1. Compute the year-to-year percentage change in "diluted-income from continuing operations" for each of the five years.

1a. Do the earnings appear volatile?

2. Compute the ratio of long term debt to total assets or each of the five years for Alcoa

2a. What does the pattern look like to you?

ANNUAL REPORT 2014 ALCOA WHO WE ARE Alcoa is a global leader in lightweight metals packaging, high performance defense vehicles technology, engineering and manufacturing. across air, land and sea, deeper oil and gas Alcoa innovates multi-material solutions drilling and more efficient power generation. that advance our world. Our technologies We pioneered the aluminum industry over enhance transportation, from automotive 125 years ago, and today, our 59,000 people and commercial transport to air and space in 30 countries deliver value-add products travel, and improve industrial and consumer made of titanium, nickel and aluminum, and electronics products. We enable smart produce best-in-class bauxite, alumina and buildings, sustainable food and beverage primary aluminum products. CHAIRMAN'S LETTER This year was an important milestone in Alcoa's transformation. In recent years, my shareholder letters focused on our many efforts to keep the Alcoa ship on course while buffeted by external events. Year after year, we proved that we can weather the storms that batter our industry. In 2014, as in the years before but with an accelerated pace, we discharged legacy issues that were slowing us down. This enables us to transform Alcoa faster and to better control our destiny in a world of continuing economic uncertainty. Our transformation goals are two-fold: to build Alcoa's valueadd portfolio of multi-material, innovation-rich businesses that serve high-growth end markets, and to increase the global competitiveness of our commodity portfolio by moving further down the alumina and aluminum cost curves. These goals draw on Alcoa's innovation strengths in our value-add businesses and proven cost management systems in our commodity business. We are focusing our value-add businesses on multiple growth markets like aerospace and automotive. We are structuring our commodity business for continued profitability during the cyclical swings in the price of aluminum, profiting more when prices are high and remaining competitive when prices are low. Our transformation strategy, both its current impact and its future growth potential, has greatly improved our operating performance. As a result, 2014 was another solid year of Alcoa business performance and transformation progress that delivered significant returns to our shareholders. Our stock price increased by 49% over the course of the year, compared to 5% for the S&P 500 Materials Index and 8% for the Dow Jones Industrial Average (DJIA). On a three-year basis, Alcoa outperformed the S&P 500 Materials Index and DJIA by 38 and 37 percentage points, respectively. Our sustained performance stems from Alcoa's innovation strengths and our partnerships with our customers to create new applications that are transforming entire industries and expanding Alcoa's market share. As our high employee-engagement scores attest, we have unleashed the innovative energies of Alcoans. Another year of strong financial performance reinforces confidence in Alcoa's ability to consistently deliver on our commitments and provide the means to make investments critical to Alcoa's future growth. In the aerospace sector, we completed the acquisition of Firth Rixson and in the first quarter of 2015 closed on the purchase of TITAL, which together will double Alcoa's content on key newgeneration jet engine programs. These acquisitions will provide Alcoa with leading-edge technologies, strengthen our titanium and 2 nickel metals capabilities and expand our footprint in Europe and China. We are creating a leading portfolio position across all major components of a jet engine on the most attractive and highest growth engine platforms. Combined with our innovation advances in aircraft structures, particularly in our breakthrough aluminum-lithium extrusions and electromagnetic energy management fastening systems technologies, Alcoa will be a driving force in advancing next-generation aircraft. Because our customers recognize that Alcoa's innovations play a vital role in new aircraft fleets by improving fuel efficiency by 20%, reducing engine fuel burn by 15% and decreasing maintenance costs by 30%, they depend on us to help them shape the future of the aerospace industry. In the automotive sector, we have built on Alcoa's A951 bonding process, the breakthrough that enables the automotive industry to shift to aluminum intensive vehicles. The first high-volume model to make that shift is Ford's F-150 pickup, the highest selling vehicle in the United States. By replacing its steel body with military-grade aluminum, Ford reduced the weight of the new F-150 by more than 700 pounds and offers its customers significant fuel economies, heavier payload, improved handling and greater ruggedness. As other automotive manufacturers transition to aluminum, we forecast that Alcoa's 2013 auto sheet revenues of $229 million prior to the shift, will triple by 2015 and then double to $1.3 billion by 2018. To provide us the technologies and capacity to begin capturing that explosive growth, we launched an expansion and modernization of our rolling mills in Iowa and Tennessee. Most importantly, we also announced new advanced aluminum alloys that combine higher strength with lower weight and improved formability, while showing automotive grade surface quality. These material characteristics are what every vehicle designer dreams of, but so far never had, and will be made possible by Alcoa's truly revolutionary Micromill production technology. Automotive manufacturers also have responded favorably to the fact that the Micromill will reduce the time to produce aluminum coil from molten metal to 20 minutes from 20 days. Alcoa innovation is driving profitable growth across multiple business areas. We launched a new portfolio of foundry alloys to support the automotive industry's relentless pursuit of lighter, more efficient power trains and suspension components. We invented a four-layer brazing sheet for automotive, residential and commercial condensers and evaporators that are undergoing an exciting transition from copper to aluminum. The aerospace industry's first aluminum fan blade forging that Alcoa developed for Pratt & Whitney's jet engines that use its Geared Turbofan technology recently qualified for Airbus' new A320neo. In the commercial transportation sector, our latest aluminum wheel model, the Ultra ONE with MagnaForce alloy, is 47% lighter than a steel wheel, enabling truck drivers to increase their fuel savings and payloads. For our U.S. military customers, we produced the world's largest aluminum forging for the armored undercarriage of troop transport vehicles, an innovation that will save countless soldiers' lives. The increased thermal performance and superior blast resistance of Alcoa's windows and framing systems for the facades of nonresidential buildings have become an indispensable part of the green building phenomenon to improve energy efficiency by 25%. Aluminum bottles and aseptic foil are breathing new life into our packaging business. In each of those markets, our technologies are enabling our customersand therefore Alcoato gain market share. We also took decisive actions in 2014 to improve the profitability of our commodity business. We reduced the capacity of our smelting business by 549 thousand metric tons through divestitures, closures and curtailments of high-cost assets. Construction of the Ma'adenAlcoa integrated aluminum complex in Saudi Arabia neared completion in 2014, under budget and ahead of schedule. The combination of the highly profitable Saudi complex, the reduction of high-cost facilities and significant productivity improvements in our remaining upstream operations are expected to enable us to achieve our 2016 targets of reaching the 21st and 38th percentiles on the respective alumina refining and aluminum smelting cost curves. In 2014, we made significant progress in exerting greater control of our commodity business. Since introducing the Alumina Price Index (API) in 2010 to sell our smelter-grade alumina at prices that represent alumina market fundamentals rather than being linked to the volatile aluminum price on the London Metal Exchange, we have been steadily increasing our API/spot sales. In 2014, 68% of total third-party smelter-grade alumina sales were based on API/spot market pricing, up from 55% in 2013. In our aluminum business, we have been offering differentiated, value-add products that are cast in forms customized for the needs of customers. Value-add products represented 65% of total shipments from our smelters in 2014, up from 60% in 2013. The success of all our businesses depends on five levers that we call the Alcoa Advantage. As in the previous three years, we generated more than $1 billion of year-over-year productivity savings. Half of that came from our Procurement Advantage, leveraging more than $18 billion in buying power and streamlining our supplier base. When we strengthened our Operating System Advantage with an idea generation tool, more than 55% of Alcoans in plants and locations around the world took responsibility for suggesting and following through on new projects that are generating additional cost savings, working capital improvements and growth opportunities. A major reason for greater employee involvement and productivity is our Talent Advantage that enables us to attract, develop and motivate outstanding talent, resulting in a 57% increase in our employee engagement scores in the past eight years. Each year, we also measure the effectiveness of our Customer Advantage through an industry-wide program called Net Promoter Score (NPS); in 2014, we exceeded the industrial Best-in-Class NPS rating by more than four points. Our Technology Advantage enables our businesses to work with our Alcoa Technical Center to develop the many innovations we describe in this report. During my visits to Alcoa facilities around the world in 2014, it has been gratifying to see the Alcoa Advantage in action. To single out just one of hundreds of examples, during a visit with the CEO of a major aerospace customer of our power and propulsion business in Whitehall, Michigan, one of our newly-hired engineers, Peter Takunjo, demonstrated an acoustic emissions technology that he developed to detect cracks in ceramic cores early on. As those cracks were previously only discovered during final testing at the end of the manufacturing cycle, the new technology dramatically cut costs in our manufacturing process and improved on-time delivery to our customers. Peter's recruitment and development at Alcoa, and his opportunity as a newly-hired engineer to work on one of Alcoa's most sophisticated products for a key customer, is a classic example of the Alcoa Advantage working together in a way that no competitor can match. In addition to the Alcoa Advantage, our businesses benefit from a set of Alcoa Values that have endured the test of timeIntegrity; Respect; Environment, Health and Safety; Innovation; and Excellence. Serving as our Company's North Star, Alcoa's Values guided the generations of Alcoans who came before us. Those same Values are attracting the best and brightest of today's generation to Alcoa and inspiring them to help transform Alcoa for future generations. Thanks to our acceleration of that transformation during 2014, the path to Alcoa's future is much clearer and our leaders have far greater control in shaping that future than ever before. We are pleased to see that you, our shareholders, have confidence in our transformation strategy and have benefitted from another solid year of Alcoa business performance and shareholder returns. You have my commitment, as well as that of Alcoa's directors and management, that we will build on the successes of 2014 for many years to come. Klaus Kleinfeld Chairman of the Board and Chief Executive Officer 3 2014 SALES: $23.9 BILLION BY SEGMENT $0.2 $3.5 $7.4 $6.0 $6.8 Global Rolled Products Primary Metals Engineered Products and Solutions Alumina Other BY GEOGRAPHIC AREA 7% 15% FINANCIAL AND OPERATING HIGHLIGHTS ($ in millions, except per-share amounts) Sales Net income (loss) 51% 27% 2014\t2013 2012 $23,906\t$23,032 $23,700 268\t(2,285) 191 United States Europe Pacific Other Americas Per common share data: Basic 0.21\t(2.14) 0.18 Diluted 0.21\t(2.14) 0.18 0.12\t0.12 0.12 Dividends paid Total assets 37,399\t35,742 40,179 Capital expenditures 1,219\t1,193 1,261 Cash provided from operations 1,674\t1,578 1,497 Book value per share* 9.07 9.84\t12.32 Common stock outstandingend of year (000)** 1,216,664\t1,071,011 1,067,212 NUMBER OF EMPLOYEES Pacific 26,000 17,000 9,000 7,000 59,000 60,000\t61,000 United States Europe *\t\u0007 value per share = (Total shareholders' equity minus Preferred stock) divided by Common stock Book outstanding, end of year. There were an estimated 560,000 shareholders, which includes registered shareholders and beneficial **\t\u0007 owners holding stock through banks, brokers, or other nominees, as of February 20, 2015 (the record date for the 2015 annual shareholders' meeting). 4 2014 2013\t2012 Other Americas 26,000\t26,000 17,000\t17,000 10,000\t11,000 7,000\t7,000 2014 FINANCIAL PERFORMANCE* Alcoa's 2014 operating performance was the strongest since 2008, demonstrating how the Company's transformation is driving profitability. Excluding the impact of special items, performance growth drove 2014 net income of $1.1 billion, or $0.92 per share, up slightly more than threefold from 2013. STRONG PERFORMANCE DRIVES EARNINGS GROWTH $ in millions 540 1,116 292 357 16 123 64 2013 LME Currency Volume +$107 MARKET 48 31 757 Price/Mix Productivity Energy +$1,113 PERFORMANCE 2014 Cost Increases/ Other Raw Materials -$461 COST HEADWINDS Through the power of Alcoa's Degrees of Implementation program, which is the Company's disciplined execution methodology for moving from ideas to cash, our businesses generated $1.2 billion in productivity savings. This result exceeded an $850 million annual target and improved total productivity savings since 2008 to $7.9 billion. PRODUCTIVITY 2009-2014 $ in millions 2,410 1,291 1,099 1,194 338 279 65 512 1,117 742 2009 2010 EPS (28%) 2011 GRP (23%) GPP (43%) 2012 2013 2014 OTHER (6%) All figures are pretax and pre-minority interest. 2009-2010 represents net productivity. 2011-2013 represents gross productivity. EPS: Engineered Products and Solutions; GRP: Global Rolled Products; GPP: Global Primary Products represents the Alumina and Primary Metals segments combined. Alcoa also managed growth capital expenditures of $484 million against a $500 million annual target; controlled sustaining capital expenditures of $735 million against a $750 million annual target; and invested $91 million in our Saudi Arabia joint venture project against a $125 million annual target. Additionally, we continued to manage working capital diligently in 2014, resulting in average days working capital at 28 days in the fourth quarter, even with the fourth quarter of 2013, while supporting growth initiatives related to the automotive and aerospace end markets we serve. We have reduced average days working capital by nine days since the fourth quarter of 2009. SUSTAINED WORKING CAPITAL EXCELLENCE EVEN 1 DAY LOWER 6 DAYS LOWER 33 32 28 4Q14 3Q13 30 3Q14 2Q13 2 DAYS LOWER 28 2Q14 31 1Q14 29 4Q13 30 32 1Q13 2Q12 36 4Q12 35 3Q12 34 1Q12 9 day reduction since 4Q09 36 4Q11 40 3Q11 40 2Q11 40 1Q11 37 4Q10 44 3Q10 43 2Q10 42 1Q10 4Q09 37 EVEN As a result of our disciplined execution, we met our overarching goal to be free cash flow positive for the fifth consecutive year, ending 2014 with free cash flow totaling $455 million on cash from operations of $1.7 billion. * \u0007 ee Calculation of Financial Measures at the end of this report for reconciliations of certain non-GAAP financial measures S (adjusted income, free cash flow, days working capital and adjusted EBITDA). 5 ENGINEERED PRODUCTS AND SOLUTIONS 2014 was the best year ever for our innovative, multi-material Engineered Products and Solutions (EPS) segment. It generated $6.0 billion in third-party revenues and $767 million in after-tax operating income (ATOI) with an adjusted EBITDA margin of 21.9%. By engineering proprietary products that are highly valuable to customers across its aerospace, commercial transportation, building and construction, industrial gas turbine, and oil and gas end markets, EPS drove strong share gains across all of its businesses. The segment signed a number of valuable contracts throughout the year, including a $1.1 billion 10-year supply agreement with Pratt & Whitney for jet engine components. GLOBAL ROLLED PRODUCTS Our Global Rolled Products (GRP) segment continued to benefit in 2014 from the historic shift to aluminumintensive vehicles. The segment proudly began to supply Ford with military-grade aluminum sheet for the new Ford F-150 in record amounts from our expanded facility in Davenport, Iowa. Additionally, Alcoa signed a multi-year contract valued at more than $1 billion to supply Boeing with aluminum sheet and plate products, which further demonstrates the significant value that GRP offers Alcoa's aerospace customers. GRP generated $7.4 billion in third-party revenues and $312 million in ATOI with an adjusted EBITDA per metric ton of $339 driven in large part by automotive growth and an ongoing robust aerospace market. GLOBAL PRIMARY PRODUCTS Our hard work optimizing our operations in the Global Primary Products business continued to pay off. In the fourth quarter of 2014, the combined Alumina and Primary Metals segments (referred to as our upstream business) improved performance for the 13th consecutive quarter. Our transformed, lower-cost upstream business became increasingly competitive and profitable in 2014. Alumina generated $3.5 billion in third-party revenues and $370 million in ATOI with an adjusted EBITDA per metric ton of $55. In addition, since 2010, we have strengthened our position on the global alumina cost curve by moving down five points from the 30th percentile in 2010 to the 25th percentile in 2014, equivalent to an improvement in our cost per metric ton of $15 relative to the industry. Primary Metals generated $6.8 billion in third-party revenues and $594 million in ATOI while completing the year with an adjusted EBITDA per metric ton of $422, the strongest level since 2007. Our ability to reshape our smelting portfolio helped Alcoa to move down eight points on the global aluminum cost curve from the 51st percentile in 2010 to the 43rd percentile in 2013, and our position remained steady in 2014. By the end of 2014, we had improved our cost per metric ton of aluminum by $50 relative to the industry. 6 ENGINEERED PRODUCTS AND SOLUTIONS $6.0B in third-party revenues Adjusted EBITDA margin of 21.9% GLOBAL ROLLED PRODUCTS $7.4B in third-party revenues Adjusted EBITDA per metric ton of $339 Floto + Warner/OTTO GLOBAL PRIMARY PRODUCTS $10.3B in third-party revenues Global alumina cost curve 25th percentile Global aluminum cost curve 43rd percentile 7 Alcoa's transformation is accelerating. We are creating a lightweight, multi-material innovation powerhouse and a globally competitive commodity business. The Company has invested in the midstream and downstream businesses and optimized our upstream portfolioboth with the aim of creating compelling sustainable value for our shareholders. This transformation is underpinned by the Alcoa Advantage. Every day, we increase our competitiveness by leveraging company-wide technology innovations, customer relationships, purchasing power, operating systems and talent. Our transformation is fueling Alcoa's profitable growth and enabling our customers' success. ALCOA IS TRANSFORMING. 1 2 4 8 5 3 Innovation in Flight Alcoa is a multi-material, innovative leader in aerospace. Our aerospace products help power jet engines, are the key building blocks for airframes from nose to tail and securely fasten aircraft and the engines that propel them. As aircraft and engine makers plan for the next generation of advanced and fuel-efficient planes, they are increasingly turning to lighter, high-performance materials. To meet this demand, Alcoa opened the world's largest aluminum-lithium plant in Lafayette, Indiana where we produce advanced, third-generation aluminum-lithium alloys for the aerospace industry. This state-of-the-art facility positions Alcoa as the world's premier aluminum-lithium supplier. Combined with our wide-ranging manufacturing capabilities, Alcoa offers the broadest portfolio of aluminum-lithium components for aircraft. These lighter and stronger alloys and products are valuable to our customers, helping Alcoa grow revenues. Already a global leader in jet engine airfoils and high-performance engine castings, Alcoa announced two aerospace acquisitions in 2014. Alcoa completed the acquisition of Firth Rixson in November 2014, accelerating Alcoa's transformation into a multi-material enterprise by increasing our offerings made of nickel-based superalloys, titanium, stainless steel and advanced aluminum alloys. Through the Firth Rixson acquisition, Alcoa gained the most advanced isothermal forging technology. Isothermally forged parts are increasingly required in jet engines that use elevated turbine temperatures to maximize power output, drive fuel efficiency and reduce emissions. Alcoa's acquisition of TITAL, which closed in the first quarter of 2015, will provide a global growth platform for titanium structural cast parts for the world's bestselling jet engines and airframe structures, while expanding Alcoa's aluminum casting capacity. In addition to acquisitions, Alcoa also announced organic aerospace investments and expansions. Positioning the Company to capture growing aerospace demand, we are boosting our jet engine parts production in Indiana and Virginia, and we are doubling our high-technology coating capacity for jet engine parts in Michigan. Supporting demand for aerospace structures, we will also install advanced aerospace plate manufacturing capabilities in Iowa. In a jet engine first, Alcoa is supplying Pratt & Whitney with the forging for the first-ever aluminum and aluminum-lithium, hybrid-metallic front fan blade for jet engines. The forging was developed for Pratt & Whitney's PurePower engines using advanced aluminum and aluminum-lithium alloys and a proprietary manufacturing process. These breakthroughs were only possible by working in lock-step with Pratt & Whitney and by harnessing the capabilities of our metallic science expertise at the Alcoa Technical Center and the manufacturing strength at our plants in Cleveland, Ohio and Lafayette, Indiana. 1.\t\u0007 keep pace with demand, the Company To has expanded its aluminum-lithium capabilities at the Alcoa Technical Center outside Pittsburgh and at its Kitts Green facility in the United Kingdom. In Lafayette, Indiana, pictured here, Alcoa has already contracted $100 million in aluminumlithium revenues for 2017. 2.\t\u0007 Aluminum-lithium fan blade forgings are less dense than titanium, offer improved aerodynamics vs. carbon fiber reinforced polymer and contribute to 16% improved fuel burn for Pratt & Whitney's engines. Photo courtesy of Pratt & Whitney. a major concern for wings which house fuel. By providing a tight connection between the fastener and the structure into which it is installed, Alcoa's Flite-Tite fastener makes good contact with the copper mesh used in many wing construction systems to dissipate electrical energy. 3.\t\u0007 Rixson and TITAL double Alcoa's average Firth revenue content on high-growth engine programs. 5.\t\u0007ith additive manufacturing (3D printing), Alcoa W can model complex jet engine parts in half the 4.\t\u0007 average, each commercial jet gets hit by On time, from 52 weeks to 25, increasing speed to lightning roughly once per year. Unlike aluminum market and reducing costs by approximately 25%. planes, composites don't conduct electricity 9 Driving on the Cutting Edge Alcoa has been an automotive innovator since the days of the Ford Model T. Today, aluminum remains an essential part of lightweighting vehiclesconsumers want lighter cars for fuel economy and corporate average fuel economy standards demand it. Aluminum gives vehicles a competitive edge on the road. It increases safety by reducing stopping distances and, unlike steel, aluminum auto body panels are naturally corrosion resistant. With the goal of building the best ever Ford F-150, Ford Motor Company turned to Alcoa to be a major supplier of aluminum sheet for the next generation F-150, the highest-selling vehicle in America. Built with Alcoa's innovative military-grade aluminum alloys, the 2015 F-150 is as much as 700 pounds lighter than its predecessor, and accelerates, brakes, tows and resists corrosion like never before. (Source: Ford Motor Company website). Ford has announced that it plans to leverage the F-150's aluminum architecture for its next-generation heavy-duty pickups. As other automakers follow Ford's lead, the amount of aluminum body sheet per vehicle in North America is expected to increase nearly eleven-fold from 14 pounds in 2012 to 150 pounds by 2025. (Source: Ducker Worldwide). As aluminum's adoption grows industry-wide, Alcoa projects a nearly six-fold increase in its automotive sheet revenues from $229 million in 2013 to $1.3 billion in 2018. In 2014, Alcoa unveiled the Micromill, a manufacturing breakthrough technology to unlock the future of automotive aluminum products. By leveraging the Alcoa technology advantage, the Alcoa-patented MicromillTM process dramatically changes the microstructure of the metal, producing the most advanced aluminum sheet on the market. In fact, the Micromill produces automotive alloy that is 40% more formable and 30% stronger than ingot-based aluminum, while meeting stringent automotive surface quality requirements. In addition, automotive parts made with Alcoa Micromill material will be twice as formable and 30% lighter than parts made from high-strength steel. That will allow our customers to redefine the boundaries of vehicle design, supporting lighter, more fuel efficient, safer and more stylish vehicles for the future. The Micromill will enable Alcoa to expand our reach into the $3.5 billion total market for steel automotive applications, such as the fenders and the inside panels of vehicle doors, which today both are generally made of steel. (Please see Micromill graphic on bottom of facing page). 1.\t\u0007 part of Ford's \"Future of Tough\" national As campaign, Alcoa employees took the all new aluminum Ford F-150 for a test drive at Alcoa's Tennessee operations. 2.\t\u0007 and clean tech company Phinergy debuted Alcoa a zero-emissions electric demo car powered by a revolutionary aluminum-air battery at the Circuit Gilles-Villeneuve in Montreal. Alcoa and Phinergy are collaborating to commercialize the aluminumair battery, which can extend the distance an electric car travels by approximately 1,000 miles. 3.\t\u0007 Magazine named Alcoa 951, an enabler for R&D adhesive bonding of aluminum intensive vehicles, an R&D 100 Award winner. The R&D Awards recognize the top 100 technology innovations introduced in the past year across industry, academia and governmentsponsored research. 4.\t\u0007 new Davenport Works auto expansion in Iowa, The pictured here, is supplying Ford's 2015 F-150 with high-strength automotive sheet made with a militarygrade aluminum alloy. The auto expansion in Alcoa, Tennessee remains on schedule to open in mid 2015. Floto + Warner/OTTO 10 1 2 3 4 ALCOA MICROMILL MATERIAL: WORLD'S MOST ADVANCED ALUMINUM ALLOY FOR NEXT-GEN AUTOMOTIVE PRODUCTS More Formable 40% 2x vs. ingot based AI vs. HighStrength Steel + Stronger 30% vs. ingot based AI + Lighter 30% vs. HighStrength Steel Unique Alloy Micro Structure 11 1 2 12 3 Innovation for the Long Haul From rolled aluminum sheet products on tanks and flatbeds, to aluminum solutions for doors, fuel tanks, radiators and wheels, plus industrial fasteners, our commercial transportation products cover trucks and trailers from top to bottom. Alcoa helps truck drivers travel lighter so they can carry more payload and use less fuel key drivers of the commercial vehicle industry. We are the global leader in forged aluminum commercial vehicle wheels, and in 2014, we unveiled the world's lightest heavy-duty truck wheel. Introduced in the United States, the Ultra ONETM wheel weighs 40 pounds, 47% lighter than a steel wheel of the same size, helping to save up to 1,450 pounds per rig (based on conversion from standard steel to wide-based aluminum). Our aluminum wheel solutions are expected to deliver growth for the long haul, with an estimated compound annual growth rate for Alcoa wheels sales of 17% from 2010 to 2018. Alcoa will bring the Ultra ONETM wheel to Europe in the second half of 2015. Our advanced aluminum solutions also protect loads on railways. Alcoa's technical experts in Russia developed a new proprietary aluminum alloy for grain hoppers for transporting bulk cargo and grain, which need extra protection from harsh weather. The aluminum hopper can carry an 80-ton load, 12.5% more than a comparable steel hopper. Defending with Innovation Alcoa meets the needs of today's U.S. armed forces by creating advanced and affordable solutions that are lighter, faster and stronger. In 2014, Alcoa produced the world's largest single-piece closed die forged aluminum hull for combat vehicles to improve troop protection. Alcoa manufactured the single-piece part, which was co-designed by Alcoa and the U.S. Army Research Laboratory, to replace today's welded and assembled hulls. Based on early modeling and simulation, single-piece underbody structures could provide two times better protection against blasts such as those caused by Improvised Explosive Devicesthan traditional hulls, primarily by eliminating welded seams. Single-piece hulls can also reduce vehicle weight and assembly time, and, therefore, overall cost. 1.\t\u0007 world's largest single-piece closed die forged The aluminum hull, such as the one shown here for combat vehicles, is part of a joint Alcoa-U.S. Army initiative launched in 2013. Alcoa produced the forging at its plant in Cleveland, using its 50,000-ton forging press, the world's most advanced hydraulic press. 4 2.\t\u0007 also rolled out its most durable, easy-toAlcoa maintain commercial truck wheelthe Dura-Bright EVO wheel. It stands up stronger against the weather, road salts, grime and cleaning agents that can corrode and dull standard commercial truck wheels. 3.\t\u0007 take five pounds out of our lightest To heavy-duty truck wheel, our experts at the Alcoa Technical Centerthe world's largest light metals research centerinvented a new alloy, the patented MagnaForce alloy. It is on average 17% stronger than the industry standard, Alcoa's 6061 alloy, in similar applications. 4.\t\u0007 fasteners made by Alcoa Fastening Steel Systems in Texas, U.S. and Telford, U.K. secure the aluminum hopper. Commercial production is planned for 2015. 13 Building Innovation Demand for energy efficient buildings is increasing in all corners of the world. As requirements for environmentally-friendly buildings become more stringent, Alcoa has developed new aluminum components and designs that enhance energy efficiency, reduce carbon emissions, help achieve green building standards and protect occupants. Green buildings have enormous advantagesthey are up to 25% more energy efficient, produce 35% fewer emissions and studies show that their occupants are more satisfied than those in older buildings. (Source: LEED Gold Building vs. avg. U.S. commercial building, LEED Green Building Fact Sheet 2013, McGraw Hill). Green buildings offer high-value to customers through LEED certification (leadership standards for energy and environmental design). Studies show that LEED-certified buildings can command higher rent rates and typically have higher return on investment. One example of our leading-edge technology is the OptiQ ultra thermal window. This product, developed with the U.S. Department of Energy, offers a 40% improvement in thermal performance due to a triple insulating glass process, and it's made out of aluminum, so it's air and water resistant, which means it will not rot, warp or buckle due to moisture or weather exposure. Innovation in Your Cooler and on Your Shelf Alcoa's history of packaging innovation spans from the very first pop-top tab used on an aluminum can in 1962 to the new Bud Light Cool TwistTM aluminum bottle unveiled in 2014. Alcoa's packaging portfolio uses unique and proprietary technologies to help beer and beverage companies bring their brands to life in new and exciting ways. Alcoa also uses efficient manufacturing solutions that are fully compatible with its customers' existing production lines. Using Alcoa's patented bottle technologyalong with other proprietary technologies and materialsand working closely with Anheuser-Busch, the new Cool TwistTM 16-ounce aluminum bottle proudly bears the Alcoa logo and allows Bud Light drinkers to enjoy a re-closable package that is 84% lighter than glass bottles and infinitely recyclable. Inner PE coating ALUMINUM Middle PE coating Paperboard Outer PE coating 1 14 2 3 4 1. \u0007 old under the Kawneer, Reynobond and Reynolux S brand names, Alcoa building and construction products help increase thermal performance for greater energy savings. Select Kawneer entrances, framing and wall systems are also blast resistant. (Georgia Gwinnett College Library and Learning Center; Architect: LEO A DALY; Photo: Creative Services Photography / Rion Rizzo). 2.\t\u0007 Aluminum packaging solutions deliver freshness, convenience, and security for food, beverages and other products. 3.\t\u0007 is investing $40 million in its Itapissuma, Brazil Alcoa rolling mill to increase production of specialty foils for aseptic and flexible packages, like the one pictured here. Demand for specialty packaging in Brazil is expected to rise 7% annually over the next three years due to population growth and consumer preference. (Source: Brazilian Aluminum Association). 4.\t\u0007 provided product support to the Anheuser-Busch Alcoa innovations team, from package design through the launch of the new bottle. 15 1 2 1.\t\u0007 Alcoa's upstream business improved performance for the 13th consecutive quarter in the fourth quarter of 2014. Since 2008, Global Primary Products has generated $3.9 billion in productivity savings, increasing Alcoa's overall profitability. Photo: Fjardal smelter, Iceland. 2.\t\u0007 Saudi joint venture alumina refinery The successfully produced its first alumina from Saudi Arabian bauxite. At full run rate, the refinery will produce 1.8 million metric tons of alumina annually. 16 3.\t\u0007 value-add product mix increased upstream The margins by $1.3 billion from 2010 through 2014. Creating a Globally Competitive Commodity Business Alcoa pioneered the aluminum industry over 125 years ago, and today we produce best-in-class bauxite, alumina and primary aluminum products. As part of the Company's transformation, we have taken aggressive steps within our commodity portfolio to lower costs and become increasingly competitive. In Primary Metals, Alcoa closed or sold smelting capacity in Australia, Italy and the United States, and curtailed capacity in Brazil. In all, Alcoa has reduced 31% of its highest-cost global operating smelting capacity since 2007, supporting the Company's goal to improve its position on the global aluminum cost curve to the 38th percentile by 2016 from the 51st percentile in 2010. Recognizing how deeply closures impact our workforce, the Company provided support to affected employees. In addition, the Alcoa Foundation often provides support to affected communities. As an example, at Point Henry in Australia, the Foundation contributed $559,000 combined to six organizations located in Geelong, Victoria. We also took decisive steps to improve our alumina cost position by selling our ownership stake in a bauxite mine and alumina refinery joint venture in Jamaica and announcing a strategic review of a refinery in Suriname. Divesting, or closing, high-cost refining capacity supports the Company's goal to lower its position on the global alumina cost curve to the 21st percentile by 2016 from the 30th percentile in 2010. The exciting end market growth enjoyed by our multi-material, innovative midstream and downstream businesses is also driving growth in our upstream portfolio through value-add casthouse products. Casting aluminum into slabs that are then rolled into aluminum sheet supports automotive growth, while producing aluminum in billet form serves growing extrusion markets, like nonresidential building and construction. The commodity business is also creating new value for customers through specialty foundry alloys, initially for auto castings. These higher value-add products increased from 57% of total primary aluminum shipments in 2010 to 65% in 2014, and are expected to rise to 70% in 2016. ALUMINA PRICE INDEX (API) We are also growing margins by continuing to shift the pricing of smelter-grade alumina to an Alumina Price Index (API) that better reflects market fundamentals than London Metal Exchange-based pricing. We increased API and spot-priced smelter grade alumina to 68% of third-party shipments in 2014, up from 5% in 2010. In 2016, we forecast that on average 84% of our third-party alumina shipments will be based on API or spot pricing. API/Spot Pricing as a % of third-party shipments 84% 75% 68% In Saudi Arabia, the Ma'aden-Alcoa joint venture, the lowest-cost aluminum complex in the world, progressed as planned. In 2014, the smelter became fully operational and generated profits in the second half of the year, and the refinery produced its first alumina. 55% 37% 28% 5% SLAB CASTING SUPPORTING AUTOMOTIVE GROWTH 2010 2011 2012 2013 2014 2015E 2016E 3 BILLET PRODUCTION SERVING GROWING EXTRUSIONS MARKETS 17 OUR ALCOA VALUES Our Alcoa ValuesIntegrity, Respect, Innovation, Excellence and Environment, Health and Safetybring out the best in our employees and our Company. As Alcoa transforms, our Values serve as a bright beacon, continuing to guide how we work with our stakeholders and communities. Safety Our world-class safety culture values human life above all else, seeks to manage risk accordingly and consistently delivers safety performance in the top tier of the mining and manufacturing industries. After Alcoans and contractors worked fatality-free for 811 consecutive days, a contractor was tragically and fatally injured on November 18, 2014, while working on a project at our Point Comfort operations in Texas, a stark reminder that fatal and serious injury prevention must remain a daily focus. With respect to other safety indicators, we improved our days away, restricted and transfer (DART) rate by 8.3% in 2014. The DART rate measures injuries and illnesses that involve days away from work, in which work is restricted or in which employees are transferred to another job per 100 full-time workers. Ethics and Compliance In 2014, Alcoa's Ethics and Compliance Program expanded its reach through increased communications and the impact of its global Integrity Champion Network. High potential employees appointed to the Network work within their businesses and resource units to raise awareness, promote a \"Speak-Up\" culture, and provide advice on ethics and compliance matters. In 2014, Alcoa released a new Code of Conduct, providing a roadmap for \"Advancing with Integrity.\" Every employee worldwide received the Code, reinforcing Chairman and CEO Klaus Kleinfeld, along with colleagues from Alcoa's New York office, participated in a Month of Service event at an underserved school. As part of the event, much needed books were donated to the school's library. 18 Alcoa's Values and the shared responsibility for conducting business in accordance with Alcoa's highest ethical standards and the law. At the same time, Alcoa's 24/7 hotline was rebranded as the \"Integrity Line.\" The Program's monthly \"Leading with Integrity\" messages to leadership include real life ethics and compliance scenarios for discussion with employees. The Ethics and Compliance Program continues to focus on anti-corruption, trade compliance and adherence with all relevant U.S. and national laws and regulations. Sustainability Alcoa's sustainability leadership has strengthened through our transformation. The curtailment and closure of less efficient and high-cost smelters have driven additional greenhouse gas (GHG) reductions of 40.4 million metric tons. We also are leveraging Alcoa innovation in our value-add businesses to help solve some of the world's biggest problems in the areas of energy, climate change, and urbanization. Alcoa's significant contributions to a sustainable world can be found in the aluminization of the automotive industry through breakthrough innovations like the automotive bonding technology Alcoa 951, in resilient hurricane-resistant building products, in innovative fan blades that allow engines to run faster and hotter, and in proprietary aerospace alloys that save fuel and reduce GHGs. Alcoa Foundation Responding to the extensive transformational activities in 2014, Alcoa Foundation provided support to communities around the world that were affected by closures, curtailments, divestitures and acquisitions. Focusing on the growing need for technically qualified talent, the Foundation supported Science, Technology, Engineering and Math (STEM) and vocational programs in Alcoa communities worldwide. In the United States, Alcoa Foundation helped draft the \"Employer's Playbook for Building an Apprenticeship Program,\" which will be used by Alcoa plants, other manufacturers and local community colleges to support technical training. The Foundation also collaborated with Discovery Education to provide digital resources for students and teachers to introduce them to manufacturing careers. The site, www.manufactureyourfuture.com, features a virtual tour of Alcoa's innovative Davenport, Iowa facility. Continuing our sustainability focus, the Foundation also provides grants to environmental organizations worldwide. Additionally, validating employees' commitment to the communities in which Alcoa operates, Alcoans donated 110,000 volunteer hours during our annual Month of Service to educational, environmental and social causes. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, 2014 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-3610 ALCOA INC. (Exact name of registrant as specified in its charter) Pennsylvania 25-0317820 (State of incorporation) (I.R.S. Employer Identification No.) 390 Park Avenue, New York, New York 10022-4608 (Address of principal executive offices) (Zip code) Registrant's telephone numbers: Investor Relations------------ (212) 836-2674 Office of the Secretary-------(212) 836-2732 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $1.00 per share New York Stock Exchange th ownership New York Stock Exchange Depositary Shares, each representing a 1/10 interest in a share of 5.375% Class B Mandatory Convertible Preferred Stock, Series 1, par value $1.00 per share Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No . Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No . Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes No . Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of \"large accelerated filer,\" \"accelerated filer,\" and \"smaller reporting company\" in Rule 12b-2 of the Exchange Act. Large accelerated filer [] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No . The aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant, as of the last business day of the registrant's most recently completed second fiscal quarter was approximately $17 billion. As of February 13, 2015, there were 1,222,248,058 shares of common stock, par value $1.00 per share, of the registrant outstanding. Documents incorporated by reference. Part III of this Form 10-K incorporates by reference certain information from the registrant's definitive Proxy Statement for its 2015 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A (Proxy Statement). TABLE OF CONTENTS Page(s) Part I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 27 37 37 37 47 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 51 51 86 87 162 162 162 Part II Item 5. Part III Item 10. Item 11. Item 12. 163 163 Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Item 14. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 163 164 164 Part IV Item 15. Note on Incorporation by Reference In this Form 10-K, selected items of information and data are incorporated by reference to portions of the Proxy Statement. Unless otherwise provided herein, any reference in this report to disclosures in the Proxy Statement shall constitute incorporation by reference of only that specific disclosure into this Form 10-K. PART I Item 1. Business. General Formed in 1888, Alcoa Inc. is a Pennsylvania corporation with its principal office in New York, New York. In this report, unless the context otherwise requires, \"Alcoa\" or the \"Company\" means Alcoa Inc. and all subsidiaries consolidated for the purposes of its financial statements. The Company's Internet address is http://www.alcoa.com. Alcoa makes available free of charge on or through its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission (SEC). The information on the Company's Internet site is not a part of, or incorporated by reference in, this annual report on Form 10-K. The SEC maintains an Internet site that contains these reports at http://www.sec.gov. Forward-Looking Statements This report contains (and oral communications made by Alcoa may contain) statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as \"anticipates,\" \"believes,\" \"estimates,\" \"expects,\" \"forecast,\" \"hopes,\" \"outlook,\" \"projects,\" \"should,\" \"targets,\" \"will,\" \"will likely result,\" or other words of similar meaning. All statements that reflect Alcoa's expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning aluminum industry growth or other trend projections, anticipated financial results or operating performance, and statements about Alcoa's strategies, objectives, goals, targets, outlook, and business and financial prospects. Forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors and are not guarantees of future performance. Actual results, performance or outcomes may differ materially from those expressed in or implied by those forward-looking statements. For a discussion of some of the specific factors that may cause Alcoa's actual results to differ materially from those projected in any forward-looking statements, see the following sections of this report: Part I, Item 1A. (Risk Factors), Part II, Item 7. (Management's Discussion and Analysis of Financial Condition and Results of Operations), including the disclosures under Segment Information and Critical Accounting Policies and Estimates, and Note N and the Derivatives Section of Note X to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data). Alcoa disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Overview Alcoa is a global leader in lightweight metals engineering and manufacturing. Alcoa's innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial applications. Alcoa is also the world leader in the production and management of primary aluminum, fabricated aluminum, and alumina combined, through its active participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Aluminum is a commodity that is traded on the London Metal Exchange (LME) and priced daily. Sales of primary aluminum and alumina represent approximately 40% of Alcoa's revenues. The price of aluminum influences the operating results of Alcoa. 1 Alcoa is a global company operating in 30 countries. Based upon the country where the point of sale occurred, the United States and Europe generated 51% and 27%, respectively, of Alcoa's sales in 2014. In addition, Alcoa has investments and operating activities in, among others, Australia, Brazil, China, Guinea, Iceland, Russia, and Saudi Arabia, all of which present opportunities for substantial growth. Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in these countries. Alcoa's operations consist of four worldwide reportable segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions. Description of the Business Information describing Alcoa's businesses can be found on the indicated pages of this report: Item Page(s) Discussion of Recent Business Developments: Management's Discussion and Analysis of Financial Condition and Results of Operations: OverviewResults of Operations (Earnings Summary) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements: Note D. Restructuring and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note F. Acquisitions and Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note N. Contingencies and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment Information: Business Descriptions, Principal Products, Principal Markets, Methods of Distribution, Seasonality and Dependence Upon Customers: Alumina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Primary Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global Rolled Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Engineered Products and Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Information about Segments and Financial Information about Geographic Areas: Note Q. Segment and Geographic Area Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 105 110 120 62 63 67 68 132 The following tables and related discussion of the Company's Bauxite Interests, Alumina Refining and Primary Aluminum Facilities and Capacities, Global Rolled Products, Engineered Products and Solutions and Corporate Facilities provide additional description of Alcoa's businesses. The Alumina segment primarily consists of a series of affiliated operating entities referred to as Alcoa World Alumina and Chemicals (AWAC). Alcoa owns 60% and Alumina Limited owns 40% of these individual entities. For more information on AWAC, see Exhibit Nos. 10(a) through 10(f)(1) to this report. Bauxite Interests Aluminum is one of the most plentiful elements in the earth's crust and is produced primarily from bauxite, an ore containing aluminum in the form of aluminum oxide, commonly referred to as alumina. Aluminum is made by extracting alumina from bauxite and then removing oxygen from the alumina. Alcoa processes most of the bauxite that it mines into alumina. The Company obtains bauxite from its own resources and from those belonging to the AWAC enterprise, located in the countries listed in the table below, as well as pursuant to both long-term and short-term contracts and mining leases. During 2014, Alcoa consumed 40.8 million metric tons (mt) from AWAC and its own resources and 8.2 million mt from entities in which the Company has an equity interest. In addition, AWAC sold 1.6 million mt of bauxite to third parties. Tons of bauxite are reported as bone dry metric tons (bdmt) unless otherwise stated. See the glossary of bauxite mining related terms at the end of this section. The Company has access to large bauxite deposit areas with mining rights that extend in most cases more than 20 years from the date of this report. For purposes of evaluating the amount of bauxite that will be available to supply as 2 feedstock to its refineries, the Company considers both estimates of bauxite resources as well as calculated bauxite reserves. Bauxite resources represent deposits for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence based on the amount of exploration sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Bauxite reserves represent the economically mineable part of resource deposits, and include diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out to define the reserves, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. Alcoa employs a conventional approach (including additional drilling with successive tightening of the drill grid) with customized techniques to define and characterize its various bauxite deposit types allowing Alcoa to confidently establish the extent of its bauxite resources and their ultimate conversion to reserves. The table below only includes the amount of proven and probable reserves controlled by the Company. While the level of reserves may appear low in relation to annual production levels, they are consistent with historical levels of reserves for the Company's mining locations. Given the Company's extensive bauxite resources, the abundant supply of bauxite globally and the length of the Company's rights to bauxite, it is not cost-effective to invest the significant resources necessary to establish bauxite reserves that reflect the total size of the bauxite resources available to the Company. Rather, bauxite resources are upgraded annually to reserves as needed by the location. Detailed assessments are progressively undertaken within a proposed mining area and mine activity is then planned to achieve a uniform quality in the supply of blended feedstock to the relevant refinery. Alcoa believes its present sources of bauxite on a global basis are sufficient to meet the forecasted requirements of its alumina refining operations for the foreseeable future. Bauxite Resource Development Guidelines Alcoa has developed best practice guidelines for bauxite reserve and resource classification at its operating bauxite mines. Alcoa's reserves are declared in accordance with Alcoa's internal guidelines as administered by the Alcoa Ore Reserves Committee (AORC). The reported ore reserves set forth in the table below are those that Alcoa estimates could be extracted economically with current technology and in current market conditions. Alcoa does not use a price for bauxite, alumina, or aluminum to determine its bauxite reserves. The primary criteria for determining bauxite reserves are the feed specifications required by the customer alumina refinery. In addition to these specifications, a number of modifying factors have been applied to differentiate bauxite reserves from other mineralized material. Alcoa mining locations have annual in-fill drilling programs designed to progressively upgrade the reserve and resource classification of their bauxite. 3 Alcoa Bauxite Interests, Share of Reserves and Annual Production1 Country Project Australia Darling Range Mines ML1SA Brazil Owners' Mining Rights (% Entitlement) Expiration Probable Date of Reserves Mining (million Rights bdmt) Proven Reserves (million (bdmt) Available Reactive Alumina Silica Content Content (%) (%) AvAl2O3 RxSiO2 2014 Annual Production (million bdmt) 43.1 117.8 33.1 0.9 31.4 Poos de Caldas Alcoa Alumnio S.A. (Alumnio)3 (100%) 20204 0.1 1.3 40.0 4.8 0.5 Juruti4 RN101, RN102, RN103, RN104, #34 Suriname 2024 21004 7.8 26.0 47.8 4.2 4.8 20336 2.2 - 39.0 4.7 2.7 Alcoa of Australia Limited (AofA)2 (100%) Alcoa World Alumina Brasil Ltda. (AWA Brasil)2 (100%) Coermotibo and Suriname Onverdacht Aluminum Company, L.L.C. (Suralco)2 (55%) N.V. Alcoa Minerals of Suriname (AMS)5 (45%) Equity interests: Brazil Trombetas Minerao Rio do Norte S.A. (MRN)7 (18.2%) 20464 3.1 12.8 49.4 4.6 3.3 Guinea Bok Compagnie des Bauxites de Guine (CBG)8 (22.95%) 20389 40.1 21.7 TAl2O310 49.5 TSiO210 1.7 3.4 Kingdom of Saudi Arabia Al Ba'itha Ma'aden Bauxite & Alumina Company (25.1%)11 2037 33.8 19.7 TAA12 49.4 TSiO212 8.7 0.2 1 This table shows only the AWAC and/or Alcoa share (proportion) of reserve and annual production tonnage. 2 This entity is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina Limited. 3 Alumnio is owned 100% by Alcoa. 4 Brazilian mineral legislation does not establish the duration of mining concessions. The concession remains in force until the exhaustion of the deposit. The Company estimates that (i) the concessions at Poos de Caldas will last at least until 2020, (ii) the concessions at Trombetas will last until 2046 and (iii) the concessions at Juruti will last until 2100. Depending, however, on actual and future needs, the rate at which the deposits are exploited and government approval is obtained, the concessions may be extended to (or expire at) a later (or an earlier) date. 5 Alcoa World Alumina LLC (AWA LLC) owns 100% of N.V. Alcoa Minerals of Suriname (AMS). Suralco and AMS are parts of the AWAC group of companies which are owned 60% by Alcoa and 40% by Alumina Limited. 6 The mining rights in the Onverdacht and Coermotibo areas where Suralco has active mines extend until 2033. Bauxite within these areas will likely be exhausted in the near future. During 2015, Suralco will be mining from both reserves and resources. Alcoa has decided not to develop a mine at the Nassau Plateau based on current refinery cost and market conditions. 4 7 Alumnio holds an 8.58% total interest, AWA Brasil holds a 4.62% total interest and AWA LLC holds a 5% total interest in MRN. MRN is jointly owned with affiliates of Rio Tinto Alcan Inc., Companhia Brasileira de Alumnio, Companhia Vale do Rio Doce, BHP Billiton Plc (BHP Billiton) and Norsk Hydro. Alumnio, AWA Brasil, and AWA LLC purchase bauxite from MRN under long-term supply contracts. 8 AWA LLC owns a 45% interest in Halco (Mining), Inc. (Halco). Halco owns 100% of Bok Investment Company, a Delaware company, which owns 51% of CBG. The Guinean Government owns 49% of CBG, which has the exclusive right through 2038 to develop and mine bauxite in certain areas within a 10,000 square-mile concession in northwestern Guinea. 9 AWA LLC has a bauxite purchase contract with CBG that expires in 2029. Before that expiration date, AWA LLC expects to negotiate an extension of the contract as CBG will have concession rig