ALCOA INC
10-K405, 2000-02-28
PRIMARY PRODUCTION OF ALUMINUM
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                                  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, 1999
                                       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.)

Alcoa Corporate Center, 201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858
                (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:

     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 February 17, 2000 there were 371,872,159  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 $28,450 million.

Documents incorporated by reference.

     Parts  I and  II  of  this  Form  10-K  incorporate  by  reference  certain
information from the registrant's  1999 Annual Report to Shareholders.  Part III
of this Form 10-K  incorporates  by reference the  registrant's  Proxy Statement
dated  February  25, 2000,  except for the  performance  graph and  Compensation
Committee Report.


                                       1
<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 a major  participant  in all segments of the  industry:  mining,
refining, smelting,  fabricating and recycling. Alcoa serves customers worldwide
primarily  in the  transportation  (including  aerospace,  automotive,  rail and
shipping),  packaging,  building and industrial  markets with a great variety of
fabricated and finished products.

Alcoa is organized into 25 independently managed business units and has over 228
operating  locations in 32  countries.  Alcoa gives  business unit leaders clear
responsibilities that concentrate authority closer to customers.

The U.S.  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
- -------------------

In August 1999, Alcoa and Reynolds Metals Company (Reynolds) announced that they
had reached a  definitive  merger  agreement  under which Alcoa will acquire all
outstanding  shares  of  Reynolds  in a  tax-free  stock-for-stock  transaction.
Reynolds  shareholders  will  receive 1.06 shares of Alcoa common stock for each
share of Reynolds common stock.

The combined company will have about 127,000  employees and will operate in over
300 locations in 37 countries.  Based on annualized  1999 results,  the combined
company should have annual revenues that exceed $21 billion.

Alcoa and  Reynolds  have  made all of the  requisite  competition  notification
filings with the appropriate U.S. and international governmental authorities. On
February 11,  2000,  the  Reynolds  stockholders  voted to approve and adopt the
merger  agreement.  Completion  of the  merger is  subject  to  satisfaction  of
applicable regulatory requirements.

Market and Geographic Information
- ---------------------------------

Alcoa  serves a  variety  of  customers  in a number  of  markets.  Consolidated
sales from these markets during the past three years were:

                                       2
<PAGE>

<TABLE>
<CAPTION>

                                                                     (dollars in millions)
                                                                1999           1998          1997
                                                                ----           ----          ----
         <S>                                                  <C>            <C>           <C>
         Transportation                                       $ 3,976        $ 3,738       $ 3,119
         Packaging                                              3,169          3,304         3,201
         Distributor and Other                                  2,896          2,764         2,151
         Aluminum Ingot                                         2,241          2,012         1,521
         Alumina and Chemicals                                  1,842          1,781         1,961
         Building and Construction                              2,199          1,741         1,366
                                                                -----          -----         -----
                                                 Total        $16,323        $15,340       $13,319
                                                              =======        =======       =======


                                                                    (dollars in millions)
                                                               1999           1998          1997
         U.S.                                                 $10,392        $ 9,212       $ 7,593
         Australia                                              1,398          1,470         1,875
         Spain                                                  1,059            965            44
         Brazil                                                   730            934         1,161
         Germany                                                  521            554           580
         Other                                                  2,223          2,205         2,066
                                                                -----          -----         -----
                                                  Total       $16,323        $15,340       $13,319
                                                              =======        =======       =======

</TABLE>

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

In accordance  with SFAS No. 131,  "Disclosures  about Segments of an Enterprise
and Related  Information,"  Alcoa reports four worldwide  segments:  Alumina and
Chemicals,  Primary Metals, Engineered Products and Flat-Rolled Products. All of
the  Company's  products  that do not fall into one of those four  segments  are
reported in the category entitled Other. See Note O 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:
     o    bauxite
     o    alumina
     o    alumina-based  chemicals used  principally in industrial  applications
          and
     o    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 Industrial Chemicals (AIC) 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 into alumina most of the bauxite that
it mines. All of the Company's active bauxite interests are part of AWAC, except
in Brazil.

                                       3
<PAGE>

Alcoa is the world's  leading  producer of alumina.  The Company  sells  alumina
principally  from  operations  in Australia,  Jamaica and  Suriname.  Alcoa sold
approximately  53% of its alumina  production in 1999 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.  Prices may be based on formulas  related to
aluminum ingot market prices or to alumina production costs.

AWA entities and Sino Mining Alumina  Limited (SMAL) have a long-term  agreement
for  the  purchase  of  alumina  for  the  Chinese  aluminum  industry.  SMAL is
ultimately  owned by the China State Nonferrous  Metals Industry  Administration
(SNMIA), a Chinese state-owned  enterprise that has succeeded the China National
Nonferrous Metals Industry Corporation as the entity responsible for the Chinese
aluminum  industry as part of the ongoing  governmental  restructuring in China.
The  agreement  entitles a  subsidiary  of SMAL to purchase a minimum of 400,000
metric tons (mt) of alumina per year for 30 years. The ongoing  restructuring of
SNMIA and the Chinese  aluminum  industry has not impacted this  agreement.  The
SMAL  subsidiary  also has the option to increase  its alumina  purchases as the
needs of the Chinese aluminum industry grow.

In November 1999, Alcoa and China Aluminum Corp. (Chalco) signed a memorandum of
understanding to form a strategic partnership. SNMIA witnessed the memorandum of
understanding.  The  parties  are  negotiating  a master  strategic  partnership
agreement that is expected to involve an association of several Chalco and Alcoa
aluminum production facilities.

Alcoa World Alumina - Australia
- -------------------------------

AWA - Australia's  bauxite mineral lease is due for renewal in 2002, but 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
mt at the end of 1999. In October 1999,  AWA - Australia  announced  that it had
completed  its  440,000 mt per year  expansion  of the  Wagerup  refinery.  This
expansion increased Wagerup's production capacity from approximately 1.7 million
mt per year to approximately 2.2 million mt per year. This is the first stage of
a planned  expansion  to 3.3  million  mt per year at  Wagerup,  for which AWA -
Australia has obtained environmental approval.

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.

In  May  1999,   AWA  announced   that  it  had  applied  for  a  patent  for  a
high-efficiency  causticization  invention  for  use  in  the  alumina  refining
process.  A research  team at the Kwinana  refinery  developed  the new process,
which  improves  productivity  at a refinery  by  reducing  the amount of sodium
carbonate in the chemical solution for processing the bauxite ore.

AWA - Australia is exploring the  possibility of selling three power stations in
Western  Australia and has requested  bids from  interested  parties.  The three
natural gas-fired  cogeneration  power stations are located within each of AWA -
Australia's three alumina refineries in Western Australia.

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

                                       4
<PAGE>

majority  owner,  an  affiliate of Billiton  plc  (Billiton).  Bauxite from both
mining  operations  serves  Suralco's  share of a refinery in Suriname.  Suralco
expects to deplete the current mine  reserves at both  operations  in the period
2005-2010.

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.  At the end of 1999, the refinery's
annual capacity was approximately one million mt.

        Brazil

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. 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%.

In 1999, the Alumar refinery  completed an expansion of 260,000 mt, bringing the
total annual  capacity to  approximately  1.25 million mt. The smelter  consumes
most of this alumina production.

Aluminio  holds an 8.6%  interest  and  Abalco  S.A.  holds a 4.6%  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,  Norsk Hydro and Reynolds.  Aluminio and Abalco S.A.  purchase bauxite
from MRN under long-term supply contracts.

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

        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  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 March 2001.

        Africa

Alcoa has long-term  contracts to purchase  bauxite  mined by a  partially-owned
entity in the Republic of Guinea in Western Africa.  This bauxite  services most
of the  requirements  of the Pt. Comfort,  Texas and San Ciprian,  Spain alumina
refineries. The contracts expire after 2011.

        United States

AWA, through a majority-owned entity, St. Croix Alumina,  L.L.C., owns a 600,000
mt per year alumina  refinery  located on St. Croix,  U.S.  Virgin  Islands.  In
February 1998, AWA restarted the refinery due to

                                       5
<PAGE>

an increase in worldwide demand for alumina. The refinery had been inactive as a
result of world alumina market conditions.

AWA owns an alumina  refinery at Pt.  Comfort,  Texas with an annual capacity to
2.3 million mt.

Alcoa Industrial Chemicals
- --------------------------

Alcoa sells  industrial  chemicals to customers in a broad  spectrum of markets.
These markets include:
     o    refractories
     o    ceramics
     o    abrasives
     o    chemicals processing and
     o    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 AIC:
     o    Bauxite, Arkansas
     o    Dalton, Georgia
     o    Falta, India (joint venture)
     o    Ft. Meade, Florida
     o    Iwakuni and Naoetsu, Japan
     o    Kwinana and Rockingham, Australia
     o    Leetsdale, Pennsylvania
     o    Ludwigshafen, Germany
     o    Moerdijk and Rotterdam, the Netherlands
     o    Pocos de Caldas and Salto, Brazil
     o    Port Allen and Vidalia, Louisiana
     o    Pt. Comfort, Texas and
     o    Singapore.

In late 1998, AIC began  construction  of a facility in China to process tabular
alumina and other  alumina-based  materials  for sale to the Chinese  refractory
market. This facility is scheduled for completion in the first half of 2000.

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  hydrofluosilicic  acid. Aluminum
fluoride is used in the aluminum smelting process.

AIC 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

The Company smelts primary aluminum from alumina  obtained  principally from its
alumina   refineries.   Alcoa's   consolidated   primary  aluminum  capacity  is
approximately  3.2 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 1999  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.

                                       6
<PAGE>

Since 1994,  Alcoa has had 450,000 mt of its  worldwide  smelting  capacity idle
because of an  oversupply  of ingot on world  markets.  In January  2000,  Alcoa
announced that it will restart  approximately  200,000 mt of its currently idled
aluminum  smelting  capacity.  The  Company  plans to bring this  capacity  into
production over the course of the year. Alcoa will have approximately 250,000 mt
of aluminum smelting capacity that remains idle following this restart.

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.  Most  purchase  contracts  for firm power tie
prices to aluminum prices or to prices based on various indices.

In February 1999, the Company  entered into a 50/50 joint venture with C.C. Pace
Resource  Management,  LLC, an energy management and consulting company, to form
Pace Global  Energy  Services,  LLC.  The new company  will provide a variety of
energy-related  management  and  consulting  services  to  Alcoa  and  to  other
unaffiliated companies.

        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:
     o    AWA - Australia (45% interest)
     o    China International Trust and Investment Corporation (22.5% interest)
     o    Marubeni Aluminium Australia Pty., Ltd. (22.5% interest) and
     o    Eastern Aluminum Ltd. (10% interest).

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 - 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 annum
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.  Using a formula,  the parties
determine  the power prices based on the price of  aluminum.  Negotiations  have
been finalized to permit power  interuptibility 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 de Minas
Gerais S.A. (CEMIG),  the  government-controlled  electric  utility,  at a small
discount from the applicable  industrial tariff price. There is a protective cap
on the price of the  electric  power based on the London  Metal  Exchange  (LME)
aluminum price.

In  February  1999,  Aluminio  and  CEMIG  entered  into  a new  power  purchase
agreement.  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.

                                       7
<PAGE>

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 1999, over
40% of the project was 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.

        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 360,000 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.

        North America

In May 1999,  the Company filed with the Federal Energy  Regulatory  Commission,
and the states of New York and North Carolina,  indicating its intent to combine
five of its wholly-owned utility subsidiaries,  Yadin, Inc., Tapoco, Inc., Alcoa
Generating Corporation,  Long Sault, Inc. and Colockum Transmission Company into
a single entity,  to be called Alcoa Power Generating Inc.  (APGI).  The mergers
into APGI were effective January 1, 2000.

The Company  generates  approximately  35% of the power  requirements for its 11
North American  smelters and generally  purchases the remainder  under long-term
contracts.  Alcoa obtains approximately 12% 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 Bonneville Power Administration (BPA)
that services the Wenatchee,  Washington smelter. Several contractual provisions
allow power  supply  restrictions  when power is in short  supply.  Beginning in
1995, power purchased from a local public utility district replaced a portion of
the power supplied under the BPA contract. The Wenatchee facility currently uses
no power from BPA, but instead  purchases  its  additional  power needs from the
local public utility district.

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.  Low-sulfur coal
contracts   satisfied  an  additional  35%  of  the  requirement  through  1999.
Short-term  contracts of less than two years  satisfy the  remainder of the fuel
requirements.

The  Rockdale,  Texas  smelter  uses  lignite to generate  power.  Company-owned
generating  units  supply  about  one-half  of  the  total  requirements.  Texas
Utilities  Company  supplies  the  balance  through a long-term  power  contract
expiring in 2013.

                                       8
<PAGE>

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  recently  extended to 2010.  In mid-1999,  APGI entered into a
power sales  contract with Carolina  Power & Light Company  (CP&L),  under which
APGI sells the capacity and energy produced at its  hydroelectric  units to CP&L
and, in return,  CP&L supplies the power  requirements of the Badin plant.  This
arrangement continues through the end of August 2000.

The purchased power (primarily hydroelectric) contract for the Massena, New York
smelter  expires not earlier  than 2003.  Alcoa,  however,  may  terminate  this
contract 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 power rates are linked to the prevailing price of aluminum.

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 (24.95%). A Japanese consortium, led by
a subsidiary of Mitsui & Co. Ltd., owns an aggregate 39% interest in each of the
Intalco and Eastalco  facilities.  Subsidiaries of Century Aluminum  Company,  a
publicly  traded  domestic  corporation,  and  Sudelektra  Holding,  AG, a Swiss
corporation,  together  own 49.67% of Mt.  Holly.  On February 7, 2000,  Century
Aluminum Company announced that it had reached agreement in principle to acquire
Sudelektra  Holding's 23% interest in Mt. Holly.  The transaction is expected to
be completed by the end of the first quarter of 2000.  Subsidiaries  of Reynolds
own an  aggregate  50%  interest,  and 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.

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.  The power rate for all of the  electricity
supplied  to the  Becancour  facility  is  linked  to the  prevailing  price  of
aluminum.  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 no longer  linked to the price of
aluminum  but 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. For the foreseeable future,  these contracts are
expected to meet the power requirements of these facilities.

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

        Suriname

In March  1999,  Alcoa  shut down its  30,000 mt per year  smelter  in  Paranam,
Suriname.

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.

                                       9
<PAGE>

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

RCS  accounted  for most of the  1999  revenues  in the  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.  Use of aluminum
beverage cans continues to increase by approximately 3% annually worldwide.

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

Kaal Australia Pty., Ltd.,  50%-owned by Alcoa, owns and operates the former AWA
- - Australia  rolling mill at Point Henry and the former Comalco  Limited rolling
mill at Yennora.  These mills produce RCS for the  Australian and Asian markets.
AWA - Australia supplies Kaal Australia with aluminum ingot.

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

Foil
- ----

Alcoa's Lebanon,  Pennsylvania facility produces industrial foil, laminated foil
and brazing  sheet.  The building and  construction,  packaging  and  automotive
markets  use  these  products.  Continuous  casting  facilities  in  Hawesville,
Kentucky  and  Badin,  North  Carolina  produce  reroll  stock in support of the
Lebanon  facility.  The Company  also owns and  operates an  additional  casting
facility in St.  Louis,  Missouri.  Foil  products  from this  facility are sold
primarily to commercial users in the flexible packaging, converter, food service
and  pharmaceutical  industries.  Alcoa also owns and  operates  a  facility  in
Russellville,  Arkansas.  The  Russellville  plant,  which is  supported  by the
casting facility in St. Louis, produces foodservice and converter foil products.

Aluminio, near Recife, Brazil, manufactures light gauge sheet, foil products and
laminated  evaporator panels.  The Yennora,  Australia plant also 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,  that  operates  the  former  SAFP  aluminum  foil
production facility in Shanghai,  China. With

                                       10
<PAGE>

the addition of a second  caster in April 1998,  the annual  output of the joint
venture facility is now over 15,000 mt.

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

In August 1999,  Alcoa and Kibar Holding Co. of Turkey signed a letter of intent
to form a strategic  alliance with Kibar's Turkish  aluminum  business.  Kibar's
aluminum  business,  known as Assan  Aluminyum,  is the leading rolled  products
business in Turkey.

In  November  1999,  Alcoa  purchased  substantially  all the  assets  of Golden
Aluminum  Company,  a subsidiary of ACX  Technologies,  Inc.  Golden  Aluminum's
operations  include a shuttered  rolling  facility in San  Antonio,  Texas and a
rolling  facility  in Ft.  Lupton,  Colorado.  Alcoa will retain the San Antonio
plant for development work and non-can sheet production.  In January 2000, Alcoa
sold the Ft. Lupton facility to Quanex Corporation.

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

Alcoa produces sheet and plate products that are used in the following markets:
     o    aerospace
     o    auto and truck
     o    lithographic
     o    railroad
     o    shipbuilding
     o    building and construction
     o    defense and
     o    other industrial and consumer markets.

The  Company  maintains  its own  sales  force  for most of the  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.
This facility began to operate in 1998 and became fully  operational  during the
second half of 1999.

                                       11
<PAGE>

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's  Memory  Products  business  in  Sidney,  Ohio was closed in 1999 as the
memory disk market and customer base declined.

Alcoa's Brite Products business in Norcross, Georgia was closed in 1999.

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 as well as soft alloy  extrusions  for the building,
construction,  food,  transportation  and  agricultural  markets in central  and
western Europe. Kofem delivers aluminum truck bodies to major beverage companies
in Europe and the Middle East.

The  Company's  Alcoa Italia S.p.A.  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.  These
mills  produce  common  alloy  flat  and  coiled  sheet  for  the  building  and
construction,  and transportation  markets,  lithographic sheet and coil, bright
products for lighting,  cosmetic and industrial uses and foil products for food,
pharmaceutical and industrial applications in Europe.

In April 1999,  Alcoa completed the acquisition of the bright products  business
of Pechiney's  Rhenalu  rolling plant located at  Castelsarrasin  near Toulouse,
France.

In August 1999, Alcoa, the Holding Company for Metallurgical  Industries and the
Egypt Aluminum Company (Egyptalum) signed a memorandum of understanding relating
to the formation of a strategic alliance between Alcoa and Egyptalum.  Egyptalum
is the largest  aluminum company in Egypt,  with substantial  assets in smelting
and rolled products.

IV.  Engineered Products

Engineered products include aluminum  extrusions,  forgings,  castings and wire,
rod and bar.

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

The North American extrusion business is comprised of Alcoa Engineered  Products
and Alcoa Extruded Construction Products.

                                       12
<PAGE>

Alcoa Engineered Products has nine operating locations:
     o    Baltimore, Maryland - hard alloy extrusions
     o    Catawba, North Carolina - specialized extrusions
     o    Chandler, Arizona - hard alloy extrusions, tube and forge stock
     o    Cressona,  Pennsylvania  - industrial  and  distribution  common alloy
          extrusions
     o    Elizabethton,  Tennessee - industrial  and  distribution  common alloy
          extrusions
     o    Lafayette, Indiana - hard alloy extrusions and tube
     o    Massena,  New York - cast rod,  mechanical-grade  redraw rod, wire and
          cold-finished rod and bar extrusions
     o    Morris, Illinois - industrial and distribution common alloy extrusions
     o    Spanish  Fork,  Utah  -  industrial  and  distribution   common  alloy
          extrusions

These facilities are supported by sales and administration  centers in Illinois,
Indiana and  Pennsylvania.  Extruded aluminum products from these operations are
sold to  original  equipment  manufacturers  in  aerospace/defense,  automotive,
commercial transportation,  machinery, electrical, recreation, consumer durables
and other industrial markets and to distributors who service these markets.

Alcoa Extruded  Construction  Products has nine operating  locations:  Arkansas,
Florida,  Georgia  (2),  Ohio,  Louisiana,  Mississippi,  South  Dakota  and  an
international  operation in Monterrey,  Mexico. These facilities manufacture and
sell soft-alloy  extruded products.  Representative  products include window and
door frames,  bath and shower  enclosures,  patio and pool  enclosures,  stadium
seating, light poles and flag poles, and colored architectural shapes.

Alcoa Extruded Construction Products' shower and bath enclosures are distributed
through service centers in California,  Florida,  Georgia, Iowa, North Carolina,
Pennsylvania, Texas and Washington, as well as through independent distributors.
The Mexican operation consists of a two-press extrusion plant in Monterrey.  All
plants and facilities are owned by the Company,  except for the plant located in
Monterrey  and the service  centers,  which are leased.  The Company  closed its
extrusion facility in West Chicago, Illinois in April 1999.

In January 2000, Alcoa purchased Excel Extrusions, Inc., a subsidiary of Noranda
Aluminum,  Inc.,  located in Warren,  Ohio.  The  facility  produces  soft-alloy
aluminum  extrusions  that are used  primarily in the building and  construction
markets.

A subsidiary in Argentina and Aluminio  manufacture  aluminum extruded products.
Aluminio  operates  five  plants in Brazil,  with a total of  fifteen  extrusion
presses.

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 subsidiaries of Alcoa Europe Holding B.V.,  formerly Alcoa Nederland Holding
B.V., produce extrusions,  common alloy sheet products and a variety of finished
products for the building industry, such as aluminum windows, doors and aluminum
ceiling  systems.  These companies also  manufacture  products for  agricultural
applications, such as automated greenhouse systems.

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

The Company owns and operates extrusion plants in Valls, Noblejas and La Coruna,
Spain.

Alcoa also has  extrusion  plants in Hungary  and the United  Kingdom.  In March
1999, Alcoa completed its acquisition of Reynolds'  aluminum  extrusion plant in
Irurzun,  Spain as well as its distribution operation for architectural systems,
which has warehouses in several cities in Spain.

                                       13
<PAGE>

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,  17 service centers and
one additional  manufacturing  location 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.

Alumax Europe N.V.  manages Kawneer  Europe's  operations in the United Kingdom,
France,  Germany and Poland. It also participates in a joint venture in Morocco.
Three manufacturing plants located in France,  England and Germany, two of which
are owned and one of which is leased,  provide  architectural  aluminum products
similar to those  produced by Kawneer  operations in the U.S. These products are
marketed  under the Kawneer  Europe name  throughout  Europe.  Kawneer  Europe's
subsidiaries also operate service centers in France,  Poland and Morocco.  Other
former  operations of Alumax Europe,  which included custom  extrusion plants in
the United Kingdom and the Netherlands,  and an aluminum  recycling  facility in
the Netherlands that produces soft-alloy  extrusion billet, have been integrated
operationally into Alcoa Europe Extrusion and End Products Business Unit.

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.

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.

Aluminio plans to build a 72,000-unit-per-year aluminum wheel plant in the state
of Pernambuco,  Brazil.  The new plant initially will operate by finishing Alcoa
wheels imported in unfinished form.

V.  Other

This  category  includes  the  production  and  sale  of high  performance  body
structures  for cars,  electrical,  plastic and  composite  materials  products,
manufacturing and packaging equipment, magnesium products and steel and titanium
forgings.

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

In 1999,  Alcoa refocused its Automotive  Structures  business unit. The Company
formed two new businesses,  Alcoa Automotive Castings (which includes a Finished
Extruded  Components  unit) and Alcoa Automotive  Engineering.  Alcoa Automotive
Castings  offers  high-quality,  structural  castings  and formed  and  machined
extrusions,  while Alcoa Automotive  Engineering  provides design,  engineering,
prototyping   and  cost  analysis  for  aluminum   structures,   assemblies  and
components.

                                       14
<PAGE>

The  manufacturing  plant in Soest,  Germany became part of the Alcoa Automotive
Castings business. Alcoa 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. The Soest plant also produces the front end module
for the new Mercedes-Benz A Class car.

Alcoa Automotive Castings's Modena, Italy facility assembles spaceframes for the
Ferrari  360  Modena,  which  was  introduced  in 1999 to  favorable  automotive
industry reviews.

In August 1999,  Alcoa acquired  almost all of the remaining 50% interest in the
A-CMI  partnership  from Hayes  Lemmerz  International,  Inc.  A-CMI was a joint
venture formed in 1995 between Alcoa and CMI International, Inc. to produce cast
aluminum  products for the  automotive  industry.  Hayes  Lemmerz  purchased CMI
International,  Inc.  in  February  1999.  A-CMI,  now part of Alcoa  Automotive
Castings, has plants located in Fruitport,  Michigan,  Hawesville,  Kentucky and
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 and General Motors.

Alcoa  also  designs  and  builds  specialized  die-casting  machines  through a
subsidiary in Montreal, Canada.

Alcoa's plant in Northwood, Ohio manufactures DaimlerChrysler's Plymouth Prowler
frame and a variety of aluminum  structural  assemblies for the U.S.  automotive
industry, including the Corvette windshield surround.

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

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

Alumax Engineered Metal Processes,  Inc. (AEMP) produced  automotive  components
with  operations  in  Jackson,  Tennessee  and  Bentonville,  Arkansas  using  a
semi-solid  forging  process.  In May  1999,  Alcoa  completed  the  sale of the
Jackson, Tennessee facility to the management of AEMP. In addition, Alcoa closed
the Bentonville, Arkansas plant.

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 supplies EDS to:
     o    Ford
     o    Subaru
     o    PACCAR
     o    Audi and
     o    Volkswagen.

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.

                                       15
<PAGE>

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.

Significant  competitive  factors in the EDS markets include price,  quality and
full service supplier  capability,  as automakers  increasingly  require support
from selected suppliers on a global basis.

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, CATV and electric utility industries. EF&I subsidiaries
of Six "R"  Communications  include  T.I.C.S.  Corporation  in Charlotte,  North
Carolina;  MinTel  Communications,  L.L.C.  in  Norcross,  Georgia;  and Quality
Control Services, L.L.C. in Richmond, Virginia.

In October 1999, AFL's telecommunications  division acquired 55% of the stock of
Tele-Tech Company, Inc., in Lexington,  Kentucky and 55% of the stock of Digisys
Corp.  in  Alpharetta,  Georgia.  Both  companies are providers of EF&I services
nationally to the telecom industry and 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.

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

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 plastic closure,
PET plastic bottle, closure molding equipment and packaging equipment design and
assembly facilities at the following locations:

Packaging and Closures Facilities:
     o    Barcelona, Spain
     o    Barueri, Itapissuma, Lages and Queimados, Brazil
     o    Bogota, Colombia
     o    Buenos Aires, Argentina
     o    Crawfordsville, Indiana
     o    Englewood, Colorado
     o    Ensenada and Saltillo, Mexico
     o    Lima, Peru
     o    Lyubuchany, Russia
     o    Manama, Bahrain
     o    Manila, the Philippines
     o    Nogi, Japan
     o    Olive Branch, Mississippi
     o    Randolph, New York
     o    San Jose, Costa Rica
     o    Santiago, Chile
     o    Sidney, Ohio
     o    Szekesfehervar, Hungary

                                       16
<PAGE>

     o    Tianjin, China and
     o    Worms and Viernheim, Germany.

The Alcoa Packaging Equipment business unit designs,  manufactures and services:
     o    can forming equipment
     o    can decoration equipment
     o    registered embossers
     o    end conversion presses
     o    a variety of testing equipment for the can-making industry
     o    plastic and aluminum  closure  handling,  orientation,  inspection and
          capping equipment for the food and beverage industry and
     o    specialty   aluminum   components  for  the  semiconductor   equipment
          industry.

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

Aluminio  and  Phelps  Dodge  Corporation  have a joint  venture  that  produces
aluminum  electric  cable and copper  wiring and cables in Brazil.  The venture,
Phelps Dodge & Alcoa Fios e Cabos  Eletricos  S.A., is owned 60% by Phelps Dodge
and 40% by Aluminio.  Production  takes place at the venture's plant in Pocos de
Caldas.

Alcoa  Building  Products,  Inc.  (ABP)  manufactures  and  markets  residential
aluminum siding and other aluminum building  products.  ABP sells these products
principally to specialty distributors.

ASCI produces aluminum closures for bottles at Worms,  Germany,  Nogi, Japan and
Barcelona,  Spain. In early 1999, the Company sold the assets subject to certain
liabilities of Capsulas Metalicas, S.A., its metal beverage closures business in
Barcelona, Spain, to Alucapvit, S.p.A.

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

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

ABP  produces  vinyl  siding  and  accessories  and other  nonaluminum  building
products for the residential building and construction markets.

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.

Aluminio  owns  40% and  affiliates  of  Alcatel  of  France  own 60% of a joint
venture,  called Alcatel Cabos Brazil. The venture manufactures,  in Brazil, and
sells telecommunication cables and related accessories in South America.

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.

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.

                                       17
<PAGE>

The aluminum  industry is highly  cyclical,  and the 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.

The Company  continues to examine all aspects of its  operations  and activities
and  redesign  them where  necessary to enhance  effectiveness  and achieve cost
reductions. 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) that  encompasses the entire
value chain, including manufacturing and supporting business processes. Research
and development has led to improved  product quality and production  techniques,
new product development and cost control.

ABS is based upon the complete integration of the Company's mission,  vision and
values with  manufacturing  and its business  processes and measures in order to
produce  desired  outcomes.  The basic tenets of ABS are (1) making products for
use (not  inventory),  and working only on the needs of customers  (external and
internal) (2) doing away with waste  everywhere and (3) recognizing that success
can only be achieved through people.

Alcoa has realized  significant  achievements to date through the implementation
of ABS in its businesses, including:
     o    reduction of waste
     o    reduction in lead times
     o    improvement in delivery performance
     o    improvement in "throughput" and recovery
     o    increases in productivity
     o    reduction of inventory and backlogged orders
     o    reduction in handling equipment and
     o    emptying of factory floor space.

Alcoa  believes that ABS will in time  substantially  improve its  profitability
relative  to its peers.  In July  1998,  Alcoa  announced  a $1.1  billion  cost
reduction  initiative to be achieved by January 1, 2001. The Company  intends to
realize a significant portion of this reduction through ABS. At the end of 1999,
the Company had achieved  $728 million in  annualized  cost savings  towards the
$1.1 billion goal.

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

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.  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.

                                       18
<PAGE>

In the U.S.,  Alcoa is net  metal  short  and is  subject  to the risk of higher
aluminum  prices for the  anticipated  metal  purchases  required to fulfill the
long-term  customer contracts noted above. 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  requirements  will be met. At December 31, 1999 and 1998, these contracts
totaled approximately  465,000 mt and 933,000 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 1999 year-end, three-month LME aluminum ingot
price of $1,650 per mt would result in a pretax gain or loss to future  earnings
of $77 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, 1999 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.

The  expiration  dates of the  options  and the  delivery  dates of the  futures
contracts  noted above 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 options positions will be rolled
forward.  This may result in significant  cash inflows if the hedging  contracts
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.

Alcoa  also had  21,000  mt and  29,000  mt of  futures  and  options  contracts
outstanding  at  year-end  1999 and 1998,  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 $12 million in 1999 and charges of $45 million in
1998 and $13 million in 1997. A hypothetical 10% change in aluminum ingot prices
from the  year-end  1999 level of $1,650 per mt would result in a pretax gain or
loss of $3 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, 1999,  these  contracts
totaled  244,000  mt.  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  1999 level of $1,650 per mt would  result in a pretax
gain or loss of $29 million related to these positions. The hypothetical gain or
loss was calculated using the same model and assumptions noted earlier.

Alcoa also purchases  certain other  commodities,  such as fuel oil, natural gas
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 T
to the financial statements.

                                       19
<PAGE>

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  1999
year-end  forward  rates would result in a pretax gain or loss of  approximately
$169 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 T for information related to the accounting
policies  and fair  market  values of  Alcoa's  foreign  exchange  contracts  at
December 31, 1999 and 1998.

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, 1999 and 1998,  Alcoa had $3,067  million and $3,489
million  of debt  outstanding  at  effective  interest  rates of 5.8% and  6.1%,
respectively,  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 1999 levels would increase or decrease interest expense by $20 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 T.

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 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). 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 at each of its scheduled  meetings
on the scope of its derivative activities.

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

The  disclosures,  with respect to aluminum 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 disclosed.

Year 2000 Issue
- ---------------

Alcoa,  like other businesses,  made substantial  preparations for the Year 2000
issue.  The Year 2000 issue arose from the past practice of utilizing two digits
(as  opposed  to  four) to  represent  the year in some  computer  programs  and
software.  If uncorrected,  this could have resulted in computational  errors as
dates are  compared  across  the  century  boundary.  The vast  majority  of the
products produced and sold by Alcoa are unaffected by Year 2000 issues in use or
operation since they contain no microprocessors.

                                       20
<PAGE>

Based  on  information   available  to  date,  Alcoa  has  not  experienced  any
significant  events  attributable to Year 2000 issues. The Company will continue
to monitor for potential issues at Alcoa, its customers and suppliers,  in order
to permit a rapid response  should any issues arise.  Alcoa believes that if any
Year 2000 issues were to arise, they would not have a significant  impact on its
operations and would most likely be isolated, short-term events.

Alcoa's Year 2000 program  provided a focused effort across all of the Company's
locations that:

     o    identified,  assessed,  remediated and tested 26,232 Alcoa systems and
          components;
     o    formally assessed 3,399 critical and important suppliers;
     o    conducted 202 formal on-site program verification reviews;
     o    provided Year 2000 readiness  information to 2,802 separate  customers
          and
     o    updated and completed 1,890 contingency plans.

In 1999 and 1998,  Alcoa  incurred  $38  million  each  year of direct  costs in
connection with its Year 2000 program.  These costs include external  consulting
costs and the cost of hardware  and  software  replaced as a result of Year 2000
issues.  Alcoa does not expect to incur significant  direct costs related to the
Year 2000 issue during the current year.

Employees
- ---------

Alcoa had approximately 107,700 employees worldwide at year-end 1999.

Alcoa and its unions ratified six-year labor agreements covering the majority of
Alcoa's U.S.  production workers in mid-1996.  As part of the agreements,  Alcoa
and the unions agreed to an unprecedented  partnership  mandating that they work
cooperatively on customer requirements,  business objectives and shareholder and
union  interests.  The  agreements  set broad  goals for  employee  safety,  job
security,  and influence,  control and  accountability for the work environment.
Other  major  provisions  include  wage  increases  over the first  five  years,
enhanced pension benefits,  increases in sickness and accident  insurance,  life
insurance and dental  benefits and the amount of income a spouse may earn before
sharing medical benefit costs.

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.

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.

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 $128 million in
1999,  $128 million  in  1998  and  $143 million  in  1997.  The  Company  funds
substantially all R&D expenses.

                                       21
<PAGE>

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.

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  $90  million  during  1999  for  new or  expanded
facilities for environmental  control.  Capital expenditures for such facilities
will  approximate $99 million in 2000. These figures do not include the costs of
operating these facilities.  Remediation  expenses are continuing at many of the
Company's  facilities.  See Note U 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 which 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  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.

                                       22
<PAGE>

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.  In
December 1999, the Company submitted an Analysis of Alternatives  report to EPA.
The report  evaluates  several  alternative  remedial  approaches for the Grasse
River.

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 facility. 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.  A  Feasibility  Study is
anticipated to be filed in March 2000. 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.

In March 1997, Alcoa Italia S.p.A.  received an order from Italian  governmental
authorities relating to several environmental  deficiencies at its Fusina Plant.
Alcoa  Italia  and  the  governmental  authorities  commenced  discussions  that
resulted in a plan for sampling  certain  emission  points.  During 1998,  Alcoa
Italia  sampled air emissions at the Fusina  Plant.  The results of the samples,
which  indicated  that the  emissions  are within the  authorized  limits,  were
submitted to the Italian  governmental  authorities,  who have formally notified
Alcoa Italia that the  emissions  are  satisfactory  and that the order has been
closed.

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.  Alcoa filed a motion in February  1999  stating  that claims are
barred by the  statute  of  limitations.  Amended  pleadings  were  filed by the
plaintiffs  in August  1999,  and  demurrer  motions are now pending  before the
court.

In  March  1998,  Region V of the EPA  referred  various  alleged  environmental
violations  at Alcoa's  Warrick  Operations  to the civil  division  of the U.S.
Department  of Justice  (DOJ).  The alleged  violations  stem from an April 1997
multi-media  environmental  inspection of Warrick Operations by the EPA relating
to water permit exceedances as reported on monthly discharge monitoring reports,
wastewater  toxicity  issues and alleged opacity  violations.  Alcoa and the DOJ
entered  into  a  series  of  tolling  agreements  to  suspend  the  statute  of
limitations  related to the alleged  violations in this matter. The parties have
reached final  agreement on the language of a consent decree that will formalize
settlement  of this matter.  The consent  decree will be executed by the parties
and lodged with the court during the first quarter of 2000.

                                       23
<PAGE>

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.  Alcoa  filed a motion to dismiss  and a motion to strike
certain parts of the government's  complaint  requesting sediment remediation in
August 1999. A discovery  schedule had been entered into by the parties and this
matter is scheduled for trial in January 2002.

In March 1999,  two search  warrants were executed by various  federal and state
agencies  on  the  Alcoa  Port  Allen  works  of  Discovery  Aluminas,  Inc.,  a
subsidiary,  in Port Allen,  Louisiana.  Also in March, Discovery Aluminas, Inc.
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. The case has not been set for trial.  In
October  1999, a second grand jury  subpoena for  documents  was issued to Alcoa
requesting  information regarding wastewater discharges from a Port Allen plant.
Alcoa has provided a complete and timely response to the subpoena. Alcoa also is
engaged in discussions  with the U.S.  Attorney's  office and the EPA seeking to
resolve the situation.

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,  upon
completion of briefing,  certified the appeal to the  Washington  Supreme Court.
Oral  argument was heard in January 2000. A decision by the court is expected by
the third quarter 2000.

In April 1997, German customs  authorities  conducted a search of the offices of
Alcoa VAW Hannover  Presswerk  GmbH & Co. KG (Alcoa VAW) in  Hannover,  Germany,
seeking materials relating to export  transactions dating from 1992. In November
1997, German customs authorities reported 53 documentary customs violations, and
in January 1998, the local  district  attorney  opened legal  proceedings on the
matter. Discussions between Alcoa VAW and German customs authorities continue.

Alcoa,  along  with  various  asbestos  manufacturers,  distributors  and  other
businesses, is a defendant 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  facilities.  In two of these cases,  jury verdicts
were returned against the Company, and settlements have been reached.

Following the March 9, 1998  announcement of the proposed  acquisition of Alumax
by Alcoa and AMX Acquisition Corporation,  five putative class actions on behalf
of stockholders  of Alumax were filed in the Delaware Court of Chancery  against
Alumax and certain of Alumax's directors. Four of these actions also named Alcoa
as a defendant.  The  plaintiffs in those actions  alleged,  among other things,
that the  director  defendants  agreed to a buyout  of  Alumax at an  inadequate
price,  that they failed to provide  Alumax's  stockholders  with all  necessary
information  about the value of  Alumax,  that they  failed to make an  informed
decision as no market check of Alumax's value was obtained and the acquisition

                                       24
<PAGE>

was  structured  to ensure that  stockholders  would tender their shares and was
coercive. In addition, the plaintiffs alleged that the Schedules 14D-1 and 14D-9
filed by Alcoa, AMX Acquisition Corporation and Alumax, respectively,  failed to
disclose  certain  information  necessary for Alumax's  stockholders  to make an
informed decision regarding the offer and the other transactions contemplated by
the merger agreement.  Plaintiffs sought to enjoin the acquisition or to rescind
it in the event that it was consummated and to cause Alumax to implement a "full
and fair" auction for Alumax.  Plaintiffs also sought compensatory damages in an
unspecified amount, costs and disbursements, including attorneys' fees, and such
other relief as the Delaware Court of Chancery may deem appropriate.  The matter
has been dismissed.

The  Internal  Revenue  Service  (IRS)  asserted  that Alumax and certain of its
subsidiaries  were improperly  included in the 1984, 1985, and 1986 consolidated
income tax returns of AMAX Inc. and on that basis  assessed a Federal income tax
deficiency against Alumax of $129 million. Alumax filed a petition in the United
States Tax Court  seeking a  redetermination  of the  purported  deficiency.  On
September 30, 1997, the Tax Court decided in favor of the IRS, stating that AMAX
Inc. did not have the 80% control necessary to consolidate. On October 27, 1997,
Alumax paid an aggregate of $411 million to the IRS, representing the deficiency
and accrued  interest.  On December 24, 1997, Alumax filed a notice of appeal of
the Tax Court's  decision to the United States Court of Appeals for the Eleventh
Circuit.  A decision  affirming the Tax Court's  decision was handed down by the
Court of Appeals on January 21, 1999.  The Company  requested a rehearing of the
issue. Under the terms of a Tax Disaffiliation  Agreement executed by Alumax and
AMAX in connection with the merger of AMAX into Cyprus Minerals  Company and the
public  distribution of all of Alumax's shares in November 1993,  Alumax assumed
responsibility for all proceedings  relating to the  above-described  deficiency
and payment of any additional taxes,  along with interest that may ultimately be
due; and Cyprus Amax Minerals  Company will share certain tax benefits that will
become available to it in the event of a final adverse determination.  An appeal
was decided against the Company, and the case has been closed.

In July 1999, Alcoa Aluminio 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
antirust  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. The matter is being defended.

                                       25
<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 1999.

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, 2000 are listed below.

Paul H. O'Neill, 64, Director and Chairman of the Board. Mr. O'Neill was elected
a director  of Alcoa in 1986 and became  Chairman  of the Board in 1987.  He was
Chief Executive  Officer from June 1987 to May 1999.  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,  56,  Director,  President and Chief Executive  Officer.  Mr.
Belda was elected to Alcoa's  Board of Directors in September  1998. He has been
Chief Executive  Officer since May 1999 and President since January 1997. He was
elected Chief  Operating  Officer in January 1997,  Executive  Vice President in
1994 and Vice Chairman in 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.

Michael  Coleman,  49, Vice  President  and  President  - Alcoa Rigid  Packaging
Division. 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,  54, Vice President and President - Alcoa Europe.  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.

Barbara S. Jeremiah,  48, 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, 53, 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.

Frank L. Lederman,  50, 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 1988-1995. 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.

                                       26
<PAGE>

Joseph C. Muscari, 53, 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,  54, Vice  President  and  President - Alcoa World  Alumina and
Chemicals.  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.

Lawrence R. Purtell,  52,  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,   59,   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,  64,  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.


                                     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 65
of the 1999 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.  The stock split is subject to the  approval of Alcoa  shareholders,  who
must approve an amendment to Alcoa's  Articles of  Incorporation to increase the
authorized  shares of Alcoa common stock at the Company's  annual meeting on May
12, 2000. If approved, shareholders of record on May 26, 2000 will receive an

                                       27
<PAGE>

additional  common share for each share held. The  additional  shares will be
distributed  on or about June 9, 2000.  Per-share  amounts  and number of shares
outstanding  have not been  adjusted  for the stock split since it is subject to
shareholder approval.

At February 14, 2000 (the record date for the Company's 2000 annual shareholders
meeting),  there were approximately  185,000 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
28 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  29  through  38 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 35 through 37 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 39 through 55 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 5 through 11 of the Registrant's  definitive Proxy Statement
dated  February  25,  2000  (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 13 of the  Proxy
Statement is incorporated herein by reference.

                                       28
<PAGE>

Item 11.  Executive Compensation.

This  information is contained  under the caption  "Executive  Compensation"  on
pages 15  through  25 of the  Proxy  Statement  and is  incorporated  herein  by
reference.  The performance graph and 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 caption  "Alcoa Stock  Ownership  and
Performance"  on pages 12 through 13 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 5 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 39
     through 55 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:

          Independent  Accountant's Report of  PricewaterhouseCoopers  LLP dated
          January  10,  2000,  except for Note V, for which the date is February
          11, 2000, on the Company's  financial  statement  schedule  filed as a
          part hereof for the fiscal years ended  December  31,  1999,  1998 and
          1997.

          Schedule II - Valuation and Qualifying Accounts - for the fiscal years
          ended December 31, 1999, 1998 and 1997.

          (3) Exhibits

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

2.        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 Report on Form 8-K filed
          August 27, 1999.

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

                                       29
<PAGE>

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.

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(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(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) 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 November 10,
          1995,  incorporated  by  reference to  exhibit 10(g) to the  Company's
          Annual Report on  Form 10-K  (Commission  file number  1-3610) for the
          year ended December 31, 1995.

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.

                                       30
<PAGE>

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.

10(j)(4). Amendments to Deferred Compensation Plan, effective January 1, 1999.

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).    Amended and Restated Revolving Credit Agreement (364-Day), dated as of
          August 13, 1999, incorporated by reference  to  exhibit 10(n)  to  the
          Company's  Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
          September 30, 1999.

10(o).    Revolving  Credit  Agreement (Five-Year), dated as of August 14, 1998,
          incorporated by reference to exhibit 10(o) to the Company's  Quarterly
          Report on Form 10-Q for the quarter ended September 30, 1998.

10(p).    Alcoa Stock  Incentive  Plan,  effective June 1, 1999, incorporated by
          reference to  exhibit 10(p) to the  Company's  Annual  Report on  Form
          10-K for the year ended December 31, 1998.

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(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.

                                       31
<PAGE>

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

12.       Computation of Ratio of Earnings to Fixed Charges.

13.       Portions of Alcoa's 1999 Annual Report to Shareholders.

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(l) and 10(p) through 10(s)(1) 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. Alcoa filed a Form 8-K, dated  November 12,  1999,
with the Securities and Exchange Commission to report that a shareholder filed a
purported derivative action on behalf of the Company alleging that the Company's
proxy statement,  dated March 8, 1999, contained materially false and misleading
representations  and omissions  concerning  the Company's  proposed  Alcoa Stock
Incentive Plan.

                                       32
<PAGE>

                       Independent Accountant's Report 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 10,  2000,  except for Note V for which the date is February  11,
2000, appearing in the 1999 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 10, 2000, except for
Note V, for which the date is
February 11, 2000

                                       33
<PAGE>

<TABLE>
<CAPTION>


                                            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 (A)       Deductions (B)       end of period
     -----------                   ------           --------     ------------       --------------       -------------

<S>                                  <C>               <C>          <C>                <C>                   <C>
Allowance for doubtful accounts:

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

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

    1997                             $ 48              $ 6          $ (4)(A)           $14(B)                $ 37

Income tax valuation allowance:

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

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

    1997                             $110              $12          $(13)(A)           $ 5(C)                $104

<FN>

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.

</TABLE>

                                       34
<PAGE>

                                    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.


February 28, 2000             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.

         Signature                   Title                      Date


/s/Alain J. P. Belda       President                         February 28, 2000
    Alain J. P. Belda      and Chief Executive Officer
                           (Principal Executive Officer
                           and Director)


/s/Richard B. Kelson       Executive Vice President and      February 28, 2000
    Richard B. Kelson      Chief Financial Officer
                           (Principal Financial Officer)


Kenneth W. Dam, Joseph T. Gorman,  Judith M. Gueron, Sir Ronald Hampel,  Hugh M.
Morgan, John P. Mulroney, Paul H. O'Neill, Henry B. Schacht,  Franklin A. Thomas
and Marina v.N. Whitman,  each as a Director,  on February 28, 2000, by Denis A.
Demblowski, their Attorney-in-Fact.*


*By  /s/Denis A. Demblowski
         Denis A. Demblowski
         Attorney-in-Fact


                                       35
<PAGE>





















                       Alcoa Logo




















Form A07-15899



                                                                   Exhibit 10(a)

                          ALCOA STOCK ACQUISITION PLAN

                           (EFFECTIVE JANUARY 1, 1999)

     The  Compensation  Committee  of the Board of  Directors  of Alcoa Inc.  is
adopting this Alcoa Stock  Acquisition Plan for the exclusive  benefit of select
management  and highly  compensated  employees.  The  purpose of this Plan is to
provide  eligible  employees  with a match on  incentive  compensation  which is
deferred and invested in an Alcoa stock fund.

                             ARTICLE I - DEFINITIONS

1.1  The following terms have the specified meanings.

"Affiliate"  means any  business  entity  which the  Company  and/or one or more
Subsidiaries control in fact.

"Alcoa Stock" means shares of Company  common stock,  par value $1.00 per share,
as well as share-equivalent  credits standing in a Participant's  account in the
Equivalent Company Stock Fund.

"Alcoa Stock  Ownership  Guidelines"  means the guidelines  established by Alcoa
Inc.  from  time to time  regarding  the  ownership  levels  of  Alcoa  Stock by
employees in Job Grades 27 and above.

"Award"  means the annual  award,  which an  Eligible  Employee  is  eligible to
receive under the provisions of the Alcoa Incentive Compensation Plan.

"Award Date" means February of the calendar year following the Award Year except
as may be otherwise  designated in accordance  with the  provisions of the Alcoa
Incentive Compensation Plan.

"Award  Year"  means the  calendar  year for  which  Awards  are made  under the
provisions of the Alcoa Incentive Compensation Plan.

"Beneficiary" means the Beneficiary under the Alcoa Deferred  Compensation Plan,
or  for   Participants   ineligible  for  that  plan,  the  Beneficiary  is  the
Participant's  spouse unless otherwise  designated in writing by the Participant
and such  other  designated  Beneficiary  has been  agreed to in  writing by the
Participant's spouse on a form approved by the Committee.

"Board"  means the Board of  Directors  of the  Company  or any duly  authorized
committee thereof.

"Change in  Control"  means a Change in  Control  as defined in the Alcoa  Rabbi
Trust  Agreement  by and between  the  Company and Mellon Bank N.A.  dated as of
August, 1998.

"Committee"  means the  administrative  committee created under the Savings Plan
which  has  complete   authority  to  control  and  manage  the   operation  and
administration of that plan.

"Company" means Alcoa Inc.

"Continuous Service" means Continuous Service as defined in the Savings Plan.

"Eligible Employee" means any employee who meets the eligibility requirements as
provided in Article II.

"Equivalent  Fixed Income Fund" means the phantom  investment  vehicle  which is
deemed to be equivalent in all respects,  including  value,  to the Fixed Income
Fund established under the Savings Plan.

"Equivalent  Company  Investment  Funds" means the phantom  investment  vehicles
under this Plan which are deemed to be  equivalent  in all  respects,  including
value, to the Investment Funds established under the Savings Plan.

"Equivalent  Company Stock Fund" means the phantom investment vehicle under this
Plan, which is deemed to be equivalent in all respects,  including value, to the
Company Stock Fund established under the Savings Plan.

"Incentive Compensation Deferral Credits" means

     (a)  any amounts credited to a Participant's account under
     the Alcoa Deferred Compensation Plan on the applicable Award
     Date equivalent to the dollar amount which the Participant
     has elected to defer from an Award for the 1999 or any later
     Award Year, or

     (b)  for Participant's ineligible to participate in the
     Alcoa Deferred Compensation Plan, any amounts credited under
     this Plan on the applicable Award Date, equivalent to the
     dollar amount which the Participant has elected to defer
     from an Award for the 1999 or any later Award Year.  Awards,
     Incentive Compensation Deferral Credits, and Matching
     Company Credit Awards will, if applicable, be based on the
     amount of such awards or credits in local currency converted
     into US Dollars, based on the exchange rate as determined by
     Alcoa's Corporate Finance Department.

"Matching  Company Credit Award" means an amount equivalent to 25% of the dollar
value of the Incentive Compensation Deferral Credits deferred on an Award Date.

"Nonforfeitable  Circumstance" means a Nonforfeitable Circumstance as defined in
the Savings Plan.

"Participant"  means any Eligible  Employee who commences  participation in this
Plan as provided in Article II.

"Plan" means the Alcoa Stock  Acquisition  Plan, as it is now in existence or as
hereafter amended.

"Savings Plan" means the Alcoa Savings Plan for Non-Bargaining  Employees, or as
hereafter amended.

"Subsidiary"  means a corporation at least 50% of whose outstanding voting stock
is owned or controlled by the Company and/or one or more other Subsidiaries, and
any non-corporate  business entity in which the Company and/or one or more other
Subsidiaries have at least a 50% interest in capital or profits.

          ARTICLE II - PARTICIPATION AND MATCHING COMPANY CREDIT AWARDS

2.1 An  Eligible  Employee  means any  employee  who is a member of the group of
select management and highly compensated  employees who on the date the deferral
election for Incentive  Compensation Deferral Credits is made and recorded,  and
who on the Award Date for that deferral:

     (a)  is actively at work for the Company, a Subsidiary or
          Affiliate,
     (b)  has a job grade of 27 or higher,
     (c)  is not in a collective bargaining unit,
     (d)  has less than five years of Continuous Service,
     (e)  is subject to the Alcoa Stock Ownership Guidelines, and
     (f)  does not hold, nor at any time has held the requisite
          number of shares for their current job grade as
          provided under the Alcoa Stock Ownership Guidelines.

2.2 An Eligible Employee commences participation in this Plan:

     (a)  If eligible for the Alcoa Deferred Compensation Plan,
     on the Award Date applicable to the portion of any Award
     which he or she has deferred for the 1999 Award Year or any
     later Award Year under the Alcoa Deferred Compensation Plan,
     and has elected to invest such deferral into the Equivalent
     Company Stock Fund under the Alcoa Deferred Compensation
     Plan.  On or before December 31, 1999, an Eligible Employee
     may make a one time deferral election to the Alcoa Deferred
     Compensation Plan for any portion of the Award for the 1999
     Award Year.  Thereafter, elections must be made pursuant to
     the Alcoa Deferred Compensation Plan, or

     (b)  If ineligible for the Alcoa Deferred Compensation Plan,
     on the Award Date applicable to the portion of any Award
     which he or she has deferred for the 1999 Award Year or any
     later Award Year under this Plan.  On or before December 31,
     1999, an Eligible Employee may make a one time deferral
     election to this Plan for any portion of the Award for the
     1999 Award Year.  Participation in this Plan by any non-
     resident Eligible Employee under this subsection, is
     conditioned on any approval that is required by a non-US
     governmental entity.

2.3 Commencing  with the 1999 Award Year and later Award Years a Participant who
by proper  election has  deferred  all or a portion of an Award,  and elected to
invest such  deferral into the  "equivalent  company stock fund" under the Alcoa
Deferred Compensation Plan or the Equivalent Company Stock Fund under this Plan,
will be credited with a Matching Company Credit Award.

                            ARTICLE III - INVESTMENTS

3.1 Matching Company Credit Awards are invested in the Equivalent  Company Stock
Fund.

3.2 Incentive  Compensation  Deferral Credits made under this Plan, and Matching
Company  Credit Awards on those amounts,  which have vested,  may be invested in
10%  increments,  at the election of the  Participant,  in the Equivalent  Fixed
Income Fund or the Equivalent  Company Stock Fund. A Participant  may change his
or her  investment  election,  effective  for  the  first  full  payroll  period
following the date the appropriate  direction has been properly  received by the
Company or its designee,  in accordance  with uniform rules  established  by the
Committee.

3.3 The Company reserves the right to refuse to honor any Participant  direction
related to investments or  withdrawals,  including  transfers  among  investment
options,  where necessary or desirable to assure  compliance with applicable law
including U.S. and other Securities laws.  However,  the Company does not assume
any  responsibility for compliance by officers or others with any such laws, and
any failure by the Company to delay or dishonor any such  direction  will not be
deemed to increase the  Company's  legal  exposure to the  Participant  or third
parties.

                              ARTICLE IV - VESTING

4.1 Each  Matching  Company  Credit  Award  will  vest on the third  Award  Date
following the Award Date on which the Matching Company Credit Award was made. If
at any time prior to a Matching  Company  Credit Award  vesting,  the  Incentive
Compensation Deferral Credit, or any part of the Incentive Compensation Deferral
Credit, on which the Matching Company Credit Award was based, is transferred out
of the "equivalent  company stock fund" in the Alcoa Deferred  Compensation Plan
or the  Equivalent  Company  Stock Fund under this Plan,  the  Matching  Company
Credit Award will be forfeited.

4.2  Notwithstanding  the  foregoing,   upon  a  Participant's   termination  of
employment, for any reason other than a Nonforfeitable  Circumstance or a Change
in  Control,  any  Matching  Company  Credits  which  have  not  vested  will be
forfeited.   Upon  a   Participant's   termination   of  employment   due  to  a
Nonforfeitable  Circumstance,  or in the  event  of a  Change  in  Control,  any
Matching Company Credits will vest.

4.3
     (a)  If the Participant is eligible for the Alcoa Deferred
     Compensation Plan, Matching Company Credit Awards, which
     vest will be transferred to the Equivalent Company Stock
     Fund in the Alcoa Deferred Compensation Plan, and thereafter
     are subject to the provisions of that plan.

     (b)  If the Participant is ineligible for the Alcoa Deferred
     Compensation Plan, Matching Company Credit Awards, which
     have vested, may be invested pursuant to Section 3.2.

                    ARTICLE V - DISTRIBUTIONS

5.1  (a)  If the Participant is eligible for the Alcoa Deferred
     Compensation Plan, all vested benefits will be transferred
     to and distributed through the Alcoa Deferred Compensation
     Plan, and are subject to the provisions of that plan.

     (b)  If the Participant is ineligible for the Alcoa Deferred
     Compensation Plan, all vested benefits will be distributed
     in cash through this Plan in accordance with the provisions
     of this Article.  All distributions will be paid to the
     Participant or the Beneficiary in U.S. Dollars.

5.2 Except as otherwise specified in this Article, the amount of vested Matching
Company  Credit  Awards  and  Incentive   Compensation  Deferral  Credits  in  a
Participant's  account will be  distributed to the  Participant  upon his or her
termination of Continuous Service, for any reason.

5.3 All  distributions  made pursuant to the  termination  of the  Participant's
Continuous  Service by reason other than death or retirement will be paid to the
Participant as soon as administratively practical in a lump sum.

5.4 Prior to his or her retirement  date, a Participant may elect that the value
of his or her account be  distributed  either in a lump sum at  retirement or in
annual  installments of any number  designated by the Participant up to, but not
more than ten (10) following his or her retirement, commencing the January 31 of
the first calendar year following such retirement and each January 31 thereafter
until he or she has  received  all  installments.  A  Participant's  election to
receive  installments  must  be made  at  least  one  year  prior  to his or her
retirement  date.  The  Participant's  election to receive  either a lump sum or
annual  installments  becomes  irrevocable  one year prior to the  Participant's
retirement  date, or at such other time as may be approved by the Committee.  In
the event the Participant fails to make such an election,  all amounts in his or
her  account  will  be  distributed  as a  lump  sum  distribution  as  soon  as
administratively practical after his or her retirement.

5.5 Distributions from this Plan to a Beneficiary are in a lump sum or in annual
installments  of any number  designated by the  Participant  up to, but not more
than ten (10)  following his or her death  commencing the first January 31 after
the  Participant's  death and each January 31 thereafter  until all installments
have been  distributed.  In the event a Beneficiary  dies prior to receiving all
the annual  installments  which he or she is entitled to receive from this Plan,
any  remaining  installments  will be  distributed  as soon as  administratively
practical in a lump sum to the Beneficiary's estate.

5.6  (a)  Benefits payable hereunder are payable in cash out of
     the general assets of the Company, and no segregation of
     assets for such benefits will be made.  The right of a
     Participant or any Beneficiary to receive benefits under
     this Plan is that of an unsecured claim against the assets
     and is no greater than the rights of an unsecured general
     creditor to the Company.  Notwithstanding the foregoing, in
     the event the Company establishes a trust, to which it may,
     but is not required to contribute money or other property of
     the Company in contemplation of paying benefits under this
     Plan, such money or other property remains subject to the
     claims of creditors of the Company.

     (b)  Notwithstanding any other provisions of this Plan, if
     any amounts held in a trust of the above described nature
     are found, due to the creation or operation of said trust,
     in a final decision by a court of competent jurisdiction, or
     under a "determination" by the Internal Revenue Service in a
     closing agreement in audit or a final refund disposition
     (within the meaning of Section 1313(a) of Internal Revenue
     Code of 1986, as amended), to have been includable in the
     gross income of a Participant or Beneficiary prior to
     payment of such amounts from said trust, the trustee for the
     trust will, as soon as practicable, pay to such Participant
     or Beneficiary an amount equal to the amount determined to
     have been includable in gross income in such determination,
     and will accordingly reduce the Participant's or
     Beneficiary's future benefits payable under this Plan.  The
     trustee will not make any distribution to a Participant or
     Beneficiary pursuant to this paragraph unless it has
     received a copy of the written determination described above
     together with any legal opinion which it may request as to
     the applicability thereof.

              ARTICLE VI - ADMINISTRATION AND EXPENSES OF THE PLAN

6.1  The  Committee  or its  delegate  administers  the  Plan.  The  Committee's
resolution  of any matter  concerning  this Plan is final and  binding  upon the
Company, Subsidiary or Affiliate and any Participant and/or Beneficiary affected
thereby.  Any individual disputing any decision has 60 days from the date of the
decision to file an appeal to the Committee. The Committee has the discretionary
authority to interpret the provisions of the Plan, make  credibility  decisions,
and take any and all actions in determining the eligibility,  participation  and
coverage of any individual claiming benefits under this Plan.

6.2 The Plan will pay all costs and expenses incurred in its administration.

6.3 Notwithstanding  the foregoing,  for any Affiliate of which the Company owns
less than an 80% interest as defined under  Internal  Revenue Code Section 1504,
the  obligation of and  liability  for the benefits  accrued under this Plan for
Participants  employed  by such an  Affiliate,  remain the sole  obligation  and
liability of the Affiliate by express resolution of its board or other governing
body.

                     ARTICLE VII - AMENDMENT AND TERMINATION

7.1 This Plan may be amended,  suspended or terminated at any time by the Board;
provided, however, that no such act may reduce or in any manner adversely affect
any  Participant's  or  Beneficiary's  right with  respect to benefits  that are
credited to the Participant's account as of the date of such act.

                          ARTICLE VIII - MISCELLANEOUS

8.1 This Plan does not confer any rights upon any Participant  for  continuation
of employment with the Company,  Subsidiary or Affiliate,  nor does it interfere
with the  rights of the  Company,  Subsidiary  or  Affiliate  to  terminate  the
employment of any Participant  and/or to take any personnel action affecting any
Participant  without  regard to the effect  that such  action may have upon such
Participant as to recipient of benefits under this Plan.

8.2 No  benefit  under  this  Plan  may be  assigned,  transferred,  pledged  or
encumbered or be subject in any manner to alienation or anticipation.

8.3 This Plan is  construed,  regulated and  administered  under the laws of the
Commonwealth of Pennsylvania, United States of America, except for laws relating
to choice or conflict  of laws,  and except to the extent  preempted  by federal
law.  All claims or disputes,  must be brought  within the  jurisdiction  of the
federal courts of the United States of America  sitting in the Western  District
of Pennsylvania.



                                                                Exhibit 10(j)(3)

                                  AMENDMENT TO
                        ALCOA DEFERRED COMPENSATION PLAN


1. Effective as of November 1, 1998,  Section 8.6 is deleted in its entirety and
replaced with the following:

          8.6 No benefit under this Plan may be assigned,  transferred,  pledged
     or encumbered or be subject in any manner to alienation or anticipation.


2. In all other respects the Plan is hereby ratified and confirmed.




                                                                Exhibit 10(j)(4)

               AMENDMENTS TO THE ALCOA DEFERRED COMPENSATION PLAN

     Pursuant  to  Article 10 of the Plan  which  provides  that the Plan may be
amended or modified,  the Plan is amended  effective  as of January 1, 1999,  or
such other date as provided below, as follows:

1.   The  definition of  "Continuous  Service" is amended by the addition of the
     following sentence to the end of last paragraph:

          Effective as of July 1, 1998 all years of service
          accrued with Alumax, Inc. or any of its subsidiaries
          ("Alumax") on and after June 16, 1998, by any
          Participant who was actively employed with Alumax on
          June 16, 1998, will be taken into account to determine
          Continuous Service.

2.   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 (a) who on or after June 1, 1990
          are actively at work for the Company, a Subsidiary or
          Affiliate, have a job grade of 19 or higher, as
          determined by the Company, are eligible for
          participation in the Savings Plan, and are not in a
          collective bargaining unit, 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 Inside Director
          Committee as provided on Schedule A hereto.  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.

3.   The definition of "Salary" is deleted in its entirety and replaced with the
     following:

          "Salary" means "Eligible Compensation" as defined in
          the Savings Plan or "Compensation" as defined in the
          Alumax Inc. Thrift Plan for Salaried Employees, as
          applicable, without regard to the limitations imposed
          by Section 401(a)(17) of the Internal Revenue Code.

4.   Effective July 1, 1999,  Section 7 is amended by deleting  subsections  (b)
     and (c) in their entirety and replacing them with the following:

               (b)  (i)  Commencing on January 1, 1993 once every
          month a Participant may, by appropriate direction which
          is properly received by the Company or its designee, in
          accordance with uniform rules established by the
          Company ("Appropriate Direction"), elect to transfer in
          increments of 10% all or part of the deemed value of
          his or her Salary Reduction Credits, Additional Salary
          Reduction Credits, Incentive Compensation Deferral
          Credits, Excess D Deferral Credits, except as may be
          limited by the Committee, from any one or more
          investment Options to any one or more other such
          Investment Options.  Such a transfer shall not
          constitute a change in the Participant's current
          investment election.

                    (ii) Commencing on July 1, 1999 a Participant
          may, by appropriate direction which is properly
          received by the Company or its designee, in accordance
          with uniform rules established by the Company
          ("Appropriate Direction"), elect to transfer in
          increments of 10% all or part of the deemed value of
          his or her Salary Reduction Credits, Additional Salary
          Reduction Credits, Incentive Compensation Deferral
          Credits, Excess D Deferral Credits, except as may be
          limited by the Committee, from any one or more
          investment Options to any one or more other such
          Investment Options.  Such a transfer may be made daily,
          with the exception of a transfer from the Alcoa Stock
          which may be made no more frequently than once every 15
          calendar days.  Such a transfer shall not constitute a
          change in the Participant's current investment
          election.

               (c)  (i)  Commencing on January l, 1993 once every
          month a Participant who has attained 5 Years of Plan
          Participation may, after Appropriate Direction, elect
          to transfer in increments of 10% all or part of his or
          her Matching Company Credits, except as may be limited
          by the Committee, which have been in his or her account
          for two full calendar years from the date that said
          Matching Company Credits were deemed to be allocated to
          the Participant's account, from the Investment Option
          in which such Credits are deemed to be invested, to any
          one or more other Investment Option.

                    (ii) Commencing on July 1, 1999 a Participant
          who has attained 3 Years of Plan Participation may,
          after Appropriate Direction, elect to transfer in
          increments of 10% all or part of his or her Matching
          Company Credits, except as may be limited by the
          Committee, which have been in his or her account for
          two full calendar years from the date that said
          Matching Company Credits were deemed to be allocated to
          the Participant's account, from the Investment Option
          in which such Credits are deemed to be invested, to any
          one or more other Investment Option.  Such a transfer
          may be made daily, with the exception of a transfer
          from the Alcoa Stock which may be made no more
          frequently than once every 15 calendar days.

5.   In all other respects the Plan is ratified and confirmed.

                                   SCHEDULE A

                               Alumax Participants
                                  As of 1/1/00
                (italics indicates subsequent transfer to Alcoa)
<TABLE>
<CAPTION>

  Eligible for Salary
  Deferrals as well as
Incentive Compensation:
        Name                SS#        Eligibility
                                           Date
<S>                     <C>              <C>
Campbell, Paul G.       ###-##-####      01/01/99
Centa, Thomas           ###-##-####      07/02/99
Gianneschi, Thomas      ###-##-####      05/01/99
Hagen, Veronica         ###-##-####      01/01/99
Madison, Karen          ###-##-####      12/01/99
Meyer, Randall          ###-##-####      04/09/99
Kramer, William D.      ###-##-####      1/1/1999

    Eligibile for
      Incentive
    Compensation
   Deferrals only:
Name                  SS#               Eligibility
                                           Date
Degler, William D.      ###-##-####      01/01/00
Elder, Edmund J.        ###-##-####      01/01/99
Farmer, Kerry J.        ###-##-####      01/01/99
Gwynne, Russell M.      ###-##-####      01/01/00
Jurges, Charles D.      ###-##-####      01/01/99
Kline, Ronald L.        ###-##-####      01/01/00
Leach, Thomas           ###-##-####      01/01/99
Leyland, Robert G.      ###-##-####      01/01/99
Maniez, Leon            ###-##-####      01/01/99
Marken, Oatha           ###-##-####      01/01/00
Martin, Richard         ###-##-####      01/01/00
McHale, Robert          ###-##-####      01/01/99
Newsted, Guy            ###-##-####      01/01/99
Ribble, Ronnie J.       ###-##-####      01/01/99
Scopel, Tyrone          ###-##-####      01/01/00
Shuman, David           ###-##-####      01/01/99
Stehlik, James E.       ###-##-####      01/01/99
Wahl, Harry J.          ###-##-####      01/01/99
Chan, Joseph            ###-##-####      1/1/1999
Dwyer, James            ###-##-####      1/1/1999

     Paid out at
    Termination:
Name                  SS#               Eligibility
                                           Date
Goode, Denny P.         ###-##-####      1/1/1999

</TABLE>


                                                                EXHIBIT 10(s)(1)

                                AMENDMENTS TO THE
               ALCOA DEFERRED COMPENSATION ESTATE ENHANCEMENT PLAN


     Pursuant  to  Article 10 of the Plan  which  provides  that the Plan may be
amended or modified,  the Plan is amended  effective  as of January 1, 1999,  or
such other date as provided below, as follows:

1.   The  definition of  "Continuous  Service" is amended by the addition of the
     following sentence to the end of last paragraph:

          Effective as of July 10, 1998 all years of service
          accrued with Alumax, Inc. or any of its subsidiaries
          ("Alumax") on and after June 16, 1998, by any
          Participant who was actively employed with Alumax on
          June 16, 1998, will be taken into account to determine
          Continuous Service.

2.   The definition of "Salary" is deleted in its entirety and replaced with the
     following:

          "Salary" means "Eligible Compensation" as defined in
          the Savings Plan or "Compensation" as defined in the
          Alumax Inc. Thrift Plan for Salaried Employees, as
          applicable, without regard to the limitations imposed
          by Section 401(a)(17) of the Internal Revenue Code.

3.   Effective July 1, 1999,  Section 7 is amended by deleting  subsections  (a)
     and (b) in their entirety and replacing them with the following:

               (a)  (i)  Commencing on July 10, 1998 once every
          month a Participant may, by appropriate direction which
          is properly received by the Company or its designee, in
          accordance with uniform rules established by the
          Company ("Appropriate Direction"), elect to transfer in
          increments of 10% all or part of the deemed value of
          his or her Salary Reduction Credits, Additional Salary
          Reduction Credits, Incentive Compensation Deferral
          Credits, Excess D Deferral Credits, except as may be
          limited by the Committee, from any one or more
          investment Options to any one or more other such
          Investment Options.  Such a transfer shall not
          constitute a change in the Participant's current
          investment election.

                    (ii) Commencing on July 1, 1999 a Participant
          may, by appropriate direction which is properly
          received by the Company or its designee, in accordance
          with uniform rules established by the Company
          ("Appropriate Direction"), elect to transfer in
          increments of 10% all or part of the deemed value of
          his or her Salary Reduction Credits, Additional Salary
          Reduction Credits, Incentive Compensation Deferral
          Credits, Excess D Deferral Credits, except as may be
          limited by the Committee, from any one or more
          investment Options to any one or more other such
          Investment Options.  Such a transfer may be made daily,
          with the exception of a transfer from the Alcoa Stock
          which may be made no more frequently than once every 15
          calendar days.  Such a transfer shall not constitute a
          change in the Participant's current investment
          election.

               (b)  (i)  Commencing on July 10, 1998 once every
          month a Participant who has attained 5 Years of Plan
          Participation may, after Appropriate Direction, elect
          to transfer in increments of 10% all or part of his or
          her Matching Company Credits, except as may be limited
          by the Committee, which have been in his or her account
          for two full calendar years from the date that said
          Matching Company Credits were deemed to be allocated to
          the Participant's account, from the Investment Option
          in which such Credits are deemed to be invested, to any
          one or more other Investment Option.

                    (ii) Commencing on July 1, 1999 a Participant
          who has attained 3 Years of Plan Participation may,
          after Appropriate Direction, elect to transfer in
          increments of 10% all or part of his or her Matching
          Company Credits, except as may be limited by the
          Committee, which have been in his or her account for
          two full calendar years from the date that said
          Matching Company Credits were deemed to be allocated to
          the Participant's account, from the Investment Option
          in which such Credits are deemed to be invested, to any
          one or more other Investment Option.  Such a transfer
          may be made daily, with the exception of a transfer
          from the Alcoa Stock which may be made no more
          frequently than once every 15 calendar days.

4.   Effective  January 1, 2000,  Sections  8.7(a) and (b) are amended by adding
     the following to the beginning of each subsection:

          Except for Participant Elections related to the
          deferrals of "special payments," as provided for in
          Section 3.5,

5.   Effective January 1, 2000, a new subsections 8.7(e) is added as follows:

               (e)  Participant Elections related to the
          deferrals of "special payments," as provided for in
          Section 3.5, which were elected prior to the
          Participant's Termination of Service, will be credited
          to the Participant's Plan account at the time payment
          would otherwise have been made.

6.   In all other respects the Plan is ratified and confirmed.



                                                                      Exhibit 12
<TABLE>
<CAPTION>

                                           COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                                                    FOR THE YEAR ENDED DECEMBER 31
                                                     (in millions, except ratios)

                                                          1999           1998           1997            1996            1995
                                                          ----           ----           ----            ----            ----

<S>                                                     <C>            <C>            <C>             <C>             <C>
Earnings:
  Income before taxes on income, and
    before extraordinary loss and accounting
    changes                                             $1,849         $1,605         $1,602          $1,082          $1,470
  Minority interests' share of earnings of
   majority-owned subsidiaries
   without fixed charges                                    -              (2)             3               4               2
  Less equity (earnings) losses                            (55)           (50)           (42)            (30)            (59)
  Fixed charges added to net income                        232            245            182             171             151
  Proportionate share of income (loss)
    of 50% owned persons                                    42             37             35              25              58
  Distributed income of less than 50%
    owned persons                                            9             -              -               -              -
  Amortization of capitalized interest:
    Consolidated                                            15             20             20              22              23
    Proportionate share of 50% owned persons                -              -               1               1               1
                                                         -----          -----          -----           -----           -----

      Total earnings                                    $2,092         $1,855         $1,801          $1,275          $1,646
                                                        ======         ======         ======          ======          ======

Fixed Charges:
  Interest expense:
    Consolidated                                          $195           $198           $141            $134            $120
    Proportionate share of 50% owned persons                 4              3              3               5               7
                                                           ---            ---            ---             ---             ---
                                                           199            201            144             139             127
                                                           ---            ---            ---             ---             ---

  Amount representative of the interest
  factor in rents:
    Consolidated                                            32             43             37              32              24
    Proportionate share of 50% owned persons                 1              1              1              -               -
                                                           ---            ---            ---             ---             ---
                                                            33             44             38              32              24
                                                           ---            ---            ---             ---             ---

   Fixed charges added to earnings                         232            245            182             171             151
                                                           ---            ---            ---             ---             ---

  Interest capitalized:
    Consolidated                                            21             13              9               5               2
    Proportionate share of 50% owned persons                -              -              -               -               -
                                                           ---            ---            ---             ---             ---
                                                            21             13              9               5               2
                                                           ---            ---            ---             ---             ---

  Preferred stock dividend requirements
  of majority-owned subsidiaries                            -              -              -               -                5
                                                           ---            ---            ---             ---             ---

      Total fixed charges                                 $253           $258           $191            $176            $158
                                                          ====           ====           ====            ====            ====

Ratio of earnings to fixed charges                         8.3            7.2            9.4             7.2            10.4
                                                          ====           ====           ====            ====            ====

</TABLE>


                                   EXHIBIT 13

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

<TABLE>
<CAPTION>


                                                1999              1998              1997              1996              1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>               <C>               <C>               <C>
Sales                                       $ 16,323          $ 15,340          $ 13,319          $ 13,061          $ 12,500
Net income*                                    1,054               853               805               515               791
  Earnings per common share
    Basic                                       2.87              2.44              2.33              1.47              2.22
    Diluted                                     2.82              2.42              2.31              1.46              2.20
- -----------------------------------------------------------------------------------------------------------------------------------
Alcoa's average realized price per
  pound for aluminum ingot                       .67               .67               .75               .73               .81
Average U.S. market price per pound
  for aluminum ingot (Metals Week)               .66               .66               .77               .71               .86
- -----------------------------------------------------------------------------------------------------------------------------------
Cash dividends paid per common share            .805               .75              .488              .665               .45
Total assets                                  17,066            17,463            13,071            13,450            13,643
Long-term debt (noncurrent)                    2,657             2,877             1,457             1,690             1,216
- -----------------------------------------------------------------------------------------------------------------------------------

<FN>
*Includes net after-tax gains of $44 in 1997, and net after-tax  charges of $122
in 1996 and $10 in 1995

</TABLE>

                               28

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

EARNINGS SUMMARY
1999 was a milestone year for Alcoa,  as net income  exceeded $1 billion for the
first time in the company's 111-year history. Highlights from the year include:
>    Net income of $1,054, a 24% increase from 1998;
>    Aluminum shipments of 4,478 mt, up 13% from 1998;
>    Revenues of $16,323, driven by higher volumes; and
>    Return on average shareholders' equity of 17.2%.
     The  improvement  in  Alcoa's  1999 net  income  was the  result  of higher
aluminum  revenues,  operating  improvements  and a lower  effective  tax  rate.
Revenues increased as a result of higher volumes, partly offset by lower overall
aluminum prices.
     Alcoa's financial results for 1998 also were strong, as summarized below:
>    Net income of $853, 6% above 1997;
>    Aluminum shipments of 3,951 mt, up 34% from 1997;
>    Revenues of $15,340, resulting from higher volumes; and
>    Return on average shareholders' equity of 16.3%.
     Improved  financial  results  for 1998  relative to 1997 were the result of
higher volumes,  aided in part by the Alumax and Inespal acquisitions,  and good
cost performance. Partially offsetting these positive factors were lower overall
aluminum and alumina prices and the impact of higher debt levels.

SEGMENT INFORMATION
Alcoa's  operations consist of four worldwide  segments:  Alumina and Chemicals,
Primary Metals,  Flat-Rolled Products, and Engineered Products. Alcoa businesses
that are not reported to  management  as part of one of these four  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 LIFO accounting and minority  interest,  are excluded from segment profit. In
addition,  certain expenses, such as corporate general administrative  expenses,
depreciation  and amortization on corporate  assets,  and certain special items,
are  not  included  in  segment  results.  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 1999,  Alcoa changed its internal  reporting
system to include the results of aluminum hedging in the Primary Metals segment.
Previously,  these results were included as  reconciling  items between  segment
ATOI and net income.  Segment  results  for 1998 and 1997 have been  restated to
reflect this change.
     ATOI for all segments totaled $1,489 in 1999,  compared with $1,344 in 1998
and  $1,247  in 1997.  See Note O to the  financial  statements  for  additional
information.  The following discussion provides shipment,  revenue and ATOI data
for each segment for the years 1997 through 1999.

                               29


I. ALUMINA AND CHEMICALS

<TABLE>
<CAPTION>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
Third-party alumina
 shipments (mt)                   7,054             7,130           7,223
Third-party sales                $1,842            $1,847          $1,978
Intersegment sales                  925               832             634
- ------------------------------------------------------------------------------
Total sales                     $ 2,767           $ 2,679         $ 2,612
- ------------------------------------------------------------------------------
After-tax operating income        $ 307             $ 318           $ 302
- ------------------------------------------------------------------------------

</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.  Approximately  two-thirds of the
third-party sales from this segment are from alumina.
     In 1999,  third-party  sales of  alumina  were up 5%  compared  with  1998.
Shipments fell 1% while realized prices rose 6%. For 1998,  third-party sales of
alumina fell 14% from 1997, as realized  prices fell 13% and shipments  fell 1%.
Lower third-party  shipments,  as a consequence of higher  intersegment sales in
1999 and 1998, were a direct result of the Alumax acquisition. Previously, sales
of alumina to Alumax were  classified as third-party  revenues;  these sales are
now recorded as intersegment.  Including intersegment sales, shipments were down
slightly in 1999 and up in 1998.
     Third-party sales of alumina-based  chemical products were down 3% in 1999,
as the  divestiture  of Alcoa  Specialty  Chemicals in 1998,  lower prices and a
lower  value-added mix more than offset higher  shipments.  In 1998,  sales were
unchanged compared with 1997, as higher shipments,  aided by acquisitions,  were
offset by lower prices.
     Segment  ATOI for 1999 fell 3% from 1998 to $307.  Alumina ATOI fell 4%, as
intersegment  sales comprised a higher  percentage of total sales.  Offsetting a
portion of this  decline was improved  cost  performance  in Brazil,  along with
lower energy and raw material  costs at  operations  in Australia  and the U.S.,
respectively.  Chemicals  ATOI  for  1999  rose  13%,  as the  impact  of  lower
third-party  sales  was  more  than  offset  by cost  improvements  relating  to
productivity  enhancements  at North American  operations  and lower  production
costs.  Segment ATOI in 1998 rose 5% over 1997, as lower operating costs and the
impact of the Inespal acquisition were partly offset by lower realized prices.
     In 1999,  Alcoa completed the expansion of its Wagerup alumina  refinery in
Australia. This expansion, which increases 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.

II. PRIMARY METALS

<TABLE>
<CAPTION>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
Third-party aluminum
 shipments (mt)                   1,442             1,392             940
Third-party sales                $2,241            $2,105          $1,600
Intersegment sales                2,793             2,509           1,883
- ------------------------------------------------------------------------------
Total sales                      $5,034            $4,614          $3,483
- ------------------------------------------------------------------------------
After-tax operating income       $  535            $  372          $  399
- ------------------------------------------------------------------------------

</TABLE>

The focus of this segment is 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  businesses,  as well as sold to outside
customers.  Other products  produced and sold by this segment include powder and
scrap.

                               30

Alcoa's aluminum hedging activities also are included in this segment.  Aluminum
ingot produced by Alcoa and used  internally is transferred to other segments at
prevailing market prices. Third-party sales of ingot, which make up the majority
of this segment's third-party revenues,  rose 4% from 1998. The increase was due
to higher  shipments,  which also rose 4%. On average,  prices in 1999  compared
with 1998 were  unchanged.  In 1998,  third-party  sales of ingot  rose 32% from
1997.  The increase  was the result of  additional  shipments  from the smelting
operations of acquired companies,  which were partially offset by an 11% decline
in realized prices.
     Intersegment sales increased in 1999 relative to 1998, and in 1998 relative
to 1997,  as Alumax and  Inespal  sourced  the  majority  of their  metal  needs
internally.
     Alcoa's  average  realized  price for ingot in 1999 was 67 cents per pound,
unchanged  from 1998. In 1997,  the average  realized  price was 75 cents.  This
compares with average  prices on the London Metal Exchange (LME) of 63 cents per
pound in 1999 and 1998, and 74 cents in 1997.
     Alcoa  operated its worldwide  smelting  system at 90% of rated capacity in
1999.  In January  2000,  Alcoa  announced  that it will  restart  approximately
200,000 mt of idle  smelting  capacity  by the end of the  current  year.  Alcoa
continues to have 250,000 mt of smelting capacity idle.
     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 1998
July  purchase  of  Alumax.  Lower  raw  material  prices,  $45 of  productivity
improvements  at U.S.  operations  and cost  efficiencies  in Brazil  also had a
positive impact on segment ATOI.  Mark-to-market  gains in 1999 versus losses in
1998 added $57 to ATOI in 1999.  Primary  metals ATOI fell 7% in 1998 from 1997,
as lower  metal  prices and higher  mark-to-market  losses  more than offset the
impact  of  acquired  companies  and the  results  of  internal  hedging.  Lower
operating  costs in 1998  helped  ease the  decline,  muting the impact of lower
prices.

III. FLAT-ROLLED PRODUCTS

<TABLE>
<CAPTION>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
Third-party aluminum
 shipments (mt)                   1,982             1,764           1,469
Third-party sales                $5,113            $4,900          $4,188
Intersegment sales                   51                59              53
- ------------------------------------------------------------------------------
Total sales                      $5,164            $4,959          $4,241
- ------------------------------------------------------------------------------
After-tax operating income       $  281            $  306          $  269
- ------------------------------------------------------------------------------

</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 mill products used in the  transportation
and distributor  markets.  Approximately  45% of the  third-party  shipments and
sales in this segment are derived from the sale of RCS,  while a similar  amount
is  obtained  from mill  products.  Other  flat-rolled  products,  such as foil,
comprise the remainder of this segment.  Third-party  sales from this segment in
1999  increased 4% from 1998, as shipments,  aided by a full year's results from
the former Alumax locations,  rose 12%.  Third-party sales in 1998 increased 17%
over 1997, as the impact from  acquisitions was partially offset by a 2% decline
in prices.
     Third-party  sales from RCS were down 5% in 1999  primarily  as a result of
lower prices. RCS pricing tends to lag movements in the

                               31

LME by three to six months,  resulting in RCS prices falling year over year. For
the  industry  as  a  whole,  1999  shipments  of  beverage  cans  by  U.S.  can
manufacturers   fell  .7%  from  1998.  In  1998,  these  shipments  rose  2.2%.
Third-party  sales  were  essentially  unchanged  in  1998  from  1997,  as were
shipments and prices.
     Mill products  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 in Latin  America.  Average
realized  prices  fell in part  due to  acquisitions,  as  post-  Alumax,  lower
value-added products made up a higher percentage of total shipments. Third-party
sales  from mill  products  in 1998 were up 21% over 1997.  Shipments,  aided by
acquisitions, increased 23%, while prices fell 2%.
     ATOI for Flat-Rolled  Products fell 8% in 1999, as higher revenues and cost
reductions were overshadowed by lower prices and lower equity earnings. RCS ATOI
fell 14%,  as a $16 decline in equity  earnings  from Kaal,  a  50%-owned  joint
venture that  operates RCS  facilities  in Australia  and Japan,  had a negative
impact on financial  performance.  The decline in Kaal's  earnings was primarily
the result of lower revenues from Japan.  Lower prices, $3 of higher advertising
costs and a less profitable  mix,  partially  offset by $7 of cost  improvements
related to purchased  materials,  also had a negative  impact on RCS ATOI.  Mill
products ATOI fell 9%, as improved  results for U.S.  operations  were more than
offset by weaker  performance  in Latin  America and Europe.  U.S. mill products
results were aided by acquisitions,  which increased volumes,  along with $11 of
improved productivity and cost performance.  A shift in mix towards lower value-
added  products  offset a portion of these gains.  In Europe and Latin  America,
lower prices were partly offset by productivity  and cost  improvements.  Partly
offsetting the decline in RCS and mill products ATOI were improved  results from
foil operations and the shutdown of Alcoa Memory Products in 1999.
     In 1998,  ATOI for  Flat-Rolled  Products rose 14%, as increases  from mill
products and foil were  partially  offset by declines in RCS. RCS ATOI was down,
as higher costs for labor and services reduced margins. Mill products ATOI rose,
as acquisitions and higher prices for products used in the transportation market
offset losses related to the production and sale of computer memory disks.

IV. ENGINEERED PRODUCTS

<TABLE>
<CAPTION>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
Third-party aluminum
 shipments (mt)                     989               729             441
Third-party sales                $3,728            $3,110          $2,077
Intersegment sales                   26                11               9
- ------------------------------------------------------------------------------
Total sales                      $3,754            $3,121          $2,086
- ------------------------------------------------------------------------------
After-tax operating income       $  180            $  183          $  100
- ------------------------------------------------------------------------------

</TABLE>

This segment includes hard and soft alloy extrusions, aluminum forgings, rod and
bar. These  products  serve the  transportation,  construction  and  distributor
markets.  Third-party shipments for this segment were up 36% in 1999, generating
a 20% increase in revenues.  In 1998,  third-party shipments rose 65% over 1997,
resulting in a 50% increase in revenues.  Acquisitions  and higher  shipments of
forged  wheels,  partly offset by the 1998 sale of Alcotec,  a wire  fabricator,
were  responsible  for the increase in shipments.  Average  realized  prices for
Engineered Products for the 1999 period fell 12%, to $1.71

                               32

per pound,  primarily due to the addition of the Alumax extrusion  businesses in
the  1998  third  quarter.   These  businesses   produce  primarily  soft  alloy
extrusions, which have a lower value-added,  resulting in a reduction in average
realized prices.
     Extruded  product  sales were up 26% from 1998 as  shipments  rose 43%.  In
1998, sales rose 65% on a 91% increase in shipments.  The Alumax acquisition was
a significant factor in the increase in shipments.  Partially  offsetting higher
shipments were lower soft alloy prices and a 23% drop in shipments of hard alloy
products.   Forged  wheel  sales  increased  33%  and  32%  in  1999  and  1998,
respectively,  from the prior year.  Continued  strong  demand for forged wheels
used in sport utility vehicles and light trucks was a major factor in the higher
shipment levels.
     Engineered  Products 1999 ATOI fell 2% from 1998 to $180.  The 1998 sale of
Alcotec  resulted in an $18  decrease  in 1999  segment  ATOI  relative to 1998.
Additionally,  declines in the  extrusion  business in Latin  America and in the
architectural  extrusion  business in the U.S.  were  nearly  offset by improved
results in Europe and from forged products. The decline in Latin America was due
to lower  volumes and prices,  while the drop in returns from the  architectural
extrusion business was due to lower volumes and higher production costs.  Europe
benefited   from   acquisitions,   increased   market  share  and   productivity
improvements.  Forged  products  ATOI rose 39%, as higher  prices and  continued
growth in the wheel market offset a shift to a lower value- added mix.
     ATOI in 1998 for this segment rose 84% over the comparable 1997 period. The
increase was due to acquired companies,  the above-mentioned gain on the sale of
Alcoa's  interest  in Alcotec  and  improved  operating  results  from  European
extrusion facilities. Also contributing to the increase were higher shipments of
forged wheels.

V. OTHER

<TABLE>
<CAPTION>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>
Third-party aluminum
 shipments (mt)                      65                66             106
Third-party sales                $3,393            $3,362          $3,457
- ------------------------------------------------------------------------------
After-tax operating income       $  186            $  165          $  177
- ------------------------------------------------------------------------------

</TABLE>

This category  includes Alcoa  Fujikura Ltd.  (AFL),  which produces  electrical
components for the automotive industry along with  telecommunications  products.
In addition,  Alcoa's  aluminum  and plastic  closures  operations,  residential
building  products  operations  and aluminum  automotive  engineering  and parts
businesses  are included in this group.  Third- party sales from this group were
up 1% from  1998,  as higher  sales of  automotive  electrical  components,  the
acquisition  of the  remaining  50% of  A-CMI  in the  1999  third  quarter  and
increased  sales from closures  were nearly  offset by declines  from  packaging
operations in Brazil. This segment's third-party sales in 1998 were down 3% from
1997, as higher sales of automotive  electrical components were more than offset
by the loss of revenues from the sale of Alcoa Aluminio's cable business in late
1997.
     Third-party  sales at AFL increased 5% in 1999 and 7% in 1998,  relative to
the prior year,  as higher  volumes  were  partly  offset by  declining  prices.
Closures  revenue for 1999 rose 7% from 1998,  as higher  volumes were  somewhat
offset by lower prices. In 1998, closures revenues fell 1% compared with 1997.
     This group  incurred a special  item gain of $71 in 1997.  The gain was the
result  of the sale of  various  businesses,  a  majority  interest  in  Alcoa's
Brazilian cable business and land in Japan.
     ATOI for this group rose 13% from 1998,  as  improvements  in closures  and
aluminum  automotive  parts  were  partly  offset  by a decline  from  packaging
operations in Brazil.  The  improvement  in closures ATOI was a result of higher
volumes and $6 of cost  improvements,  offset in part by lower prices.  Aluminum
automotive  parts  benefited  from  higher  volumes and  selling  prices,  lower
administrative costs and $12 of improved productivity.  Cost improvements of $22
somewhat  offset  the  impact  of a  23%  decline  in  revenues  from  packaging
operations in Brazil.  In 1998,  ATOI fell 7% from 1997, as improved  results at
AFL, along with a gain from the sale of Alcoa's Australian gold operations, were
more than offset by special item gains in 1997 versus no special items in 1998.

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>

                                   1999              1998            1997
- ------------------------------------------------------------------------------
<S>                             <C>               <C>             <C>
Total after-tax operating
 income                         $ 1,489           $ 1,344         $ 1,247
Elimination of
 intersegment (profit)
 loss                               (24)              (16)             12
Unallocated amounts (net
 of tax):
  Interest income                    26                64              67
  Interest expense                 (126)             (129)            (92)
  Minority interest                (242)             (238)           (268)
  Corporate expense                (171)             (197)           (172)
  Other                             102                25              11
- ------------------------------------------------------------------------------
Consolidated net income         $ 1,054           $   853         $   805
- ------------------------------------------------------------------------------

</TABLE>

     Items required to reconcile ATOI to consolidated net income include:
>    Corporate  adjustments  to eliminate any  remaining  profit or loss between
     segments;
>    The after-tax impact of interest income and expense at the statutory rate;
>    Minority interest;
>    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 from 1999 to 1998 was due to LIFO  adjustments  that
occurred in 1999 and  adjustments  to deferred taxes that resulted from a change
in the Australian corporate income tax rate.

SPECIAL ITEMS
There were no special  items  recorded  in 1999 or 1998.  Special  items in 1997
resulted in a net gain of $96 ($44 after tax and minority interests, or 13 cents
per basic  share).  The fourth  quarter  sale of a majority  interest in Alcoa's
Brazilian  cable business and land in Japan generated gains of $86. In addition,
the sale of equity  securities  resulted in a gain of $38, while the divestiture
of noncore businesses provided $25. These gains were partially offset by charges
of $53, related to environmental and impairment matters.

                               33

COSTS AND OTHER
COSTS OF GOODS SOLD -- Cost of goods sold (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  relate  primarily to acquired  companies.
Offsetting  a  portion  of the  acquisition-  driven  increases  were  cost  and
operating  improvements  of  approximately  $500.  The $1,658  increase  in 1998
relative to 1997 was due to higher  volumes of $1,800,  which also were  related
primarily to acquisitions, partly offset by cost improvements of $200. COGS as a
percentage  of sales fell 1% to 76.8% in 1999,  as higher  shipments,  good cost
control and a LIFO  liquidation  more than offset the  negative  impact of lower
overall aluminum prices on revenues.  In 1998, COGS as a percentage of sales was
 .7 percentage points higher than the 77.1% recorded in 1997, as higher shipments
and a higher  value-added  product  mix more  than  offset  the  impact  of cost
improvements.

SELLING AND GENERAL  ADMINISTRATIVE  EXPENSES -- S&GA expenses  increased 9%, or
$68,  to $851 in  1999.  The  higher  level  of  these  costs in 1999 was due to
acquisitions;  Alcoa  owned  Alumax  for 12 months in 1999  versus six months in
1998. In addition,  higher  personnel costs related to pay for performance had a
negative impact on S&GA in 1999. As a percentage of sales revenue, S&GA was 5.2%
in 1999.  S&GA for 1998 rose $101 from 1997 to $783, or 5.1% of sales  revenues.
The higher 1998 S&GA total results from  acquisitions,  partially offset by cost
reductions.

RESEARCH  AND  DEVELOPMENT  EXPENSES  -- 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 areas. R&D costs for
1998 were  down 10% from  1997.  A  reduction  in R&D  personnel  was  primarily
responsible for lower spending on research in the metals, castings, closures and
alumina businesses.

INTEREST  EXPENSE  --  Interest  expense  of $195 in 1999 was down $3 from 1998.
Total interest  costs,  including  capitalized  interest,  were up 2% to $216 in
1999.  The  increase  in  total  interest  costs  was due to a  higher  level of
capitalized  interest  along with 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. Interest expense in 1998 totaled $198, up $57 from 1997. The increase
was the result of 1998  borrowings  of over  $1,850,  the proceeds of which were
used primarily to fund acquisitions.

INCOME TAXES -- Alcoa's  effective  tax rate in 1999 was 29.9%,  5.1  percentage
points below the statutory rate of 35%. The lower rate is 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%, three percentage  points below
the  statutory  rate of 35%. The lower rate is  primarily  due to lower taxes on
foreign income.
     The 1997  effective  tax rate was 33%,  two  percentage  points  below  the
statutory  rate of 35%. The lower rate is  primarily  due to the  favorable  tax
effect of certain special items.

                               34

OTHER  INCOME/FOREIGN  CURRENCY -- 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 asset sales. Offsetting a portion
of these  negative  factors were gains from marking to market  certain  aluminum
commodity  contracts versus losses in 1998. In 1998 from 1997, other income fell
9% to $149. The majority of the change was due to increased  losses from marking
to market aluminum commodity  contracts and lower interest income.  Offsetting a
portion of these negative  factors were increased  gains related to asset sales,
higher equity income and a positive swing in foreign exchange.
     Exchange  gains  (losses)  included in other income were $(18.7) in 1999, $
(3.7) in 1998 and $(9.8) in 1997.  The total  impact on net income,  after taxes
and minority interests, was $(8.3) in 1999, $(8.0) in 1998 and $6.9 in 1997.
     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 SFAS 52, "Foreign Currency  Translation,"
the change in these  facts and  circumstances  required  a change to  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.

MINORITY  INTERESTS -- Minority  interests' share of income from operations rose
2% from  1998 to $242.  The  increase  was due to  higher  earnings  at Alcoa of
Australia  (AofA) and AFL,  partly  offset by lower  earnings  from Alcoa  World
Alumina L.L.C. For 1998,  minority  interest fell 11% to $238, as lower earnings
at Aluminio and AofA were partly offset by improvements at AFL.

RISK FACTORS
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.  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 the U.S.,  Alcoa is net metal short and is subject to the risk of higher
aluminum  prices for the  anticipated  metal  purchases  required to fulfill the
long-term  customer contracts noted above. 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  requirements  will be met. At December 31, 1999 and 1998, these contracts
totaled approximately  465,000 mt and 933,000 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 1999 year-end, three-month LME  aluminum
ingot  price of $1,650  per mt would  result in a pretax  gain or loss to future
earnings of $77 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, 1999 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.
     The  expiration  dates of the options and the delivery dates of the futures
contracts  noted above 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 options positions will be rolled
forward.  This may result in significant  cash inflows if the hedging  contracts
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.
     Alcoa also had 21,000 mt and 29,000 mt of  futures  and  options  contracts
outstanding  at  year-end  1999 and 1998,  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 $12 in 1999 and charges of $45 in 1998 and $13 in
1997. A hypothetical  10% change in aluminum ingot prices from the year-end 1999
level of $1,650  per mt would  result in a pretax  gain or loss of $3 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, 1999,  these  contracts
totaled  244,000  mt.  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  1999 level of $1,650 per mt would  result in a pretax
gain or loss of $29 related to these positions.  The  hypothetical  gain or loss
was calculated using the same model and assumptions noted earlier.
     Alcoa also purchases certain other  commodities,  such as fuel oil, natural
gas and copper, for its operations and enters into futures and options contracts
to eliminate volatility in the prices of such products.

                               35

None of these  contracts are material.  For additional  information on financial
instruments, see Notes A and T 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 1999 year-end  forward rates would result in a pretax gain or loss of
approximately $169 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 T for information related to the accounting
policies  and fair  market  values of  Alcoa's  foreign  exchange  contracts  at
December 31, 1999 and 1998.

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, 1999 and 1998,  Alcoa had
$3,067 and $3,489 of debt  outstanding  at effective  interest rates of 5.8% and
6.1%,  respectively,  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 1999 levels would  increase or decrease  interest  expense by $20.
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 T.

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 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). 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 at each of its scheduled  meetings
on the scope of its derivative activities.

MATERIAL  LIMITATIONS -- The  disclosures,  with respect to aluminum  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 disclosed.

ENVIRONMENTAL MATTERS
Alcoa  continues to participate in  environmental  assessments and cleanups at a
number  of  locations.   These  include  approximately  10  owned  or  operating
facilities and adjoining

                               36

properties,  approximately  10  previously  owned  or  operated  facilities  and
adjoining  properties  and  approximately  65 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 U 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 Alcoa's  Massena,  New
York, and Pt. Comfort,  Texas plant sites that allege natural resource damage or
off-site  contaminated  sediments,  where  investigations are ongoing.  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 two 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 1999 was $174, of which
$63 was classified as a current liability,  and reflects the most probable costs
to  remediate  identified  environmental  conditions  for  which  costs  can  be
reasonably estimated.  About 22% of this balance relates to Alcoa's Massena, New
York  plant site and 11%  relates to Alcoa's  Pt.  Comfort,  Texas  plant  site.
Remediation  expenses  charged to the reserve were $47 in 1999,  $63 in 1998 and
$64 in 1997. These include expenditures currently mandated, as well as those not
required  by any  regulatory  authority  or third  party.  In 1999,  the reserve
balance  was  increased  by  $4  to  cover  anticipated   future   environmental
expenditures.
     Included in annual  operating  expenses are the recurring costs of managing
hazardous substances and environmental programs. These costs are estimated to be
about 2% of cost of goods sold.

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

CASH FROM OPERATIONS
Cash from operations increased 2% to $2,236 in 1999, after rising 16% in 1998 to
$2,197,  versus  $1,888 in 1997.  The 1999  increase was primarily the result of
higher  earnings,  partly offset by higher  working  capital  requirements.  The
increase  in cash from  operations  in 1998  relative  to 1997 was due to higher
earnings,  a  reduction  in deferred  hedging  gains and lower  working  capital
requirements.
     Higher  working  capital  requirements  for 1999  were a result  of  higher
receivables,  a  reduction  in  taxes  and  payables,  partly  offset  by  lower
inventories. In 1998, lower working capital requirements were essentially due to
lower levels of receivables and  inventories,  partially offset by a decrease in
accounts payable and accrued expenses.

FINANCING ACTIVITIES
Financing  activities  used  $1,166  of cash in  1999,  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

                               37

increase in common stock issued in connection  with employee stock option plans.
Specifically, in 1999 Alcoa used $838 of cash to repurchase 15,605,522 shares of
the  company's  common stock at an average  price of $53.70 per share.  In 1998,
Alcoa used $365 to repurchase  9,774,600 shares of common stock. Stock purchases
in 1999 and 1998 were partially offset by $609 and $87,  respectively,  of stock
issued for employee stock option plans.
     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,  $250 of
term  debt due in 2018,  $200 of term  debt due in 2005 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 the 1998
third quarter,  Alcoa entered into a new $2,000  revolving-credit  facility. The
facility is  comprised  of a 364-day  $1,000  facility  and a  five-year  $1,000
facility. The revolving-credit facilities are used to support the Alcoa and AofA
commercial paper programs.
     Dividends paid to  shareholders  were $298 in 1999, an increase of $33 from
1998. The  difference  was due to a higher total dividend in 1999,  with a total
payout  of 80.5  cents per  share  versus  75 cents per share in 1998.  In 1998,
dividends to shareholders  rose $94 from 1997 to $265, as the total payout of 75
cents per share was significantly above the 1997 payout of 48.8 cents per share.
In early January 2000, Alcoa's board of directors increased the base dividend by
33%, to $1.00 per share, and increased the threshold for payment of the variable
dividend  to $3.00 per share.  This will  result in a  quarterly  dividend of 25
cents per share for 2000, a 24%  increase  from the 1999  quarterly  dividend of
20.125  cents per share.  Alcoa's  variable  dividend  program  provides for the
distribution, in the following year, of 30% of Alcoa's annual earnings in excess
of $3.00 per basic share.
     Dividends paid and return of capital to minority  interests totaled $122 in
1999,  a decline of $100 from the prior  year.  The decline was due to a lack of
dividends  paid at Aluminio and at entities  comprising  Alcoa World Alumina and
Chemicals  (AWAC).  In 1998,  dividends  paid and return of capital to  minority
interests fell $120 from 1997 to $222. The decrease is a result of AWAC and AofA
returning  funds to their  investors in 1997.  Of the $342 cash outflow in 1997,
$206 relates to payments made by AofA, while a payment of $96 was made by AWAC.
     Debt as a  percentage  of  invested  capital  was 28.3% at the end of 1999,
compared with 31.7% for 1998 and 25.0% for 1997.

INVESTING ACTIVITIES
Cash used for  investing  activities  in 1999 totaled  $1,167,  down $1,210 from
1998. Capital  expenditures totaled $920, compared with $932 in 1998 and $913 in
1997.  Of the total  expenditures  in 1999,  27% 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  $91 in 1999,  $105 in 1998 and $94 in
1997.
     Alcoa used $1,463 in 1998 for acquisitions,  notably the Alumax and Inespal
transactions.  During the 1999  period,  Alcoa spent $122 to acquire a number of
businesses, including the bright products business of Pechiney's Rhenalu rolling
plant located near Toulouse,  France and Reynolds'  aluminum  extrusion plant in
Irurzun,  Spain. In 1999,  Alcoa also acquired the remaining 50% interest in its
A-CMI  partnership  from Hayes Lemmerz.  A-CMI was a joint venture between Alcoa
and  CMI  International  formed  to  produce  cast  aluminum  products  for  the
automotive  industry.  In  the  1999  fourth  quarter,   Alcoa  acquired  Golden
Aluminum's closed rolling facility in San Antonio, Texas.
     Alcoa added $96 and $126 to its investments in 1999 and 1998, respectively,
primarily to acquire a stake in the Norwegian metals  producer,  Elkem. In 1998,
Alcoa received $55 from the sale of its specialty chemical, Alcotec wire, Vernon
cast plate and Australian  gold  operations.  Asset sales in 1997 generated $265
and included the Caradco, Arctek, Alcoa Composites, Norcold, Dayton Technologies
and  Richmond,  Indiana  facilities.  Also  included  was the sale of a majority
interest in Alcoa's Brazilian cable business.

YEAR 2000 ISSUE
Alcoa,  like other businesses,  made substantial  preparations for the Year 2000
issue.  The Year 2000 issue arose from the past practice of using two digits (as
opposed to four) to represent the year in some  computer  programs and software.
If uncorrected,  this could have resulted in  computational  errors as dates are
compared across the century boundary. The vast majority of the products produced
and sold by Alcoa are  unaffected by Year 2000 issues in use or operation  since
they contain no microprocessors.
     Based on  information  available  to date,  Alcoa has not  experienced  any
significant  events  attributable to Year 2000 issues. The company will continue
to monitor for potential issues at Alcoa, its customers and suppliers,  in order
to permit a rapid response  should any issues arise.  Alcoa believes that if any
Year 2000 issues were to arise, they would not have a significant  impact on its
operations and would most likely be isolated, short- term events.
     Alcoa's  Year 2000  program  provided  a focused  effort  across all of the
company's locations that:
>    identified,  assessed,  remediated  and tested  26,232  Alcoa  systems  and
     components;
>    formally assessed 3,399 critical and important suppliers;
>    conducted 202 formal on-site program verification reviews;
>    provided Year 2000 readiness information to 2,802 separate customers; and
>    updated and completed 1,890 contingency plans.
     In 1999  and  1998,  Alcoa  incurred  $38  each  year of  direct  costs  in
connection with its Year 2000 program.  These costs include external  consulting
costs and the cost of hardware  and  software  replaced as a result of Year 2000
issues.  Alcoa does not expect to incur significant  direct costs related to the
Year 2000 issue during the current year.

SUBSEQUENT EVENT
On February 11, 2000, the  shareholders of Reynolds Metals Company,  by majority
vote, approved the proposed merger transaction  between Alcoa and Reynolds.  The
merger  transaction  remains  subject to the  approval  of various  governmental
authorities.

                               38

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.

/s/ A. Belda

Alain J.P. Belda President and Chief Executive Officer

/s/ Richard B. Kelson

Richard B. Kelson Executive Vice President and Chief Financial Officer

AUDIT COMMITTEE REPORT
The  Audit  Committee  of the  Board of  Directors,  which is  composed  of five
independent directors, met four times in 1999. In addition, the chairman of this
committee  met with  management  and the  independent  accountants  prior to the
announcement of quarterly earnings in April, July and October.
     The Audit Committee oversees Alcoa's financial  reporting process on behalf
of the Board of  Directors.  In  fulfilling  its  responsibility,  the committee
recommended to the Board the reappointment of PricewaterhouseCoopers  LLP as the
company's independent public accountants.  The Audit Committee reviewed with the
Vice  President-Environment,  Health and Safety,  Audit and  Compliance  and the
independent   accountants  the  overall  scope  and  specific  plans  for  their
respective  audits.  The committee  reviewed with management  Alcoa's annual and
quarterly  reporting  process,  and  the  adequacy  of  the  company's  internal
controls. Without management present, the committee met separately with the Vice
President-  Environment,  Health  and  Safety,  Audit  and  Compliance  and  the
independent  accountants  to review  the  results of their  examinations,  their
evaluations  of the  company's  internal  controls,  and the overall  quality of
Alcoa's financial reporting.

/s/ Henry Schacht

Henry B. Schacht Chairman, Audit Committee

INDEPENDENT ACCOUNTANT'S REPORT

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, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with  accounting  principles  generally  accepted  in the United  States.  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 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 the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

600 Grant St., Pittsburgh, Pa. January 10, 2000, except for Note V, for which
the date is February 11, 2000.


                               39

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

<TABLE>
<CAPTION>

For the year ended December 31       1999            1998            1997
- ------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>
Revenues
Sales (O)                         $16,323         $15,340         $13,319
Other income                          124             149             163
- ------------------------------------------------------------------------------
                                   16,447          15,489          13,482
- ------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold                 12,536          11,933          10,275
Selling, general
  administrative and other
  expenses                            851             783             682
Research and development
  expenses                            128             128             143
Provision for depreciation,
  depletion and amortization          888             842             735
Special items (D)                      --              --             (96)
Interest expense (S)                  195             198             141
- ------------------------------------------------------------------------------
                                   14,598          13,884          11,880
- ------------------------------------------------------------------------------
Earnings
  Income before taxes on
    income                          1,849           1,605           1,602
Provision for taxes on income
  (P)                                 553             514             529
- ------------------------------------------------------------------------------
  Income from operations            1,296           1,091           1,073
Minority interests                   (242)           (238)           (268)
- ------------------------------------------------------------------------------
Net Income                        $ 1,054         $   853         $   805
- ------------------------------------------------------------------------------
Earnings per Share (B and M)
  Basic                           $  2.87         $  2.44         $  2.33
  Diluted                         $  2.82         $  2.42         $  2.31
- ------------------------------------------------------------------------------

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

</TABLE>

                               40

CONSOLIDATED BALANCE SHEET   Alcoa and subsidiaries
(in millions)

<TABLE>
<CAPTION>

December 31                                       1999              1998
- ---------------------------------------------------------------------------
<S>                                            <C>              <C>
Assets
Current assets:
  Cash and cash equivalents (T)                $   237           $   342
  Short-term investments (T)                        77                39
  Receivables from customers, less
    allowances: 1999-$58; 1998-$61               2,199             2,163
  Other receivables                                165               171
  Inventories (E)                                1,618             1,881
  Deferred income taxes (P)                        233               198
  Prepaid expenses and other current
    assets                                         271               231
- ------------------------------------------------------------------------------
    Total current assets                         4,800             5,025
Properties, plants and equipment (F)             9,133             9,134
Goodwill, net of accumulated amortization
  of $221 in 1999 and $179 in 1998 (C)           1,328             1,414
Other assets (H and T)                           1,805             1,890
- ------------------------------------------------------------------------------
      Total Assets                             $17,066           $17,463
- ------------------------------------------------------------------------------

Liabilities
Current liabilities:
  Short-term borrowings (weighted average
    rate of 5.1% in 1999 and 4.8% in
    1998) (T)                                    $ 343             $ 431
  Accounts payable, trade                        1,219             1,044
  Accrued compensation and retirement
    costs                                          582               553
  Taxes, including taxes on income                 368               431
  Other current liabilities                        424               628
  Long-term debt due within one year (G
    and T)                                          67               181
- ------------------------------------------------------------------------------
    Total current liabilities                    3,003             3,268
Long-term debt, less amount due within
  one year (G and T)                             2,657             2,877
Accrued postretirement benefits (Q)              1,720             1,840
Other noncurrent liabilities and deferred
  credits (I)                                    1,473             1,588
Deferred income taxes (P)                          437               358
- ------------------------------------------------------------------------------
      Total liabilities                          9,290             9,931
- ------------------------------------------------------------------------------
      Minority Interests (A and J)               1,458             1,476
- ------------------------------------------------------------------------------
Contingent liabilities (L)                          --                --

Shareholders' Equity
Preferred stock (N)                                 56                56
Common stock (N)                                   395               395
Additional capital                               1,704             1,676
Retained earnings                                6,061             5,305
Treasury stock, at cost                         (1,260)           (1,029)
Accumulated other comprehensive loss              (638)             (347)
- ------------------------------------------------------------------------------
      Total shareholders' equity                 6,318             6,056
- ------------------------------------------------------------------------------
      Total Liabilities and Equity             $17,066           $17,463
- ------------------------------------------------------------------------------

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

</TABLE>

                               41

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

<TABLE>
<CAPTION>

For the year ended December 31              1999         1998         1997
- ------------------------------------------------------------------------------
<S>                                      <C>          <C>          <C>
Cash from Operations
Net income                               $ 1,054      $   853      $   805
Adjustments to reconcile net income to
  cash from operations:
  Depreciation, depletion and
    amortization                             901          856          754
  Change in deferred income taxes             54          110           83
  Equity earnings before additional
    taxes, net of dividends                  (10)          (3)         (31)
  Noncash special items                       --           --          (96)
  Gains from investing activities--
    sale of assets                           (12)         (32)          --
  Minority interests                         242          238          268
  Other                                       31          (23)          (5)
  Changes in assets and liabilities,
    excluding effects of acquisitions
    and divestitures:
    (Increase) reduction in
      receivables                            (56)         145           12
    Reduction in inventories                 253          100           53
    (Increase) reduction in prepaid
      expenses and other current
      assets                                 (36)          23          (26)
    Increase (reduction) in accounts
      payable and accrued expenses           (79)         (68)          82
    Increase (reduction) in taxes,
      including taxes on income               26           69          (27)
    Cash received on long-term alumina
      supply contract                         --           --          240
    Change in deferred hedging gains/
      losses                                 (63)         (51)        (113)
    Net change in noncurrent assets
      and liabilities                        (69)         (20)        (111)
- ------------------------------------------------------------------------------
      Cash from operations                 2,236        2,197        1,888
- ------------------------------------------------------------------------------
Financing Activities
Net additions (reduction) to short-
  term borrowings                            (89)         (76)         143
Common stock issued and treasury stock
  sold                                       609           87          203
Repurchase of common stock                  (838)        (365)        (604)
Dividends paid to shareholders              (298)        (265)        (171)
Dividends paid and return of capital
  to minority interests                     (122)        (222)        (342)
Net change in commercial paper                --          776          (79)
Additions to long-term debt                  572          881          188
Payments on long-term debt                (1,000)      (1,096)        (327)
- ------------------------------------------------------------------------------
      Cash used for financing
        activities                        (1,166)        (280)        (989)
- ------------------------------------------------------------------------------
Investing Activities
Capital expenditures                        (920)        (932)        (913)
Acquisitions, net of cash acquired (K)      (122)      (1,463)          --
Proceeds from the sale of assets              45           55          265
Sale of (additions to) investments           (96)        (126)          52
Changes in minority interests                 --           33           14
Changes in short-term investments            (37)          66          (87)
Other                                        (37)         (10)         (10)
- ------------------------------------------------------------------------------
      Cash used for investing
        activities                        (1,167)      (2,377)        (679)
- ------------------------------------------------------------------------------
      Effect of exchange rate changes
        on cash                               (8)           1          (17)
- ------------------------------------------------------------------------------
Net change in cash and cash
  equivalents                               (105)        (459)         203
Cash and cash equivalents at beginning
  of year                                    342          801          598
- ------------------------------------------------------------------------------
      Cash and cash equivalents at end
        of year                          $   237      $   342      $   801
- ------------------------------------------------------------------------------

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

</TABLE>

                               42

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

<TABLE>
<CAPTION>


                                                                                                     Accumulated
                                                                                                            other         Total
                        Comprehensive     Preferred      Common    Additional  Retained    Treasury   comprehensive shareholders'
December 31                    income         stock       stock       capital  earnings       stock   income (loss)        equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                  <C>        <C>         <C>       <C>        <C>               <C>          <C>
Balance at end of 1996                         $ 56       $ 179       $   592   $ 4,083    $   (371)         $  (76)      $ 4,463
Comprehensive income--
  1997:
  Net income--1997              $ 805                                               805                                       805
  Other comprehensive
    income (loss):
    Minimum pension
      liability, net of
      $2 tax benefit               (4)
    Unrealized
      translation
      adjustments                (250)
    Unrealized gains on
      securities, net of
      $1 tax expense                1
    Gains on securities
      included in net
      income, net of $13
      tax benefit                 (24)                                                                         (277)         (277)
                          -----------
Comprehensive income            $ 528
                          -----------
Cash dividends:
Preferred @ $3.75 per
  share                                                                              (2)                                       (2)
Common @ $.488 per share                                                           (169)                                     (169)
Treasury shares
  purchased                                                                                    (604)                         (604)
Stock issued:
  compensation plans                                                      (14)                  217                           203
- -----------------------------------------------------------------------------------------------------------------------------------
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):
    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 @ $.75 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 @ $.805 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
- -----------------------------------------------------------------------------------------------------------------------------------

<FN>
*Comprised of unrealized  translation  adjustments of $(623) and minimum pension
liability of $(15)

</TABLE>

SHARE ACTIVITY
(number of shares)

<TABLE>
<CAPTION>

                                                                               Common stock
                                                 -----------------------------------------------------------------------
                                Preferred stock                Issued              Treasury       Net outstanding
- ------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>                   <C>                   <C>
Balance at end of 1996                  557,649           357,845,166           (12,825,888)          345,019,278
Treasury shares purchased                                                       (16,154,534)          (16,154,534)
Stock issued: compensation plans                                                  7,686,508             7,686,508
- ------------------------------------------------------------------------------------------------------------------------
Balance at end of 1997                  557,649           357,845,166           (21,293,914)          336,551,252
Treasury shares purchased                                                        (9,774,600)           (9,774,600)
Stock issued: Alumax acquisition                           36,850,760                                  36,850,760
Stock issued: compensation plans                                                  3,181,666             3,181,666
- ------------------------------------------------------------------------------------------------------------------------
Balance at end of 1998                  557,649           394,695,926           (27,886,848)          366,809,078
Treasury shares purchased                                                       (15,605,522)          (15,605,522)
Stock issued: compensation plans                                                 16,545,442            16,545,442
- ------------------------------------------------------------------------------------------------------------------------
Balance at end of 1999                  557,649           394,695,926           (26,946,928)          367,748,998
- ------------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                               43

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 E
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 five 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 F and S 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 H for additional information.
     REVENUE  RECOGNITION.  Alcoa  recognizes  revenue  when title passes to the
customer.
     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 U for additional information.
     STOCK-BASED  COMPENSATION.  Alcoa accounts for stock-based  compensation in
accordance  with the  provisions  of 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 N.
     FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS.  Alcoa enters into long-term
contracts to supply fabricated  products to a number of its customers.  To hedge
the market risk of changing  prices for purchases or sales of metal,  Alcoa uses
commodity futures and options contracts.
     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  purchased  metal needs 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 a  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.
     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 $12 in 1999 and losses of $45 in
1998 and $13 in 1997.

                               44

     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 also purchases  certain other  commodities  such as fuel oil, gas and
copper for its  operations  and  enters  into  futures  contracts  to  eliminate
volatility in the prices of such products. None of these contracts are material.
     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 T
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  have  changed   significantly   since  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 to 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.
     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 is consistent  with Alcoa's recent policy
change regarding the manner in which large subsidiaries are capitalized and will
result in lower overall financing costs to the company.
     RECENTLY ADOPTED  ACCOUNTING  STANDARDS.  A Statement of Position (SOP) was
issued by the American  Institute of CPAs in April 1998. The SOP,  "Reporting on
the Costs of Start-up  Activities,"  requires that costs  incurred to open a new
facility,  introduce a new product,  commence a new  operation or other  similar
activities be expensed as incurred. This SOP, which was adopted in 1999, did not
have a material impact on Alcoa's financial statements.
     RECENTLY  ISSUED  ACCOUNTING   STANDARDS.   In  June  1998,  the  Financial
Accounting  Standards  Board  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities." The standard  requires that entities value
all  derivative  instruments  at fair value and record  the  instruments  on the
balance sheet.  The standard also  significantly  changes the  requirements  for
hedge accounting.  In June 1999, the FASB approved a delay in the effective date
of this standard until January 2001.  The company  believes that the adoption of
the standard will have a material  impact on its balance  sheet.  Upon adoption,
Alcoa's  commodity,  foreign exchange and interest rate derivative  contracts as
well as certain  underlying  exposures  will be recorded on the balance sheet at
fair value. Management is currently assessing the details of the standard and is
preparing a plan of implementation.
     RECLASSIFICATION. Certain amounts in previously issued financial statements
were reclassified to conform to 1999 presentations.

B. COMMON STOCK SPLIT
On January 10, 2000, the board of directors  declared a two-for-one common stock
split.  The stock split is subject to the  approval of Alcoa  shareholders,  who
must approve an amendment to Alcoa's  Articles of  Incorporation to increase the
authorized  shares of Alcoa common stock at the company's  annual meeting on May
12, 2000. If approved,  shareholders  of record on May 26, 2000, will receive an
additional  common  share for each share  held.  The  additional  shares will be
distributed on June 9, 2000.  Per-share amounts and number of shares outstanding
in this report have not been adjusted for the stock split since it is subject to
shareholder approval.  If the stock split is approved by shareholders,  earnings
per share will be restated to the following:

<TABLE>
<CAPTION>

(Unaudited)                           1999            1998           1997
- ------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>
Basic EPS                           $ 1.43          $ 1.22         $ 1.17
Diluted EPS                           1.41            1.21           1.15
- ------------------------------------------------------------------------------

</TABLE>

                               45

C. ACQUISITIONS

In August 1999, Alcoa and Reynolds Metals Company (Reynolds)  announced they had
reached a definitive agreement to merge. Under the agreement, Alcoa will acquire
all of the outstanding  shares of Reynolds at an exchange rate of 1.06 shares of
Alcoa common stock for each share of Reynolds.  The value of the  transaction is
approximately $4,800. The combined company will have annual revenues of $21,000,
approximately  127,000  employees  and will  operate  over 300  locations  in 37
countries  around the world.  The  acquisition  is subject to the  expiration of
antitrust  waiting  periods and other customary  conditions.  The acquisition of
Reynolds will be accounted for using the purchase method.
     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.  Alumax operated over 70 plants and other
manufacturing facilities in 22 states, Canada, Western Europe and Mexico.
     The following  unaudited pro forma information for the years ended December
31, 1998 and 1997  assumes  that the  acquisition  of Alumax had occurred at the
beginning of each respective year.  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 and
Alumax  and  additional  depreciation  related  to the  increase  in basis  that
resulted from the transaction.  Tax effects from the pro forma adjustments noted
above have been included at the 35% U.S. statutory rate.

<TABLE>
<CAPTION>

(Unaudited)                                1998                1997
- ------------------------------------------------------------------------
<S>                                    <C>                 <C>
Net sales                              $ 16,766            $ 16,160
Net income                                  876                 770
- --------------------------------------------------------------------------
Earnings per share:
 Basic                                     2.36                2.02
 Diluted                                   2.35                2.00
- --------------------------------------------------------------------------

</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.
     In February  1998,  Alcoa  completed its  acquisition  of Inespal,  S.A. 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.
     Alcoa completed a number of other acquisitions in 1999, 1998 and 1997. 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.  In
the  case of the  Alumax  acquisition,  the  allocation  of the  purchase  price
resulted in goodwill of  approximately  $910,  which is being  amortized  over a
forty-year  period.  Operating  results have been  included in the  statement of
consolidated  income  since  the  dates  of the  acquisitions.  Had the  Inespal
acquisition  occurred at the  beginning of 1998,  net income for that year would
not have been materially different.

D. SPECIAL ITEMS
Special  items in 1997  resulted  in a gain of $96  ($44,  or 13 cents per basic
share, after tax and minority interests). The fourth quarter sales of a majority
interest in Alcoa's  Brazilian  cable business and land in Japan generated gains
of $86. In addition,  the sale of equity  securities  resulted in a gain of $38,
while the  divestiture  of noncore  businesses  provided  $25.  These gains were
partially  offset by charges of $53,  related  primarily  to  environmental  and
impairment  matters.  As of the end of 1998, the  impairment  liability had been
substantially extinguished. The actual costs incurred related to the impairments
were not significantly different than the original estimates.

E. INVENTORIES

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                 <C>
Finished goods                          $   363             $   418
Work in process                             550                 592
Bauxite and alumina                         286                 347
Purchased raw materials                     267                 361
Operating supplies                          152                 163
- --------------------------------------------------------------------------
                                        $ 1,618             $ 1,881
- --------------------------------------------------------------------------

</TABLE>

Approximately  57% of total  inventories  at December  31, 1999 were valued on a
LIFO basis. If valued on an average- cost basis,  total  inventories  would have
been  $645 and $703  higher at the end of 1999 and  1998,  respectively.  During
1999,  LIFO  inventory  quantities  were  reduced,  which  resulted in a partial
liquidation  of the LIFO bases.  The impact of this  liquidation  increased  net
income by $31 or eight cents per share.

F. PROPERTIES, PLANTS AND EQUIPMENT, AT COST

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                 <C>
Land and land rights, including
 mines                                  $   270             $   284
Structures                                4,491               4,561
Machinery and equipment                  13,090              12,649
- --------------------------------------------------------------------------
                                         17,851              17,494
Less: accumulated depreciation
 and depletion                            9,303               9,091
- --------------------------------------------------------------------------
                                          8,548               8,403
Construction work in progress               585                 731
- --------------------------------------------------------------------------
                                        $ 9,133             $ 9,134
- --------------------------------------------------------------------------

</TABLE>

                               46

G. LONG-TERM DEBT

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                 <C>
Commercial paper, variable rate,
 (5.8% and 5.4% average rates)          $   980             $   745
5.75% Notes payable, due 2001               250                 250
6.125% Bonds, due 2005                      200                 200
6.50% Bonds, due 2018                       250                 250
6.75% Bonds, due 2028                       300                 300
Bank loans, 7.5 billion yen, due
 1999, (4.4% fixed rate)                     --                  78
Tax-exempt revenue bonds ranging
 from 3.3% to 5.9%, due 2000-2033           166                 153
Alcoa Fujikura Ltd.
 Variable-rate term loan, due
  1999-2002 (5.5% average rate)             210                 230
Alcoa Aluminio 7.5% Notes, due
 2008                                       194                 388
 Variable-rate notes, due 1999-
  2001 (7.6% and 6.6% average
  rates)                                      8                  40
Alcoa of Australia
 Euro-commercial paper, variable
  rate, (5.4% average rate)                  20                 250
Other                                       146                 174
- --------------------------------------------------------------------------
                                          2,724               3,058
Less: amount due within one year             67                 181
- --------------------------------------------------------------------------
                                        $ 2,657             $ 2,877
- --------------------------------------------------------------------------

</TABLE>

The amount of long-term  debt  maturing in each of the next five years is $67 in
2000, $366 in 2001, $209 in 2002, $1,010 in 2003 and $27 in 2004.
     In 1998,  Alcoa issued $300 of thirty-year  bonds due in 2028, $250 of term
debt due in 2018, $200 of term debt due in 2005 and $1,100 of commercial  paper.
The  proceeds  from  these  borrowings  were used to fund  acquisitions  and for
general corporate purposes.
     In 1998,  Alcoa entered into a new $2 billion  revolving-  credit facility,
which  expires in equal  amounts  in August  2000 and  August  2003.  Under this
agreement,  certain levels of  consolidated  net worth must be maintained  while
commercial paper balances are outstanding.
     In  1997,  Alcoa  Fujikura  issued a $250  term  loan  and  entered  into a
five-year,  $250 revolving-credit  agreement. The proceeds of the term loan were
used to repay existing debt. These agreements require Alcoa Fujikura to maintain
certain financial ratios.
     In 1996,  Alcoa  Aluminio  issued $400 of export notes,  of which $185 were
repurchased  by Alcoa in 1999. The export note  agreement  requires  Aluminio to
maintain certain financial ratios.
     A  portion  of  the  commercial  paper  issued  by  Alcoa  and  all  of the
Euro-commercial  paper issued by Alcoa of  Australia  (AofA) are  classified  as
long-term  debt because they are backed by the  revolving-credit  facility noted
above.

H. OTHER ASSETS

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                  <C>
Investments, principally equity
 investments                            $   630              $  586
Intangibles, net of accumulated
 amortization of $177 in 1999 and
 $139 in 1998                               117                 127
Noncurrent receivables                       43                  67
Deferred income taxes                       424                 505
Deferred charges and other                  591                 605
- --------------------------------------------------------------------------
                                        $1,805               $1,890
- --------------------------------------------------------------------------

</TABLE>

I. OTHER NONCURRENT LIABILITIES AND DEFERRED CREDITS

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                 <C>
Deferred hedging gains                       --             $    55
Deferred alumina sales revenue          $   220                 228
Environmental remediation                   111                 124
Deferred credits                            283                 336
Other noncurrent liabilities                859                 845
- --------------------------------------------------------------------------
                                        $ 1,473             $ 1,588
- --------------------------------------------------------------------------

</TABLE>

The deferred  hedging  gains are  associated  with metal  contracts  and will be
reflected in future earnings concurrent with the hedged revenues or costs.

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

<TABLE>
<CAPTION>

December 31                                1999                1998
- ------------------------------------------------------------------------
<S>                                     <C>                 <C>
Alcoa of Australia                      $   439             $   376
Alcoa Aluminio                              253                 366
Alcoa World Alumina                         290                 290
Alcoa Fujikura                              260                 233
Other majority-owned companies              216                 211
- --------------------------------------------------------------------------
                                        $ 1,458             $ 1,476
- --------------------------------------------------------------------------

</TABLE>

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

<TABLE>
<CAPTION>

                                     1999            1998            1997
- ------------------------------------------------------------------------------
<S>                                 <C>             <C>             <C>
Interest                            $ 225           $ 199           $ 146
Income taxes                          394             371             343
- ------------------------------------------------------------------------------

</TABLE>

The details of cash payments related to acquisitions follow.

<TABLE>
<CAPTION>

                                      1999            1998           1997
- ------------------------------------------------------------------------------
<S>                                  <C>           <C>                 <C>
Fair value of assets                 $ 282         $ 5,511             --
Liabilities                           (159)         (2,554)            --
Stock issued                            --          (1,321)            --
- ------------------------------------------------------------------------------
Cash paid                              123           1,636             --
Less: cash acquired                      1             173             --
- ------------------------------------------------------------------------------
Net cash paid for acquisitions       $ 122         $ 1,463             --
- ------------------------------------------------------------------------------

</TABLE>

                               47

L. CONTINGENT LIABILITIES
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  currently  party to a  hydroelectric  construction  project in
Brazil.  Total  estimated  construction  costs are $500,  of which the company's
share is 24%.  In the event  that other  participants  in this  project  fail to
fufill their financial responsibilities, Aluminio may be liable for its pro rata
share of the deficiency.
     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 $190 in 2000, $182 in 2001, $179 in 2002, $176 in 2003, $176 in
2004 and $2,222  thereafter.  Expenditures under these contracts totaled $179 in
1999, $171 in 1998 and $219 in 1997.

M. 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  securities  outstanding.  See Note N for  additional
information.
     The details of basic and diluted earnings per common share follow.

<TABLE>
<CAPTION>

                                      1999            1998           1997
- ------------------------------------------------------------------------------
<S>                                <C>               <C>            <C>
Net income                         $ 1,054           $ 853          $ 805
Less: preferred stock dividends          2               2              2
- ------------------------------------------------------------------------------
Income available to common
 stockholders                      $ 1,052           $ 851          $ 803
Average shares outstanding--
 basic                               366.9           349.1          344.5
Effect of dilutive securities:
 Shares issuable upon exercise
  of dilutive outstanding stock
  options                              6.7             2.5            3.3
- ------------------------------------------------------------------------------
 Average shares outstanding--
  diluted                            373.6           351.6          347.8
Basic EPS                          $  2.87          $ 2.44         $ 2.33
Diluted EPS                           2.82            2.42           2.31
- ------------------------------------------------------------------------------

</TABLE>

N. 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 600 million shares  authorized at a par value of $1 per
share. As of December 31, 1999,  40,833,662 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 25 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>

                                      1999            1998           1997
- ------------------------------------------------------------------------------
<S>                                <C>               <C>            <C>
Net income:
 As reported                       $ 1,054           $ 853          $ 805
 Pro forma                             912             815            756
- ------------------------------------------------------------------------------
Basic earnings per share:
 As reported                          2.87            2.44           2.33
 Pro forma                            2.48            2.33           2.19
- ------------------------------------------------------------------------------
Diluted earnings per share:
 As reported                          2.82            2.42           2.31
 Pro forma                            2.44            2.31           2.17
- ------------------------------------------------------------------------------

</TABLE>

The weighted average fair value of options granted was $10.69 per share in 1999,
$5.73 per share in 1998 and $5.90 per share in 1997.
     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>

                                            1999         1998         1997
- ------------------------------------------------------------------------------
<S>                                        <C>           <C>         <C>
Average risk-free interest rate             5.0%          5.2%        6.1%
Expected dividend yield                     1.4           2.1         1.3
Expected volatility                        37.0          25.0        25.0
Expected life (years):
 New option grants                          2.5           2.5         2.5
 Reload option grants                       1.5           1.5         1.0
- ------------------------------------------------------------------------------

</TABLE>

                               48

The transactions for shares under options were:

<TABLE>
<CAPTION>

                                     1999            1998            1997
- ------------------------------------------------------------------------------
<S>                                <C>             <C>             <C>
Outstanding, beginning of
 year:
 Number of options                   26.6            21.1            20.1
 Weighted average exercise
  price                            $33.00          $31.67          $25.87
Granted:
 Number of options                   21.8            11.8            12.8
 Weighted average exercise
  price                            $48.93          $34.37          $36.07
Exercised:
 Number of options                  (21.6)           (6.0)          (11.5)
 Weighted average exercise
  price                            $34.44          $30.13          $26.40
Expired or forfeited:
 Number of options                    (.3)            (.3)            (.3)
 Weighted average exercise
  price                            $37.17          $36.49          $31.70
- ------------------------------------------------------------------------------
Outstanding, end of year:
 Number of options                   26.5            26.6            21.1
 Weighted average exercise
  price                            $44.29          $33.00          $31.67
- ------------------------------------------------------------------------------
Exercisable, end of year:
 Number of options                   13.2            13.8            10.4
 Weighted average exercise
  price                            $38.41          $30.47          $26.73
- ------------------------------------------------------------------------------
Shares reserved for future
 options                             14.3            11.4            17.8
- ------------------------------------------------------------------------------

</TABLE>

The following tables summarize certain stock option  information at December 31,
1999:

Options Outstanding

<TABLE>
<CAPTION>

Range of                              Weighted average   Weighted average
exercise price           Number         remaining life     exercise price
- ------------------------------------------------------------------------------
<S>                        <C>       <C>                           <C>
$ 0.25                       .3      employment career             $ 0.25
$13.93-$27.57               1.9                   4.20              22.13
$27.58-$41.21               5.6                   5.60              35.12
$41.22-$54.85              12.3                   8.21              43.00
$54.86-$68.49               5.9                   6.04              62.24
$68.50-$82.13                .5                   6.05              73.07
- ------------------------------------------------------------------------------
 Total                     26.5                   6.74              44.29
- ------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

Options Exercisable

Range of                                        Weighted average
exercise price                    Number       exercisable price
- -----------------------------------------------------------------------
<S>                                 <C>                   <C>
$ 0.25                                .3                  $ 0.25
$13.93-$27.57                        1.9                   22.13
$27.58-$41.21                        5.6                   35.12
$41.22-$54.85                        3.9                   44.91
$54.86-$68.49                        1.5                   62.35
$68.50-$82.13                         --                      --
- -----------------------------------------------------------------------
 Total                              13.2                  $38.41
- -----------------------------------------------------------------------

</TABLE>

O. 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  profit of each  segment.  Nonoperating
items such as interest income, interest expense,  foreign exchange gains/losses,
the effects of LIFO  accounting and minority  interest are excluded from segment
profit. In addition,  certain expenses such as corporate general  administrative
expenses,  depreciation and amortization on corporate assets and certain special
items are not included in segment  results.  Segment assets  exclude cash,  cash
equivalents,  short-term investments and all deferred taxes. Segment assets also
exclude items such as corporate fixed assets, LIFO reserves,  goodwill allocated
to corporate and other amounts.  In 1999,  Alcoa changed its internal  reporting
system to include the results of aluminum hedging in the Primary Metals segment.
Previously,  these results were reported as  reconciling  items between  segment
ATOI and net income.  Segment  results  for 1998 and 1997 have been  restated to
reflect this change.
     The accounting  policies of the segments are the same as those described in
the Summary of Significant  Accounting Policies (Note A).  Transactions  between
segments are established based on negotiation  between 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, transportation (including
aerospace,  automotive,  rail and  shipping),  building  and  construction,  and
industrial customers worldwide. Total exports from the U.S. were $1,309 in 1999,
compared  with $1,283 in 1998 and $1,207 in 1997.  Alcoa's  reportable  segments
follow.

ALUMINA AND CHEMICALS.  This segment's activities include the mining of bauxite,
which is then  refined  into  alumina.  The alumina is then sold to internal and
external customers  worldwide,  or processed into industrial  chemical products.
The alumina  operations of Alcoa World Alumina and Chemicals (AWAC) comprise the
majority of this segment.

PRIMARY METALS. This group's focus is Alcoa's worldwide smelter system.  Primary
Metals  receives  alumina  from the Alumina and  Chemicals  segment and produces
aluminum  ingot to be used by other Alcoa  segments,  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.

                               49

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

ENGINEERED  PRODUCTS.  This segment  includes the  aggregation  of hard and soft
alloy extrusions, aluminum forgings, rod and bar. These products serve primarily
the transportation, construction and distributor markets.

OTHER.  This category  includes Alcoa Fujikura Ltd.,  which produces  electrical
components for the automotive industry along with telecommunication products. In
addition,   Alcoa's   aluminum  and  plastic  closure   operations  and  Alcoa's
residential building products operations are included in this group.

<TABLE>
<CAPTION>

                                 Alumina and         Primary      Flat-rolled       Engineered
Segment information                chemicals          metals         products         products            Other          Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>              <C>              <C>              <C>           <C>
1999
Sales:
 Third-party sales                  $ 1,842          $ 2,241          $ 5,113          $ 3,728          $ 3,393       $ 16,317
 Intersegment sales                     925            2,793               51               26               --          3,795
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                        $ 2,767          $ 5,034          $ 5,164          $ 3,754          $ 3,393       $ 20,112
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income (loss)                    --          $    42          $    (9)              --          $    10       $     43
 Depreciation, depletion and
  amortization                      $   161              216              184          $   116              149            826
 Special items                           --               --               --               --               --             --
 Income tax                             159              214              131               88              103            695
 After-tax operating income             307              535              281              180              186          1,489
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures               $   183          $   207          $   166          $   144          $   158       $    858
 Equity investment                       54              153               66               --              287            560
 Total assets                         3,250            5,098            3,395            2,387            2,409         16,539
- -----------------------------------------------------------------------------------------------------------------------------------

1998
Sales:
 Third-party sales                  $ 1,847          $ 2,105          $ 4,900          $ 3,110          $ 3,362       $ 15,324
 Intersegment sales                     832            2,509               59               11               --          3,411
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                        $ 2,679          $ 4,614          $ 4,959          $ 3,121          $ 3,362       $ 18,735
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income (loss)               $     1          $    27          $     8          $    (1)         $    10       $     45
 Depreciation, depletion and
  amortization                          159              176              190               88              155            768
 Special items                           --               --               --               --               --             --
 Income tax                             174              196              126               85              107            688
 After-tax operating income             318              372              306              183              165          1,344
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures               $   275          $   164          $   152          $   105          $   143       $    839
 Equity investment                       50              150               69               --              146            415
 Total assets                         3,082            5,341            3,513            2,427            2,246         16,609
- -----------------------------------------------------------------------------------------------------------------------------------

1997
Sales:
 Third-party sales                  $ 1,978          $ 1,600          $ 4,188          $ 2,077          $ 3,457       $ 13,300
 Intersegment sales                     634            1,883               53                9               --          2,579
- -----------------------------------------------------------------------------------------------------------------------------------
 Total sales                        $ 2,612          $ 3,483          $ 4,241          $ 2,086          $ 3,457       $ 15,879
- -----------------------------------------------------------------------------------------------------------------------------------
Profit and loss:
 Equity income                           --             $ 23              $ 7               --             $ 12           $ 42
 Depreciation, depletion and
  amortization                      $   175              129              173          $    66              156            699
 Special items loss (gain)                4               (3)              (1)              (2)             (71)           (73)
 Income tax                             168              214              123               48              104            657
 After-tax operating income             302              399              269              100              177          1,247
- -----------------------------------------------------------------------------------------------------------------------------------
Assets:
 Capital expenditures               $   201          $   137          $   159          $   149          $   128       $    774
 Equity investment                       51              140               61                1              124            377
 Total assets                         3,027            2,334            2,786            1,469            2,284         11,900
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                               50

The following reconciles segment information to consolidated totals.

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                <C>            <C>            <C>
Sales:
 Total sales                       $ 20,112       $ 18,735       $ 15,879
 Elimination of intersegment
  sales                              (3,795)        (3,411)        (2,579)
 Other revenues                           6             16             19
- ------------------------------------------------------------------------------
    Consolidated sales             $ 16,323       $ 15,340       $ 13,319
- ------------------------------------------------------------------------------
Net income:
 Total after-tax operating
  income                           $  1,489       $  1,344       $  1,247
 Elimination of intersegment
  (profit) loss                         (24)           (16)            12
 Unallocated amounts (net of
  tax):
   Interest income                       26             64             67
   Interest expense                    (126)          (129)           (92)
   Minority interest                   (242)          (238)          (268)
   Corporate expense                   (171)          (197)          (172)
   Other                                102             25             11
- ------------------------------------------------------------------------------
    Consolidated net income        $  1,054       $    853       $    805
- ------------------------------------------------------------------------------
Assets:
 Total assets                      $ 16,539       $ 16,609       $ 11,900
 Elimination of intersegment
  receivables                          (362)          (378)          (286)
Unallocated amounts:
 Cash, cash equivalents and
  short-term investments                314            381            906
 Deferred tax assets                    657            703            560
 Corporate goodwill                     422            480             --
 Corporate fixed assets                 317            315            326
 LIFO reserve                          (645)          (703)          (770)
 Other                                 (176)            56            435
- ------------------------------------------------------------------------------
    Consolidated assets            $ 17,066       $ 17,463       $ 13,071
- ------------------------------------------------------------------------------

</TABLE>

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

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                <C>            <C>            <C>
Revenues:
 U.S.                              $ 10,392        $ 9,212        $ 7,593
 Australia                            1,398          1,470          1,875
 Spain                                1,059            965             44
 Brazil                                 730            934          1,161
 Germany                                521            554            580
 Other                                2,223          2,205          2,066
- ------------------------------------------------------------------------------
                                   $ 16,323       $ 15,340       $ 13,319
- ------------------------------------------------------------------------------
Long-lived assets:
 U.S.                               $ 6,650        $ 6,726        $ 4,133
 Australia                            1,585          1,441          1,453
 Brazil                                 712            967          1,047
 Canada                                 948            890              2
 Germany                                165            213            201
 Other                                1,122          1,023            853
- ------------------------------------------------------------------------------
                                   $ 11,182       $ 11,260        $ 7,689
- ------------------------------------------------------------------------------

</TABLE>

P. INCOME TAXES

The components of income before taxes on income were:

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                 <C>            <C>            <C>
U.S.                                $   631        $   595        $   708
Foreign                               1,218          1,010            894
- ------------------------------------------------------------------------------
                                    $ 1,849        $ 1,605        $ 1,602
- ------------------------------------------------------------------------------

</TABLE>

The provision for taxes on income consisted of:

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>
Current:
 U.S. federal*                        $ 175          $ 159          $ 172
 Foreign                                306            219            274
 State and local                         18             26             --
- ------------------------------------------------------------------------------
                                        499            404            446
- ------------------------------------------------------------------------------
Deferred:
 U.S. federal*                           74             81             82
 Foreign                                (25)            25             (4)
 State and local                          5              4              5
- ------------------------------------------------------------------------------
                                         54            110             83
- ------------------------------------------------------------------------------
Total                                 $ 553          $ 514          $ 529
- ------------------------------------------------------------------------------

<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.
     In 1999, the exercise of employee stock options  generated a tax benefit of
$145.  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>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>
U.S. federal statutory rate           35.0%          35.0%          35.0%
Taxes on foreign income               (2.4)          (4.1)           (.2)
State taxes net of federal
 benefit                                .5             .7            (.2)
Tax rate changes                      (2.4)            --             --
Other                                  (.8)            .4           (1.6)
- ------------------------------------------------------------------------------
Effective tax rate                    29.9%          32.0%          33.0%
- ------------------------------------------------------------------------------

</TABLE>

The components of net deferred tax assets and liabilities follow.

<TABLE>
<CAPTION>

                               1999                      1998
                     -------------------------------------------------
                       Deferred     Deferred    Deferred     Deferred
                            tax          tax         tax          tax
December 31              assets  liabilities      assets  liabilities
- -----------------------------------------------------------------------
<S>                     <C>          <C>         <C>          <C>
Depreciation                 --      $   951          --      $   881
Employee benefits       $   872           --     $   869           --
Loss provisions             214           --         208           --
Deferred income/expense      91          138         124          103
Tax loss carryforwards      185           --         192           --
Tax credit carryforwards      2           --           5           --
Other                       111           64          68           46
- ------------------------------------------------------------------------------
                          1,475        1,153       1,466        1,030
Valuation allowance        (134)          --        (135)          --
- ------------------------------------------------------------------------------
                        $ 1,341      $ 1,153     $ 1,331      $ 1,030
- ------------------------------------------------------------------------------

</TABLE>

Of the total deferred tax assets associated with the tax loss carryforwards, $31
expires  over  the  next 10  years,  $10  over  the  next 20  years  and $144 is
unlimited.  A substantial  portion of the valuation  allowance  relates to these
carryforwards  because the ability to generate sufficient foreign taxable income
in future years is uncertain.
     The cumulative amount of Alcoa's share of undistributed  earnings for which
no deferred taxes have been provided was $1,838 at December 31, 1999. 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.

                               51

Q. 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>

                                Pension benefits      Postretirement benefits
                             ----------------------  -------------------------
December 31                      1999         1998         1999        1998
- ------------------------------------------------------------------------------
<S>                           <C>          <C>         <C>          <C>
Change in benefit
 obligation
  Benefit obligation at
   beginning of year          $ 5,394      $ 4,700     $  1,862     $ 1,675
  Service cost                    141          119           19          18
  Interest cost                   342          318          109         112
  Amendments                        5            8            1           1
  Actuarial (gains) losses       (143)         165         (173)         31
  Alumax acquisition               --          473           --         148
  Divestitures                     --          (46)          --          (5)
  Benefits paid                  (387)        (333)        (130)       (117)
  Exchange rate                    14          (10)          (1)         (1)
- ------------------------------------------------------------------------------
  Benefit obligation at end
   of year                    $ 5,366      $ 5,394     $  1,687     $ 1,862
- ------------------------------------------------------------------------------

Change in plan assets
  Fair value of plan assets
   at beginning of year       $ 5,758      $ 5,101     $    100     $    88
  Actual return on plan
   assets                         666          601           12          12
  Alumax acquisition               --          429           --          --
  Divestiture                      --          (50)          --          --
  Employer contributions           16           47           --          --
  Participants
   contributions                   22           11           --          --
  Benefits paid                  (362)        (351)          --          --
  Administrative expenses         (15)         (17)          --          --
  Exchange rate                    18          (13)          --          --
- ------------------------------------------------------------------------------
  Fair value of plan assets
   at end of year             $ 6,103      $ 5,758     $    112    $    100
- ------------------------------------------------------------------------------

Funded status                 $   737      $   364     $ (1,575)   $ (1,762)
  Unrecognized net
   actuarial gain              (1,189)        (789)        (221)        (48)
  Unrecognized net prior
   service cost (credit)           69           90         (116)       (151)
  Unrecognized transition
   obligation                       1            2           --          --
- ------------------------------------------------------------------------------
  Net amount recognized       $  (382)     $  (333)    $ (1,912)   $ (1,961)
- ------------------------------------------------------------------------------

Amount recognized in the
 balance sheet consists of:
  Prepaid benefit             $    61      $    59           --          --
  Accrued benefit liability      (471)        (425)    $ (1,912)   $ (1,961)
  Intangible asset                  4            9           --          --
  Accumulated other
   comprehensive income            24           24           --          --
- ------------------------------------------------------------------------------
  Net amount recognized       $  (382)     $  (333)    $ (1,912)   $ (1,961)
- ------------------------------------------------------------------------------

</TABLE>

The components of net periodic benefit costs are reflected below.

<TABLE>
<CAPTION>

                                                  Pension benefits                                 Postretirement benefits
                                 -----------------------------------------------    -----------------------------------------------
December 31                            1999             1998             1997             1999             1998           1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>               <C>              <C>              <C>            <C>
Components of net periodic
 benefit costs
  Service cost                        $ 141            $ 119             $ 95             $ 19             $ 18           $ 18
  Interest cost                         341              318              305              109              112            105
  Expected return on plan
   assets                              (427)            (391)            (346)              (9)              (8)            (7)
  Amortization of prior service
   cost (benefit)                        40               48               37              (34)             (34)           (34)
  Recognized actuarial (gain)
   loss                                  (4)              (7)               1               (4)              (5)            (4)
  Amortization of transition
   obligation                             2                2                1               --               --             --
- -----------------------------------------------------------------------------------------------------------------------------------
  Net periodic benefit costs           $ 93             $ 89             $ 93             $ 81             $ 83           $ 78
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                               52

The aggregate  benefit  obligation and fair value of plan assets for the pension
plans with  benefit  obligations  in excess of plan assets were $1,022 and $696,
respectively,  as of December 31, 1999, and $754 and $445,  respectively,  as of
December 31, 1998. The aggregate pension accumulated benefit obligation and fair
value of plan  assets with  accumulated  benefit  obligations  in excess of plan
assets were $337 and $119,  respectively,  as of December 31, 1999, and $501 and
$287, respectively, at December 31, 1998.
     Weighted average assumptions used to determine plan liabilities and expense
follow.

<TABLE>
<CAPTION>

December 31                               1999           1998          1997
- ------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>
Discount rate                            7.00%          6.50%         6.75%
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, a 6.5% annual rate of increase in the per capita cost
of covered  health care  benefits was assumed for 2000.  The rate was assumed to
decrease gradually to 5.25% in 2004 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                 $ 11               $ (8)
Effect on postretirement benefit
 obligations                               120               (102)
- ------------------------------------------------------------------------

</TABLE>

Alcoa also sponsors a number of defined  contribution  pension  plans.  Expenses
were $64 in 1999, $57 in 1998 and $47 in 1997.

R. LEASE EXPENSE
Certain equipment, warehousing and office space and oceangoing vessels are under
operating lease agreements.  Total expense for all leases was $145 in 1999, $130
in 1998 and $111 in 1997.  Under  long-term  operating  leases,  minimum  annual
rentals are $78 in 2000,  $56 in 2001, $40 in 2002, $21 in 2003, $12 in 2004 and
a total of $33 for 2005 and thereafter.

S. INTEREST COST COMPONENTS

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>
Amount charged to expense             $ 195          $ 198          $ 141
Amount capitalized                       21             13              9
- ------------------------------------------------------------------------------
                                      $ 216          $ 211          $ 150
- ------------------------------------------------------------------------------

</TABLE>

T. FINANCIAL INSTRUMENTS
The carrying values and fair values of Alcoa's financial instruments at December
31 follow.

<TABLE>
<CAPTION>

                                       1999                     1998
                             ----------------------   ------------------------
                             Carrying         Fair     Carrying        Fair
                                value        value        value       value
- ------------------------------------------------------------------------------
<S>                             <C>          <C>          <C>         <C>
Cash and cash equivalents       $ 237        $ 237        $ 342       $ 342
Short-term investments             77           77           39          39
Noncurrent receivables             43           43           67          67
Short-term debt                   410          410          612         612
Long-term debt                  2,657        2,526        2,877       2,902
- ------------------------------------------------------------------------------

</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. Unrealized gains (losses) on these contracts at December 31, 1999 and
1998 were $57 and $(36), respectively.
     The table below  reflects the various types of foreign  exchange  contracts
Alcoa uses to manage its foreign exchange risk.

<TABLE>
<CAPTION>

                                      1999                     1998
                             ----------------------  -------------------------
                             Notional       Market     Notional      Market
                               amount        value       amount       value
- ------------------------------------------------------------------------------
<S>                           <C>             <C>       <C>           <C>
Forwards                      $ 1,499         $ 60      $ 2,845       $ (58)
Purchased options                  28            3           52           1
Written options                    --           --           27          --
- ------------------------------------------------------------------------------

</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.  Alcoa  utilizes  written  options  mainly  to offset or close out
purchased options.

                               53

     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 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>

                                       1999                     1998
                             ------------------------  -----------------------
                                  Buy         Sell          Buy        Sell
- ------------------------------------------------------------------------------
<S>                           <C>              <C>      <C>           <C>
Australian dollar             $ 1,447          $ 4      $ 1,751       $ 211
Canadian dollar                    98            8          230         129
Dutch guilder                      --           --          135          22
Japanese yen                        6           --          109          14
Deutsche mark                       2           21           22          69
Pound sterling                     --           --           30          70
Other                              --           --           35          36
- ------------------------------------------------------------------------------
                              $ 1,553         $ 33      $ 2,312       $ 551
- ------------------------------------------------------------------------------

</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, 1999, the company had the following interest rate swap
contracts outstanding:
> Four 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.
> Five interest rate swap contracts  relating to Alcoa Fujikura's  variable rate
loan. These  agreements  convert the variable rate to a fixed rate on a notional
amount of $198 and mature in 2002.
     In addition to the above, Aluminio has a number of 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 $257.
     Alcoa utilizes cross-currency rate swaps to take advantage of international
debt  markets.  At  year-end  1999,  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 1999 or 1998.
     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.

U. ENVIRONMENTAL MATTERS
Alcoa  continues to participate in  environmental  assessments and cleanups at a
number  of  locations.   These  include  approximately  10  owned  or  operating
facilities  and  adjoining  properties,  approximately  10  previously  owned or
operated facilities and adjoining  properties and approximately 65 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,
and Pt.  Comfort,  Texas sites that allege natural  resource  damage or off-site
contaminated   sediments,   where  investigations  are  ongoing.  The  following
discussion provides additional details regarding the current status of these two
sites.
     MASSENA/GRASSE  RIVER.  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 conducting 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.
     During 1999, Alcoa continued 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  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 to EPA. This report  identified  potential
courses of remedial action related to the PCB contamination of the river.  Alcoa
has  proposed to 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 EPA.  The costs of these
pilot  scale  tests have been fully  reserved.  The  results of these  tests and
discussions with EPA regarding all of the alternatives identified should provide
additional  information  for  the  selection  and  approval  of the  appropriate
remedial alternative.  Alcoa intends to seek EPA approval for the pilot tests in
the first half of 2000.
     The Analysis of Alternatives report and the results of the pilot tests must
be reviewed and approved by 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. Alcoa is
also aware of a natural  resource  damage  claim that may be asserted by certain
federal, state and tribal natural resource trustees at this location.

                               54

     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,  EPA listed the "Alcoa  (Point  Comfort)/Lavaca  Bay Site" on the National
Priorities  List  and,  shortly  thereafter,  Alcoa  and  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  draft  remedial  investigation,  a  draft
feasibility  study and a draft  baseline  risk  assessment  to EPA. In addition,
Alcoa recently commenced  construction of the EPA-approved project to fortify an
offshore  dredge  disposal  island.  The probable and  estimable  costs of these
actions are fully  reserved.  Additional  costs to  complete a remedy  currently
cannot be  estimated  since  they  will  depend  on the  extent  of  remediation
required,  if any, the remedial method chosen and the time frame to complete any
remediation  activity.  Since the order with 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 late 2000 or early 2001.
     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 two
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 1999 and 1998 was $174
and  $217  (of  which  $63 and $85  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.  About 22%
of the 1999  balance  relates to the  Massena  plant  site,  and 11% of the 1999
balance relates to the Pt. Comfort plant site.  Remediation  expenses charged to
the  reserve  were  $47 in  1999,  $63 in 1998  and $64 in  1997.  They  include
expenditures currently mandated, as well as those not required by any regulatory
authority  or third  party.  In 1999,  the reserve  balance was  increased by $4
million to cover anticipated  future  environmental  expenditures.  In 1998, the
reserve  balance was  increased  as a result of adding the Alumax  environmental
reserve  to Alcoa's  existing  reserve  balance.  Included  in annual  operating
expenses  are  the  recurring  costs  of  managing   hazardous   substances  and
environmental  programs.  These  costs are  estimated  to be about 2% of cost of
goods sold.

V. SUBSEQUENT EVENT

On February 11, 2000, the  shareholders of Reynolds Metals Company,  by majority
vote, approved the proposed merger transaction  between Alcoa and Reynolds.  The
merger  transaction  remains  subject to the  approval  of various  governmental
authorities.

SUPPLEMENTAL FINANCIAL INFORMATION

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

<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                                     .60                .65                .71                .91               2.87
 Diluted                                   .60                .64                .69                .89               2.82
- ---------------------------------------------------------------------------------------------------------------------------------

<FN>

*The 1999 fourth quarter  included an after-tax credit of $49 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                                  $ 3,445            $ 3,587            $ 4,109            $ 4,199           $ 15,340
Income from operations                     280                269                266                276              1,091
Net income                                 210                207                218                218*               853
Earnings per share:
 Basic                                     .63                .62                .61                .59               2.44
 Diluted                                   .62                .62                .61                .59               2.42
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
*The 1998 fourth quarter  included an after-tax credit of $32 related to changes
in the LIFO index.

</TABLE>

NUMBER OF EMPLOYEES (UNAUDITED)

<TABLE>
<CAPTION>

                                       1999           1998           1997
- ------------------------------------------------------------------------------
<S>                                 <C>            <C>             <C>
Other Americas                       45,100         40,900         36,200
U.S.                                 38,400         38,900         27,200
Europe                               18,800         18,200         11,900
Pacific                               5,400          5,500          6,300
- ------------------------------------------------------------------------------
                                    107,700        103,500         81,600
- ------------------------------------------------------------------------------

</TABLE>


                               55

                             GRAPHICS APPENDIX LIST

REVENUES BY MARKET - page 28
billions of dollars

<TABLE>
<CAPTION>

                                1995    1996    1997    1998    1999
                                ----    ----    ----    ----    ----

<S>                             <C>     <C>     <C>     <C>     <C>
Alumina and Chemicals            1.7     1.9     2.0     1.8     1.8
Building and Construction        1.5     1.5     1.4     1.7     2.2
Aluminum Ingot                   1.3     1.5     1.5     2.0     2.2
Distribution                     2.0     2.2     2.1     2.8     2.9
Packaging                        3.8     3.3     3.2     3.3     3.2
Transportation                   2.2     2.7     3.1     3.7     4.0
                                ----    ----    ----    ----    ----

Total                           12.5    13.1    13.3    15.3    16.3
                                ====    ====    ====    ====    ====

</TABLE>

Revenues by Geographic Area - page 28
billions of dollars

<TABLE>
<CAPTION>

                          1995    1996    1997    1998    1999
                          ----    ----    ----    ----    ----

<S>                       <C>     <C>     <C>     <C>     <C>
Other Americas            1.2     1.3     1.4     1.2     1.0
Pacific                   2.0     2.3     2.2     1.8     1.7
Europe                    1.7     1.8     2.1     3.1     3.2
US                        7.6     7.7     7.6     9.2    10.4
                         ----    ----    ----    ----    ----

Total                    12.5    13.1    13.3    15.3    16.3
                         ====    ====    ====    ====    ====

</TABLE>


Net Income - page 29
millions of dollars

        1995    1996    1997    1998     1999
        ----    ----    ----    ----     ----

         791     515     805     853    1,054


Percent Return on Shareholders' Equity - page 29

        1995    1996    1997    1998    1999
        ----    ----    ----    ----    ----

        18.5    11.6    18.1    16.3    17.2


<TABLE>
<CAPTION>

Revenues by Segment - page 30
billions of dollars

                          1996    1997    1998    1999
                          ----    ----    ----    ----

<S>                       <C>     <C>     <C>     <C>
Alumina and Chemicals      2.0     2.0     1.8     1.9
Primary Metals             1.6     1.6     2.1     2.2
Engineered Products        1.9     2.1     3.1     3.7
Flat-rolled Products       4.1     4.2     4.9     5.1
Other                      3.5     3.4     3.4     3.4
                          ----    ----    ----    ----

Total                     13.1    13.3    15.3    16.3
                          ====    ====    ====    ====

</TABLE>

Alumina Production - page 30
thousands of metric tons

        1995      1996      1997      1998      1999
        ----      ----      ----      ----      ----

        10,578    10,644    11,048    12,938    13,273


Aluminum Production - page 31
thousands of metric tons

        1995      1996      1997      1998      1999
        ----      ----      ----      ----      ----

        1,056     1,708     1,725     2,471     2,851


<TABLE>
<CAPTION>

Aluminum Product Shipments - page 32
thousands of metric tons

                        1995      1996     1997      1998       1999
                        ----      ----     ----      ----       ----

<S>                     <C>       <C>      <C>       <C>        <C>
Third-Party Ingot         673       901      920     1,367      1,411
Fabicated Products      1,909     1,940    2,036     2,584      3,067
                        -----     -----    -----     -----      -----

Total                   2,582     2,841    2,956     3,951      4,478
                        =====     =====    =====     =====      =====

</TABLE>

<TABLE>
<CAPTION>

Cost of Goods Sold - page 34
as a percent of sales

                        1995    1996    1997    1998    1999
                        ----    ----    ----    ----    ----

<S>                     <C>     <C>     <C>     <C>     <C>
Revenue -               12.5    13.1    13.3    15.3    16.3
billions of dollars

Cost of goods sold      75.8    77.2    77.1    77.8    76.8
as a percent of sales

</TABLE>

<TABLE>
<CAPTION>

Selling and General Administrative Expenses - page 34
as a percent of sales

                          1995    1996    1997    1998    1999
                          ----    ----    ----    ----    ----

<S>                       <C>     <C>     <C>     <C>     <C>
Revenue -                 12.5    13.1    13.3    15.3    16.3
billions of dollars

Selling and general        5.7     5.5     5.1     5.1     5.2
administrative expenses
as a percent of sales

</TABLE>

Cash From Operations - page 36
millions of dollars

                1995      1996      1997      1998      1999
                ----      ----      ----      ----      ----

               1,713     1,279     1,888     2,197     2,236


Debt as a Percent of Invested Capital - page 36

                1995      1996      1997      1998      1999
                ----      ----      ----      ----      ----

                24.0      25.5      25.0      31.7      28.3

Free Cash Flow to Debt Coverage - page 37

                1995      1996      1997      1998      1999
                ----      ----      ----      ----      ----

                1.12      0.79      1.13      0.63      0.80

<TABLE>
<CAPTION>

Capital Expenditures and Depreciation - page 37
millions of dollars

                        1995    1996    1997    1998    1999
                        ----    ----    ----    ----    ----

<S>                      <C>     <C>     <C>     <C>     <C>
Capital Expenditures     887     996     913     932     920

Depreciation             713     747     735     842     888

</TABLE>

Stock Listing - page 65

Common: New York Stock Exchange,  The Electronical Stock Exchange in Switzerland
and exchanges in Brussels, Frankfurt and London.

Preferred:  American Stock Exchange

Ticker Symbol:  AA

<TABLE>
<CAPTION>

Quarterly Common Stock Information - page 65

                                1999                                        1998
                ------------------------------------      ----------------------------------

Quarter         High          Low           Dividend      High          Low         Dividend
                ----          ---           --------      ----          ---         --------

<S>             <C>           <C>           <C>           <C>           <C>         <C>
First           $45-3/32      $35-15/16     $.20125       $39-1/16      $32-9/16    $.1875
Second           67-15/16      40-1/4        .20125        39-11/16      31-3/8      .1875
Third            70-7/8        58-1/2        .20125        37            29          .1875
Fourth           83-3/8        57-1/4        .20125        40-5/8        33-5/8      .1875
- --------------------------------------------------------------------------------------------
Year            $83-3/8       $35-15/16     $.805         $40-5/8       $29         $.75
============================================================================================

</TABLE>

<TABLE>
<CAPTION>

Common Share Data - page 65

                Estimated number        Average shares
                of shareholders*        outstanding (000)
                ----------------        -----------------

<S>             <C>                     <C>
1999            185,000                 366,944
1998            119,000                 349,114
1997             95,800                 344,452
1996             88,300                 348,667
1995             83,600                 356,036

<FN>
*These  estimates  include  shareholders  who own stock  registered in their own
names and those who own stock through banks and brokers.

</TABLE>


                                                                      Exhibit 21

               SUBSIDIARIES AND EQUITY ENTITIES OF THE REGISTRANT
                            (As of December 31, 1999)

                                                                   State or
                                                                   country of
     Name                                                          organization
     ----                                                          ------------

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 CSI Espana, S.A.                                             Spain
Alcoa International Holdings Company                               Delaware
      Alcoa Closure Systems International (Tianjin) Co., Ltd.      China
      Alcoa Europe Holding B.V.                                    Netherlands
           Alcoa Automotive GmbH                                   Germany
                Alcoa Chemie GmbH                                  Germany
                Alcoa Deutschland GmbH                             Germany
                Alcoa Extrusions Hannover GmbH & Co. KG            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 Moerdijk B.V.                                     Netherlands
           Alcoa Nederland B.V.                                    Netherlands
           Norsk Alcoa A/S                                         Norway
      Alcoa Inter-America, Inc.                                    Delaware
      Alcoa Japan Limited                                          Japan
      Alcoa-Kofem Kft                                              Hungary
      Alcoa of Australia Limited                                   Australia
           A.F.P. Pty. Limited                                     Australia
               Hedges Gold Pty. Ltd.                               Australia
           Alcoa of Australia (Asia) Limited                       Hong Kong
      Alcoa Russia, Inc.                                           Delaware
      KAAL Australia Pty. Limited                                  Australia
      KSL Alcoa Aluminum Company, Ltd.                             Japan
      Kobe Alcoa Transportation Products, Ltd.                     Japan
Alcoa Laudel, Inc.                                                 Delaware
Alcoa Manufacturing (G.B.) Limited                                 England
Alcoa Power Generating Inc.***                                     Tennessee
Alcoa Properties, Inc.                                             Delaware
      Alcoa South Carolina, Inc.                                   Delaware


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


<PAGE>
                                                                  State or
                                                                  country of
     Name                                                         organization
     ----                                                         ------------

Alcoa Recycling Company, Inc.                                     Delaware
Alcoa Securities Corporation                                      Delaware
      Alcoa Automotive Structures, Inc.                           Delaware
      Alcoa Brite Products, Inc.                                  Delaware
      Alcoa CSI de Mexico en Saltillo, S.A. de C.V.               Mexico
      Alcoa Fujikura Ltd.                                         Delaware
           Stribel GmbH                                           Germany
           Michels GmbH                                           Germany
      Alcoa Kobe Transportation Products, Inc.                    Delaware
      Alcoa Packaging Machinery, Inc.                             Delaware
      ASC Alumina, Inc.                                           Delaware
      B & C Research, Inc.                                        Ohio
      Halethorpe Extrusions, Inc.                                 Delaware
      Northwest Alloys, Inc.                                      Delaware
      Pimalco, Inc.                                               Arizona
      Three Rivers Insurance Company                              Vermont
      Tifton Aluminum Company, Inc.                               Delaware
Alcoa (Shanghai) Aluminum Products Company Limited                China
Alcoa World Alumina LLC*                                          Delaware
      Alcoa ACC Industrial Chemicals Ltd.                         India
      Alcoa Kasei Limited                                         Japan
      Alcoa Minerals of Jamaica, L.L.C.                           Delaware
      Alcoa Steamship Company, Inc.                               New York
      Halco (Mining) Inc.                                         Delaware
           Compagnie des Bauxites de Guinee                       Delaware
      Lib-Ore Steamship Company, Inc.                             Liberia
      Moralco Limited                                             Japan
      St. Croix Alumina, L.L.C.                                   Delaware
      Suriname Aluminum Company, L.L.C.                           Delaware
Alumax Inc.                                                       Delaware
      Alcoa Extrusions, Inc.                                      Pennsylvania
      Alumax Becancour, Inc.                                      Delaware
      Alumax Europe N.V.                                          Belgium
      Alumax of South Carolina, Inc.                              Delaware
           Mt. Holly Aluminum Company                             South Carolina
      Alumax Foils, Inc.                                          Delaware
      Alumax Mill Products, Inc.                                  Delaware
      Alumax Quebec, Inc.                                         Wyoming
      Eastalco Aluminum Company                                   Delaware
      Intalco Aluminum Corporation                                Delaware
      Kawneer Company, Inc.                                       Delaware
      Canalco, Inc.                                               Delaware
           Aluminerie Lauralco, Inc.                              Delaware
Gulf Closures W.L.L.                                              Bahrain
Shibazaki Seisakusho Limited                                      Japan


The names of certain  subsidiaries and equity entities which,  considered in the
aggregate, would not constitute a significant subsidiary, have been omitted from
the above list.



                                                                      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 and 333-91331), Form S-3 (Registration
Nos. 33-60045, 33-64353 and 333-59381) and Form S-4 (Registration Nos. 333-58227
and 333-93849) of our reports dated  January 10,  2000,  except for Note V,  for
which the date is February 11, 2000, on our audits of the consolidated financial
statements  and  financial  statement  schedule of Alcoa Inc.  and  consolidated
subsidiaries as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31,  1999, which reports are incorporated by reference
or included in this Form 10-K.


                                         /s/PricewaterhouseCoopers LLP
                                         PricewaterhouseCoopers LLP


600 Grant Street
Pittsburgh, Pennsylvania
February 28, 2000


                                                                      Exhibit 24

                               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,  ROBERT G.
WENNEMER,  TIMOTHY S. MOCK and DENIS A.  DEMBLOWSKI,  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  registration  under said Act of the Company's Annual Report
on Form  10-K  for  1999,  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 Form 10-K for 1999 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  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 14, 2000
Kenneth W. Dam


/s/ Joseph T. Gorman                 January 14, 2000
Joseph T. Gorman


/s/ Judith M. Gueron                 January 14, 2000
Judith M. Gueron


/s/ Sir Ronald Hampel                January 14, 2000
Sir Ronald Hampel


/s/ Hugh M. Morgan                   January 14, 2000
Hugh M. Morgan


/s/ John P. Mulroney                 January 14, 2000
John P. Mulroney


/s/ Paul H. O'Neill                  January 14, 2000
Paul H. O'Neill


/s/ Henry B. Schacht                 January 14, 2000
Henry B. Schacht


/s/ Franklin A. Thomas               January 14, 2000
Franklin A. Thomas


/s/ Marina v.N. Whitman              January 14, 2000
Marina v.N. Whitman


<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               DEC-31-1999
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<SECURITIES>                                    77,000
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                                0
                                     56,000
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<TOTAL-LIABILITY-AND-EQUITY>                17,066,000
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<INTEREST-EXPENSE>                             195,000
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<CHANGES>                                            0
<NET-INCOME>                                 1,054,000
<EPS-BASIC>                                       2.87
<EPS-DILUTED>                                     2.82


</TABLE>


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