Alcoa Announces 3rd Quarter 2006 Income from Continuing Operations of $540 Million, or $0.62 Per Share, up 89% from Year Ago.

Highlights:

* Income from continuing operations up 89% versus year-ago quarter.

* Revenues 19% higher than year-ago quarter.

* Cash from operations was $748 million including the impact of a discretionary $200 million pension contribution, 52% higher than the year-ago quarter and 94% higher year-to-date.

* Debt-to-capital ratio at 32.8%, within target range despite major investments in strategic growth projects.

* Year-to-date income from continuing operations $1.9 billion, or $2.17 per share, up 82% from year ago.

* Year-to-date annualized return on capital of 14.3%, up from 8.7% in 2005.

NEW YORK -- Alcoa (NYSE:AA) today announced third quarter 2006 income from continuing operations of $540 million, or $0.62 per diluted share, an 89 percent increase from the third quarter of 2005. As expected, due to seasonal slow-downs and lower metal prices, income was lower on a sequential basis, down from $0.85 in the second quarter.

In the first nine months of 2006, Alcoa has generated more profits than in any full year in the company's history. Year-to-date income from continuing operations was $1.9 billion, 82 percent higher than the same period in 2005.

Net income for the quarter was $537 million, or $0.61, an 85 percent increase from 2005's $0.33 and 28 percent below the $0.85 in the second quarter.

Revenues for the quarter increased 19 percent from a year ago to $7.6 billion. Compared to the second quarter of 2006, sales decreased 2 percent primarily due to lower metal prices and seasonality. Prices for aluminum on the London Metal Exchange declined six percent this quarter.

"We continue to drive stronger performance than our results in 2005, with both the top and bottom line showing double-digit improvements over the third quarter of last year," said Alain Belda, Alcoa Chairman and CEO. "2006 is already the strongest in Alcoa's history, and we will continue to deliver in the fourth quarter.

"In July, we said the third quarter would be solid, but would reflect the traditional seasonal slow-down and lower metal prices. In fact, the quarter was the third best in company history even though metal prices on the LME declined six percent. While the North American automotive and the housing construction markets are softening, most of our downstream markets continue to be strong - especially aerospace and commercial transportation," Belda added.

Cash from operations for the quarter was $748 million including the impact of a discretionary $200 million contribution to the company's pension plans. Year-to-date, cash from operations is more than $1.2 billion, a 94 percent increase from a year ago.

Balance Sheet and Growth Projects

During the quarter, the company made strong progress on projects designed to seize growth as aluminum consumption is projected to double in the next 14 years. The Alcoa Fjardaal smelter in Iceland is now 75 percent complete and is expected to produce its first metal in the second quarter of 2007. In Brazil, the new Juruti bauxite mine and the expansion of the Sao Luis alumina refinery are underway. The refinery will produce an additional 2.1 million mtpy beginning in 2009. In North America, work continued on environmental upgrades at the company's Warrick, Indiana smelter which will help secure its power generation self-sufficiency. At the Intalco smelter in Ferndale, Wash,, the company will be starting up a second potline which will produce an additional 7,500 metric tons per month beginning in the first half of 2007.

Capital expenditures for the quarter were $737 million, with 75 percent dedicated to growth projects. Year to-date, the company has invested $1.4 billion in growth projects, or approximately 67 percent of capital expenditures.

In the quarter, Alcoa also announced a definitive agreement to sell its Home Exteriors vinyl siding business. That sale, which will generate more than $300 million in cash to fund growth projects, is expected to be completed in the fourth quarter of 2006.

Days of working capital were relatively flat in the quarter compared to the third quarter of 2005. The Company's debt-to-capital ratio stood at 32.8 percent at the end of the quarter, within the Company's target range.

During the current quarter, the company's effective tax rate was 24.7 percent. In the quarter, the Company recorded a discrete tax benefit of $18 million related to the cumulative correction of its deferred tax assets attributable to an international location.

The Company's year to date annualized return on capital was 14.3 percent, compared to 8.7 percent a year ago. On a trailing four quarters basis, return on capital for the third quarter 2006 was 14.1 percent after excluding investments on growth, and 12.2 percent including those investments.

Segment and Other Results

Alumina - After-tax operating income ("ATOI") was $271 million, down $7 million from the previous quarter, but up 74 percent from the year-ago quarter. Unfavorable currency effects, energy prices, and mix offset higher sales volumes supported by record production levels of 3,890 KMT in the quarter.

Primary Metals - Segment ATOI was $346 million, down $143 million or 29 percent from the prior quarter and up 106 percent from the year-ago quarter. The ATOI decrease resulted from lower LME prices, higher raw material costs and unfavorable currency. Third-party realized metal prices declined $108 per ton, or four percent, to $2,620 per ton. The Company purchased roughly 130 kmt of primary metal for internal use as part of its strategy to sell value-added products.

Flat-Rolled Products - ATOI for the segment was $48 million, down 39 percent from the prior quarter and down 41 percent from the year-ago quarter. The decline was primarily due to seasonal shutdowns and mill outages in North America and Europe, and an increase in direct material and energy costs. These impacts were somewhat offset by a more favorable product mix. Included in the results were $13 million in continuing start-up costs for new facilities in Russia and China as part of the long-term growth strategy.

Extruded and End Products - ATOI declined $1 million from the prior quarter due to seasonally lower volumes, offset by a more favorable mix. Segment ATOI remained flat in comparison to the prior year quarter.

Engineered Solutions - Segment ATOI declined $25 million from the prior quarter due to scheduled summer shutdowns in the auto industry coupled with lower demand in the North American automotive market. However, ATOI rose $41 million, or 121 percent, above the prior year quarter. Strong demand in the aerospace and commercial vehicle markets, continued productivity gains and targeted price increases led to the improved results.

Packaging and Consumer - Segment ATOI was lower by $13 million versus the previous quarter and $4 million from the year-ago quarter primarily due to seasonal weakness in Food Packaging and Closures and higher resin costs, partially offset by continued strength in the Consumer business. It is anticipated that the lagged recovery of the third quarter raw material cost increases will benefit the fourth quarter.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on October 10th to present the quarter's results. The meeting will be webcast via alcoa.com. Call information and related details are available at www.alcoa.com under "Invest."

About Alcoa

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap[R] foils and plastic wraps, Alcoa[R] wheels, and Baco[R] household wraps. Among its other businesses are closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 44 countries and has been named one of the top sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

Forward Looking Statement

Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in economic or aluminum industry conditions generally, including global supply and demand conditions and prices for primary aluminum, alumina and other products; (b) material adverse changes in the markets served by Alcoa, including the transportation, building, construction, distribution, packaging, industrial gas turbine and other markets; (c) Alcoa's inability to mitigate impacts from increased energy and raw materials costs, or other cost inflation; (d) Alcoa's inability to achieve the level of cost savings, productivity improvements or earnings or revenue growth anticipated by management; (e) Alcoa's inability to complete its growth projects and integration of acquired facilities as planned and by targeted completion dates; (f) unfavorable changes in laws, governmental regulations or policies, currency exchange rates or competitive factors in the countries in which Alcoa operates; (g) significant legal proceedings or investigations adverse to Alcoa, including environmental, product liability, safety and health and other claims; and (h) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2005, Forms 10-Q for the quarters ended March 31, 2006 and June 30, 2006 and other reports filed with the Securities and Exchange Commission.

[TABLE OMITTED]
(a) Prior periods' financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility and the home
exteriors business in discontinued operations in 2006.
[TABLE OMITTED]
(a) Prior period financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility and the home
exteriors business in discontinued operations in 2006.
[TABLE OMITTED]
(b) Prior period financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility and the home
exteriors business in discontinued operations in 2006.
[TABLE OMITTED]
(c) Prior period financial statements have been reclassified to
reflect the Hawesville, KY automotive casting facility and the home
exteriors business in discontinued operations in 2006.
[TABLE OMITTED]
(1) Segment depreciation, depletion and amortization has been adjusted
from the previously reported annual amounts to reflect the movement
of certain amounts to Corporate.
[TABLE OMITTED]
(2)  Certain amounts have been reclassified to Other so that this line
reflects only the impact of LIFO.

Prior periods' segment information has been reclassified to reflect
the movement of the Hawesville, KY automotive casting facility and the
home exteriors business to discontinued operations in 2006.

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

(1) The Bloomberg Methodology calculates ROC based on trailing four
    quarters.  Average balances are calculated as (September 2005
    ending balance + September 2006 ending balance) divided by 2.
(2) The Annualized Methodology numerator amounts are calculated using
    the first nine months of 2006 balances divided by 9 and
    multiplying that result by 12.  Average balances are calculated as
    (September 2006 ending balance + December 2005 ending balance)
    divided by 2.
(3) Calculated as total shareholders' equity, less preferred stock.
[TABLE OMITTED]
Return on capital, excluding growth investments is a non-GAAP
financial measure.  Management believes that this measure is
meaningful to investors because it provides greater insight with
respect to the underlying operating performance of the company's
productive assets.  The company has significant growth investments
underway in its upstream and downstream businesses, as previously
noted, with expected completion dates over the next several years.
As these investments generally require a period of time before they
are productive, management believes that a return on capital measure
excluding these growth investments is more representative of current
operating performance.

(4) The Bloomberg Methodology calculates ROC based on trailing four
    quarters.  Average balances are calculated as (September 2004
    ending balance + September 2005 ending balance) divided by 2.
(5) The Annualized Methodology numerator amounts are calculated using
    the first nine months of 2005 balances divided by 9 and
    multiplying that result by 12.  Average balances are calculated as
    (September 2005 ending balance + December 2004 ending balance)
    divided by 2.
(6) Calculated as total shareholders' equity, less preferred stock.
[TABLE OMITTED]
Days of Working Capital = Working Capital divided by
(Sales/number of days in the quarter)