ALUMINUM CO OF AMERICA, 10-K405, 1996-03-11

ALUMINUM CO OF AMERICA
10-K405, 1996-03-11
PRIMARY PRODUCTION OF ALUMINUM

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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 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-3610

ALUMINUM COMPANY OF AMERICA
(Exact name of registrant as specified in its charter)

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

425 Sixth Avenue, Alcoa Building,
Pittsburgh, Pennsylvania 15219-1850
(Address of principal executive offices) (Zip code)

Registrant's telephone number--area code 412

Investor Relations------------553-3042
Office of the Secretary------553-4707

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

Name of each exchange
Title of each class 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 March 1, 1996 there were 175,070,628 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 $9,997 million.

Documents incorporated by reference.

Parts I and II of this Form 10-K incorporate by reference
certain information from the registrant's 1995 Annual Report
to Shareholders. Part III of this Form 10-K incorporates by
reference the registrant's Proxy Statement dated March 6, 1996,
except for the performance graph and Compensation Committee
Report.

ALUMINUM COMPANY OF AMERICA

Aluminum Company of America was formed in 1888 under the
laws of the Commonwealth of Pennsylvania. Unless the context
otherwise requires, Alcoa or the Company means Aluminum Company
of America and all subsidiaries consolidated for the purposes
of its financial statements.

PART I

Item 1. Business.

Alcoa is the world's largest integrated aluminum company,
producing and selling primary aluminum and semi-fabricated and
finished aluminum products. Alcoa is also the world's largest
producer of alumina. The Company produces and sells alumina-
based chemicals, a variety of other finished products and compo-
nents and systems. The Company's products are used primarily
by packaging, transportation (including aerospace, automotive,
rail and shipping), building and industrial customers world-
wide. Alcoa has operating and sales locations in 28 countries.

Alcoa serves a variety of customers in a number of
markets. Consolidated revenues from these markets were:

(dollars in millions)
Revenues by Market 1995 1994 1993
---- ---- ----

<S> <C> <C> <C>
Packaging $ 3,797 $2,830 $2,606
Transportation 2,232 1,671 1,397
Distributor and Other 1,988 1,570 1,274
Alumina and Chemicals 1,705 1,494 1,437
Building and Construction 1,531 1,391 1,299
Aluminum Ingot 1,247 948 1,042

Total Sales and Operating Revenues $12,500 $9,904 $9,055

</TABLE>

Segment and geographic area financial information is
presented in Note P to the Financial Statements.

Major Operations

Most aluminum facilities located in the United States are
owned by the parent company. Alcoa of Australia Limited
(AofA), Alcoa Aluminio S.A. (Aluminio) in Brazil and Alcoa
Fujikura Ltd. (AFL) are the three largest operating subsi-
diaries.

AofA operates integrated aluminum facilities in Australia,
including mining, refining, smelting and fabricating opera-
tions. More than half of AofA's 1995 revenues were derived
from alumina, and the balance was derived principally from
primary aluminum, rigid container sheet and gold.

Alcoa Brazil Holdings Company holds Alcoa's 59%
interest in Aluminio, an integrated aluminum producer in
Brazil. Aluminio operates mining, refining, smelting,
fabricating and closures facilities at various locations in
Brazil. Approximately 28% of Aluminio's 1995 unconsolidated
revenues was derived from primary aluminum, and exports
accounted for approximately one-fourth of its revenues.

-2-

AFL, owned 51% by Alcoa and 49% by Fujikura Ltd. of Japan,
produces and markets automotive electrical distribution
systems, as well as fiber optic products and systems for
selected electric utilities, telecommunications, cable televi-
sion and datacom markets.

Alumina and Chemicals Restructuring

In December 1994, Alcoa and WMC Limited of Melbourne,
Australia (WMC) (formerly Western Mining Corporation Holdings
Limited) restructured and combined their respective worldwide
bauxite, alumina and alumina-based chemicals businesses and
investments into a group of companies (Alcoa World Alumina)
owned 60% by Alcoa. The restructuring and combination of cer-
tain businesses and investments in Brazil between Alcoa, WMC
and third party investors in Aluminio were concluded late in
the first quarter of 1995. See Note C to the Financial
Statements.

Alcoa World Alumina is a series of affiliated operating
entities and assets which includes the following:

1. 99.25% ownership interest in AofA, including its
aluminum smelting and fabricating operations;

2. Alcoa's operations at Point Comfort, Texas
(refining); bauxite mining in Guinea, Africa (through an
interest in Halco (Mining) Inc.); Jamaica (mining and
refining); Suriname (mining, refining and smelting); and the
U.S. Virgin Islands (refining);

3. Alcoa's bauxite and alumina shipping operations;

4. Alcoa's alumina-based chemicals businesses in
Australia, Germany, India, Japan, the Netherlands, Singapore
and U.S.; and

5. An interest in the Alumar alumina refinery at Sao
Luis, Brazil (Alumar Refinery) and in Mineracao Rio do Norte
S.A. (MRN) (mining).

A five-member strategic council, with three members
appointed by Alcoa and two by WMC, provides counsel and direc-
tion to Alcoa World Alumina. Alcoa provides operating manage-
ment for all of the affiliated operating entities.

Competition

The markets for most aluminum products are highly competi-
tive. 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 competitive conditions are
discussed later for each of the Company's major product classes.

The Company continues to examine all aspects of its opera-
tions and activities and redesign them where necessary to
enhance effectiveness and achieve cost reductions. Alcoa
believes that its competitive position is enhanced by 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.
Research and development, and an increased emphasis on full
utilization of technology, have led to improved product
quality and production techniques, new product development and
cost control.

-3-

The dissolution of the former Soviet Union and the lack of
a mechanism to successfully integrate its economy with market
economies significantly contributed to a global oversupply of
aluminum in recent years. Prior to 1991, former Soviet alumi-
num producers primarily served internal markets which weakened
substantially after the collapse of the Soviet Union, and
aluminum produced at former Soviet smelters began to be
exported. These exports caused an imbalance in demand and
supply and resulted in severe downward pressure on aluminum
prices.

In January 1994, an accord was reached among the govern-
ments of six major primary aluminum-producing nations
(Australia, Canada, the European Union, Norway, Russia and the
U.S.) to address the global aluminum supply situation. Under
the accord, the Russian industry would reduce its annual alumi-
num exports for up to two years, the EU would refrain from
renewing import quotas on Russian ingot when the quotas expired
in early 1994, and certain of the participating governments
would create a fund to assist in the modernization of the
Russian industry.

By year-end 1994, Alcoa indefinitely curtailed 450,000
metric tons (mt) per year of its total worldwide smelting pro-
duction. This capacity remains idled.

Risk Factors

In addition to risks inherent in Alcoa's worldwide opera-
tions, Alcoa is exposed generally to financial, market, politi-
cal and economic risks.

Commodity Risks

Alcoa is a leading global producer of aluminum ingot and
aluminum fabricated products. Aluminum ingot is an interna-
tionally priced, sourced and traded commodity. The principal
trading market for ingot is the London Metal Exchange (LME).
Alcoa participates in this market by buying and selling forward
portions of its aluminum requirements and output.

Alcoa divides its operations into four regions: U.S.,
Pacific, Other Americas and Europe. AofA in the Pacific
region, and Aluminio in the Other Americas, are generally in
net long metal positions. From time to time, they may sell
production forward. In the European region there are no
smelting operations controlled by Alcoa, and accordingly, this
region is net short and may purchase forward positions from
time to time. At the present time, forward purchase and sales
activity within these three regions is not material.

In the U.S., and for export, Alcoa enters into long-term
contracts with a number of its fabricated products customers.
At December 31, 1995, and 1994, such contracts approximated
2,483,000 mt and 1,500,000 mt, respectively, of fabricated
products over the next several years. Alcoa may enter into
similar arrangements in the future.

As a hedge against the economic risk of higher prices for
metal needs associated with these long-term contracts, Alcoa
entered into long positions, principally using futures and
option contracts. At December 31, 1995 and 1994, these con-
tracts totaled approximately 1,210,000 mt and 1,400,000 mt,
respectively. The contracts limit the unfavorable effect of
price increases on metal purchases and likewise limit the
favorable effect from price declines. The futures and option
contracts are with creditworthy counterparties and are further
supported by cash, treasury bills or irrevocable letters of
credit issued by carefully chosen banks.

For financial accounting purposes, the gains and losses
on the hedging contracts are reflected in earnings concurrent
with the hedged costs. The cash flows from these contracts
are classified in a manner consistent with the underlying
nature of the transactions.

-4-

The expiration dates of the call options and the delivery
dates of the futures contracts do not always coincide exactly
with the dates on which Alcoa is required to purchase metal to
meet its contractual commitments with customers. Accordingly,
some of the futures and option positions will be rolled forward.
This may result in significant cash inflows if the hedging con-
tracts are "in-the-money" at the time they are rolled forward.
Conversely, there could be significant cash outflows if metal
prices fall below the price of contracts being rolled forward.

In addition, Alcoa had 461,000 mt of LME contracts out-
standing at year-end 1995 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 an aftertax charge to
earnings of $38 million in 1995.

Alcoa also purchases certain other commodities, such as
gas and copper, for its operations and enters into contracts
to eliminate volatility in the prices of such products. None
of these contracts are material. For additional information
on financial instruments, see Note Q.

Financial Risk

Since Alcoa participates in the global marketplace, it is
subject to significant exposure from fluctuations in foreign
currencies. As a matter of company policy, Alcoa enters into
foreign currency exchange contracts, including forwards and
options, to manage its transactional exposure to changes in
currency exchange rates.

Alcoa also attempts to maintain a reasonable balance
between fixed and floating rate debt, using interest rate swaps
where appropriate to keep financing costs as low as possible.

Risk Management

All of the aluminum and other commodity contracts, as well
as the various types of financial instruments, are straight-
forward. They are primarily entered into for the purpose of
removing uncertainty and volatility, and principally cover
underlying exposures.

Alcoa's commodity and derivative activities are subject to
the management, direction and control of the Strategic Risk
Management Committee (SRMC). It is composed of the Chief Execu-
tive Officer, the Vice Chairman, the Chief Financial Officer and
other officers and employees as the Chief Executive Officer may
select from time to time. SRMC reports to the Board of
Directors at each of its scheduled meetings on the scope of
Alcoa's derivatives activities and programs.

For further information on Alcoa's hedging and derivatives
activities, see Notes A, I and Q to the Financial Statements,
which are incorporated herein by reference.

Segments

Alcoa's operations consist of three segments: Alumina and
Chemicals, Aluminum Processing, and Nonaluminum Products.
Discussion of Alcoa's operations and properties by its three
segments follows.

-5-

Alumina and Chemicals Segment

The Alumina and Chemicals segment includes the production
and sale of bauxite, alumina, alumina (industrial) chemicals
and transportation services.

Bauxite

Bauxite, aluminum's principal raw material, is refined
into alumina through a chemical process and is then smelted
into primary aluminum. Most of the bauxite mined and alumina
produced by the Company, except by AofA, is further processed
by the Company into aluminum. All of the Company's bauxite
interests are now included in Alcoa World Alumina with the
exception of Alcoa's bauxite mines in Arkansas, Aluminio's
bauxite mines in Pocos de Caldas, Brazil and an 8.6% interest
in MRN, which is also held by Aluminio.

The Company has long-term contracts to purchase bauxite
mined by a partially-owned entity in the Republic of Guinea.
These agreements expire after 2011. This bauxite services
most of the requirements of the Point Comfort, Texas alumina
refinery. Suriname Aluminum Company, L.L.C. (Suralco) mines
bauxite in Suriname under rights which expire after the year
2000. Suralco also holds a 26% minority interest in a bauxite
mining joint venture managed by the majority owner, an
affiliate of Gencor Limited of South Africa (Gencor). Bauxite
from both mining operations serves Suralco's share of the
refinery in Suriname referred to below.

AofA's bauxite mineral leases expire in 2003. Renewal
options allow AofA to extend the leases until 2045. The
natural gas requirements of the refineries are supplied
primarily under a contract with the parties comprising the North
West Shelf Gas Joint Venture. The contract expires in 2005 and
imposes minimum purchase requirements.

Bauxite mining rights in Jamaica expire after the year
2020. These rights are owned by the joint venture with the
government of Jamaica referred to in the next section.

Alumina

Alumina is sold principally from operations in Australia,
Jamaica and Suriname. Approximately 38% of the Company's
alumina production in 1995 was sold to third parties. Most of
the alumina supply contracts are negotiated on the basis of
agreed volumes over a multi-year time period to assure a con-
tinuous supply of alumina to the smelters which receive the
alumina. Most alumina is sold under contracts where prices
are negotiated periodically or are based on formulas related to
aluminum ingot market prices or to production costs. Alumina
demand and supply are generally in balance.

AofA is the world's largest and one of the lowest-cost
producers of alumina. Its three alumina plants, located in
Kwinana, Pinjarra and Wagerup in Western Australia, have in the
aggregate an annual rated capacity of approximately 6.4 million
mt. Most of AofA's alumina is sold under supply contracts to a
number of customers worldwide.

Suralco owns 55% of the 1.6 million mt per year alumina
refinery in Paranam, Suriname and operates the plant. An
affiliate of Gencor holds the remaining 45%.

An Alcoa subsidiary and a corporation owned by the govern-
ment of Jamaica are equal participants in a joint venture,
managed by the subsidiary, that owns an alumina refinery in
Clarendon Parish, Jamaica. Annual alumina capacity at the
Clarendon refinery will be increased from 800,000 to approxi-
mately 1,000,000 mt in the next several years.

-6-

Aluminio is the operator of the Alumar Consortium
(Alumar), a cost-sharing and production-sharing venture which
owns a large refining and smelting project near the northern
coastal city of Sao Luis, Brazil. The Alumar Refinery has an
annual capacity of approximately 1,000,000 mt and is owned
35.1% by Aluminio, 36% by an affiliate of Gencor, 18.9% by
Abalco S.A. (owned 60% by Alcoa and 40% by WMC) and 10% by an
affiliate of Alcan Aluminium Limited (Alcan). A majority of
the alumina production is consumed at the smelter.

Aluminio holds an 8.6% interest and Abalco S.A. holds a
4.6% interest in MRN, a mining company which is jointly owned
by affiliates of Alcan, Companhia Brasileira de Aluminio,
Companhia Vale do Rio Doce, Gencor, Norsk Hydro and Reynolds
Metals Company. Aluminio purchases bauxite from MRN under a
long-term supply contract.

At Pocos de Caldas, Brazil, Aluminio mines bauxite and
operates a refinery which produces alumina, primarily for its
nearby smelter.

In July 1995, Alcoa Alumina & Chemicals, L.L.C., through a
majority owned entity, St. Croix Alumina, L.L.C., acquired a
600,000 mt per year alumina refinery located on St. Croix, U.S.
Virgin Islands from Virgin Islands Alumina Corporation, a sub-
sidiary of Glencore International AG.

Industrial Chemicals

The Company sells industrial chemicals to customers in a
broad spectrum of markets for use in refractories, ceramics,
abrasives, chemicals processing and other specialty applica-
tions.

A variety of industrial chemicals, principally alumina-
based chemicals, are produced or processed at plants located in
Mobile, Alabama; Bauxite, Arkansas; Ft. Meade, Florida; Dalton,
Georgia; Lake Charles, Port Allen and Vidalia, Louisiana;
Leetsdale, Pennsylvania; Nashville, Tennessee; Point Comfort,
Texas; Kwinana and Rockingham, Australia; Pocos de Caldas and
Salto, Brazil; Ludwigshafen, Germany; Iwakuni and Naoetsu,
Japan; Moerdijk and Rotterdam, the Netherlands; and Singapore.
Aluminum fluoride, used in aluminum smelting, is produced from
fluorspar at Point Comfort and from hydrofluosilicic acid at
Ft. Meade. With the exception of the plants located in Pocos
de Caldas and Salto, all of these facilities are now part of
Alcoa World Alumina.

The Company and The Associated Cement Companies Ltd. of
Bombay, India have formed a joint venture to import, process
and market tabular alumina and alumina-based chemicals for the
refractory and ceramic industries in India. The venture com-
pleted construction of its processing plant in India in 1995.

In June 1995, the Company acquired Discovery Industries,
Inc., a privately-held producer of alumina-based chemicals in
Port Allen, Louisiana.

Aluminum Processing Segment

The Aluminum Processing segment comprises the production
and sale of molten metal, ingot, and aluminum products that are
flat-rolled, engineered or finished. Also included are power,
transportation and other services.

-7-

Revenues and shipments for the principal classes of pro-
ducts in the aluminum processing segment are as follows:

(dollars in millions)
1995 1994 1993
---- ---- ----

<S> <C> <C> <C>
Revenues:
Aluminum ingot $1,197 $ 920 $1,042
Flat-rolled products 4,177 3,201 2,974
Engineered products 2,303 1,882 1,528
Other aluminum products 357 474 430
----- ----- -----
Total $8,034 $6,477 $5,974
===== ===== =====

(mt in thousands)
Shipments:
Aluminum ingot 673 655 841
Flat-rolled products 1,380 1,381 1,271
Engineered products 454 433 379
Other aluminum products 75 82 89
----- ----- -----
Total 2,582 2,551 2,580
===== ===== =====

</TABLE>

Aluminum Ingot

The Company smelts primary aluminum from alumina obtained
principally from the alumina refineries discussed earlier.
Smelters are located at Warrick, Indiana; Massena, New York;
Badin, North Carolina; Alcoa, Tennessee; Rockdale, Texas;
Wenatchee, Washington; Point Henry and Portland, Australia;
Pocos de Caldas and Sao Luis, Brazil; and Paranam, Suriname.
The Company's smelting operations in Australia and Suriname
have been included in Alcoa World Alumina. Alcoa's consoli-
dated annual rated primary aluminum capacity is approximately
1.9 million mt. When operating at capacity, the Company's
smelters more than satisfy the primary aluminum requirements
of the Company's fabricating operations. Purchases of aluminum
scrap (principally used beverage cans), supplemented by pur-
chases of ingot when necessary, satisfy any additional aluminum
requirements. Most of the Company's primary aluminum produc-
tion in 1995 was delivered to other Alcoa operations for
alloying and/or further fabricating.

The Company utilizes electric power, natural gas and other
forms of energy in its refining, smelting and processing opera-
tions. Aluminum is produced from alumina by an electrolytic
process requiring large amounts of electric power. Electric
power accounts over time for approximately 25% of the Company's
primary aluminum costs. Alcoa generates approximately 40% of
the power used at its smelters worldwide. Most firm power
purchase contracts tie prices to aluminum prices or to prices
based on various indices.

The joint venture smelter at Portland, Victoria, with an
annual rated capacity of 320,000 mt, is owned 45% by AofA, 25%
by the State of Victoria, 10% by the First National Resources
Trust, 10% by the China International Trust and Investment Cor-
poration, and 10% by Marubeni Aluminium Australia Pty., Ltd.
(Portland Smelter Participants). A subsidiary of AofA operates
the smelter. Each Portland Smelter Participant is required to
contribute to the cost of operations and construction in pro-
portion to its interests in the venture and is entitled to its
proportionate share of the output. Alumina is supplied by
AofA. The Portland site can accommodate additional smelting
capacity.

Currently, approximately 36% of the power for the Point
Henry smelter is generated by AofA using its extensive brown
coal deposits. The balance of the power, and power for the
Portland, Victoria smelter, is available under contracts with
the State Electricity Commission of Victoria which expire in

-8-

2014 and 2016, respectively. Power prices are tied by formula
to aluminum prices. The State Government of Victoria has
announced its desire to renegotiate the power contracts for the
Point Henry and Portland smelters, but, after discussions, ter-
minated the negotiations and advised that the existing base
contracts will be honored. Informal discussions are continuing
on clarifying various aspects of power supply to the smelters.

The Alumar Consortium aluminum smelter at Sao Luis, Brazil
has an annual rated capacity of 328,000 mt. Aluminio receives
about 54% of the primary aluminum production.

Electric power for Alumar's Sao Luis smelter is purchased
from the government-controlled power grid in Brazil at a small
discount from the applicable industrial tariff price and is
protected by a cap based on the LME price of aluminum.
Aluminio's Pocos de Caldas smelter purchased firm and inter-
ruptible power from the government-controlled electric utility
under a contract which expired January 1, 1996. Aluminio is
negotiating with the utility for a renewal of that contract.
Pending completion of a new contract, Aluminio is purchasing
power from the utility at the applicable common tariff price.

Over 50% of the power requirements for Alcoa's U.S.
smelters is generated by the Company, and the remainder is
purchased from others under long-term contracts. Less than 15%
of the self-generated power results from the Company's entitle-
ment to a fixed percentage of the output from a hydroelectric
power facility located in the northwestern United States.

The Company generates substantially all of the power used
at its Warrick smelter using coal reserves near the smelter
that should satisfy requirements through year-end 1997. The
Company is negotiating a coal supply contract to meet the needs
of the smelter through 2006. Lignite is used to generate power
for the Rockdale, Texas smelter. Company-owned generating
units supply about half of the total requirements and the
balance is purchased from a dedicated power plant under a con-
tract which expires not earlier than 2013.

In connection with the electric power generated for the
aluminum smelters at Alcoa, Tennessee and Badin, North Carolina,
two subsidiaries of the Company own and operate hydroelectric
facilities subject to Federal Energy Regulatory Commission
licenses effective until 2005 and 2008, respectively. For the
Tennessee plant, the Company also purchases firm and interrup-
tible power from Tennessee Valley Authority under a contract
which expires in 2000. For the Badin plant, the Company pur-
chases additional power under an evergreen contract providing
for specified periods of notice before termination by either
party.

The purchased power contract for the Massena smelter
expires not earlier than 2003 but may be terminated by the
Company with one year's notice.

Alcoa has two principal power contracts for its Wenatchee
smelter. The contract for the power output entitlement
referred to above expires in 2011. The contract with Bonne-
ville Power Administration expires in 2001 and includes 25%
interruptible power. Power restrictions may occur when pre-
cipitation is below normal. Beginning in 1995, a portion
of the power supplied under the entitlement contract was
replaced by power purchased from the local public utility
district. Additional power also may be purchased from the
district.

Although not included in the revenues by market or
revenues and shipments tables above or in the rated primary
aluminum capacity figure above, the Company reports equity
earnings from its interest in two primary aluminum smelters in
Norway. Elkem Aluminium ANS, 50% owned by Norsk Alcoa A/S, a
subsidiary, is a partnership that owns and operates the
smelters.

-9-

In November 1995, Alcoa signed an agreement to acquire the
principal operating assets of Alumix S.p.A., Italy's state-
owned integrated aluminum producer. Alcoa will acquire two
primary aluminum smelters, at Portovesme and Fusina, with
combined annual capacity of 170,000 mt; a rolling mill at
Fusina with annual capacity of 140,000 mt; four aluminum extru-
sion plants (at Bolzano, Fossanova, Feltre and Iglesias) with
combined annual capacity of 70,000 mt; and an extrusion die
shop, six metal distribution centers, three administrative
centers and sales offices in France, Germany, Spain and the
United Kingdom. The acquisition is expected to close before
mid-year 1996.

Flat-Rolled Products

The Company's flat-rolled products serve three principal
markets: light gauge sheet products serve principally the
packaging market, and sheet and plate products serve princi-
pally the transportation and building and construction markets.

Alcoa employs its own sales force for most products sold
in the packaging market. Most of the packaging revenues in
1995 were derived from rigid container sheet (RCS) sold to can
companies for production of beverage and food cans and can
ends. The number of RCS customers in the U.S. is relatively
small, and the number of can companies has been shrinking. Use
of aluminum beverage cans continues to increase, particularly
in Asia, Europe and South America, where per capita consump-
tion remains relatively low. Aluminum foil and packaging sheet
(other than RCS) are sold principally in the packaging markets.

Aluminum's diverse characteristics, particularly its light
weight and recyclability, are significant factors in packaging
markets where alternatives such as steel, plastic and glass are
competitive materials. Leadership in the packaging markets is
maintained by improving processes and facilities, as well as by
providing research and technical support to customers.

Light gauge aluminum sheet and foil products are manufac-
tured at several locations. RCS is produced at Warrick,
Indiana; Alcoa, Tennessee; Point Henry, Australia; Yennora,
Australia (a joint venture facility acquired in January 1996);
Moka, Japan (a joint venture facility); and Swansea, Wales.
Light gauge sheet and foil are produced at Lebanon, Pennsyl-
vania; Shanghai, China; and Yennora, Australia. Foil conver-
sion activity at the Davenport, Iowa plant will be repositioned
to the Lebanon facility by mid-year 1996. Light gauge sheet,
foil products and laminated evaporator panels are manufactured
by Aluminio at Recife, Brazil.

Used aluminum beverage cans are an important source of
metal for RCS. The cost of used beverage cans continued to
increase during the first half of 1995, then drifted lower
during the second half of the year. Recycling aluminum con-
serves raw materials, reduces litter and saves energy - about
95% of the energy needed to produce aluminum from bauxite.
Also, recycling capacity costs much less than new primary
aluminum capacity. Can recycling or remelt facilities are
located at or near Alcoa's Warrick, Indiana and Alcoa,
Tennessee plants.

In early 1995 the Company and Shanghai Aluminum Fabrica-
tion Plant (SAFP) formed a joint venture company to acquire and
operate SAFP's existing aluminum foil and foil laminate produc-
tion facility in Shanghai, China. The joint venture company,
which commenced operations in May 1995, is owned 60% by Alcoa
and 40% by SAFP. The facility currently produces approximately
8,500 mt of aluminum foil per year. It is anticipated that
through the use of technology developed by Aluminio and the
addition of a second caster, annual output will increase to
approximately 18,000 mt within five years.

The Company has joint ventures with Kobe Steel, Ltd.
(Kobe) in Australia and Japan that serve the packaging markets.
KSL Alcoa Aluminum Company, Ltd. (KAAL) manufactures and sells
RCS in

-10-

Japan and other Asian countries. The Company holds a 50%
interest in KAAL. In connection with this joint venture,
Alcoa entered into a long-term metal contract with Kobe.

KAAL Australia Pty. Limited (KAAL/Australia) was formed in
December 1995 to acquire Comalco Limited's rolled products
operations at Yennora, Australia. KAAL/Australia will manufac-
ture and sell aluminum sheet and foil for the Australian market,
as well as RCS for Australian and Asian markets. The Company
also holds a 50% interest in KAAL/Australia. Negotiations
relating to the acquisition of the AofA rolling mill at Point
Henry by KAAL/Australia or an affiliate are proceeding.

Sheet and plate products serve aerospace, automotive,
lithographic, railroad, ship-building, building and construc-
tion, defense and other industrial and consumer markets. The
Company maintains its own sales forces for most of these
products. Differentiation of material properties, price and
service are significant competitive factors. Aluminum's
diverse characteristics are important in these 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.

The Company's largest sheet and plate plant is located at
Davenport, Iowa. It produces products requiring special
alloying, heat treating and other processing, some of which are
unique or proprietary. The Company serves European sheet and
plate markets through a distribution center in Paal, Belgium.

The Company substantially has completed a plant in
Hutchinson, Kansas for further processing and just-in-time
stocking of aluminum sheet products for the aerospace market.

Alcoa continues to develop alloys and products for aero-
space applications, such as new aluminum alloys for application
in the Boeing 777 aircraft. A research and development effort
also has resulted in the commercial development of a series of
aluminum and aluminum-lithium alloys which offer significant
weight savings over traditional materials for aerospace and
defense applications.

The Company and Kobe also have two joint venture
companies, one in the U.S. and one in Japan, to serve the
transportation industry. The initial emphasis of these
companies is on expanding the use of aluminum sheet products
in passenger cars and light trucks.

The Company has a 50.1% interest in Alcoa-Kofem Kft., a
Hungarian subsidiary. The government-owned Hungarian Aluminium
Industrial Corporation holds the remaining equity interest.
The subsidiary produces common alloy flat and coiled sheet,
soft alloy extrusions and end products for the building, con-
struction, food and agricultural markets in central and western
Europe. Alcoa is providing technological and operational
expertise to Alcoa-Kofem Kft.

Engineered Products

Engineered products principally include extrusion and
tube, wire, rod and bar, forgings, castings, aluminum building
products, aluminum memory disk blanks and other products which
are sold in a wide range of markets, but principally in the
transportation market.

Aluminum extrusions and tube are produced principally at
five U.S. locations. The Chandler, Arizona plant produces hard
alloy extrusions, tube and forge stock; the Lafayette, Indiana
plant produces a broad range of hard alloy extrusions and tube;
the Baltimore, Maryland plant produces large press extrusions;
and plants at Tifton, Georgia and Delhi, Louisiana produce
common alloy extrusions. In 1994, the Company announced the
shutdown of the hard alloy extrusion and tube and forgings
facilities at its Vernon, California plant. This plant
continues to produce cast aluminum plate. In August

-11-

1995, Alcoa announced that it will invest approximately $12
million over the next two years in new machinery and equip-
ment for the cast aluminum plate operations.

Alcoa and VAW Aluminium AG (VAW) have a joint venture that
produces and markets high-strength aluminum extrusions, rod and
bar to serve principally European transportation and defense
markets. An Alcoa subsidiary owns 60% and VAW owns 40% of the
venture, which is called Alcoa VAW Hannover Presswerk GmbH &
Co. KG and is located in Hannover, Germany.

Aluminum extruded products are manufactured by a subsidiary
of Alcoa Latin American Holdings Corporation in Argentina and at
several Aluminio locations in Brazil. In early March 1996,
Aluminio acquired the extrusion assets of an Alcan affiliate in
Brazil. These assets include four plants and eight extrusion
presses. The transaction will be submitted to the Brazilian
antitrust authorities for review and approval.

Alcoa Nederland Holding B.V. (ANH) and its subsidiaries
produce extrusions, common alloy sheet products and a variety
of finished products for the building industry, such as alumi-
num windows, doors and aluminum ceiling systems, as well as
products for the agricultural industry such as automated green-
house systems.

The Company also produces extrusions in Hungary, Spain and
the United Kingdom.

Mechanical-grade redraw rod, wire and cold-finished rod
and bar are produced at Massena, New York and are sold to dis-
tributors and customers for a variety of applications in the
building and transportation markets.

Aluminum forgings are produced at Cleveland, Ohio and
Bologne, France. These forgings are sold principally in the
aerospace, defense and transportation markets. Forged alumi-
num wheels for truck, bus and automotive markets are produced
at Cleveland, Ohio.

During the third quarter of 1995, Alcoa announced plans
to build a plant in Szekesfehervar, Hungary to manufacture
forged aluminum truck wheels for the European market. The
plant also may manufacture wheels for export to Asian, South
American and other geographic markets where European-type
wheels are used. The plant is scheduled to commence operations
in early 1997.

Alcoa Automotive Structures GmbH produces aluminum compo-
nents and sub-assemblies for aluminum automotive spaceframes.
Aluminum spaceframes represent a significant departure from the
traditional method and material used to manufacture primary
auto body structures. In 1993 Alcoa completed construction and
began operating a unique multi-million dollar plant in Soest,
Germany to supply aluminum spaceframe products to its first
customer, Audi AG. In 1994 Audi began marketing its new A8
luxury sedan, the first automobile to utilize a complete
aluminum spaceframe body structure. The aluminum body struc-
ture of the A8 is a result of a cooperation between Alcoa and
Audi that began in 1981 and is constructed from components and
sub-assemblies that are or will be produced by Alcoa. Audi has
announced that the A8 will go on sale in the United States in
the fall of 1996.

Alcoa continues to cooperate with several automobile manu-
facturers in Europe, North America and Japan to develop new
automotive applications for aluminum products. For example,
Chrysler Corporation's Plymouth Prowler, a new roadster, is
scheduled to enter initial, low-volume production in January
1997. Carrying 900 pounds of aluminum (or approximately one-
third of its weight), the Prowler will utilize an all aluminum
frame and body as well as aluminum for brake rotors and suspen-
sion components. Alcoa will provide the car's frame as well as
aluminum sheet stock to be stamped into body panels and bumper
assemblies.

-12-

Alcoa has constructed and begun production at a plant in
Northwood, Ohio, near Toledo, which will manufacture aluminum
structural assemblies for the automotive industry.

During the first quarter of 1995 the Company formed a
joint venture with a subsidiary of CMI International, Inc. to
produce cast and forged aluminum automotive parts. The Company
holds a 50% interest in the venture called A-CMI.

In September 1995, A-CMI announced plans to build its
first European manufacturing plant in Lista, Norway. The plant
will develop and produce cast aluminum chassis, suspension,
brake and powertrain components and systems. The plant repre-
sents a total investment of approximately $40 million and will
be built in close proximity to an Elkem Aluminium ANS smelter
which will deliver molten aluminum to the plant. This facility
will commence production in mid-1997.

In August 1995, the Company acquired DBM Industries, Ltd.,
of Montreal, Canada, a designer and builder of specialized die-
casting machines. The acquisition provides Alcoa with the
capability to manufacture die-cast aluminum parts and custom
die-casting machines.

Aluminio produces aluminum truck and van bodies in Sao
Paulo, Brazil and aluminum electrical cables at its Pocos de
Caldas plant.

Alcoa Building Products produces and markets residential
aluminum siding and other aluminum building products. These
products are sold principally to wholesale distributors.

Other Aluminum Products

Alcoa produces aluminum closures for bottles at Richmond,
Indiana; Worms, Germany; Nogi and Ichikawa, Japan; and near
Barcelona, Spain.

The Company also sells aluminum scrap and produces and
markets aluminum paste, particles, flakes, atomized powder, and
is engaged in the production of high purity aluminum.

Nonaluminum Products Segment

The Nonaluminum Products segment includes the production
and sale of electrical, ceramic, plastic, and composite
materials products, manufacturing equipment, gold, magnesium
products, and steel and titanium forgings.

AFL produces and markets automotive electrical distribu-
tion systems (EDS), as well as fiber optic products and systems
for selected electric utilities, telecommunications, cable
television and datacom markets. AFL is the only EDS supplier
that has been awarded the Total Quality Excellence (TQE) Award
by Ford Motor Company. All AFL automotive operations also have
the Q1 rating from Ford. AFL now is supplying EDS to Subaru of
America, Inc. (in the U.S.), Auto Alliance, Inc. (Mazda-Ford
joint venture), Kenworth, Peterbilt, Mack and Navistar. AFL
has a 90% interest in Michels GmbH & Co. KG, a manufacturer of
EDS for automobiles, appliances and farm equipment with three
plants in Germany and five plants in Hungary. AFL's Stribel
group of companies are European manufacturers of electro-
mechanical and electronic components for the European automo-
tive market.

In July 1995, AFL acquired the operations of Electro-Wire
Products, Inc. Electro-Wire Products also manufactured EDS for
autos, trucks and farm equipment. Combining these two busi-
nesses created a worldwide enterprise that is the largest
supplier of EDS to Ford Motor Company's worldwide operations.
The combined enterprise also is the largest supplier of EDS to
the heavy truck industry.

-13-

In the first half of 1996, AFL and Aluminio will manufac-
ture and sell EDS in Brazil through a joint venture.

Alcoa Electronic Packaging, Inc. (AEP) produces ceramic
packages used to hold integrated circuits for electronic equip-
ment. In early December 1995, AEP was notified by its major
customer, Intel, that no new orders would be forthcoming.
Alcoa is exploring all options available at this time. The
book value of AEP's net assets at year-end 1995 was $69 million.

Alcoa produces plastic closures for bottles at Crawfords-
ville, Indiana; Olive Branch, Mississippi; Buenos Aires, Argen-
tina; Sao Paulo, Brazil; Santiago, Chile; Tianjin, China;
Bogota, Colombia; Szekesfehervar, Hungary; Nogi, Japan;
Saltillo, Mexico; and near Barcelona, Spain. The Company also
operates a plastic closures decorating facility and polye-
thylene (PET) injection and blow molding facilities at Lima,
Peru. Aluminio produces PET pre-forms and finished PET bottles
at several plant and customer sites in Brazil and Argentina.
Projects to manufacture pre-forms and bottles also are in
development in China.

Alcoa Zepf, L.L.C., a joint venture company owned 60% by
the Company and 40% by Zepf Technologies USA Inc., manufactures
rapid changeover and quick-change bottle control parts for the
beverage industry. Alcoa also participates in a joint venture
with Al Zayani Investments W.L.L. of Bahrain, known as Gulf
Closures W.L.L., that manufactures plastic closures for markets
in the Middle East. Alcoa's worldwide closures businesses are
coordinated from Indianapolis, Indiana. The use of plastic
closures has surpassed that of aluminum closures for beverage
containers in the U.S. and is gaining momentum in other
countries.

Alcoa Composites, Inc. principally designs and manufac-
tures composite parts and structures for aerospace and trans-
portation applications.

The Company manufactures packaging equipment and machinery,
principally for producing and decorating metal cans and can
ends. In addition, the Company manufactures lines of equipment
for producing plastic closures and for applying plastic or
aluminum closures to beverage containers. Effective at the end
of February 1996, Alcoa divested its minority interest in a
company which sells food packaging machinery that fills and
seals metal and multi-layered polymer and paper containers.

Facilities to recover gold from AofA's mining leases in
Western Australia were constructed, and mined gold was first
poured, in 1988. Production has been declining since 1990.

Magnesium produced by Northwest Alloys, Inc. in Addy,
Washington (NWA) from minerals in the area owned by NWA is used
by Alcoa and sold to third parties. Alcoa uses magnesium for
certain aluminum alloys. Recycling is also a source of
aluminum-magnesium alloys. Responding to world magnesium
market conditions, NWA maintained high levels of magnesium
production during 1995.

Large press steel, titanium and special Inconel super-alloy
forgings are produced at Cleveland, Ohio. Titanium and steel
forgings are produced at Bologne, France. These products are
sold principally in aerospace and commercial markets.

Aluminio produces copper electrical cables at its Pocos de
Caldas and Guarulhos, Brazil plants. It also owns and operates
a chain of retail construction materials outlets in Brazil.

Alcoa Building Products' principal products for building
and construction markets are vinyl siding and accessories and
plastic injected molded shutters and architectural accessories.
Other nonaluminum building products include vinyl windows by
Alcoa Vinyl Windows, vinyl window lineals by Dayton Techno-
logies, and wood windows and patio doors by Caradco.

-14-

Norcold manufactures recreational vehicle refrigerators,
and Stolle Products Division owns a 36% interest in a joint
venture, established in January 1996, that manufactures auto
parts and appliance control panels.

A wholly owned subsidiary owns and develops a luxury resi-
dential community in South Carolina. Another subsidiary
recently completed its involvement in the development of a
residential community in Florida.

Research and Development

The Company, a technological leader in the aluminum
industry, engages in research and development (R&D) programs
which include basic and applied research and process and pro-
duct development. The research activities are conducted
principally at Alcoa Technical Center, near Pittsburgh, Penn-
sylvania. Several subsidiaries and divisions conduct their
own R&D programs, as do many plants. Expenditures for such
activities were $141 million in 1995, $126 million in 1994 and
$130 million in 1993. Substantially all R&D activities are
funded by the Company and its various units.

Environmental

Alcoa's Environmental Policy confirms its commitment to
operate worldwide in a manner which protects the environment
and the health of employees and of the citizens of the com-
munities where the Company has an impact.

The Company engages in a continuing effort to develop and
implement modern technology and policies to meet environmental
objectives. Approximately $54 million was spent during 1995
for new or expanded facilities for environmental control.
Capital expenditures for such facilities will approximate $55
million in 1996. The costs of operating these facilities are
not included in these figures. Remediation expenses being
incurred by the Company are continuing and expected to increase
at many of its facilities. See Environmental Matters on page
26 in the Annual Report to Shareholders, and Item 3 - "Legal
Proceedings" below.

Alcoa's operations, 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 the environment. This trend is expected to continue.
Compliance with new laws, regulations or policies could require
substantial expenditures by the Company in addition to those
referenced above.

Environmental and health requirements also may affect the
manufacture or marketing of certain products produced by the
Company. For example, legislation imposing deposits on beverage
containers, including aluminum cans, has been passed in a number
of states in the U.S. and is being considered elsewhere. U.S.
Federal and state regulations, such as U.S. Food and Drug
Administration regulations and California Proposition 65, affect
the manufacture of products for use in food, beverage or medical
applications and can have worldwide implications. The Coalition
of Northeastern Governors (CONEG) model law (as enacted by
several states) governing the use or presence of certain
materials has been passed in some states and impacts the manu-
facture of certain packages or packaging components. A
directive on packaging waste with a provision similar to the
CONEG legislation has been passed by the Commission of the
European Union. International laws governing delivery and
format of product safety information may impose requirements
(e.g., labeling) on other Alcoa products.

Environmental laws and regulations are important both to
the Company and to the communities where it operates. The
Company supports the use of sound scientific research and rea
listic risk criteria to analyze environmental and human health
effects and to develop effective laws and regulations in all

-15-

countries where it operates. The Company also relies on
internal standards that are applied worldwide to ensure that
its facilities operate with minimal adverse environmental
impacts, even where no regulatory requirements exist. Alcoa
recognizes that recycling and waste minimization offer real
solutions to many environmental problems, and it continues
vigorously to pursue efforts in these areas.

Employees

The Company employed approximately 72,000 people world-
wide at year-end 1995. Negotiation of new labor agreements
covering the majority of the Company's U.S. production workers
will begin in the spring of 1996.

Wages for employees in Australia are covered by agreements
which are negotiated under guidelines established by a national
industrial relations authority.

Wages for both hourly and salaried employees in Brazil are
negotiated annually in compliance with government guidelines.
Each Aluminio location, however, has established a separate
compensation package for its employees which includes real wage
increases and certain employee welfare plans.

Item 2. Properties.

See "Item 1 - Business." Alcoa believes that its facili-
ties, substantially all of which are owned, 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 which it has asserted against others. While the
amounts claimed may be substantial, the ultimate liability can-
not 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 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 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 conducted during 1995
certain remedial activities in the Grasse River for the removal
and appropriate disposal of certain river sediments. The
Company's report on that action is now being reviewed by the
EPA.

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 may be liable
for loss or damage to such resources under Federal and state
law based on Alcoa's operations at its Massena,

-16-

New York facility. While formal proceedings have not been
instituted, the Company is actively investigating these claims.

On March 31, 1994, Alcoa and Region VI of the EPA entered
into an administrative order on consent, EPA Docket No. 6-11-94,
concerning the Alcoa (Point Comfort)/Lavaca Bay National Priori-
ties List (NPL) site which includes portions of Alcoa's Point
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 at the site overseen by the
EPA. Work under the administrative order is proceeding.
Certain federal and state natural resource trustees previously
served Alcoa with notice of their intent to file suit to
recover damages for alleged loss, injury or destruction of
natural resources in Lavaca Bay and to recover the costs for
performing the assessment of such alleged damages.

Other Matters

Alcoa was named as one of several defendants in a number
of lawsuits filed as a result of the Sioux City, Iowa DC-10
plane crash in 1989. The plaintiffs claim that Alcoa fabri-
cated the titanium fan disk involved in the alleged engine
failure of the plane from a titanium forging supplied by a
third party. Six of the 117 cases are still pending.

On December 21, 1992, Alcoa was named as a defendant in KML
Leasing v. Rockwell Standard Corporation filed in the District
Court of Oklahoma County, Oklahoma on behalf of 7,317 Aero
Commander, Rockwell Commander and Gulfstream Commander aircraft
owners. The complaint alleges defects in certain wingspars
manufactured by Alcoa. Alcoa's aircraft builders products
liability insurance carrier has assumed defense of the matter.
In May 1993, Alcoa received a reservation of rights letter
from its insurance carrier which purports to reserve its
rights with respect to a majority of the types of damages
claimed. In May 1995, the court granted Alcoa's motion for
summary judgment to dismiss the action. The summary judgment
was reversed, on plaintiff's appeal, in February 1996, and the
case was remanded to the trial court. The Company and co-defen-
dants filed a petition on March 4, 1996 for rehearing before the
Oklahoma intermediate appellate court.

Alcoa and a subsidiary were notified in September 1991 by
the Department of Justice (DOJ) that it was conducting an inves-
tigation regarding possible violations of the antitrust laws in
the small press, hard alloy extrusion industry. On March 5,
1993, Alcoa and the subsidiary received an antitrust grand jury
investigation subpoena requiring production of documents
relating to pricing of small press, hard alloy extrusions.
Alcoa and its subsidiary provided the documentation requested.
The DOJ formally advised Alcoa on February 7, 1996 that it has
closed its investigation and no action will be taken against
the Company.

In August 1994 the DOJ issued a Civil Investigative Demand
(CID) to Alcoa regarding activities undertaken by Alcoa in
response to a multinational Memorandum of Understanding nego-
tiated by the U.S. government and other sovereign nations.
Alcoa complied with the request in November 1994 and is waiting
for a response from the DOJ.

On March 27, 1995, the DOJ issued a CID requesting infor-
mation regarding pricing policies on aluminum rigid container
sheet in 1994 and 1995. Alcoa complied with the document
request and provided interrogatory answers in June 1995 and is
waiting for a response from the DOJ.

On June 13, 1995, the Company was served with a class
action complaint in the matter of John P. Cooper, et al. v.
Aluminum Company of America, Case Number 3-95-CV-10074,
pending in the United States District Court for the Southern
District of Iowa. The named plaintiffs allege violation of
federal and state civil rights laws prohibiting discrimination
on the basis of race and gender. Plaintiffs

-17-

seek class action status for five classes of employees or pro-
spective employees of Alcoa at its Davenport, Iowa facility.
Plaintiffs seek a permanent injunction against allegedly dis-
criminatory practices, restitution of claimed benefits and
income, and unspecified compensatory and punitive damages.
Alcoa has answered the Complaint and denied all alleged viola-
tions of Federal or state law. Alcoa also has filed a motion
to dismiss certain of the plaintiffs' claims. Discovery is
underway.

Alcoa initiated a lawsuit in King County, Washington in
December 1992 against nearly one hundred insurance companies
that provided insurance coverage to the Company for periods
between the years 1956 and 1985. In the 1995 third quarter,
two summary judgment motions made by certain of the defendants
were ruled upon in Alcoa's favor. During 1995, the Company
settled claims against several of the defendants. Trial in
this proceeding is expected to commence in March/April 1996.

On March 5, 1996, a class action complaint was filed in
Los Angeles County (California) Superior Court against U.S.
producers of primary aluminum, including Alcoa, claiming con-
spiracy and collusive action in violation of state antitrust
laws. The suit alleges that the defendants colluded to raise
prices of aluminum products by cutting production. The pro-
ducers' role as advisors to the U.S. Government during its nego-
tiation of the 1994 Memorandum of Understanding with govern-
ments of other aluminum producing nations was cited in support
of plaintiffs' claim. Damages sustained by the alleged plain-
tiff class (purchasers of primary or aluminum products during
the period January 1, 1994 to March 5, 1996) are claimed at
$4.4 billion and are subject to trebling.

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 1995.

Item 4A. Executive Officers of the Registrant.

The names, ages, positions and areas of responsibility of
the executive officers of the Registrant as of March 1, 1996
are listed below.

Paul H. O'Neill, 60, Chairman of the Board and Chief
Executive Officer. Mr. O'Neill became a director of Alcoa in
1986 and was elected Chairman of the Board and Chief Executive
Officer effective in June 1987. Before joining Alcoa,
Mr. O'Neill had been an officer since 1977 and President and a
director since 1985 of International Paper Company.

Alain J. P. Belda, 52, Vice Chairman. Mr. Belda became
Vice Chairman in December 1995. He was President of Alcoa
Aluminio S.A. in Brazil from 1979 to March 1994. Mr. Belda 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 he was named President -
Latin America for the Company and in 1994 was elected Executive
Vice President. In his current assignment Mr. Belda has respon-
sibility for all of Alcoa's business units, except Automotive
and business units in Latin America and Asia.

George E. Bergeron, 54, Vice President and President -
Rigid Packaging Division. Mr. Bergeron was named President -
Alcoa Closure Systems International in 1982 and was elected
Vice President and General Manager - Rigid Packaging Division
in July 1990. He assumed his current responsibilities in 1991.

Peter R. Bridenbaugh, 55, Executive Vice President. Dr.
Bridenbaugh became Director, Alcoa Laboratories in 1983. He was
elected Vice President Research and Development in 1984 and
Executive

-18-

Vice President in 1991. He was the Company's Chief Technical
Officer from 1991 to 1995. Dr. Bridenbaugh currently is
responsible for Alcoa's automotive groups.

John L. Diederich, 59, Executive Vice President.
Mr. Diederich was elected Managing Director of Alcoa of
Australia Limited and Vice President of Alcoa in 1982. He was
named Vice President - Metals and Chemicals in July 1986 and
was elected a Group Vice President in October 1986. He assumed
his current position in 1991.

Richard L. Fischer, 59, Executive Vice President - Chair-
man's Counsel. Mr. Fischer was elected Vice President and
General Counsel in 1983 and became Senior Vice President in
1984. He was given the additional responsibility for Corporate
Development in 1986 and in 1991 named to his present position.
In his current assignment, Mr. Fischer is responsible for Latin
America and the Asian Region, Corporate Development and the
expansion and integration of Alcoa's international business
activities.

Ronald R. Hoffman, 61, Executive Vice President - Human
Resources, Quality, and Communications. Mr. Hoffman, an officer
since 1975, was named Vice President - Flat Rolled Products in
1979. He was elected a Group Vice President in 1984 and was
given responsibility for the Company's Packaging Systems group
in 1986. He assumed his current responsibilities in 1991.

Jan H. M. Hommen, 52, Executive Vice President and Chief
Financial Officer. Mr. Hommen was Financial Director of Alcoa
Nederland until 1979 when he was elected Assistant Treasurer -
Corporate Finance of Alcoa. He was elected Treasurer in August
1986 and Vice President and Treasurer in December 1986. He was
elected to his current position in 1991.

Richard B. Kelson, 49, Executive Vice President - Environ-
ment, Health and Safety, and General Counsel. Mr. Kelson was
appointed Assistant Secretary and Managing General Attorney in
1984 and Assistant General Counsel in 1989. He was elected
Senior Vice President - Environment, Health and Safety in 1991
and Executive Vice President and General Counsel in May 1994.

Frank L. Lederman, 46, Vice President and Chief Technical
Officer. Mr. Lederman was Senior Vice President and Chief
Technical Officer for Noranda, Inc., a company he joined in
1988. Mr. Lederman 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.

L. Richard Milner, 49, Vice President - Corporate Develop-
ment. Mr. Milner was named General Manager - Castings Division
in 1984 and General Manager - Primary Products, Marketing in
1986. In 1987 he assumed responsibility as Director - Corpo-
rate Development. He was elected to his current position in
1991.

Robert F. Slagle, 55, Vice President and President - Alcoa
World Alumina. Mr. Slagle was elected Treasurer in 1982 and
Vice President in 1984. In 1986, he was named Vice President -
Industrial Chemicals and, in 1987, was named Vice President -
Industrial Chemicals and U.S. Alumina Operations. Mr. Slagle
was named Vice President - Raw Materials, Alumina and Indus-
trial Chemicals in 1989, and Vice President of Alcoa and
Managing Director - Alcoa of Australia Limited in 1991. He was
named to his current position, with responsibility for Alcoa's
global bauxite and alumina activities, in January 1996.

G. Keith Turnbull, 60, Executive Vice President - Strategic
Analysis/Planning and Information. Dr. Turnbull was appointed
Assistant Director of Alcoa Laboratories in 1980. He was named
Director - Technology Planning in 1982 and Vice President -
Technology Planning in 1986. In 1991 he was elected to his
current position.

-19-

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 50 of the 1995 Annual Report to
Shareholders (the Annual Report) and are incorporated herein by
reference.

At February 12, 1996 (the record date for the Company's
1996 annual shareholders meeting) there were approximately
83,600 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 columnar table showing selected financial
data for the Company is set forth on page 21 of the Annual
Report and is incorporated herein by reference.

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

Management's review and comments on the consolidated
financial statements are set forth on pages 22 through 27 of
the Annual Report and are 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 set forth on pages 28 through 41 of the Annual Report and
are incorporated herein by reference.

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

None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information regarding Directors is contained under the
caption "Board of Directors" on pages 3 through 7 of the Regis-
trant's definitive Proxy Statement dated March 6, 1996 (the
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."

-20-

Item 11. Executive Compensation.

This information is contained under the caption "Compensa-
tion of executive officers" on pages 9 through 12 of the Proxy
Statementand is incorporated herein by reference. The perfor-
mance graph and Compensation Committee Report shall not be
deemed to be "filed."

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

This information is contained under the caption "Security
ownership" on page 8 of the Proxy Statement and is incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions.

This information is contained under the caption "Certain
relationships and related transactions" on page 7 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 accoun-
tants are set forth on pages 28 through 41 of the Annual Report
and are incorporated herein by reference.

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

Independent Auditor's Report of Coopers & Lybrand L.L.P.
dated January 8, 1996 on the Company's financial statement
schedule filed as a part hereof for the fiscal years ended
December 31, 1995, 1994 and 1993 and related consent dated
March 11, 1996.

Schedule II - Valuation and Qualifying Accounts - for the
fiscal years ended December 31, 1995, 1994 and 1993.

(3) Exhibits

Exhibit
Number Description *

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, 1993.

3(b). By-Laws of the Registrant, incorporated by reference
to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1991.

-21-

10(a). Long Term Stock Incentive Plan, effective January 1,
1992, incorporated by reference to exhibit 10(a) to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1991.

10(a)(1). Amendments to Long Term Stock Incentive Plan, effec-
tive January 1, 1995, incorporated by reference to
exhibit 10(a)(1) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.

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 for the year ended
December 31, 1980.

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 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 for the year
ended December 31, 1994.

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 for the year ended December 31,
1992 and exhibit 10(e)(1) of the Company's Annual
Report on Form 10-K 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 for the year ended December 31, 1987,
exhibit 10(g) to the Company's Annual Report on Form
10-K for the year ended December 31, 1990, and
exhibit 10(f)(2) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992.

10(g). Deferred Fee Plan for Directors, as amended effective
November 10, 1995 (filed herewith).

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

10(h)(1). Amendment to Restricted Stock Plan for Non-Employee
Directors, effective November 10, 1995 (filed here-
with).

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 for the year
ended December 31, 1989.

10(i)(1). Amendment to Fee Continuation Plan for Non-Employee
Directors, effective November 10, 1995 (filed here-
with).

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 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)
of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.

-22-

10(j)(2). Amendment to Deferred Compensation Plan, effective
June 1, 1995 (filed herewith).

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 for the year ended December 31, 1990.

10(l). 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 for the year ended December 31,
1987.

11. Computation of Earnings per Common Share.

12. Computation of Ratio of Earnings to Fixed Charges.

13. Portions of Alcoa's 1995 Annual Report to Share-
holders.

21. Subsidiaries and Equity Entities of the Registrant.

23. Consent of Independent Certified Public Accountants.

24. Power of Attorney for certain directors.

27. Financial data schedule.

*Exhibit Nos. 10(a) through 10(k) 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 1995.

-23-

Independent Auditor's Report

To the Shareholders and Board of Directors
Aluminum Company of America

Our report on the consolidated financial statements of
Aluminum Company of America has been incorporated by reference
in this Form 10-K from page 28 of the 1995 Annual Report to
Shareholders of Aluminum Company of America. In connection
with our audits of such financial statements, we have also
audited the related financial statement schedule listed under
Item 14 of this Form 10-K.

In our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.

/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.

600 Grant Street
Pittsburgh, Pennsylvania
January 8, 1996

-24-

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

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 Deductions end of period
----------- ------ -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:

1995 $ 37.4 $17.4 $(1.8)(A) $ 7.2(B) $ 45.8

1994 $ 33.2 $13.4 $(2.0)(A) $ 7.2(B) $ 37.4

1993 $ 17.7 $19.2 $(0.2)(A) $ 3.5(B) $ 33.2

Income tax valuation allowance:

1995 $170.0 $16.2 - $74.1(C) $112.1

1994 $171.4 $19.9 - $21.3(C) $170.0

1993 $157.3 $52.7 - $38.6(C) $171.4

<FN>
Notes: (A) Collections on accounts previously written off, acquisition of subsidiaries and foreign currency
translation adjustments.
(B) Uncollectible accounts written off
(C) Related primarily to utilization of tax loss carry forwards.

</TABLE>

-25-

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.

ALUMINUM COMPANY OF AMERICA

March 8, 1996 By /s/Earnest J. Edwards
Earnest J. Edwards
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.

Signature Title Date

/s/Paul H. O'Neill Chairman of the Board March 8, 1996
Paul H. O'Neill and Chief Executive Officer
(Principal Executive Officer
and Director)

/s/Jan H. M. Hommen Executive Vice President and March 8, 1996
Jan H. M. Hommen Chief Financial Officer
(Principal Financial Officer)

Kenneth W. Dam, John P. Diesel, Joseph T. Gorman, Judith M.
Gueron, Sir Ronald Hampel, John P. Mulroney, Sir Arvi Parbo,
Henry B. Schacht, Forrest N. Shumway, Franklin A. Thomas and
Marina v.N. Whitman, each as a Director, on March 8, 1996,
by Barbara Jeremiah, their Attorney-in-Fact.*

*By /s/Barbara Jeremiah
Barbara Jeremiah
Attorney-in-Fact

-26-

EXHIBIT INDEX

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