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10-Q
false
N.A.
2009-06-30
ALCOA INC
0000004281
AA
--12-31
Yes
No
Yes
Large Accelerated Filer
-10000000
89000000
168000000
1000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>C. Discontinued Operations and Assets
Held for Sale</b> – For all periods presented in the
accompanying Statement of Consolidated Operations, the Electrical
and Electronic Solutions (EES) business was classified as
discontinued operations.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following table details
selected financial information for the EES business included within
discontinued operations:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="78%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">118</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">375</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">273</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">752</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Loss from operations before income
taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(195</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(219</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Benefit for income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">60</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Loss from discontinued
operations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(142</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(159</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the 2009 second quarter
and six-month period, the loss from discontinued operations was
comprised of a $120 loss on the divestiture of the wire harness and
electrical portion of the EES business (see Note E) and the
remainder was the operational results of the EES business. In the
2008 second quarter and six-month period, the loss from
discontinued operations represents the operational results of the
EES business.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">For both periods presented in
the accompanying Consolidated Balance Sheet, the assets and
liabilities of operations classified as held for sale include the
electronics portion of the EES business, the Global Foil business,
the Transportation Products Europe business, and the Hawesville, KY
automotive casting facility. Additionally, the wire harness and
electrical portion of the EES Business, the wireless component of
the previously divested telecommunications business, and a small
automotive casting business in the U.K. were classified as held for
sale as of December 31, 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The major classes of assets
and liabilities of operations held for sale are as
follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,</b></font><br />
<font face="Times New Roman" size="1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Receivables</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">75</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">99</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Inventories</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">40</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">102</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Properties, plants, and
equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">25</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets held for sale</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">176</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">247</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Liabilities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accounts payable, trade</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">43</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">101</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accrued expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Liabilities of operations held for
sale</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">64</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">130</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
</tbody>
</table>
</div>
-1.06
-1.06
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>I. Commitments and
Contingencies</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Litigation</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On February 27, 2008,
Alcoa Inc. received notice that Aluminium Bahrain B.S.C. (Alba) had
filed suit against Alcoa Inc. and Alcoa World Alumina LLC
(collectively, “Alcoa”), and others, in the U.S.
District Court for the Western District of Pennsylvania (the
“Court”), Civil Action number 08-299, styled Aluminium
Bahrain B.S.C. v. Alcoa Inc., Alcoa World Alumina LLC, William
Rice, and Victor Phillip Dahdaleh. The complaint alleges that
certain Alcoa entities and their agents, including Victor Phillip
Dahdaleh, have engaged in a conspiracy over a period of 15 years to
defraud Alba. The complaint further alleges that Alcoa and its
employees or agents (1) illegally bribed officials of the
government of Bahrain and (or) officers of Alba in order to force
Alba to purchase alumina at excessively high prices,
(2) illegally bribed officials of the government of Bahrain
and (or) officers of Alba and issued threats in order to pressure
Alba to enter into an agreement by which Alcoa would purchase an
equity interest in Alba, and (3) assigned portions of existing
supply contracts between Alcoa and Alba for the sole purpose of
facilitating alleged bribes and unlawful commissions. The complaint
alleges that Alcoa and the other defendants violated the Racketeer
Influenced and Corrupt Organizations Act (RICO) and committed
fraud. Alba’s complaint seeks compensatory, consequential,
exemplary, and punitive damages, rescission of the 2005 alumina
supply contract, and attorneys’ fees and costs. Alba seeks
treble damages with respect to its RICO claims.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On February 26, 2008,
Alcoa Inc. had advised the U.S. Department of Justice (DOJ) and the
Securities and Exchange Commission (SEC) that it had recently
become aware of these claims, had already begun an internal
investigation, and intended to cooperate fully in any investigation
that the DOJ or the SEC may commence. On March 17, 2008, the
DOJ notified Alcoa that it had opened a formal investigation and
Alcoa has been cooperating with the government.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In response to a motion filed
by the DOJ on March 27, 2008, the Court ordered the suit filed
by Alba to be administratively closed and that all discovery be
stayed to allow the DOJ to fully conduct an investigation without
the interference and distraction of ongoing civil litigation. The
Court further ordered that the case will be reopened at the close
of the DOJ’s investigation. The Company is unable to
reasonably predict an outcome or to estimate a range of reasonably
possible loss.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In November 2006, in Curtis
v. Alcoa Inc., Civil Action No. 3:06cv448 (E.D. Tenn.), a
class action was filed by plaintiffs representing approximately
13,000 retired former employees of Alcoa or Reynolds Metals Company
and spouses and dependents of such retirees alleging violation of
the Employee Retirement Income Security Act (ERISA) and the
Labor-Management Relations Act by requiring plaintiffs, beginning
January 1, 2007, to pay health insurance premiums and
increased co-payments and co-insurance for certain medical
procedures and prescription drugs. Plaintiffs allege these changes
to their retiree health care plans violate their rights to vested
health care benefits. Plaintiffs additionally allege that Alcoa has
breached its fiduciary duty to plaintiffs under ERISA by
misrepresenting to them that their health benefits would never
change. Plaintiffs seek injunctive and declaratory relief, back
payment of benefits, and attorneys’ fees. Alcoa has consented
to treatment of plaintiffs’ claims as a class action. During
the fourth quarter of</font> <font face="Times New Roman" size=
"2">2007, following briefing and argument, the court ordered
consolidation of the plaintiffs’ motion for preliminary
injunction with trial, certified a plaintiff class, bifurcated and
stayed the plaintiffs’ breach of fiduciary duty claims,
struck the plaintiffs’ jury demand, but indicated it would
use an advisory jury, and set a trial date of September 17,
2008. In August 2008, the court set a new trial date of
March 24, 2009 and, subsequently, the trial date was moved to
September 22, 2009. In June 2009, the court indicated that it
would not use an advisory jury at trial. Alcoa estimates that, in
the event of an unfavorable outcome, the maximum exposure would be
an additional postretirement benefit liability of approximately
$300 and approximately $40 of expense (includes an interest cost
component) annually, on average, for the next 11 years. Alcoa
believes that it has valid defenses and intends to defend this
matter vigorously. However, at this stage of the proceeding, the
Company is unable to reasonably predict the outcome.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In addition to the litigation
discussed above, various other 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 the Company’s financial position, liquidity, or results
of operations 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 material adverse effect,
individually or in the aggregate, on the financial position,
liquidity, or the results of operations of the Company.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Environmental Matters</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa continues to
participate in environmental assessments and cleanups at a number
of locations. These include 30 owned or operating facilities and
adjoining properties, 33 previously owned or operating facilities
and adjoining properties, and 71 waste sites, including Superfund
sites. A liability is recorded for environmental remediation when a
cleanup program becomes probable and the costs or damages can be
reasonably estimated.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">As assessments and cleanups
proceed, the liability is adjusted based on progress made 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.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following discussion
provides details regarding the current status of certain
significant reserves related to current or former Alcoa
sites.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Massena, NY.</b> Alcoa has
been conducting investigations and studies of the Grasse River,
adjacent to Alcoa’s Massena plant site, under a 1989 order
from the U.S. Environmental Protection Agency (EPA) issued under
the Comprehensive Environmental Response, Compensation and
Liability Act, also known as Superfund. Sediments and fish in the
river contain varying levels of polychlorinated biphenyls
(PCBs).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa submitted various
Analysis of Alternatives Reports to the EPA starting in 1998
through 2002 that reported the results of river and sediment
studies, potential alternatives for remedial actions related to the
PCB contamination, and additional information requested by the
EPA.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In June 2003, the EPA
requested that Alcoa gather additional field data to assess the
potential for sediment erosion from winter river ice formation and
breakup. The results of these additional studies, submitted in a
report to the EPA in April 2004, suggest that this phenomenon has
the potential to occur approximately every 10 years and may impact
sediments in certain portions of the river under all remedial
scenarios. The EPA informed Alcoa that a final remedial decision
for the river could not be made without substantially more
information, including river pilot studies on the effects of ice
formation and breakup on each of the remedial techniques. Alcoa
submitted to the EPA, and the EPA approved, a Remedial Options
Pilot Study (ROPS) to gather this information. The scope of this
study included sediment removal and capping, the installation of an
ice control structure, and significant monitoring.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">From 2004 through 2008, Alcoa
completed the work outlined in the ROPS. In November 2008, Alcoa
submitted an update to the EPA incorporating the new information
obtained from the ROPS related to the feasibility and costs
associated with various capping and dredging alternatives,
including options for ice control. As a result, Alcoa increased the
reserve associated with the Grasse River by $40 for the estimated
costs of a proposed ice control remedy and for partial settlement
of potential damages of natural resources.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">This new information will be
used by the EPA to select a remedy for the entire river. The
EPA’s ultimate selection of a remedy could result in
additional liability. Alcoa may be required to record a subsequent
reserve adjustment at the time the EPA’s Record of Decision
is issued, which is expected in 2009 or later.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Sherwin, TX.</b> In
connection with the sale of the Sherwin alumina refinery, which was
required to be divested as part of the Reynolds merger in 2000,
Alcoa agreed to retain responsibility for the remediation of the
then existing environmental conditions, as well as a pro rata share
of the final closure of the active waste disposal areas, which
remain in use. Alcoa’s share of the closure costs is
proportional to the total period of operation of the active waste
disposal areas. Alcoa estimated its liability for the active
disposal areas by making certain assumptions about the period of
operation, the amount of material placed in the area prior to
closure, and the appropriate technology, engineering, and
regulatory status applicable to final closure. The most probable
cost for remediation was reserved.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>East St. Louis, IL.</b> In
response to questions regarding environmental conditions at the
former East St. Louis operations, Alcoa and the City of East St.
Louis, the owner of the site, entered into an administrative order
with the EPA in December 2002 to perform a remedial investigation
and feasibility study of an area used for the disposal of bauxite
residue from historic alumina refining operations. A draft
feasibility study was submitted to the EPA in April 2005. The
feasibility study included remedial alternatives that ranged from
no further action to significant grading, stabilization, and water
management of the bauxite residue disposal areas. As a result,
Alcoa increased the environmental reserve for this location by $15
in 2005. The EPA’s ultimate selection of a remedy could
result in additional liability. Alcoa may be required to record a
subsequent reserve adjustment at the time the EPA’s Record of
Decision is issued, which is expected late in 2009 or
later.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Vancouver, WA.</b> In
1987, Alcoa sold its Vancouver smelter to a company that is now
known as Evergreen Aluminum (Evergreen). The purchase and sale
agreement contained a provision that Alcoa retain liability for any
environmental issues that arise subsequent to the sale that
pre-date 1987. As a result of this obligation, Alcoa recorded a
reserve for the Vancouver location at that time. Evergreen
decommissioned the smelter and cleaned up its portion of the site
under a consent order with the Washington Department of Ecology
(WDE). In February 2008, Evergreen notified Alcoa that it had
identified numerous areas containing contamination that predated
1987.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Separately, in September
2008, Alcoa completed a Remedial Investigation/Feasibility Study
(RI/FS) under the Washington State Model Toxics Control Act and
negotiated a consent decree with the WDE, which requires Alcoa to
complete cleanup of PCB contaminated sediments in the Columbia
River as well as remediate soil contamination in upland portions of
the Vancouver property.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Late in 2008, Alcoa started
cleanup work on the Columbia River and discovered additional
contamination and waste materials along the shoreline area and in
upland areas. In addition, Evergreen presented additional cost
estimates for contaminated areas that were discovered since March
2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">As a result of all of the
above items related to the former Vancouver site, Alcoa increased
the environmental reserve by $16 in 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">While continuing the cleanup
work on the Columbia River during the 2009 first quarter, Alcoa
discovered more contamination and waste materials, resulting in a
$2 increase to the environmental reserve. In the 2009 second
quarter, cleanup work was completed related to the Evergreen
property and the Columbia River. Alcoa expects to submit a final
report on this cleanup work to the WDE in the 2009 third
quarter.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Based on the foregoing, it is
possible that Alcoa’s financial position, liquidity, or
results of operations, in a particular period, could be materially
affected by matters relating to these sites. However, based on
facts currently available, management believes that adequate
reserves have been provided and that the disposition of these
matters will not have a materially adverse effect on the financial
position, liquidity, or the results of operations of the
Company.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa’s remediation
reserve balance was $303 and $316 at June 30, 2009 and
December 31, 2008 (of which $30 and $39 was classified as a
current liability), respectively, and reflects the most probable
costs to remediate identified environmental conditions for which
costs can be reasonably estimated. In the 2009 second quarter and
six-month period, the remediation reserve was increased by $1 and
$8, respectively, associated with various sites. The changes to the
remediation reserve were recorded in Cost of goods sold on the
accompanying Statement of Consolidated Operations. Payments related
to remediation expenses applied against the reserve were $10 and
$21 in the 2009 second quarter and six-month period, respectively.
These amounts include expenditures currently mandated, as well as
those not required by any regulatory authority or third
party.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Included in annual operating
expenses are the recurring costs of managing hazardous substances
and environmental programs. These costs are estimated to be
approximately 2% of cost of goods sold.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Investments</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alumínio is a
participant in several hydroelectric power construction projects in
Brazil for purposes of increasing its energy self-sufficiency and
providing a long-term, low-cost source of power for its facilities.
Two of these projects, Machadinho and Barra Grande, were completed
in 2002 and 2006, respectively.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alumínio committed to
taking a share of the output of the Machadinho and Barra Grande
projects each for 30 years at cost (including cost of financing the
project). In the event that other participants in either one of
these projects fail to fulfill their financial responsibilities,
Alumínio may be required to fund a portion of the deficiency.
In accordance with the respective agreements, if Alumínio
funds any such deficiency, its participation and share of the
output from the respective project will increase
proportionately.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">With Machadinho and Barra
Grande, Alumínio’s current power self-sufficiency is
approximately 40% (will be approximately 70% once the hydroelectric
power projects described below are completed and operating at full
capacity), to meet a total energy demand of approximately 690
megawatts from Brazilian primary plants. Alumínio accounts for
the Machadinho and Barra Grande hydroelectric projects as equity
method investments. Alumínio’s investment participation
in these projects is 30.99% for Machadinho and 42.18% for Barra
Grande. Its total investment in these projects was $231 (R$451) and
$182 (R$436) at June 30, 2009 and December 31, 2008,
respectively. Alcoa’s maximum exposure to loss on these
completed projects is approximately $490 (R$950), which represents
Alcoa’s investment and guarantees of debt as of June 30,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the first quarter of 2006,
Alumínio acquired an additional 6.41% share in the Estreito
hydroelectric power project, reaching 25.49% of total participation
in the consortium. This additional share entitles Alumínio to
38 megawatts of assured energy. Alumínio’s share of the
project is estimated to have installed capacity of approximately
280 megawatts and assured power of approximately 150 megawatts. In
December 2006, the consortium obtained the environmental
installation license, after completion of certain socioeconomic and
cultural impact studies as required by a governmental agency.
Construction began in the first quarter of 2007 and is expected to
be completed in 2011. Total estimated project costs are
approximately $1,800 (R$3,600) and Alumínio’s share is
approximately $470 (R$920). As of June 30, 2009, Alumínio
has contributed approximately $270 (R$520) towards the $470
commitment.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the first quarter of 2007,
construction began on the Serra do Facão hydroelectric power
project. Construction of this facility is expected to be completed
in 2010. The implementation of construction activities had been
temporarily suspended in 2004 due to the temporary suspension of
the project’s installation permit by legal injunction issued
by the Brazilian Judicial Department (Public Ministry). Since 2004,
this project was placed on hold due to unattractive market
conditions. In mid-2006, market conditions became favorable and
Alumínio proceeded with plans to begin construction. In
September 2006, the national environmental agency renewed the
installation permit allowing construction to commence.
Alumínio’s share of the Serra do Facão project is
34.97% and entitles Alumínio to approximately 65 megawatts of
assured power. Total estimated project costs are approximately $420
(R$820) and Alumínio’s share is approximately $150
(R$290). Through March 31, 2009, Alumínio contributed
approximately $110 (R$220) towards the $150 commitment. In April
2009, the consortium obtained long-term financing for the remaining
costs of construction. As a result, the participants in this
project will no longer be required to provide capital for their
share of the project costs. Instead, the participants were each
required to guarantee (expires 2027) a portion of the
consortium’s debt. Additionally, the consortium returned a
portion of previous capital contributions to the participants, of
which Alumínio received $53 (R$110). This return of capital
contributions was reflected in Additions to investments on the
accompanying Statement of Consolidated Cash Flows. Alumínio
accounts for the Serra do Facão hydroelectric power project as
an equity method investment and its total investment in this
project was $67 (R$131) as of June 30, 2009. Alcoa’s
maximum exposure to loss on this project is approximately $140
(R$280), which represents Alumínio’s investment and
guarantee of debt as of June 30, 2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In 2004, Alcoa acquired a 20%
interest in a consortium, which subsequently purchased the Dampier
to Bunbury Natural Gas Pipeline (DBNGP) in Western Australia, in
exchange for an initial cash investment of $17 (A$24). The
investment in the DBNGP was made in order to secure a competitively
priced long-term supply of natural gas to Alcoa’s refineries
in Western Australia. This investment was classified as an equity
investment. Alcoa has made additional contributions of $103
(A$136), including $3 (A$4) in the 2009 second quarter and $18
(A$27) in the 2009 six-month period, and committed to invest an
additional $37 (A$47) to be paid as the pipeline expands through
2011. In addition to its equity ownership, Alcoa has an agreement
to purchase gas transmission services from the DBNGP. Alcoa’s
maximum exposure to loss on the investment and the related contract
is approximately $390 (A$490) as of June 30, 2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Other</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In July 2006, the European
Commission (EC) announced that it had opened an investigation to
establish whether an extension of the regulated preferential
electricity tariff granted by Italy to some energy-intensive
industries complies with European Union (EU) state aid rules. The
new Italian power tariff modifies the preferential tariff that was
in force until December 31, 2005 and extends it through 2010.
Alcoa has been operating in Italy for more than 10 years under a
power supply structure approved by the EC in 1996. That measure,
like the new one, was based on Italian state legislation that
provides a competitive power supply to the primary aluminum
industry and is not considered state aid by the Italian Government.
The EC’s announcement states that it has doubts about the
measure’s compatibility with EU legislation and concerns
about distortion of competition in the European market of
primary</font> <font face="Times New Roman" size="2">aluminum,
where energy is an important part of the production costs. The
opening of an in-depth investigation gives interested parties the
opportunity to comment on the proposed measures; it does not
prejudge the outcome of the procedure. It is Alcoa’s
understanding that the Italian Government’s continuation of
the electricity tariff was done in conformity with all applicable
laws and regulations. Alcoa believes that the total potential
impact from a loss of the tariff would be approximately $21 pretax
(€15) per month in higher power costs at its Italian
smelters. While Alcoa believes that any additional cost would only
be assessed prospectively from the date of the EC’s decision
on this matter, it is possible that the EC could rule that the
assessment must be retroactively applied to January 2006. A
decision by the EC is expected in 2009. On November 29, 2006,
Alcoa filed an appeal before the European Court of First Instance
seeking the annulment of the EC’s decision to open an
investigation alleging that such decision did not follow the
applicable procedural rules. On March 25, 2009, the European
Court of First Instance denied Alcoa’s appeal. This decision
does not predetermine the outcome of the EC’s investigation,
it only confirms the EC’s right to open an investigation. On
June 4, 2009, Alcoa appealed the March 25, 2009 ruling;
however, no decision is expected until 2011 or later.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In January 2007, the EC
announced that it had opened an investigation to establish whether
the regulated electricity tariffs granted by Spain comply with EU
state aid rules. Alcoa has been operating in Spain for more than
nine years under a power supply structure approved by the Spanish
Government in 1986, an equivalent tariff having been granted in
1983. The investigation is limited to the year 2005 and it is
focused both on the energy-intensive consumers and the distribution
companies. The investigation provided 30 days to any interested
party to submit observations and comments to the EC. With respect
to the energy-intensive consumers, the EC opened the investigation
on the assumption that prices paid under the tariff in 2005 were
lower than the pool price mechanism, therefore being, in principle,
artificially below market conditions. Alcoa submitted comments in
which the company provided evidence that prices paid by
energy-intensive consumers were in line with the market, in
addition to various legal arguments defending the legality of the
Spanish tariff system. It is Alcoa’s understanding that the
Spanish tariff system for electricity is in conformity with all
applicable laws and regulations, and therefore no state aid is
present in the tariff system. Alcoa believes that the total
potential impact from an unfavorable decision would be
approximately $11 pretax (€8). While Alcoa believes that any
additional cost would only be assessed for the year 2005, it is
possible that the EC could extend its investigation to later years.
A decision by the EC is expected in 2009. If the EC’s
investigation concludes that the regulated electricity tariffs for
industries are unlawful, Alcoa will have an opportunity to
challenge the decision in the EU courts.</font></p>
</div>
0.20
0.20
273000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>H. Debt</b> – On March 24,
2009, Alcoa issued $575 of 5.25% convertible notes due 2014 (the
“convertible notes”). The issuance of the convertible
notes includes $75 related to the exercise of an over-allotment
option by the underwriters. The underwriting discount and
third-party expenses for the issuance of the convertible notes was
$13 and will be amortized to interest expense over the five-year
term of the convertible notes. The convertible notes were issued
under Alcoa’s shelf registration statement dated
March 10, 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Interest on the convertible
notes is payable semi-annually in arrears on March 15th and
September 15th each year, commencing on September 15,
2009. If there is an event of default under the convertible notes,
the principal amount of the convertible notes, plus accrued and
unpaid interest, may be declared immediately due and payable. These
amounts automatically become due and payable if an event of default
relating to certain events of bankruptcy, insolvency, or
reorganization occurs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa does not have the right
to redeem the convertible notes prior to the stated maturity date.
Holders of the convertible notes have the option to convert their
notes into shares of Alcoa’s common stock at any time prior
to the close of business on the second scheduled trading day (March
13, 2014) immediately preceding the stated maturity date (March 15,
2014). The initial conversion rate for the convertible notes is
155.4908 shares of Alcoa’s common stock per $1,000 (in whole
dollars) principal amount of notes (89,407,210 shares), equivalent
to a conversion price of approximately $6.43 per share, subject to
adjustment, as defined in the convertible notes. Other than
receiving cash in lieu of fractional shares, holders do not have
the option to receive cash instead of shares of common stock upon
conversion. Accrued and unpaid interest that exists upon conversion
of a note will be deemed paid by the delivery of shares of
Alcoa’s common stock and no cash payment or additional shares
will be given to holders.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On the issuance date of the
convertible notes, the market price of Alcoa’s common stock
was above the stated conversion price of $6.43 creating a
beneficial conversion option to the holders, as the convertible
notes were “in-the-money.” The beneficial conversion
option is defined as a benefit provided to the holders in the form
of non-cash interest expense to the Company. As a result, Alcoa
recorded a $66 increase to additional capital and a corresponding
decrease in the carrying value of the convertible notes
representing the intrinsic value of the beneficial conversion
option. The $66 decrease will be amortized to interest expense over
the five-year term of the convertible notes effectively accreting
the carrying value of the convertible notes to $575 by the stated
maturity date.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">If Alcoa undergoes a
fundamental change, as defined in the convertible notes, holders
may require the Company to repurchase all or a portion of their
notes at a price equal to 100% of the principal amount of the notes
to be purchased plus any accrued and unpaid interest up to, but
excluding, the repurchase date. Such a repurchase will be made in
cash.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The convertible notes are
general unsecured obligations and rank senior in right of payment
to any of Alcoa’s future indebtedness that is expressly
subordinated in right of payment to the convertible notes and
equally in right of payment with all of Alcoa’s existing and
future unsecured indebtedness and liabilities that are not so
subordinated. The convertible notes effectively rank junior to any
secured indebtedness of Alcoa to the extent of the value of the
assets securing such indebtedness, and are effectively subordinated
to all debt and other liabilities of Alcoa’s
subsidiaries.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The net proceeds from the
convertible notes ($562) and the issuance of common stock (see Note
L) were used to prepay the $1,300 outstanding under Alcoa’s
364-day revolving credit facility (see below). The remaining net
proceeds were used for general corporate purposes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">During the first quarter of
2009, Alcoa borrowed $1,300 under the $1,900 364-day senior
unsecured revolving credit facility to support its operations. The
$1,300 was repaid on March 24, 2009 with the net proceeds from
the issuance of the convertible notes (see above) and common stock
(see Note L). There were no amounts outstanding under the $1,900
364-day senior unsecured revolving credit facility at June 30,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Also during the first quarter
of 2009, Alcoa Alumínio (Alumínio) borrowed a total of
$255 in new loans with a weighted-average interest rate of 5.25%
and a weighted-average maturity of 276 days from six financial
institutions. In the second quarter of 2009, $55 was repaid and a
new $55 was borrowed. As of June 30, 2009, there were $255 in
outstanding borrowings with a weighted-average interest rate of
4.97% and a weighted-average maturity of 309 days from six
financial institutions. The purpose of these borrowings is to
support Alumínio’s export operations.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Additionally during the first
quarter of 2009, Alumínio borrowed $105 (R$236) under the
existing BNDES (Brazil’s National Bank for Economic and
Social Development) loans related to the Juruti bauxite mine
development, São Luís refinery expansion, and Estreito
hydroelectric power project. Total borrowings under these BNDES
loans were $784 (R$1,528) as of June 30, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In May 2009, Alumínio
entered into two new loan agreements (the “Loans”) with
BNDES related to the Juruti bauxite mine development and the
São Luís refinery expansion.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The first loan provides for a
commitment of $321 (R$750), which is divided into six subloans, and
will be used to pay for certain expenditures of the Juruti bauxite
mine development. Interest on two of the subloans totaling $257
(R$600) is a USD rate of interest equal to the average cost
incurred by BNDES in raising capital outside of Brazil, currently
4.19%, plus a weighted-average margin of 1.69%. Interest on four of
the subloans totaling $64 (R$150) is a BRL rate of interest equal
to BNDES’ long-term interest rate, currently 6.25%, plus a
weighted-average margin of 1.59%. As of June 30, 2009,
Alumínio borrowed $120 (R$245) and $37 (R$73) and the
weighted-average interest rate was 5.88% and 7.84% for the subloans
totaling $257 (R$600) and the subloans totaling $64 (R$150),
respectively.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The second loan provides for
a commitment of $86 (R$200), which is divided into four subloans,
and will be used to pay for certain expenditures of the São
Luís refinery expansion. Interest on two of the subloans
totaling $69 (R$160) is a USD rate of interest equal to the average
cost incurred by BNDES in raising capital outside of Brazil plus a
weighted-average margin of 1.70%. Interest on two of the subloans
totaling $17 (R$40) is a BRL rate of interest equal to BNDES’
long-term interest rate plus a weighted-average margin of 1.70%. As
of June 30, 2009, Alumínio borrowed $33 (R$65) and $10 (R$19)
and the weighted-average interest rate was 5.89% and 7.95% for the
subloans totaling $69 (R$160) and the subloans totaling $17 (R$40),
respectively.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Principal and interest on the
Loans are payable monthly beginning in November 2010 and ending in
April 2016. Prior to the beginning payment date, interest is
payable quarterly on borrowed amounts. The Loans may be repaid
early without penalty with the approval of BNDES once the portions
of the growth projects related to these Loans are completed. Also,
the Loans include a financial covenant that states that Alcoa must
maintain a debt-to-equity ratio of 1.5 or lower.</font></p>
</div>
8109000000
-22000000
600000000
28000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>G. Investments</b> – On
February 12, 2009, Alcoa and the Aluminum Corporation of China
(Chinalco) entered into an agreement in which Chinalco redeemed the
convertible senior secured note (the “note”) that was
previously issued by a special purpose vehicle called Shining
Prospect Pte. Ltd., which is a private limited liability company
created solely for the purpose of acquiring shares of Rio Tinto plc
(RTP). Alcoa had joined with Chinalco on February 1, 2008 to
acquire 12% of the U.K. common stock of RTP for approximately
$14,000. Alcoa had contributed $1,200 of the $14,000 through the
purchase of the note. Under the agreement executed on
February 12, 2009, Alcoa will receive $1,021 in cash in three
installments over a six-month period ending July 31, 2009, of
which $501 was received through June 30, 2009 and is reflected
in Sales of investments on the accompanying Statement of
Consolidated Cash Flows. The remaining $520 was included in Other
receivables on the accompanying Consolidated Balance Sheet and was
not reflected in the accompanying Statement of Consolidated Cash
Flows as it represents a non-cash activity. As a result of this
transaction, Alcoa realized a loss of $182 ($118 after-tax), which
is reflected in Other expenses, net on the accompanying Statement
of Consolidated Operations, and reversed the unrealized loss that
had been recognized in Accumulated other comprehensive loss on the
accompanying Consolidated Balance Sheet since the initial
investment was made.</font></p>
</div>
0
0
17000000
-792000000
-1202000000
-0.89
-0.89
-159000000
-0.17
-0.17
-16000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>N. Income Taxes</b> – The
effective tax rate for the second quarter of 2009 and 2008 was
25.4% (benefit on a loss) and 27.1% (provision on income),
respectively. The rate for the 2009 second quarter differs from the
U.S. federal statutory rate of 35% primarily due to lower tax rates
in foreign jurisdictions, a $21 tax charge for unbenefitted
operational losses that are excluded from the estimated annual
effective tax rate calculation, and a $5 discrete income tax charge
related to the Elkem/Sapa AB exchange transaction. The rate for the
2008 second quarter differs from the U.S. federal statutory rate of
35% primarily due to foreign income being taxed in lower rate
jurisdictions and a $9 discrete income tax benefit associated with
the sale of the businesses within the former Packaging and Consumer
segment, mainly as a result of changes in tax assumptions
surrounding transaction costs and the finalization of the
divestiture of certain foreign locations.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The effective tax rate for
the 2009 and 2008 six-month periods was 34.5% (benefit on a loss)
and 31.0% (provision on income), respectively. The rate for the
2009 six-month period differs from the U.S. federal statutory rate
of 35% primarily due to lower tax rates in foreign jurisdictions
and a $6 tax charge for unbenefitted operational losses that are
excluded from the estimated annual effective tax rate calculation,
both of which were mostly offset by a $28 discrete income tax
benefit related to a Canadian tax law change allowing a tax return
to be filed in U.S. dollars and a $6 discrete income tax benefit
related to the Elkem/Sapa AB exchange transaction. The rate for the
2008 six-month period differs from the U.S. federal statutory rate
of 35% primarily due to foreign income being taxed in lower rate
jurisdictions and the $9 discrete income tax benefit mentioned
above, partially offset by a $28 discrete income tax charge related
to the allocation of the sale proceeds of the businesses within the
former Packaging and Consumer segment to higher tax rate
jurisdictions as opposed to the allocation previously
contemplated.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa has recorded deferred
tax assets associated with tax loss carryforwards and tax credit
carryforwards. As of December 31, 2008, deferred tax assets
related to tax loss carryforwards and tax credit carryforwards were
$1,017 and $320, respectively. These deferred tax asset amounts
increased during the 2009 six-month period as a result of
Alcoa’s current operating loss position. Alcoa has recorded a
valuation allowance against a portion of the tax loss carryforwards
but has not recorded a valuation allowance against the tax credit
carryforwards. Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax benefit will
not be realized. Deferred tax assets for which no valuation
allowance is recorded may not be realized if sufficient income is
not generated in the future in certain jurisdictions.</font></p>
</div>
-415000000
-690000000
-280000000
-942000000
133000000
112000000
-114000000
-428000000
229000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>F. Inventories</b></font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="1"><b>June 30,</b></font><br />
<font face="Times New Roman" size=
"1"><b>2009</b></font></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="1"><b>December 31,</b></font><br />
<font face="Times New Roman" size=
"1"><b>2008</b></font></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Finished goods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">494</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">747</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Work-in-process</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">678</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">960</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Bauxite and alumina</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">601</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">724</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Purchased raw materials</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">464</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">575</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating supplies</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">256</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">232</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,493</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,238</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">At June 30, 2009 and
December 31, 2008, 35% and 39% of total inventories,
respectively, were valued on a last in, first out (LIFO) basis. If
valued on an average-cost basis, total inventories would have been
$974 and $1,078 higher at June 30, 2009 and December 31,
2008, respectively.</font></p>
</div>
79000000
179000000
501000000
-497000000
57000000
67000000
-951000000
59000000
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>A</b>. <b>Basis of Presentation</b>
– The interim Consolidated Financial Statements (the
“Financial Statements”) of Alcoa Inc. and its
subsidiaries (“Alcoa” or the “Company”) are
unaudited. The Financial Statements include all adjustments,
consisting of normal recurring adjustments, considered necessary by
management to fairly state the results of operations, financial
position, and cash flows. The results reported in these Financial
Statements are not necessarily indicative of the results that may
be expected for the entire year. The 2008 year-end balance sheet
data was derived from audited financial statements, which were
revised in the current period to reflect changes in the
presentation of minority interests (see Note B), but does not
include all disclosures required by accounting principles generally
accepted in the United States of America. This Form 10-Q report
should be read in conjunction with Alcoa’s Annual Report on
Form 10-K for the year ended December 31, 2008, which includes
all disclosures required by accounting principles generally
accepted in the United States of America. Certain amounts in
previously issued financial statements were reclassified to conform
to the current period presentation.</font></p>
105000000
1399000000
429000000
136000000
-137000000
971000000
57000000
-380000000
-80000000
49000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>J. Other Income, Net</b></font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended</b></font><br />
<font face="Times New Roman" size=
"1"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended</b></font><br />
<font face="Times New Roman" size=
"1"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity (income) loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(22</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">22</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(50</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(18</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(32</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign currency gains, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(60</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(67</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(46</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Losses (gains) from asset
sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(17</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(25</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">72</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(89</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(96</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(59</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the 2009 six-month period,
Losses (gains) from asset sales include a $188 gain related to the
Elkem/Sapa AB exchange transaction (see Note E) and a $182 loss on
the sale of the Shining Prospect investment (see Note
G).</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 18 Folio_Start * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
 </p>
</div>
5000000
0
17000000
168000000
79000000
0
-15000000
-4000000
5000000
884000000
69000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>O. Pension Plans and Other
Postretirement Benefits</b> – The components of net periodic
benefit cost are as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 55pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Pension
benefits</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">70</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">87</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">170</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">171</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">337</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">343</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Expected return on plan
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(192</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(203</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(383</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(409</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amortization of prior service
cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Recognized actuarial loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Curtailments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net periodic benefit cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">92</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 79pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Postretirement
benefits</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">46</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">48</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">92</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">96</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Expected return on plan
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amortization of prior service
benefit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Recognized actuarial loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Curtailments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net periodic benefit cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">55</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">58</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">111</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">During the second quarter of
2009, Alcoa completed the divestiture of the wire harness and
electrical portion of the EES business to Platinum Equity (see Note
E) and continued to execute its global workforce reduction plan
(see Note D). As a result, certain pension and postretirement
benefit plans were remeasured and Alcoa recognized curtailment
gains and losses due to the significant reduction in the expected
aggregate years of future service of the employees of the EES
business and the employees subject to the global workforce
reduction plan, respectively. In the second quarter of 2009, Alcoa
recorded curtailment gains of $5 and $1 related to the pension and
postretirement benefit plans, respectively, that include the EES
employees in Loss from discontinued operations and curtailment
losses of $9 related to the pension plans that include the
employees subject to the global workforce reduction plan in
Restructuring and other charges on the accompanying Statement of
Consolidated Operations. The curtailment gains and losses include
recognition of the change in the projected benefit obligation (PBO)
or accumulated postretirement benefit obligation (APBO) and a
portion of the previously unrecognized prior service cost
reflecting the reduction in expected future service.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The remeasurement of these
pension plans generated a net increase in 2009 annual net periodic
benefit cost of $9 of which $1 was recognized in the 2009 second
quarter and the remainder will be recognized ratably over the
second half of 2009. The remeasurement of these postretirement
benefit plans generated a decrease in 2009 annual net periodic
benefit cost of less than $1. Also, the pension plans’ PBO
and plan assets decreased by $197 and $74, respectively, and the
postretirement benefit plans’ APBO decreased by $1 due to the
remeasurements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Additionally in the second
quarter of 2009, Alcoa recorded a credit of $144 ($94 after-tax)
for pension plans and a charge of $1 (less than $1 after-tax) for
postretirement benefit plans in accumulated other comprehensive
loss due to the remeasurement of the curtailed plans.</font></p>
</div>
-1435000000
876000000
905000000
253000000
506000000
0
9000000
23000000
79000000
151000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>D. Restructuring and Other
Charges</b> – In the second quarter and six-month period of
2009, Alcoa recorded restructuring and other charges of $82 ($56
after-tax and noncontrolling interests) and $151 ($102 after-tax
and noncontrolling interests), respectively. Restructuring and
other charges in the 2009 second quarter include $42 ($30 after-tax
and noncontrolling interests) for the layoff of approximately 1,560
employees (1,320 in the Flat-Rolled Products segment; 120 in the
Alumina segment; 60 in the Primary Metals segment; and 60 in
Corporate) to continue to address the impact of the global economic
downturn on Alcoa’s businesses; $23 ($15 after-tax) in
adjustments to the Global Foil and Transportation Products Europe
businesses mainly due to unfavorable foreign currency movements; a
$9 ($6 after-tax) curtailment charge due to the remeasurement of
pension plans as a result of the workforce reductions (see
Note O); and $8 ($5 after-tax and noncontrolling interests) in
net charges associated with previously approved restructuring
programs. In the 2009 six-month period, restructuring and other
charges include $90 ($62 after-tax and noncontrolling interests)
for the layoff of approximately 4,060 employees (2,190 in the
Engineered Products and Solutions segment; 1,380 in the Flat-Rolled
Products segment; 220 in the Primary Metals segment; 120 in the
Alumina segment; and 150 in Corporate) to continue to address the
impact of the global economic downturn on Alcoa’s businesses;
the previously mentioned $23 ($15 after-tax) in</font> <font face=
"Times New Roman" size="2">adjustments to businesses held for sale
and the $9 ($6 after-tax) curtailment charge; $18 ($12 after-tax)
for the write-off of previously capitalized third-party costs
related to potential business acquisitions due to the adoption of
SFAS 141(R) (see Note B); and $11 ($7 after-tax and noncontrolling
interests) in net charges associated with previously approved
restructuring programs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the second quarter and
six-month period of 2008, Alcoa recorded restructuring and other
charges of less than $1 and $38 ($31 after-tax and noncontrolling
interests), respectively. Restructuring and other charges include
$5 ($3 after-tax) and $41 ($31 after-tax) in the 2008 second
quarter and six-month period, respectively, as a result of the loss
recognized on the sale of the businesses within the former
Packaging and Consumer segment. The $5 was offset by a net credit
of $5 ($3 after-tax and noncontrolling interests) in the 2008
second quarter, primarily as a result of adjustments to severance
reserves associated with previously approved restructuring programs
due to changes in facts and circumstances. The $41 was slightly
offset by a net credit in the 2008 six-month period, primarily as a
result of the previously mentioned adjustments partially offset by
severance and other exit costs associated with previously approved
restructuring programs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa does not include
restructuring and other charges in the segment results. The pretax
impact of allocating restructuring and other charges to the segment
results would have been as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="81%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Alumina</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Primary Metals</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Flat-Rolled Products</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">33</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Engineered Products and
Solutions</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Packaging and Consumer</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">41</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Segment total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">91</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">33</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">60</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total restructuring and other
charges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">151</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">As of June 30, 2009,
approximately 2,030 of the 4,060 employees associated with 2009
restructuring programs and 5,200 of the 6,300 employees associated
with 2008 restructuring programs were terminated. The remaining
terminations for 2008 restructuring programs are expected to be
completed by the end of 2009. In the 2009 second quarter and
six-month period, cash payments made against the severance reserves
were $18 and $22, respectively, related to the 2009 restructuring
programs and $34 and $76, respectively, related to the 2008
restructuring programs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Activity and reserve balances
for restructuring charges are as follows (the amounts in the table
below include activity for the EES business because the related
reserve balances are not included in liabilities of operations held
for sale):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="79%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Employee<br />
termination and<br />
severance costs</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="1"><b>Other</b></font><br />
<font face="Times New Roman" size=
"1"><b>exit costs</b></font></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reserve balances at December 31,
2007</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">115</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">157</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b><font size=
"+0"><u>2008</u>:</font></b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(91</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(19</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(110</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restructuring charges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">236</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">65</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">301</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reserve balances at December 31,
2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">251</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">77</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">328</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b><font size=
"+0"><u>2009</u>:</font></b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(118</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(126</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restructuring charges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">99</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">104</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(40</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reserve balances at June 30,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">194</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">72</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">266</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
<font size="+0"> </font></p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">In the 2009 six-month period, Other for employee termination
and severance costs includes a reduction of $26 for reserves
related to the EES business as Platinum Equity assumed these
obligations (see Note E).</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The remaining reserves are
expected to be paid in cash during 2009, with the exception of
approximately $85 to $90, which is expected to be paid over the
next several years for ongoing site remediation work, special
termination benefit payments, and lease termination
costs.</font></p>
</div>
8391000000
<div>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>B. Recently Adopted and Recently
Issued Accounting Standards</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Adopted</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On June 30, 2009, Alcoa
adopted Statement of Financial Accounting Standards (SFAS)
No. 165, “Subsequent Events,” (SFAS 165). SFAS 165
establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. Specifically,
SFAS 165 sets forth the period after the balance sheet date during
which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure
in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, and the disclosures
that an entity should make about events or transactions that
occurred after the balance sheet date. The adoption of SFAS 165 had
no impact on the Financial Statements as management already
followed a similar approach prior to the adoption of this standard
(see Note Q).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted SFAS No. 157, “Fair Value
Measurements,” (SFAS 157) as it relates to nonfinancial
assets and nonfinancial liabilities that are not recognized or
disclosed at fair value in the financial statements on at least an
annual basis. SFAS 157 defines fair value, establishes a framework
for measuring fair value in accounting principles generally
accepted in the United States of America (GAAP), and expands
disclosures about fair value measurements. The provisions of this
standard apply to other accounting pronouncements that require or
permit fair value measurements and are to be applied prospectively
with limited exceptions. The adoption of SFAS 157, as it relates to
nonfinancial assets and nonfinancial liabilities, had no impact on
the Financial Statements. The provisions of SFAS 157 will be
applied at such time a fair value measurement of a nonfinancial
asset or nonfinancial liability is required, which may result in a
fair value that is materially different than would have been
calculated prior to the adoption of SFAS 157.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133,” (SFAS 161). SFAS 161 requires
enhanced disclosures about an entity’s derivative and hedging
activities, including (i) how and why an entity uses
derivative instruments, (ii) how derivative instruments and
related hedged items are accounted for under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging
Activities,” as amended (SFAS 133), and (iii) how
derivative instruments and related hedged items affect an
entity’s financial position, financial performance, and cash
flows. Other than the required disclosures (see the Derivatives
section of Note P), the adoption of SFAS 161 had no impact on the
Financial Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB
No. 51,” (SFAS 160). SFAS 160 amends Accounting Research
Bulletin No. 51, “Consolidated Financial
Statements,” to establish accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This standard defines a
noncontrolling interest, previously called a minority interest, as
the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. SFAS 160 requires, among other items, that
a noncontrolling interest be included in the consolidated statement
of financial position within equity separate from the
parent’s equity; consolidated net income to be reported at
amounts inclusive of both the parent’s and noncontrolling
interest’s shares and, separately, the amounts of
consolidated net income attributable to the parent and
noncontrolling interest all on the consolidated statement of
operations; and if a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary be
measured at fair value and a gain or loss be recognized in net
income based on such fair value. The presentation and disclosure
requirements of SFAS 160 were applied retrospectively. Other than
the change in presentation of noncontrolling interests, the
adoption of SFAS 160 had no impact on the Financial
Statements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted SFAS No. 141 (revised 2007), “Business
Combinations,” (SFAS 141(R)), which replaces SFAS
No. 141, “Business Combinations,” (SFAS 141) but
retains the fundamental requirements in SFAS 141, including that
the purchase method be used for all business combinations and for
an acquirer to be identified for each business combination. This
standard defines the acquirer as the entity that obtains control of
one or more businesses in the business combination and establishes
the acquisition date as the date that the acquirer achieves control
instead of the date that the consideration is transferred. SFAS
141(R) requires an acquirer in a business combination, including
business combinations achieved in stages (step acquisition), to
recognize the assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited
exceptions. It also requires the recognition of assets acquired and
liabilities assumed arising from certain contractual contingencies
as of the acquisition date, measured at their acquisition-date fair
values. Additionally, SFAS 141(R) requires acquisition-related
costs to be expensed in the period in which the costs are incurred
and the services are received instead of including such costs as
part of the acquisition price. The adoption of SFAS 141(R) resulted
in a charge of $18 ($12 after-tax) in Restructuring and other
charges on the accompanying Statement of Consolidated Operations
for the write off of previously capitalized third-party costs
related to potential business acquisitions. Also, the provisions of
SFAS 141(R) were applied to an acquisition completed on
March 31, 2009 (see Note E).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On June 30, 2009, Alcoa
adopted FASB Staff Position (FSP) No. FAS 157-4, “Determining
Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly,” (FSP FAS 157-4). FSP FAS 157-4
provides additional guidance for estimating fair value in
accordance with SFAS 157 when the volume and level of activity for
the asset or liability have significantly decreased and includes
guidance for identifying circumstances that indicate a transaction
is not orderly. This guidance is necessary to maintain the overall
objective of fair value measurements, which is that fair value is
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date under current market
conditions. The adoption of FSP FAS 157-4 had no impact on the
Financial Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On June 30, 2009, Alcoa
adopted FSP No. FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments,” (FSP FAS
115-2/124-2). FSP FAS 115-2/124-2 amends existing
other-than-temporary impairment guidance for debt securities to
make the guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and
equity securities. The adoption of FSP FAS 115-2/124-2 had no
impact on the Financial Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On June 30, 2009, Alcoa
adopted FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures
about Fair Value of Financial Instruments,” (FSP FAS
107-1/APB 28-1). FSP FAS 107-1/APB 28-1 requires a publicly traded
company to include disclosures about the fair value of its
financial instruments whenever it issues summarized financial
information for interim reporting periods. Such disclosures include
the fair value of all financial instruments, for which it is
practicable to estimate that value, whether recognized or not
recognized in the statement of financial position; the related
carrying amount of these financial instruments; and the method(s)
and significant assumptions used to estimate the fair value. Other
than the required disclosures (see the Other Financial Instruments
section of Note P), the adoption of FSP FAS 107-1/APB 28-1 had no
impact on the Financial Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Effective January 1,
2009, Alcoa adopted FSP No. FAS 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination
That Arise from Contingencies,” (FSP FAS 141(R)-1), which was
issued on April 1, 2009. FSP FAS 141(R)-1 applies to all
assets acquired and liabilities assumed in a business combination
that arise from certain contingencies as defined in this FSP and
requires (i) an acquirer to recognize at fair value, at the
acquisition date, an asset acquired or liability assumed in a
business combination that arises from a contingency if the
acquisition-date fair value of that asset or liability can be
determined during the measurement period otherwise the asset or
liability should be recognized at the acquisition date if certain
defined criteria are met; (ii) contingent consideration
arrangements of an acquiree assumed by the acquirer in a business
combination be recognized initially at fair value;
(iii) subsequent measurements of assets and liabilities
arising from contingencies be based on a systematic and rational
method depending on their nature and contingent consideration
arrangements be measured subsequently in accordance with the
provisions of SFAS 141(R); and (iv) disclosures of the amounts
and measurement basis of such assets and liabilities and the nature
of the contingencies. The provisions of FSP FAS 141(R)-1 were
applied to an acquisition completed on March 31, 2009 (see
Note E).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted FSP No. FAS 142-3, “Determination of the Useful
Life of Intangible Assets,” (FSP FAS 142-3). FSP FAS 142-3
amends the factors that should be considered in developing renewal
or extension assumptions used to determine the useful life of a
recognized intangible asset under FASB Statement No. 142,
“Goodwill and Other Intangible Assets,” (SFAS 142) in
order to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of
expected cash flows used to measure the fair value of the asset
under SFAS 141(R) and other GAAP. The adoption of FSP FAS 142-3 had
no impact on the Financial Statements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 1, 2009,
Alcoa adopted FSP No. EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities,” (FSP EITF 03-6-1). FSP EITF 03-6-1
states that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included
in the computation of earnings per share pursuant to the two-class
method. The adoption of FSP EITF 03-6-1 did not have a material
impact on the Financial Statements.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Issued</u></font></p>
<p style=
"MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In June 2009, the Financial
Accounting Standards Board (FASB) issued SFAS No. 168,
“The FASB Accounting Standards Codification</font><font face=
"Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">TM</sup></font>
<font face="Times New Roman" size="2">and the Hierarchy of
Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162,” (SFAS 168). SFAS 168 replaces
SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles,” and establishes the FASB Accounting
Standards Codification</font><font face="Times New Roman" size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">TM</sup></font>
<font face="Times New Roman" size="2">(Codification) as the source
of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial
statements in conformity with GAAP. Rules and interpretive releases
of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for
SEC registrants. The FASB will no longer issue new standards in the
form of Statements, FASB Staff Positions, or Emerging Issues Task
Force Abstracts; instead the FASB will issue Accounting Standards
Updates. Accounting Standards Updates will not be authoritative in
their own right as they will only serve to update the Codification.
The issuance of SFAS 168 and the Codification does not change GAAP.
SFAS 168 becomes effective for Alcoa for the period ending
September 30, 2009. Management has determined that the
adoption of SFAS 168 will not have an impact on the Financial
Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In June 2009, the FASB issued
SFAS No. 167, “Amendments to FASB Interpretation
No. 46(R),” (SFAS 167). SFAS 167 amends FASB
Interpretation No. 46 (Revised December 2003),
“Consolidation of Variable Interest Entities—an
interpretation of ARB No. 51,” (FIN 46(R)) to require an
enterprise to perform an analysis to determine whether the
enterprise’s variable interest or interests give it a
controlling financial interest in a variable interest entity; to
require ongoing reassessments of whether an enterprise is the
primary beneficiary of a variable interest entity; to eliminate the
quantitative approach previously required for determining the
primary beneficiary of a variable interest entity; to add an
additional reconsideration event for determining whether an entity
is a variable interest entity when any changes in facts and
circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar
rights of those investments to direct the activities of the entity
that most significantly impact the entity’s economic
performance; and to require enhanced disclosures that will provide
users of financial statements with more transparent information
about an enterprise’s involvement in a variable interest
entity. SFAS 167 becomes effective for Alcoa on January 1,
2010. Management is currently evaluating the potential impact of
SFAS 167 on the Financial Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In June 2009, the FASB issued
SFAS No. 166, “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140,”
(SFAS 166). SFAS 166 amends various provisions of SFAS
No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities—a
replacement of FASB Statement No. 125,” by removing the
concept of a qualifying special-purpose entity and removes the
exception from applying FIN 46(R) to variable interest entities
that are qualifying special-purpose entities; limits the
circumstances in which a transferor derecognizes a portion or
component of a financial asset; defines a participating interest;
requires a transferor to recognize and initially measure at fair
value all assets obtained and liabilities incurred as a result of a
transfer accounted for as a sale; and requires enhanced disclosure;
among others. SFAS 166 becomes effective for Alcoa on
January 1, 2010. Management is currently evaluating the
potential impact of SFAS 166 on the Financial
Statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In December 2008, the FASB
issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets,” (FSP FAS
132(R)-1). FSP FAS 132(R)-1 amends SFAS No. 132 (revised
2003), “Employers’ Disclosures about Pensions and Other
Postretirement Benefits,” to provide guidance on an
employer’s disclosures about plan assets of a defined benefit
pension or other postretirement plan. This guidance is intended to
ensure that an employer meets the objectives of the disclosures
about plan assets in an employer’s defined benefit pension or
other postretirement plan to provide users of financial statements
with an understanding of the following: how investment allocation
decisions are made; the major categories of plan assets; the inputs
and valuation techniques used to measure the fair value of plan
assets; the effect of fair value measurements using significant
unobservable inputs on changes in plan assets; and significant
concentrations of risk within plan assets. FSP FAS 132(R)-1 becomes
effective for Alcoa on December 31, 2009. As FSP FAS 132(R)-1
only requires enhanced disclosures, management has determined that
the adoption of FSP FAS 132(R)-1 will not have an impact on the
Financial Statements.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>Q. Subsequent Events</b> –
Management evaluated all activity of Alcoa through July 23,
2009 (the issue date of the Financial Statements) and concluded
that no subsequent events have occurred that would require
recognition in the Financial Statements or disclosure in the Notes
to the Financial Statements.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>K. Segment Information</b> – In
May 2009, management approved the movement of Alcoa’s hard
alloy extrusions business from the Flat-Rolled Products segment to
the Engineered Products and Solutions segment. This move was made
to capture market, customer, and manufacturer synergies through the
combination of the hard alloy extrusions business with the power
and propulsion forgings business. Prior period amounts were
reclassified to reflect this change.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa’s reportable
segments, reclassified to exclude discontinued operations and
assets held for sale (see Note C), are as follows (differences
between segment totals and consolidated totals are in
Corporate):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="60%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Alumina</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Primary<br />
Metals</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Flat-<br />
Rolled<br />
Products</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Engineered<br />
Products<br />
and<br />
Solutions</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Packaging<br />
and<br />
Consumer</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Second quarter ended June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Third-party sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">441</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,146</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,427</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,194</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,208</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">306</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">349</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">678</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">747</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,495</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,450</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,194</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,886</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Profit and loss:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation, depletion, and
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">139</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">55</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">46</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">307</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(21</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(119</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">40</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(101</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">After-tax operating income
(ATOI)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(178</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(132</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Second quarter ended June 30,
2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Third-party sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">717</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,437</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,363</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,660</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">19</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,196</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">766</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,108</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">65</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,939</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,483</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,545</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,428</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,660</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">19</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,135</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Profit and loss:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation, depletion, and
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">128</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">59</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">41</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">295</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">131</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">75</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">293</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">ATOI</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">190</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">428</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">48</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">172</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">838</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="59%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<!-- 7 Split_Table * DO NOT REMOVE OR EDIT -->
<!-- 10 Repeat_Tbl_Hdr_Start * DO NOT REMOVE OR EDIT -->
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Alumina</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Primary<br />
Metals</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Flat-<br />
Rolled<br />
Products</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Engineered<br />
Products<br />
and<br />
Solutions</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Packaging<br />
and<br />
Consumer</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- 11 Repeat_Tbl_Hdr_End * DO NOT REMOVE OR EDIT -->
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Six months ended June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Third-party sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">871</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,990</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,937</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,464</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,262</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">690</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">742</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,481</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,561</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,732</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,986</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,464</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,743</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Profit and loss:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity income (loss)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation, depletion, and
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">122</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">261</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">107</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">86</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">576</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(22</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(266</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">86</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(203</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">ATOI</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(390</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(96</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">183</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(275</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Six months ended June 30,
2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Third-party sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,397</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,314</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,699</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,211</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">516</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14,137</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,433</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,213</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">131</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,777</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,830</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,527</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,830</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,211</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">516</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17,914</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Profit and loss:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">19</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation, depletion, and
amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">141</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">252</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">114</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">83</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">590</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">124</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">247</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">135</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">554</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">ATOI</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">359</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">735</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">81</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">320</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,506</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following table
reconciles total segment ATOI to consolidated net (loss) income
attributable to Alcoa:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size="1"><b>Six
months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segment ATOI</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(132</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">838</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(275</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,506</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Unallocated amounts (net of
tax):</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Impact of LIFO</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">39</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">68</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(75</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(75</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(57</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(149</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(121</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Noncontrolling interests</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(70</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(137</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(70</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(91</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(141</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(173</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restructuring and other
charges</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(102</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(31</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Discontinued operations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(142</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(159</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(31</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(34</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(197</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(138</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Consolidated net (loss) income
attributable to Alcoa</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(454</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">546</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(951</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">849</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Items required to reconcile
segment ATOI to consolidated net (loss) income attributable to
Alcoa include: the impact of LIFO inventory accounting; interest
income and expense; noncontrolling interests; corporate expense,
comprised of general administrative and selling expenses of
operating the corporate headquarters and other global
administrative facilities, along with depreciation and amortization
on corporate-owned assets; restructuring and other charges;
discontinued operations; and other, which includes intersegment
profit eliminations and other metal adjustments, differences
between tax rates applicable to the segments and the corporate
effective tax rate, and other nonoperating items such as foreign
currency translation gains/losses.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the 2009 six-month period,
Other also included a $118 realized loss on the sale of the Shining
Prospect investment (see Note G) and a $21 adjustment for the
finalization of the estimated fair value of the Sapa AB joint
venture (see Note E).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following table details
segment assets:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Alumina</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,416</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,800</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Primary Metals*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,883</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,239</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Flat-Rolled Products</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,582</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,164</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Engineered Products and
Solutions</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,556</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,770</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total segment assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,437</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30,973</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">Primary Metals’ segment assets as of December 31, 2008
were revised to include derivative contract assets, which were
previously excluded from segment assets, to conform to the current
period presentation. This change was made to align the derivative
contract assets with the segment where the impacts of these assets
were reported.</font></td>
</tr>
</tbody>
</table>
</div>
484000000
53000000
876000000
-18000000
-479000000
-14000000
-78000000
-50000000
189000000
9593000000
53000000
1.875
-7000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>P. Derivatives and Other Financial
Instruments</b></font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b><u>Derivatives</u></b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa is exposed to certain
risks relating to its ongoing business operations, including
financial, market, political, and economic risks. The following
discussion provides information regarding Alcoa’s exposure to
the risks of changing commodity prices, interest rates, and foreign
currency exchange rates.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa’s commodity and
derivative activities are subject to the management, direction, and
control of the Strategic Risk Management Committee (SRMC). The SRMC
is composed of the chief executive officer, the chief financial
officer, and other officers and employees that the chief executive
officer selects. The SRMC reports to the Board of Directors on the
scope of its activities.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The aluminum, energy,
interest rate, and foreign exchange contracts are held for purposes
other than trading. They are used primarily to mitigate uncertainty
and volatility, and to cover underlying exposures. The Company is
not involved in trading activities for energy, weather derivatives,
or other nonexchange commodity trading activities.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The fair value of outstanding
derivative contracts recorded as assets in the accompanying
Consolidated Balance Sheet were as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="44%"></td>
<td valign="bottom" width="4%"></td>
<td width="40%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 58pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Asset
Derivatives</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance Sheet
Location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives designated as hedging
instruments under SFAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">70</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">68</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">90</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">146</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives designated as hedging
instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">263</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">186</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives not designated as hedging
instruments under SFAS 133*:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives not designated as
hedging instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">53</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Less margin held:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
assets</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">64</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sub-total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total Asset Derivatives</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">222</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">172</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">See the “Other” section within Note P for
additional information on Alcoa’s purpose for entering into
derivatives not designated as hedging instruments and its overall
risk management strategies.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The fair value of outstanding
derivative contracts recorded as liabilities in the accompanying
Consolidated Balance Sheet were as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="44%"></td>
<td valign="bottom" width="4%"></td>
<td width="40%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 69pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Liability
Derivatives</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance Sheet
Location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives designated as hedging
instruments under SFAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">162</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">492</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">32</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">339</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">309</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives designated as hedging
instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">549</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">837</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives not designated as hedging
instruments under SFAS 133*:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">33</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">18</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Embedded credit derivative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives not designated as
hedging instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">91</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">103</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Less margin posted:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">119</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Fair
value of derivative contracts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Other
noncurrent liabilities and deferred credits</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 7em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sub-total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">119</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total Liability Derivatives</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">598</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">821</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">See the “Other” section within Note P for
additional information on Alcoa’s purpose for entering into
derivatives not designated as hedging instruments and its overall
risk management strategies.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Fair value is defined as the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. The fair value hierarchy distinguishes
between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs)
and (2) an entity’s own assumptions about market
participant assumptions developed based on the best information
available in the circumstances (unobservable inputs). The fair
value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). The three levels of the fair
value hierarchy are described below:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 6px; MARGIN-BOTTOM: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" align="left" width="2%"><font face=
"Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font face="Times New Roman" size="2">Level 1 -
Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or
liabilities.</font></p>
</td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 6px; MARGIN-BOTTOM: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" align="left" width="2%"><font face=
"Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font face="Times New Roman" size="2">Level 2 -
Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly, including quoted prices for similar assets or
liabilities in active markets; quoted prices for identical or
similar assets or liabilities in markets that are not active;
inputs other than quoted prices that are observable for the asset
or liability (e.g., interest rates); and inputs that are derived
principally from or corroborated by observable market data by
correlation or other means.</font></p>
</td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 6px; MARGIN-BOTTOM: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" align="left" width="2%"><font face=
"Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font face="Times New Roman" size="2">Level 3 -
Inputs that are both significant to the fair value measurement and
unobservable.</font></p>
</td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following section
describes the valuation methodologies used by Alcoa to measure
derivative contracts at fair value, including an indication of the
level in the fair value hierarchy in which each instrument is
generally classified. Where appropriate, the description includes
details of the valuation models, the key inputs to those models,
and any significant assumptions.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Derivative contracts are
valued using quoted market prices and significant other observable
and unobservable inputs. Such financial instruments consist of
aluminum, energy, interest rate, and foreign exchange contracts.
The fair values for the majority of these derivative contracts are
based upon current quoted market prices. These financial
instruments are typically exchange-traded and are generally
classified within Level 1 or Level 2 of the fair value hierarchy
depending on whether the exchange is deemed to be an active market
or not.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">For certain derivative
contracts whose fair values are based upon trades in liquid
markets, such as aluminum options, valuation model inputs can
generally be verified and valuation techniques do not involve
significant management judgment. The fair values of such financial
instruments are generally classified within Level 2 of the fair
value hierarchy.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa has other derivative
contracts that do not have observable market quotes. For these
financial instruments, management uses significant other observable
inputs (i.e., information concerning time premiums and volatilities
for certain option type embedded derivatives and regional premiums
for swaps). For periods beyond the term of quoted market prices for
aluminum, Alcoa uses a macroeconomic model that estimates the
long-term price of aluminum based on anticipated changes in
worldwide supply and demand. Where appropriate, valuations are
adjusted for various factors such as liquidity, bid/offer spreads,
and credit considerations. Such adjustments are generally based on
available market evidence (Level 2). In the absence of such
evidence, management’s best estimate is used (Level
3).</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following table presents
Alcoa’s derivative contract assets and liabilities that are
measured and recognized at fair value on a recurring basis
classified under the appropriate level of the fair value
hierarchy:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,</b></font><br />
<font face="Times New Roman" size="1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,</b></font><br />
<font face="Times New Roman" size="1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Assets:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 1</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">165</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">79</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 2</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">113</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">160</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 3</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Margin held*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(67</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">222</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">172</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Liabilities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 1</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">185</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">569</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 2</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 3</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">426</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">341</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Margin posted*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(119</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">598</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">821</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">Margin held represents cash collateral received related to
aluminum contracts included in Level 1 and interest rate contracts
included in Level 2 and margin posted represents cash collateral
paid related to aluminum derivative contracts included in Level 1
and energy contracts included in Level 2. Alcoa elected to net the
margin held and posted against the fair value amounts recognized
for derivative instruments executed with the same counterparties
under master netting arrangements.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Financial instruments
classified as Level 3 in the fair value hierarchy represent
derivative contracts in which management has used at least one
significant unobservable input in the valuation model. The
following table presents a reconciliation of activity for such
derivative contracts on a net basis:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="74%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Balance at beginning of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">303</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">341</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total realized/unrealized (losses) or
gains included in:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of goods sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">117</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Purchases, sales, issuances, and
settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Transfers in and (or) out of Level
3*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Balance at end of period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">426</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">426</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total (losses) or gains included in
earnings attributable to the change in unrealized gains or losses
relating to derivative contracts still held at June 30,
2009:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of goods sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">In the 2009 six-month period, there was a transfer of a
derivative contract into Level 3 due to the acquisition of an
embedded derivative in a power contract, which is linked to the LME
and a foreign exchange rate, related to the Elkem transaction (see
Note E).</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">As reflected in the table
above, the net unrealized loss on derivative contracts using Level
3 valuation techniques was $426 as of June 30, 2009. This loss
is mainly attributed to embedded derivatives in power contracts
that index the price of power to the London Metal Exchange (LME)
price of aluminum. These embedded derivatives are primarily valued
using observable market prices. However, due to the length of the
contracts, the valuation model also requires management to estimate
the long-term price of aluminum based upon anticipated changes in
worldwide supply and demand. The embedded derivatives have been
designated as hedges of forward sales of aluminum and their
realized gains and losses are included in Sales on the accompanying
Statement of</font> <font face="Times New Roman" size=
"2">Consolidated Operations. Also, included within Level 3
measurements are derivative financial instruments that hedge the
cost of electricity. Transactions involving on-peak power are
observable as there is an active market. However, there are certain
off-peak times when there is not an actively traded market for
electricity. Therefore, management utilizes various forecast
services, historical relationships, and near term market actual
pricing to determine the fair value. Gains and losses realized for
the electricity contracts are included in Cost of goods sold on the
accompanying Statement of Consolidated Operations. Additionally, an
embedded derivative in a power contract that indexes the difference
between the long-term debt ratings of Alcoa and the counterparty
from any of the three major credit rating agencies is included in
Level 3. Management uses forecast services, historical
relationships, and market prices to determine fair value. Realized
gains and losses for this embedded derivative are included in Other
expenses, net on the accompanying Statement of Consolidated
Operations. None of the Level 3 positions on hand at June 30,
2009 resulted in any unrealized gains in the accompanying Statement
of Consolidated Operations.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Fair Value Hedges</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">For derivative instruments
that are designated and qualify as fair value hedges, the gain or
loss on the derivative as well as the offsetting loss or gain on
the hedged item attributable to the hedged risk are recognized in
current earnings. Alcoa includes the gain or loss on the hedged
items in the same line items as the offsetting loss or gain on the
related derivative contracts as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="66%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap" rowspan="3">
<p style="WIDTH: 200pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Derivatives in SFAS 133
Fair Value Hedging Relationships</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" rowspan="3"><font face=
"Times New Roman" size="1"><b>Location of Gain<br />
or (Loss)<br />
Recognized in<br />
Income on<br />
Derivatives</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="12"><font face=
"Times New Roman" size="1"><b>Amount of Gain or
(Loss)</b></font><br />
<font face="Times New Roman" size="1"><b>Recognized in Income on
Derivatives</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">Sales</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">102</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">44</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(39</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">403</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">Interest expense</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">15</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">26</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">6</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size="2">Other
expenses,<br />
net</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="top"> </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">117</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">48</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(13</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">408</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Aluminum.</b> Alcoa is a
leading global producer of primary aluminum and aluminum fabricated
products. As a condition of sale, customers often require Alcoa to
enter into long-term, fixed-price commitments. These commitments
expose Alcoa to the risk of higher aluminum prices between the time
the order is committed and the time that the order is shipped.
Alcoa’s aluminum commodity risk management policy is to
manage, principally through the use of futures and options
contracts, the aluminum price risk associated with a portion of its
firm commitments. These contracts cover known exposures, generally
within three years. As of June 30, 2009 and 2008, Alcoa had
654 kmt and 410 kmt, respectively, of aluminum futures designated
as fair value hedges. The effects of this hedging activity will be
recognized over the designated hedge periods in 2009 to
2012.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Interest Rates.</b> Alcoa
uses interest rate swaps to help maintain a strategic balance
between fixed- and floating-rate debt and to manage overall
financing costs. As of June 30, 2009 and 2008, the Company had
pay floating, receive fixed interest rate swaps that were
designated as fair value hedges. In both periods, these hedges
effectively convert the interest rate from fixed to floating on
$1,890 of debt through 2018.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Foreign Exchange.</b>
During the 2008 second quarter and six-month period, Alcoa used
cross-currency interest rate swaps that effectively converted its
U.S. dollar denominated debt into Brazilian real debt at local
interest rates.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">There were no transactions
that ceased to qualify as a fair value hedge in the 2009 and 2008
second quarters and six-month periods.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Cash Flow Hedges</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">For derivative instruments
that are designated and qualify as cash flow hedges, the effective
portion of the gain or loss on the derivative is reported as a
component of other comprehensive income (OCI) and reclassified into
earnings in the same period or periods during which the hedged
transaction affects earnings. Gains and losses on the derivative
representing either hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness are recognized in
current earnings.</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="17%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td width="16%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td width="15%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap" rowspan="3">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="1"><b>Derivatives in</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="1"><b>SFAS 133</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="1"><b>Cash Flow</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="1"><b>Hedging</b></font></p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px; WIDTH: 47pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size=
"1"><b>Relationships</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="14"><font face=
"Times New Roman" size="1"><b>Amount of Gain or (Loss)<br />
Recognized in OCI on Derivatives<br />
(Effective</b></font><br />
<font face="Times New Roman" size="1"><b>Portion)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" rowspan="3">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Location of<br />
Gain or<br />
(Loss)<br />
Reclassified<br />
from<br />
Accumulated<br />
OCI into<br />
Income<br />
(Effective<br />
Portion)</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="14"><font face=
"Times New Roman" size="1"><b>Amount of Gain or (Loss)<br />
Reclassified from Accumulated<br />
OCI into Income (Effective<br />
Portion)*</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" rowspan="3">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Location of<br />
Gain or<br />
(Loss)<br />
Recognized<br />
in Income on<br />
Derivatives<br />
(Ineffective<br />
Portion and<br />
Amount<br />
Excluded<br />
from<br />
Effectiveness<br />
Testing)</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="12"><font face=
"Times New Roman" size="1"><b>Amount of Gain or (Loss)<br />
Recognized in Income on<br />
Derivatives (Ineffective Portion<br />
and Amount<br />
Excluded from Effectiveness<br />
Testing)**</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter</b></font><br />
<font face="Times New Roman" size="1"><b>ended</b></font><br />
<font face="Times New Roman" size=
"1"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size="1"><b>Six
months<br />
ended</b></font><br />
<font face="Times New Roman" size=
"1"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second<br />
quarter<br />
ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size="1"><b>Six
months<br />
ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>Second<br />
quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size="1"><b>Six
months<br />
ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(173</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(83</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(59</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(308</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">17</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(47</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">31</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(83</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(2</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(14</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">12</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(63</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(8</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">47</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(13</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(8</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">57</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(34</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">74</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of goods sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(14</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">2</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(21</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(12</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">24</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">46</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of goods sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(9</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(17</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">—  </font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(180</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(39</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(80</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(296</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">3</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(38</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">57</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(79</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(2</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="top" align="right"><font face="Times New Roman" size=
"2">(1</font></td>
<td valign="top" nowrap="nowrap"><font face="Times New Roman" size=
"2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">Assuming market rates remain constant with the rates at
June 30, 2009, a gain of $13 is expected to be recognized in
earnings over the next 12 months.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face=
"Times New Roman" size="1">**</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">For the second quarter ended June 30, 2009 and 2008, the
amount of gain or (loss) recognized in income represents $1 and
$(1), respectively, related to the ineffective portion of the
hedging relationships. For the six months ended June 30, 2009
and 2008, the amount of gain or (loss) recognized in income
represents $3 and an immaterial amount, respectively, related to
the ineffective portion of the hedging relationships. There was
also a loss of $1 recognized in income related to the amount
excluded from the assessment of hedge effectiveness for both the
second quarter ended and six months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Aluminum and Energy.</b>
Alcoa anticipates the continued requirement to purchase aluminum
and other commodities, such as electricity, for its operations.
Alcoa enters into futures and forward contracts to reduce
volatility in the price of these commodities. Alcoa has also
entered into power supply and other contracts that contain pricing
provisions related to the LME aluminum price. The LME-linked
pricing features are considered embedded derivatives. A majority of
these embedded derivatives have been designated as cash flow hedges
of future sales of aluminum. On March 31, 2009, Alcoa acquired
an embedded derivative in a power contract, which is linked to the
LME and a foreign exchange rate, in the Elkem transaction (see Note
E).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Interest Rates.</b> There
were no cash flow hedges of interest rate exposures outstanding as
of June 30, 2009 and 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Foreign Exchange.</b>
Alcoa is subject to exposure from fluctuations in foreign currency
exchange rates. Foreign exchange contracts may be used from time to
time to hedge the variability in cash flows from the forecasted
payment or receipt of currencies other than the functional
currency. These contracts cover periods consistent with known or
expected exposures through 2009. On March 31, 2009, Alcoa
acquired foreign currency derivatives in the Elkem transaction (see
Note E) which cover anticipated foreign currency exposures through
2011.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa had the following
outstanding forward contracts that were entered into to hedge
forecasted transactions:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts (kmt)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,755</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,252</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Energy contracts (megawatt
hours)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,255,120</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,971,715</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">147</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Other</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa has also entered into
certain derivatives to minimize its price risk related to other
customer sales and pricing arrangements. Alcoa has not qualified
these contracts for hedge accounting treatment and therefore, the
fair value gains and losses on these contracts are recorded in
earnings as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="40%"></td>
<td valign="bottom" width="3%"></td>
<td width="37%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap" rowspan="3">
<p style="WIDTH: 176pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Derivatives Not Designated
as Hedging Instruments<br />
Under SFAS 133</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" rowspan="3">
<p style="WIDTH: 177pt; BORDER-BOTTOM: #000000 1px solid">
<font face="Times New Roman" size="1"><b>Location of Gain or (Loss)
Recognized in Income on<br />
Derivatives</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="14"><font face="Times New Roman" size=
"1"><b>Amount of Gain or (Loss) Recognized<br />
in Income on Derivatives</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(17</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Aluminum contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(10</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(40</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Embedded credit derivative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(15</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(29</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="1%"><font face=
"Times New Roman" size="1">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"1">As of June 30, 2009 and 2008, these foreign exchange
contracts were entered into and settled during the respective
periods.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The embedded credit
derivative relates to a power contract that indexes the difference
between the long-term debt rating of Alcoa and the counterparty
from any of the three major credit rating agencies. If
Alcoa’s credit ratings were downgraded at any time, an
independent investment banker would be consulted to determine a
hypothetical interest rate for both parties. The two interest rates
would be netted and the resulting difference would be multiplied by
Alcoa’s equivalent percentage of the outstanding principal of
the counterparty’s debt obligation as of December 31st
of the year preceding the calculation date. This differential would
be added to the cost of power in the period following the
calculation date.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><u>Material Limitations</u></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The disclosures with respect
to commodity prices, interest rates, and foreign currency exchange
risk do not take into account the underlying commitments or
anticipated transactions. If the underlying items were included in
the analysis, the gains or losses on the futures contracts may be
offset. Actual results will be determined by a number of factors
that are not under Alcoa’s control and could vary
significantly from those factors disclosed.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Alcoa is exposed to credit
loss in the event of nonperformance by counterparties on the above
instruments, as well as credit or performance risk with respect to
its hedged customers’ commitments. Although nonperformance is
possible, Alcoa does not anticipate nonperformance by any of these
parties. Contracts are with creditworthy counterparties and are
further supported by cash, treasury bills, or irrevocable letters
of credit issued by carefully chosen banks. In addition, various
master netting arrangements are in place with counterparties to
facilitate settlement of gains and losses on these
contracts.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b><u>Other Financial
Instruments</u></b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The carrying values and fair values of
Alcoa’s other financial instruments are as
follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="76%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>June 30, 2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"1"><b>December 31, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Carrying<br />
value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair</b></font><br />
<font face="Times New Roman" size="1"><b>value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Carrying<br />
value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair</b></font><br />
<font face="Times New Roman" size="1"><b>value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash and cash equivalents</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">851</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">851</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">762</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">762</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restricted cash</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Noncurrent receivables</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Available-for-sale securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Long-term debt due within one
year</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">115</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">115</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">56</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Short-term borrowings</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">663</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">663</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">478</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">478</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Commercial paper</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,535</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,535</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Long-term debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,387</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,986</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,509</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,345</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following methods were
used to estimate the fair values of other financial
instruments:</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Cash and cash equivalents,
Restricted cash, Long-term debt due within one year, Short-term
borrowings, and Commercial paper.</b> The carrying amount
approximates fair value because of the short maturity of the
instruments.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Noncurrent
receivables.</b> The fair value of noncurrent receivables was based
on anticipated cash flows, which approximates carrying
value.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Available-for-sale
securities.</b> The fair value of such securities was based on
quoted market prices. These financial instruments consist of
exchange-traded fixed income and equity securities, which are
carried at fair value, and were classified in Level 1 of the fair
value hierarchy.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2"><b>Long-term debt.</b> The
fair value is based on interest rates that are currently available
to Alcoa for issuance of debt with similar terms and
maturities.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>L. Preferred and Common Stock</b>
– On March 24, 2009, Alcoa issued 172.5 million
shares of common stock (par value of $1 per share) at a price of
$5.25 per share. The issuance of common stock includes
22.5 million shares related to the exercise of an
over-allotment option by the underwriters. The underwriting
discount and third-party expenses for the issuance of the common
stock was $30 and was recorded as a decrease to additional capital.
The common stock was issued under Alcoa’s shelf registration
statement dated March 10, 2008. Alcoa is authorized to issue
up to 1.8 billion shares of common stock. As of June 30, 2009,
there were 1,097,074,538 common shares issued and 974,286,776
common shares outstanding.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The net proceeds from the
issuance of common stock ($876) and the convertible notes (see Note
H) were used to prepay the $1,300 outstanding under Alcoa’s
364-day revolving credit facility (see Note H). The remaining net
proceeds were used for general corporate purposes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In March 2009, the quarterly
common stock dividend was reduced from $0.17 per share to $0.03 per
share in connection with a series of financial actions initiated to
improve liquidity.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>E. Acquisitions and Divestitures</b>
– On June 15, 2009, Alcoa completed the divestiture of
the wire harness and electrical portion of the EES business to
Platinum Equity effective June 1, 2009. Alcoa paid $193 upon
consummation of the transaction and recognized a loss of $120 in
discontinued operations (see Note C) on the accompanying Statement
of Consolidated Operations. The cash payment was comprised of the
agreed upon transaction price of $175 and a working capital
adjustment of $18 based on the provisions of the purchase
agreement. This transaction is subject to certain post-closing
adjustments as defined in the purchase agreement. Proceeds from the
sale of assets and businesses on the accompanying Statement of
Consolidated Cash Flows include this payment as a cash outflow. The
wire harness and electrical portion of the EES business generated
sales of $1,114 in 2008 and, at the time of divestiture, had
operations in 13 countries employing approximately 16,200
employees.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On March 31, 2009, Alcoa
completed the non-cash exchange of its 45.45% stake in the Sapa AB
joint venture for Orkla ASA’s (Orkla) 50% stake in the Elkem
Aluminium ANS joint venture (Elkem). Alcoa now owns 100% of Elkem
and Orkla now owns 100% of Sapa AB. Prior to the completion of the
exchange transaction, Alcoa accounted for its investments in Sapa
AB and Elkem on the equity method and the carrying values were $475
and $435, respectively, at December 31, 2008. Elkem includes
aluminum smelters in Lista and Mosjøen, Norway with a combined
output of 282 kmt (thousand metric tons) and the anode plant in
Mosjøen in which Alcoa already holds an 82% stake. These three
facilities employ approximately 700 workers combined. The
individual assets and liabilities of Elkem were included in the
Primary Metals segment at March 31, 2009 (the final amounts to
be recorded will be based on valuation and other studies that have
not yet been completed) and Elkem’s results of operations
were reflected in this segment starting on April 1, 2009. The
exchange transaction resulted in the recognition of a $188 gain
($133 after-tax), comprised of a $156 adjustment to the carrying
value of Alcoa’s existing 50% interest in Elkem in accordance
with the fair value measurement provisions of SFAS 141(R) and a $32
adjustment for the finalization of the estimated fair value of the
Sapa AB joint venture. The $188 gain was reflected in Other
expenses, net on the accompanying Statement of Consolidated
Operations, of which $156 ($112 after-tax) was reflected in the
Primary Metals segment and $32 ($21 after-tax) was reflected in
Corporate. The portion of the gain reflected in Corporate was
because the original write-down of the 45.45% Sapa AB investment to
its estimated fair value in December 2008 was reflected in
Corporate. At the time the exchange transaction was completed,
Elkem had $18 in cash, which was reflected in the accompanying
Statement of Consolidated Cash Flows on the acquisitions
line.</font></p>
</div>
-946000000
5000000
-159000000
-787000000
453000000
180000000
175000000
1224000000
798000000
173000000
429000000
0
-134000000
-137000000
-2000000
0
0
49000000
0
-380000000
0
0
-80000000
57000000
253000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>M. Earnings Per Share</b> –
Basic earnings per 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
share equivalents outstanding. The information used to compute
basic and diluted EPS on (loss) income from continuing operations
attributable to Alcoa common shareholders is as follows (shares in
millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="78%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Second quarter ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size=
"1"><b>Six months ended<br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">(Loss) income from continuing operations
attributable to Alcoa common shareholders</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(312</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">553</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(792</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">852</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Less: preferred stock
dividends</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">(Loss) income from continuing operations
available to Alcoa common shareholders</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(312</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">553</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(791</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">851</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Average shares outstanding –
basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">974</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">816</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">896</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">817</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Effect of dilutive
securities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Potential shares of common stock,
attributable to stock options, stock awards, and performance
awards</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Average shares outstanding –
diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">974</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">825</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">896</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">826</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td><font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In the 2009 second quarter
and six-month period, basic average shares outstanding and diluted
average shares outstanding were the same because the effect of
dilutive securities was anti-dilutive since Alcoa generated a loss
from continuing operations. As a result, 27 million stock
options, 7 million stock and performance awards, and
89 million share equivalents related to the convertible notes
were not included in the computation of diluted EPS. Had Alcoa
generated income from continuing operations in the 2009 second
quarter and six-month period, 94 million and 53 million,
respectively, potential shares of common stock related to the stock
options, stock and performance awards, and convertible notes would
have been included in diluted average shares
outstanding.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Options to purchase
40 million and 30 million shares of common stock at a
weighted average exercise price of $35.27 and $39.57 per share were
outstanding as of June 30, 2009 and 2008, respectively, but
were not included in the computation of diluted EPS because they
were anti-dilutive, as the options’ exercise price was
greater than the average market price of Alcoa’s common
stock.</font></p>
</div>
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