lowest applicable industrial tariff rate.

The Company reports equity earnings from its interest in two smelters in Norway.
Elkem Aluminium ANS, 50%-owned by an Alcoa subsidiary, is a partnership that
owns and operates the smelters.  The smelters have a combined capacity of
210,000 mt per year.  The Company has acquired over 30% of the outstanding
shares of Elkem A/S, the other owner of Elkem Aluminium ANS.

                                       11
<PAGE>

As part of the Reynolds acquisition, the Company acquired HAW, which owns 33% of
a 120,000 mt per year smelter in Hamburg, Germany.

   Africa

As part of the Reynolds acquisition, Alcoa is entitled to a 10% share of the
production at the Ghana smelter.  Production in Ghana is dependent on
hydroelectric power.  The Ghana plant is currently operating at reduced capacity
due to drought conditions that have existed since 1994.

Alcoa also holds a 10% equity interest in the Aluminum Smelter Company of
Nigeria (ALSCON), as a result of the Reynolds acquisition.  The smelter closed
indefinitely in 1999 due to lack of working capital.

   Venezuela

Alcoa acquired from the Reynolds acquisition a 7.31% equity interest in C.V.G.
Aluminio del Caroni, S.A. (ALCASA), which produces primary aluminum in Puerto
Ordaz, Venezuela.


Primary Metals - Other
- ----------------------

In addition, Alcoa produces and markets aluminum paste, particles, flakes,
atomized powder and high-purity aluminum.


III.  Flat-Rolled Products

Alcoa's flat-rolled products serve three principal markets: packaging,
transportation and building and construction.  Light gauge sheet products,
mainly rigid container sheet and foil, serve the packaging market, and mill
products (sheet and plate) serve the other markets.  Alcoa employs its own sales
force for most flat-rolled products.


Rigid Container Sheet (RCS)
- ---------------------------

RCS accounted for most of the 2000 revenues in the flat-rolled products
packaging market.  Can companies purchase RCS for production of beverage and
food cans and can ends.  The number of RCS customers in the U.S. is relatively
small.

Aluminum's diverse characteristics, particularly its light weight, recyclability
and flexibility for package designs, are significant factors in packaging
markets.  Aluminum competes with materials such as steel, plastic and glass in
these markets.  Alcoa maintains leadership in the packaging markets by improving
processes and facilities.  Alcoa also provides marketing, research and technical
support to its customers.  Alcoa produces RCS at the following locations:

     .  Warrick, Indiana
     .  Alcoa, Tennessee
     .  Point Henry and Yennora, Australia (joint venture facilities)
     .  Moka, Japan (joint venture facility) and
     .  Swansea, U.K.

Kaal Australia Pty., Ltd., 50%-owned by Alcoa, owns and operates rolling mills
at Point Henry and Yennora.  These mills produce RCS for the Australian and
Asian markets and general sheet and foil for the Australian market.  AWA -
Australia supplies Kaal Australia's Pt. Henry rolling mill with molten aluminum.

                                       12
<PAGE>

A subsidiary of Alcoa participates in a 50/50 joint venture with Kobe Steel,
Ltd. that produces RCS for markets in Japan and other Asian countries.  In
connection with this venture, Alcoa has a long-term contract to supply metal to
Kobe Steel.

Used aluminum beverage cans are an important source of metal for RCS.  Recycling
aluminum conserves raw materials, reduces litter and saves energy -- about 95%
of the energy needed to produce aluminum from bauxite.  In addition, recycling
capacity costs much less than new primary aluminum capacity.  The Company has
can recycling or remelt facilities at or near its plants in:

     .  Warrick, Indiana
     .  Alcoa, Tennessee and
     .  Yennora, Australia.


Foil
- ----

The businesses discussed in this section produce products for industrial
applications as opposed to the consumer applications of the foil products
produced by the Packaging and Consumer Business discussed in Segment V below.

Alcoa's Lebanon, Pennsylvania facility produces heavy gauge foil and brazing
sheet.  The heating and air conditioning, packaging and automotive markets use
these products.  A continuous casting facility in Badin, North Carolina produces
reroll stock in support of the Lebanon facility.  The Company also owns and
operates an additional integrated casting and rolling facility in St. Louis,
Missouri.  Foil products from this facility are sold primarily to commercial
users in the flexible packaging, converter and pharmaceutical industries.  Alcoa
owns and operates a rolling facility in Russellville, Arkansas that supports
the facility in St. Louis. The Company also owns and operates a continuous cast
aluminum mini-mill in San Antonio, Texas. The equipment in the plant is being
upgraded and the facility produces multi-purpose sheet and foil products.

Aluminio, near Recife, Brazil, manufactures light gauge sheet, foil products and
laminated evaporator panels.  The Yennora, Australia plant produces light
gauge sheet.  In addition, the facilities at Alicante and Sabinanigo, Spain
produce foil products.

Alcoa and Shanghai Aluminum Fabrication Plant (SAFP) have a joint venture, owned
60% by Alcoa and 40% by SAFP, which operates the former SAFP aluminum foil
production facility in Shanghai, China.  The annual output of the joint venture
facility is over 15,000 mt.

The Company owns a 56% interest in a foil mill in Kunming, Yunnan, China.


Mill Products
- -------------

Alcoa produces sheet and plate products that are used in the following markets:

     .  aerospace
     .  auto and truck
     .  lithographic
     .  railroad
     .  shipbuilding
     .  building and construction
     .  defense and
     .  other industrial and consumer markets.

                                       13
<PAGE>

The Company maintains its own sales force for most sheet and plate products.

Differentiation of material properties, price and service are significant
competitive factors in these markets.  Aluminum's diverse characteristics are
important in markets where competitive materials include steel and plastics for
automotive and building applications; magnesium, titanium, composites and
plastics for aerospace and defense applications; and wood and vinyl in building
and construction applications.  Alcoa continues to develop alloys and products
for aerospace and defense applications, such as those developed for the Boeing
777 aircraft, the Lockheed F-16 aircraft, the Canadair aircraft, the Advanced
Amphibious Assault Vehicle and the Airbus A340-600 aircraft.

Davenport, Iowa is home to Alcoa's largest sheet and plate plant.  The plant
produces products requiring special alloying, heat-treating and other
processing.  Some of these products are unique and proprietary.  Over the past
two years, the Davenport plant's heat-treating capacity for sheet and plate was
increased to meet aerospace and automotive demand.  Alcoa also commissioned the
largest vertical heat-treat furnace in North America, thus tripling the plant's
capacity for wide-width fuselage sheet.  A horizontal plate heat-treating
furnace, which was installed in 1997, has increased the plant's capacity by 30%.

Alcoa has a plant in Hutchinson, Kansas for further processing and just-in-time
stocking of aluminum sheet products for the U.S. aerospace market.  Alcoa serves
European sheet and plate markets through a distribution center in Paal, Belgium.

Alcoa has a plant in Danville, Illinois for further processing and just-in-time
stocking of aluminum sheet products for the North American automotive market.

The Company also has plants in Lancaster, Pennsylvania and Texarkana, Texas that
produce sheet and plate, and semi-fabricated products, circles and blanks.  The
Lancaster facility also produces semi-fabricated cast aluminum plate, engineered
to meet highly specialized industrial applications.  The Texarkana mill is a
leased facility.  The five-year operating lease for the facility expires in
November 2002, but is renewable for up to two additional years.

Alcoa and Kobe Steel have a joint venture consisting of one company in the U.S.
and one in Japan.  The focus of these ventures is to expand the use of aluminum
sheet products in passenger cars and light trucks.  As a result of a
restructuring of the venture in January 2000, the U.S. company will focus on
research and development efforts, while the Japanese company will continue to
engage in commercial (manufacturing, marketing and sales) as well as research
and development efforts, to serve the transportation industry.

The Company's Hungarian subsidiary, Alcoa-Kofem Kft (Kofem), produces common
alloy flat and coiled sheet.  Kofem delivers aluminum truck bodies to major
beverage companies in Europe and the Middle East.

The Company's Alcoa Italia S.p.A. (Alcoa Italia) subsidiary produces industrial
plate and common alloy flat and coiled sheet for the building and construction,
transportation and other industrial markets in Europe at its Fusina, Italy
rolling mill.

Alcoa has rolling mills at Amorebieta, Alicante and Sabinanigo, Spain and
Castelsarrasin near Toulouse, France.  These mills produce common alloy flat and
coiled sheet for the building and construction and transportation markets. They
produce lithographic sheet and coil and bright products for lighting, cosmetic
and industrial uses and foil products for food, pharmaceutical and industrial
applications in Europe.

In October 2000, Alcoa completed its acquisition of selected British Aluminium
Limited businesses.  This acquisition included a plate mill in Kitts Green, in
Birmingham, England and a sheet mill in Dolgarrog, Wales, both with the
capabilities to produce heat-treated products for the aerospace industry.

                                       14
<PAGE>

IV.  Engineered Products

Engineered products include aluminum extrusions, forgings, castings, investment
castings and steel and aluminum fasteners.


Extrusions
- ----------

   North America

Alcoa North American Extrusions is comprised of four businesses operating under
the names: Alcoa Extruded Aerospace Products, Alcoa Extruded Construction
Products, Alcoa Engineered Products and Alcoa Extruded Heat Exchanger Products.

Alcoa Extruded Aerospace Products (AEAP) produces hard alloy extrusions,
primarily for use in commercial aircraft, and drawn tube used in automotive
drive shaft, aerospace and consumer durable applications.  AEAP's manufacturing
facilities are located in Baltimore, Maryland; Lafayette, Indiana and Chandler,
Arizona.

Alcoa Extruded Construction Products (AECP) produces soft alloy extrusions used
in window and door frames, bath and shower enclosures, patio and pool
enclosures, stadium seating, light and flag poles and colored architectural
shapes.  Manufacturing facilities are located in Magnolia, Arkansas; Plant City,
Florida; Tifton and Fairburn, Georgia; Warren, Ohio; Delhi, Louisiana; Hernando,
Mississippi and Yankton, South Dakota.  Shower and bath enclosures are
distributed through service centers in California, Florida, Georgia, Kansas,
North Carolina, Pennsylvania, Texas and Washington, as well as through
independent distributors.

AECP's Warren, Ohio facility was acquired in January 2000 through the purchase
of Excel Extrusions, Inc., a subsidiary of Noranda Aluminum, Inc.

Alcoa Engineered Products' (AEP) soft alloy extrusions, cast rod and cold
finished rod and bar are sold to original equipment manufacturers (OEMs) in
automotive, commercial transportation, machinery, electrical, consumer durables
and other industrial markets and to distributors who service these markets. AEP
has six manufacturing facilities located in Catawba, North Carolina; Cressona,
Pennsylvania; Elizabethton, Tennessee; Massena, New York; Morris, Illinois and
Spanish Fork, Utah.

Alcoa Extruded Heat Exchanger Products has one manufacturing location in
Louisville, Kentucky, which produces small diameter round tube and micro-
multivoid hollows in coiled form used in heat exchanger applications for
automotive and consumer durables.

   South America

Aluminio also operates plants in Argentina, Brazil and Venezuela that
manufacture aluminum extruded products.  Aluminio operates six plants in Brazil
that are located in Sorocaba, Utinga, Sao Caetano, Turbarao, Itapissuma and Rio
de Janeiro.

   Europe

The Company's European extrusions business includes 21 extrusion plants in seven
European countries, an independent casthouse and two end product businesses.

                                       15
<PAGE>

Alcoa Extrusions Hannover GmbH & Co. KG produces and markets high-strength
aluminum extrusions and rod and bar to serve European transportation and defense
markets.

The Company also owns and operates extrusion plants in The Netherlands and
Wales.

Alcoa Italia produces and markets industrial extrusions through plants in
Bolzano, Fossanova, Feltre and Iglesias, Italy.  Also part of Alcoa Italia
is an extrusion die shop located in Mori, Italy.

The Company owns and operates extrusion plants in Valls, Noblejas, La Coruna and
Irurzun, Spain, as well as a distribution operation for architectural systems,
which has warehouses throughout the country.  In September 2000, the Company
opened a new extrusion plant at La Selva in Spain.

Alcoa also has extrusion plants in Hungary and the United Kingdom.  The Company
owns and operates three soft alloy extrusion plants that are located in Holland,
Germany and the Republic of Ireland which were acquired in the Reynolds
acquisition.  In addition to producing products for the building and industrial
sectors, they also supply the automotive market with heat exchanger tubing and
structural parts, including bumpers, car and truck door frames and sunroof
frames.

With its acquisition of the British Aluminium Limited businesses, the Company
acquired three extrusion plants, which are located in Banbury, St. Helens and
Latchford, Great Britain.

   Asia

As part of the Reynolds acquisition, Alcoa has a 32.48% ownership interest in
Bohai Aluminium Industries Limited in Qinhuangdao, China.


Forgings and Castings
- ---------------------

The Company's plant in Cleveland, Ohio produces aluminum forgings, sold
principally in the aerospace, automotive, commercial transportation and defense
markets.  The Cleveland plant, along with the Company's facility in Barberton,
Ohio, also produces aluminum forged wheels for passenger automobiles, sport
utility vehicles and light trucks and wheels for the bus and Class 8 heavy-duty
truck industry.

As part of the Reynolds acquisition, the Company acquired a transportation
business that operates nine plants supplying a wide range of fabricated aluminum
products to the transportation industry and has interests in two additional
plants located in Canada and Venezuela.  The principal products are wheels, heat
exchanger tubing and automotive structures.  The Company markets these products
primarily in North America to the "Big Three" automobile manufacturers, with
customers also in Europe and Venezuela.

The Company produces forged and cast aluminum wheels in a variety of sizes,
styles and finishes.  In February 1999, Reynolds completed the start-up of a $32
million expansion of its forged aluminum wheel manufacturing facility in
Lebanon, Virginia.  The expansion doubled the plant's production capacity to 1.4
million wheels per year.

Alcoa's plant in Szekesfehervar, Hungary manufactures forged aluminum truck
wheels for the European market.  The plant also manufactures wheels for export
to Asian, South American and other geographic markets that use European-style
wheels.

                                       16
<PAGE>

Aluminio operates a 72,000-unit-per-year aluminum wheel finishing plant in the
state of Pernambuco, Brazil.  The plant imports forgings from other Alcoa
operations and finishes them for sale in South America.


Investment Castings
- -------------------

Howmet Corporation (Howmet), acquired in June 2000 as part of the Cordant
acquisition, and now a wholly-owned indirect subsidiary of Alcoa, manufactures
super-alloy, titanium and aluminum components for aerospace engine and airframe
applications and industrial gas turbine engine applications for customers
worldwide.

Howmet's aerospace castings consist of super-alloy and titanium castings for
aircraft turbine engines and airframe and engine structural applications.
Products include individual airfoils consisting of blades (rotating foils) or
vanes (non-rotating foils), as well as integral castings such as turbine rotors
and nozzle rings for smaller engines involving an entire set of blades and
related components cast together.  Structural components include support
components of engines, such as engine castings, frames and bearing housings,
and other airframe components. Howmet's aerospace castings are manufactured for
commercial and military applications and sold to aircraft OEMs. The OEMs use the
castings in new engines and/or sell them as replacement parts.

Industrial gas turbine engine products consist of airfoils (including moving
blades and stationary vanes) for gas turbines used for power generation
primarily by the electric utility industry and mechanical drive applications for
industrial and pipeline operations, oil and gas processing and offshore
drilling.

Howmet subsidiaries produce aluminum investment castings for the commercial
aerospace and defense markets.  Applications include electronic packaging,
electro-optical system housings, pumps, compressors and aircraft structurals.

The aerospace market consists of both commercial and military aerospace
manufacturing companies, domestic and foreign.  Customer product qualification
required by domestic and foreign regulatory agencies such as the Federal
Aviation Administration as to plant and product quality and lot traceability is
important for the aerospace market acceptance of certain products.


Fasteners
- ---------

As part of Alcoa's acquisition of Cordant, the Company acquired Cordant's
fastening systems products business known as Huck Fasteners (Huck).  This
business consists of specialty fasteners, installation tools and custom
injection molded plastic products that are sold to customers directly by Huck
and through a distribution network in both U.S. and international markets.
Fasteners made from a variety of materials, including high strength metals and
metal alloys, are threaded and non-threaded consisting of lock bolts, blind
bolts, lock nuts, blind rivets, cap screws and various other metal products sold
under various trade names and trademarks for aerospace, industrial, automotive
and construction industry applications.  Injection molded products consist of
custom components and end products.  Fastener installation tools are also
manufactured and marketed to provide customers complete fastener installation
systems.

Huck faces the same aerospace market competition and customer product
qualifications as discussed above.  In that regard, Huck's fasteners have been
qualified by major aerospace companies worldwide in order for such customers to
use these fasteners in original equipment and aftermarket aircraft products.
Principal domestic and foreign industrial markets include automotive, truck,
trailer, railcar, and mining applications.  The construction industry utilizes
Huck's fastening systems for certain structural

                                       17
<PAGE>

applications such as bridges and building structures. Plastic injection molded
products are used in the computer, telecommunications and medical industries.

In January 2001, the Company acquired certain assets of Midwest Fastener
Corporation for the manufacture of non-proprietary externally threaded fasteners
used primarily in joining auto body parts and final auto assemblies.  The
fasteners vary in size, are made from various grades of steel and are used
across a wide variety of engineered applications in many automobile makes and
models.


V.  Packaging and Consumer


This new segment includes the packaging and consumer businesses as well as
closures and packaging equipment.


Packaging and Consumer Businesses
- ---------------------------------

As part of the Reynolds acquisition, Alcoa acquired the Reynolds' packaging and
consumer business.  This business provides a variety of foil, plastic and other
products and related services to the packaging and consumer products markets.
Reynolds was, and Alcoa now is, the world's leading aluminum foil producer and a
major converter of plastic resins.

   Flexible Packaging

Alcoa markets a diverse range of flexible packaging products under the Reynolds
brand name, including inner and outer wraps, pouches, specialty cartons, child-
resistant blister backing, and plastic containers.  The customers of this
business include global marketers of food, confection, healthcare and tobacco
products.  Alcoa also serves the foodservice market (restaurants, delis,
supermarket take-out, and fast-food and catering establishments) with over 1,000
foil, plastic and paper products including aluminum and plastic film, plastic
containers and lids, foodservice bags, catering trays, sandwich bags and wraps,
baking cups and trays also marketed under the Reynolds brand name.  Alcoa also
produces industrial plastic film (including Reynolon shrink film) and labels for
shrink wrapping and tamper-evident packaging.

Alcoa manufactures its packaging products at wholly-owned facilities it acquired
in the Reynolds acquisition which are located in the U.S., Brazil, Canada and
Spain.  Alcoa also has an interest in foil operations in Colombia and Venezuela
as part of the Reynolds acquisition.  The capacity of these manufacturing
facilities depends on the variety and types of products manufactured.

In September 2000, Aluminio acquired Itaipava, a producer of flexible
aluminum packaging in Brazil.

   Consumer Products

Alcoa's consumer business manufactures and markets an extensive line of foil,
plastic and paper consumer products predominantly under the Reynolds brand name.
Products include the well-known Reynolds Wrap Aluminum Foil, Reynolds Plastic
Wrap, Reynolds Oven Bags, Reynolds Pot Lux Cookware, Reynolds Freezer Paper,
Reynolds Cut-Rite Wax Paper, Reynolds Baker's Choice Bake Cups, and Reynolds
Wrappers Foil Sheets.  Reynolds' consumer products are distributed throughout
North America, with the U.S. being Reynolds' largest market for these products,
and in more than 65 other countries.

                                       18
<PAGE>

A consumer products subsidiary, Reyco Ltda., in Sao Paulo, Brazil, produces
consumer products under the Masterpack brand name, and a limited number of
foodservice items under the Reynolds brand.

Through a subsidiary acquired in the Reynolds acquisition that trades under the
name Presto Products Company, Alcoa is a supplier of private label plastic
consumer products.  The Company produces a variety of plastic food wraps and
bags (including trash bags and reclosable snack, sandwich, storage and freezer
bags) that are sold predominantly in North America.  In August 2000, Presto
Products acquired certain assets of Conagra Inc.'s Arrow Industries Division.
These assets will add significant capacity to Presto Products' operations and
will produce products such as consumer disposer bags, non-reclosable sandwich
and food storage bags and plastic wrap.

In August 2000, the Company acquired certain assets of privately held Baco
Consumer Products, Ltd. (Baco).  Baco is the U.K.'s leading supplier of
household wraps, including aluminum foil, plastic bags, clingfilm and bin
liners.

   Graphics

Alcoa's subsidiary, Southern Graphic Systems, Inc., which was acquired as part
of the Reynolds acquisition, produces rotogravure printing cylinders, color
separations and flexographic plates used in Alcoa's packaging printing
operations and for the consumer and industrial packaging industry.  Southern
Graphic's major customers, in addition to Alcoa, are other consumer products
companies and converters, with a trend toward consumer products companies.
Southern Graphic also provides graphics management services and manufactures
printing accessories (bases and anilox rolls).

Southern Graphic has a plant in Toronto, Ontario, Canada that produces
flexographic separations and plates for the packaging industry in Canada.
Southern Graphic has four U.S. production facilities for flexographic
separations and plates for the packaging industry.  In addition, Southern
Graphic, through its Mexican subsidiary, Southern Graphic Systems Mexico S. de
R.L. de C. V., provides onsite services to its customers at its new Mexico City,
Mexico offices.

In April 2000, Southern Graphic acquired the assets of Cage Graphic Arts, Inc.,
a company that offered a complete line of prepress services for the flexographic
and offset printing industries.



Closures and Packaging Equipment
- --------------------------------

Alcoa Closure Systems International, Inc. (ACSI), the world's largest producer
of plastic closures, manages all of Alcoa's worldwide closures businesses other
than in South America.  ACSI coordinates its business from Indianapolis,
Indiana.  The Company's South American closures business and PET (polyethylene
terephthalate) plastic bottles manufacturing facilities are managed separately
by Aluminio from Sao Paulo, Brazil.

The use of plastic closures has surpassed that of aluminum closures for beverage
containers in the U.S. and in many other countries.  Alcoa has facilities
designing and/or making plastic and aluminum closures, PET plastic bottles,
closure molding equipment, capping machinery and other equipment for the food
and beverage industry at the following locations:

Packaging and Closures Facilities:

     .  Barcelona, Spain
     .  Barueri, Itapissuma, Lages and Queimados, Brazil
     .  Bogota, Colombia
     .  Buenos Aires and Uschuaia, Argentina

                                       19
<PAGE>

     .  Canton, Ohio
     .  Crawfordsville, Indiana
     .  Englewood, Colorado
     .  Ensenada and Saltillo, Mexico
     .  Kilgore, Texas
     .  Lima, Peru
     .  Lyubuchany, Russia
     .  Manama, Bahrain
     .  Manila, the Philippines
     .  Montivideo, Uruguay
     .  Nogi, Japan
     .  Olive Branch, Mississippi
     .  Randolph, New York
     .  Rieti, Italy
     .  San Jose, Costa Rica
     .  Santiago, Chile
     .  Sidney, Ohio
     .  Shreveport, Louisiana
     .  Szekesfehervar, Hungary
     .  Tianjin, China
     .  Valencia, Venezuela
     .  West Bromwich, UK and
     .  Worms and Viernheim, Germany.

In February 2000, ACSI acquired certain assets from Redicon Corporation involved
in the design and manufacture of metal forming systems, which is an extension of
its product line.

On July 31, 2000, the Company completed the acquisition of Southern Plastics,
Inc.  The acquisition adds injection molding technology as well as access to the
food and personal care markets to ACSI.

The Alcoa Packaging Equipment business unit designs, manufactures and services:

     .  can forming equipment
     .  registered embossers
     .  end manufacturing systems
     .  printing systems and
     .  a variety of testing equipment for the can-making industry.


VI.  Other

This category includes the Alcoa Automotive businesses, Alcoa Fujikura Ltd.'s
electronic and electrical distribution systems (EDS) as well as its
telecommunications products and services, Thiokol's propulsion systems, Kawneer
Company, Inc.'s architectural aluminum products, Alcoa Building Products, Inc.'s
building and construction products, and various other aluminum and non-aluminum
products.


Alcoa Automotive
- ----------------

The Company's Automotive unit is organized into three businesses: Automotive
Castings, Automotive Engineering and Automotive Assembly & Fabrication.

                                       20
<PAGE>

The Company's Alcoa Automotive Castings unit offers high-quality structural
castings, while its Alcoa Automotive Engineering unit provides design,
engineering, prototyping and cost analysis for aluminum structures, assemblies
and components to both internal and external customers, and its Alcoa Automotive
Assembly & Fabrication unit manufactures structural assemblies and components as
well as formed and machined extrusions.

Alcoa Automotive Castings' Soest, Germany plant produces the components and
selected sub-assemblies for the Audi A8 spaceframe, the result of a cooperative
effort between the two companies that began in 1981, as well as the front-end
module for the Mercedes-Benz A Class car.

Alcoa Automotive Castings also produces components at its Michigan Casting
Center in Fruitport, Michigan, its Kentucky Casting Center in Hawesville,
Kentucky and its Scandinavian Casting Center in Lista, Norway.  The Lista plant
is located near the 50%-owned Elkem Aluminium ANS smelter, which delivers molten
aluminum to the plant.  Current Automotive Castings customers include
DaimlerChrysler, Ford, Volvo, BMW, Jaguar, Audi and General Motors.

Together with Lingotes Especiales S.A. of Valladolid, Spain, Alcoa acquired
Alloy Technologies Limited, now known as "Alcoa-Lingotes Castings Limited" in
Leyland, England, in the second quarter of 2000.  Alcoa-Lingotes Castings is
developing automated green sand-casting technology to supply automotive
components.

The Alcoa Automotive Assembly & Fabrication unit consists of the Company's Ohio
Assembly & Fabrication Center in Northwood, Ohio, which manufactures
DaimlerChrysler's Plymouth Prowler frame and a variety of aluminum structural
assemblies for the U.S. automotive industry, including the Corvette windshield
surround; the Indiana Assembly & Fabrication Center (formerly Reynolds' RAMCO
Manufacturing Company) unit in Auburn, Indiana, which makes extrusions and
assembles other components for use in bumpers, car and truck door frames,
convertible roof brackets, sunroof frames, antilock brake system housings,
steering shafts and steering column brackets; and the Italian Assembly &
Fabrication Center in Modena, Italy, which assembles spaceframes for the Ferrari
360 Modena, which was introduced in 1999 to favorable automotive industry
reviews.

Alcoa Automotive Engineering includes the design and engineering offices in
Esslingen (Stuttgart), Germany, Livonia (Detroit), Michigan and Alcoa Technical
Center, near Pittsburgh, Pennsylvania.  The unit of Alcoa Automotive designs
aluminum auto body structures for a variety of car manufacturers and for Tier 1
suppliers to the automotive industry.

Alcoa is working with several other automobile manufacturers in North America,
Europe and Japan to develop new automotive applications for aluminum products.


Alcoa Fujikura Ltd. (AFL)
- -------------------------

AFL produces and markets electronic and electrical distribution systems (EDS)
for the automotive industry, as well as fiber optic products and systems for
selected electric utilities, telecommunications, cable television and datacom
markets.

AFL owns Michels GmbH & Co. K.G. (Michels), a European manufacturer of EDS for
automobiles.  AFL also owns the Stribel group of companies, European
manufacturers of electromechanical and electronic components for the European
automotive market.  The European facilities are located in Germany, Hungary,
Ireland and the United Kingdom.

                                       21
<PAGE>

AFL's subsidiaries operate EDS facilities in Ciudad Acuna, Piedras Negras,
Monterrey, Torreon and Ciudad Juarez, Mexico.  AFL and Aluminio have a joint
venture, AFL do Brasil Ltda., that manufactures and sells EDS in Brazil.  AFL
also has an EDS manufacturing facility in Venezuela.

An AFL subsidiary operates a telecommunications components assembly facility in
Monterrey, Mexico.

Six "R" Communications, L.L.C., part of AFL's telecommunications division, is a
Monroe, North Carolina-based provider of EF&I services (engineer, furnish and
install) to the telecom and CATV industries.  Other EF&I subsidiaries of AFL
include T.I.C.S. Corporation in Charlotte, North Carolina; MinTel
Communications, L.L.C. in Norcross, Georgia; Quality Control Services, L.L.C. in
Richmond, Virginia; Tele-Tech Company, Inc. in Lexington, Kentucky; and Digisys
Corp. in Alpharetta, Georgia.  AFL also provides cabling contracting services
for LAN and computer network installations.

In February 2000, AFL's telecommunications division acquired privately held
Noyes Fiber Systems, Inc., headquartered in Belmont, New Hampshire.  Noyes Fiber
Systems is a manufacturer of fiber optic test equipment for measuring,
maintaining and documenting the performance of fiber optic networks.

In June 2000, AFL's telecommunications division purchased the assets of Focas,
Ltd. in Swindon, UK and the assets of Focas, Inc. in Alpharetta, Georgia.  Both
companies manufacture aerial fiber optic cable for communication networks around
the world.

In November 2000, AFL's telecommunications division purchased Atlantic and
Pacific Telcom, Inc. headquartered in Roanoke, Virginia.  This company provides
a variety of EF&I services to the telecom industry.  In addition, the
telecommunications division purchased the assets of Thomas & Betts Corporation's
fiber optic division located in Attleboro, Massachusetts.  This company
manufactures fiber optic components for OEMs and their optical system suppliers.


Thiokol Propulsion
- ------------------

As part of the Cordant acquisition, Alcoa acquired the propulsion systems
division of Cordant operating as Thiokol Propulsion (Thiokol).  Thiokol produces
solid rocket propulsion systems and related products, and provides research and
development and launch support services for the National Aeronautics and Space
Administration, Department of Defense and commercial space applications.
On January 31, 2001, Alcoa announced that it had reached an agreement to sell
Thiokol.  See Recent Developments on page 3.


Other Aluminum Products
- -----------------------

Kawneer Company, Inc. (Kawneer) designs, manufactures and markets architectural
aluminum products and is a leading producer of these products in the U.S. and
Canada.  These products include entrances, windows, framing and curtain wall
systems for the commercial building markets.  Kawneer products also are
engineered for use on construction projects throughout the world.

Kawneer operates five integrated architectural plants, 15 service centers and
two additional manufacturing locations in the U.S.  Distribution is principally
through dealers, most of whom are glazing contractors.

Kawneer also operates two integrated architectural plants in Canada that provide
most of the product that is sold for large overseas projects, as well as two
service centers.

                                       22
<PAGE>

Alcoa Europe Building and Construction Systems manages the architectural
aluminum systems businesses (curtain walling, windows, doors) of Kawneer and
Reynolds through five major locations (UK, Ireland, Holland, Germany and France)
along with Reynobond composite panels and Reynolux painted coil produced in
Merxheim, France.  A number of additional building products (partition systems,
balcony railings, roof edging and ancillary products) are produced and marketed
in Holland.

The Company produces Reynobond aluminum composite material that is sold
worldwide for architectural and specialty applications.

The Company also produces Reynolux painted aluminum sheet and profiled products;
designs and markets architectural systems consisting of curtainwall, window and
door units for residential and commercial applications; and produces and sells
polymer-coated magnet wire for electrical transformers.

Alcoa Building Products, Inc. (ABP) manufactures and markets aluminum siding and
accessory products for the residential building and construction markets.  ABP
sells these products principally through specialty distributors.

Alcoa owns a 36% interest in American Trim, L.L.C., a joint venture that
manufactures primarily auto parts and appliance control panels.

As part of the Reynolds acquisition, Alcoa acquired a 36% interest in LATASA,
the largest aluminum can producer in Latin America.  LATASA has four operating
locations in Brazil, one in Argentina and one in Chile.


Other Nonaluminum Products
- --------------------------

ABP produces vinyl siding and accessories and other nonaluminum building
products for the residential building and construction markets.  ABP sells these
products principally through specialty distributors.

As part of the Reynolds acquisition, Alcoa acquired a distribution business that
distributes aluminum, stainless steel and other specialty metal products under
the names Reynolds Aluminum Supply Company (RASCO), Permamet Metals, Inc. and
RASCO Specialty Metals Inc. (in Canada).

RASCO provides supply chain management services to North American metal
fabricating customers requiring high-quality aluminum, stainless steel and other
specialty metal products.  During 2000, RASCO's total distribution sales were
49% in aluminum mill products and 49% in stainless steel mill products.  RASCO
processes and distributes plate, sheet, extrusions, rod and bar products through
37 facilities across North America.  RASCO provides metal processing services
such as cutting to length, slitting, blanking, shearing, sawing and plasma
burning.  The metal processing services offered by RASCO allow it to provide
customized products, delivered just-in-time to customers.  RASCO's customers
include fabricators and manufacturers in transportation, equipment, machinery
and other markets.

During 2000, RASCO completed a new 72,000 square foot service center in Kansas
City and began expansions to facilities in Shelbyville, Kentucky, and
Wilmington, Delaware, each with new blanking equipment.  The blanking lines will
provide customers with close tolerance, custom size blanks ready for their
production lines.

Northwest Alloys, Inc., in Addy, Washington, produces magnesium from minerals in
the area owned by the Company.  Alcoa uses the magnesium for certain aluminum
alloys and also sells it to third parties.

                                       23
<PAGE>

The Alcoa facility at Cleveland, Ohio produces large press steel, titanium and
special super-alloy forgings.  Aerospace and commercial customers are the
principal purchasers of these products.


Alcoa e-Business
- ----------------

The Company has formed a "virtual" business unit to champion closer eCommerce
integration between Alcoa and its customers and suppliers.  This initiative
utilizes an enhanced infrastructure and a combination of internal and external
resources.

The Company has standardized its desktop systems, is consolidating its numerous
North American data centers and is implementing a common enterprise business
system.  Alcoa's eProcurement initiatives include an internal catalog based
electronic mall which has been rolled out in North America with an MRO/indirect
procurement focus.  The functionality of the mall streamlines the procurement
process from requisition through payment.  Additionally, a number of major
purchases have been accomplished using dedicated auction sites and exchange
marketplaces.

Certain Alcoa business units have developed individual eCommerce portals which
are now being consolidated into a coordinated corporate site.

Where there is opportunity to enhance supply chain efficiency or to expand
market reach, Alcoa utilizes external eCommerce sites and marketplaces and in
some instances has taken a minority equity position.


Competition
- -----------

The markets for most aluminum products are highly competitive.  Price, quality
and service are the principal competitive factors in most of these markets.
Where aluminum products compete with other materials, the diverse
characteristics of aluminum are also a significant factor, particularly its
light weight and recyclability.

The Company continues to examine all aspects of its operations and activities
and redesign them where necessary to enhance effectiveness ad achieve cost
reductions.  Research and development has led to improved product quality and
production techniques, new product development and cost control.  Alcoa believes
that it enhances its competitive position through its improved processes,
extensive facilities and willingness and ability to commit capital where
necessary to meet growth in important markets, and by the capability of its
employees.  This is being done through aggressive implementation of the Alcoa
Business System (ABS), an integrated set of systems and tools organized to
provide a common language and unencumbered transfer of knowledge across
businesses and geographies.

ABS is the management system Alcoa set out to implement worldwide four years
ago.  The basic ABS Principles are:  (1) making only what the customer wants,
when the customer wants it;  (2) eliminating as waste anything not wanted by the
customer; and (3) recognizing that people are critical to the success of ABS.

In addition to the positive and tangible financial outcomes, ABS provides a
simple, consistent, powerful framework for decision making, communication and
people engagement.  It has been a valuable contributor to the integration of
Alcoa's recent acquisitions.

Alcoa believes that ABS will in time substantially improve its profitability and
become a source of competitive advantage.  At the end of 2000, the Company
announced that it had achieved its $1.1 billion annualized cost savings
initiative (announced in 1998), excluding the impact of higher energy costs,

                                       24
<PAGE>

which were $132 million for the year 2000.  At the end of January 2001, Alcoa
announced a new $1.0 billion cost reduction initiative to be achieved by
December 31, 2003.


Risk Factors
- ------------

This report contains (and oral communications made by Alcoa may contain)
forward-looking statements.  These statements are based on Alcoa's estimates and
assumptions and are subject to a number of risks and uncertainties.  Actual
results could differ materially from those projected in the forward-looking
statements.  Forward-looking statements can be identified generally as those
containing words such as "anticipates", "assumes," "believes", "estimates",
"expects", "should", "will", "will likely result", "forecast", "outlook",
"projects" or similar expressions.  For each of these statements, Alcoa claims
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995.  Alcoa disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

In addition to the risks inherent in its operations, Alcoa is exposed to
financial, market, political and economic risks.  The following discussion,
which provides additional detail regarding Alcoa's exposure to the risks of
changing commodity prices, foreign exchange rate, interest rates, legal
contingencies and environmental matters, includes forward-looking statements
that involve risk and uncertainties.


Commodity Price Risks
- ---------------------

The aluminum industry is highly cyclical, and the London Metal Exchange
(LME)-based prices of primary aluminum influence the Company's results of
operations. This price sensitivity impacts a portion of the Company's alumina
sales and many of the Company's aluminum products. There is, however, less
impact on the more specialized and value-added products.

Alcoa is a leading global producer of aluminum ingot and aluminum fabricated
products.  As a condition of sale, customers often require Alcoa to commit to
fixed-price contracts that sometimes extend a number of years into the future.
Customers will likely require Alcoa to enter into similar arrangements in the
future.  These contracts expose Alcoa to the risk of fluctuating aluminum prices
between the time the order is accepted and the time that the order ships.

In order to fulfill some of the orders noted above, Alcoa might be required to
purchase aluminum to supplement its internal production.  These purchases expose
the company to the risk of higher aluminum prices.  To hedge this risk, Alcoa
enters into long positions, principally using futures and options.  Alcoa
follows a stable pattern of purchasing metal; therefore, it is highly likely
that anticipated metal purchase requirements will be met.  At December 31, 2000
and 1999, these contracts totaled approximately 522,000 mt and 465,000 mt,
respectively.  These contracts act to fix the purchase price for these metal
purchase requirements, thereby reducing Alcoa's risk to rising metal prices.

A hypothetical 10% change from the 2000 year-end, three-month LME aluminum ingot
price of $1,565 per mt would result in a pretax gain or loss to future earnings
of $81 million related to all of the futures and options contracts noted above.
However, it should be noted that any change in the value of these contracts,
real or hypothetical, would be significantly offset by an inverse change in the
value of the underlying metal purchase transactions.

Earnings were selected as the measure of sensitivity due to the historical
relationship between aluminum ingot prices and Alcoa's earnings.  The
hypothetical change of 10% was calculated using a parallel shift in the existing
December 31, 2000 forward price curve for aluminum ingot.  The price curve takes
into account the time value of money, as well as future expectations regarding
the price of aluminum ingot.

                                       25
<PAGE>

The futures and options contracts noted above are with creditworthy counter
parties and are further supported by cash, treasury bills or irrevocable letters
of credit issued by carefully chosen banks.

Alcoa also had 51,000 mt and 21,000 mt of futures and options contracts
outstanding at year-end 2000 and 1999, respectively, that cover long-term,
fixed-price commitments to supply customers with metal from internal sources.
Accounting convention requires that these contracts be marked to market, which
resulted in after-tax gains of $6 million in 2000 and $12 million in 1999 and
charges of $45 million in 1998.  A hypothetical 10% change in aluminum ingot
prices from the year-end 2000 level of $1,565 per mt would result in a pre-tax
gain or loss of $7 million related to these positions.  The hypothetical gain or
loss was calculated using the same model and assumptions noted earlier.

Alcoa sells products to various third parties at prices that are influenced by
changes in LME aluminum prices.  From time to time, the Company may elect to
hedge a portion of these exposures to reduce the risk of fluctuating market
prices on these sales.  Towards this end, Alcoa may enter into short positions
using futures and options contracts.  At December 31, 2000 and 1999, these
contracts totaled 112,000 and 244,000 mt respectively.  These contracts act to
fix a portion of the sales price related to these sales contracts.  A
hypothetical 10% change in aluminum ingot prices from the year-end 2000 level of
$1,565 per mt would result in a pretax gain or loss of $15 million related to
these positions.  The hypothetical gain or loss was calculated using the same
model and assumptions noted earlier.

Alcoa is required to purchase natural gas to meet its production requirements.
These purchases expose the Company to the risk of higher natural gas prices.  To
hedge this risk, Alcoa enters into long positions, principally using futures and
options. Alcoa follows a stable pattern of purchasing natural gas; therefore, it
is highly likely that anticipated natural gas purchases will occur. At
December 31, 2000 the fair value of the contracts for natural gas totaled
approximately $69 million. A hypothetical 50% change in the market price of
natural gas from year-end 2000 levels would increase or decrease future earnings
by $81 million.

Alcoa also purchases certain other commodities, such as fuel oil, electricity
and copper, for its operations and enters into futures and options contracts to
eliminate volatility in the prices of such products.  None of these contracts
are material.  For additional information on financial instruments, see Notes A
and S to the Financial Statements.


Foreign Exchange Risks
- -----------------------

Alcoa is subject to significant exposure from fluctuations in foreign
currencies.  As a matter of company policy, foreign currency exchange contracts,
including forwards and options, are sometimes used to limit the risk of
fluctuating exchange rates.  A hypothetical 10% change in applicable 2000 year-
end forward rates would result in a pretax gain or loss of approximately $210
million related to these positions.  However, it should be noted that any change
in the value of these contracts, real or hypothetical, would be significantly
offset by an inverse change in the value of the underlying hedged item.  The
model assumes a parallel shift in the forward curve for the applicable
currencies and includes the foreign currency impacts of Alcoa's cross-currency
interest rate swaps.  See Notes A and S to the Financial Statements for
information related to the accounting policies and fair market values of Alcoa's
foreign exchange contracts at December 31, 2000 and 1999.


Interest Rate Risks
- -------------------

Alcoa attempts to maintain a reasonable balance between fixed and floating-rate
debt and uses interest rate swaps and caps to keep financing costs as low as
possible.  At December 31, 2000 and 1999,

                                       26
<PAGE>

Alcoa had $8,133 million and $3,067 million of debt outstanding at effective
interest rates of 7.6% for 2000 and 5.8% for 1999, after the impact of interest
rate swaps and caps is taken into account. A hypothetical change of 10% in
Alcoa's effective interest rate from year-end 2000 levels would increase or
decrease interest expense by $62 million. The interest rate effect of Alcoa's
cross-currency interest rate swaps has been included in this analysis. For more
information related to Alcoa's use of interest rate instruments, see Notes A and
S to the Financial Statements.



Risk Management
- ---------------

All of the aluminum and other commodity contracts, as well as the various types
of financial instruments, are straightforward and are held for purposes other
than trading.  They are used primarily to mitigate uncertainty and volatility
and cover underlying exposures.

Alcoa's commodity and derivative activities are subject to the management,
direction and control of the Strategic Risk Management Committee (SRMC).  SRMC
is composed of the chief executive officer, the chief financial officer and
other officers and employees that the chief executive officer may select from
time to time.  SRMC reports to the board of directors on the scope of its
derivative activities.


Material Limitations
- --------------------

The disclosures with respect to commodity prices and foreign exchange risk do
not take into account the underlying anticipated purchase obligations and the
underlying transactional foreign exchange exposures.  If the underlying items
were included in the analysis, the gains or losses on the futures and options
contracts may be offset.  Actual results will be determined by a number of
factors that are not under Alcoa's control and could vary significantly from
those factors disclosed.


Legal Contingencies
- -------------------

Various lawsuits, claims and proceedings have been or may be instituted or
asserted against Alcoa, including those pertaining to environmental, product
liability and safety and health matters.  While the amounts claimed may be
substantial, the ultimate liability cannot now be determined because of the
considerable uncertainties that exist.  Therefore, it is possible that results
of operations or liquidity in a particular period could be materially affected
by certain contingencies.  For more information, see Note K to the Financial
Statements.


Environmental Matters
- ---------------------

It is possible that Alcoa's results of operations or liquidity in a particular
period could be materially affected by certain environmental matters, including
remediation costs and damages related to the Massena, New York; Pt. Comfort,
Texas; Troutdale, Oregon; and Sherwin, Texas sites.  For more information, see
Note T to the Financial Statements.


Employees
- ---------

Alcoa and its subsidiaries had approximately 142,000 employees worldwide at
year-end 2000.

                                       27
<PAGE>

In the U.S., in mid-1996, Alcoa and a number of unions ratified six-year labor
agreements, which, at year-end 2000, covered approximately 13,000 of Alcoa's
production and maintenance workers.  The agreements have five years of defined
provisions.  At the end of the fifth year, Alcoa and the unions will reopen the
entire contract.  If the parties cannot reach agreement, they will submit the
economic provisions to arbitration.  There are approximately 14,000 U.S.
production and maintenance workers covered under various other labor agreements,
which provide for varying termination dates and other employment provisions.
There are approximately 18,000 non-union U.S. production and maintenance
workers.

Agreements negotiated under guidelines established by a national industrial
relations authority cover wages for AWA - Australia employees.

Aluminio negotiates wages for both hourly and salaried employees annually in
compliance with government guidelines.  Each Aluminio location, however, has a
separate compensation package for its employees.

In Canada, Alcoa has over 4,000 employees, some of whom are covered under six
different labor agreements.

In Mexico, Alcoa has over 30,000 employees, some of whom are covered under three
different labor agreements.

In Italy, Alcoa has 16 locations with approximately 2,600 employees, most of
whom are represented by national trade unions.

In the United Kingdom, Alcoa has approximately 4,600 employees, most of whom are
represented by four different trade unions.

In Spain, Alcoa has eight plants and one central office, each one with its own
collective bargaining agreement.  There are two plants with collective
bargaining agreements at a regional level.  Each agreement is negotiated with
the committee of workers of the plant.  The collective bargaining agreements
affect about 4,000 employees.


Research and Development
- ------------------------

Alcoa, a technology leader in the aluminum industry, engages in research and
development programs that include process and product development, and basic and
applied research.  Alcoa conducts these activities within its business units and
at Alcoa Technical Center.  Expenditures for R&D activities were $194 million in
2000, $128 million in 1999 and $128 million in 1998.  The Company funds
substantially all R&D expenses.

Each of the major process/product areas within the Company has a Technology
Management Review Board (TMRB), consisting of members from various worldwide
locations.  The TMRB is responsible for formulating and communicating a
technology strategy for its particular process/product area, developing and
managing the technology portfolio and ensuring the global transfer of
technology.

In June 2000, Alcoa confirmed that it had been working on new developments in
inert anode technology and that the United States Patent and Trademark Office
had granted the Company patents related to these advanced smelting process
technologies.  The Company plans a test of the technology in a single pot in a
commercial facility during the first half of this year.  Dependent upon results
of single pot testing activity, testing may be expanded to a complete potline in
2002.  Assuming the technology proves to be commercially feasible, the Company
believes that it will be able to convert its existing potlines to this new

                                       28
<PAGE>

technology, resulting in significant operating cost savings.  The new technology
will also generate substantial environmental benefits in the form of reduction
and elimination of certain emissions.  No timetable has been established for
commercial use.


Environmental
- -------------

Alcoa's Environment, Health and Safety Policy confirms its commitment to operate
worldwide in a manner that protects the environment and the health and safety of
employees and of the citizens of the communities where the Company operates.

Alcoa continues its efforts to develop and implement modern technology, and
standards and procedures, to meet its Environment, Health and Safety goals.  The
Company spent approximately $96 million during 2000 for new or expanded
facilities for environmental control.  Capital expenditures for such facilities
will approximate $91 million in 2001.  These figures do not include the costs of
operating these facilities.  Remediation expenses are continuing at many of the
Company's facilities.  See Note T on Environmental Matters in the Annual Report
to Shareholders and "Item 3 -- Legal Proceedings" below.

Alcoa's operations worldwide, like those of others in manufacturing industries,
have in recent years become subject to increasingly stringent legislation and
regulations intended to protect human health and safety, and the environment.
The Company expects this trend to continue.  Compliance with new laws,
regulations or policies could require substantial expenditures by the Company in
addition to those mentioned above.

Alcoa supports the use of sound scientific research and realistic risk criteria
to analyze environmental and human health and safety effects and to develop
effective laws and regulations in all countries where it operates.  The Company
also relies on internal standards that it applies worldwide to ensure that its
facilities operate with minimal adverse environmental, health and safety
impacts, even where no regulatory requirements exist.  Alcoa recognizes that
recycling and pollution prevention offer real solutions to many environmental
problems, and it continues vigorously to pursue efforts in these areas.



Item 2.  Properties.

See "Item 1.  Business."  Alcoa believes that its facilities are suitable and
adequate for its operations.



Item 3. Legal Proceedings.

In the ordinary course of its business, Alcoa is involved in a number of
lawsuits and claims, both actual and potential, including some that it has
asserted against others.  While the amounts claimed may be substantial, the
ultimate liability cannot now be determined because of the considerable
uncertainties that exist.  It is possible that results of operations or
liquidity in a particular period could be materially affected by certain
contingencies.  Management believes, however, that the disposition of matters
that are pending or asserted will not have a material adverse effect on the
financial position of the Company.

Environmental Matters
- ---------------------

Alcoa is involved in proceedings under the Superfund or analogous state
provisions regarding the usage, disposal, storage or treatment of hazardous
substances at a number of sites in the U.S.  The

                                       29
<PAGE>

Company has committed to participate, or is engaged in negotiations with federal
or state authorities relative to its alleged liability for participation, in
clean-up efforts at several such sites.

In response to a unilateral order issued under Section 106 of the Comprehensive
Environmental Compensation and Liability Act of 1980 (CERCLA) by the U.S.
Environmental Protection Agency (EPA) Region II regarding releases of hazardous
substances, including polychlorinated biphenyls (PCBs), into the Grasse River
near its Massena, New York facility, Alcoa has been conducting investigations
and studies of the river under order from the EPA issued under CERCLA.  EPA
Region II has reviewed the Company's Analysis of Alternatives document submitted
in December 1999.  EPA has requested that Alcoa revise the document by including
additional remedial alternatives.  Alcoa expects to submit a revised Analysis of
Alternatives report during 2001.

Representatives of various federal and state agencies and a Native American
tribe, acting in their capacities as trustees for natural resources, have
asserted that Alcoa and Reynolds may be liable for loss or damage to such
resources under federal and state law based on Alcoa's and Reynolds' operations
at their Massena facilities.  While formal proceedings have not been instituted,
the Company continues to actively investigate these claims.

In March 1994, Alcoa and Region VI of the EPA entered into an administrative
order on consent, EPA Docket No. 6-11-94, concerning the Alcoa (Pt.
Comfort)/Lavaca Bay National Priorities List site that includes portions of
Alcoa's Pt. Comfort, Texas bauxite refining operations and portions of Lavaca
Bay, Texas, adjacent to the Company's plant.  The administrative order requires
the Company to conduct a remedial investigation and feasibility study under EPA
oversight.  Work under the administrative order is proceeding, including actions
to fortify an offshore dredge disposal island that may include the removal of
certain mercury-contaminated sediments adjacent to Alcoa's plant in and near
routinely dredged navigation channels.  As required by the order, the Company
submitted a baseline risk assessment for the site and a draft Feasibility Study.
The Company and certain federal and state natural resource trustees, who
previously served Alcoa with notice of their intent to file suit to recover
damages for alleged loss or injury of natural resources in Lavaca Bay, have
entered into several agreements to cooperatively identify restoration
alternatives and approaches for Lavaca Bay.  Efforts under those agreements are
ongoing.

As previously reported, on May 13, 1998, an action was filed in the Superior
Court of Riverside County, California allegedly on behalf of more than 500
plaintiffs who currently live, or formerly lived, in the Glen Avon, California
area, who claim to have suffered personal injuries, both physical and emotional,
as well as property damage, as a result of air and water contamination due to
the escape of toxic wastes from the Stringfellow disposal site.  The complaint,
which names Alcoa, Alumax Inc. and more than 130 other companies as defendants,
was served on Alcoa and Alumax in October 1998.  Based on motions filed during
1999, the court ruled in March 2000 that approximately 350 plaintiffs' claims
were not timely and dismissed those claims.  Approximately 140 claims remain in
litigation, and nearly all those of individuals were minors or not yet born
during the relevant time period.

In October 1998, Region V of the EPA referred various alleged environmental
violations at Alcoa's Lafayette Operations to the civil division of the DOJ.
The alleged violations relate to water permit exceedances as reported on monthly
discharge monitoring reports.  Alcoa and the DOJ entered into a tolling
agreement to suspend the statute of limitations related to the alleged
violations in order to facilitate settlement discussions with the DOJ and EPA.
The parties have been unable to reach settlement on this matter.  In June 1999,
the DOJ and EPA filed a complaint against Alcoa in the United States District
Court for the Northern District of Indiana.  The matter is proceeding with
discovery and is currently set for trial in late November 2001.  In addition,
the Company is engaged in settlement negotiations with EPA and DOJ.

                                       30
<PAGE>

As previously reported, in March 1999, two search warrants were executed by
various federal and state agencies on the Alcoa Port Allen works of Discovery
Aluminas, Inc. (Discovery), a subsidiary, in Port Allen, Louisiana.  Also in
March, Discovery was served with a grand jury subpoena that required the
production to a federal grand jury of certain company records relating to
alleged environmental issues involving wastewater discharges and management of
solid or hazardous wastes at the plant.  In April 1999, the Port Allen plant
manager was indicted for a single count of violating the Clean Water Act.  In
December 2000 a plea agreement was executed between Discovery and the federal
authorities.  In addition, an agreement was reached between Discovery and
state/local authorities to resolve this matter.  Under these agreements
together, Discovery will: (1) plead guilty to a one-count felony for violating
the federal Clean Water Act and its state analog; (2) pay a $700,000 fine to the
United States; (3) pay $50,000 in community restitution; and (4) pay $400,000 to
the State of Louisiana.  Discovery anticipates being sentenced sometime in the
first quarter of 2001.  The Louisiana Department of Environmental Quality has
expressed an intention to issue a civil penalty to Discovery for water
violations and settlement discussions are ongoing.

Other Matters
- -------------

Alcoa initiated a lawsuit in King County, Washington in December 1992 against
nearly 100 insurance companies that provided insurance coverage for
environmental property damage at Alcoa plant sites between the years 1956 and
1985.  The trial for the first three sites concluded in October 1996 with a jury
verdict partially in Alcoa's favor and an award of damages to Alcoa.  In its
post-trial decisions, the trial court substantially reduced the amount that
Alcoa will be able to recover from its insurers on the three test sites.  Alcoa
appealed these rulings to the Washington Court of Appeals, which certified the
appeal to the Washington Supreme Court.  Alcoa prevailed on significant portions
of the appeal and is awaiting a decision by the trial court implementing the
ruling on appeal.

Alcoa and Reynolds, along with various asbestos manufacturers, distributors and
other premises users, are defendants in numerous individual lawsuits filed in
the State of Texas on behalf of persons claiming injury as a result of
occupational exposure to asbestos at various Alcoa and Reynolds facilities.

In July 1999, Alcoa Aluminio S.A. received notice that an administrative
proceeding was commenced by Brazil's Secretary of Economic Law of the Ministry
of Justice against Brazilian producers of primary aluminum, including Alcoa
Aluminio. The suit alleges collusive action in the pricing of primary aluminum
in violation of Brazilian antitrust law. Alcoa Aluminio has presented its
defense and is awaiting the decision of the Secretary of Economic Law. If the
Secretary of Economic Law determines that the antitrust law was violated, then
the action may be further prosecuted by the Administrative Council of Economic
Defense. Brazilian law provides for civil and criminal sanctions for violations
of antitrust law, including fines ranging from 1% to 30% of a company's revenue
during the last fiscal year.

On October 15, 1999, Victoria Shaev, who represents that she is an Alcoa
shareholder, filed a purported derivative action on behalf of the Company in the
United States District Court for the Southern District of New York, naming as
defendants the Company, each member of Alcoa's Board of Directors, certain
officers of the Company and PricewaterhouseCoopers LLP, Alcoa's independent
accountants.  The shareholder did not make a demand on the Company prior to
filing this lawsuit.  Under relevant law, this demand is required.  The lawsuit
alleges, among other things, that Alcoa's proxy statement dated March 8, 1999
contained materially false and misleading representations and omissions
concerning the Company's proposed Alcoa Stock Incentive Plan and that the
shareholder approval of the plan, based upon these alleged representations and
omissions, was defective.  The Plaintiff seeks to invalidate the shareholder
approval of the plan and enjoin its implementation.  She also requests that
Alcoa pay the costs and disbursements of the action, including the fees of her
accountants, counsel and experts.  A motion to dismiss the matter has been filed
and is pending before the court.

                                       31
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of 2000.

Item 4A. Executive Officers of the Registrant.

The names, ages, positions and areas of responsibility of the executive officers
of the Registrant as of February 15, 2001 are listed below.

Alain J. P. Belda, 57, Director, Chairman of the Board and Chief Executive
Officer.  Mr. Belda was elected to Alcoa's Board of Directors in September 1998
and became Chairman in January 2001.  He has been Chief Executive Officer since
May 1999.  He was President and Chief Executive Officer from May 1999 to January
2001, and President and Chief Operating Officer from January 1997 to May 1999.
He served as Vice Chairman from 1995 to 1997 and Executive Vice President from
1994 to 1995.  Mr. Belda was President of Alcoa Aluminio S.A. in Brazil from
1979 to March 1994.  He was elected Vice President of Alcoa in 1982 and, in
1989, was given responsibility for all of Alcoa's interests in Latin America
(other than Suriname).  In August 1991 Mr. Belda was named President - Latin
America for the Company.

Ricardo E. Belda, 56, Vice President and Group President, Alcoa Europe.  Mr.
Belda joined Alcoa Aluminio S.A. in Brazil in 1968.  In 1987, he was named
General Manager of the Flat Rolled Products Division and elected a director of
Alcoa Aluminio.  In 1991, he was named Executive Director of the Mill Products
Division of Alcoa Aluminio.  He was appointed President, Alcoa Netherland
Holding B.V. in 1995 and President, Alcoa Europe -- Extrusions and End Products
in 1997.  Mr. Belda was elected a Vice President of Alcoa in May 2000 and was
appointed Group President, Alcoa Europe in March 2000.  Mr. Belda and Alain J.P.
Belda are brothers.

Michael Coleman, 50, Vice President and President, Alcoa Rigid Packaging.  Mr.
Coleman joined Alcoa in January 1998.  He had been Vice President - Operations
of North Star Steel from 1993 to 1994, Executive Vice President - Operations
from 1994 to 1996 and President from 1996 through 1997.  Mr. Coleman joined
North Star Steel in 1982.

L. Patrick Hassey, 55, Executive Vice President and Group President, Alcoa
Industrial Components.  Mr. Hassey joined Alcoa in 1967 and was named Davenport
Works Manager in 1985.  In 1991, he was elected a Vice President of Alcoa and
appointed President - Aerospace/Commercial Rolled Products Division.  He was
appointed President - Alcoa Europe in November 1997.  He was named to his
current position in May 2000.

Barbara S. Jeremiah, 49, Vice President-Corporate Development.  Ms. Jeremiah
joined Alcoa in 1977 as an attorney and was elected Assistant General Counsel in
1992 and Corporate Secretary in 1993.  She was elected to her current position
in 1998, where she heads Alcoa corporate development activities.

Richard B. Kelson, 54, Executive Vice President and Chief Financial Officer.
Mr. Kelson was elected Assistant General Counsel in 1989, Senior Vice President
- - Environment, Health and Safety in 1991 and Executive Vice President and
General Counsel in May 1994.  He was named to his current position in May 1997.

William E. Leahey, Jr., 51, Vice President and Group President, Alcoa Packaging,
Consumer, Construction and Distribution.  Mr. Leahey joined Reynolds Metals
Company in 1990 and served as its

                                       32
<PAGE>

Vice President, Can Division from 1993 to 1997 and Senior Vice President, Global
Can from 1997 to 1998. In 1998, he was named Executive Vice President and Chief
Financial Officer of Reynolds. He was named to his current position at Alcoa in
May 2000.

Frank L. Lederman, 51, Vice President and Chief Technical Officer.  Mr. Lederman
was Senior Vice President and Chief Technical Officer of Noranda, Inc., a
Canadian-based, diversified natural resource company, from 1988 to 1995.  He
joined Alcoa as a Vice President in May 1995 and became Chief Technical Officer
in December 1995.  In his current position, Mr. Lederman directs operations of
the Alcoa Technical Center.

Timothy S. Mock, 58, Vice President and Controller.  Mr. Mock joined Alcoa in
1964 and was named President of Alcoa's Wire, Rod and Bar business unit in 1988.
He was appointed Managing Director of Alcoa Italia S.p.A. following Alcoa's
acquisition of Alumix, S.p.A. in 1996.  In 1998, he was named President of Alcoa
Automotive Structures.  He was elected to his current position in September
1999.

Joseph C. Muscari, 54, Vice President-Environment, Health and Safety, Audit and
Compliance.  Mr. Muscari joined Alcoa in 1969 and was named President-Alcoa Asia
in 1993.  In 1997, he was elected Vice President-Audit.  He was named to his
current position in May 1999 and is responsible for EHS policy, standards and
strategy and the Alcoa integrated audit process.  In addition, Mr. Muscari is
the chief compliance officer for the Company.

G. John Pizzey, 55, Vice President and Group President, Alcoa Primary Products.
Mr. Pizzey joined Alcoa of Australia Limited in 1970 and was appointed to the
board of Alcoa of Australia as Executive Director -- Victoria Operations and
Managing Director of Portland Smelter Services in 1986.  He was named President
- - Bauxite and Alumina Division of Alcoa in 1994 and President - Primary Metals
Division of Alcoa in 1995.  Mr. Pizzey was elected a Vice President of Alcoa in
1996 and was appointed President - Alcoa World Alumina in November 1997 and
President -- Alcoa World Alumina and Chemicals in August 1999.  He was named to
his current position in June 2000.

Lawrence R. Purtell, 53, Executive Vice President and General Counsel.  Mr.
Purtell joined Alcoa in November 1997.  He had been Corporate Secretary and
Associate General Counsel of United Technologies Corporation from 1989 to 1992.
Mr. Purtell was Vice President and General Counsel of Carrier Corporation, a
unit of United Technologies Corporation and international designer, manufacturer
and marketer of heating, ventilating and air conditioning equipment and
services, from 1992 to 1993.  He was Senior Vice President and General Counsel
and Corporate Secretary of McDermott International, Inc. from 1993 to 1996.  In
1996, Mr. Purtell joined Koch Industries, Inc. as Senior Vice President, General
Counsel and Corporate Secretary.

Robert F. Slagle, 60, Executive Vice President, Human Resources and
Communications.  Mr. Slagle was elected Treasurer in 1982 and Vice President in
1984.  In 1986, he was named Vice President - Industrial Chemicals and, in 1987,
Vice President - Industrial Chemicals and U.S. Alumina Operations.  Mr. Slagle
served as Vice President - Raw Materials, Alumina and Industrial Chemicals in
1989, and Vice President of Alcoa and Managing Director - Alcoa of Australia
Limited in 1991.  He was named President - Alcoa World Alumina in 1996 and was
elected to his current position in November 1997.

G. Keith Turnbull, 65, Executive Vice President - Alcoa Business System.  Dr.
Turnbull was appointed Assistant Director of Alcoa Laboratories in 1980.  He was
named Director - Technology Planning in 1982, Vice President -- Technology
Planning in 1986 and Executive Vice President -- Strategic Analysis/Planning and
Information in 1991.  In January 1997, he was named to his current position,
with responsibility for company-wide implementation of the Alcoa Business
System.

                                       33
<PAGE>

                                    PART II


Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters.

Dividend per share data, high and low prices per share and the principal
exchanges on which the Company's common stock is traded are set forth on page 66
of the 2000 Annual Report to Shareholders (Annual Report) and are incorporated
herein by reference.

On January 10, 2000, the Board of Directors declared a two-for-one common stock
split, subject to shareholder approval to increase the number of authorized
shares.  At the Company's annual meeting on May 12, 2000, Alcoa shareholders
approved an amendment to increase the authorized shares of Alcoa common stock
from 600 million to 1.8 billion.  As a result of the stock split, shareholders
of record on May 26, 2000, received an additional common share for each share
held.  The additional shares were distributed on June 9, 2000.  In this report,
all per-share amounts and number of shares outstanding have been restated to
reflect the stock split.

At December 31, 2000, there were approximately 265,300 Alcoa shareholders,
including both record holders and an estimate of the number of individual
participants in security position listings.

Item 6.  Selected Financial Data.

The comparative table showing selected financial data for the Company is on page
33 of the Annual Report and is incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operation.

Management's review and comments on the consolidated financial statements are on
pages 34 through 43 of the Annual Report and are incorporated herein by
reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

The information regarding quantitative and qualitative disclosures about market
risk is on pages 40 through 41 of the Annual Report and is incorporated herein
by reference.

Item 8.  Financial Statements and Supplementary Data.

The Company's consolidated financial statements, the notes thereto and the
report of the independent public accountants are on pages 44 through 61 of the
Annual Report and are incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

None.

                                       34
<PAGE>

                                    PART III


Item 10.  Directors and Executive Officers of the Registrant.

The information regarding Directors is contained under the captions "Board of
Directors" and "Election of Directors" on pages 6 through 12 of the Registrant's
definitive Proxy Statement dated February 22, 2001 (Proxy Statement) and is
incorporated herein by reference.

The information regarding executive officers is set forth in Part I, Item 4A
under "Executive Officers of the Registrant."

The information required by Item 405 of Regulation S-K contained under the
caption "Compliance With Section 16(a) Reporting" on page 14 of the Proxy
Statement is incorporated herein by reference.

Item 11.  Executive Compensation.

This information is contained under the captions "Stock Performance Graph" and
"Executive Compensation" on page 15 and pages 18 through 27, respectively, of
the Proxy Statement and is incorporated herein by reference.  The stock
performance graph and the Report of the Compensation Committee shall not be
deemed to be "filed."

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

This information is contained under the captions "Stock Ownership of Certain
Beneficial Owners" and "Stock Ownership of Directors and Executive Officers" on
pages 13 through 14 of the Proxy Statement and is incorporated herein by
reference.

Item 13.  Certain Relationships and Related Transactions.

This information is contained under the caption "Transactions with Directors'
Companies" on page 6 of the Proxy Statement and is incorporated herein by
reference.


                                    PART IV


Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K.

  (a) The consolidated financial statements, financial statement schedule and
exhibits listed below are filed as part of this report.

     (1) The Company's consolidated financial statements, the notes thereto and
the report of the independent public accountants are on pages 44 through 61 of
the Annual Report and are incorporated herein by reference.

     (2)  The following report and schedule should be read with the Company's
consolidated financial statements in the Annual Report:

     Report of PricewaterhouseCoopers LLP dated January 8, 2001, except for Note
     U, for which the date is January 31, 2001, on the Company's financial
     statement schedule filed as a part hereof for the fiscal years ended
     December 31, 2000, 1999 and 1998.

                                       35
<PAGE>

     Schedule II - Valuation and Qualifying Accounts - for the fiscal years
     ended December 31, 2000, 1999 and 1998.

     (3)  Exhibits

Exhibit
Number                             Description *
- ------                             -----------

2(a).     Agreement and Plan of Merger among the Company, RLM Acquisition Corp.
          and Reynolds Metals Company dated as of August 18, 1999, incorporated
          by reference to exhibit 99.1 to the Company's Current Report on
          Form 8-K filed August 27, 1999.

2(b).     Agreement and Plan of Merger among the Company, Omega Acquisition
          Corp. and Cordant Technologies Inc. dated as of March 14, 2000,
          incorporated by reference to exhibit 12(d)(1) to the Tender Offer
          Statement on Schedule TO filed by the Company and Omega Acquisition
          Corp. on March 20, 2000.

2(c).     Agreement and Plan of Merger among the Company, HMI Acquisition Corp.
          and Howmet International Inc. dated as of June 2, 2000, incorporated
          by reference to exhibit 12(d)(5) to Amendment No. 5 to the Tender
          Offer Statement on Schedule TO filed by the Company and HMI
          Acquisition Corp. on June 5, 2000.

 3(a).    Articles of the Registrant as amended, incorporated by reference to
          exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the
          quarter ended June 30, 2000.

 3(b).    By-Laws of the Registrant as amended, incorporated by reference to
          exhibit 3(b) to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1998.

10(a).    Alcoa Stock Acquisition Plan, effective January 1, 1999, incorporated
          by reference to exhibit 10(a) to the Company's Annual Report on Form
          10-K for the year ended December 31, 1999.

10(a)(1). Amendments to Alcoa Stock Acquisition Plan, effective September 1,
          2000.

10(b).    Employees' Excess Benefit Plan, Plan A, incorporated by reference to
          exhibit 10(b) to the Company's Annual Report on Form 10-K (Commission
          file number 1-3610) for the year ended December 31, 1980.

10(b)(1). Amendments to Employees' Excess Benefit Plan, Plan A, effective
          January 1, 2000.

10(c).    Incentive Compensation Plan, as amended effective January 1, 1993,
          incorporated by reference to exhibit 10(c) to the Company's Annual
          Report on Form 10-K (Commission file number 1-3610) for the year ended
          December 31, 1992.

10(d).    Employees' Excess Benefit Plan, Plan C, as amended and restated in
          1994, effective January 1, 1989, incorporated by reference to exhibit
          10(d) to the Company's Annual Report on Form 10-K (Commission file
          number 1-3610) for the year ended December 31, 1994.

10(d)(1). Amendments to Employees' Excess Benefit Plan, Plan C, effective
          January 1, 2000.

10(e).    Employees' Excess Benefit Plan, Plan D, as amended effective October
          30, 1992, incorporated by reference to exhibit 10(e) to the Company's
          Annual Report on Form 10-K (Commission file number 1-3610) for the
          year ended December 31, 1992 and exhibit 10(e)(1)

                                       36
<PAGE>

          the Company's Annual Report on Form 10-K (Commission file number 1-
          3610) for the year ended December 31, 1994.

10(f).    Employment Agreement of Paul H. O'Neill, as amended through February
          25, 1993, incorporated by reference to exhibit 10(h) to the Company's
          Annual Report on Form 10-K (Commission file number 1-3610) for the
          year ended December 31, 1987, exhibit 10(g) to the Company's Annual
          Report on Form 10-K (Commission file number 1-3610) for the year ended
          December 31, 1990 and exhibit 10(f)(2) to the Company's Annual Report
          on Form 10-K (Commission file number 1-3610) for the year ended
          December 31, 1992.

10(g).    Deferred Fee Plan for Directors, as amended effective July 9, 1999,
          incorporated by reference to exhibit 10(g)(1) to the Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.

10(h).    Restricted Stock Plan for Non-Employee Directors, as amended effective
          March 10, 1995, incorporated by reference to exhibit 10(h) to the
          Company's Annual Report on Form 10-K (Commission file number 1-3610)
          for the year ended December 31, 1994.

10(h)(1). Amendment to Restricted Stock Plan for Non-Employee Directors,
          effective November 10, 1995, incorporated by reference to exhibit
          10(h)(1) to the Company's Annual Report on Form 10-K (Commission file
          number 1-3610) for the year ended December 31, 1995.

10(i).    Fee Continuation Plan for Non-Employee Directors, incorporated by
          reference to exhibit 10(k) to the Company's Annual Report on Form 10-K
          (Commission file number 1-3610) for the year ended December 31, 1989.

10(i)(1). Amendment to Fee Continuation Plan for Non-Employee Directors,
          effective November 10, 1995, incorporated by reference to exhibit
          10(i)(1) to the Company's Annual Report on Form 10-K (Commission file
          number 1-3610) for the year ended December 31, 1995.

10(j).    Deferred Compensation Plan, as amended effective October 30, 1992,
          incorporated by reference to exhibit 10(k) to the Company's Annual
          Report on Form 10-K (Commission file number 1-3610) for the year ended
          December 31, 1992.

10(j)(1). Amendments to Deferred Compensation Plan, effective January 1, 1993,
          February 1, 1994 and January 1, 1995, incorporated by reference to
          exhibit 10(j)(1) to the Company's Annual Report on Form 10-K
          (Commission file number 1-3610) for the year ended December 31, 1994.

10(j)(2). Amendment to Deferred Compensation Plan, effective June 1, 1995,
          incorporated by reference to exhibit 10(j)(2) to the Company's Annual
          Report on Form 10-K (Commission file number 1-3610) for the year ended
          December 31, 1995.

10(j)(3). Amendment to Deferred Compensation Plan, effective November 1, 1998,
          incorporated by reference to exhibit 10(j)(3) to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1999.

10(j)(4). Amendments to Deferred Compensation Plan, effective January 1, 1999,
          incorporated by reference to exhibit 10(j)(4) to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1999.

10(j)(5). Amendments to Deferred Compensation Plan, effective January 1,
          2000.

                                       37
<PAGE>

10(k).    Summary of the Executive Split Dollar Life Insurance Plan, dated
          November 1990, incorporated by reference to exhibit 10(m) to the
          Company's Annual Report on Form 10-K (Commission file number 1-3610)
          for the year ended December 31, 1990.

10(l).    Dividend Equivalent Compensation Plan, effective February 3, 1997,
          incorporated by reference to exhibit 10(l) to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1996.

10(m).    Form of Indemnity Agreement between the Company and individual
          directors or officers, incorporated by reference to exhibit 10(j) to
          the Company's Annual Report on Form 10-K (Commission file number 1-
          3610) for the year ended December 31, 1987.

10(n).    Revolving Credit Agreement (364-Day), dated as of April 28, 2000,
          incorporated by reference to exhibit 10(n) to the Company's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2000.

10(o).    Revolving Credit Agreement (Five-Year), dated as of April 28, 2000,
          incorporated by reference to exhibit 10(t) to the Company's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2000.

10(p).    Alcoa Stock Incentive Plan, effective June 1, 1999, incorporated by
          reference to exhibit 10(p)(1) to the Company's Quarterly Report on
          Form 10-Q for the quarter ended June 30, 1999.

10(q).    Alcoa Supplemental Pension Plan for Senior Executives, effective
          January 1, 1999, incorporated by reference to exhibit 10(q) to the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1998.

10(q)(1). Amendments to Alcoa Supplemental Pension Plan for Senior
          Executives, effective January 1, 2000.

10(r).    Deferred Fee Estate Enhancement Plan for Directors, effective July 10,
          1998, incorporated by reference to exhibit 10(r) to the Company's
          Annual Report on Form 10-K for the year ended December 31, 1998.

10(s).    Alcoa Deferred Compensation Estate Enhancement Plan, effective July
          10, 1998, incorporated by reference to exhibit 10(s) to the Company's
          Annual Report on Form 10-K for the year ended December 31, 1998.

10(s)(1). Amendments to Alcoa Deferred Compensation Estate Enhancement Plan,
          effective January 1, 2000, incorporated by reference to exhibit
          10(s)(1) to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1999.

10(s)(2). Amendments to Alcoa Deferred Compensation Estate Enhancement Plan,
          effective January 1, 2000.

13.       Portions of Alcoa's 2000 Annual Report to Shareholders.

21.       Subsidiaries and Equity Entities of the Registrant.

23.       Consent of Independent Certified Public Accountants.

                                       38
<PAGE>

24.       Power of Attorney for certain directors.


     *Exhibit Nos. 10(a) through 10(m) and 10(p) through 10(s) are management
contracts or compensatory plans required to be filed as Exhibits to this Form
10-K.

     Amendments and modifications to other Exhibits previously filed have been
omitted when in the opinion of the Registrant such Exhibits as amended or
modified are no longer material or, in certain instances, are no longer required
to be filed as Exhibits.

     No other instruments defining the rights of holders of long-term debt of
the Registrant or its subsidiaries have been filed as Exhibits because no such
instruments met the threshold materiality requirements under Regulation S-K.
The Registrant agrees, however, to furnish a copy of any such instruments to the
Commission upon request.

    (b) Reports on Form 8-K.  None was filed in the fourth quarter of 2000.

                                       39
<PAGE>

                      Report of Independent Accountants on
                          Financial Statement Schedule



To the Shareholders and Board of Directors
of Alcoa Inc. (Alcoa)

Our audits of the consolidated financial statements referred to in our report
dated January 8, 2001, except for Note U, for which the date is January 31,
2001, appearing in the 2000 Annual Report to Shareholders of Alcoa (which report
and consolidated financial statements are incorporated by reference in this
Annual Report on Form 10-K) also included an audit of the financial statement
schedule listed in Item 14(a)(2) of this Form 10-K.  In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.


                                  /s/ PricewaterhouseCoopers LLP
                                  PricewaterhouseCoopers LLP


600 Grant Street
Pittsburgh, Pennsylvania
January 8, 2001, except for
Note U, for which the date is
January 31, 2001

                                       40
<PAGE>

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                        FOR THE YEARS ENDED DECEMBER 31
                                 (in millions)


<TABLE>
<CAPTION>
Col. A                                   Col. B                    Col. C                       Col. D             Col E
- ------                                   ------                    ------                       ------             -----
                                                                  Additions
                                                                  ---------
                                        Balance at        Charged to       Charged to
                                        beginning of      costs and        other                                  Balance at
  Description                           period            expenses         accounts (A)      Deductions (B)       end of period
  -----------                           -------           --------         ------------      --------------       -------------
 <S>                                    <C>               <C>              <C>               <C>                  <C>

Allowance for doubtful accounts:

    2000                                  $ 58               $ 9              $11(A)                $9(B)             $ 69

    1999                                  $ 61               $10              $(5)(A)               $8(B)             $ 58

    1998                                  $ 37               $11              $ 23(A)               $10(B)            $ 61

Income tax valuation allowance:

    2000                                  $134               $27              $30(A)               $26(D)             $165

    1999                                  $135               $12              $ 6(A)               $19(D)             $134

    1998                                  $104               $16              $ 21(A)              $ 6(C)             $135

</TABLE>

Notes:  (A)   Collections on accounts previously written off,
              acquisition/divestiture of subsidiaries and foreign currency
              translation adjustments.

        (B)   Uncollectible accounts written off.

        (C)   Related primarily to reductions in the valuation reserve based on
              a change in circumstances.

        (D)   Related primarily to utilization of tax loss carryforwards.

                                   SIGNATURE

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                             ALCOA INC.


March 2, 2001                By  /s/Timothy S. Mock
                               ----------------------------------------
                                    Timothy S. Mock
                               Vice President and Controller
                               (Also signing as Principal Accounting Officer)


          Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

                                       41
<PAGE>

     Signature                          Title                      Date


/s/Alain J. P. Belda           Chairman                         March 2, 2001
- -------------------------      and Chief Executive Officer
                               (Principal Executive Officer
                               and Director)


/s/Richard B. Kelson           Executive Vice President and     March 2, 2001
- -------------------------      Chief Financial Officer
                               (Principal Financial Officer)


Kenneth W. Dam, Joseph T. Gorman, Judith M. Gueron, Sir Ronald Hampel, Hugh M.
Morgan, John P. Mulroney, Henry B. Schacht, Franklin A. Thomas and Marina v.N.
Whitman, each as a Director, on March 2, 2001, by Donna C. Dabney, their
Attorney-in-Fact.*


*By  /s/Donna C. Dabney
     ------------------
     Donna C. Dabney
     Attorney-in-Fact

                                       42
<PAGE>







                                 [LOGO ALCOA]







Form A07-15899
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(A)(1)
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AMENDMENT TO THE ALCOA STOCK ACQUISITION PLAN
<TEXT>

<PAGE>

                                                              Exhibit 10 (a) (1)

                               AMENDMENTS TO THE
                          ALCOA STOCK ACQUISITION PLAN

Pursuant to Section 7.1 of the Plan, the Plan is amended as follows:

1.   The definition of "Award" is amended by adding the following sentence to
     the end thereof:

     For purposes of this Plan, payments in 2001 under the Performance
     Enhancement Reward Program will be treated as an Award for the purpose of
     determining Incentive Compensation Deferral Credits and Matching Company
     Credit Awards.

2.   Section 3.2 is amended by replacing "10%," wherever it appears with "1%."

3.   A new Section 5.7 is added as follows:

     Effective September 1, 2000, any transfer of employment to a subsidiary or
     affiliate in which the Company and/or any one or more Subsidiaries have at
     least a 20% ownership interest will not be considered a termination in
     Continuous Service for purposes of this Article V - Distributions.

4.   The second and third sentences of Section 5.4 are deleted in their entirety
     and replaced with the following:

     A Participant's election to receive installments must be made at least 6
     months prior to his or her retirement date.  The Participant's election to
     receive either a lump sum or annual installments shall become irrevocable 6
     months prior to the Participant's retirement date, or at such other time as
     may be approved by the Committee.

5.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(B)(1)
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>AMENDMENT TO THE ALCOA EXCESS BENEFITS PLAN A
<TEXT>

<PAGE>

                                                              Exhibit 10 (b) (1)

                               AMENDMENTS TO THE
                          ALCOA EXCESS BENEFITS PLAN A

Pursuant to Article 5 of the Plan, the Plan is amended as follows:

1.   Section 2.3 is deleted in its entirety and replaced with the following:

          No benefit under this Excess Plan may be assigned, transferred,
          pledged or encumbered or be subject in any manner to alienation or
          anticipation, except that any exceptions to the non-alienation
          provisions in Plan I, shall also apply to benefits hereunder.

2.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(D)(1)
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>AMENDMENT TO THE ALCOA EXCESS BENEFITS PLAN C
<TEXT>

<PAGE>

                                                              Exhibit 10 (d) (1)

                               AMENDMENTS TO THE
                          ALCOA EXCESS BENEFITS PLAN C

Pursuant to Article 5 of the Plan, the Plan is amended as follows:

1.   The definition of Annual Compensation is amended by adding the following
     sentence to the end thereof:

          "Special Payments" within the meaning of the Alcoa Deferred
          Compensation Plan are not treated as Annual Compensation.

2.   Section 2.6 is deleted in its entirety and replaced with the following:

          No benefit under this Excess Plan may be assigned, transferred,
          pledged or encumbered or be subject in any manner to alienation or
          anticipation, except that any exceptions to the non-alienation
          provisions in Plan I, shall also apply to benefits hereunder.

3.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(J)(5)
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>AMENDMENT TO THE ALCOA DEFERRED COMP. PLAN
<TEXT>

<PAGE>

                                                              Exhibit 10 (j) (5)
                               AMENDMENTS TO THE
                        ALCOA DEFERRED COMPENSATION PLAN

Pursuant to Article 10 of the Plan, the Plan is amended as follows:

1.   The definition of "Eligible Employee" is deleted in its entirety and
     replaced with the following:

     "Eligible Employee" means any employee who is a member of the group of
     select management and highly compensated employees, who on or after June 1,
     1990 is actively at work for the Company, a Subsidiary or Affiliate, has a
     job grade of 19 or higher, as determined by the Company, is not in a
     collective bargaining unit, and (a) who is eligible for participation in
     the Savings Plan, or (b) who on or after January 1, 1999 is eligible to
     participate in the Alumax Inc. Thrift Plan for Salaried Employees and is
     named as an Eligible Employee by the Executive Vice President - Human
     Resources, as provided on Schedule A hereto, or (c) who on or after May 3,
     2000 is a Reynolds Metals Company employee and is eligible for Incentive
     Compensation.  Such Alumax eligible employees will be eligible to make
     Salary Reduction Credits and/or Incentive Compensation Deferral Credits, in
     accordance with this plan, as provided on Schedule A.

2.   Effective January 1, 2000, Section 3.5 is amended by adding the following
     to the end thereof:

     Payments in 2001 under the Performance Enhancement Reward Program will be
     treated as "special payments" under this plan.

3.   Sections 5.1(a), 7(b)(ii), 7(c)(i) and (ii) are amended by replacing "10%,"
     wherever it appears with "1%."

4.   Sections 7(c)(i) and 8.1 are amended by replacing "5," wherever it appears
     with "3."

5.   Section 8.1 is amended by adding the following sentence to the end thereof:

     Effective September 1, 2000, any transfer of employment to a subsidiary or
     affiliate in which the Company and/or any one or more Subsidiaries have at
     least a 20% ownership interest will not be considered a termination in
     Continuous Service for purposes of this Article VIII - Distributions.

6.   The second and third sentences of Section 8.3 are deleted in their entirety
     and replaced with the following:

     A Participant's election to receive installments must be made at least 6
     months prior to his or her retirement date.  The Participant's election to
     receive either a lump sum or annual installments shall become irrevocable 6
     months prior to the
<PAGE>

     Participant's retirement date, or at such other time as
     may be approved by the Committee.

7.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(Q)(1)
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>AMEND. TO THE ALCOA SUPP. PENSION PLAN SENIOR EXE.
<TEXT>

<PAGE>

                                                             Exhibit 10 (q) (1)


                               AMENDMENTS TO THE
             ALCOA SUPPLEMENTAL PENSION PLAN FOR SENIOR EXECUTIVES

Pursuant to Article 5 of the Plan, the Plan is amended as follows:

1.   The definition of Annual Compensation is amended by adding the following
     sentence to the end thereof:

          "Special Payments" within the meaning of the Alcoa Deferred
          Compensation Plan are not treated as Annual Compensation.

2.   Section 2.4 is deleted in its entirety and replaced with the following:

          No benefit under this Plan may be assigned, transferred, pledged or
          encumbered or be subject in any manner to alienation or anticipation,
          except that any exceptions to the non-alienation provisions in Plan I,
          shall also apply to benefits hereunder.

3.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(S)(2)
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>AMEND. TO THE ALCOA ESTATE ENHANCEMENT COMP PLAN
<TEXT>

<PAGE>

                                                              Exhibit 10 (s) (2)

                               AMENDMENTS TO THE
              ALCOA ESTATE ENHANCEMENT DEFERRED COMPENSATION PLAN

Pursuant to Article 10 of the Plan, the Plan is amended as follows:

1.   Effective January 1, 2000, the definition of "Eligible Employee" is deleted
     in its entirety and replaced with the following:

     "Eligible Employee" means any employee who is a member of the group of
     select management and highly compensated employees, who on or after June 1,
     1990 is actively at work for the Company, a Subsidiary or Affiliate, has a
     job grade of 19 or higher, as determined by the Company, is not in a
     collective bargaining unit, and (a) who is eligible for participation in
     the Savings Plan, or (b) who on or after January 1, 1999 is eligible to
     participate in the Alumax Inc. Thrift Plan for Salaried Employees and is
     named as an Eligible Employee by the Executive Vice President - Human
     Resources, as provided on Schedule A hereto, or (c) who on or after May 3,
     2000 is a Reynolds Metals Company employee and is eligible for Incentive
     Compensation.  Such Alumax eligible employees will be eligible to make
     Salary Reduction Credits and/or Incentive Compensation Deferral Credits, in
     accordance with this plan, as provided on Schedule A.

2.   Effective January 1, 2000, Section 3.5 is amended by adding the following
     sentence to the end thereof:

     Payments in 2001 under the Performance Enhancement Reward Program will be
     treated as "special payments" under this Plan.

3.   Sections 5.1(a), 6(a)(ii), 6(b)(ii) are amended by replacing "10%,"
     wherever it appears with "1%."

4.   Section 7.1 is amended by replacing "five," wherever it appears with "3."

5.   Section 7.1 is amended by adding the following sentence to the end thereof:

     Effective September 1, 2000, any transfer of employment to a subsidiary or
     affiliate in which the Company and/or any one or more Subsidiaries have at
     least a 20% ownership interest will not be considered a termination in
     Continuous Service for purposes of this Article VII - Distributions.

6.   Effective September 1, 2000, the second and third sentences of Section 8.3
     are deleted in their entirety and replaced with the following:

     A Participant's election to receive installments must be made at least 6
     months prior to his or her retirement date.  The Participant's election to
     receive either a lump sum or annual installments shall become irrevocable 6
     months prior to the
<PAGE>

     Participant's retirement date, or at such other time as
     may be approved by the Committee.

7.  In all other respects the Plan is hereby ratified and confirmed.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>SELECTED PAGES FROM THE 2000 ANNUAL REPORT
<TEXT>

<PAGE>

                                                                      Exhibit 13


SELECTED FINANCIAL DATA
(dollars in millions, except per-share amounts and ingot
prices)

<TABLE>
<CAPTION>
                           2000        1999        1998      1997      1996
- ------------------------------------------------------------------------------
<S>                    <C>         <C>         <C>       <C>       <C>
Sales                  $ 22,936    $ 16,323    $ 15,340  $ 13,319  $ 13,061
Net income*               1,484       1,054         853       805       515
  Earnings per common
    share
    Basic (before
      cumulative
      effect)              1.83        1.43        1.22      1.17      0.74
    Basic (after
      cumulative
      effect)              1.82        1.43        1.22      1.17      0.74
    Diluted (before
      cumulative
      effect)              1.81        1.41        1.21      1.15      0.73
    Diluted (after
      cumulative
      effect)              1.80        1.41        1.21      1.15      0.73
- ------------------------------------------------------------------------------
Alcoa's average
  realized price per
  pound for aluminum
  ingot                     .77         .67         .67       .75       .73
Average U.S. market
  price per pound for
  aluminum ingot
  (Metals Week)             .75         .66         .66       .77       .71
- ------------------------------------------------------------------------------
Cash dividends paid
  per common share         .500        .403        .375      .244      .333
Total assets             31,691      17,066      17,463    13,071    13,450
Long-term debt
  (noncurrent)            4,987       2,657       2,877     1,457     1,690
- ------------------------------------------------------------------------------
<FN>
*2000 includes cumulative effect of accounting change for revenue recognition
of $(5); 1997 and 1996 include net after-tax gains of $44 and net after-tax
charges of $122, respectively.
</TABLE>

                               33
<PAGE>

RESULTS OF OPERATIONS
(dollars in millions, except share amounts and ingot prices;
shipments in  thousands of metric tons [mt])

EARNINGS SUMMARY
2000 was another record year for Alcoa, with net income
the highest in the company's 112-year history, marking
the fourth consecutive year for increases in both earnings
and earnings per share. The acquisitions of Reynolds Metals
Company (Reynolds) and Cordant Technologies Inc. (Cordant)
were completed in 2000 and were accretive to earnings
in the fourth quarter. Highlights from the year include:
> Net income of $1,484, a 41% increase from 1999;
> Revenues of $22,936, a 41% increase from 1999;
> Return on average shareholders' equity of 16.8%;
> Achievement of the $1.1 billion cost reduction target; and
> Aluminum shipments of 5,398 mt, up 21% from 1999.
  Improved financial results for 2000 relative to 1999 were
the result of higher volumes, aided by the Reynolds and
Cordant acquisitions, an increase in aluminum prices and
continued operating improvements. Partially offsetting
these positive factors were higher energy costs, a higher
effective tax rate and softening in the transportation,
building, construction and distribution markets.
  1999 was a milestone year for Alcoa, as net income exceeded
$1 billion for the first time in the company's history.
Highlights from 1999 include:
> Net income of $1,054, a 24% increase from 1998;
> Revenues of $16,323, driven by higher volumes;
> Return on average shareholders' equity of 17.2%; and
> Aluminum shipments of 4,478 mt, up 13% from 1998.
  The improvement in Alcoa's 1999 net income was the result
of higher aluminum revenues, operating improvements and
a lower effective tax rate. Revenues in 1999 increased
from 1998 as a result of higher volumes and a full year's
results from the Alumax, Inc. (Alumax) acquisition which
occurred in July 1998, partly offset by lower overall
aluminum prices.

SEGMENT INFORMATION Alcoa's operations consist of five
worldwide segments: Alumina and Chemicals, Primary Metals,
Flat-Rolled Products, Engineered Products and Packaging
and Consumer. Alcoa businesses that are not reported to
management as part of one of these five segments are aggregated
and reported as "Other." Alcoa's management reporting
system measures the after-tax operating income (ATOI)
of each segment. Nonoperating items, such as interest
income, interest expense, foreign exchange gains/losses,
the effects of last-in, first-out (LIFO) inventory accounting
and minority interests are excluded from segment ATOI.
In addition, certain expenses, such as corporate general
administrative expenses and depreciation and amortization
on corporate assets, are not included in segment ATOI.
Segment assets exclude cash, cash equivalents, short-term
investments and all deferred taxes. Segment assets also
exclude items such as corporate fixed assets, LIFO reserve,
goodwill allocated to corporate and other amounts.
  In 2000, as a result of acquisitions, Alcoa changed its
internal management reporting structure to add the Packaging
and Consumer segment. This segment includes the Reynolds
packaging and consumer businesses acquired in 2000, Alcoa's
closures, packaging, PET (polyethylene terephthalate)
bottles and packaging machinery businesses. Previously,
the closures, packaging, PET bottles and packaging machinery
businesses were reported in the Other group. Segment data
from 1999 and 1998 has been restated to reflect this change.
Other Reynolds and Cordant businesses were added to the
appropriate existing segments.
  ATOI for all segments totaled $2,389 in 2000, compared
with $1,489 in 1999 and $1,344 in 1998. See Note N to
the financial statements for additional information. The
following discussion provides shipment, revenue and ATOI
data for each segment for the years 1998 through 2000.

                               34
<PAGE>

I. ALUMINA AND CHEMICALS

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>          <C>
Alumina production (mt)                13,968         13,273        12,938
Third-party alumina shipments (mt)      7,472          7,054         7,130
Third-party sales                     $ 2,108        $ 1,842       $ 1,847
Intersegment sales                      1,104            925           832
- ------------------------------------------------------------------------------
Total sales                           $ 3,212        $ 2,767       $ 2,679
- ------------------------------------------------------------------------------
After-tax operating income              $ 585          $ 307         $ 318
- ------------------------------------------------------------------------------
</TABLE>

This segment's activities include the mining of bauxite,
which is then refined into alumina. Alumina is sold to
internal and external customers worldwide or is processed
into industrial chemical products. The industrial chemical
products are sold to a broad spectrum of markets including
refractories, ceramics, abrasives, chemicals processing
and other specialty applications. This segment does not
include the Reynolds alumina assets that were required
to be divested.
  Alumina comprises approximately two-thirds of the total
third-party sales. In late 1999, Alcoa completed the expansion
of its Wagerup alumina refinery in Australia. This expansion,
which increased Wagerup's capacity by 440,000 mt to a
total plant capacity of 2.2 million mt per year, was completed
on time and on budget. With the completion of this expansion
and the increased production levels at Kwinana, Pinjarra
and San Ciprian, alumina shipments increased 6% from 1999.
The increase in production, along with a 13% increase
in prices, led to a 19% increase in third-party sales
of alumina in 2000 compared with 1999. In 1999, third-
party sales of alumina were up 5% compared with 1998.
Shipments fell 1% while realized prices rose 6%. Third-
party sales of alumina-based chemical products were up
2% in 2000 compared with 1999. The increase was mainly
attributable to increased volume in Alcoa's Latin America
chemical operations. Third-party sales of alumina-based
chemical products were down 3% in 1999 from 1998, as the
divestiture of Alcoa Specialty Chemicals in 1998, lower
prices and a lower value-added mix more than offset higher
shipments.
  Segment ATOI in 2000 rose 91% over 1999 due to higher
alumina prices, higher shipment volumes and continued
cost reductions, partially offset by higher energy costs.
There was an increase in both alumina and chemicals ATOI
of 95% and 23%, respectively, from 1999 to 2000. Segment
ATOI for 1999 fell 3% from 1998 to $307 as a result of
lower operating income recognized on intersegment sales,
somewhat offset by cost reductions. Alumina ATOI fell
4%, while chemicals ATOI rose 13% from 1998 to 1999.
  As announced in 2000, operations at the alumina refinery
located in St. Croix, U.S. Virgin Islands, were suspended
on January 31, 2001. Additionally, in February 2001, Alcoa
announced reduced operating rates at its Pt. Comfort,
Texas refinery and a complete curtailment at its aluminum
fluoride facility in Fort Meade, Florida. Future production
at St. Croix, Pt. Comfort and Ft. Meade will be evaluated
in light of internal and external supply commitments or
market conditions.
                               35
<PAGE>

II. PRIMARY METALS

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>          <C>
Aluminum production (mt)                3,539          2,851         2,471
Third-party aluminum shipments
 (mt)                                   2,071          1,442         1,392
Third-party sales                     $ 3,756        $ 2,241       $ 2,105
Intersegment sales                      3,504          2,793         2,509
- ------------------------------------------------------------------------------
Total sales                           $ 7,260        $ 5,034       $ 4,614
- ------------------------------------------------------------------------------
After-tax operating income            $ 1,000          $ 535         $ 372
- ------------------------------------------------------------------------------
</TABLE>

This segment consists of Alcoa's worldwide smelter system.
The smelting operations of Reynolds have been added to
this segment. Primary Metals receives alumina from the
Alumina and Chemicals segment and produces aluminum ingot
to be used by Alcoa's fabricating businesses, as well
as sold to outside customers. Revenues from the sale of
powder, scrap and excess power are also included in this
segment. Results from internal hedging contracts and from
marking to market certain aluminum commodity contracts
are also included in this segment. Aluminum ingot produced
by Alcoa and used internally is transferred to other segments
at prevailing market prices.
  In 2000, third-party sales rose $1,515 or 68%. Approximately
two-thirds of this increase was a result of the Reynolds
acquisition. The remaining increase was due to a 7% increase
in shipments and higher realized prices for ingot in 2000.
Alcoa's average realized price for ingot in 2000 was 77
cents per pound, an increase of 15% over the average realized
price of 67 cents per pound in both 1999 and 1998. This
compares with average prices on the London Metal Exchange
(LME) of 75 cents per pound in 2000 and 66 cents per pound
in 1999 and 1998.
  In 1999, third-party sales rose 6% from 1998. The increase
was due primarily to higher shipments of 4%.
  Intersegment sales continued to increase in 2000 and in
1999 as the former Reynolds, Alumax and Inespal locations
sourced the majority of their metal needs internally.
  Including the Reynolds acquisition, Primary Metals ATOI
increased by $465 in 2000, up 87% from 1999. Higher metal
prices in 2000 were responsible for approximately two-
thirds of the increase, while the Reynolds acquisition
accounted for approximately one-fourth of the increase.
The remainder of the increase was due to increased volumes
and cost reductions, offset somewhat by higher energy
prices. Mark-to-market gains in 2000 and 1999 were not
material.
  Primary Metals ATOI rose 44% in 1999 from 1998. Driving
the improvement was a 7% increase in shipments due to
including a full year's results from the July 1998 purchase
of Alumax, lower raw material prices, production improvements
and cost reductions. Mark-to-market gains in 1999 versus
losses in 1998 added $57 to ATOI in 1999.
  Alcoa announced various capacity restarts and curtailments.
After the curtailments and restart of capacity, Alcoa
will have approximately 500,000 mt per year of idle capacity.

III. FLAT-ROLLED PRODUCTS

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>          <C>
Third-party aluminum shipments
 (mt)                                   1,960          1,982         1,764
Third-party sales                     $ 5,446        $ 5,113       $ 4,900
Intersegment sales                         97             51            59
- ------------------------------------------------------------------------------
Total sales                           $ 5,543        $ 5,164       $ 4,959
- ------------------------------------------------------------------------------
After-tax operating income              $ 299          $ 281         $ 306
- ------------------------------------------------------------------------------
</TABLE>

This segment's principal business is the production and
sale of aluminum plate, sheet and foil. This segment includes
rigid container sheet (RCS), which is used to produce
aluminum beverage cans, and sheet and plate used in the
transportation and distributor markets.  Approximately
45% of the third-party shipments in this segment are derived
from the sale of RCS and approximately 48% is obtained
from sheet and plate. Other flat-rolled products, such
as foil, comprise the remainder of this segment.
  In 2000, third-party sales from this segment increased
$333 from 1999 with rising prices offsetting a slight
decrease in shipments. The net decrease in shipments is
comprised of a decrease of 24 mt in sheet and plate, offset
by a 12 mt increase in RCS. Third-party sales from RCS
in 2000 were up 8% from 1999, primarily due to a rise
in average prices of 7%. Third-party sales for sheet and
plate rose 6% from 1999, as average prices increased by
9%, offset by a decrease in shipments of 2%. Lower shipments
in the U.S. more than offset increases in Europe and Latin
America. Higher prices in all regions also contributed
to the increase in sales.
  Third-party sales from this segment in 1999 increased
4% from 1998, as shipments rose 12%, aided by a full year's
results from the Alumax locations. In 1999, third-party
sales from RCS were down 5% compared with 1998 primarily
as a result of lower prices. In 1999, sheet and plate
third-party sales were up 14% from 1998, as shipments
rose 32% and average prices fell 14%. Higher shipments
in the U.S. and the impact of acquisitions were partly
offset by lower shipments

                               36
<PAGE>

in Latin America. Average realized prices fell in 1999
in part due to a change in product mix resulting from
the full-year impact of the Alumax acquisition.
  ATOI for Flat-Rolled Products increased in 2000 by 6%
as higher prices offset lower shipments and higher energy
costs. RCS ATOI dropped 7% from 1999 as stronger revenues
and a $14 increase in equity earnings were more than offset
by higher energy and scrap costs. Sheet and plate ATOI
increased by 7% from 1999 due to increased  volumes in
Latin America and Europe, while the U.S. remained constant.
ATOI for foil operations was down due to lower volumes
and increased natural gas prices.
  In 1999, ATOI for Flat-Rolled Products fell 8%, as higher
revenues and cost reductions were overshadowed by lower
prices and lower equity earnings. RCS ATOI fell 14% due
to a decline of $16 in equity earnings, lower prices and
less favorable product mix, partially offset by cost improvements.
Sheet and Plate ATOI fell 9% as improved results for U.S.
operations, aided by acquisitions, were more than offset
by weaker performance in Latin America and Europe. Partially
offsetting the decline in RCS and sheet and plate ATOI
were improved results from foil operations and the shutdown
of Alcoa Memory Products in 1999.

IV. ENGINEERED PRODUCTS

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>          <C>
Third-party aluminum shipments
 (mt)                                   1,061            989           729
Third-party sales                     $ 5,471        $ 3,728       $ 3,110
Intersegment sales                         62             26            11
- ------------------------------------------------------------------------------
Total sales                           $ 5,533        $ 3,754       $ 3,121
- ------------------------------------------------------------------------------
After-tax operating income              $ 210          $ 180         $ 183
- ------------------------------------------------------------------------------
</TABLE>

This segment consists of hard- and soft-alloy extrusions,
including architectural extrusions, super-alloy castings,
steel and aluminum fasteners, aluminum forgings and wheels.
These products serve the transportation, construction
and distributor markets. This segment includes the Reynolds
wheel business, as well as the Huck fasteners and Howmet
super-alloy castings businesses acquired as part of the
Cordant acquisition.
  In 2000, third-party sales increased 47% primarily due
to the acquisitions of Reynolds and Cordant. The shipment
data and average realized prices per pound of aluminum
for this segment were significantly impacted in 2000 by
the additions of Huck and Howmet, which produce revenue
but have little aluminum components. Extruded products
third-party sales were up 17%, 7% from price increases
in existing businesses and 10% from the recent acquisitions.
Shipment volumes for the existing businesses were down
1%, offset by an increase in prices. Forged wheel sales
increased 34% in 2000 mainly due to the Reynolds acquisition.
  In 1999, third-party shipments for this segment were up
36%, generating a 20% increase in revenues. Extruded product
sales were up 26% in 1999 from 1998 as shipments rose
43%, offset by a decrease in average realized price of
12%, primarily due to a change in product mix as a result
of the Alumax acquisition. The continued strong demand
for forged wheels used in sport utility vehicles and light
trucks was a major factor in the higher shipment levels
in 1999 compared with 1998.
  ATOI for Engineered Products in 2000 increased by 17%
to $210. The impact of acquisitions, primarily Huck and
Howmet, increased ATOI by 23%, offset by a decline in
existing businesses. The U.S. and European engineered
and extruded products ATOI fell 37% and 61% in 2000 and
1999, respectively, as a result of the overall decline
in the transportation market. This was somewhat offset
by an increase of 125% for Latin America due to improvements
in market share.
  In 1999, ATOI for Engineered Products fell 2% from 1998
to $180. The decrease was due to the sale of Alcotec in
1998, as well as declines in volumes in the extrusion
business. These factors were slightly offset by improved
results in Europe due to acquisitions and in forged products
as a result of higher prices and continued growth in the
wheel market.

                               37
<PAGE>

V. PACKAGING AND CONSUMER

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>              <C>          <C>
Third-party aluminum shipments
 (mt)                                     119              9            10
Third-party sales                     $ 2,084          $ 801         $ 856
- ------------------------------------------------------------------------------
After-tax operating income              $ 131           $ 68          $ 61
- ------------------------------------------------------------------------------
</TABLE>

This segment includes the packaging and consumer businesses
of Reynolds acquired in 2000, as well as Alcoa's closures,
packaging, PET bottles and packaging machinery businesses.
Alcoa's closures, packaging, PET bottles and packaging
machinery businesses were previously included in the Other
group. Data from 1999 and 1998 has been restated to reflect
this change.
  Third-party sales were $2,084 in 2000, up $1,283 from
1999. The Reynolds packaging and consumer businesses accounted
for 92% of the increase. Third-party sales from existing
businesses improved 12% over 1999. Closures increased
third-party sales 16% year over year, driven by acquisitions
in 2000.
  Third-party sales in 1999 decreased by $55 or 6% from
1998, as the decline in packaging operations in Brazil
more than offset the increased sales from closures.
  ATOI increased by 93% in 2000 due to the acquisition of
the Reynolds packaging and consumer businesses. Excluding
the impact of Reynolds, ATOI fell 13% from 1999 primarily
due to the impact of higher resin prices in closures.
  ATOI for this segment rose 12% from 1998 to 1999, as
improvements in closures were partially offset by a decline from
packaging operations in Brazil. The improvement in closures ATOI
in 1999 was a result of higher volumes and cost improvements,
offset in part by lower prices. Cost improvements somewhat
offset the impact of a 23% decline in revenues from packaging
operations in Brazil.

VI. OTHER

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>           <C>
Third-party aluminum shipments
 (mt)                                     187             56            56
Third-party sales                     $ 4,071        $ 2,592       $ 2,506
- ------------------------------------------------------------------------------
After-tax operating income              $ 164          $ 118         $ 104
- ------------------------------------------------------------------------------
</TABLE>

This group includes Alcoa's businesses that do not fit
into the segments previously mentioned. This group includes
Alcoa Fujikura Ltd. (AFL), which produces fiber-optic
cable and provides services for the telecommunications
industry and produces electrical components for the automotive
industry; Thiokol Propulsion (Thiokol), a producer of
solid rocket propulsion systems; Reynolds' metal distribution
business (RASCO); the residential building products operations,
Alcoa Building Products (ABP) and aluminum automotive
engineering and parts businesses. Thiokol and RASCO were
added in 2000 as part of the Cordant and Reynolds acquisitions,
respectively. Alcoa's closures, packaging, PET bottles
and packaging machinery businesses that were previously
reported in this group are now included in the Packaging
and Consumer segment.
  In 2000, third-party sales were up 57% due primarily to
the RASCO and Thiokol acquisitions. Excluding these acquisitions,
third-party revenue increased by 14%, driven by an increase
of 16% in the AFL telecommunications business that was
partially offset by a 7% decrease at ABP. The increase
in the AFL telecommunications business is largely due
to acquisitions in 2000. The decline in ABP sales is due
to softness in the overall housing and construction market.
  Third-party sales from this group in 1999 were up $86
or 3% from 1998. Higher sales of automotive electrical
components and a 5% increase in third-party sales at AFL
were somewhat offset by declines from the castings and
cable businesses in Brazil.
  In 2000, ATOI for this group increased by 39% including
the acquisitions of RASCO and Thiokol. Excluding these
acquisitions, ATOI rose by 14%, driven by a 20% increase
at AFL, mainly due to acquisitions, offset by a decrease
at ABP, due to lower volumes and higher resin costs.
  In 1999, ATOI for this group rose 13% from 1998 as aluminum
automotive parts benefited from higher volumes and selling
prices, lower administrative costs and improved productivity.

RECONCILIATION OF ATOI TO CONSOLIDATED NET INCOME
The following reconciles segment ATOI to Alcoa's consolidated
net income and explains each line item in the reconciliation:

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>           <C>
Total after-tax operating income      $ 2,389        $ 1,489       $ 1,344
Elimination of intersegment profit        (20)           (24)          (16)
Unallocated amounts (net of tax):
  Interest income                          40             26            64
  Interest expense                       (278)          (126)         (129)
  Minority interests                     (381)          (242)         (238)
  Corporate expense                      (227)          (171)         (197)
  Other                                   (39)           102            25
- ------------------------------------------------------------------------------
Consolidated net income               $ 1,484        $ 1,054         $ 853
- ------------------------------------------------------------------------------
</TABLE>

  Items required to reconcile ATOI to consolidated net
income include:
> Corporate adjustments to eliminate any remaining profit
  or loss among segments;
> The after-tax impact of interest income and expense
  at the statutory rate;
> Minority interests;
> Corporate expense, comprised of general administrative
  and selling expenses of operating the corporate headquarters
  and other global administrative facilities along with
  depreciation on corporate owned assets; and
> Other, which includes the impact of LIFO, differences
  between estimated tax rates used in each segment and the
  corporate effective tax rate and other nonoperating items
  such as foreign exchange.
  The variance in Other was due to LIFO adjustments in 1999
and the adjustments to deferred taxes in 1999 that resulted
from a change in the Australian corporate income tax rate.


                               38
<PAGE>

COSTS AND OTHER
COSTS OF GOODS SOLD (COGS) -- COGS rose $4,806 or 38%
to $17,342 in 2000. The increase was primarily due to
higher sales volumes in 2000. COGS as a percentage of
sales was 75.6%, down 1.2% from 1999. The decrease is
due primarily to higher sales prices resulting from a
stronger LME and cost-cutting efforts, somewhat offset
by higher cost of sales at acquired entities and higher
energy costs. COGS totaled $12,536 for 1999, up 5% from
1998. The increase was due to higher volumes that generated
additional costs of $1,100. The higher volumes related
primarily to acquired companies. Offsetting a portion
of the increases were cost and operating improvements
of approximately $500. In 1999, COGS as a percentage of
sales also fell 1.0% to 76.8% as cost reductions and a
LIFO liquidation more than offset the negative impact
of lower overall aluminum prices on revenues.

SELLING AND GENERAL ADMINISTRATIVE EXPENSES (S&GA) --
S&GA expenses increased 30% to $1,108 in 2000. The increase
was primarily due to acquisitions and higher personnel
costs related to pay for performance, partially offset
by cost-cutting improvements. However, as a percentage
of revenue, S&GA was down by 0.4% to 4.8% in 2000.
  S&GA expenses in 1999 were $851, an increase of 9% or
$68 from 1998. The higher level of S&GA in 1999 was also
due to acquisitions; Alcoa owned Alumax for 12 months
in 1999 versus six months in 1998. S&GA expenses were
also impacted by higher personnel costs related to pay
for performance in 1999. As a percentage of sales revenue,
S&GA was 5.2% in 1999.

RESEARCH AND DEVELOPMENT EXPENSES (R&D) -- In 2000, R&D
expenses increased $66 or 52% with acquisitions accounting
for $33 or 26%. The remaining increases were due to corporate
spending and increases in Primary Metals, Flat-Rolled
Products and AFL.
  R&D expenses of $128 in 1999 were essentially unchanged
from 1998, as a reduction in corporate spending was offset
by increases in the Primary Metals and Flat-Rolled Products
segments.

INTEREST EXPENSE -- Interest expense rose $232 to $427
in 2000 primarily as a result of the Reynolds and Cordant
acquisitions. Debt of $1,297 was assumed in the acquisition
of Reynolds while $826 of debt was assumed in the Cordant
acquisition. Alcoa issued $1,500 of notes. Alcoa also
issued $3,711 of commercial paper. Additionally, the company
entered into a new $2,490 revolving-credit facility that
expires in April 2001 and a $510 revolving-credit facility
that expires in August 2005. Total interest costs, including
interest capitalized, was $447, with the capitalized interest
cost remaining relatively constant from 1999. Interest
expense of $195 in 1999 was down $3 from 1998. Total interest
costs, including capitalized interest, were up 2% to $216
in 1999 due to a higher level of capitalized interest
and higher interest rates, partly offset by lower debt
levels and the repayment of some higher cost debt. The
increase in capitalized interest relates to the expansion
of the Wagerup alumina refinery in Australia.

INCOME TAXES -- In 2000, Alcoa's effective tax rate was
33.5%, one and a half percentage points below the statutory
rate of 35%. This lower rate is primarily driven by lower
taxes on foreign income. Alcoa's effective tax rate in
1999 was 29.9%. The lower rate was primarily due to lower
taxes on foreign income and a reduction in the Australian
corporate income tax rate. In the 1999 fourth quarter,
Australia reduced its corporate income tax rate from 36%
to 34% for 2000 and to 30% for 2001. Alcoa's effective
tax rate in 1998 was 32%. The lower rate was primarily
due to lower taxes on foreign income.

OTHER INCOME/FOREIGN CURRENCY -- In 2000, other income
increased 24% or $30 from 1999. The increase was due to
a $59 increase in equity income and higher interest and
dividend income, offset by foreign exchange losses. Other
income totaled $124 in 1999, down $25 from 1998. The decline
was due to a $57 decline in interest income, a negative
swing in foreign exchange and lower gains from

                               39
<PAGE>

asset sales. Offsetting a portion of these negative factors
in 1999 were gains from marking to market certain aluminum
commodity contracts versus losses in 1998.
  Foreign exchange losses included in other income were
$82 in 2000, $19 in 1999, and $4 in 1998.
  In July 1999, the Brazilian real became the functional
currency for translating the financial statements of Alcoa's
59%-owned Brazilian subsidiary, Alcoa Aluminio (Aluminio).
Economic factors and circumstances related to Aluminio's
operations had changed significantly since the devaluation
of the real in the 1999 first quarter. Under Statement
of Financial Accounting Standards (SFAS) No. 52, "Foreign
Currency Translation," the change in those facts and circumstances
required a change in Aluminio's functional currency. As
a result, at July 1, 1999, Alcoa's shareholders' equity
(cumulative translation adjustment) and minority interests
were reduced by $156 and $108, respectively.  These amounts
were driven principally by a reduction in fixed assets.
This reduction resulted in a $15 decrease in Aluminio's
depreciation expense for 1999 and $30 in 2000.
  The total impact of translation and exchange included
in net income, after taxes and minority interests, was
an $8 loss in each year.

MINORITY INTERESTS -- In 2000, minority interests increased
by $139 to $381. The increase was due to higher earnings
at Alcoa of Australia  (AofA), AFL, and Aluminio. Minority
interests' share of income from operations rose 2% in
1999 from 1998 to $242. The increase was due to higher
earnings at AofA and AFL, partially offset by lower earnings
from other Alcoa World Alumina and Chemicals (AWAC) locations.

MARKET RISKS
In addition to the risks inherent in its operations, Alcoa
is exposed to financial, market, political and economic
risks. The following discussion, which provides additional
detail regarding Alcoa's exposure to the risks of changing
commodity prices, foreign exchange rates and interest
rates, includes forward-looking statements that involve
risk and uncertainties. Forward-looking statements also
include those containing such words as "anticipates, believes,
estimates, expects, hopes, targets, should, will, will
likely result, forecast, outlook, projects" or similar
expressions. Actual results could differ materially from
those projected in these forward-looking statements.

COMMODITY PRICE RISKS -- Alcoa is a leading global producer
of aluminum ingot and aluminum fabricated products. As
a condition of sale, customers often require Alcoa to
commit to fixed-price contracts that sometimes extend
a number of years into the future.  Customers will likely
require Alcoa to enter into similar arrangements in the
future. These contracts expose Alcoa to the risk of fluctuating
aluminum prices between the time the order is accepted
and the time that the order ships.
  In order to fulfill some of the orders noted above, Alcoa
might be required to purchase aluminum to supplement its
internal production. These purchases expose the company
to the risk of higher aluminum prices. To hedge this risk,
Alcoa enters into long positions, principally using futures
and options. Alcoa follows a stable pattern of purchasing
metal; therefore, it is highly likely that anticipated
metal purchase requirements will be met. At December 31,
2000 and 1999, these contracts totaled approximately 522,000
mt and 465,000 mt, respectively. These contracts act to
fix the purchase price for these metal purchase requirements,
thereby reducing Alcoa's risk to rising metal prices.
  A hypothetical 10% change from the 2000 year-end, three-
month LME aluminum ingot price of $1,565 per mt would
result in a pretax gain or loss to future earnings of
$81 related to all of the futures and options contracts
noted above. However, it should be noted that any change
in the value of these contracts, real or hypothetical,
would be significantly offset by an inverse change in
the value of the underlying metal purchase transactions.
  Earnings were selected as the measure of sensitivity due
to the historical relationship between aluminum ingot
prices and Alcoa's earnings. The hypothetical change of
10% was calculated using a parallel shift in the existing
December 31, 2000 forward price curve for aluminum ingot.
The price curve takes into account the time value of money,
as well as future expectations regarding the price of
aluminum ingot.
  The futures and options contracts noted above are with
creditworthy counterparties and are further supported
by cash, treasury bills or irrevocable letters of credit
issued by carefully chosen banks.
  Alcoa also had 51,000 mt and 21,000 mt of futures and
options contracts outstanding at year-end 2000 and 1999,
respectively, that cover long-term, fixed-price commitments
to supply customers with metal from internal sources.
Accounting convention requires that these contracts be
marked to market, which resulted in after-tax gains of
$6 in 2000 and $12 in 1999 and charges of $45 in 1998.
A hypothetical 10% change in aluminum ingot prices from
the year-end 2000 level of $1,565 per mt would result
in a pretax gain or loss of $7 related to these positions.
The hypothetical gain or loss was calculated using the
same model and assumptions noted earlier.
  Alcoa sells products to various third parties at prices
that are influenced by changes in LME aluminum prices.
From time to time, the company may elect to hedge a portion
of these exposures to reduce the risk of fluctuating market
prices on these sales. Toward this end, Alcoa may enter
into short positions using futures and options contracts.
At December 31, 2000 and 1999, these contracts totaled
112,000 mt and 244,000 mt, respectively. These contracts
act to fix a portion of the sales price related to these
sales contracts. A hypothetical 10% change in aluminum
ingot prices from the year-end 2000 level of $1,565 per
mt would result in a pretax gain or loss of $15 related
to these positions. The hypothetical gain or loss was
calculated using the same model and assumptions noted
earlier.
  Alcoa is required to purchase natural gas to meet its
production requirements. These purchases expose the company
to the risk of higher natural gas prices. To hedge this
risk, Alcoa enters into long positions, principally using
futures and options. Alcoa follows

                               40
<PAGE>

a stable pattern of purchasing natural gas; therefore,
it is highly likely that anticipated natural gas purchases
will occur. At December 31, 2000, the fair value of the
contracts for natural gas totaled approximately $69. A
hypothetical 50% change in the market price of natural
gas from year-end 2000 levels would increase or decrease
future earnings by $81.
  Alcoa also purchases certain other commodities, such as
fuel oil, electricity and copper, for its operations and
enters into futures and options contracts to eliminate
volatility in the prices of such products. None of these
contracts are material. For additional information on
financial instruments, see Notes A and S to the financial
statements.

FOREIGN EXCHANGE RISKS -- Alcoa is subject to significant
exposure from fluctuations in foreign currencies.  As
a matter of company policy, foreign currency exchange
contracts, including forwards and options, are sometimes
used to limit the risk of fluctuating exchange rates.
A hypothetical 10% change in applicable 2000 year-end
forward rates would result in a pretax gain or loss of
approximately $210 related to these positions. However,
it should be noted that any change in the value of these
contracts, real or hypothetical, would be significantly
offset by an inverse change in the value of the underlying
hedged item. The model assumes a parallel shift in the
forward curve for the applicable currencies and includes
the foreign currency impacts of Alcoa's cross-currency
interest rate swaps. See Notes A and S for information
related to the accounting policies and fair market values
of Alcoa's foreign exchange contracts at December 31,
2000 and 1999.

INTEREST RATE RISKS -- Alcoa attempts to maintain a reasonable
balance between fixed- and floating-rate debt and uses
interest rate swaps and caps to keep financing costs as
low as possible.  At December 31, 2000 and 1999, Alcoa
had $8,133 and $3,067 of debt outstanding at effective
interest rates of 7.6% for 2000 and 5.8% for 1999, after
the impact of interest rate swaps and caps is taken into
account. A hypothetical change of 10% in Alcoa's effective
interest rate from year-end 2000 levels would increase
or decrease interest expense by $62. The interest rate
effect of Alcoa's cross-currency interest rate swaps has
been included in this analysis.  For more information
related to Alcoa's use of interest rate instruments, see
Notes A and S to the financial statements.

RISK MANAGEMENT -- All of the aluminum and other commodity
contracts, as well as the various types of financial instruments,
are straightforward and are held for purposes other than
trading. They are used primarily to mitigate uncertainty
and volatility and cover underlying exposures.
  Alcoa's commodity and derivative activities are subject
to the management direction and control of the Strategic
Risk Management Committee (SRMC). SRMC is composed of
the chief executive officer, the chief financial officer
and other officers and employees that the chief executive
officer may select from time to time. SRMC reports to
the board of directors on the scope of its derivative
activities.

MATERIAL LIMITATIONS -- The disclosures with respect to
commodity prices and foreign exchange risk do not take
into account the underlying anticipated purchase obligations
and the underlying transactional foreign exchange exposures.
If the underlying items were included in the analysis,
the gains or losses on the futures and options contracts
may be offset. Actual results will be determined by a
number of factors that are not under Alcoa's control and
could vary significantly from those factors disclosed.

ENVIRONMENTAL MATTERS
Alcoa participates in environmental assessments and cleanups
at a number of locations. These include approximately
24 owned or operating facilities and adjoining properties,
approximately 28 previously owned or operated facilities
and adjoining properties and approximately 87 Superfund
and other waste sites. A liability is recorded for environmental
remediation costs or damages when a cleanup program becomes
probable and the costs or damages can be reasonably estimated.
For additional information, see Notes A and T to the financial
statements.
  As assessments and cleanups proceed, the liability is
adjusted based on progress in determining the extent of
remedial actions and related costs and damages. The liability
can change substantially due to factors such as the nature
and extent of contamination, changes in remedial requirements
and technological changes.  Therefore, it is not possible
to determine the outcomes or to estimate with any degree
of accuracy the potential costs for certain of these matters.
For example, there are issues related to Massena, New
York; Pt. Comfort, Texas; and Troutdale, Oregon sites
where investigations are ongoing and where natural resource
damage or off-site contaminated sediments have been alleged.
Based on these facts, it is possible that Alcoa's results
of operations, in a particular period, could be materially
affected by matters relating to these sites. However,
based on facts currently available, management believes
that the disposition of these matters will not have a
materially adverse effect on the financial position or
liquidity of the company.
  Alcoa's remediation reserve balance at the end of 2000
was $447, of which $78 was classified as a current liability,
and reflects the most probable costs to remediate identified
environmental conditions for which costs can be reasonably
estimated. Approximately 17% of this balance relates to
the Massena, New York plant sites, 22% relates to the
Sherwin, Texas plant site and 11% relates to the Troutdale,
Oregon plant site. Remediation expenses charged to the
reserve were $77 in 2000, $47 in 1999 and $63 in 1998.
These include expenditures  currently mandated, as well
as those not required by any regulatory authority or third
party. In 2000, the reserve balance was increased by $350
as a result of acquisitions.
  Included in annual operating expenses are the recurring
costs of managing hazardous substances and environmental
programs. These costs are estimated to be about 3% of
cost of goods sold.

                               41
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
(dollars in millions, except share amounts)

CASH FROM OPERATIONS
Cash from operations increased 20% to $2,851 in 2000,
after rising 8% in 1999 to $2,381, versus $2,197 in 1998.
The 2000 increase was primarily due to increases in net
income, depreciation and amortization, partially offset
by changes in noncurrent assets and liabilities. The increase
in cash from operations in 1999 relative to 1998 was primarily
the result of higher earnings and lower working capital.
In 1999, the lower working capital was a result of lower
inventories and  higher taxes, partly offset by higher
receivables.

FINANCING ACTIVITIES
Cash provided from financing activities was $1,552 in
2000 compared with cash used in financing activities of
$1,311 in 1999. The primary reason for the shift in 2000
was the increase in short-term borrowings, commercial
paper and long-term debt.  This was partially offset by
a decrease in common stock issued for stock compensation
plans. In 1999, financing activities used $1,311 of cash
versus $280 in the 1998 period. The primary reason for
the increase in 1999 was a decrease in borrowings. This
decrease was partly offset by an increase in common stock
issued in connection with stock compensation plans.
  In 2000, the additions to long-term debt exceeded the
payments by $571. In 2000, Alcoa issued $1,500 of notes.
Of these notes, $1,000 mature in 2010 and carry a coupon
rate of 7.375%, and $500 mature in 2005 and carry a coupon
rate of 7.25%. Additionally, Alcoa issued $3,711 of commercial
paper. Net payments on long-term debt in 1999 totaled
 $428, versus $561 of net additions in 1998. In 1998,
Alcoa issued $1,100 of commercial paper, $200 of term
debt due in 2005, $250 of term debt due in 2018, and $300
of thirty-year bonds due in 2028. Partially offsetting
these borrowings were net payments of $350 on commercial
paper and the repayment of $950 of Alumax debt. In 2000,
Alcoa entered into a new $2,490 revolving-credit facility
that expires in April 2001 and a $510 revolving-credit
facility that expires in August 2005. The revolving-credit
facilities are used to support Alcoa's commercial paper
program.
  In 2000, Alcoa used $763 to repurchase 21,742,600 shares
of the company's common stock at an average price of $35.08
per share. In 1999, Alcoa used $838 to repurchase 31,211,044
shares of the company's common stock at an average price
of $26.85 per share. Stock purchases in 2000 and 1999
were partially offset by $251 and $464, respectively,
of stock issued for stock compensation plans.
  Debt as a percentage of invested capital was 38.6% at
the end of 2000, compared with 28.3% for 1999 and 31.7%
for 1998.

                               42
<PAGE>

  In 2000, dividends paid to shareholders increased by
$120 to $418. The increase was due to a higher number
of shares outstanding as well as an increase in the  dividend
per share in 2000, with a total payout of 50 cents per
share versus 40.3 cents per share in 1999. Alcoa has a
variable dividend program that provides for the distribution,
in the following year, of 30% of Alcoa's annual earnings
in excess of $1.50 per basic share. The dividends paid
to shareholders in 1999 were $298, an increase of $33
from 1998 when dividends paid were 37.5 cents per share.
  The dividends paid to minority interests in 2000 were
$212, an increase of $90 from 1999. The increase was due
to an increase in dividends paid to Aluminio and AWAC.
For 1999, the dividends paid and return of capital to
minority interests totaled $122, a decline of $100 from
1998. The decline was due to a lack of dividends paid
at Aluminio and at entities comprising AWAC.

INVESTING ACTIVITIES
Cash used for investing activities in 2000 totaled $4,309,
up $3,142 from 1999. In 2000, cash used in investing activities
included $3,121 for a number of acquisitions, consisting
mainly of Reynolds, Cordant and British Aluminium Limited.
In 1999, Alcoa spent $122 to acquire a number of businesses,
none of which were individually significant.
  Capital expenditures totaled $1,121 in 2000, compared
with $920 and $932 in 1999 and 1998, respectively. Of
the total capital expenditures in 2000, 32% related to
capacity expansion, including alumina production in Australia
and automotive sheet production  in the U.S. Also included
are costs of new and expanded facilities for environmental
control in ongoing operations totaling $96 in 2000, $91
in 1999, and $105 in 1998. Alcoa added $94, $96 and $126
to its investments in 2000, 1999 and 1998, respectively,
primarily to acquire a stake in the Norwegian metals producer,
Elkem.

SUBSEQUENT EVENT
On January 31, 2001, Alcoa and Alliant Techsystems Inc.
(ATK) announced that they had reached a definitive agreement
under which ATK will acquire Thiokol for $685 cash. The
transaction, which has received all necessary corporate
approvals of both companies, is subject to customary regulatory
approvals. It is expected to close by the end of the second
quarter of 2001.

                               43
<PAGE>

MANAGEMENT'S REPORT TO ALCOA SHAREHOLDERS

The accompanying financial statements of Alcoa and consolidated
subsidiaries were prepared by management, which is responsible
for their integrity and objectivity. The statements were
prepared in accordance with generally accepted accounting
principles and include amounts that are based on management's
best judgments and estimates. The other financial information
included in this annual report is consistent with that
in the financial statements.
  The company maintains a system of internal controls, including
accounting controls, and a strong program of internal
auditing. The system of controls provides for appropriate
procedures that are consistent with high standards of
accounting and administration. The company believes that
its system of internal controls provides reasonable assurance
that assets are safeguarded against losses from unauthorized
use or disposition and that financial records are reliable
for use in preparing financial statements.
  Management also recognizes its responsibility for conducting
the company's affairs according to the highest standards
of personal and corporate conduct. This responsibility
is characterized and reflected in key policy statements
issued from time to time regarding, among other things,
conduct of its business activities within the laws of
the host countries in which the company operates and potentially
conflicting outside business interests of its employees.
The company maintains a systematic program to assess compliance
with these policies.





Alain J.P. Belda
Chairman and
Chief Executive Officer





Richard B. Kelson
Executive Vice President and
Chief Financial Officer

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors Alcoa Inc.
(Alcoa)

In our opinion, the accompanying consolidated balance
sheet and the related consolidated statements of income
and shareholders' equity and of cash flows present fairly,
in all material respects, the financial position of Alcoa
at December 31, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years
in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United
States of America. These financial statements are the
responsibility of Alcoa's management; our responsibility
is to express an opinion on these financial statements
based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally
accepted in the United States of America which require
that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting
principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis
for our opinion.




600 Grant St., Pittsburgh, Pa.
January 8, 2001, except for Note U,
for which the date is January 31, 2001

                               44
<PAGE>

STATEMENT OF CONSOLIDATED INCOME          Alcoa and subsidiaries
(in millions, except per-share amounts)

<TABLE>
<CAPTION>
For the year ended December 31           2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>
REVENUES
Sales (A and N)                      $ 22,936       $ 16,323      $ 15,340
Other income                              154            124           149
- ------------------------------------------------------------------------------
                                       23,090         16,447        15,489
- ------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of goods sold                     17,342         12,536        11,933
Selling, general administrative
  and other expenses                    1,108            851           783
Research and development expenses         194            128           128
Provision for depreciation,
  depletion and amortization            1,207            888           842
Interest expense (R)                      427            195           198
- ------------------------------------------------------------------------------
                                       20,278         14,598        13,884
- ------------------------------------------------------------------------------
EARNINGS
  Income before taxes on income         2,812          1,849         1,605
Provision for taxes on income (O)         942            553           514
- ------------------------------------------------------------------------------
  Income from operations                1,870          1,296         1,091
Less: Minority interests' share           381            242           238
  Income before accounting change       1,489          1,054           853
Cumulative effect of accounting
  change (A)                               (5)            --            --
- ------------------------------------------------------------------------------
NET INCOME                            $ 1,484        $ 1,054         $ 853
- ------------------------------------------------------------------------------
EARNINGS PER SHARE (B and L)
  Basic (before cumulative effect)     $ 1.83         $ 1.43        $ 1.22
  Basic (after cumulative effect)      $ 1.82         $ 1.43        $ 1.22
  Diluted (before cumulative
    effect)                            $ 1.81         $ 1.41        $ 1.21
  Diluted (after cumulative
    effect)                            $ 1.80         $ 1.41        $ 1.21
- ------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial
statements.

                               45
<PAGE>

CONSOLIDATED BALANCE SHEET                Alcoa and subsidiaries
(in millions)

<TABLE>
<CAPTION>
December 31                                        2000             1999
- -------------------------------------------------------------------------
<S>                                             <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents (S)                   $ 315            $ 237
  Short-term investments (S)                         56               77
  Receivables from customers, less
    allowances: 2000-$69; 1999-$58                3,461            2,199
  Other receivables                                 354              165
  Inventories (D)                                 2,703            1,618
  Deferred income taxes (O)                         385              233
  Prepaid expenses and other current assets         304              271
- ------------------------------------------------------------------------------
    Total current assets                          7,578            4,800
Properties, plants and equipment (E)             12,850            9,133
Goodwill, net of accumulated amortization
  of $344 in 2000 and $221 in 1999 (C)            6,003            1,328
Other assets (G and S)                            5,260            1,805
- ------------------------------------------------------------------------------
      TOTAL ASSETS                             $ 31,691         $ 17,066
- ------------------------------------------------------------------------------
LIABILITIES
Current liabilities:
  Short-term borrowings (F and S)               $ 2,719            $ 343
  Accounts payable, trade                         1,876            1,219
  Accrued compensation and retirement costs         928              582
  Taxes, including taxes on income                  702              368
  Other current liabilities                       1,302              424
  Long-term debt due within one year
    (F and S)                                       427               67
- ------------------------------------------------------------------------------
    Total current liabilities                     7,954            3,003
Long-term debt, less amount due within one
  year (F and S)                                  4,987            2,657
Accrued postretirement benefits (P)               2,719            1,720
Other noncurrent liabilities and deferred
  credits (H)                                     2,126            1,473
Deferred income taxes (O)                           969              437
- ------------------------------------------------------------------------------
      Total liabilities                          18,755            9,290
- ------------------------------------------------------------------------------
      MINORITY INTERESTS (I)                      1,514            1,458
- ------------------------------------------------------------------------------
Contingent liabilities (K)                           --               --

SHAREHOLDERS' EQUITY
Preferred stock (M)                                  56               56
Common stock (M)                                    925              395
Additional capital                                5,927            1,704
Retained earnings                                 7,127            6,061
Treasury stock, at cost                          (1,717)          (1,260)
Accumulated other comprehensive loss               (896)            (638)
- ------------------------------------------------------------------------------
      Total shareholders' equity                 11,422            6,318
- ------------------------------------------------------------------------------
      TOTAL LIABILITIES AND EQUITY             $ 31,691         $ 17,066
- ------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial
statements.


                               46
<PAGE>

STATEMENT OF CONSOLIDATED CASH FLOWS       Alcoa and subsidiaries
(in millions)

<TABLE>
<CAPTION>
For the year ended December 31           2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>             <C>
CASH FROM OPERATIONS
Net income                            $ 1,484        $ 1,054         $ 853
Adjustments to reconcile net
  income to cash from operations:
  Depreciation, depletion and
    amortization                        1,219            901           856
  Change in deferred income taxes         135             54           110
  Equity earnings before
    additional taxes, net of
    dividends                             (66)           (10)           (3)
  Gains from investing activities
    --sale of assets                       (7)           (12)          (32)
  Accounting change                         5             --            --
  Minority interests                      381            242           238
  Other                                    32             31           (23)
  Changes in assets and
    liabilities, excluding effects
    of acquisitions and
    divestitures:
    (Increase) reduction in
      receivables                        (446)           (56)          145
    Reduction in inventories              117            253           100
    Reduction (increase) in
      prepaid expenses and other
      current assets                        6            (36)           23
    Reduction in accounts payable
      and accrued expenses                (88)           (79)          (68)
    Increase in taxes, including
      taxes on income                     407            171            69
    Change in deferred hedging
      gains/losses                          7            (63)          (51)
    Net change in noncurrent
      assets and liabilities             (335)           (69)          (20)
- ------------------------------------------------------------------------------
      CASH PROVIDED FROM
        OPERATIONS                      2,851          2,381         2,197
- ------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net changes to short-term
  borrowings                            2,123            (89)          (76)
Common stock issued for stock
  compensation plans                      251            464            87
Repurchase of common stock               (763)          (838)         (365)
Dividends paid to shareholders           (418)          (298)         (265)
Dividends paid and return of
  capital to minority interests          (212)          (122)         (222)
Net change in commercial paper            530             --           776
Additions to long-term debt             1,918            572           881
Payments on long-term debt             (1,877)        (1,000)       (1,096)
- ------------------------------------------------------------------------------
      CASH PROVIDED FROM (USED
        FOR) FINANCING ACTIVITIES       1,552         (1,311)         (280)
- ------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures                   (1,121)          (920)         (932)
Acquisitions, net of cash acquired
  (J)                                  (3,121)          (122)       (1,463)
Proceeds from the sale of assets            4             45            55
Additions to investments                  (94)           (96)         (126)
Sale of investments                        18             --            --
Changes in minority interests              --             --            33
Changes in short-term investments          21            (37)           66
Other                                     (16)           (37)          (10)
- ------------------------------------------------------------------------------
      CASH USED FOR INVESTING
        ACTIVITIES                     (4,309)        (1,167)       (2,377)
- ------------------------------------------------------------------------------
      EFFECT OF EXCHANGE RATE
        CHANGES ON CASH                   (16)            (8)            1
- ------------------------------------------------------------------------------
Net change in cash and cash
  equivalents                              78           (105)         (459)
Cash and cash equivalents at
  beginning of year                       237            342           801
- ------------------------------------------------------------------------------
      CASH AND CASH EQUIVALENTS AT
        END OF YEAR                     $ 315          $ 237         $ 342
- ------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial
statements.

                               47
<PAGE>

STATEMENT OF SHAREHOLDERS' EQUITY         Alcoa and subsidiaries
(in millions, except per-share amounts)


<TABLE>
<CAPTION>
                                                                                                        Accumulated     Total
                                                                                                              other    share-
                            Comprehensive     Preferred      Common  Additional    Retained    Treasury  comprehen-  holders'
December 31                      income           stock       stock     capital    earnings       stock   sive loss    equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>               <C>            <C>     <C>           <C>         <C>      <C>          <C>
BALANCE AT END OF 1997                             $ 56       $ 179       $ 578     $ 4,717      $ (758)     $ (353)  $ 4,419
Comprehensive income--1998:
  Net income--1998                $ 853                                                 853                               853
  Other comprehensive
    income (loss):
    Change in minimum
      pension liability,
      net of $3 tax benefit          (5)
    Unrealized translation
      adjustments                    11                                                                           6         6
                              ---------
Comprehensive income              $ 859
                              ---------
Cash dividends:
Preferred @ $3.75 per share                                                              (2)                               (2)
Common @ $.375 per share                                                               (263)                             (263)
Treasury shares purchased                                                                          (365)                 (365)
Stock issued: Alumax
  acquisition                                                    19       1,302                                         1,321
Stock issued: compensation
  plans                                                                      (7)                     94                    87
Stock issued: two-for-one
  split                                                         197        (197)                                           --
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 1998                               56         395       1,676       5,305      (1,029)       (347)    6,056
Comprehensive income--1999:
  Net income--1999              $ 1,054                                               1,054                             1,054
  Other comprehensive loss:
    Unrealized translation
      adjustments (A)              (291)                                                                       (291)     (291)
                              ---------
Comprehensive income              $ 763
                              ---------
Cash dividends:
Preferred @ $3.75 per share                                                              (2)                               (2)
Common @ $.403 per share                                                               (296)                             (296)
Treasury shares purchased                                                                          (838)                 (838)
Stock issued: compensation
  plans                                                                      28                     607                   635
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 1999                               56         395       1,704       6,061      (1,260)       (638)    6,318
Comprehensive income--2000:
  Net income--2000              $ 1,484                                               1,484                             1,484
  Other comprehensive
    income (loss):
    Change in minimum
      pension liability,
      net of $(3) tax
      expense                         5
    Unrealized translation
      adjustments                  (263)                                                                       (258)     (258)
                              ---------
Comprehensive income            $ 1,226
                              ---------
Cash dividends:
Preferred @ $3.75 per share                                                              (2)                               (2)
Common @ $.500 per share                                                               (416)                             (416)
Treasury shares purchased                                                                          (763)                 (763)
Stock issued: Reynolds
  acquisition                                                   135       4,367                                         4,502
Stock issued: compensation
  plans**                                                                   251                     306                   557
Stock issued: two-for-one
  split                                                         395        (395)                                           --
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 2000                      $        56       $ 925     $ 5,927     $ 7,127    $ (1,717)     $ (896)*$ 11,422
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
 * Comprised of unrealized translation adjustments of $(886) and minimum
   pension liability of $(10)
** Includes stock to be issued under options of $182
</TABLE>


SHARE ACTIVITY  (B)
(number of shares)

<TABLE>
<CAPTION>
                                                                              Common stock
                                                      -----------------------------------------------------------------------------

                                     Preferred stock                  Issued                Treasury         Net outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                         <C>                     <C>                 <C>
BALANCE AT END OF 1997                       557,649             715,690,332             (42,587,828)            673,102,504
Treasury shares purchased                                                                (19,549,200)            (19,549,200)
Stock issued: Alumax acquisition                                  73,701,520                                      73,701,520
Stock issued: compensation plans                                                           6,363,332               6,363,332
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 1998                       557,649             789,391,852             (55,773,696)            733,618,156
Treasury shares purchased                                                                (31,211,044)            (31,211,044)
Stock issued: compensation plans                                                          33,090,884              33,090,884
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 1999                       557,649             789,391,852             (53,893,856)            735,497,996
Treasury shares purchased                                                                (21,742,600)            (21,742,600)
Stock issued: Reynolds acquisition                               135,182,686                                     135,182,686
Stock issued: compensation plans                                                          16,579,158              16,579,158
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF 2000                       557,649             924,574,538             (59,057,298)            865,517,240
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial
statements.

                               48
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars and shares in millions, except per-share amounts)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial
statements include the accounts of Alcoa and companies
more than 50% owned. Investments in other entities are
accounted for principally on an equity basis.
  The consolidated financial statements are prepared in
conformity with generally accepted accounting principles
and require management to make certain estimates and assumptions.
These may affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities
at the date of the financial statements. They may also
affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from
those estimates upon subsequent resolution of identified
matters.
  INVENTORY VALUATION. Inventories are carried at the lower
of cost or market, with cost for a substantial portion
of U.S. and Canadian inventories determined under the
last-in, first-out (LIFO) method. The cost of other inventories
is principally determined under the average-cost method.
See Note D for additional detail.
  PROPERTIES, PLANTS AND EQUIPMENT. Properties, plants and
equipment are recorded at cost. Depreciation is recorded
principally on the straight-line method at rates based
on the estimated useful lives of the assets, averaging
33 years for structures and between 5 and 25 years for
machinery and equipment. Profits or losses from the sale
of assets are included in other income. Repairs and maintenance
are charged to expense as incurred. Interest related to
the construction of qualifying assets is capitalized as
part of the construction costs.
  Depletion is taken over the periods during which the estimated
mineral reserves are extracted. See Notes E and R for
additional detail.
  AMORTIZATION OF INTANGIBLES. The excess purchase price
over the net tangible assets of businesses acquired is
reported as goodwill in the Consolidated Balance Sheet.
Goodwill and other intangibles are amortized on a straight-
line basis over not more than 40 years. The carrying value
of goodwill and other intangibles is evaluated periodically
in relation to the operating performance and future undiscounted
cash flows of the underlying businesses. Adjustments are
made if the sum of expected future net cash flows is less
than book value. See Note G for additional information.
  REVENUE RECOGNITION. Alcoa recognizes revenue when title,
ownership and risk of loss pass to the customer. See Recently
Adopted Accounting Standards for additional information.
  Thiokol Propulsion's (Thiokol) sales encompass products
and services performed principally under contracts and
subcontracts with various United States government (government)
agencies and aerospace prime contractors. Sales under
cost-type contracts are recognized as costs are incurred
and include a portion of total estimated earnings to be
realized in the ratio that costs incurred relate to estimated
total costs. Sales under fixed-price-type contracts are
recognized when deliveries are made or upon completion
of specified tasks. Cost or performance incentives are
incorporated into certain contracts and are recognized
when awards are earned or when realization is reasonably
assured and amounts can be estimated.  Alcoa participates
in teaming arrangements and records its share of sales
and profits related to such ventures on the percentage-
of-completion method. Adjustments in estimates, which
can affect both revenues and earnings, are made in the
period in which the information necessary to make the
adjustment becomes available. Provisions for estimated
losses on contracts are recorded when identified.
  ENVIRONMENTAL EXPENDITURES. Expenditures for current operations
are expensed or capitalized, as appropriate. Expenditures
relating to existing conditions caused by past operations,
and which do not contribute to future revenues, are expensed.
Liabilities are recorded when remedial efforts are probable
and the costs can be reasonably estimated. The liability
may include costs such as site investigations, consultant
fees, feasibility studies, outside contractor and monitoring
expenses. Estimates are not discounted or reduced by potential
claims for recovery. Claims for recovery are recognized
when received. The estimates also include costs related
to other potentially responsible parties to the extent
that Alcoa has reason to believe such parties will not
fully pay their proportionate share. The liability is
periodically reviewed and adjusted to reflect current
remediation progress, prospective estimates of required
activity and other factors that may be relevant, including
changes in technology or regulations. See Note T for additional
information.
  STOCK-BASED COMPENSATION. Alcoa accounts for stock-based
compensation in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations.
Accordingly, compensation cost is not required to be recognized
on options granted. Disclosures required with respect
to alternative fair value measurement and recognition
methods prescribed by Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," are presented in Note M.
  FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS. Alcoa enters
into long-term contracts to supply fabricated aluminum
products to a number of its customers. To hedge the market
risk of changing prices for purchases or sales of metal,
Alcoa uses aluminum commodity futures and options contracts.
Alcoa also purchases certain other commodities such as
fuel oil, natural gas, electricity and copper for its
operations and enters into futures and options contracts
to eliminate volatility in the prices of such products.
  Gains and losses related to transactions that qualify
for hedge accounting, including closed futures contracts,
are deferred and reflected in cost of goods sold when
the underlying physical transaction takes place. The deferred
gains or losses are reflected on the balance sheet in
other current and noncurrent liabilities or assets. If
future purchases are revised lower than initially anticipated,
the futures contracts associated with the reduction no
longer qualify for deferral and are marked to market.
Mark-to-market gains and losses are recorded in other
income in the current period.
  The effectiveness of the hedge is measured by an historical
and probable future high correlation of changes in the
fair value of the hedging instruments with changes in
value of the hedged item. If correlation ceases to exist,
hedge accounting will be terminated and gains or losses
recorded in other income. To date, high correlation has
always been achieved.

                               49
<PAGE>

  Alcoa also enters into futures and options contracts
that cover long-term, fixed-price commitments to supply
customers with metal from internal sources. These contracts
are marked to market, and the gains and losses from changes
in market value of the contracts are recorded in other
income in the current period. This resulted in after-tax
gains of $6 in 2000 and $12 in 1999 and losses of $45
in 1998.
  From time to time, Alcoa may elect to sell forward a portion
of its production. Gains and losses related to transactions
that qualify for hedge accounting are deferred and reflected
in revenues when the underlying physical transaction takes
place. The deferred gains or losses are reflected on the
balance sheet in other current and noncurrent liabilities
or assets. If the above contracts no longer qualify for
deferral, the contracts are marked to market to other
income in the current period.
  Alcoa attempts to maintain a reasonable balance between
fixed- and floating-rate debt, using interest rate swaps
and caps, to keep financing costs as low as possible.
If the requirements for hedge accounting are met, amounts
paid or received under these agreements are recognized
over the life of the agreements as adjustments to interest
expense. Otherwise, the instruments are marked to market,
and the gains and losses from changes in the market value
of the contracts are recorded in other income in the current
period.
  Upon early termination of an interest rate swap or cap,
gains or losses are deferred and amortized as adjustments
to interest expense of the related debt over the remaining
period covered by the terminated swap or cap.
  Alcoa is subject to exposure from fluctuations in foreign
currencies. To manage this exposure, Alcoa uses foreign
exchange forward and option contracts. Gains and losses
on contracts that meet the requirements for hedge accounting
are deferred and included in the basis of the underlying
transactions. Contracts that do not meet these requirements
are marked to market in other income each period.
  Cash flows from financial instruments are recognized in
the statement of cash flows in a manner consistent with
the underlying transactions. See Note S for additional
detail.
  FOREIGN CURRENCY. The local currency is the functional
currency for Alcoa's significant operations outside the
U.S., except in Canada, where the U.S. dollar is used
as the functional currency. The determination of the functional
currency for Alcoa's Canadian operations is made based
on the appropriate economic and management indicators.
  Effective July 1, 1999, the Brazilian real became the
functional currency for translating the financial statements
of Alcoa's 59%-owned Brazilian subsidiary, Alcoa Aluminio
S.A. (Aluminio). Economic factors and circumstances related
to Aluminio's operations had changed significantly due
to the devaluation of the real in the 1999 first quarter.
Under SFAS No. 52, "Foreign Currency Translation," the
change in these facts and circumstances required a change
in Aluminio's functional currency.
  As a result of the change, at July 1, 1999, Alcoa's
shareholders' equity (cumulative translation adjustment) and
minority interests' accounts were reduced by $156 and $108,
respectively. These amounts were driven principally by a
reduction in fixed assets. This reduction resulted in a $15
decrease in Aluminio's depreciation expense for 1999 and $30 in
2000.
  One of the factors affecting the change in Aluminio's
functional currency was Alcoa's purchase of approximately
$185 of Aluminio's 7.5% secured export notes. The repurchase
of these notes was consistent with Alcoa's policy change
regarding the manner in which large subsidiaries are capitalized
and resulted in lower overall financing costs  to the
company.
  RECENTLY ADOPTED ACCOUNTING STANDARDS. In 2000, Alcoa
changed its method of accounting for revenue recognition
in accordance with Staff Accounting Bulletin (SAB) 101,
"Revenue Recognition in Financial Statements." Under the
new accounting method, adopted retroactive to January
1, 2000, Alcoa recognizes revenue upon the passage of
title, ownership and risk of loss to the customer. The
cumulative effect of the change on prior years resulted
in a charge to income of $5 (net of income taxes and minority
interests of $3), which has been included in net income
for the year ended December 31, 2000. The change did not
have a significant effect on revenues or results of operations
for the year ended December 31, 2000. The pro forma amounts,
assuming that the new revenue recognition method were
applied retroactively to prior periods, were not materially
different from the amounts shown in the Statement of Consolidated
Income for the years ended December 31, 1999 and 1998.
Therefore, these amounts have not been presented.
  For the three months ended March 31, 2000, Alcoa recognized
$43 in revenue that resulted from the cumulative effect
adjustment as of January 1, 2000. The effect of the revenue
in the first quarter was to increase income by $5 (net
of income taxes and minority interests of $3) during that
period.
  Effective January 1, 2001, Alcoa adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities,"
as amended by SFAS Nos. 137 and 138. The new accounting
standard requires that all derivative instruments be recorded
on the balance sheet at fair value. Changes in the fair
value of derivatives are recorded each period in current
earnings or in other comprehensive income, depending on
whether a derivative is designated as a fair value or
cash flow hedge. The ineffective portion of all hedges
is recognized in current-period earnings.
  For transactions that are designated as fair value hedges,
changes in the fair value of the hedged asset, liability
or firm commitment are also recorded on the balance sheet.
Thus, changes in the fair value of the derivative instrument
are generally offset in the income statement by changes
in the fair value of the hedged item.
  For transactions that are designated as cash flow hedges
related to a variable-rate liability or a forecasted transaction,
the offsetting effects of changes in the fair value of
the derivative instrument are reported in other comprehensive
income. These gains and losses will be reclassified to
earnings in the periods in which earnings are impacted
by the variability of the cash flows of the hedged item.
  On January 1, 2001, Alcoa recorded the fair value of all
outstanding derivative instruments as assets or liabilities
on the balance sheet. The transition adjustment was not
material to earnings or accumulated other comprehensive
income.

                               50
<PAGE>

  In September 2000, the Financial Accounting Standards
Board (FASB) issued SFAS No. 140, an amendment to SFAS
No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments  of Liabilities." SFAS 140
is effective for transfers after March 31, 2001, and is
effective for disclosures about securitizations and collateral
and for recognition and reclassification of collateral
for fiscal years ending after December 15, 2000. This
SFAS, which was adopted in 2000, did not have a material
impact on Alcoa's financial statements.
  RECLASSIFICATION. Certain amounts in previously issued
financial statements were reclassified to conform to 2000
presentations.

B. COMMON STOCK SPLIT
On January 10, 2000, the board of directors declared a
two-for-one common stock split, subject to shareholder
approval to increase the number of authorized shares.
At the company's annual meeting on May 12, 2000, Alcoa
shareholders approved an amendment to increase the authorized
shares of Alcoa common stock from 600 million to 1.8 billion.
As a result of the stock split, shareholders of record
on May 26, 2000, received an additional common share for
each share held. The additional shares were distributed
on June 9, 2000. All per-share amounts and number of shares
outstanding in this report have been restated for the
stock split.

C. ACQUISITIONS
In August 1999, Alcoa and Reynolds Metals Company (Reynolds)
announced they had reached a definitive agreement to merge.
On May 3, 2000, after approval by the U.S. Department
of Justice (DOJ) and other regulatory agencies, Alcoa
and Reynolds completed their merger. Under the agreement,
Alcoa issued 2.12 shares of Alcoa common stock for each
share of Reynolds. The exchange resulted in Alcoa issuing
approximately 135 million shares at a value of $33.30
per share to Reynolds stockholders. The transaction was
valued at approximately $5,900, including debt assumed
of $1,297. The purchase price includes the conversion
of outstanding Reynolds options to Alcoa options as well
as other direct costs of the acquisition. The purchase
price allocation is preliminary; the final allocation
of the purchase price will be based upon valuation and
other studies, including environmental and other contingent
liabilities, that have not been completed. However, Alcoa
does not believe that the completion of these studies
will have a material impact on the purchase price allocation.
The preliminary allocation resulted in total goodwill
of approximately $2,000, which will be amortized over
a 40-year period.
  As part of the merger agreement, Alcoa agreed to divest
the following Reynolds operations:
> a 56% stake in its alumina refinery at Worsley, Australia;
> a 50% stake in its alumina refinery at Stade, Germany;
> 100% of an alumina refinery at Sherwin, Texas; and
> 25% of an interest in its aluminum smelter at Longview,
  Washington.
  The consolidated financial statements have been prepared
in accordance with Emerging Issues Task Force (EITF) 87-
11, "Allocation of Purchase Price to Assets to be Sold."
Under EITF 87-11, the fair value  of net assets to be
divested have been reported as assets held for sale in
the balance sheet, and the results of operations from
these assets of $19 (after tax) have not been included
in the Statement of Consolidated Income.
  On January 25, 2001, Alcoa completed the sale of Reynolds
Australia Alumina, Ltd. LLC, which held the 56% interest
in the Worsley alumina refinery in Western Australia,
for $1,490. The purchaser is an affiliate of Billiton
plc.
  On December 31, 2000, Alcoa sold the Reynolds Sherwin,
Texas alumina refinery to BPU Reynolds, Inc.
  On December 27, 2000, Alcoa and Michigan Avenue Partners
(MAP) announced that they had reached an agreement under
which MAP will acquire 100% of the Reynolds aluminum smelter
located in Longview, Washington. The agreement, which
is contingent on financing, is subject to regulatory approvals
and is expected to close by the end of the first quarter
of 2001.
  Negotiations to divest Reynolds' interest in an alumina
refinery in Stade, Germany are ongoing and are expected
to be concluded in the first quarter of 2001.
  On March 14, 2000, Alcoa and Cordant Technologies Inc.
(Cordant) announced a definitive agreement under which
Alcoa would acquire all outstanding shares of Cordant,
a company serving global aerospace and industrial markets.
In addition, on April 13, 2000, Alcoa announced plans
to commence a cash tender offer for all outstanding shares
of Howmet International Inc. (Howmet). The offer for Howmet
shares was part of Alcoa's acquisition of Cordant, which
owned approximately 85% of Howmet.
  On May 25, 2000 and June 20, 2000, after approval by the
DOJ and other regulatory agencies, Alcoa completed the
acquisitions of Cordant and Howmet, respectively. Under
the agreement and tender offer, Alcoa paid $57 for each
outstanding share of Cordant common stock and $21 for
each outstanding share of Howmet common stock. The total
value of the transaction was approximately $3,300, including
the assumption of debt of $826. The purchase price includes
the conversion of outstanding Cordant and Howmet options
to Alcoa options as well as other direct costs of the
acquisition. The purchase price allocation is preliminary;
the final allocation is subject to valuation and other
studies, including environmental and other contingent
liabilities, that have not been completed. However, Alcoa
does not believe that the completion of these studies
will have a material impact on the purchase price allocation.
The preliminary allocation resulted in total goodwill
of approximately $2,400, which will be amortized over
a 40-year period.
  In July 1998, Alcoa acquired Alumax Inc. (Alumax) for
approximately $3,800, consisting of cash of approximately
$1,500, stock of approximately $1,300 and assumed debt
of approximately $1,000. The allocation of the purchase
price resulted in goodwill of approximately $910, which
is being amortized over a 40-year period.
  The following unaudited pro forma information for the
years ended December 31, 2000, 1999 and 1998 assumes that
the acquisitions of Reynolds and Cordant had occurred
at the beginning of 2000 and 1999, and the acquisition
of Alumax had occurred at the beginning of 1998. Adjustments
that have been made to arrive at the pro forma totals
include those related to acquisition financing; the amortization
of goodwill; the elimination of transactions between Alcoa,
Reynolds, Cordant and Alumax; and additional depreciation

                               51
<PAGE>

related to the increase in basis that resulted from the
transaction. Tax effects from the pro forma adjustments
previously noted have been included at the 35% U.S. statutory
rate.

<TABLE>
<CAPTION>
(Unaudited)                              2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>
Sales                                $ 25,636       $ 23,369       $16,766
Net income                              1,514          1,148           876
- ------------------------------------------------------------------------------
Earnings per share:
 Basic                                 $ 1.86*        $ 1.32        $ 1.18
 Diluted                                 1.84*          1.30          1.18
- ------------------------------------------------------------------------------
<FN>
* Includes the cumulative effect adjustment of the accounting change for
  revenue recognition
</TABLE>

The pro forma results are not necessarily indicative of
what actually would have occurred if the transaction had
been in effect for the periods presented, are not intended
to be a projection of future results and do not reflect
any cost savings that might be achieved from the combined
operations.
  On October 31, 2000, after approval by the European Union
(EU), Alcoa completed the acquisition of Luxfer Holdings
plc's aluminum plate, sheet and soft-alloy extrusion manufacturing
operations and distribution businesses of British Aluminium
Limited, a wholly owned subsidiary of Luxfer. These businesses
generated approximately $360 in revenues in 1999 and have
about 1,550 employees. Had the British Aluminium acquisition
occurred at the beginning of 2000, net income for the
year would not have been materially different.
  In February 1998, Alcoa completed its acquisition of Inespal,
S.A. (Inespal), of Madrid, Spain. Alcoa paid approximately
$150 in cash and assumed $260 of debt and liabilities
in exchange for substantially all of Inespal's businesses.
The acquisition included an alumina refinery, three aluminum
smelters, three aluminum rolling facilities, two extrusion
plants and an administrative center. Had the Inespal acquisition
occurred at the beginning of 1998, net income for the
year would not have been materially different.
  Alcoa completed a number of other acquisitions in 2000,
1999 and 1998. Net cash paid for other acquisitions in
2000 was $488. None of these transactions had a material
impact on Alcoa's financial statements.
  Alcoa's acquisitions have been accounted for using the
purchase method. The purchase price has been allocated
to the assets acquired and liabilities assumed based on
their estimated fair market values. Any excess purchase
price over the fair market value of the net assets acquired
has been recorded as goodwill. For all of Alcoa's acquisitions,
operating results have been included in the Statement
of Consolidated Income since the dates of the acquisitions.

D. INVENTORIES

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                           <C>                <C>
Finished goods                                $ 814              $ 363
Work in process                                 806                550
Bauxite and alumina                             311                286
Purchased raw materials                         562                267
Operating supplies                              210                152
- -----------------------------------------------------------------------------
                                            $ 2,703            $ 1,618
- -----------------------------------------------------------------------------
</TABLE>

Approximately 51% of total inventories at December 31,
2000 were valued on a LIFO basis. If valued on an average-
cost basis, total inventories would have been $658 and
$645 higher at the end of 2000 and 1999, respectively.
During 2000 and 1999, LIFO inventory quantities were reduced,
which resulted in partial liquidations of the LIFO bases.
The impact of these liquidations increased net income
by $31 or four cents per share in 2000 and 1999.

E. PROPERTIES, PLANTS AND EQUIPMENT, AT COST

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                         <C>               <C>
Land and land rights, including mines         $ 384              $ 270
Structures                                    5,329              4,491
Machinery and equipment                      16,063             13,090
- -----------------------------------------------------------------------------
                                             21,776             17,851
Less: accumulated depreciation and
 depletion                                    9,750              9,303
- -----------------------------------------------------------------------------
                                             12,026              8,548
Construction work in progress                   824                585
- -----------------------------------------------------------------------------
                                           $ 12,850            $ 9,133
- -----------------------------------------------------------------------------
</TABLE>

F. DEBT

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                         <C>                <C>
Commercial paper, variable rate, (6.6%
 and 5.8% average rates)                    $ 1,510              $ 980
5.75% Notes payable, due 2001                   250                250
6.125% Bonds, due 2005                          200                200
7.25% Notes, due 2005                           500                 --
7.375% Notes, due 2010                        1,000                 --
6.50% Bonds, due 2018                           250                250
6.75% Bonds, due 2028                           300                300
Tax-exempt revenue bonds ranging from
 3.7% to 7.2%, due 2001-2033                    347                166
Alcoa Fujikura Ltd.
 Variable-rate term loan, due 2001-
  2002 (6.3% average rate)                      190                210
Alcoa Aluminio
 7.5% Export notes, due 2008                    184                194
 Variable-rate notes, due 2001 (8.2%
  and 7.6% average rates)                         3                  8
Alcoa of Australia
 Euro-commercial paper, variable rate,
  (5.4% average rate)                            --                 20
Reynolds
  9% Bonds, due 2003                             21                 --
  Medium-term notes, due 2001-2013
   (8.3% average rate)                          334                 --
  6.625% Notes payable, due 2001-2002           114                 --
Cordant
  6.625% Notes payable, due 2008                150                 --
Other                                            61                146
- -----------------------------------------------------------------------------
                                              5,414              2,724
Less: amount due within one year                427                 67
- -----------------------------------------------------------------------------
                                            $ 4,987            $ 2,657
- -----------------------------------------------------------------------------
</TABLE>

The amount of long-term debt maturing in each of the next
five years is $427 in 2001, $294 in 2002, $1,089 in 2003,
$59 in 2004 and $1,269 in 2005.
  Debt increased primarily as a result of the Reynolds and
Cordant acquisitions. Debt of $1,297 was assumed in the
acquisition of Reynolds, while $826 of debt was assumed
in the acquisition of Cordant. The Cordant acquisition,
including the acquisition of the remaining shares of Howmet,
was financed with debt.

                               52
<PAGE>

  In 2000, Alcoa issued $1,500 of notes. Of these notes,
$1,000 mature in 2010 and carry a coupon rate of 7.375%,
and $500 mature in 2005 and carry a coupon rate of 7.25%.
In addition, Alcoa issued $3,711 of commercial paper.
The proceeds from these borrowings were used to fund acquisitions,
refinance debt and for general corporate purposes.
  In 2000, Alcoa entered into a new $2,490 revolving-credit
facility that expires in April 2001 and a $510 revolving-
credit facility that expires in August 2005. In 1998,
Alcoa entered into a $2,000 revolving-credit facility,
half of which expired in August 2000, while the other
half expires in August 2003. Under these agreements, certain
levels of consolidated net worth must be maintained while
commercial paper balances are outstanding. A portion of
the commercial paper issued by Alcoa is classified as
long-term debt because it is backed by the revolving-credit
facilities.
  Alcoa Fujikura Ltd. (AFL) and Aluminio are required to
maintain certain financial ratios under the terms of the
term loan and export note agreements, respectively.
  Short-term borrowings of $2,719 consisted of commercial
paper of $2,201, extendible commercial notes of $280 and
bank and other borrowings of $238 at December 31, 2000.
Short-term borrowings of $343 at December 31, 1999 consisted
of commercial paper of $108 and bank and other borrowings
of $235. The weighted average interest rate on short-term
borrowings was 6.6% in 2000 and 5.1% in 1999.

G. OTHER ASSETS

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                         <C>                <C>
Investments, principally equity
 investments                                  $ 954              $ 630
Assets held for sale                          1,473                 --
Intangibles, net of accumulated
 amortization of $238 in 2000 and $177
 in 1999                                        821                117
Noncurrent receivables                          118                 43
Deferred income taxes                           360                424
Deferred charges and other                    1,534                591
- -----------------------------------------------------------------------------
                                            $ 5,260            $ 1,805
- -----------------------------------------------------------------------------
</TABLE>

H. OTHER NONCURRENT LIABILITIES AND DEFERRED CREDITS

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                         <C>                <C>
Deferred alumina sales revenue                $ 212              $ 220
Environmental remediation                       369                111
Deferred credits                                317                283
Other noncurrent liabilities                  1,228                859
- -----------------------------------------------------------------------------
                                            $ 2,126            $ 1,473
- -----------------------------------------------------------------------------
</TABLE>

I. MINORITY INTERESTS
The following table summarizes the minority shareholders' interests in
the equity of consolidated subsidiaries.

<TABLE>
<CAPTION>
December 31                                    2000               1999
- ---------------------------------------------------------------------------
<S>                                         <C>                <C>
Alcoa of Australia                            $ 462              $ 439
Alcoa Aluminio                                  256                253
Alcoa World Alumina and Chemicals               260                290
Alcoa Fujikura Ltd.                             309                260
Other majority-owned companies                  227                216
- -----------------------------------------------------------------------------
                                            $ 1,514            $ 1,458
- -----------------------------------------------------------------------------
</TABLE>

J. CASH FLOW INFORMATION
Cash payments for interest and income taxes follow.

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                     <C>            <C>           <C>
Interest                                $ 388          $ 225         $ 199
Income taxes                              419            394           371
- ------------------------------------------------------------------------------
</TABLE>

The details of cash payments related to acquisitions follow.

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>               <C>         <C>
Fair value of assets acquired        $ 14,991          $ 282       $ 5,511
Liabilities assumed                    (7,075)          (159)       (2,554)
Stock options issued                     (182)            --            --
Stock issued                           (4,502)            --        (1,321)
- ------------------------------------------------------------------------------
Cash paid                               3,232            123         1,636
Less: cash acquired                       111              1           173
- ------------------------------------------------------------------------------
Net cash paid for acquisitions        $ 3,121          $ 122       $ 1,463
- ------------------------------------------------------------------------------
</TABLE>

K. COMMITMENTS AND CONTINGENCIES
Various lawsuits, claims and proceedings have been or
may be instituted or asserted against Alcoa, including
those pertaining to environmental, product liability and
safety and health matters. While the amounts claimed may
be substantial, the ultimate liability cannot now be determined
because of the considerable uncertainties that exist.
Therefore, it is possible that results of operations or
liquidity in a particular period could be materially affected
by certain contingencies. However, based on facts currently
available, management believes that the disposition of
matters that are pending or asserted will not have a materially
adverse effect on the financial position of the company.
  Aluminio is a 23.75% participant in a hydroelectric construction
project in Brazil. The total estimated costs of the project
are $532, of which $422 has been expended to date. Aluminio
has contributed $41 to the project in the form of equity
and $31 in the form of short-term financing. Aluminio
has also guaranteed $42 of a bridge loan to the project
as of December 31, 2000. Long-term financing in the amount
of $342 is currently being negotiated for the project.
Upon completion of this long-term financing in 2001, Aluminio
will receive repayment of its short-term loan and will
provide a guarantee equal to 34% of the project's total
outstanding indebtedness, estimated at $342. As a result
of this participation, Aluminio will receive a share of
the output upon completion of the project. In the event
that other participants in this project fail to fulfill
their financial  responsibilities, Aluminio may be liable
for a portion of the deficiency.  In accordance with the
agreement, if Aluminio funds any such deficiency, its
participation and share of the output from the project
will increase proportionately.
  Alcoa of Australia (AofA) is party to a number of natural
gas and electricity contracts that expire between 2001
and 2022. Under these take-or-pay contracts, AofA is obligated
to pay for a minimum amount of natural gas or electricity
even if these commodities are not required for operations.
Commitments related to these contracts total $184 in 2001,
$177 in 2002, $173 in 2003, $174 in 2004, $154 in 2005
and $2,120 thereafter. Expenditures under these contracts
totaled $188 in 2000, $179 in 1999 and $171 in 1998.

                               53
<PAGE>

L. EARNINGS PER SHARE
Basic earnings per common share (EPS) amounts are computed
by dividing earnings after the deduction of preferred
stock dividends by the average number of common shares
outstanding. Diluted EPS amounts assume the issuance of
common stock for all potentially dilutive equivalents
outstanding. Antidilutive outstanding stock options have
been excluded from the diluted EPS calculation. See
Note M for additional information.
  The details of basic and diluted EPS follow:

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>             <C>
Income before cumulative effect       $ 1,489        $ 1,054         $ 853
Less: preferred stock dividends             2              2             2
- ------------------------------------------------------------------------------
Income available to common
 stockholders before cumulative
 effect                               $ 1,487        $ 1,052         $ 851
Cumulative effect of accounting
 change                                    (5)            --            --
- ------------------------------------------------------------------------------
Income available to common
 stockholders after cumulative
 effect                               $ 1,482        $ 1,052         $ 851
- ------------------------------------------------------------------------------
Average shares outstanding--basic       814.2          733.8         698.2
Effect of dilutive securities:
 Shares issuable upon exercise of
  dilutive stock options                  9.0           13.4           5.0
- ------------------------------------------------------------------------------
 Average shares outstanding--
  diluted                               823.2          747.2         703.2
Basic EPS (before cumulative
 effect)                               $ 1.83         $ 1.43        $ 1.22
Basic EPS (after cumulative
 effect)                                 1.82           1.43          1.22
Diluted EPS (before cumulative
 effect)                                 1.81           1.41          1.21
Diluted EPS (after cumulative
 effect)                                 1.80           1.41          1.21
- ------------------------------------------------------------------------------
</TABLE>

Options to purchase 44 million shares of common stock
at an average exercise price of $36.00 were outstanding
as of December 31, 2000 but were not included in the computation
of diluted EPS because the option exercise price was greater
than the average market price of the common shares.
  In April 2000, Alcoa entered into a forward share repurchase
agreement to partially hedge the equity exposure related
to its stock option program. The contract, which matures
in 2002, allows the company to repurchase up to 10 million
shares from a financial institution. The company may elect
to settle the contract on a net share basis in lieu of
physical settlement. The contract permits early settlement.
As of December 31, 2000, 10 million shares had been committed
at an average price of $31.90 per share. The effect of
this repurchase agreement has been considered in determining
diluted EPS.

M. PREFERRED AND COMMON STOCK
PREFERRED STOCK. Alcoa has two classes of preferred stock.
Serial preferred stock has 557,740 shares authorized,
with a par value of $100 per share and an annual $3.75
cumulative dividend preference per share. Class B serial
preferred stock has 10 million shares authorized (none
issued) and a par value of $1 per share.

COMMON STOCK. There are 1.8 billion shares authorized
at a par value of $1 per share. As of December 31, 2000,
90,620,594 shares of common stock were reserved for issuance
under the long-term stock incentive plan.
  Stock options under the company's stock incentive plan
have been and may be granted, generally at not less than
market prices on the dates of grant, except for the 12.5
cents per-share options issued as a payout of earned performance
share awards. The stock option program includes a reload
or stock continuation ownership feature. Stock options
granted have a maximum term of 10 years. Vesting periods
are one year from the date of grant and six months for
options granted under the reload feature.
  Alcoa's net income and earnings per share would have been
reduced to the pro forma amounts shown below if compensation
cost had been determined based on the fair value at the
grant dates.

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>             <C>
Net income:
 As reported                          $ 1,484        $ 1,054         $ 853
 Pro forma                              1,277            912           815
- ------------------------------------------------------------------------------
Basic earnings per share:
 As reported                             1.82           1.43          1.22
 Pro forma                               1.57           1.24          1.16
- ------------------------------------------------------------------------------
Diluted earnings per share:
 As reported                             1.80           1.41          1.21
 Pro forma                               1.55           1.22          1.16
- ------------------------------------------------------------------------------
</TABLE>

The weighted average fair value per option granted was
$10.13 in 2000, $5.35 in 1999 and $2.87 in 1998.
  The fair value of each option is estimated on the date
of grant or subsequent reload using the Black-Scholes
pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                    2000            1999            1998
- -----------------------------------------------------------------------------
<S>                              <C>            <C>             <C>
Average risk-free interest
 rate                                6.1%            5.0%            5.2%
Expected dividend yield              1.6             1.4             2.1
Expected volatility                 40.0            37.0            25.0
Expected life (years):
 New option grants                   2.5             2.5             2.5
 Reload option grants                2.0             1.5             1.5
- -----------------------------------------------------------------------------
</TABLE>

The transactions for shares under options were:

<TABLE>
<CAPTION>
                                    2000            1999            1998
- -----------------------------------------------------------------------------
<S>                              <C>            <C>             <C>
Outstanding, beginning of
 year:
 Number of options                  53.0            53.2            42.2
 Weighted average exercise
  price                          $ 22.15         $ 16.50         $ 15.84
Options assumed from
 acquisitions:
  Number of options                 15.2              --              --
  Weighted average exercise
   price                         $ 25.09              --              --
Granted:
 Number of options                  31.3            43.6            23.6
 Weighted average exercise
  price                          $ 37.87         $ 24.47         $ 17.19
Exercised:
 Number of options                 (24.3)          (43.2)          (12.0)
 Weighted average exercise
  price                          $ 22.03         $ 17.22         $ 15.07
Expired or forfeited:
 Number of options                   (.4)            (.6)            (.6)
 Weighted average exercise
  price                          $ 34.90         $ 18.59         $ 18.25
- ------------------------------------------------------------------------------
Outstanding, end of year:
 Number of options                  74.8            53.0            53.2
 Weighted average exercise
  price                          $ 29.29         $ 22.15         $ 16.50
- ------------------------------------------------------------------------------
Exercisable, end of year:
 Number of options                  44.6            26.4            27.6
 Weighted average exercise
  price                          $ 23.42         $ 19.21         $ 15.24
- ------------------------------------------------------------------------------
Shares reserved for future
 options                            15.8            28.6            22.8
- ------------------------------------------------------------------------------
</TABLE>

                               54
<PAGE>

The following tables summarize certain stock option information
at December 31, 2000:

Options Outstanding

<TABLE>
<CAPTION>
                                                Weighted        Weighted
                                                 average         average
Range of                                       remaining        exercise
exercise price                    Number            life           price
- -----------------------------------------------------------------------------
<S>                            <C>         <C>              <C>
$ 0.125                              0.6      employment          $0.125
                                                  career
$ 4.38-$12.15                        3.0            3.86           10.04
$12.16-$19.93                        8.6            4.41           16.70
$19.94-$27.71                       17.0            5.84           22.58
$27.72-$35.49                       21.7            6.18           31.75
$35.50-$43.25                       23.9            8.07           39.48
- ------------------------------------------------------------------------------
 Total                              74.8            6.36          $29.29
- ------------------------------------------------------------------------------

Options Exercisable

                                                  Weighted
                                                   average
Range of                                      exerciseable
exercise price                    Number             price
- -----------------------------------------------------------------
$ 0.125                              0.6            $0.125
$ 4.38-$12.15                        3.0             10.04
$12.16-$19.93                        8.6             16.70
$19.94-$27.71                       17.0             22.57
$27.72-$35.49                       14.6             31.04
$35.50-$43.25                        0.8             40.22
- -----------------------------------------------------------------
 Total                              44.6            $23.42
- -----------------------------------------------------------------
</TABLE>

N. SEGMENT AND GEOGRAPHIC AREA INFORMATION
Alcoa is primarily a producer of aluminum products. Its
segments are organized by product on a worldwide basis.
Alcoa's management reporting system evaluates performance
based on a number of factors; however, the primary measure
of performance is the after-tax operating income (ATOI)
of each segment. Nonoperating items such as interest income,
interest expense, foreign exchange gains/losses, the effects
of LIFO inventory accounting and minority interests are
excluded from segment ATOI. In addition, certain expenses,
such as corporate general administrative expenses and
depreciation and amortization on corporate assets, are
not included in segment ATOI. Segment assets exclude cash,
cash equivalents, short-term investments and all deferred
taxes. Segment assets also exclude items such as corporate
fixed assets, LIFO reserve, goodwill allocated to corporate
and other amounts.
  In 2000, as a result of acquisitions, Alcoa changed its
internal management reporting structure to add the Packaging
and Consumer segment. Alcoa's closures, packaging, PET
bottles and packaging machinery businesses were moved
from the Other group to this segment. Previously reported
data from 1999 and 1998 has been restated to reflect this
change. Reynolds' packaging and consumer businesses were
also added to the new Packaging and Consumer segment.
Other Reynolds and Cordant businesses were added to the
appropriate existing segments.
  The accounting policies of the segments are the same as
those described in the Summary of Significant Accounting
Policies (Note A). Transactions among segments are established
based on negotiation among the parties. Differences between
segment totals and Alcoa's consolidated totals for line
items not reconciled are primarily due to corporate allocations.
  Alcoa's products are used primarily by packaging, consumer
products, transportation (including aerospace, automotive,
rail and shipping), building and construction and industrial
customers worldwide. Total exports from the U.S. were
$1,687 in 2000, compared with $1,309 in 1999 and $1,283
in 1998. Total government contract revenue at Thiokol
was $372 in 2000. Alcoa's reportable segments follow.

ALUMINA AND CHEMICALS. This segment's activities include
the mining of bauxite, which is then refined into alumina.
Alumina is sold to internal and external customers worldwide
or is processed into industrial chemical products. Alcoa's
Australian alumina operations are a significant component
of this segment. This segment does not include the Reynolds
alumina assets that were required to be divested. The
majority of the third-party sales from this segment are
derived from alumina.

PRIMARY METALS. This segment consists of Alcoa's worldwide
smelter system. Primary Metals receives alumina from the
Alumina and Chemicals segment and produces aluminum ingot
to be used by Alcoa's fabricating business, as well as
sold to outside customers. Results from internal hedging
contracts and from marking to market certain aluminum
commodity contracts are also included in this segment.
Revenues from the sale of powder, scrap and excess power
are also included. The sale of ingot represents over 90%
of this segment's third-party sales.

FLAT-ROLLED PRODUCTS. This segment's principal business
is the production and sale of aluminum plate, sheet and
foil. This segment includes rigid container sheet (RCS),
which is used to produce aluminum beverage cans, and sheet
and plate used in the transportation and distributor markets.

ENGINEERED PRODUCTS. This segment consists of hard- and
soft-alloy extrusions, including architectural extrusions,
super-alloy castings, steel and aluminum fasteners, aluminum
forgings and wheels. This segment includes the Reynolds
wheel business, as well as the Huck fasteners and Howmet
super-alloy castings businesses. These products serve
primarily the transportation, construction and distributor
markets.

PACKAGING AND CONSUMER. This segment includes Alcoa's
closures, packaging, PET bottles and packaging machinery
businesses, as well as the packaging and consumer businesses
of Reynolds acquired in 2000.

                               55
<PAGE>

OTHER. This group includes Alcoa businesses that do not
fit into the segments previously mentioned. This group
includes AFL, which produces electrical components for
the automotive industry along with fiber-optic cable and
services for the telecommunications industry; Thiokol,
a producer of solid rocket propulsion systems; Reynolds'
metal distribution business (RASCO); the residential building
products operations, Alcoa Building Products (ABP); and
aluminum automotive engineering and parts businesses.
Thiokol and RASCO were added in 2000 as part of the Cordant
and Reynolds acquisitions, respectively.

<TABLE>
<CAPTION>
                                                                                         Packaging
                           Alumina and        Primary     Flat-Rolled     Engineered           and
Segment information          Chemicals         Metals        Products       Products      Consumer         Other         Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>               <C>         <C>             <C>             <C>              <C>          <C>
2000
Sales:
 Third-party sales            $ 2,108         $ 3,756         $ 5,446        $ 5,471       $ 2,084       $ 4,071      $ 22,936
 Intersegment sales             1,104           3,504              97             62            --            --         4,767
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                  $ 3,212         $ 7,260         $ 5,543        $ 5,533       $ 2,084       $ 4,071      $ 27,703
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income                    $ 3            $ 50             $ 6            $ 1          $ --          $ 32          $ 92
 Depreciation, depletion
  and amortization                163             311             188            221           105           127         1,115
 Income tax                       279             505             126            124            70            93         1,197
 After-tax operating
  income                          585           1,000             299            210           131           164         2,389
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures           $ 154           $ 232           $ 185          $ 234         $ 112         $ 100       $ 1,017
 Equity investment                176             274              90              6             1           139           686
 Total assets                   2,924           7,700           3,657          6,455         2,457         3,376        26,569
- -----------------------------------------------------------------------------------------------------------------------------------

1999
Sales:
 Third-party sales            $ 1,842         $ 2,241         $ 5,113        $ 3,728         $ 801       $ 2,592      $ 16,317
 Intersegment sales               925           2,793              51             26            --            --         3,795
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                  $ 2,767         $ 5,034         $ 5,164        $ 3,754         $ 801       $ 2,592      $ 20,112
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income (loss)            $ --            $ 42            $ (9)          $ --          $ --          $ 10          $ 43
 Depreciation, depletion
  and amortization                161             216             184            116            60            89           826
 Income tax                       159             214             131             88            32            71           695
 After-tax operating
  income                          307             535             281            180            68           118         1,489
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures           $ 183           $ 207           $ 166          $ 144          $ 96          $ 62         $ 858
 Equity investment                 54             153              66             --             1           138           412
 Total assets                   3,046           4,532           3,385          2,320           646         1,647        15,576
- -----------------------------------------------------------------------------------------------------------------------------------

1998
Sales:
 Third-party sales            $ 1,847         $ 2,105         $ 4,900        $ 3,110         $ 856       $ 2,506      $ 15,324
 Intersegment sales               832           2,509              59             11            --            --         3,411
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                  $ 2,679         $ 4,614         $ 4,959        $ 3,121         $ 856       $ 2,506      $ 18,735
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income (loss)             $ 1            $ 27             $ 8           $ (1)         $ --          $ 10          $ 45
 Depreciation, depletion
  and amortization                159             176             190             88            63            92           768
 Income tax                       174             196             126             85            28            79           688
 After-tax operating
  income                          318             372             306            183            61           104         1,344
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures           $ 275           $ 164           $ 152          $ 105          $ 96          $ 47         $ 839
 Equity investment                 50             150              69             --             1           112           382
 Total assets                   3,082           5,341           3,513          2,427           678         1,568        16,609
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                               56
<PAGE>

The following reconciles segment information to consolidated
totals.

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>
Sales:
 Total sales                         $ 27,703       $ 20,112      $ 18,735
 Elimination of intersegment sales     (4,767)        (3,795)       (3,411)
 Other revenues                            --              6            16
- ------------------------------------------------------------------------------
    Consolidated sales               $ 22,936       $ 16,323      $ 15,340
- ------------------------------------------------------------------------------
Net income:
 Total after-tax operating income     $ 2,389        $ 1,489       $ 1,344
 Elimination of intersegment
  profit                                  (20)           (24)          (16)
 Unallocated amounts (net of tax):
   Interest income                         40             26            64
   Interest expense                      (278)          (126)         (129)
   Minority interests                    (381)          (242)         (238)
   Corporate expense                     (227)          (171)         (197)
   Other                                  (39)           102            25
- ------------------------------------------------------------------------------
    Consolidated net income           $ 1,484        $ 1,054         $ 853
- ------------------------------------------------------------------------------
Assets:
 Total assets                        $ 26,569       $ 15,576      $ 16,609
 Elimination of intersegment
  receivables                            (530)          (362)         (378)
Unallocated amounts:
 Cash, cash equivalents and short-
  term investments                        371            314           381
 Deferred tax assets                      745            657           703
 Corporate goodwill                     1,570            558           480
 Corporate fixed assets                   414            278           315
 LIFO reserve                            (658)          (645)         (703)
 Operations to be divested              1,473             --            --
 Other                                  1,737            690            56
- ------------------------------------------------------------------------------
    Consolidated assets              $ 31,691       $ 17,066      $ 17,463
- ------------------------------------------------------------------------------
</TABLE>

Geographic information for revenues, based on country
of origin, and long-lived assets follows:

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>
Revenues:
 U.S.                                $ 15,487       $ 10,392       $ 9,212
 Australia                              1,690          1,398         1,470
 Spain                                  1,146          1,059           965
 Brazil                                   885            730           934
 Germany                                  713            521           554
 Other                                  3,015          2,223         2,205
- ------------------------------------------------------------------------------
                                     $ 22,936       $ 16,323      $ 15,340
- ------------------------------------------------------------------------------
Long-lived assets:
 U.S.                                $ 14,276        $ 6,650       $ 6,726
 Australia                              1,458          1,585         1,441
 Brazil                                   698            712           967
 Canada                                 2,844            948           890
 Germany                                  213            165           213
 Other                                  1,700          1,122         1,023
- ------------------------------------------------------------------------------
                                     $ 21,189       $ 11,182      $ 11,260
- ------------------------------------------------------------------------------
</TABLE>

O. INCOME TAXES
The components of income before taxes on income were:

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>
U.S.                                    $ 756          $ 631         $ 595
Foreign                                 2,056          1,218         1,010
- ------------------------------------------------------------------------------
                                      $ 2,812        $ 1,849       $ 1,605
- ------------------------------------------------------------------------------
</TABLE>

The provision for taxes on income consisted of:

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>
Current:
 U.S. federal*                          $ 217          $ 175         $ 159
 Foreign                                  568            306           219
 State and local                           22             18            26
- ------------------------------------------------------------------------------
                                          807            499           404
- ------------------------------------------------------------------------------
Deferred:
 U.S. federal*                             90             74            81
 Foreign                                   42            (25)           25
 State and local                            3              5             4
- ------------------------------------------------------------------------------
                                          135             54           110
- ------------------------------------------------------------------------------
Total                                   $ 942          $ 553         $ 514
- ------------------------------------------------------------------------------
<FN>
*Includes U.S. taxes related to foreign income
</TABLE>

In the 1999 fourth quarter, Australia reduced its corporate
income tax rate from 36% to 34% for 2000 and 30% for 2001.
  The exercise of employee stock options generated a tax
benefit of $108 in 2000 and $145 in 1999. This amount
was credited to additional capital and reduced current
taxes payable.
  Reconciliation of the U.S. federal statutory rate to Alcoa's
effective tax rate follows.

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>
U.S. federal statutory rate              35.0%          35.0%         35.0%
Taxes on foreign income                  (3.5)          (2.4)         (4.1)
State taxes net of federal benefit         .5             .5            .7
Tax rate changes                           --           (2.4)           --
Other                                     1.5            (.8)           .4
- ------------------------------------------------------------------------------
Effective tax rate                       33.5%          29.9%         32.0%
- ------------------------------------------------------------------------------
</TABLE>

The components of net deferred tax assets and liabilities
follow.

<TABLE>
<CAPTION>
                                          2000                   1999
                                ----------------------------------------------
                                  Deferred   Deferred   Deferred   Deferred
                                       tax   tax lia-        tax   tax lia-
December 31                         assets   bilities     assets   bilities
- ------------------------------------------------------------------------------
<S>                             <C>          <C>        <C>        <C>
Depreciation                          $ --    $ 2,263         --      $ 951
Employee benefits                    1,127         --      $ 872         --
Loss provisions                        588         --        214         --
Deferred income/expense                237        166         91        138
Tax loss carryforwards                 272         --        185         --
Tax credit carryforwards               144         --          2         --
Other                                  262        304        111         64
- ------------------------------------------------------------------------------
                                     2,630      2,733      1,475      1,153
Valuation allowance                   (165)        --       (134)        --
- ------------------------------------------------------------------------------
                                   $ 2,465    $ 2,733    $ 1,341    $ 1,153
- ------------------------------------------------------------------------------
</TABLE>

Of the total deferred tax assets associated with the tax
loss carryforwards, $57 expires over the next 10 years,
$99 over the next 20 years and $116 is unlimited. Of the
tax credit carryforwards, $107 is unlimited with the balance
expiring over the next 10 years. A substantial portion
of the valuation allowance relates to the loss carryforwards
because the ability to generate sufficient foreign taxable
income in future years is uncertain. Approximately $60
of the valuation allowance relates to acquired companies
for which subsequently recognized benefits will reduce
goodwill.
  The cumulative amount of Alcoa's share of undistributed
earnings for which no deferred taxes have been provided
was $3,861 at December 31, 2000. Management has no plans
to distribute such earnings in the foreseeable future.
It is not practical to determine the deferred tax liability
on these earnings.

                               57
<PAGE>

P. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Alcoa maintains pension plans covering most U.S. employees
and certain other employees. Pension benefits generally
depend on length of service, job grade and remuneration.
Substantially all benefits are paid through pension trusts
that are sufficiently funded to ensure that all plans
can pay benefits to retirees as they become due.
  Alcoa maintains health care and life insurance benefit
plans covering most eligible U.S. retired employees and
certain other retirees. Generally, the medical plans pay
a stated percentage of medical expenses, reduced by deductibles
and other coverages. These plans are generally unfunded,
except for certain benefits funded through a trust. Life
benefits are generally provided by insurance contracts.
Alcoa retains the right, subject to existing agreements,
to change or eliminate these benefits.
  The table below reflects the status of Alcoa's pension
and postretirement benefit plans.

<TABLE>
<CAPTION>
                                                            Postretirement
                                    Pension benefits           benefits
                                ----------------------------------------------
December 31                           2000       1999       2000       1999
- ------------------------------------------------------------------------------
<S>                               <C>        <C>        <C>        <C>
CHANGE IN BENEFIT OBLIGATION
  Benefit obligation at
 beginning of year                 $ 5,366    $ 5,394    $ 1,687    $ 1,862
  Service cost                         162        141         25         19
  Interest cost                        502        342        177        109
  Amendments                             9          5        (17)         1
  Actuarial (gains) losses            (309)      (143)        85       (173)
  Acquisitions (principally
 Reynolds and Cordant)               3,124         --      1,182         --
  Benefits paid                       (514)      (387)      (215)      (130)
  Exchange rate                        (70)        14         --         (1)
- ------------------------------------------------------------------------------
  Benefit obligation at end of
 year                              $ 8,270    $ 5,366    $ 2,924    $ 1,687
- ------------------------------------------------------------------------------

CHANGE IN PLAN ASSETS
  Fair value of plan assets at
 beginning of year                 $ 6,103    $ 5,758      $ 112      $ 100
  Actual return on plan assets         586        666         12         12
  Acquisitions (principally
 Reynolds and Cordant)               3,597         --         31         --
  Employer contributions                61         16          5         --
  Participants' contributions           13         22         --         --
  Benefits paid                       (487)      (362)        (5)        --
  Administrative expenses              (12)       (15)        --         --
  Exchange rate                        (71)        18         --         --
- ------------------------------------------------------------------------------
  Fair value of plan assets at
 end of year                       $ 9,790    $ 6,103      $ 155      $ 112
- ------------------------------------------------------------------------------

FUNDED STATUS                      $ 1,520      $ 737   $ (2,769)  $ (1,575)
  Unrecognized net actuarial
 gain                               (1,385)    (1,189)      (137)      (221)
  Unrecognized net prior service
 cost (credit)                          40         69        (97)      (116)
  Unrecognized transition
 obligation                             --          1         --         --
- ------------------------------------------------------------------------------
  Net amount recognized              $ 175     $ (382)  $ (3,003)  $ (1,912)
- ------------------------------------------------------------------------------

AMOUNT RECOGNIZED IN THE BALANCE
 SHEET CONSISTS OF:
  Prepaid benefit                    $ 661       $ 61         --         --
  Accrued benefit liability           (509)      (471)  $ (3,003)  $ (1,912)
  Intangible asset                       9          4         --         --
  Accumulated other
 comprehensive income                   14         24         --         --
- ------------------------------------------------------------------------------
  Net amount recognized              $ 175     $ (382)  $ (3,003)  $ (1,912)
- ------------------------------------------------------------------------------
</TABLE>

The components of net periodic benefit costs are reflected
below.

<TABLE>
<CAPTION>
                                                 Pension benefits                    Postretirement benefits
                                      ---------------------------------------------------------------------------------------------
December 31                                  2000            1999           1998           2000           1999           1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                <C>           <C>             <C>             <C>            <C>
COMPONENTS OF NET PERIODIC BENEFIT
 COSTS
  Service cost                              $ 162           $ 141          $ 119           $ 25           $ 19           $ 18
  Interest cost                               502             342            318            177            109            112
  Expected return on plan assets             (666)           (427)          (391)           (11)            (9)            (8)
  Amortization of prior service cost
   (benefit)                                   35              39             48            (34)           (34)           (34)
  Recognized actuarial gain                   (18)             (4)            (7)            (2)            (4)            (5)
  Amortization of transition
   obligation                                   2               2              2             --             --             --
- -----------------------------------------------------------------------------------------------------------------------------------
  Net periodic benefit costs                 $ 17            $ 93           $ 89          $ 155           $ 81           $ 83
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                               58
<PAGE>

The aggregate benefit obligation and fair value of plan
assets for the pension plans with benefit obligations
in excess of plan assets were $804 and $508, respectively,
as of December 31, 2000, and $1,022 and $696, respectively,
as of December 31, 1999. The aggregate pension accumulated
benefit obligation and fair value of plan assets with
accumulated benefit obligations in excess of plan assets
were $594 and $338, respectively, as of December 31, 2000,
and $337 and $119, respectively, at December 31, 1999.
  Weighted average assumptions used to determine plan liabilities
and expense follow.

<TABLE>
<CAPTION>
December 31                              2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>
Discount rate                            7.75%          7.00%         6.50%
Expected long-term return on plan
 assets                                  9.00           9.00          9.00
Rate of compensation increase            5.00           5.00          5.00
- ------------------------------------------------------------------------------
</TABLE>

For measurement purposes, an 8.5% annual rate of increase
in the per capita cost of covered health care benefits
was assumed for 2001. The rate was assumed to decrease
gradually to 5.5% in 2005 and remain at that level thereafter.
  Assumed health care cost trend rates have a significant
effect on the amounts reported for the health care plan.
A one-percentage-point change in these assumed rates would
have the following effects:

<TABLE>
<CAPTION>
                                                  1%                1%
                                            increase          decrease
- ---------------------------------------------------------------------------
<S>                                       <C>               <C>
Effect on total of service and
 interest cost components                      $ 13              $ (13)
Effect on postretirement benefit
 obligations                                    165               (144)
- -----------------------------------------------------------------------------
</TABLE>

Alcoa also sponsors a number of defined contribution pension
plans. Expenses were $80 in 2000, $64 in 1999 and $57
in 1998.

Q. LEASE EXPENSE
Certain equipment, warehousing and office space and oceangoing
vessels are under operating lease agreements. Total expense
for all leases was $152 in 2000, $145 in 1999 and $130
in 1998. Under long-term operating leases, minimum annual
rentals are $125 in 2001, $100 in 2002, $63 in 2003, $38
in 2004, $27 in 2005 and a total of $123 for 2006 and
thereafter.

R. INTEREST COST COMPONENTS

<TABLE>
<CAPTION>
                                         2000           1999          1998
- ------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>
Amount charged to expense               $ 427          $ 195         $ 198
Amount capitalized                         20             21            13
- ------------------------------------------------------------------------------
                                        $ 447          $ 216         $ 211
- ------------------------------------------------------------------------------
</TABLE>

S. FINANCIAL INSTRUMENTS
The carrying values and fair values of Alcoa's financial
instruments at December 31 follow.

<TABLE>
<CAPTION>
                                          2000                   1999
                                ----------------------------------------------
                                  Carrying       Fair   Carrying       Fair
                                     value      value      value      value
- ------------------------------------------------------------------------------
<S>                             <C>            <C>     <C>           <C>
Cash and cash equivalents            $ 315      $ 315      $ 237      $ 237
Short-term investments                  56         56         77         77
Noncurrent receivables                 118        118         43         43
Short-term debt                      3,146      3,146        410        410
Long-term debt                       4,987      5,053      2,657      2,526
- ------------------------------------------------------------------------------
</TABLE>

The methods used to estimate the fair values of certain
financial instruments follow.

CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND
SHORT-TERM DEBT. The carrying amounts approximate fair
value because of the short maturity of the instruments.
All investments purchased with a maturity of three months
or less are considered cash equivalents.

NONCURRENT RECEIVABLES. The fair value of noncurrent receivables
is based on anticipated cash flows and approximates carrying
value.

LONG-TERM DEBT. The fair value is based on interest rates
that are currently available to Alcoa for issuance of
debt with similar terms and remaining maturities.

Alcoa holds or purchases derivative financial instruments
for purposes other than trading. Details of the significant
instruments follow.

FOREIGN EXCHANGE CONTRACTS. The company enters into foreign
exchange contracts to hedge its significant firm and anticipated
purchase and sale commitments denominated in foreign currencies.
These contracts cover periods commensurate with known
or expected exposures, generally within 36 months, and
are principally unsecured foreign exchange contracts with
carefully selected banks. The market risk exposure is
essentially limited to risk related to currency rate movements.
Unrecognized gains (losses) on these contracts at December
31, 2000 and 1999 were $(139) and $57, respectively.
  The table below reflects the various types of foreign
exchange contracts Alcoa uses to manage its foreign exchange
risk.

<TABLE>
<CAPTION>
                                          2000                   1999
                                ----------------------------------------------
                                  Notional     Market   Notional     Market
                                    amount      value     amount      value
- ------------------------------------------------------------------------------
<S>                             <C>           <C>      <C>           <C>
Forwards                           $ 2,342     $ (166)   $ 1,499       $ 60
Purchased options                       --         --         28          3
- ------------------------------------------------------------------------------
</TABLE>

The notional values summarized above provide an indication
of the extent of the company's involvement in such instruments
but do not represent its exposure to market risk.
  The following table summarizes by major currency the contractual
amounts of Alcoa's forward exchange and option contracts
translated to U.S. dollars at December 31 rates. The "buy"
amounts represent

                               59
<PAGE>

the U.S. dollar equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the
U.S. dollar equivalent of commitments to sell foreign
currencies.

<TABLE>
<CAPTION>
                                          2000                   1999
                                ----------------------------------------------
                                       Buy       Sell        Buy       Sell
- ------------------------------------------------------------------------------
<S>                             <C>             <C>     <C>           <C>
Australian dollar                  $ 1,940        $ 1    $ 1,447        $ 4
Canadian dollar                        197                    98          8
Japanese yen                            --         --          6         --
Deutsche mark                           --         --          2         21
Pound sterling                          --          6         --         --
Euro                                    --         29         --         --
- ------------------------------------------------------------------------------
                                   $ 2,137       $ 36    $ 1,553       $ 33
- ------------------------------------------------------------------------------
</TABLE>

INTEREST RATE SWAPS. Alcoa manages its debt portfolio
by using interest rate swaps and options to achieve an
overall desired position of fixed and floating rates.
As of December 31, 2000, Alcoa had the following interest
rate swap contracts outstanding:  > Interest rate swap
contracts relating to Alcoa's 5.75% notes that mature
in 2001. The swaps convert $175 notional amount from fixed
rates to floating rates and mature in 2001.  > Interest
rate swap contracts relating to AFL's variable-rate loan.
These agreements convert the variable rate to a fixed
rate on a notional amount of $178 and mature in 2002.
  In addition to the above, Aluminio has cross-currency
interest rate swap contracts, relating to deposit accounts,
that primarily convert local currency floating rates to
dollar fixed rates on a notional amount of $81.
  Alcoa utilizes cross-currency interest rate swaps to take
advantage of international debt markets. At year-end 2000,
Alcoa had in place $60 of cross-currency interest rate
swaps that effectively convert U.S. dollar-denominated
debt into liabilities in yen based on Japanese interest
rates.
  Based on current interest rates for similar transactions,
the fair value of all interest rate swap agreements is
not material.
  Credit and market risk exposures are limited to the net
interest differentials. The net payments or receipts from
interest rate swaps are recorded as part of interest expense
and are not material. The effect of interest rate swaps
on Alcoa's composite interest rate on long-term debt was
not material at the end of 2000 and 1999.
  Alcoa is exposed to credit loss in the event of nonperformance
by counterparties on the above instruments, but does not
anticipate nonperformance by any of the counterparties.
  For further information on Alcoa's hedging and derivatives
activities, see Note A.

T. ENVIRONMENTAL MATTERS
Alcoa participates in environmental assessments and cleanups
at a number of locations. These include approximately
24 owned  or operating facilities and adjoining properties,
approximately 28 previously owned or operated facilities
and adjoining properties and approximately 87 Superfund
and other waste sites. A liability is recorded for environmental
remediation costs or damages when a cleanup program becomes
probable and the costs or damages can be reasonably estimated.
See Note A for additional information.
  As assessments and cleanups proceed, the liability is
adjusted based on progress in determining the extent of
remedial actions and related costs and damages. The liability
can change substantially due to factors such as the nature
and extent of contamination, changes in remedial requirements
and technological changes. Therefore, it is not possible
to determine the outcomes or to estimate with any degree
of accuracy the potential costs for certain of these matters.
For example, there are issues related to the Massena,
New York; Pt. Comfort, Texas; and Troutdale, Oregon sites
where investigations are ongoing and where natural resource
damage or off-site contaminated sediments have been alleged.
The following discussion provides additional details regarding
the current status of these sites.
  MASSENA. Sediments and fish in the Grasse River adjacent
to Alcoa's Massena, New York plant site contain varying
levels of polychlorinated biphenyl (PCB). Alcoa has been
identified by the U.S. Environmental Protection Agency
(EPA) as potentially responsible for this contamination
and, since 1989, has been conduct

                               60
<PAGE>

ing investigations and studies of the river under order
from the EPA issued under the Comprehensive Environmental
Response, Compensation and Liability Act, also known as
Superfund.
  Alcoa continues to perform studies and investigations
on the Grasse River. A planned pilot test of certain sediment
capping techniques, intended for 1999, could not be completed
because a final scope of work could not be developed with
the EPA in time to complete the project before the construction
season concluded. In addition, in the 1999 fourth quarter,
Alcoa submitted an Analysis of Alternatives report to
the EPA. This report identified potential courses of remedial
action related to the PCB contamination of the river.
Alcoa has proposed to the EPA that the planned pilot scale
tests be conducted to assess the feasibility of performing
certain sediment-covering techniques before selection
and approval of a remedial alternative by the EPA. The
costs of these pilot scale tests have been fully reserved.
The results of these tests and discussions with the EPA
regarding all of the alternatives identified should provide
additional information for the selection and approval
of the appropriate remedial alternative.
  The Analysis of Alternatives report and the results of
the pilot tests must be reviewed and approved by the EPA.
Currently, no one of the alternatives is more likely to
be selected than any other. The range of additional costs
associated with the potential courses of remedial action
is between zero and $53. During meetings through December
2000, the EPA had indicated to Alcoa that it believes
additional remedial alternatives need to be included in
the Analysis of Alternatives report. Such additional remedies
involve removal of more sediment from the river than was
included in the alternatives provided in the recent Analysis
of Alternatives report. The cost of such potential additional
remedial alternatives cannot be estimated at this time.
Alcoa expects to submit a revised Analysis of Alternatives
report during 2001.
  In 1988, Reynolds discovered that soils in the area of
the heat transfer medium system at its primary aluminum
production plant in Massena, New York were contaminated
with PCB and other contaminants. Remediation of the contaminated
soils and other contaminated areas of the plant were substantially
completed in 1998. Portions of the St. Lawrence River
system adjacent to the plant are also contaminated with
PCB. Since 1989, Reynolds has been conducting investigations
and studies of the river system under order from the EPA
issued under Superfund. Alcoa is working with the EPA
to better define the scope of the dredging program, which
is planned for 2001 and has been included in the reserve.
  Alcoa is aware of natural resource damage claims that
may be asserted by certain federal, state and tribal natural
resource trustees at these locations.
  PT. COMFORT/LAVACA BAY. In 1990, Alcoa began discussions
with certain state and federal natural resource trustees
concerning alleged releases of mercury from its Pt. Comfort,
Texas facility into the adjacent Lavaca Bay. In March
1994, the EPA listed the "Alcoa (Point Comfort)/Lavaca
Bay Site" on the National Priorities List and, shortly
thereafter, Alcoa and the EPA entered into an administrative
order on consent under which Alcoa is obligated to conduct
certain remedial investigations and feasibility studies.
In accordance with this order, Alcoa recently submitted
a remedial investigation report, a draft feasibility study
and a baseline risk assessment to the EPA. In addition,
Alcoa has nearly completed construction of the EPA-approved
project to fortify an offshore dredge disposal island.
The probable and estimable costs of these actions are
fully reserved. Since the order from the EPA, Alcoa and
the natural resource trustees have continued efforts to
understand natural resource injury and ascertain appropriate
restoration alternatives. That process is currently expected
to be complete by early 2001.
  TROUTDALE, OREGON. In 1994, the EPA added the Reynolds
Troutdale, Oregon primary aluminum production plant to
the National Priorities List of Superfund sites. Alcoa
is cooperating with the EPA and, under a September 1995
consent order, is working with the EPA in investigating
potential environmental contamination at the Troutdale
site and promoting more efficient cleanup at the site.
The current estimate of costs has been accrued; however,
the shutdown of operations at Troutdale, announced June
28, 2000, could affect the cleanup alternative selected
for the site.
  SHERWIN, TEXAS. In connection with the sale of the Sherwin
alumina refinery, which was required to be divested as
part of the Reynolds merger (see Note C), Alcoa has agreed
to retain responsibility for the remediation of certain
properties, including former waste disposal areas, and
a share of the ultimate closure costs of other active
waste disposal areas. The cost of such remediation has
been evaluated and is fully reserved.
  Based on the above, it is possible that Alcoa's results
of operations, in a particular period, could be materially
affected by matters relating to these sites. However,
based on facts currently available, management believes
that the disposition of these matters will not have a
materially adverse effect on the financial position or
liquidity of the company.
  Alcoa's remediation reserve balance at the end of 2000
and 1999 was $447 and $174 (of which $78 and $63 were
classified as a current liability), respectively, and
reflects the most probable costs to remediate identified
environmental conditions for which costs can be reasonably
estimated. Approximately 17% of the 2000 balance relates
to the Massena plant sites, 22% of the 2000 balance relates
to the Sherwin plant site and 11% of the 2000 balance
relates to the Troutdale plant site. Remediation costs
charged to the reserve were $77 in 2000, $47 in 1999 and
$63 in 1998. They include expenditures currently mandated,
as well as those not required by any regulatory authority
or third party. In 2000, the reserve balance was increased
by $350 as a result of acquisitions. In 1999, the reserve
balance was increased by $4 to cover anticipated future
environmental expenditures.

U. SUBSEQUENT EVENT On January 31, 2001, Alcoa and Alliant
Techsystems Inc. (ATK) announced that they had reached
a definitive agreement under which ATK will acquire Thiokol
for $685 in cash. The transaction, which has received
all necessary corporate approvals of both companies, is
subject to customary regulatory approvals. It is expected
to close by the end of the second quarter of 2001.

SUPPLEMENTAL FINANCIAL INFORMATION

QUARTERLY DATA (UNAUDITED)
(dollars in millions, except per-share amounts)

<TABLE>
<CAPTION>
2000                      First*     Second       Third    Fourth      Year
- ------------------------------------------------------------------------------
<S>                    <C>         <C>         <C>       <C>       <C>
Sales                   $ 4,509     $ 5,569     $ 6,298   $ 6,560  $ 22,936
Income from operations      457         462         459       492     1,870
Net income                  347         377         368       392**   1,484
Earnings per share:
 Basic                      .47         .47         .42       .45      1.82
 Diluted                    .47         .47         .42       .45      1.80
- ------------------------------------------------------------------------------
<FN>
*  The first quarter amounts have been restated for the effect of the change in
   accounting for revenue recognition (see Note A). Amounts originally reported
   were as follows: Sales, $4,531; Income from operations, $460; Net income,
   $355; Earnings per share, basic and diluted, $.48. The amounts for the
   quarters ended June 30 and September 30, 2000 were not materially different
   from those originally reported; therefore, these amounts have not been
   restated.
** The 2000 fourth quarter includes an after-tax credit of $18, or two cents
   per share,  related to changes in the LIFO index and LIFO liquidations.
</TABLE>

<TABLE>
<CAPTION>
1999                      First      Second       Third    Fourth      Year
- ------------------------------------------------------------------------------
<S>                    <C>         <C>         <C>       <C>       <C>
Sales                   $ 3,985     $ 4,033     $ 4,052   $ 4,253  $ 16,323
Income from operations      247         294         313       442     1,296
Net income                  221         240         259       334*    1,054
Earnings per share:
 Basic                      .30         .33         .35       .46      1.43
 Diluted                    .30         .32         .35       .44      1.41
- ------------------------------------------------------------------------------
<FN>
* The 1999 fourth quarter included an after-tax credit of $49, or seven cents
  per share, related to changes in the LIFO index and LIFO liquidations.
</TABLE>

NUMBER OF EMPLOYEES (UNAUDITED)
<TABLE>
<CAPTION>
                                   2000              1999            1998
- ------------------------------------------------------------------------------
<S>                             <C>               <C>            <C>
Other Americas                   46,500            45,100          40,900
U.S.                             61,600            38,400          38,900
Europe                           27,400            18,800          18,200
Pacific                           6,500             5,400           5,500
- ------------------------------------------------------------------------------
                                142,000           107,700         103,500
- ------------------------------------------------------------------------------
</TABLE>


                               61
<PAGE>

SHAREHOLDER INFORMATION

ANNUAL MEETING
The annual meeting of shareholders will be at 9:30 a.m.
Friday, April 20, 2001 at the Westin Convention Center
Pittsburgh.

COMPANY NEWS
Visit our Web site at www.alcoa.com for current stock
quotes, Securities and Exchange Commission (SEC) filings,
quarterly earnings reports and other company news announcements.
This information is also available toll-free 24 hours
a day by calling 1 800 522 6757 (in the U.S. and Canada)
or 1 402 572 4993 (all other calls). Reports may be requested
by voice, fax or mail.
  Copies of the annual report, Alcoa Update, and Forms
10-K and 10-Q may be requested through the Internet or by
calling the toll-free numbers.

INVESTOR INFORMATION
Security analysts and investors may write to Director
- - Investor Relations, at charles.mclane@alcoa.com or call
1 212 836 2674.

OTHER PUBLICATIONS
For a report of contributions and programs supported by
Alcoa Foundation, write Alcoa Foundation at the corporate
center address or call 1 412 553 2348.
  For a report on Alcoa's environmental, health and safety
performance, write Alcoa EHS Department at the corporate
center address.

DIVIDENDS
Alcoa's objective is to pay common stock dividends at
rates competitive with other investments of equal risk
and consistent with the need to reinvest earnings for
long-term growth. To support this objective, Alcoa pays
a base quarterly dividend of 12.5 cents per common share.
Alcoa also pays a variable dividend that is linked directly
to financial performance. The variable dividend is 30%
of Alcoa's annual earnings over $1.50 per basic share.
This is calculated annually and paid quarterly, together
with the base dividend, to shareholders of record at each
quarterly distribution date.

DIVIDEND REINVESTMENT
The company offers a Dividend Reinvestment and Stock Purchase
Plan for shareholders of Alcoa common and preferred stock.
The plan allows shareholders to reinvest all or part of
their quarterly dividends in shares of Alcoa common stock.
Shareholders also may purchase additional shares under
the plan with cash contributions. The company pays brokerage
commissions and fees on these stock purchases.

DIRECT DEPOSIT OF DIVIDENDS
Shareholders may have their quarterly dividends deposited
directly to their checking, savings or money market accounts
at any financial institution that participates in the
Automated Clearing House (ACH) system.

SHAREHOLDER SERVICES
Shareholders with questions on account balances, dividend
checks, reinvestment or direct deposit, address changes,
lost or misplaced stock certificates, or other shareholder
account matters may contact Alcoa's stock transfer agent,
registrar and dividend disbursing agent:

First Chicago Trust Company,            Telephone Response Center:
a Division of EquiServe                 1 800 317 4445
Shareholder Services Group              Outside U.S. and Canada:
P.O. Box 2500                           1 201 324 0313
Jersey City, NJ 07303-2500

Internet address: www.equiserve.com
Telecommunications Device for the Deaf (TDD): 1 201 222
4955

For shareholder questions on other matters related to
Alcoa, write to Donna Dabney, Corporate Secretary, Alcoa,
6603 West Broad Street, Richmond, Va. 23230 or call
1 412 553 4707.

STOCK LISTING
Common: New York Stock Exchange, The Electronical Stock
Exchange in Switzerland, the Australian Stock Exchange
and exchanges in Brussels, Frankfurt and London
Preferred: American Stock Exchange
Ticker symbol: AA

QUARTERLY COMMON STOCK INFORMATION

<TABLE>
<CAPTION>
                         2000                               1999*
          ---------------------------------------------------------------------

Quarter        High           Low  Dividend        High          Low  Dividend
- -------------------------------------------------------------------------------
<S>         <C>         <C>           <C>     <C>          <C>          <C>
First*      $43 5/8     $30 13/32     $.125    $22 9/16    $17 31/32     $.101
Second       37 1/16     27 7/8        .125     33 31/32    20 1/8        .100
Third        34 15/16    23 1/4        .125     35 7/16     29 1/4        .101
Fourth       35          23 1/8        .125     41 11/16    28 5/8        .101
- -------------------------------------------------------------------------------
Year       $ 43 5/8    $ 23 1/8       $.500    $41 11/16  $ 17 31/32     $.403
- -------------------------------------------------------------------------------
<FN>
* Adjusted to reflect two-for-one stock split
</TABLE>

COMMON SHARE DATA

<TABLE>
<CAPTION>
                           Estimated number            Average shares
                           of shareholders*        outstanding (000)*
- ----------------------------------------------------------------------------
<S>                        <C>                    <C>
2000                                265,300                   814,229
1999                                185,000                   733,888
1998                                119,000                   698,228
1997                                 95,800                   688,904
1996                                 88,300                   697,334
- ----------------------------------------------------------------------------
<FN>
 * These estimates include shareholders who own stock registered in their own
   names and those who own stock through banks and brokers.
** Adjusted to reflect two-for-one stock split
</TABLE>

CORPORATE CENTER

Alcoa                                         Alcoa Inc. is incorporated
201 Isabella St. at 7th St. Bridge            in the Commonwealth of
Pittsburgh, PA 15212-5858                     Pennsylvania.
Telephone: 1 412 553 4545
Fax: 1 412 553 4498
Internet: www.alcoa.com

                               66

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>SUBSIDIARIES OF THE COMPANY
<TEXT>

<PAGE>

                                                                      Exhibit 21

               SUBSIDIARIES AND EQUITY ENTITIES OF THE REGISTRANT
                           (As of December 31, 2000)
<TABLE>
<CAPTION>
                                                                           State or
                                                                           country of
  Name                                                                     organization
  ----                                                                     ------------
<S>                                                                        <C>
Alcoa Brazil Holdings Company                                              Delaware
   Alcoa Aluminio S.A.                                                     Brazil
   Abalco S.A.                                                             Brazil
Alcoa Building Products, Inc.**                                            Ohio
Alcoa Closure Systems International, Inc.                                  Delaware
Alcoa International Holdings Company                                       Delaware
   AIHC Export, Ltd.                                                       Barbados
   Alcoa Europe Holding B.V.                                               Netherlands
      Alcoa Automotive GmbH                                                Germany

      Alcoa Chemie Nederland B.V.                                          Netherlands
      Alcoa Europe S.A.                                                    Switzerland
      Alcoa Inespal, S.A.                                                  Spain
         Alumina Espanola, S.A.                                            Spain
         Aluminio Espanola, S.A.                                           Spain
      Alcoa Italia S.p.A.                                                  Italy
      Alcoa Transformacion, S.A.                                           Spain
      Norsk Alcoa A/S                                                      Norway
         Alcoa Automotive Castings Scandinavian Casting Center ANS         Norway
   Alcoa Inter-America, Inc.                                               Delaware
   Alcoa-Kofem Kft                                                         Hungary
   Alcoa of Australia Limited                                              Australia
   Alcoa Manufacturing (G.B.) Limited                                      United Kingdom
      Baco Consumer Products Limited
Alcoa Latin American Holdings Corporation                                  British Virgin Islands
Alcoa Laudel, Inc.                                                         Delaware
   UK Aluminium Holdings Limited                                           United Kingdom
   British Aluminium Limited                                               United Kingdom
Alcoa Power Generating Inc.***                                             Tennessee
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                           State or
                                                                           country of
  Name                                                                     organization
  ----                                                                     ------------
<S>                                                                        <C>
Alcoa Securities Corporation                                               Delaware
   Alcoa Remediation Management, Inc.                                      Delaware
   Alcoa CSI de Mexico en Saltillo, S.A. de C.V.                           Mexico
   Alcoa Fujikura Ltd.                                                     Delaware
      Stribel GmbH                                                         Germany
      Six "R" Communications, L.L.C.                                       Delaware
      Tele-Tech Company, Inc.                                              Kentucky
   Pimalco, Inc.                                                           Arizona
   Tifton Aluminum Company, Inc.                                           Delaware
Alcoa (Shanghai) Aluminum Products Company Limited                         China
Alcoa World Alumina LLC*                                                   Delaware
   AAC Holdings Company                                                    Delaware
      Alcoa Steamship Company, Inc.                                        New York
   Alcoa Minerals of Jamaica, L.L.C.                                       Delaware
   Halco (Mining) Inc.                                                     Delaware
      Compagnie des Bauxites de Guinee                                     Delaware
   St. Croix Alumina, L.L.C.                                               Delaware
   Suriname Aluminum Company, L.L.C.                                       Delaware
Alumax Inc.                                                                Delaware
   Alcoa Extrusions, Inc.                                                  Pennsylvania
   Alumax Foils, Inc.                                                      Delaware
   Alumax Mill Products, Inc.                                              Delaware
   Aluminerie Lauralco, Inc.                                               Delaware
   Eastalco Aluminum Company                                               Delaware
   Intalco Aluminum Corporation                                            Delaware
   Kawneer Company, Inc.                                                   Delaware
Cordant Technologies Inc.                                                  Delaware
   Thiokol Technologies International, Inc.                                Delaware
   Howmet International Inc.                                               Delaware
   Huck International Inc.                                                 Delaware
Gulf Closures W.L.L.                                                       Bahrain
Reynolds Metals Company                                                    Delaware
   Reynolds International, Inc.                                            Delaware
      RMCC Company                                                         Delaware
         Reynolds Aluminum Company of Canada, Ltd.                         Quebec
           Canadian Reynolds Metals Company, Ltd.                          Quebec
      Reynolds International do Brasil Participacoes, Ltda.                Brazil
      Reynolds Aluminium France, S.A.                                      France
      Reynolds Aluminium Holland B.V.                                      Netherlands
   Reynolds Aluminium Deutschland, Inc.                                    Delaware
   Reynolds Australia Alumina, Ltd. LLC****                                Delaware
   Reynolds Becancour, Inc.                                                Delaware
      RB Sales Company, Limited                                            Delaware
   Reynolds Consumer Products, Inc.                                        Delaware
   RMC Delaware, Inc.                                                      Delaware
      Southern Graphics Systems, Inc.                                      Kentucky
      RMC Properties, Ltd.                                                 Delaware
      Saint George Insurance Company                                       Vermont
Shibazaki Seisakusho Limited                                               Japan
</TABLE>



*    Registered to do business in Alabama, Arkansas, California, Florida,
     Georgia, Louisiana, North Carolina, Pennsylvania and Texas under the name
     of Alcoa World Chemicals.

**   Registered to do business in Ohio under the name of Mastic.

***  Registered to do business in Tennessee under the names Tapoco and APG
     Trading, in Indiana under the name of AGC, in North Carolina under the
     names of Yadkin and Tapoco, in New York under the name of Long Sault and in
     Washington under the name of Colockum.

**** Sold on January 25, 2001.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>

<PAGE>

                                                                 Exhibit 23


                      CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the incorporation by reference in the registration statements
of Alcoa Inc. on Form S-8 (Registration Nos. 33-22346,33-24846,33-49109,
33-60305, 333-27903, 333-62663, 333-79575, 333-91331, 333-32516, 333-36208,
333-36214, 333-37740, 333-39708 and 333-47116) of our reports dated January 8,
2001, except for Note U, for which the date is January 31, 2001, on our audits
of the consolidated financial statements and financial statement schedule of
Alcoa Inc. and consolidated subsidiaries as of December 31, 2000 and 1999 and
for each of the three years in the period ended December 31, 2000, which reports
are incorporated by reference or included in this Form 10-K.


                                           /s/PricewaterhouseCoopers LLP
                                           PricewaterhouseCoopers LLP


600 Grant Street
Pittsburgh, Pennsylvania
March 2, 2001


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>

<PAGE>

                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Directors of Alcoa
Inc. (the "Company") hereby constitute and appoint RICHARD B. KELSON, WILLIAM B.
PLUMMER, TIMOTHY S. MOCK and DONNA C. DABNEY, or any of them, their true and
lawful attorneys and agents to do any and all acts and things and execute any
and all instruments which said attorneys and agents, or any of them, may deem
necessary or advisable or may be required to enable the Company to comply with
the Securities Exchange Act of 1934, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under said Act of the Company's Annual Report on Form
10-K for 2000, including specifically, but without limiting the generality of
the foregoing, power and authority to sign the name of the undersigned to the
Company's Annual Report on 10-K for 2000 to be filed with the Securities and
Exchange Commission and to any instruments or documents filed as part of or in
connection with any such Annual Report on Form 10-K, including any amendments or
supplements thereto; and the undersigned hereby ratify and confirm all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof.

     IN WITNESS WHEREOF, the undersigned have subscribed these presents on the
date set opposite their names below.


/s/ Kenneth W. Dam
_______________________________                       January 12, 2001
Kenneth W. Dam


/s/ Joseph T. Gorman
_______________________________                       January 12, 2001
Joseph T. Gorman


/s/ Judith M. Gueron
_______________________________                       January 12, 2001
Judith M. Gueron


/s/ Sir Ronald Hampel
_______________________________                       January 12, 2001
Sir Ronald Hampel

<PAGE>

/s/ Hugh M. Morgan
_______________________________                       January 12, 2001
Hugh M. Morgan


/s/ John P. Mulroney
_______________________________                       January 12, 2001
John P. Mulroney


/s/ Henry B. Schacht
_______________________________                       January 12, 2001
Henry B. Schacht


/s/ Franklin A. Thomas
_______________________________                       January 12, 2001
Franklin A. Thomas


/s/ Marina v.N. Whittman
_______________________________                       January 12, 2001
Marina v.N. Whittman
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
