# Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	The	Fiscal	Year	Ended	December	31,	2015

OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	File	Number	1-3610

# ALCOA	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Pennsylvania

(State	of	incorporation)

(I.R.S.	Employer	Identification	No.)

(Address	of	principal	executive	offices)					(Zip	code)

# Registrant's	telephone	numbers:

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

	Title	of	each	class

Common	Stock,	par	value	$1.00	per	share Depositary	Shares,	each	representing	a	1/10 	ownership th

	Name	of	each	exchange	on	which	registered New	York	Stock	Exchange New	York	Stock	Exchange

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	ü.

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	ü	.

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	ü		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	ü		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.	[ü]

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.

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Exchange	Act).	Yes							No	ü.

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	$14	billion.	As	of	February	11,	2016,	there	were	1,314,845,888	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	2016	Annual	Meeting	of	Shareholders	to be	filed	pursuant	to	Regulation	14A	(Proxy	Statement).

| Item	1. | Business | 1 |
| :--- | :--- | :--- |
| Item\t1A. | Risk\tFactors | 28 |
| Item\t1B. | Unresolved\tStaff\tComments | 39 |
| Item\t2. | Properties | 39 |
| Item\t3. | Legal\tProceedings | 39 |
| Item\t4. | Mine\tSafety\tDisclosures | 47 |
| Part\tII |  |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 48 |
| Item\t6. | Selected\tFinancial\tData | 50 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 50 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 88 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 89 |
| Item\t9. | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 169 |
| Item\t9A. | Controls\tand\tProcedures | 169 |
| Item\t9B. | Other\tInformation | 169 |
| Part\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 170 |
| Item\t11. | Executive\tCompensation | 170 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 170 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 170 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 170 |

# 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,"	"could,"	"estimates,"	"expects,"	"forecasts,"	"goal,"	"intends,"	"may,"	"outlook,"	"plans,"	"projects,"	"seeks,"	"sees,"	"should,"	"targets," "will,"	"will	likely	result,"	"would,"	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	global	demand	growth	for	aluminum, supply/demand	balances,	growth	of	the	aerospace,	automotive	and	other	end	markets,	or	other	trend	projections,	anticipated	financial	results	or	operating	performance, statements	about	Alcoa's	strategies,	objectives,	goals,	targets,	outlook,	and	business	and	financial	prospects,	including	statements	regarding	the	separation	transaction; the	future	performance	of	Value-Add	Company	and	Upstream	Company	if	the	separation	is	completed;	the	expected	benefits	of	the	separation;	projections	of	improved profitability,	enhanced	shareholder	value,	competitive	position,	market	share,	growth	opportunities,	credit	ratings,	revenues,	cash	flow	or	other	financial	items	of	the separated	companies;	the	expected	timing	of	completion	of	the	separation;	and	the	expected	qualification	of	the	separation	as	a	tax-free	transaction.

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).	Market	projections	are	subject	to	the	risks	discussed	above	and	other	risks	in	the	market.	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	aerospace,	automotive,	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.

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	55%	and	26%, respectively,	of	Alcoa's	sales	in	2015.	In	addition,	Alcoa	has	investments	and	operating	activities	in,	among	others,	Australia,	Brazil,	China,	Guinea,	Iceland,	Russia, and	Saudi	Arabia.	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	five	worldwide	reportable	segments:	Alumina,	Primary	Metals,	Global	Rolled	Products,	Engineered	Products	and	Solutions,	and Transportation	and	Construction	Solutions.

# Description	of	the	Business

Information	describing	Alcoa's	businesses	can	be	found	on	the	indicated	pages	of	this	report:

| Item | Page(s) |
| :--- | :--- |
| Discussion\tof\tRecent\tBusiness\tDevelopments: |  |
| Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations: |  |
| Overview—Results\tof\tOperations\t(Earnings\tSummary) | 53 |
| Notes\tto\tConsolidated\tFinancial\tStatements: |  |
| Note\tD.\tRestructuring\tand\tOther\tCharges | 108 |
| Note\tF.\tAcquisitions\tand\tDivestitures | 114 |
| Note\tN.\tContingencies\tand\tCommitments | 125 |
| Segment\tInformation: |  |
| Business\tDescriptions,\tPrincipal\tProducts,\tPrincipal\tMarkets,\tMethods\tof\tDistribution,\tSeasonality\tand\tDependence\tUpon\tCustomers: |  |
| Alumina | 63 |
| Primary\tMetals | 65 |
| Global\tRolled\tProducts | 68 |
| Engineered\tProducts\tand\tSolutions | 70 |
| Transportation\tand\tConstruction\tSolutions | 71 |
| Financial\tInformation\tabout\tSegments\tand\tFinancial\tInformation\tabout\tGeographic\tAreas: |  |
| Note\tQ.\tSegment\tand\tGeographic\tArea\tInformation | 137 |

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	Transportation	and	Construction	Solutions	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.

# Proposed	Separation	Transaction

On	September	28,	2015,	Alcoa	announced	that	its	Board	of	Directors	approved	a	plan	to	separate	into	two	independent,	publicly-traded	companies.	One	company	will comprise	the	Alumina	and	Primary	Metals	segments	and	the	other	company	will	comprise	the	Global	Rolled	Products,	Engineered	Products	and	Solutions,	and Transportation	and	Construction	Solutions	segments.	Alcoa	is	targeting	to	complete	the	separation	in	the	second	half	of	2016.	The

transaction	is	subject	to	a	number	of	conditions,	including,	but	not	limited	to,	final	approval	by	Alcoa's	Board	of	Directors,	receipt	of	a	favorable	opinion	of	legal counsel	with	respect	to	the	tax-free	nature	of	the	transaction	for	U.S.	federal	income	tax	purposes,	completed	financing,	and	the	effectiveness	of	a	Form	10	registration statement	to	be	filed	with	the	U.S.	Securities	and	Exchange	Commission.	Upon	completion	of	the	separation,	Alcoa	shareholders	will	own	all	of	the	outstanding	shares of	both	companies.	Alcoa	may,	at	any	time	and	for	any	reason	until	the	proposed	transaction	is	complete,	abandon	the	separation	plan	or	modify	or	change	its	terms.

# Bauxite	Interests

This	Bauxite	Interests	section	explains	the	Company's	interests	in	various	bauxite	mines	throughout	the	world.	Bauxite	is	one	of	the	Company's	basic	raw	materials	and is	also	a	product	sold	into	the	third-party	marketplace.	This	section	provides	mine	description	and	reserve	and	annual	production	figures	in	respect	of	the	Company's interests.

Aluminum	is	one	of	the	most	abundant	elements	in	the	earth's	crust.	Aluminum	metal	is	produced	by	smelting	alumina.	Alumina	is	produced	primarily	from	refining bauxite.	Bauxite	contains	various	aluminum	hydroxide	minerals,	the	most	important	of	which	are	gibbsite	and	boehmite.	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.	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.

During	2015,	mines	operated	by	Alcoa	(owned	by	Alcoa	and	AWAC)	produced	38.3	million	bdmt	and	separately	mines	operated	by	third	parties	(with	Alcoa	and AWAC	equity	interests)	produced	7.0	million	bdmt	on	a	proportional	equity	basis	for	a	total	bauxite	production	of	45.3	million	bdmt.

Based	on	the	terms	of	its	bauxite	supply	contracts,	AWAC	bauxite	purchases	from	Mineração	Rio	do	Norte	S.A.	(MRN)	and	Compagnie	des	Bauxites	de	Guinée	(CBG) differ	from	its	proportional	equity	in	those	mines.	Therefore	during	2015,	AWAC	had	access	to	47.8	million	bdmt	of	production	from	its	portfolio	of	mines.

During	2015,	AWAC	sold	2.0	million	bdmt	of	bauxite	to	third	parties	and	purchased	1.1	million	bdmt	from	third	parties.	The	bauxite	delivered	to	Alcoa	and	AWAC refineries	amounted	to	46.8	million	bdmt	during	2015.

The	Company	is	growing	its	third-party	bauxite	sales	business.	During	the	third	quarter	of	2015,	Alcoa	received	permission	from	the	Government	of	Western	Australia to	export	trial	shipments	from	its	Western	Australia	mines.

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	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	funds	and	efforts	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.

# Alcoa	Bauxite	Interests,	Share	of	Reserves	and	Annual	Production^1

|  |  |  |  |  |  |  |  |  | Available | Reactive | Reactive | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Owners' |  | Expiration Probable | Expiration Probable | Proven | Alumina | Silica | Silica | Annual |
|  |  |  |  | Mining |  | Date\tof | Reserves | Reserves | Content | Content | Content | Production |
|  |  |  |  | Rights\t(% |  | Mining | (million | (million | (%) | (%) | (%) | (million |
| Country | Project | Entitlement) | Entitlement) | Entitlement) | Entitlement) | Rights | bdmt) | (bdmt) | AvAl O^3\n2 | RxSiO^2 | RxSiO^2 | bdmt) |
| Australia | Darling\tRange |  |  |  |  | 2024 | 28.5 | 150.0 | 33.0 | 0.9 | 0.9 | 31.7 |
|  | Mines\tML1SA | \t Alcoa\tof\tAustralia\tLimited\t(AofA) | \t Alcoa\tof\tAustralia\tLimited\t(AofA) | \t Alcoa\tof\tAustralia\tLimited\t(AofA) | 2\t(100%) |  |  |  |  |  |  |  |
| Brazil | Poços\tde\tCaldas | Alcoa\tAlumínio | Alcoa\tAlumínio |  |  | 2020^4 | 0.9 | 1.3 | 39.6 | 4.4 | 4.4 | 0.3 |
|  |  | S.A.\t(Alumínio) | S.A.\t(Alumínio) | 3\t(100%) |  |  |  |  |  |  |  |  |
|  | Juruti^4 | Alcoa\tWorld | Alcoa\tWorld |  |  | 2100^4 | 8.7 | 26.5 | 47.7 | 4.1 | 4.1 | 4.7 |
|  | RN101,\tRN102, | Alumina\tBrasil | Alumina\tBrasil |  |  |  |  |  |  |  |  |  |
|  | RN103,\tRN104, | Ltda.\t(AWA | Ltda.\t(AWA |  |  |  |  |  |  |  |  |  |
|  | #34 | Brasil) | 2\t(100%) |  |  |  |  |  |  |  |  |  |
| Suriname | Coermotibo\tand | Suriname | Suriname |  |  | 2033^6 | 0.0 | 0.0 | N/A | N/A | N/A | 1.6 |
|  | Onverdacht | Aluminum | Aluminum |  |  |  |  |  |  |  |  |  |
|  |  | Company,\tL.L.C.\t(Suralco) | Company,\tL.L.C.\t(Suralco) | 2\t(55%) |  |  |  |  |  |  |  |  |
|  |  | N.V.\tAlcoa | N.V.\tAlcoa |  |  |  |  |  |  |  |  |  |
|  |  | Minerals\tof | Minerals\tof |  |  |  |  |  |  |  |  |  |
|  |  | Suriname\t(AMS) | Suriname\t(AMS) | 5\t(45%) |  |  |  |  |  |  |  |  |
| Equity\tinterests: |  |  |  |  |  |  |  |  |  |  |  |  |
| Brazil | Trombetas | Mineração\tRio\tdo\tNorte\tS.A.\t(MRN)^7 | Mineração\tRio\tdo\tNorte\tS.A.\t(MRN)^7 | Mineração\tRio\tdo\tNorte\tS.A.\t(MRN)^7 | Mineração\tRio\tdo\tNorte\tS.A.\t(MRN)^7 | 2046^4 | 3.7 | 10.4 | 49.5 | 4.5 | 4.5 | 3.0 |
|  |  | (18.2%) |  |  |  |  |  |  |  |  |  |  |
| Guinea | Boké | Compagnie\tdes\tBauxites\tde | Compagnie\tdes\tBauxites\tde |  |  | 2038^9 | 59.5 | 23.2 | TAl O \t^10 |  |  |  |
|  |  |  |  |  |  |  |  |  | 2\n3 | TSiO^2^10 | TSiO^2^10 | 3.4 |
|  |  | Guinée\t(CBG)^8 | Guinée\t(CBG)^8 |  |  |  |  |  | 48.5 | 1.7 | 1.7 |  |
|  |  | (22.95%) |  |  |  |  |  |  |  |  |  |  |
| Kingdom\tof | Al\tBa'itha | Ma'aden\tBauxite | Ma'aden\tBauxite |  |  | 2037 | 33.8 | 19.3 | TAA^12 | TSiO \t^12 | 2 | 0.6 |
| Saudi\tArabia |  | &\tAlumina\tCompany | &\tAlumina\tCompany |  |  |  |  |  | 49.4 | 8.6 | 8.6 |  |

This	table	shows	only	the	AWAC	and/or	Alcoa	share	(proportion)	of	reserve	and	annual	production	tonnage. 1

This	entity	is	part	of	the	AWAC	group	of	companies	and	is	owned	60%	by	Alcoa	and	40%	by	Alumina	Limited. 2

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	Poços	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. 4

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. 5

At	the	end	of	2015,	AWAC's	bauxite	mineral	and	mining	rights	remained	valid	until	2033.	The	AWAC	mines	in	Suriname	were	curtailed	in	the	fourth	quarter	of 2015.	There	are	no	plans	for	AWAC	to	restart	these	mines	and	there	are	no	reserves	to	declare. 6

Alumínio	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	Alumínio,	Companhia	Vale	do	Rio	Doce,	BHP	Billiton	Plc	(BHP	Billiton)	and	Norsk	Hydro. Alumínio,	AWA	Brasil,	and	AWA	LLC	purchase	bauxite	from	MRN	under	long-term	supply	contracts. 7

AWA	LLC	owns	a	45%	interest	in	Halco	(Mining),	Inc.	(Halco).	Halco	owns	100%	of	Boké	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	an approximately	2939	square	kilometer	concession	in	northwestern	Guinea. 8

AWA	LLC	and	Alũmina	Española,	S.A.	have	bauxite	purchase	contracts	with	CBG	that	expire	in	2033.	Before	that	expiration	date,	AWA	LLC	and	Alũmina Española,	S.A.	expect	to	negotiate	extensions	of	their	contracts	as	CBG	will	have	concession	rights	until	2038.	The	CBG	concession	can	be	renewed	beyond	2038 by	agreement	of	the	Government	of	Guinea	and	CBG	should	more	time	be	required	to	commercialize	the	remaining	economic	bauxite	within	the	concession. 9

Guinea—Boké:	CBG	prices	bauxite	and	plans	the	mine	based	on	the	bauxite	qualities	of	total	alumina	(TAlO )	and	total	silica	(TSiO). 10

Ma'aden	Bauxite	&	Alumina	Company	is	a	joint	venture	owned	by	Saudi	Arabian	Mining	Company	(Ma'aden)	(74.9%)	and	AWA	Saudi	Limited	(25.1%).	AWA Saudi	Limited	is	part	of	the	AWAC	group	of	companies	and	is	owned	60%	by	Alcoa	and	40%	by	Alumina	Limited. 11

Kingdom	of	Saudi	Arabia—Al	Ba'itha:	Bauxite	reserves	and	mine	plans	are	based	on	the	bauxite	qualities	of	total	available	alumina	(TAA)	and	total	silica (TSiO ). 12

# Qualifying	statements	relating	to	the	table	above:

Australia—Darling	Range	Mines:	Huntly	and	Willowdale	are	the	two	AWAC	active	mines	in	the	Darling	Range	of	Western	Australia.	The	mineral	lease	issued	by	the State	of	Western	Australia	to	AofA	is	known	as	ML1SA	and	its	term	extends	to	2024.	The	lease	can	be	renewed	for	an	additional	twenty-one	year	period	to	2045.	The declared	reserves	are	as	for	December	31,	2015.	The	amount	of	reserves	reflects	the	total	AWAC	share.	Additional	resources	are	routinely	upgraded	by	additional exploration	and	development	drilling	to	reserve	status.	The	Huntly	and	Willowdale	mines	supply	bauxite	to	three	local	AWAC	alumina	refineries.

Brazil—Poços	de	Caldas:	Declared	reserves	are	as	for	December	31,	2015.	Tonnage	is	total	Alcoa	share.	Additional	resources	are	being	upgraded	to	reserves	as needed.

Brazil—Juruti	RN101,	RN102,	RN103,	RN104,	#34:	Declared	reserves	are	as	for	December	31,	2015.	All	reserves	are	on	Capiranga	Plateau.	Declared	reserves	are total	AWAC	share.	Declared	reserve	tonnages	and	the	annual	production	tonnage	are	washed	product	tonnages.	The	Juruti	mine's	operating	license	is	periodically renewed.

Suriname—Suralco:	The	AWAC	mines	in	Suriname	were	curtailed	in	the	fourth	quarter	of	2015.	AWAC	has	no	plans	to	restart	these	mines	and	there	are	no	reserves	to declare.

Brazil—Trombetas-MRN:	Declared	reserves	have	been	estimated	by	MRN	as	for	December	31,	2015.	The	CP	Report	for	December	31,	2015	reserves	is	expected	to be	issued	on	or	about	February	29,	2016.	Declared	and	annual	production	tonnages	reflect	the	total	for	Alumínio	and	AWAC	shares	(18.2%).	Declared	tonnages	are washed	product	tonnages.

Guinea—Boké-CBG:	Declared	reserves	are	based	on	export	quality	bauxite	and	have	been	estimated	by	CBG	as	for	December	31,	2015.	The	CP	Report	for December	31,	2015	reserves	is	expected	to	be	issued	in	March	2016.	Declared	tonnages	reflect	only	the	AWAC	share	of	CBG's	reserves.	Annual	production	tonnage	is reported	based	on	AWAC's	22.95%	share.	Declared	reserves	quality	is	reported	based	on	total	alumina	(TAl 2	O )	and	total	silica	(TSiO)	because	CBG	export	bauxite	is sold	on	this	basis.	Additional	resources	are	being	routinely	drilled	and	modeled	to	upgrade	to	reserves	as	needed.

Kingdom	of	Saudi	Arabia—Al	Ba'itha:	The	Al	Ba'itha	Mine	began	production	during	2014	and	production	was	increased	in	2015.	Declared	reserves	are	as	for December	31,	2015.	The	proven	reserves	have	been	decremented	for	2015	mine	production.	The	declared	reserves	are	located	in	the	South	Zone	of	the	Az	Zabirah Bauxite	Deposit.	The	reserve	tonnage	in	this	declaration	is	AWAC	share	only	(25.1%).

The	following	table	provides	additional	information	regarding	the	Company's	bauxite	mines:

N.V.	Alcoa	Minerals of	Suriname. Expires	in	2033. some	places,	the bauxite	overlies Precambrian granitic	and

gneissic	rocks which	have	been deeply	weathered to	saprolite. Bauxitization likely	occurred during	the	middle to	late	Eocene Epoch.

|  |  |  | Title, |  | Mine |  | Facilities, |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Means\tof |  | Lease\tor |  | Mineralization |  | Use\t& |
| Mine\t&\tLocation | Access | Operator | Options | History | Style | Power\tSource | Condition |
| Brazil—MRN.\tClosest\ttown\tis | The\tmine\tand\tport | MRN | Mining\trights\tand | Mining\tbegan\tin | Open-cut\tmines. | MRN\tgenerates | Ore\tmined\tfrom\tseveral\tplateaus\tis |
| Trombetas\tin\tthe\tState\tof\tPará, | areas\tare |  | licenses\tfrom\tthe | 1979. | Bauxite\tderived | its\town | crushed\tand\ttransported\tto\tthe |
| Brazil. | connected\tby |  | Government\tof | Major\texpansion\tin | from\tweathering | electricity\tfrom | washing\tplant\tby\tlong-distance |
|  | sealed\troad\tand |  | Brazil. | 2003. | during\tthe\tTertiary | fuel\toil. | conveyors. |
|  | company\towned |  | Concession\trights |  | of\tCretaceous\tfine |  | The\twashing\tplant\tis\tlocated\tin\tthe |
|  | rail. |  | expire\tin\t2046. |  | to\tmedium\tgrained |  | mining\tzone. |
|  | Washed\tore\tis |  |  |  | feldspathic |  | Washed\tore\tis\ttransported\tto\tthe\tport |
|  | transported\tto |  |  |  | sandstones. |  | area\tby\tcompany-owned\tand |
|  | Porto\tTrombetas |  |  |  | The\tdeposits\tare |  | operated\trail. |
|  | by\trail. |  |  |  | covered\tby\tthe |  | At\tPorto\tTrombetas\tthe\tore\tis\tloaded |
|  | Trombetas\tis |  |  |  | Belterra\tclays. |  | onto\tcustomer\tships\tberthed\tin\tthe |
|  | accessed\tby\triver |  |  |  |  |  | Trombetas\tRiver.\tSome\tore\tis\tdried |
|  | and\tby\tair\tat\tthe |  |  |  |  |  | and\tthe\tdrying\tfacilities\tare\tlocated |
|  | airport. |  |  |  |  |  | in\tthe\tport\tarea. |
|  |  |  |  |  |  |  | Mine\tplanning\tand\tservices\tand |
|  |  |  |  |  |  |  | mining\tequipment\tworkshops\tare |
|  |  |  |  |  |  |  | located\tin\tthe\tmine\tzone. |
|  |  |  |  |  |  |  | The\tmain\tadministrative,\trail\tand |
|  |  |  |  |  |  |  | port\tcontrol\toffices\tand\tvarious |
|  |  |  |  |  |  |  | workshops\tare\tlocated\tin\tthe\tport |
|  |  |  |  |  |  |  | area. |
|  |  |  |  |  |  |  | MRN's\tmain\thousing\tfacilities,\t"the |
|  |  |  |  |  |  |  | city",\tare\tlocated\tnear\tthe\tport. |
|  |  |  |  |  |  |  | The\tmines,\tport\tand\tall\tfacilities\tare |
|  |  |  |  |  |  |  | operating. |
| Guinea—CBG. | The\tmine\tand | CBG | CBG\tLease\texpires\tin | Construction\tbegan | Open-cut\tmines. | The\tcompany | Mine\toffices,\tworkshops,\tpower |
| Closest\ttown\tto\tthe | port\tareas\tare |  | 2038.\tThe\tlease\tis | in\t1969. | The\tbauxite\tdeposits | generates\tits | generation\tand\twater\tsupply\tfor\tthe |
| mine\tis\tSangaredi. | connected\tby |  | renewable\tin\t25-year | First\texport\tore | within\tthe\tCBG | own\telectricity | mine\tand\tcompany\tmine\tcity\tare |
| Closest\ttown\tto\tthe | sealed\troad\tand |  | increments.\tCBG's | shipment\twas\tin | lease\tare\tof\ttwo | from\tfuel\toil\tat | located\tat\tSangaredi. |
| port\tis\tKamsar.\tThe\tCBG\tLease\tis | company-operated |  | rights\tare\tspecified | 1973. | general\ttypes. | both\tKamsar | The\tmain\tadministrative\toffices,\tport |
| located\twithin\tthe | rail.\tOre\tis |  | within\tthe\tBasic |  | TYPE\t1:\tIn-situ | and\tSangaredi. | control,\trailroad\tcontrol,\tworkshops, |
| Boké,\tTelimele\tand | transported\tto\tthe |  | Agreement\tand |  | laterization\tof |  | power\tgeneration\tand\twater\tsupply |
| Gaoual | port\tat\tKamsar\tby |  | Amendment\t1\tto\tthe |  | Ordovician\tand |  | are\tlocated\tin\tKamsar.\tOre\tis |
| administrative | rail.\tThere\tare\tair |  | Basic\tAgreement |  | Devonian\tplateau |  | crushed,\tdried\tand\texported\tfrom |
| regions. | strips\tnear\tboth\tthe |  | with\tthe\tGovernment |  | sediments\tlocally |  | Kamsar.\tCBG\thas\tcompany\tcities |
|  | mine\tand\tport. |  | of\tGuinea. |  |  |  | within\tboth\tKamsar\tand\tSangaredi. |
|  | These\tare\tnot |  |  |  | intruded\tby\tdolerite |  |  |
|  | operated\tby\tthe |  |  |  | dikes\tand\tsills. |  | The\tmines,\trailroad,\tdriers,\tport\tand |
|  | company. |  |  |  | TYPE\t2:\tSangaredi |  | other\tfacilities\tare\toperating. |
|  |  |  |  |  | type\tdeposits\tare |  |  |
|  |  |  |  |  | derived\tfrom\tclastic |  |  |
|  |  |  |  |  | deposition\tof |  |  |
|  |  |  |  |  | material\teroded |  |  |
|  |  |  |  |  | from\tthe\tType\t1 |  |  |
|  |  |  |  |  | laterite\tdeposits\tand |  |  |
|  |  |  |  |  | possibly\tsome\tof\tthe |  |  |
|  |  |  |  |  | proliths\tfrom\tthe |  |  |
|  |  |  |  |  | TYPE\t1\tplateaus |  |  |
|  |  |  |  |  | deposits. |  |  |
| Kingdom\tof\tSaudi | The\tmine\tand | Ma'aden | The\tcurrent\tmining | The\tinitial | Open-cut\tmine. | The\tcompany | The\tmine\tincludes\tfixed\tplants\tfor |
| Arabia—Al\tBa'itha | refinery\tare | Bauxite\t& | lease\twill\texpire\tin | discovery\tand | Bauxite\toccurs\tas\ta | generates | crushing\tand\ttrain\tloading; |
| Mine.\tQibah\tis\tthe | connected\tby\troad | Alumina | 2037. | delineation\tof | paleolaterite\tprofile | electricity\tat | workshops\tand\tancillary\tservices; |
| closest\tregional | and\trail.\tOre\tis | Company |  | bauxite\tresources | developed\tat\tan | the\tmine\tsite | power\tplant;\tand\twater\tsupply. |
| centre\tto\tthe\tmine,\tlocated\tin\tthe | transported\tto\tthe |  |  | was\tcarried\tout | angular | from\tfuel\toil. | There\tis\ta\tcompany\tvillage\twith |
| Qassim\tprovince. | refinery\tat\tRas |  |  | between\t1979\tand | unconformity |  | supporting\tfacilities.\tMining |
|  | Al\tKhair\tby\trail. |  |  | 1984. | between\tunderlying |  | operations\tcommenced\tin\t2014. |
|  |  |  |  | The\tsouthern\tzone | late\tTriassic\tto\tearly |  | Mine\tconstruction\twas\tcompleted\tin |
|  |  |  |  | of\tthe\tAz\tZabirah | Cretaceous |  | the\tsecond\tquarter\tof\t2015\tand\tthe |
|  |  |  |  | deposit\twas | sediments\t(parent |  | mining\toperations\tcontinued\tat |
|  |  |  |  | granted\tto | rock\tsequence |  | planned\tlevels. |
|  |  |  |  | Ma'aden\tin\t1999. | Biyadh\tFormation) |  |  |

# Kingdom	of	Saudi	Arabia	Joint	Venture

In	December	2009,	Alcoa	and	Saudi	Arabian	Mining	Company	(Ma'aden)	entered	into	a	joint	venture	to	develop	a	fully	integrated	aluminum	complex	in	the	Kingdom of	Saudi	Arabia.	In	its	initial	phases,	the	complex	includes	a	bauxite	mine	with	an	initial	capacity	of	4	million	bdmt	per	year;	an	alumina	refinery	with	an	initial	capacity of	1.8	million	mt	per	year	(mtpy);	an	aluminum	smelter	with	an	initial	capacity	of	ingot,	slab	and	billet	of	740,000	mtpy;	and	a	rolling	mill	with	initial	capacity	of 380,000	mtpy.	The	mill	will	produce	a	variety	of	sheet	products.

The	refinery,	smelter	and	rolling	mill	are	located	within	the	Ras	Al	Khair	industrial	zone	on	the	east	coast	of	the	Kingdom	of	Saudi	Arabia.

The	smelter	and	refinery	are	fully	operational.	The	mine	construction	was	completed	in	the	second	quarter	of	2015	and	ramp	up	of	operations	is	proceeding	as	planned.

Total	capital	investment	is	expected	to	be	approximately	$10.8	billion	(SAR	40.5	billion).	Ma'aden	owns	a	74.9%	interest	in	the	joint	venture.	Alcoa	owns	a	25.1% interest	in	the	smelter	and	rolling	mill,	with	AWAC	holding	a	25.1%	interest	in	the	mine	and	refinery.	For	additional	information	regarding	the	joint	venture,	see	the Equity	Investments	section	of	Note	I	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).

# Glossary	of	Bauxite	Mining	Related	Terms

# Alumina	Refining	Facilities	and	Capacity

Alcoa	is	the	world's	leading	producer	of	alumina.	Alcoa's	alumina	refining	facilities	and	its	worldwide	alumina	capacity	are	shown	in	the	following	table:

# Alcoa	Worldwide	Alumina	Refining	Capacity

|  |  |  |  |  |  |  | Alcoa |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  | Nameplate | Consolidated |
|  |  |  |  |  | Owners | Capacity^1 | Capacity^2 |
| Country | Facility |  |  |  | (%\tof\tOwnership) | (000\tMTPY) | (000\tMTPY) |
| Australia | Kwinana | AofA \t(100%) |  |  |  | 2,190 | 2,190 |
|  | Pinjarra | AofA\t(100%) |  |  |  | 4,234 | 4,234 |
|  | Wagerup | AofA\t(100%) |  |  |  | 2,555 | 2,555 |
| Brazil | Poços\tde\tCaldas | Alumínio | 4\t(100%) |  |  | 390^5 | 390 |
|  | São\tLuís\t(Alumar) | AWA\tBrasil | 3\t(39%) |  |  |  |  |
|  |  | Rio\tTinto\tAlcan\tInc. | Rio\tTinto\tAlcan\tInc. | 6\t(10%) |  |  |  |
|  |  | Alumínio\t(15%) | Alumínio\t(15%) |  |  |  |  |
|  |  | BHP\tBilliton \t(36%) | BHP\tBilliton \t(36%) |  |  | 3,500 | 1,890 |

|  |  |  |  | Nameplate | Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Owners | Capacity^1 | Capacity^2 |
| Country | Facility |  | (%\tof\tOwnership) | (000\tMTPY) | (000\tMTPY) |
| Spain | San\tCiprián | Alúmina\tEspañola,\tS.A. | 3\t(100%) | 1,500\n7 | 1,500 |
| Suriname | Suralco | Suralco | 3\t(55%)\tAMS \t(45%)\n8 | 2,207\n9 | 2,207 |
| United\tStates | Point\tComfort,\tTX | AWA\tLLC \t(100%)\n3 |  | 2,305^10 | 2,305 |
| TOTAL |  |  |  | 18,881 | 17,271 |

Nameplate	Capacity	is	an	estimate	based	on	design	capacity	and	normal	operating	efficiencies	and	does	not	necessarily	represent	maximum	possible	production. 1

The	figures	in	this	column	reflect	Alcoa's	share	of	production	from	these	facilities.	For	facilities	wholly-owned	by	AWAC	entities,	Alcoa	takes	100%	of	the production. 2

As	a	result	of	the	decision	to	fully	curtail	the	Poços	de	Caldas	smelter,	management	initiated	a	reduction	in	alumina	production	at	this	refinery.	The	capacity	that is	operating	at	this	refinery	is	producing	at	an	approximately	45%	output	level. 5

The	named	company	or	an	affiliate	holds	this	interest. 6

The	capacity	that	is	operating	at	this	refinery	is	producing	at	an	approximately	95%	output	level. 7

AWA	LLC	owns	100%	of	N.V.	Alcoa	Minerals	of	Suriname	(AMS).	AWA	LLC	is	part	of	the	AWAC	group	of	companies	and	is	owned	60%	by	Alcoa	and	40% by	Alumina	Limited. 8

The	Suralco	alumina	refinery	now	has	been	fully	curtailed	(see	below). 9

The	Point	Comfort	alumina	refinery	will	be	fully	curtailed	(see	below). 10

As	of	December	31,	2015,	Alcoa	had	approximately	2,801,000	mtpy	of	idle	capacity	against	total	Alcoa	Consolidated	Capacity	of	17,271,000	mtpy.

In	March	2015,	the	Company	initiated	a	12-month	review	of	2,800,000	mtpy	in	refining	capacity	for	possible	curtailment	(partial	or	full),	permanent	closure	or divestiture.	This	review	is	part	of	the	Company's	target	to	lower	Alcoa's	refining	operations	on	the	global	alumina	cost	curve	to	the	21st	percentile	(currently	23^rd )	by	the end	of	2016.	As	part	of	this	review,	in	March	2015,	the	Company	decided	to	curtail	443,000	mtpy	(one	digester)	of	capacity	at	the	Suralco	refinery;	this	action	was completed	by	the	end	of	April	2015.

Additionally,	in	September,	the	Company	decided	to	curtail	the	remaining	capacity	(887,000	mtpy—two	digesters)	at	Suralco;	the	Company	completed	it	by	the	end	of November	2015	(877,000	mtpy	of	capacity	at	Suralco	had	previously	been	curtailed).	The	Company	is	currently	in	discussions	with	the	Suriname	government	to determine	the	best	long-term	solution	for	Suralco	due	to	limited	bauxite	reserves	and	the	absence	of	a	long-term	energy	alternative.

During	2015,	Alcoa	undertook	curtailment	of	the	remaining	2,010,000	mtpy	of	capacity	at	the	Point	Comfort,	Texas	refinery	(295,000	mtpy	had	previously	been curtailed).	This	action	is	expected	to	be	completed	by	the	end	of	June	2016	(375,000	mtpy	was	completed	by	the	end	of	December	2015).

As	noted	above,	Alcoa	and	Ma'aden	have	developed	an	alumina	refinery	in	the	Kingdom	of	Saudi	Arabia.	Initial	capacity	of	the	refinery	is	1.8	million	mtpy.	The refinery	produced	approximately	1.0	million	mt	in	2015.	For	additional	information	regarding	the	joint	venture,	see	the	Equity	Investments	section	of	Note	I	to	the Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).

In	November	2005,	AWA	LLC	and	Rio	Tinto	Alcan	Inc.	(RTA)	signed	a	Basic	Agreement	with	the	Government	of	Guinea	that	sets	forth	the	framework	for development	of	a	1.5	million	mtpy	alumina	refinery	in	Guinea.	In	2006,	the

Basic	Agreement	was	approved	by	the	Guinean	National	Assembly	and	was	promulgated	into	law.	The	Basic	Agreement	was	originally	set	to	expire	in	November	2008, but	was	extended	several	times,	most	recently	to	November	2015.	Alcoa	completed	a	pre-feasibility	study	in	2008,	further	pre-feasibility	work	in	2012,	and	concluded its	evaluation	of	the	project	in	2015.	AWA	LLC	and	RTA	agreed	that	current	market	conditions	are	unable	to	support	the	development	of	the	project	as	originally conceived	and	the	Basic	Agreement	expired	in	November	2015.

In	September	2006,	Alcoa	received	environmental	approval	from	the	Government	of	Western	Australia	for	expansion	of	the	Wagerup	alumina	refinery	to	a	maximum capacity	of	4.7	million	mtpy,	a	potential	increase	of	over	2	million	mtpy.	This	approval	had	a	term	of	five	years	and	included	environmental	conditions	that	must	be satisfied	before	Alcoa	could	seek	construction	approval	for	the	project.	The	project	was	suspended	in	November	2008	due	to	global	economic	conditions	and	the unavailability	of	a	secure	long-term	energy	supply	in	Western	Australia.	These	constraints	continue	and	as	such	the	project	remains	under	suspension.	In	May	2012,	the Government	of	Western	Australia	granted	Alcoa	a	5	year	extension	of	the	original	environmental	approval.	In	2015,	Alcoa	applied	for	a	further	five	year	extension.	The extension	has	not	yet	been	granted	and	there	has	been	no	additional	work	done	on	the	project.

In	2015,	Alcoa	and	Vietnam	National	Coal-Minerals	Industries	Group	began	discussions	regarding	potential	cooperation	to	improve	the	operational	and	technical performance	of	the	Tan	Rai	Refinery	which	started	up	in	2014.	In	January	2016,	the	parties	entered	into	a	non-disclosure	agreement	to	support	and	further	the development	of	this	potential	cooperation.	The	parties	continue	to	discuss	a	Memorandum	of	Understanding	(MOU).

# Primary	Aluminum	Facilities	and	Capacity

The	Company's	primary	aluminum	smelters	and	their	respective	capacities	are	shown	in	the	following	table:

# Alcoa	Worldwide	Smelting	Capacity

|  |  |  | Nameplate |  | Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Owners | Capacity^1 |  | Capacity^2 |
| Country | Facility | (%\tOf\tOwnership) | (000\tMTPY) |  | (000\tMTPY) |
| Australia | Portland | AofA\t(55%) |  |  |  |
|  |  | CITIC \t(22.5%) |  |  |  |
|  |  | Marubeni\n3\t(22.5%) | 358 |  | 197^4,5 |
| Brazil | São\tLuís\t(Alumar) | Alumínio\t(60%) |  |  |  |
|  |  | BHP\tBilliton \t(40%) | 447 |  | 268^6 |
| Canada | Baie\tComeau,\tQuébec | Alcoa\t(100%) | 280 |  | 280 |
|  | Bécancour,\tQuébec | Alcoa\t(74.95%) |  |  |  |
|  |  | Rio\tTinto\tAlcan\tInc.\n\t7\t(25.05%) | 413 |  | 310 |
|  | Deschambault,\tQuébec | Alcoa\t(100%) | 260 |  | 260 |
| Iceland | Fjarðaál | Alcoa\t(100%) | 344 |  | 344 |
| Norway | Lista | Alcoa\t(100%) | 94 | 94 | 94 |
|  | Mosjøen | Alcoa\t(100%) | 188 |  | 188 |
| Spain | Avilés | Alcoa\t(100%) | 93 | 8 | 93 |
|  | La\tCoruña | Alcoa\t(100%) | 87 | 87 | 87 |
|  | San\tCiprián | Alcoa\t(100%) | 228 |  | 228 |
| United\tStates | Evansville,\tIN\t(Warrick) | Alcoa\t(100%) | 269^9 |  | 269 |
|  | Massena\tWest,\tNY | Alcoa\t(100%) | 130 |  | 130 |
|  | Rockdale,\tTX | Alcoa\t(100%) | 191^10 |  | 191 |
|  | Ferndale,\tWA\t(Intalco) | Alcoa\t(100%) | 279^11 |  | 279 |
|  | Wenatchee,\tWA | Alcoa\t(100%) | 184^12 |  | 184 |
| TOTAL |  |  | 3,845 |  | 3,401 |

The	figures	in	this	column	reflect	Alcoa's	share	of	production	from	these	facilities. 2

This	figure	includes	the	minority	interest	of	Alumina	Limited	in	the	Portland	facility,	which	is	owned	by	AofA.	From	this	facility,	Alcoa	takes	100%	of	the production	allocated	to	AofA. 4

The	Portland	smelter	has	approximately	30,000	mtpy	of	idle	capacity. 5

The	Alumar	smelter	has	been	fully	curtailed	since	April	2015	(see	below). 6

Owned	through	Rio	Tinto	Alcan	Inc.'s	interest	in	Pechiney	Reynolds	Québec,	Inc.,	which	is	owned	by	Rio	Tinto	Alcan	Inc.	and	Alcoa. 7

The	Avilés	and	La	Coruña	smelters	have	approximately	56,000	mtpy	of	idle	capacity	combined. 8

In	January	2016,	Alcoa	announced	that	it	will	permanently	close	the	Warrick	smelter	by	the	end	of	the	first	quarter	of	2016	(see	below). 9

The	Rockdale	smelter	has	been	fully	curtailed	since	the	end	of	2008. 10

The	Intalco	smelter	has	had	approximately	49,000	mtpy	of	idle	capacity.	In	November	2015,	the	Company	announced	that	it	would	idle	the	remaining	230,000 mtpy	capacity	by	the	end	of	the	first	quarter	of	2016.	In	January	2016,	Alcoa	announced	that	it	will	delay	this	further	curtailment	of	the	smelter	until	the	end	of	the second	quarter	of	2016	(see	below). 11

The	Wenatchee	smelter	has	had	approximately	41,000	mtpy	of	idle	capacity.	The	Company	idled	the	remaining	143,000	mtpy	of	capacity	by	the	end	of	December 2015. 12

As	of	December	31,	2015,	Alcoa	had	approximately	778,000	mtpy	of	idle	capacity	against	total	Alcoa	Consolidated	Capacity	of	3,401,000	mtpy.

In	March	2015,	the	Company	initiated	a	12-month	review	of	500,000	mtpy	of	smelting	capacity	for	possible	curtailment	(partial	or	full),	permanent	closure	or divestiture.	This	review	is	part	of	the	Company's	target	to	lower	Alcoa's	smelting	operations	on	the	global	aluminum	cost	curve	to	the	38th	percentile	(currently	43 )	by 2016.	As	part	of	this	review,	in	March	2015,	Alcoa	decided	to	curtail	the	remaining	capacity	(74,000	mtpy)	at	the	Alumar	smelter;	this	action	was	completed	in	April 2015. rd

Separate	from	the	smelting	capacity	review	described	above,	in	June	2015,	Alcoa	decided	to	permanently	close	the	Poços	de	Caldas	smelter	(96,000	mtpy)	in	Brazil effective	immediately.	The	Poços	de	Caldas	smelter	had	been	temporarily	idle	since	May	2014	due	to	challenging	global	market	conditions	for	primary	aluminum	and higher	operating	costs,	which	made	the	smelter	uncompetitive.	The	decision	to	permanently	close	the	Poços	de	Caldas	smelter	was	based	on	the	fact	that	these underlying	conditions	had	not	improved.	As	a	result,	the	Poços	de	Caldas	smelter	was	removed	from	the	table	above.

In	November	2015,	Alcoa	announced	that	it	would	curtail	503,000	mtpy	of	aluminum	smelting	capacity	amid	prevailing	market	conditions	by	idling	capacity	at	the Massena	West	(130,000	mtpy),	Intalco	(230,000	mtpy)	and	Wenatchee	(143,000	mtpy)	smelters.	The	curtailment	of	the	remaining	capacity	at	Wenatchee	was	completed by	the	end	of	December	2015	and	the	curtailment	of	the	remaining	capacity	at	Intalco	was	expected	to	be	completed	by	the	end	of	March	2016.	The	casthouses	at Massena	West	and	Intalco	will	continue	to	operate.	Later	in	November	2015,	the	Company	announced	that	it	had	entered	into	a	three-and-a-half	year	agreement	with New	York	State	to	increase	the	competitiveness	of	the	Massena	West	smelter.	As	a	result,	the	Massena	West	smelter	will	continue	to	operate.

In	January	2016,	the	Company	announced	it	will	delay	the	curtailment	(230,000	mtpy)	of	its	Intalco	smelter	in	Ferndale,	Washington	until	the	end	of	the	second	quarter of	2016.	Recent	decreases	in	energy	and	raw	material	costs	have	made	it	more	cost	effective	in	the	near	term	to	keep	the	smelter	operating.

In	January	2016,	Alcoa	announced	that	it	will	permanently	close	its	269,000	mtpy	Warrick	Operations	smelter	in	Evansville,	Indiana	by	the	end	of	the	first	quarter	of 2016.	The	rolling	mill	and	power	plant	at	Warrick	Operations	will	continue	to	operate.

As	noted	above,	Alcoa	and	Ma'aden	have	developed	an	aluminum	smelter	in	the	Kingdom	of	Saudi	Arabia.	The	smelter	has	an	initial	nameplate	capacity	of	740,000 mtpy.	Since	mid-2014,	the	smelter	has	been	operating	at	full	capacity	and	it	produced	757,833	mt	in	2015.

In	2014,	Alcoa	and	the	Brunei	Economic	Development	Board	agreed	to	extend	for	four	years	an	existing	MOU	to	enable	more	detailed	studies	into	the	feasibility	of establishing	a	modern,	gas-powered	aluminum	smelter	in	Brunei	Darussalam	to	follow	a	period	of	strategic	assessment	of	global	market	conditions.

In	2007,	Alcoa	and	the	Greenland	Government	entered	into	an	MOU	regarding	cooperation	on	a	feasibility	study	for	an	aluminum	smelter	with	a	360,000	mtpy	capacity in	Greenland.	The	MOU	also	encompasses	a	hydroelectric	power	system	and	related	infrastructure	improvements,	including	a	port.	Due	to	unfavorable	global	market conditions	for	primary	aluminum,	Alcoa	and	the	Greenland	Government	entered	into	negotiations	in	2015	to	address,	among	other	subjects,	formalizing	an	extension	of estimated	dates	for	Alcoa	to	achieve	certain	of	its	undertakings	under	the	MOU,	and	providing	the	Greenland	Government	latitude	to	develop	hydro	resources throughout	Greenland.	Negotiations	between	the	parties	are	anticipated	to	complete	in	2016.

# Global	Rolled	Products

The	Company's	Global	Rolled	Products	segment	represents	Alcoa's	midstream	operations.	For	a	discussion	of	this	segment's	business,	see	"Results	of	Operations— Segment	Information"	in	Part	II,	Item	7.	(Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	Q	to	the	Consolidated Financial	Statements—Segment	and	Geographic	Area	Information	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).

In	March	2015,	Alcoa	sold	its	Russia-based	aluminum	mill	in	Belaya	Kalitva,	Alcoa	Metallurg	Rus,	to	a	subsidiary	of	Stupino	Titanium	Co.

In	September	2015,	Alcoa	announced	the	completion	of	an	expansion	at	its	Tennessee	facility	dedicated	to	supplying	aluminum	sheet	to	the	automotive	industry.	The Tennessee	plant	will	provide	aluminum	sheet	to	automakers	such	as	Ford	Motor	Company,	Fiat	Chrysler	Automobiles	and	General	Motors.	The	expansion	created approximately	200	full-time	jobs.

In	2014,	Alcoa	announced	a	$190	million	investment	at	its	Davenport	Works	facility	to	expand	its	product	offerings	in	the	aerospace	and	industrial	markets	through	the installation	of	technology	that	will	enhance	the	performance	of	thick	aluminum	and	aluminum-lithium	plate	for	use	in	various	applications	such	as	wing	ribs	and fuselage	frames	for	the	aerospace	market.	Construction	on	this	project	began	in	2015,	with	first	customer	production	expected	in	2017.

In	October	2015,	Alcoa	entered	into	an	agreement	with	the	Danieli	Group,	a	global	supplier	of	plants	and	equipment	to	the	metals	industry,	to	license	and	commercialize its	Micromill	technology.	Under	the	agreement,	Alcoa	licenses	the	patented	technology	to	Danieli	that	will	manufacture	and	sell	Micromill	equipment	to	mill	operators that	will	also	be	licensed	by	Alcoa.	The	Alcoa-patented	Micromill	process	produces	metal	with	a	microstructure	that	is	distinct	from	the	microstructure	obtained	from conventional	rolling,	allowing	the	production	of	an	aluminum	alloy	for	automotive	applications	that	has	40	percent	greater	formability	and	30	percent	greater	strength than	the	incumbent	aluminum	used	today	while	meeting	stringent	automotive	surface	quality	requirements.	Additionally,	automotive	parts	made	with	Micromill	material will	be	twice	as	formable	and	at	least	30	percent	lighter	than	parts	made	from	high	strength	steel.	The	Micromill	will	enable	the	next	generation	of	automotive	aluminum products,	and	equip	Alcoa	to	capture	growing	automotive	demand.

Also	in	2014,	Alcoa	announced	a	$40	million	investment	in	its	Itapissuma,	Brazil	rolling	mill	to	increase	production	of	specialty	foils	for	aseptic	and	flexible	packages.

Initial	work	for	the	expansion	is	underway	and	commissioning	is	expected	to	begin	in	2016.

As	noted	above,	Alcoa	and	Saudi	Arabian	Mining	Company	(Ma'aden)	entered	into	a	joint	venture	to	develop	a	fully	integrated	aluminum	complex	in	the	Kingdom	of Saudi	Arabia.	It	includes	among	other	things	the	Ma'aden	Rolling	Company,	which	owns	the	rolling	mill	that	has	capacity	to	produce	380,000	mtpy	and	is	74	acres under	roof.

# Global	Rolled	Products	Principal	Facilities

Facilities	with	ownership	described	as	"Alcoa	(100%)"	are	either	leased	or	owned	directly	or	indirectly	by	the	Company. 1

Leased	property	or	partially	leased	property. 2

The	Texarkana	rolling	mill	facility	has	been	idle	since	September	2009	due	to	a	continued	weak	outlook	in	common	alloy	markets.	In	September	2015,	the Company	announced	that	it	is	restarting	its	Texarkana	casthouse	to	meet	demand	for	aluminum	slab	for	the	automotive	industry.	The	aluminum	slab	that	will	be cast	at	Texarkana	will	be	turned	into	aluminum	sheet	at	Alcoa's	recently	expanded	automotive	facility	in	Davenport,	Iowa	and	its	rolling	mill	in	Lancaster, Pennsylvania. 3

# Engineered	Products	and	Solutions

This	segment	represents	a	portion	of	Alcoa's	downstream	operations.	For	a	discussion	of	this	segment's	business,	see	"Results	of	Operations—Segment	Information"	in Part	II,	Item	7.	(Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	Q	to	the	Consolidated	Financial	Statements— Segment	and	Geographic	Area	Information	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).	In	the	third	quarter	2015,	Alcoa	realigned	its	downstream portfolio	into	two	segments	(Engineered	Products	and	Solutions	and	Transportation	and	Construction	Solutions).	Following	the	realignment,	Engineered	Products	and Solutions	consists	of:	Alcoa	Titanium	&	Engineered	Products;	Alcoa	Fastening	Systems	&	Rings;	Alcoa	Forgings	and	Extrusions;	and	Alcoa	Power	and	Propulsion.

On	March	3,	2015,	Alcoa	completed	its	acquisition	of	TITAL,	a	privately	held	company	based	in	Germany.	TITAL	is	a	leader	in	titanium	and	aluminum	structural castings	for	aircraft	engines	and	airframes.	In	addition,	TITAL	is	a	leader	in	process	technology.

In	June	2015,	Alcoa	announced	that	it	is	investing	$22	million	in	Hot	Isotopic	Pressing	technology	at	its	facility	in	Whitehall,	Michigan.	The	investment	will	enable Alcoa	to	capture	growing	demand	for	advanced	titanium,	nickel	and	additive	manufactured	parts	for	the	world's	bestselling	engines.	Alcoa	expects	that	the	new technology	will	be	ready	for	product	qualification	in	2016.

On	July	23,	2015,	Alcoa	completed	the	acquisition	of	RTI	International	Metals,	Inc.	(RTI),	a	global	supplier	of	titanium	and	specialty	metal	products	and	services	for commercial	aerospace,	defense,	energy	and	medical	device	markets.	Following	the	acquisition,	RTI	was	renamed	Alcoa	Titanium	&	Engineered	Products.

Also	in	October	2015,	Alcoa	officially	opened	its	expanded	jet	engines	part	facility	in	La	Porte,	Indiana.	The	$100	million	expansion	of	the	Indiana	facility	enables Alcoa	to	manufacture	single	piece	structural	parts	that	are	60	percent	larger	than	those	already	produced	in	La	Porte.

In	2014,	Alcoa	commenced	an	expansion	of	its	Hampton,	Virginia	facility	to	create	the	capability	to	employ	a	new	process	technology	that	improves	jet	engine	blades. The	expansion	was	completed	in	fourth	quarter	2015.	The	Hampton	facility	includes	technology	that	cuts	the	weight	of	the	Company's	highest-volume	jet	engine	blades by	20	percent	and	significantly	improves	aerodynamic	performance.

Alcoa	and	VSMPO-AVISMA	Corporation	signed	a	cooperation	agreement	in	October	2013,	which	allowed	the	companies	to	meet	growing	demand	for	high-end titanium	and	aluminum	products	for	aircraft	manufacturers	worldwide.	The	new	joint	venture	will	focus	on	manufacturing	high-end	aerospace	products,	such	as	landing gear	and	forged	wing	components,	at	Alcoa's	plant	in	Samara,	Russia.	The	definitive	Shareholders'	Agreement	was	executed	by	the	parties	on	July	16,	2014,	and	the	deal is	expected	to	close	in	the	second	quarter	of	2016.	The	facility	is	now	operational.

# Engineered	Products	and	Solutions	Principal	Facilities

|  |  | Owners^1 |  |
| :--- | :--- | :--- | :--- |
| Country | Facility | (%\tOf\tOwnership) | Products |
| Australia | \t Oakleigh | \t Alcoa\t(100%) | \t Fasteners |
| Canada | \t Georgetown,\tOntario^2 | \t Alcoa\t(100%) | \t Aerospace\tCastings |
|  | \t Laval,\tQuébec | \t Alcoa\t(100%) | \t Aerospace\tCasting\tand\tMachining |
| China | \t Nantong | \t Alcoa\t(100%) | \t Aerospace\tCastings |
|  | \t Suzhou^2 | \t Alcoa\t(100%) | \t Fasteners\tand\tRings |
| France | \t Dives-sur-Mer | \t Alcoa\t(100%) | \t Aerospace\tand\tIndustrial\tGas\tTurbine\tCastings |
|  | \t Evron | \t Alcoa\t(100%) | \t Aerospace\tand\tSpecialty\tCastings |
|  | \t Gennevilliers | \t Alcoa\t(100%) | \t Aerospace\tand\tIndustrial\tGas\tTurbine\tCastings |
|  | \t Montbrison | \t Alcoa\t(100%) | \t Fasteners |
|  | \t St.\tCosme-en-Vairais^2 | \t Alcoa\t(100%) | \t Fasteners |
|  | \t Toulouse | \t Alcoa\t(100%) | \t Fasteners |
|  | \t Us-par-Vigny | \t Alcoa\t(100%) | \t Fasteners |
| Germany | \t Bestwig | \t Alcoa\t(100%) | \t Aerospace\tCastings |
|  | \t Erwitte | \t Alcoa\t(100%) | \t Aerospace\tCastings |
|  | \t Hannover^2 | \t Alcoa\t(100%) | \t Extrusions |
|  | \t Hildesheim-Bavenstedt^2 | \t Alcoa\t(100%) | \t Fasteners |
|  | \t Kelkheim^2 | \t Alcoa\t(100%) | \t Fasteners |

Unless	otherwise	noted,	facilities	with	ownership	described	as	"Alcoa	(100%)"	are	owned	by	the	Company. 1

The	operating	results	of	this	facility	are	reported	in	the	Global	Rolled	Products	segment. 3

# Transportation	and	Construction	Solutions

The	Company's	Transportation	and	Construction	Solutions	segment	represents	a	portion	of	Alcoa's	downstream	operations.	For	a	discussion	of	this	segment's	business, see	"Results	of	Operations—Segment	Information"	in	Part	II,	Item	7.	(Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and Note	Q	to	the	Consolidated	Financial	Statements—Segment	and	Geographic	Area	Information	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).	As	part of	its	realignment	of	the	value-add	portfolio	and	creation	of	this	new	segment,	the	Company	also	moved	the	Latin	American	soft	alloy	extrusions	business	to Transportation	and	Construction	Solutions.

compared	with	2014	production	levels.	The	$13	million	expansion	is	expected	to	create	35	new	jobs	in	Hungary	once	the	facility	reaches	full	capacity.

Alcoa	Wheel	and	Transportation	Products	has	vertically	integrated	by	building	a	new	aluminum	casthouse	in	Mexico	for	a	total	cost	of	$22	million	to	convert	the	scrap generated	throughout	the	Mexico	wheels	flowpaths	into	ingot.	While	the	first	ingot	was	cast	in	November	2014,	the	run	rate	production	was	achieved	in	March	2015.

# Transportation	and	Construction	Solutions	Principal	Facilities

Facilities	with	ownership	described	as	"Alcoa	(100%)"	are	owned	by	the	Company. 1

# Sources	and	Availability	of	Raw	Materials

The	major	raw	materials	purchased	in	2015	for	each	of	the	Company's	reportable	segments	are	listed	below.

Titanium	sponge

Aluminum	coil

Electricity Natural	gas Paint/Coating

Primary	aluminum	(ingot,	billet,	P1020,	high	purity)

Resin

Scrap	aluminum

Generally,	other	materials	are	purchased	from	third-party	suppliers	under	competitively	priced	supply	contracts	or	bidding	arrangements.	The	Company	believes	that	the raw	materials	necessary	to	its	business	are	and	will	continue	to	be	available.

For	each	metric	ton	of	alumina	produced,	Alcoa	consumes	the	following	amounts	of	the	identified	raw	material	inputs	(approximate	range	across	relevant	facilities):

| Raw	Material | Units | Consumption	per	MT	of	Alumina |
| :--- | :--- | :--- |
| Bauxite | \t mt | 2.2\t–\t3.7 |
| Caustic\tsoda | kg | 60\t–\t150 |
| Electricity | kWh | 200\t–\t260\ttotal\tconsumed\t(0\tto\t210\timported) |
| Fuel\toil\tand\tnatural\tgas | \t GJ | 6.3\t–\t11.9 |
| Lime\t(CaO) | kg | 6\t–\t58 |

For	each	metric	ton	of	aluminum	produced,	Alcoa	consumes	the	following	amounts	of	the	identified	raw	material	inputs	(approximate	range	across	relevant	facilities):

| Raw	Material | Units | Consumption	per	MT	of	Aluminum |
| :--- | :--- | :--- |
| Alumina | \t mt | 1.92\t±0.02 |
| Aluminum\tfluoride | kg | 16.5\t±6.5 |
| Calcined\tpetroleum\tcoke | \t mt | 0.37\t±0.02 |
| Cathode\tblocks | \t mt | 0.006\t±0.002 |
| Electricity | kWh | 12900\t–\t17000 |
| Liquid\tpitch | \t mt | 0.10\t±0.03 |
| Natural\tgas | \t mcf | 3.5\t±1.5 |

Explanatory	Note:	Certain	aluminum	produced	by	Alcoa	also	includes	alloying	materials.	Because	of	the	number	of	different	types	of	elements	that	can	be	used	to produce	Alcoa's	various	alloys,	providing	a	range	of	such	elements	would	not	be	meaningful.	With	the	exception	of	a	very	small	number	of	internally	used	products, Alcoa	produces	its	alloys	in	adherence	to	an	Aluminum	Association	standard.	The	Aluminum	Association,	of	which	Alcoa	is	an	active	member,	uses	a	specific designation	system	to	identify	alloy	types.	In	general,	each	alloy	type	has	a	major	alloying	element	other	than	aluminum	but	will	also	have	other	constituents	as	well,	but of	lesser	amounts.

# Energy

Employing	the	Bayer	Process,	Alcoa	refines	alumina	from	bauxite	ore.	Alcoa	then	produces	aluminum	from	the	alumina	by	an	electrolytic	process	requiring	substantial amounts	of	electric	power.	Energy	accounts	for	approximately	19%	of	the	Company's	total	alumina	refining	production	costs.	Electric	power	accounts	for	approximately 23%	of	the	Company's	primary	aluminum	production	costs.	Alcoa	generates	approximately	14%	of	the	power	used	at	its	smelters	worldwide	and	generally	purchases the	remainder	under	long-term	arrangements.	The	paragraphs	below	summarize	the	sources	of	power	and	natural	gas	for	Alcoa's	smelters	and	refineries.

# North	America	–	Electricity

The	Deschambault,	Baie	Comeau,	and	Bécancour	smelters	in	Québec	purchase	electricity	under	long-term	contracts	with	Hydro-Québec	executed	in	2014,	which	will expire	on	December	31,	2029.	Upon	expiration,	Alcoa	will	have	the	option	of	extending	the	term	of	the	Baie	Comeau	contract	to	February	23,	2036.	The	smelter	located in	Baie	Comeau,	Québec	purchases	approximately	73%	of	its	power	needs	under	the	Hydro-Québec	contract,	and	the	remainder	from	a	40%	owned	hydroelectric generating	company,	Manicouagan	Power	Limited	Partnership.

The	Company's	wholly-owned	subsidiary,	Alcoa	Power	Generating	Inc.	(APGI)	owns	and	operates	the	Yadkin	hydroelectric	project,	consisting	of	four	dams	in	North Carolina,	and	the	Warrick	coal-fired	power	plant	located	in	Indiana.

For	several	years,	APGI	has	been	pursuing	a	new	long-term	license	for	the	Yadkin	hydroelectric	project	from	the	Federal	Energy	Regulatory	Commission	(FERC).	In 2007,	APGI	filed	with	FERC	a	Relicensing	Settlement	Agreement	signed	by	a	majority	of	interested	stakeholders	that	broadly	resolved	open	issues.	The	National Environmental	Policy	Act	process	was	complete,	and	a	final	environmental	impact	statement	was	issued	in	April	2008.	The	remaining	requirement	for	relicensing	was the	issuance	by	North	Carolina	of	the	required	water	quality	certification	under	Section	401	of	the	Clean	Water	Act	(401	WQC).	North	Carolina's	Department	of Environment	Quality	((DEQ),	formally	known	as	Department	of	Environment	and	Natural	Resources	(DENR))	issued	a	401	WQC	to	APGI	on	October	23,	2015.	The period	for	appeals	has	passed	with	no	aggrieved	party	filing	an	appeal.	FERC	has	been	notified	of	the	final	401	WQC,	completing	all	necessary	items	required	for	FERC to	process	the	application.

On	August	2,	2013,	the	State	of	North	Carolina	filed	suit	in	state	court	seeking	a	declaratory	ruling	that	it,	not	APGI,	owns	the	Yadkin	riverbed	beneath	the hydroelectric	project	as	well	as	a	portion	of	the	project	dams.	APGI	removed	the	riverbed	lawsuit	to	federal	court	in	2013.	On	May	6,	2015,	U.S.	Federal	Judge	Terrance Boyle	declared	that	the	relevant	segment	of	the	Yadkin	River	was	not	navigable	at	the	time	of	North	Carolina	statehood	and	issued	a	ruling	on	September	28,	2015	that APGI	owns	the	riverbed	for	the	37-mile	relevant	segment.	The	State	of	North	Carolina	has	filed	an	appeal	with	the	Fourth	Circuit	Court	of	Appeals.

Pending	completion	of	the	relicensing	process,	APGI	received	year-to-year	license	renewals	from	FERC	starting	in	May	2008,	and	will	continue	to	operate	under	annual licenses	until	FERC	issues	a	new	license.	Since	the	permanent	closure	of	the	Badin,	North	Carolina	smelter,	power	generated	from	APGI's	Yadkin	system	is	largely being	sold	to	an	affiliate,	Alcoa	Power	Marketing	LLC,	and	then	into	the	wholesale	market.

APGI	generates	substantially	all	of	the	power	used	at	the	Company's	Warrick,	Indiana	smelter	using	nearby	coal	reserves.	Since	May	2005,	Alcoa	has	owned	the	nearby Friendsville,	Illinois	coal	reserves,	with	the	Friendsville	Mine	being	operated	by	Vigo	Coal	Company,	Inc.	(Vigo	Coal).	The	Friendsville	Mine	is	producing approximately	900,000	tons	of	coal	per	year	and	is	scheduled	to	cease	production	at	the	end	of	March	2016.	Liberty	Mine,	also	owned	by	Alcoa	and	operated	by	Vigo Coal,	produces	coal	and	is	operating	at	a	level	of	approximately	1.4	million	tons	per	year.	Friendsville	and	Liberty	Mines	together	supply	99%	of	the	power	plant's needs.	The	balance	of	the	coal	used	is	royalty	coal.

In	the	State	of	Washington,	Alcoa's	Wenatchee	smelter	is	served	by	a	contract	with	Chelan	County	Public	Utility	District	(Chelan	PUD)	under	which	Alcoa	receives approximately	26%	of	the	hydropower	output	of	Chelan	PUD's	Rocky	Reach	and	Rock	Island	dams.	In	November	2015,	Alcoa	announced	the	curtailment	of	the Wenatchee	smelter	which	was	completed	by	the	end	of	December	2015.

Starting	on	January	1,	2013,	the	Intalco	smelter	began	receiving	physical	power	from	the	Bonneville	Power	Administration	(BPA)	pursuant	to	a	contract	executed between	Alcoa	and	BPA,	under	which	Alcoa	receives	physical	power	at	the	Northwest	Power	Act	mandated	industrial	firm	power	(IP)	rate	through	September	30,	2022. In	May	2015,	the	contract	was	amended	to	reduce	the	amount	of	physical	power	received	from	BPA	and	allow	for	additional	purchases	of	market	power.

Prior	to	2007,	power	for	the	Rockdale	smelter	in	Texas	was	historically	supplied	from	Company-owned	generating	units	and	Sandow	Unit	4	owned	by	Luminant Generation	Company	LLC	(formerly	TXU	Generation	Company	LP)	(Luminant),	both	of	which	used	lignite	supplied	by	the	Company's	Sandow	Mine	and	Three	Oaks Mine.	Upon	completion	of	lignite	mining	in	the	Sandow	Mine	in	2005,	lignite	supply	transitioned	to	the	formerly	Alcoa-owned	Three	Oaks	Mine.	The	Company	retired its	three	wholly-owned	generating	units	at	Rockdale	(Sandow	Units	1,	2	and	3)	in	late	2006,	and	transitioned	to	an	arrangement	under	which	Luminant	is	to	supply	all	of the	Rockdale	smelter's	electricity	requirements	under	a	long-term	power	contract	that	does	not	expire	until	at	least	the	end	of	2038,	with	the	parties	having	the	right	to terminate	the	contract	after	2013	if	there	has	been	an	unfavorable	change	in	law	or	after	2025	(by	Luminant	only)	if	the	cost	of	the	electricity	exceeds	the	market	price.	In August	2007,	Luminant	and	Alcoa	closed	on	the	definitive	agreements	under	which	Luminant	has	constructed	and	operates	a	new	circulating	fluidized	bed	power	plant (Sandow	Unit	5)	adjacent	to	the	existing	Sandow	Unit	4	and,	in	September	2007,	on	the	sale	of	Three	Oaks	Mine	to	Luminant.	Concurrent	with	entering	into	the agreements	under	which	Luminant	constructed	and	operates	Sandow	Unit	5,	Alcoa	and	Luminant	entered	into	a	power	purchase	agreement	whereby	Alcoa	purchased power	from	Luminant.	That	Sandow	Unit	5	power	purchase	agreement	was	terminated	by	Alcoa,	effective	December	1,	2010.	In	June	2008,	Alcoa	temporarily	idled	half of	the	capacity	at	the	Rockdale	smelter	and	in	November	2008	curtailed	the	remainder	of	Rockdale's	smelting	capacity.	In	late	2011,	Alcoa	announced	that	it	would permanently	close	two	of	the	six	idled	potlines	at	the	smelter.	Demolition	and	remediation	activities	related	to	these	actions	were	completed	in	2013.	On	April	29,	2014, Luminant	Generation	LLC,	Luminant	Mining	Company	LLC,	Sandow	Power	Company	LLC	and	their	affiliated	debtors	filed	petitions	under	Chapter	11	of	the	U.S. Bankruptcy	Code	with	the	U.S	Bankruptcy	Court	for	the	District	of	Delaware.	The	Bankruptcy	Court	has	confirmed	the	debtors'	amended	plan	of	reorganization	and	has 22

entered	an	order	approving	the	debtors'	assumption	of	the	Sandow	Unit	4	agreement	and	certain	other	related	agreements	with	the	Company.

In	the	Northeast,	the	Massena	West	smelter	in	New	York	receives	physical	power	from	the	New	York	Power	Authority	(NYPA)	pursuant	to	a	contract	between	Alcoa and	NYPA,	which	expires	in	2045.	In	December	2015,	Alcoa	and	NYPA	agreed	upon	a	new	power	contract	that	will	expire	in	2019.	Upon	final	approval	of	the	contract by	New	York	State,	which	is	expected	in	the	first	half	of	2016,	the	new	power	contract	for	physical	power	will	replace	the	prior	contract.

# Australia	–	Electricity

In	2015	Alcoa	permanently	closed	the	Anglesea	power	station	and	associated	coal	mine	in	Victoria.	The	power	station	had	previously	provided	electricity	to	the	Point Henry	smelter	which	closed	in	2014.	Since	the	Port	Henry	smelter	closure,	electricity	was	sold	into	the	National	Electricity	Market	(NEM);	however	a	combination	of low	electricity	prices	and	significant	future	capital	expenditure	meant	the	facility	was	no	longer	viable.

The	Portland	smelter	continues	to	purchase	electricity	from	the	State	Electricity	Commission	of	Victoria	(SECV)	under	a	contract	with	Alcoa	Portland	Aluminium	Pty Ltd,	a	wholly-owned	subsidiary	of	AofA,	that	extends	to	October	2016.	Upon	the	expiration	of	this	contract,	the	Portland	smelter	will	purchase	power	from	the	NEM variable	spot	market.	In	March	2010,	AofA	and	Eastern	Aluminium	(Portland)	Pty	Ltd	separately	entered	into	fixed	for	floating	swap	contracts	with	Loy	Yang	(now AGL)	in	order	to	manage	their	exposure	to	the	variable	energy	rates	from	the	NEM.	The	fixed	for	floating	swap	contract	with	AGL	for	the	Point	Henry	smelter	was terminated	in	2013.	The	fixed	for	floating	swap	contract	with	AGL	for	the	Portland	smelter	operates	from	the	date	of	expiration	of	the	current	contract	with	the	SECV and	continues	until	December	2036.

Brazil	–	Electricity	Alumínio	owns	a	25.74%	stake	in	Consórcio	Machadinho,	which	is	the	owner	of	the	Machadinho	hydroelectric	power	plant	located	in	southern Brazil.

Alumínio	has	a	42.18%	interest	in	Energética	Barra	Grande	S.A.,	which	built	the	Barra	Grande	hydroelectric	power	plant	in	southern	Brazil.

Alumínio	also	has	a	34.97%	share	in	Serra	do	Facão	Energia	S.A.,	which	built	the	Serra	do	Facão	hydroelectric	power	plant	in	the	southeast	of	Brazil.

Alumínio	is	also	participating	in	the	Estreito	hydropower	project	in	northern	Brazil,	through	Estreito	Energia	S.A.	(an	Alumínio	wholly	owned	company)	holding	a 25.49%	stake	in	Consórcio	Estreito	Energia,	which	is	the	owner	of	the	hydroelectric	power	plant.

A	consortium	in	which	Alumínio	participates	and	that	had	received	concessions	for	the	Pai	Querê	hydropower	project	in	southern	Brazil	(Alumínio's	share	is	35%) decided	not	to	pursue	the	development	of	this	concession	which	will	be	returned	to	the	Federal	Government.

Since	May	2015	(after	full	curtailment	of	Poços	de	Caldas	and	Alumar	smelters),	the	excess	generation	capacity	of	around	460MW	has	been	sold	into	the	market.

# Europe	–	Electricity

Alcoa's	smelters	at	San	Ciprián,	La	Coruña	and	Avilés,	Spain	purchase	electricity	under	bilateral	power	contracts	that	commenced	on	January	1,	2013.	The	contracts	for San	Ciprián	and	Avilés	smelters	each	have	a	four-year	term	(expiring	December	31,	2016).	The	contract	for	the	La	Coruña	smelter,	which	expired	on	December	31, 2015,	has	been	extended	for	an	additional	year	(expiring	December	31,	2016).

A	competitive	bidding	mechanism	to	allocate	interruptibility	rights	in	Spain	was	settled	during	2014	to	be	applied	starting	from	January	1,	2015.	The	first	auction process	to	allocate	rights	took	place	in	November	2014,	where	Alcoa	secured	275MW	of	interruptibility	rights	for	the	2015	period	for	the	San	Ciprián	smelter.	A	second auction	process	took	place	in	December	2014,	where	Alcoa	secured	an	additional	100MW	of	interruptibility	rights	for	the	2015	period	for	the	San	Ciprián	smelter (20x5MW),	120MW	for	the	La	Coruña	smelter	(24x5MW)	and	110MW	for	the	Avilés	smelter	(22x5MW).	The	auction	process	to	allocate	the	rights	for	the	following period	took	place	in	the	first	week	of	September	2015,	where	Alcoa	secured	interruptibility	rights	for	2016	in	the	amount	of	375MW	for	San	Ciprián	Smelter	(3x90MW +	21x5MW),	115MW	for	Avilés	Smelter	(23x5MW)	and	120MW	for	La	Coruña	smelter	(24x5MW).

Alcoa	owns	two	smelters	in	Norway,	Lista	and	Mosjøen,	which	have	long-term	power	arrangements	in	place	that	continue	until	the	end	of	2019.	Financial	compensation of	the	indirect	carbon	emissions	costs	passed	through	in	the	electricity	bill	is	received	in	accordance	with	EU	Commission	Guidelines	and	Norwegian	compensation regime.

# Iceland	–	Electricity

Alcoa's	Fjarðaál	smelter	in	eastern	Iceland	began	operation	in	2007.	Central	to	those	operations	is	a	forty-year	power	contract	under	which	Landsvirkjun,	the	Icelandic national	power	company,	built	the	Kárahnjúkar	dam	and	hydropower	project,	and	supplies	competitively	priced	electricity	to	the	smelter.	In	late	2009,	Iceland	imposed two	new	taxes	on	power	intensive	industries,	both	for	a	period	of	three	years,	from	2010	through	2012.	One	tax	is	based	on	energy	consumption;	the	other	is	a	pre- payment	of	certain	other	charges	that	was	recoverable	partly	in	2014	and	will	be	fully	recovered	by	end	of	2018.	In	2012,	Iceland	extended	the	energy	consumption	tax through	2015.

# Spain	–	Natural	Gas

In	order	to	facilitate	the	full	conversion	of	the	San	Ciprian,	Spain	alumina	refinery	from	fuel	oil	to	natural	gas,	in	October	2013,	Alumina	Española	SA	(AE)	and	Gas Natural	Transporte	SDG	SL	(GN)	signed	a	take	or	pay	gas	pipeline	utilization	agreement.	Pursuant	to	that	agreement,	the	ultimate	shareholders	of	AE,	Alcoa	Inc.	and Alumina	Limited,	agreed	to	guarantee	the	payment	of	AE's	contracted	gas	pipeline	utilization	over	the	four	years	of	the	commitment	period;	in	the	event	AE	fails	to	do so,	each	shareholder	being	responsible	for	its	respective	proportionate	share	(i.e.,	60/40).	Such	commitment	came	into	force	six	months	after	the	gas	pipeline	was	put into	operation	by	GN.	The	gas	pipeline	was	completed	in	January	2015	and	the	refinery	has	switched	to	natural	gas	consumption	for	100%	of	its	needs.

Three	supply	contracts	were	signed	in	2014	for	the	supply	of	natural	gas	to	the	San	Ciprián,	Spain	alumina	refinery	during	the	2015	period	with	Endesa,	Union	Fenosa Gas	and	BP,	expiring	by	April	2016,	December	2015	and	December	2015,	respectively.	In	2015,	the	Endesa	supply	contract	expiring	in	April	2016	was	extended	until June	2017,	the	BP	supply	contract	expiring	in	December	2015	was	extended	until	December	2016	and	a	new	contract	with	Gas	Natural	Fenosa	was	signed	expiring	by December	2016.	Pursuant	to	those	agreements,	Alcoa	Inversiones	España,	S.L.	and	Alumina	Limited	agreed	to	guarantee	the	payment	of	AE's	obligations	under	the Endesa	contract	that	expires	in	April	2016,	each	shareholder	being	responsible	for	its	respective	proportionate	share	(i.e.,	60/40).	In	the	same	way,	Alcoa	Inespal	S.A. and	Alumina	Limited	have	agreed	to	guarantee	the	payment	of	AE's	obligations	under	the	Gas	Natural	Fenosa	contract	over	its	respective	length,	with	each	entity	being responsible	for	its	proportionate	share	(i.e.,	60/40).

# North	America	–	Natural	Gas

In	order	to	supply	its	refinery	and	smelters	in	the	U.S.	and	Canada,	Alcoa	generally	procures	natural	gas	on	a	competitive	bid	basis	from	a	variety	of	sources,	including producers	in	the	gas	production	areas	and	independent	gas	marketers.	For	Alcoa's	larger	consuming	locations	in	Canada	and	the	U.S.,	the	gas	commodity	and	the interstate	pipeline	transportation	are	procured	(directly	or	via	the	local	distribution	companies)	to	provide	increased	flexibility	and	reliability.	Contract	pricing	for	gas	is typically	based	on	a	published	industry	index	or	New	York	Mercantile	Exchange	(NYMEX)	price.	The	Company	may	choose	to	reduce	its	exposure	to	NYMEX	pricing by	hedging	a	portion	of	required	natural	gas	consumption.

# Australia	–	Natural	Gas

AofA	holds	a	20%	equity	interest	in	the	Dampier-to-Bunbury	natural	gas	pipeline	(this	interest	was	purchased	in	October	2004).	This	pipeline	transports	gas	from	the northwest	gas	fields	to	Alcoa's	alumina	refineries	and	other	users	in	the	Southwest	of	Western	Australia.	Alcoa	uses	gas	to	co-generate	steam	and	electricity	for	its alumina	refining	processes	at	the	Kwinana,	Pinjarra	and	Wagerup	refineries.	More	than	90%	of	Alcoa's	gas	requirements	for	the	remainder	of	the	decade	are	secured under	long-term	contracts.	In	2015,	AofA	entered	into	a	number	of	long-term	gas	supply	agreements	which	now	means	a	significant	portion	of	Alcoa's	gas	supplies	are secured	to	2030.	Alcoa	has	remained	actively	involved	with	projects	aimed	at	developing	cost-based	gas	supply	opportunities.

# Energy	Facilities

The	following	table	sets	forth	the	electricity	generation	capacity	and	2015	generation	of	facilities	in	which	the	Company	has	an	ownership	interest:

| Country | Facility | (MW)^1 | 2015	Generation	(MWh) |
| :--- | :--- | :--- | :--- |
| Australia | Anglesea^2 | 150 | 798,542 |
| Brazil | Barra\tGrande | 156 | 1,562,663 |
|  | Estreito | 157 | 1,088,018 |
|  | Machadinho | 119 | 1,780,924 |
|  | Serra\tdo\tFacão | 60 | 171,294 |
| Canada | Manicouagan | 132 | 1,161,994 |
| Suriname | Afobaka | 189 | 673,950 |
| United\tStates | Warrick | 657 | 4,538,257 |
|  | Yadkin | 215 | 661,214 |
| TOTAL |  | 1,835 | 12,436,856 |

The	Consolidated	Capacity	of	the	Brazilian	energy	facilities	is	the	assured	energy	that	is	approximately	55%	of	hydropower	plant	nominal	capacity. 1

The	Anglesea	facility	was	permanently	closed	on	August	31,	2015. 2

# Patents,	Trade	Secrets	and	Trademarks

The	Company	believes	that	its	domestic	and	international	patent,	trade	secret	and	trademark	assets	provide	it	with	a	significant	competitive	advantage.	The	Company's rights	under	its	patents,	as	well	as	the	products	made	and	sold	under	them,	are	important	to	the	Company	as	a	whole	and,	to	varying	degrees,	important	to	each	business segment.	The	patents	owned	by	Alcoa	generally	concern	particular	products	or	manufacturing	equipment	or	techniques.	Alcoa's	business	as	a	whole	is	not,	however, materially	dependent	on	any	single	patent,	trade	secret	or	trademark.	As	a	result	of	product	development	and	technological	advancement,	the	Company	continues	to pursue	patent	protection	in	jurisdictions	throughout	the	world.	At	the	end	of	2015,	the	Company's	worldwide	patent	portfolio	consisted	of	approximately	986	pending patent	applications	and	1,923	granted	patents.

The	Company	has	a	number	of	trade	secrets,	mostly	regarding	manufacturing	processes	and	material	compositions	that	give	many	of	its	businesses	important advantages	in	their	markets.	The	Company	continues	to	strive	to	improve	those	processes	and	generate	new	material	compositions	that	provide	additional	benefits.

The	Company	also	has	a	number	of	domestic	and	international	registered	trademarks	that	have	significant	recognition	within	the	markets	that	are	served.	Examples include	the	name	"Alcoa"	and	the	Alcoa	symbol	for	aluminum	products,	Howmet	metal	castings,	Huck ®	fasteners,	Kawneer ®	building	panels	and	Dura-Bright ®	wheels with	easy-clean	surface	treatments.	The	Company's	rights	under	its	trademarks	are	important	to	the	Company	as	a	whole	and,	to	varying	degrees,	important	to	each business	segment.

# Competitive	Conditions

Alcoa	is	subject	to	highly	competitive	conditions	in	all	aspects	of	its	aluminum	and	non-aluminum	businesses.	Competitors	include	a	variety	of	both	U.S.	and	non-U.S. companies	in	all	major	markets.	Innovation,	price,	quality,	and	service	are	the	principal	competitive	factors	in	Alcoa's	markets.	Where	aluminum,	titanium	and	nickel products	compete	with	other	materials—such	as	steel	and	plastics	for	automotive	and	building	applications;	magnesium,	composites,	and	plastics	for	aerospace	and defense	applications—aluminum,	titanium	and	nickel's	diverse	characteristics,	particularly	the	strength,	light	weight,	recyclability,	and	flexibility	are	also	significant factors.	Alcoa's	customer	intimacy,	advanced	manufacturing	capability,	technology,	technical	expertise,	and	innovation	in	multi-materials	and	in	specialized	alloys provide	Alcoa	a	competitive	advantage	in	certain	markets	and/or	for	certain	products.	For	Alcoa's	segments	that	market	products	under	Alcoa's	brand	names,	brand recognition,	and	brand	loyalty	also	play	a	role.	In	addition	Alcoa's	competitive	position	depends,	in	part,	on	the	Company's	access	to	an	economical	power	supply	to sustain	its	operations	in	various	countries.

# Research	and	Development

Alcoa,	a	light	metals	technology	leader,	engages	in	research	and	development	programs	that	include	process	and	product	development,	and	basic	and	applied	research. Expenditures	for	research	and	development	(R&D)	activities	were	$238	million	in	2015,	$218	million	in	2014,	and	$192	million	in	2013.

The	Company	continued	to	work	on	new	developments	in	all	business	segments	in	2015.	With	a	focus	on	multi-materials,	the	Company	integrated	acquisitions	of TITAL,	Firth	Rixson	and	RTI	which	expanded	its	reach	into	aerospace	by	adding	advanced	technologies	and	materials	capabilities,	particularly	in	titanium—the	world's fastest-growing	aerospace	metal.

The	Company	continued	leveraging	new	technologies	in	2015.	Among	them,	the	Company	entered	into	a	Joint	Development	Agreement	with	Ford	to	collaborate	on next-generation	aluminum	alloys	for	automotive	parts	using	Micromill	technology.	Working	with	Phinergy	on	advancing	an	aluminum	air	battery	technology,	the Company	will	make	an	equity	investment	of	up	to	$10	million	and	will	be	the	exclusive	anode	provider	for	applications	with	auto	OEMs	and	energy	utilities. Additionally,	the	Company	completed	its	jet	engine	expansion	in	Hampton,	Virginia.	This	facility	includes	technology	that	cuts	the	weight	of	the	Company's	highest- volume	jet	engine	blades	by	20	percent	and	significantly	improves	aerodynamic	performance.

The	Company	has	invested	$60	million	in	the	expansion	of	its	R&D	center	designed	to	accelerate	the	development	of	additive	manufacturing,	with	a	focus	on	producing metal	powder	materials	tailored	for	a	range	of	additive	process	technologies.	Alcoa	will	further	its	development	of	advanced	3D-printing	design	and	manufacturing techniques—such	as	Alcoa's	Ampliforge™	process—to	improve	production	speeds,	reduce	costs,	and	achieve	geometries	not	possible	through	traditional	methods.	The investment	also	leverages	the	Company's	testing	and	process	control	expertise	to	overcome	challenges	with	qualifying	new	3D-printed	parts,	starting	with	aerospace applications.

®	material,	and	Alcoa	and	Danieli	Group	agreed	to

license	intellectual	property	associated	with	advanced	Micromill ®	alloys	and	process	technology.	Samsung	unveiled	its	Galaxy	S6	Smartphone	using	6013	Alcoa	Power Plate™	product	for	70	percent	greater	strength	than	standard	aluminum.	The	Company	launched	four	foundry	alloys	that	offer	strength,	thermal	performance,	corrosion resistance,	and	at	least	20%	better	fatigue	resistance	in	automotive	applications.	In	addition,	Dura-Bright ®	EVO,	Alcoa's	most	durable,	easy-to-maintain	commercial truck	wheel,	was	brought	to	the	North	American	market.

# Environmental	Matters

Information	relating	to	environmental	matters	is	included	in	Note	N	to	the	Consolidated	Financial	Statements	under	the	caption	"Environmental	Matters"	on	pages	130- 134.	Approved	capital	expenditures	for	new	or	expanded	facilities	for	environmental	control	are	approximately	$60	million	for	2016	and	$70	million	for	2017.

# Employees

Total	worldwide	employment	at	the	end	of	2015	was	approximately	60,000	employees	in	26	countries.	About	37,000	of	these	employees	are	represented	by	labor	unions. The	Company	believes	that	relations	with	its	employees	and	any	applicable	union	representatives	generally	are	good.

In	the	U.S.,	approximately	10,000	employees	are	represented	by	various	labor	unions.	The	largest	collective	bargaining	agreement	is	the	master	collective	bargaining agreement	between	Alcoa	and	the	United	Steelworkers	(USW).	The	USW	master	agreement	covers	approximately	6,100	employees	at	11	U.S.	locations;	the	current labor	agreement	expires	on	May	15,	2019.	There	are	18	other	collective	bargaining	agreements	in	the	U.S.	with	varying	expiration	dates.	On	a	regional	basis,	collective bargaining	agreements	with	varying	expiration	dates	cover	approximately	14,650	employees	in	Europe	and	Russia,	13,710	employees	in	North	America,	4,350 employees	in	Central	and	South	America,	3,100	employees	in	Australia,	and	925	employees	in	China.

# Executive	Officers	of	the	Registrant

The	names,	ages,	positions	and	areas	of	responsibility	of	the	executive	officers	of	the	Company	as	of	February	19,	2016	are	listed	below.

Robert	S.	Collins,	49,	Vice	President	and	Controller.	Mr.	Collins	was	elected	to	his	current	position	in	October	2013.	He	served	as	Assistant	Controller	from	May	2009 to	October	2013.	Prior	to	his	role	as	Assistant	Controller,	Mr.	Collins	was	Director	of	Financial	Transactions	and	Policy,	providing	financial	accounting	support	for Alcoa's	transactions	in	global	mergers,	acquisitions	and	divestitures.	Before	joining	Alcoa	in	2005,	Mr.	Collins	worked	in	the	audit	and	mergers	and	acquisitions practices	at	PricewaterhouseCoopers	LLP	for	14	years.

Roy	C.	Harvey,	41,	Executive	Vice	President,	President	of	Global	Primary	Products.	Mr.	Harvey	was	elected	to	his	current	position	effective	October	2015.	From	June 2014	to	October	2015,	he	was	Executive	Vice	President,	Human	Resources	and	Environment,	Health,	Safety	and	Sustainability.	Prior	to	that,	Mr.	Harvey	was	Chief Operating	Officer	for	Global	Primary	Products	from	July	2013	to	June	2014,	where	he	focused	on	the	day-to-day	operations	of	Alcoa's	aluminum	smelters,	alumina refineries	and	bauxite	mines	worldwide.	Prior	to	that,	Mr.	Harvey	was	Chief	Financial	Officer	for	Global	Primary	Products	from	December	2011	to	July	2013.	In addition	to	these	roles,	Mr.	Harvey	served	as	Director	of	Investor	Relations,	interfacing	with	securities	analysts	and	investors	globally	on	Alcoa's	performance	and strategic	direction,	from	September	2010	to	November	2011	and	was	Director	of	Corporate	Treasury	from	January	2010	to	September	2010.	Mr.	Harvey	joined	Alcoa	in 2002	as	a	business	analyst	for	Global	Primary	Products	in	Knoxville,	Tennessee.	In	2005,	he	moved	to	the	São	Luis	Plant	in	Brazil,	as	casthouse	manager	in	the	smelter and	then	as	the	plant	controller.	In	2007,	he	became	plant	manager	for	the	San	Ciprián,	Spain,	smelter	and	a	year	later	was	named	Director	of	Finance	and	Business Integration	for	Global	Primary	Products	Europe.

Olivier	M.	Jarrault,	54,	Executive	Vice	President—Alcoa	and	Group	President,	Engineered	Products	and	Solutions.	Mr.	Jarrault	was	elected	an	Alcoa	Executive	Vice President	effective	January	21,	2011	and	was	named	Group	President	of	Engineered	Products	and	Solutions	effective	January	1,	2011.	He	served	as	Chief	Operating Officer	of	Engineered	Products	and	Solutions	from	February	2010	to	January	1,	2011.	Mr.	Jarrault	joined	Alcoa	in	2002	when	Alcoa	acquired	Fairchild	Fasteners	from The	Fairchild	Corporation.	He	served	as	President	of	Alcoa	Fastening	Systems	from	2002	to	February	2010.	He	was	elected	a	Vice	President	of	Alcoa	in	November 2006.

Klaus	Kleinfeld,	58,	Director,	Chairman	of	the	Board	and	Chief	Executive	Officer.	Mr.	Kleinfeld	was	elected	to	Alcoa's	Board	of	Directors	in	November	2003	and became	Chairman	on	April	23,	2010.	He	has	been	Chief	Executive	Officer	of	Alcoa	since	May	8,	2008.	He	was	President	and	Chief	Executive	Officer	from	May	8,	2008 to	April	23,	2010.	He	was	President	and	Chief	Operating	Officer	of	Alcoa	from	October	1,	2007	to	May	8,	2008.	Mr.	Kleinfeld	was	President	and	Chief	Executive Officer	of	Siemens	AG,	the	global	electronics	and	industrial	conglomerate,	from	January	2005	to	June	2007.	He	served	as	Deputy	Chairman	of	the	Managing	Board	and Executive	Vice	President	of	Siemens	AG	from	2004	to	January	2005.	He	was	President	and	Chief	Executive	Officer	of	Siemens	Corporation,	the	U.S.	arm	of	Siemens AG,	from	2002	to	2004.

Christoph	Kollatz,	55,	Executive	Vice	President,	Corporate	Development,	Strategy	and	New	Ventures.	Mr.	Kollatz	joined	Alcoa	in	2015	and	was	elected	an	Executive Vice	President	of	Alcoa	in	September	2015.	Before	joining	Alcoa,	Mr.	Kollatz	was	Chief	Information	and	Process	Officer	at	Lufthansa	from	2012	to	2015,	overseeing the	IT	technology	infrastructure,	as	well	as	IT	applications,	supporting	financial	and	customer	operations.	Prior	to	Lufthansa,	from	2011	to	2012,	Mr.	Kollatz	created and	led	a	start-up	business	within	SAP,	introducing	a	new	database	technology	to	the	market.	Mr.	Kollatz	held	a	series	of	leadership,	strategy	and	technology	positions	at Siemens	from	1989	to	2011,	including	as	CEO	of	Siemens	IT	Solutions	and	Services.

Kay	H.	Meggers,	51,	Executive	Vice	President—Alcoa	and	Group	President,	Global	Rolled	Products.	Mr.	Meggers	was	elected	an	Alcoa	Executive	Vice	President	in December	2011.	He	was	named	Group	President,	Global	Rolled	Products	effective	November	14,	2011.	Before	his	most	recent	appointment,	he	led	Alcoa's	Business Excellence/	Corporate	Strategy	resource	unit	and	was	also	responsible	for	overseeing	Alcoa's	Asia-Pacific	region.	He	joined	Alcoa	in	February	2010	as	Vice	President, Corporate	Initiatives,	a	position	responsible	for	planning	and	coordinating	major	strategic	initiatives	from	enhancing	technology	and	innovation	as	part	of	the	Alcoa Technology	Advantage	program	to	spearheading	growth	strategies	for	China	and	Brazil.	He	was	elected	a	Vice	President	of	Alcoa	in	June	2011.	Before	joining	Alcoa, Mr.	Meggers	was	Senior	Vice	President	at	Siemens	U.S.	Building	Technologies	Division	and	served	for	three	years	as	Business	Unit	Head	of	Building	Automation.	In 2006,	he	served	for	nine	months	as	Division	Head	of	Fire	Safety,	also	part	of	Siemens	U.S.	Building	Technologies	Division.	Between	2002	and	2005,	he	served	as	Vice President	of	Strategic	Planning	at	Siemens	U.S.

Vas	Nair,	50,	Executive	Vice	President,	Human	Resources	and	Environment,	Health,	Safety	and	Sustainability.	Ms.	Nair	was	appointed	Executive	Vice	President, Human	Resources	and	Environment,	Health,	Safety	and	Sustainability	in	November	2015.	Prior	to	being	appointed	to	her	current	role,	Ms.	Nair	was	Chief	Talent	and Diversity	Officer,	with	global	responsibility	for	diversity	and	inclusion	from	February	2015	to	October	2015.	Prior	to	joining	Alcoa,	Ms.	Nair	was	VP	of	Global Learning	and	Talent	Development	at	Estee	Lauder	from	November	2010	to	January	2015.	Ms.	Nair	was	Vice	President	and	Chief	Learning	Officer	at	Schering-Plough from	November	2003	to	October	2009.

William	F.	Oplinger,	49,	Executive	Vice	President	and	Chief	Financial	Officer.	Mr.	Oplinger	was	elected	to	his	current	position	effective	April	1,	2013.	Since	joining Alcoa	in	2000,	Mr.	Oplinger	has	held	key	corporate	positions	in	financial	analysis	and	planning	and	as	Director	of	Investor	Relations.	He	also	has	held	key	positions	in the	Global	Primary	Products	business,	including	as	Controller,	Operational	Excellence	Director,	Chief	Financial	Officer	and	Chief	Operating	Officer.	As	Chief Operating	Officer	of	Alcoa's	Global	Primary	Products	business	from	December	2011	to	March	2013,	Mr.	Oplinger	was	responsible	for	the	day-to-day	operations	of	the business'	global	network	of	aluminum	smelters,	refineries	and	mines.

Audrey	Strauss,	68,	Executive	Vice	President,	Chief	Legal	Officer	and	Secretary.	Ms.	Strauss	was	elected	to	her	current	position	upon	joining	Alcoa	in	May	2012. Prior	to	joining	Alcoa,	she	was	a	senior	litigation	partner	from	1990	to	2012	at	Fried	Frank	Harris	Shriver	and	Jacobson	LLP	(Fried	Frank),	a	law	firm	based	in	New York.	Prior	to	her	practice	at	Fried	Frank,	Ms.	Strauss	served	in	the	U.S.	Attorney's	office	for	the	Southern	District	of	New	York	from	1975	to	1982,	where	she	was Chief	Appellate	Attorney	and	Chief	of	the	Fraud	Unit.

The	Company's	executive	officers	are	elected	or	appointed	to	serve	until	the	next	annual	meeting	of	the	Board	of	Directors	(held	in	conjunction	with	the	annual	meeting of	shareholders)	except	in	the	case	of	earlier	death,	retirement,	resignation	or	removal.

# Item	1A.		RiskFactors.

Alcoa's	business,	financial	condition	and	results	of	operations	may	be	impacted	by	a	number	of	factors.	In	addition	to	the	factors	discussed	elsewhere	in	this	report,	the following	risks	and	uncertainties	could	materially	harm	its	business,	financial	condition	or	results	of	operations,	including	causing	Alcoa's	actual	results	to	differ materially	from	those	projected	in	any	forward-looking	statements.	The	following	list	of	significant	risk	factors	is	not	all-inclusive	or	necessarily	in	order	of	importance. Additional	risks	and	uncertainties	not	presently	known	to	Alcoa	or	that	Alcoa	currently	deems	immaterial	also	may	materially	adversely	affect	us	in	future	periods.

# The	aluminum	industry	and	aluminum	end-use	markets	are	highly	cyclical	and	are	influenced	by	a	number	of	factors,	including	global	economic	conditions.

The	aluminum	industry	generally	is	highly	cyclical,	and	Alcoa	is	subject	to	cyclical	fluctuations	in	global	economic	conditions	and	aluminum	end-use	markets.	Alcoa sells	many	products	to	industries	that	are	cyclical,	such	as	the	commercial	construction	and	transportation,	automotive,	and	aerospace	industries,	and	the	demand	for	its products	is	sensitive	to,	and	quickly	impacted	by,	demand	for	the	finished	goods	manufactured	by	its	customers	in	these	industries,	which	may	change	as	a	result	of changes	in	the	general	U.S.	or	worldwide	economy,	currency	exchange	rates,	energy	prices	or	other	factors	beyond	its	control.

The	demand	for	aluminum	is	highly	correlated	to	economic	growth.	For	example,	the	European	sovereign	debt	crisis	that	began	in	late	2009	had	an	adverse	effect	on European	demand	for	aluminum	and	aluminum	products.	The	Chinese	market	is	a	significant	source	of	global	demand	for,	and	supply	of,	commodities,	including aluminum.	A	sustained	slowdown	in	China's	economic	growth	and	aluminum	demand,	or	a	significant	slowdown	in	other	markets,	that	is	not	offset	by	decreases	in supply	or	by	increased	aluminum	demand	in	emerging	economies,	such	as	India,	Brazil,	and	several	South	East	Asian	countries,	could	have	an	adverse	effect	on	the global	supply	and	demand	for	aluminum	and	aluminum	prices.

While	Alcoa	believes	that	the	long-term	prospects	for	aluminum	and	aluminum	products	are	positive,	the	Company	is	unable	to	predict	the	future	course	of	industry variables	or	the	strength	of	the	global	economy	and	the	effects	of	government	intervention.	Negative	economic	conditions,	such	as	a	major	economic	downturn,	a prolonged	recovery	period,	a	downturn	in	the	commodity	sector,	or	disruptions	in	the	financial	markets,	could	have	a	material	adverse	effect	on	Alcoa's	business, financial	condition	or	results	of	operations.

# Alcoa	could	be	materially	adversely	affected	by	declines	in	aluminum	prices,	including	global,	regional	and	product-specific	prices.

The	overall	price	of	primary	aluminum	consists	of	several	components:	1)	the	underlying	base	metal	component,	which	is	typically	based	on	quoted	prices	from	the London	Metal	Exchange	(LME);	2)	the	regional	premium,	which	comprises	the	incremental	price	over	the	base	LME	component	that	is	associated	with	the	physical delivery	of	metal	to	a	particular	region	(e.g.,	the	Midwest	premium	for	metal	sold	in	the	United	States);	and	3)	the	product	premium,	which	represents	the	incremental price	for	receiving	physical	metal	in	a	particular	shape	(e.g.,	coil,	billet,	slab,	rod,	etc.)	or	alloy.	Each	of	the	above	three	components	has	its	own	drivers	of	variability.

The	LME	price	is	typically	driven	by	macroeconomic	factors,	global	supply	and	demand	of	aluminum	(including	expectations	for	growth	and	contraction	and	the	level of	global	inventories),	and	financial	investors.	An	imbalance	in	global	supply	and	demand	of	aluminum,	such	as	decreasing	demand	without	corresponding	supply declines,	could	have	a	negative	impact	on	aluminum	pricing.	Speculative	trading	in	aluminum	and	the	influence	of	hedge	funds	and	other	financial	institutions participating	in	commodity	markets	have	also	increased	in	recent	years,	potentially	contributing	to	higher	levels	of	price	volatility.	In	2015,	the	cash	LME	price	of aluminum	reached	a	high	of	$1,919	per	metric	ton	and	a	low	of	$1,424	per	metric	ton.	High	LME	inventories,	or	the	release	of	substantial	inventories	into	the	market, could	lead	to	a	reduction	in	the	price	of	aluminum.	Declines	in	the	LME	price	have	had	a	negative	impact	on	Alcoa's	results	of	operations.

Additionally,	Alcoa's	results	could	be	adversely	affected	by	decreases	in	regional	premiums	that	participants	in	the	physical	metal	market	pay	for	immediate	delivery	of aluminum.	Regional	premiums	tend	to	vary	based	on	the	supply	of	and	demand	for	metal	in	a	particular	region	and	associated	transportation	costs.	LME	warehousing rules	could	cause	aluminum	prices	to	decrease	and	surpluses	have	caused	regional	premiums	to	decrease,	which	would	have	a	negative	impact	on	the	Company's	results of	operations.

Product	premiums	generally	are	a	function	of	supply	and	demand	for	a	given	primary	aluminum	shape	and	alloy	combination	in	a	particular	region.	A	sustained	weak LME	aluminum	pricing	environment,	deterioration	in	LME	aluminum	prices,	or	a	decrease	in	regional	premiums	or	product	premiums	could	have	a	material	adverse effect	on	Alcoa's	business,	financial	condition,	and	results	of	operations	or	cash	flow.

# LME	warehousing	rules	could	cause	aluminum	prices	to	decrease.

Since	2013,	the	LME	has	been	engaged	in	a	program	aimed	at	reforming	the	rules	under	which	registered	warehouses	in	its	global	network	operate.	The	initial	rule changes	took	effect	on	February	1,	2015,	and	the	LME	has	announced	additional	changes	that	will	be	implemented	in	2016.	These	rule	changes,	and	any	subsequent changes	that	the	exchange	chooses	to	make,	could	impact	the	supply/demand	balance	in	the	primary	aluminum	physical	market	and	may	impact	regional	delivery premiums	and	LME	aluminum	prices.	Decreases	in	regional	delivery	premiums	and/or	decreases	in	LME	aluminum	prices	could	have	a	material	adverse	effect	on Alcoa's	business,	financial	condition,	and	results	of	operations	or	cash	flow.

# Alcoa	may	not	be	able	to	realize	the	expected	benefits	from	its	strategy	of	transforming	its	portfolio	by	growing	its	value-add	business	and	by	creating	a	lower cost,	competitive	commodity	business	by	optimizing	its	portfolio.

Alcoa	is	continuing	to	execute	on	its	strategy	of	transforming	its	portfolio	by	growing	its	value-add	business	to	capture	profitable	growth	as	a	lightweight	metals innovation	leader	and	by	creating	a	lower	cost,	competitive	commodity	business	by	optimizing	its	portfolio.	It	is	investing	in	its	value-add	manufacturing	and engineering	businesses	to	capture	growth	opportunities	in	strong	end	markets	like	automotive	and	aerospace.	Alcoa	is	building	out	its	value-add	businesses,	including	by introducing	innovative	new	products	and	technology	solutions,	and	investing	in	expansions	of	value-add	capacity.	Alcoa's	growth	projects	include	the	joint	venture	with Ma'aden	in	Saudi	Arabia;	the	automotive	expansions	in	Davenport,	Iowa	and	Alcoa,	Tennessee;	the	aluminum	lithium	capacity	expansion	in	Lafayette,	Indiana,	at	the Alcoa	Technical	Center	in	Pennsylvania	and	at	the	Kitts	Green	plant	in	the	United	Kingdom;	and	the	expansion	in	aerospace	capabilities	in	La	Porte,	Indiana,	Hampton, Virginia	and	Davenport,	Iowa.	From	time	to	time,	Alcoa	also	pursues	growth	opportunities	that	are	strategically	aligned	with	its	objectives,	such	as	the	acquisition	of	the Firth	Rixson	business	(completed	in	November	2014),	the	acquisition	of	TITAL	(completed	in	March	2015)	and	the	acquisition	of	RTI	International	Metals	(completed in	July	2015).	In	addition,	Alcoa	is	optimizing	its	rolling	mill	portfolio	as	part	of	its	strategy	for	profitable	growth	in	the	midstream	business.	At	the	same	time,	the Company	is	creating	a	competitive	commodity	business	by	taking	decisive	actions	to	lower	the	cost	base	of	its	upstream	operations,	including	closing,	selling	or curtailing	high-cost	global	smelting	capacity,	optimizing	alumina	refining	capacity,	and	pursuing	the	sale	of	its	interest	in	certain	other	operations.

Alcoa	has	made,	and	may	continue	to	plan	and	execute,	acquisitions	and	divestitures	and	take	other	actions	to	grow	or	streamline	its	portfolio.	Although	management believes	that	its	strategic	actions	are	beneficial	to	Alcoa,	there	is	no	assurance	that	anticipated	benefits	will	be	realized.	Adverse	factors	may	prevent	Alcoa	from realizing	the	benefits	of	its	growth	projects,	including	unfavorable	global	economic	conditions,	currency	fluctuations,	or	unexpected	delays	in	target	timelines. Acquisitions	present	significant	challenges	and	risks,	including	the	effective	integration	of	the	business	into	the	Company,	unanticipated	costs	and	liabilities,	and	the ability	to	realize	anticipated	benefits,	such	as	growth	in	market	share,	revenue	or	margins,	at	the	levels	or	in	the	timeframe	expected.	The	Company	may	be	unable	to manage	acquisitions	successfully.

With	respect	to	portfolio	optimization	actions	such	as	divestitures,	curtailments	and	closures,	Alcoa	may	face	barriers	to	exit	from	unprofitable	businesses	or	operations, including	high	exit	costs	or	objections	from	various	stakeholders.	In	addition,	Alcoa	may	retain	unforeseen	liabilities	for	divested	entities	if	a	buyer	fails	to	honor	all commitments.	Alcoa's	business	operations	are	capital	intensive,	and	curtailment	or	closure	of	operations	or	facilities	may	include	significant	charges,	including employee	separation	costs,	asset	impairment	charges	and	other	measures.

There	can	be	no	assurance	that	acquisitions,	growth	investments,	divestitures	or	closures	will	be	undertaken	or	completed	in	their	entirety	as	planned	or	that	they	will	be beneficial	to	Alcoa.

# Market-driven	balancing	of	global	aluminum	supply	and	demand	may	be	disrupted	by	non-market	forces	or	other	impediments	to	production	closures.

In	response	to	market-driven	factors	relating	to	the	global	supply	and	demand	of	aluminum,	Alcoa	has	curtailed	or	closed	portions	of	its	aluminum	production.	Certain other	aluminum	producers	have	independently	undertaken	to	make	cuts	in	production	as	well.	However,	the	existence	of	non-market	forces	on	global	aluminum	industry capacity,	such	as	political	pressures	in	certain	countries	to	keep	jobs	or	to	maintain	or	further	develop	industry	self-sufficiency,	may

prevent	or	delay	the	closure	or	curtailment	of	certain	producers'	smelters,	irrespective	of	their	position	on	the	industry	cost	curve.	Other	production	cuts	may	be	impeded by	long-term	contracts	to	buy	power	or	raw	materials.	If	industry	overcapacity	persists	due	to	the	disruption	by	such	non-market	forces	on	the	market-driven	balancing of	the	global	supply	and	demand	of	aluminum,	the	resulting	weak	pricing	environment	and	margin	compression	may	adversely	affect	the	operating	results	of	aluminum producers,	including	Alcoa.

# Alcoa's	operations	consume	substantial	amounts	of	energy;	profitability	may	decline	if	energy	costs	rise	or	if	energy	supplies	are	interrupted.

Alcoa's	operations	consume	substantial	amounts	of	energy.	Although	Alcoa	generally	expects	to	meet	the	energy	requirements	for	its	alumina	refineries	and	primary aluminum	smelters	from	internal	sources	or	from	long-term	contracts,	certain	conditions	could	negatively	affect	Alcoa's	results	of	operations,	including	the	following:

•significant	increases	in	electricity	costs	rendering	smelter	operations	uneconomic;

•significant	increases	in	fuel	oil	or	natural	gas	prices;

•unavailability	of	electrical	power	or	other	energy	sources	due	to	droughts,	hurricanes	or	other	natural	causes;

•unavailability	of	energy	due	to	energy	shortages	resulting	in	insufficient	supplies	to	serve	consumers;

•interruptions	in	energy	supply	or	unplanned	outages	due	to	equipment	failure	or	other	causes;

•curtailment	of	one	or	more	refineries	or	smelters	due	to	the	inability	to	extend	energy	contracts	upon	expiration	or	to	negotiate	new	arrangements	on	cost- effective	terms	or	due	to	the	unavailability	of	energy	at	competitive	rates;	or

•curtailment	of	one	or	more	smelters	due	to	a	regulatory	authority's	determination	that	power	supply	interruptibility	rights	granted	to	Alcoa	under	an interruptibility	regime	in	place	under	the	laws	of	the	country	in	which	the	smelter	is	located	do	not	comply	with	the	regulatory	authority's	state	aid	rules, thus	rendering	the	smelter	operations	that	had	been	relying	on	such	country's	interruptibility	regime	uneconomic.

If	events	such	as	those	listed	above	were	to	occur,	the	resulting	high	energy	costs	or	the	disruption	of	an	energy	source	or	the	requirement	to	repay	all	or	a	portion	of	the benefit	Alcoa	received	under	a	power	supply	interruptibility	regime	could	have	a	material	adverse	effect	on	Alcoa's	business	and	results	of	operations.

# Alcoa's	profitability	could	be	adversely	affected	by	increases	in	the	cost	of	raw	materials	or	by	significant	lag	effects	of	decreases	in	commodity	or	LME-linked costs.

Alcoa's	results	of	operations	are	affected	by	changes	in	the	cost	of	raw	materials,	including	energy,	carbon	products,	caustic	soda	and	other	key	inputs,	as	well	as	freight costs	associated	with	transportation	of	raw	materials	to	refining	and	smelting	locations.	Alcoa	may	not	be	able	to	fully	offset	the	effects	of	higher	raw	material	costs	or energy	costs	through	price	increases,	productivity	improvements	or	cost	reduction	programs.	Similarly,	Alcoa's	operating	results	are	affected	by	significant	lag	effects	of declines	in	key	costs	of	production	that	are	commodity	or	LME-linked.	For	example,	declines	in	the	LME-linked	costs	of	alumina	and	power	during	a	particular	period may	not	be	adequate	to	offset	sharp	declines	in	metal	price	in	that	period.	Increases	in	the	cost	of	raw	materials	or	decreases	in	input	costs	that	are	disproportionate	to concurrent	sharper	decreases	in	the	price	of	aluminum	could	have	a	material	adverse	effect	on	Alcoa's	operating	results.

# Alcoa	is	exposed	to	fluctuations	in	foreign	currency	exchange	rates	and	interest	rates,	as	well	as	inflation,	and	other	economic	factors	in	the	countries	in	which it	operates.

Economic	factors,	including	inflation	and	fluctuations	in	foreign	currency	exchange	rates	and	interest	rates,	competitive	factors	in	the	countries	in	which	Alcoa	operates, and	continued	volatility	or	deterioration	in	the	global	economic	and	financial	environment	could	affect	Alcoa's	revenues,	expenses	and	results	of	operations.	Changes	in the	valuation	of	the	U.S.	dollar	against	other	currencies,	particularly	the	Australian	dollar,	Brazilian	real,	Canadian	dollar,

Euro	and	Norwegian	kroner,	may	affect	Alcoa's	profitability	as	some	important	inputs	are	purchased	in	other	currencies,	while	the	Company's	upstream	products	are generally	sold	in	U.S.	dollars.	In	addition,	although	a	strong	U.S.	dollar	generally	has	a	positive	impact	on	Alcoa's	near-term	profitability,	over	a	longer	term,	a	strong U.S.	dollar	may	have	an	unfavorable	impact	to	Alcoa's	position	on	the	global	aluminum	cost	curve	due	to	Alcoa's	U.S.	smelting	portfolio.	As	the	U.S.	dollar strengthens,	the	cost	curve	shifts	down	for	smelters	outside	the	U.S.	but	costs	for	Alcoa's	U.S.	smelting	portfolio	may	not	decline.

# Alcoa	may	not	be	able	to	successfully	realize	future	targets	or	goals	established	for	its	business	segments,	at	the	levels	or	by	the	dates	targeted.

From	time	to	time,	Alcoa	may	announce	future	targets	or	goals	for	its	business,	which	are	based	on	the	Company's	then	current	expectations,	estimates,	forecasts	and projections	about	the	operating	environment,	economies	and	markets	in	which	Alcoa	operates.	Future	targets	and	goals	reflect	the	Company's	beliefs	and	assumptions and	its	perception	of	historical	trends,	then	current	conditions	and	expected	future	developments,	as	well	as	other	factors	management	believes	are	appropriate	in	the circumstances.	As	such,	targets	and	goals	are	inherently	subject	to	significant	business,	economic,	competitive	and	other	uncertainties	and	contingencies	regarding future	events,	including	the	risks	discussed	in	this	report.	The	actual	outcome	may	be	materially	different.	There	can	be	no	assurance	that	any	targets	or	goals	established by	the	Company	will	be	accomplished	at	the	levels	or	by	the	dates	targeted,	if	at	all.	Failure	to	achieve	the	targets	or	goals	by	the	Company	may	have	a	material	adverse effect	on	its	business,	financial	condition,	results	of	operations	or	the	market	price	of	its	securities.

# Alcoa	faces	significant	competition,	which	may	have	an	adverse	effect	on	profitability.

As	discussed	in	Part	I,	Item	1.	(Business—Competitive	Conditions)	of	this	report,	the	markets	for	Alcoa's	aluminum	and	non-aluminum	products	are	highly	competitive. Alcoa's	competitors	include	a	variety	of	both	U.S.	and	non-U.S.	companies	in	all	major	markets,	including	some	that	are	subsidized.	Alcoa's	metals,	including aluminum,	titanium	and	nickel,	compete	with	other	materials,	such	as	steel,	plastics,	composites,	ceramics,	and	glass,	among	others,	for	various	applications	in	Alcoa's key	markets.	New	product	offerings	or	new	technologies	in	the	marketplace	may	compete	with	or	replace	Alcoa	products.	The	willingness	of	customers	to	accept substitutes	for	the	products	sold	by	Alcoa,	the	ability	of	large	customers	to	exert	leverage	in	the	marketplace	to	affect	the	pricing	for	fabricated	aluminum	products,	and technological	advancements	or	other	developments	by	or	affecting	Alcoa's	competitors	or	customers	could	affect	Alcoa's	results	of	operations.	In	addition,	Alcoa's competitive	position	depends,	in	part,	on	the	Company's	ability	to	leverage	its	innovation	expertise	across	its	businesses	and	key	end	markets	and,	in	the	case	of	its upstream	businesses,	having	access	to	an	economical	power	supply	to	sustain	its	operations	in	various	countries.

A	downgrade	of	Alcoa's	credit	ratings	could	limit	Alcoa's	ability	to	obtain	future	financing,	increase	its	borrowing	costs,	increase	the	pricing	of	its	credit facilities,	adversely	affect	the	market	price	of	its	securities,	trigger	letter	of	credit	or	other	collateral	postings,	or	otherwise	impair	its	business,	financial condition,	and	results	of	operations.

Standard	and	Poor's	Ratings	Services	currently	rates	Alcoa's	long-term	debt	BBB-,	the	lowest	level	of	investment	grade	rating,	with	a	stable	ratings	outlook	(ratings	and outlook	were	affirmed	on	March	9,	2015).	On	September	28,	2015,	S&P	issued	a	statement	that	these	ratings	and	outlook	for	Alcoa	were	not	affected	by	Alcoa's	plan	to separate	into	two	publicly-traded	companies.	On	May	29,	2013,	Moody's	Investors	Service	downgraded	Alcoa's	long-term	debt	rating	from	Baa3	to	Ba1,	which	is below	investment	grade,	and	changed	the	outlook	from	rating	under	review	to	stable.	On	April	30,	2015,	Moody's	changed	the	outlook	from	stable	to	positive.	On September	28,	2015,	Moody's	affirmed	these	ratings	and	changed	the	current	outlook	from	positive	to	developing	based	on	Alcoa's	plan	to	separate	into	two	publicly- traded	companies.	On	January	21,	2016,	Moody's	placed	Alcoa's	long-term	debt	rating	under	review	and	changed	the	current	outlook	from	developing	to	rating	under review,	while	leaving	Alcoa's	short-term	debt	rating	unchanged.	On	April	11,	2014,	Fitch	Ratings	downgraded	Alcoa's	rating	from	BBB-	to	BB+,	a	below	investment grade	rating,	and	changed	the	outlook	from	negative	to	stable.	On	April	16,	2015,	Fitch	Ratings	affirmed	Alcoa's	rating	of

BB+	but	revised	Alcoa's	outlook	to	positive.	On	September	30,	2015,	Fitch	placed	these	ratings	on	"ratings	watch	positive"	based	on	Alcoa's	plan	to	separate	into	two publicly-traded	companies.

There	can	be	no	assurance	that	one	or	more	of	these	or	other	rating	agencies	will	not	take	negative	actions	with	respect	to	Alcoa's	ratings.	Increased	debt	levels,	adverse aluminum	market	or	macroeconomic	conditions,	a	deterioration	in	the	Company's	debt	protection	metrics,	a	contraction	in	the	Company's	liquidity,	or	other	factors could	potentially	trigger	such	actions.	A	rating	agency	may	lower,	suspend	or	withdraw	entirely	a	rating	or	place	it	on	negative	outlook	or	watch	if,	in	that	rating agency's	judgment,	circumstances	so	warrant.

A	downgrade	of	Alcoa's	credit	ratings	by	one	or	more	rating	agencies	could	adversely	impact	the	market	price	of	Alcoa's	securities;	adversely	affect	existing	financing (for	example,	a	downgrade	by	Standard	and	Poor's	or	a	further	downgrade	by	Moody's	would	subject	Alcoa	to	higher	costs	under	Alcoa's	Five-Year	Revolving	Credit Agreement	and	certain	of	its	other	revolving	credit	facilities);	limit	access	to	the	capital	(including	commercial	paper)	or	credit	markets	or	otherwise	adversely	affect	the availability	of	other	new	financing	on	favorable	terms,	if	at	all;	result	in	more	restrictive	covenants	in	agreements	governing	the	terms	of	any	future	indebtedness	that	the Company	incurs;	increase	the	cost	of	borrowing	or	fees	on	undrawn	credit	facilities;	result	in	vendors	or	counterparties	seeking	collateral	or	letters	of	credit	from	Alcoa; or	otherwise	impair	Alcoa's	business,	financial	condition	and	results	of	operations.

# Cyber	attacks	and	security	breaches	may	threaten	the	integrity	of	Alcoa's	intellectual	property	and	other	sensitive	information,	disrupt	its	business	operations, and	result	in	reputational	harm	and	other	negative	consequences	that	could	have	a	material	adverse	effect	on	its	financial	condition	and	results	of	operations.

Alcoa	faces	global	cybersecurity	threats,	which	may	range	from	uncoordinated	individual	attempts	to	sophisticated	and	targeted	measures,	known	as	advanced	persistent threats,	directed	at	the	Company.	Cyber	attacks	and	security	breaches	may	include,	but	are	not	limited	to,	attempts	to	access	information,	computer	viruses,	denial	of service	and	other	electronic	security	breaches.

The	Company	believes	that	it	faces	a	heightened	threat	of	cyber	attacks	due	to	the	industries	it	serves,	the	locations	of	its	operations	and	its	technological	innovations. The	Company	has	experienced	cybersecurity	attacks	in	the	past,	including	breaches	of	its	information	technology	systems	in	which	information	was	taken,	and	may experience	them	in	the	future,	potentially	with	more	frequency	or	sophistication.	Based	on	information	known	to	date,	past	attacks	have	not	had	a	material	impact	on Alcoa's	financial	condition	or	results	of	operations.	However,	due	to	the	evolving	nature	of	cybersecurity	threats,	the	scope	and	impact	of	any	future	incident	cannot	be predicted.	While	the	Company	continually	works	to	safeguard	its	systems	and	mitigate	potential	risks,	there	is	no	assurance	that	such	actions	will	be	sufficient	to	prevent cyber	attacks	or	security	breaches	that	manipulate	or	improperly	use	its	systems	or	networks,	compromise	confidential	or	otherwise	protected	information,	destroy	or corrupt	data,	or	otherwise	disrupt	its	operations.	The	occurrence	of	such	events	could	negatively	impact	Alcoa's	reputation	and	its	competitive	position	and	could	result in	litigation	with	third	parties,	regulatory	action,	loss	of	business,	potential	liability	and	increased	remediation	costs,	any	of	which	could	have	a	material	adverse	effect	on its	financial	condition	and	results	of	operations.	In	addition,	such	attacks	or	breaches	could	require	significant	management	attention	and	resources,	and	result	in	the diminution	of	the	value	of	the	Company's	investment	in	research	and	development.

# Joint	ventures	and	other	strategic	alliances	may	not	be	successful.

Alcoa	participates	in	joint	ventures	and	has	formed	strategic	alliances	and	may	enter	into	other	similar	arrangements	in	the	future.	For	example,	in	December	2009, Alcoa	formed	a	joint	venture	with	Ma'aden,	the	Saudi	Arabian	Mining	Company,	to	develop	a	fully	integrated	aluminum	complex	(including	a	bauxite	mine,	alumina refinery,	aluminum	smelter	and	rolling	mill)	in	the	Kingdom	of	Saudi	Arabia.	Although	the	Company	has,	in	connection	with	the	Saudi	Arabia	joint	venture	and	its	other existing	joint	ventures	and	strategic	alliances,	sought	to	protect	its	interests,	joint	ventures	and	strategic	alliances	inherently	involve	special	risks.	Whether	or	not	Alcoa holds	majority	interests	or	maintains	operational	control	in	such	arrangements,	its	partners	may:

•have	economic	or	business	interests	or	goals	that	are	inconsistent	with	or	opposed	to	those	of	the	Company;

•exercise	veto	rights	so	as	to	block	actions	that	Alcoa	believes	to	be	in	its	or	the	joint	venture's	or	strategic	alliance's	best	interests;

•take	action	contrary	to	Alcoa's	policies	or	objectives	with	respect	to	its	investments;	or

•as	a	result	of	financial	or	other	difficulties,	be	unable	or	unwilling	to	fulfill	their	obligations	under	the	joint	venture,	strategic	alliance	or	other	agreements, such	as	contributing	capital	to	expansion	or	maintenance	projects.

There	can	be	no	assurance	that	Alcoa's	joint	ventures	or	strategic	alliances	will	be	beneficial	to	Alcoa,	whether	due	to	the	above-described	risks,	unfavorable	global economic	conditions,	increases	in	construction	costs,	currency	fluctuations,	political	risks,	or	other	factors.

# Alcoa's	business	and	growth	prospects	may	be	negatively	impacted	by	limits	in	its	capital	expenditures.

Alcoa	requires	substantial	capital	to	invest	in	growth	opportunities	and	to	maintain	and	prolong	the	life	and	capacity	of	its	existing	facilities.	For	2016,	generating positive	cash	flow	from	operations	that	will	exceed	capital	expenditures	continues	to	be	an	Alcoa	target.	Insufficient	cash	generation	or	capital	project	overruns	may negatively	impact	Alcoa's	ability	to	fund	as	planned	its	sustaining	and	return-seeking	capital	projects.	Over	the	long	term,	Alcoa's	ability	to	take	advantage	of	improved aluminum	or	other	market	conditions	or	growth	opportunities	in	its	midstream	and	downstream	businesses	may	be	constrained	by	earlier	capital	expenditure	restrictions, which	could	adversely	affect	the	long-term	value	of	its	business	and	the	Company's	position	in	relation	to	its	competitors.

Alcoa	may	also	need	to	address	commercial	and	political	issues	in	relation	to	its	reductions	in	capital	expenditures	in	certain	of	the	jurisdictions	in	which	it	operates.	If Alcoa's	interest	in	its	joint	ventures	is	diluted	or	it	loses	key	concessions,	its	growth	could	be	constrained.	Any	of	the	foregoing	could	have	a	material	adverse	effect	on the	Company's	business,	results	of	operations,	financial	condition	and	prospects.

# Alcoa's	global	operations	expose	the	Company	to	risks	that	could	adversely	affect	Alcoa's	business,	financial	condition,	operating	results	or	cash	flows.

Alcoa	has	operations	or	activities	in	numerous	countries	and	regions	outside	the	United	States,	including	Brazil,	China,	Europe,	Guinea,	Russia,	and	the	Kingdom	of Saudi	Arabia.	The	Company's	global	operations	are	subject	to	a	number	of	risks,	including:

•economic	and	commercial	instability	risks,	including	those	caused	by	sovereign	and	private	debt	default,	corruption,	and	changes	in	local	government	laws, regulations	and	policies,	such	as	those	related	to	tariffs	and	trade	barriers,	taxation,	exchange	controls,	employment	regulations	and	repatriation	of	earnings;

•geopolitical	risks	such	as	political	instability,	civil	unrest,	expropriation,	nationalization	of	properties	by	a	government,	imposition	of	sanctions,

renegotiation	or	nullification	of	existing	agreements,	mining	leases	and	permits;

•	 war	or	terrorist	activities;

•	 major	public	health	issues	such	as	an	outbreak	of	a	pandemic	or	epidemic	(such	as	Sudden	Acute	Respiratory	Syndrome,	Avian	Influenza,	H7N9	virus,	or the	Ebola	virus),	which	could	cause	disruptions	in	Alcoa's	operations	or	workforce;

•difficulties	enforcing	intellectual	property	and	contractual	rights	in	certain	jurisdictions;	and

•unexpected	events,	including	fires	or	explosions	at	facilities,	and	natural	disasters.

While	the	impact	of	any	of	the	foregoing	factors	is	difficult	to	predict,	any	one	or	more	of	them	could	adversely	affect	Alcoa's	business,	financial	condition,	operating results	or	cash	flows.	Existing	insurance	arrangements	may	not	provide	protection	for	the	costs	that	may	arise	from	such	events.

# An	adverse	decline	in	the	liability	discount	rate,	lower-than-expected	investment	return	on	pension	assets	and	other	factors	could	affect	Alcoa's	results	of operations	or	amount	of	pension	funding	contributions	in	future	periods.

Alcoa's	results	of	operations	may	be	negatively	affected	by	the	amount	of	expense	Alcoa	records	for	its	pension	and	other	postretirement	benefit	plans,	reductions	in	the fair	value	of	plan	assets	and	other	factors.	U.S.	generally	accepted	accounting	principles	(GAAP)	require	that	Alcoa	calculate	income	or	expense	for	the	plans	using actuarial	valuations.

These	valuations	reflect	assumptions	about	financial	market	and	other	economic	conditions,	which	may	change	based	on	changes	in	key	economic	indicators.	The	most significant	year-end	assumptions	used	by	Alcoa	to	estimate	pension	or	other	postretirement	benefit	income	or	expense	for	the	following	year	are	the	discount	rate applied	to	plan	liabilities	and	the	expected	long-term	rate	of	return	on	plan	assets.	In	addition,	Alcoa	is	required	to	make	an	annual	measurement	of	plan	assets	and liabilities,	which	may	result	in	a	significant	charge	to	shareholders'	equity.	For	a	discussion	regarding	how	Alcoa's	financial	statements	can	be	affected	by	pension	and other	postretirement	benefits	accounting	policies,	see	"Critical	Accounting	Policies	and	Estimates—Pension	and	Other	Postretirement	Benefits"	in	Part	II,	Item	7. (Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	W	to	the	Consolidated	Financial	Statements—Pension	and	Other Postretirement	Benefits	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).	Although	GAAP	expense	and	pension	funding	contributions	are	impacted	by different	regulations	and	requirements,	the	key	economic	factors	that	affect	GAAP	expense	would	also	likely	affect	the	amount	of	cash	or	securities	Alcoa	would contribute	to	the	pension	plans.

Potential	pension	contributions	include	both	mandatory	amounts	required	under	federal	law	and	discretionary	contributions	to	improve	the	plans'	funded	status.	The Moving	Ahead	for	Progress	in	the	21st	Century	Act	("MAP-21"),	enacted	in	2012,	provided	temporary	relief	for	employers	like	Alcoa	who	sponsor	defined	benefit pension	plans	related	to	funding	contributions	under	the	Employee	Retirement	Income	Security	Act	of	1974	by	allowing	the	use	of	a	25-year	average	discount	rate within	an	upper	and	lower	range	for	purposes	of	determining	minimum	funding	obligations.	In	2014,	the	Highway	and	Transportation	Funding	Act	(HATFA)	was signed	into	law.	HATFA	extended	the	relief	provided	by	MAP-21	and	modified	the	interest	rates	that	had	been	set	by	MAP-21.	In	2015,	the	Bipartisan	Budget	Act	of 2015	(BBA	2015)	was	signed	into	law.	BBA	2015	extends	the	relief	period	provided	by	HAFTA.	Alcoa	believes	that	the	relief	provided	by	BBA	2015	will	moderately reduce	the	cash	flow	sensitivity	of	the	Company's	U.S.	pension	plans'	funded	status	to	potential	declines	in	discount	rates	over	the	next	several	years.	However,	higher than	expected	pension	contributions	due	to	a	decline	in	the	plans'	funded	status	as	a	result	of	declines	in	the	discount	rate	or	lower-than-expected	investment	returns	on plan	assets	could	have	a	material	negative	effect	on	the	Company's	cash	flows.	Adverse	capital	market	conditions	could	result	in	reductions	in	the	fair	value	of	plan assets	and	increase	the	Company's	liabilities	related	to	such	plans,	adversely	affecting	Alcoa's	liquidity	and	results	of	operations.

# Unanticipated	changes	in	our	tax	provisions	or	exposure	to	additional	tax	liabilities	could	affect	Alcoa's	future	profitability.

Alcoa	is	subject	to	income	taxes	in	both	the	United	States	and	various	non-U.S.	jurisdictions.	Its	domestic	and	international	tax	liabilities	are	dependent	upon	the distribution	of	income	among	these	different	jurisdictions.	Changes	in	applicable	domestic	or	foreign	tax	laws	and	regulations,	or	their	interpretation	and	application, including	the	possibility	of	retroactive	effect,	could	affect	the	Company's	tax	expense	and	profitability.	Alcoa's	tax	expense	includes	estimates	of	additional	tax	that	may be	incurred	for	tax	exposures	and	reflects	various	estimates	and	assumptions.	The	assumptions	include	assessments	of	future	earnings	of	the	Company	that	could	impact the	valuation	of	its	deferred	tax	assets.	The	Company's	future	results	of	operations	could	be	adversely	affected	by	changes	in	the	effective	tax	rate	as	a	result	of	a	change in	the	mix	of	earnings	in	countries	with	differing	statutory	tax	rates,	changes	in	the	overall	profitability	of	the	Company,	changes	in	tax	legislation	and	rates,	changes	in generally	accepted	accounting	principles,	changes	in	the	valuation	of	deferred	tax	assets	and	liabilities,	the	results	of	tax	audits	and	examinations	of	previously	filed	tax returns	or	related	litigation	and	continuing	assessments	of	its	tax	exposures.	Corporate	tax	reform	and	tax	law	changes	continue	to	be	analyzed	in	the	United	States	and	in many	other	jurisdictions.	Significant	changes	to	the	U.S.	corporate	tax	system	in	particular	could	have	a	substantial	impact,	positive	or	negative,	on	Alcoa's	effective	tax rate,	cash	tax	expenditures,	and	deferred	tax	assets	and	liabilities.

# Union	disputes	and	other	employee	relations	issues	could	adversely	affect	Alcoa's	financial	results.

A	significant	portion	of	Alcoa's	employees	are	represented	by	labor	unions	in	a	number	of	countries	under	various	collective	bargaining	agreements	with	varying durations	and	expiration	dates.	For	more	information,	see	"Employees"	in	Part	I,	Item	1.	(Business)	of	this	report.	While	Alcoa	was	previously	successful	in renegotiating	the	master	collective	bargaining	agreement	with	the	United	Steelworkers	(the	most	recent	renegotiation	having	taken	place	in	June	2014),	Alcoa	may	not be	able	to	satisfactorily	renegotiate	that	agreement	or	other	collective	bargaining	agreements	in	the	U.S.	and	other	countries	when	they	expire.	In	addition,	existing collective	bargaining	agreements	may	not	prevent	a	strike	or	work	stoppage	at	Alcoa's	facilities	in	the	future.	Alcoa	may	also	be	subject	to	general	country	strikes	or work	stoppages	unrelated	to	its	business	or	collective	bargaining	agreements.	Any	such	work	stoppages	(or	potential	work	stoppages)	could	have	a	material	adverse effect	on	Alcoa's	financial	results.

# Alcoa	could	be	adversely	affected	by	changes	in	the	business	or	financial	condition	of	a	significant	customer	or	customers.

A	significant	downturn	or	deterioration	in	the	business	or	financial	condition	of	a	key	customer	or	customers	supplied	by	Alcoa	could	affect	Alcoa's	results	of	operations in	a	particular	period.	Alcoa's	customers	may	experience	delays	in	the	launch	of	new	products,	labor	strikes,	diminished	liquidity	or	credit	unavailability,	weak	demand for	their	products,	or	other	difficulties	in	their	businesses.	If	Alcoa	is	not	successful	in	replacing	business	lost	from	such	customers,	profitability	may	be	adversely affected.

# Alcoa	may	not	be	able	to	successfully	develop	and	implement	technology	initiatives.

Alcoa	is	working	on	new	developments	for	a	number	of	strategic	projects	in	all	business	segments,	including	additive	manufacturing,	alloy	development,	engineered finishes	and	product	design,	high	speed	continuous	casting	and	rolling	technology,	and	other	advanced	manufacturing	technologies.	For	more	information	on	Alcoa's research	and	development	programs,	see	"Research	and	Development"	in	Part	I,	Item	1.	(Business)	of	this	report.	There	can	be	no	assurance	that	such	developments	or technologies	will	be	commercially	feasible	or	beneficial	to	Alcoa.

# Alcoa's	human	resource	talent	pool	may	not	be	adequate	to	support	the	Company's	growth.

Alcoa's	existing	operations	and	development	projects	require	highly	skilled	executives	and	staff	with	relevant	industry	and	technical	experience.	The	inability	of	the Company	or	the	industry	to	attract	and	retain	such	people	may	adversely	impact	Alcoa's	ability	to	adequately	meet	project	demands	and	fill	roles	in	existing	operations. Skills	shortages	in	engineering,	technical	service,	construction	and	maintenance	contractors	and	other	labor	market	inadequacies	may	also	impact	activities.	These shortages	may	adversely	impact	the	cost	and	schedule	of	development	projects	and	the	cost	and	efficiency	of	existing	operations.

# Alcoa	may	not	realize	expected	benefits	from	its	productivity	and	cost-reduction	initiatives.

Alcoa	has	undertaken,	and	may	continue	to	undertake,	productivity	and	cost-reduction	initiatives	to	improve	performance	and	conserve	cash,	including	new	procurement strategies	for	raw	materials,	such	as	backward	integration	and	non-traditional	sourcing	from	numerous	geographies,	deployment	of	company-wide	business	process models,	such	as	Alcoa's	degrees	of	implementation	process	in	which	ideas	are	executed	in	a	disciplined	manner	to	generate	savings,	and	overhead	cost	reductions.	There is	no	assurance	that	these	initiatives	will	be	successful	or	beneficial	to	Alcoa	or	that	estimated	cost	savings	from	such	activities	will	be	realized.

# Alcoa	may	be	exposed	to	significant	legal	proceedings,	investigations	or	changes	in	U.S.	federal,	state	or	foreign	law,	regulation	or	policy.

Alcoa's	results	of	operations	or	liquidity	in	a	particular	period	could	be	affected	by	new	or	increasingly	stringent	laws,	regulatory	requirements	or	interpretations,	or outcomes	of	significant	legal	proceedings	or	investigations	adverse	to

Alcoa.	The	Company	may	experience	a	change	in	effective	tax	rates	or	become	subject	to	unexpected	or	rising	costs	associated	with	business	operations	or	provision	of health	or	welfare	benefits	to	employees	due	to	changes	in	laws,	regulations	or	policies.	The	Company	is	also	subject	to	a	variety	of	legal	compliance	risks.	These	risks include,	among	other	things,	potential	claims	relating	to	product	liability,	health	and	safety,	environmental	matters,	intellectual	property	rights,	government	contracts, taxes,	and	compliance	with	U.S.	and	foreign	export	laws,	anti-bribery	laws,	competition	laws	and	sales	and	trading	practices.	Alcoa	could	be	subject	to	fines,	penalties, damages	(in	certain	cases,	treble	damages),	or	suspension	or	debarment	from	government	contracts.

While	Alcoa	believes	it	has	adopted	appropriate	risk	management	and	compliance	programs	to	address	and	reduce	these	risks,	the	global	and	diverse	nature	of	its operations	means	that	these	risks	will	continue	to	exist,	and	additional	legal	proceedings	and	contingencies	may	arise	from	time	to	time.	In	addition,	various	factors	or developments	can	lead	the	Company	to	change	current	estimates	of	liabilities	or	make	such	estimates	for	matters	previously	not	susceptible	of	reasonable	estimates,	such as	a	significant	judicial	ruling	or	judgment,	a	significant	settlement,	significant	regulatory	developments	or	changes	in	applicable	law.	A	future	adverse	ruling	or settlement	or	unfavorable	changes	in	laws,	regulations	or	policies,	or	other	contingencies	that	the	Company	cannot	predict	with	certainty	could	have	a	material	adverse effect	on	the	Company's	results	of	operations	or	cash	flows	in	a	particular	period.	For	additional	information	regarding	the	legal	proceedings	involving	the	Company,	see the	discussion	in	Part	I,	Item	3.	(Legal	Proceedings)	of	this	report	and	in	Note	N	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and Supplementary	Data).

# Alcoa	is	subject	to	a	broad	range	of	health,	safety	and	environmental	laws	and	regulations	in	the	jurisdictions	in	which	it	operates	and	may	be	exposed	to substantial	costs	and	liabilities	associated	with	such	laws	and	regulations.

Alcoa's	operations	worldwide	are	subject	to	numerous	complex	and	increasingly	stringent	health,	safety	and	environmental	laws	and	regulations.	The	costs	of	complying with	such	laws	and	regulations,	including	participation	in	assessments	and	cleanups	of	sites,	as	well	as	internal	voluntary	programs,	are	significant	and	will	continue	to be	so	for	the	foreseeable	future.	Environmental	laws	may	impose	cleanup	liability	on	owners	and	occupiers	of	contaminated	property,	including	past	or	divested properties,	regardless	of	whether	the	owners	and	occupiers	caused	the	contamination	or	whether	the	activity	that	caused	the	contamination	was	lawful	at	the	time	it	was conducted.	Environmental	matters	for	which	Alcoa	may	be	liable	may	arise	in	the	future	at	its	present	sites,	where	no	problem	is	currently	known,	at	previously	owned sites,	sites	previously	operated	by	the	Company,	sites	owned	by	its	predecessors	or	sites	that	it	may	acquire	in	the	future.	Compliance	with	environmental,	health	and safety	legislation	and	regulatory	requirements	may	prove	to	be	more	limiting	and	costly	than	the	Company	anticipates.	Alcoa's	results	of	operations	or	liquidity	in	a particular	period	could	be	affected	by	certain	health,	safety	or	environmental	matters,	including	remediation	costs	and	damages	related	to	certain	sites.	Additionally, evolving	regulatory	standards	and	expectations	can	result	in	increased	litigation	and/or	increased	costs,	all	of	which	can	have	a	material	and	adverse	effect	on	earnings and	cash	flows.

# Climate	change,	climate	change	legislation	or	regulations	and	greenhouse	effects	may	adversely	impact	Alcoa's	operations	and	markets.

Energy	is	a	significant	input	in	a	number	of	Alcoa's	operations.	There	is	growing	recognition	that	consumption	of	energy	derived	from	fossil	fuels	is	a	contributor	to global	warming.

A	number	of	governments	or	governmental	bodies	have	introduced	or	are	contemplating	legislative	and	regulatory	change	in	response	to	the	potential	impacts	of	climate change.	There	is	also	current	and	emerging	regulation,	such	as	the	mandatory	renewable	energy	target	in	Australia,	Québec's	transition	to	a	"cap	and	trade"	system	with compliance	required	beginning	2013,	the	European	Union	Emissions	Trading	Scheme	and	the	United	States'	Clean	Power	Plan,	which	became	effective	on December	22,	2015.	Alcoa	will	likely	see	changes	in	the	margins	of	greenhouse	gas-intensive	assets	and	energy-intensive	assets	as	a	result	of	regulatory	impacts	in	the countries	in	which	the	Company	operates.	These	regulatory	mechanisms	may	be	either	voluntary	or	legislated	and	may	impact	Alcoa's	operations

directly	or	indirectly	through	customers	or	Alcoa's	supply	chain.	Inconsistency	of	regulations	may	also	change	the	attractiveness	of	the	locations	of	some	of	the Company's	assets.	Assessments	of	the	potential	impact	of	future	climate	change	legislation,	regulation	and	international	treaties	and	accords	are	uncertain,	given	the wide	scope	of	potential	regulatory	change	in	countries	in	which	Alcoa	operates.	The	Company	may	realize	increased	capital	expenditures	resulting	from	required compliance	with	revised	or	new	legislation	or	regulations,	costs	to	purchase	or	profits	from	sales	of,	allowances	or	credits	under	a	"cap	and	trade"	system,	increased insurance	premiums	and	deductibles	as	new	actuarial	tables	are	developed	to	reshape	coverage,	a	change	in	competitive	position	relative	to	industry	peers	and	changes	to profit	or	loss	arising	from	increased	or	decreased	demand	for	goods	produced	by	the	Company	and	indirectly,	from	changes	in	costs	of	goods	sold.

The	potential	physical	impacts	of	climate	change	on	the	Company's	operations	are	highly	uncertain,	and	will	be	particular	to	the	geographic	circumstances.	These	may include	changes	in	rainfall	patterns,	shortages	of	water	or	other	natural	resources,	changing	sea	levels,	changing	storm	patterns	and	intensities,	and	changing	temperature levels.	These	effects	may	adversely	impact	the	cost,	production	and	financial	performance	of	Alcoa's	operations.

Alcoa's	plan	to	separate	into	two	independent	publicly-traded	companies	is	subject	to	various	risks	and	uncertainties	and	may	not	be	completed	in	accordance with	the	expected	plans	or	anticipated	timeline,	or	at	all,	and	will	involve	significant	time	and	expense,	which	could	disrupt	or	adversely	affect	Alcoa's business.

On	September	28,	2015,	Alcoa	announced	plans	to	separate	into	two	independent	publicly-traded	companies:	a	Value-Add	company	comprising	the	Global	Rolled Products,	Engineered	Products	and	Solutions,	and	Transportation	and	Construction	Solutions	segments,	and	an	Upstream	company	comprising	the	Alumina	and	Primary Metals	segments.	The	separation,	which	is	currently	targeted	to	be	completed	in	the	second	half	of	2016,	is	subject	to	approval	by	Alcoa's	Board	of	Directors	of	the	final terms	of	the	separation	and	market,	regulatory	and	certain	other	conditions.	Unanticipated	developments,	including,	among	others,	failure	of	the	separation	to	qualify	for the	expected	tax	treatment,	the	possibility	that	any	third-party	consents	required	in	connection	with	the	separation	will	not	be	received,	material	adverse	changes	in aluminum	industry	conditions	and	changes	in	global	economic	and	financial	market	conditions	generally,	could	delay	or	prevent	the	completion	of	the	proposed separation,	or	cause	the	proposed	separation	to	occur	on	terms	or	conditions	that	are	different	or	less	favorable	than	expected.

Alcoa	expects	that	the	process	of	completing	the	proposed	separation	will	be	time-consuming	and	involve	significant	costs	and	expenses,	which	may	be	significantly higher	than	what	it	currently	anticipates	and	may	not	yield	a	benefit	if	the	separation	is	not	completed.	Executing	the	proposed	separation	will	require	significant	time and	attention	from	Alcoa's	senior	management	and	employees,	which	could	disrupt	the	Company's	ongoing	business	and	adversely	affect	the	financial	results	and results	of	operations.	Alcoa	may	also	experience	increased	difficulties	in	attracting,	retaining	and	motivating	employees	during	the	pendency	of	the	separation	and following	its	completion,	which	could	harm	the	Company's	businesses.

# The	separation	may	not	achieve	some	or	all	of	the	anticipated	benefits.

Alcoa	may	not	realize	some	or	all	of	the	anticipated	strategic,	financial,	operational	or	other	benefits	from	the	separation.	As	independent	publicly-traded	companies,	the Value-Add	and	Upstream	companies	will	be	smaller,	less	diversified	companies	with	a	narrower	business	focus	and	may	be	more	vulnerable	to	changing	market conditions,	such	as	changes	in	aluminum	industry	conditions,	which	could	result	in	increased	volatility	in	their	cash	flows,	working	capital	and	financing	requirements and	could	materially	and	adversely	affect	the	respective	business,	financial	condition	and	results	of	operations.	Further,	there	can	be	no	assurance	that	the	combined value	of	the	common	stock	of	the	two	publicly-traded	companies	will	be	equal	to	or	greater	than	what	the	value	of	Alcoa's	common	stock	would	have	been	had	the proposed	separation	not	occurred.

# The	proposed	separation	may	result	in	disruptions	to,	and	negatively	impact	Alcoa's	relationships	with,	the	Company's	suppliers,	customers	and	other business	partners.

Uncertainty	related	to	the	proposed	separation	may	lead	suppliers,	customers	and	other	parties	with	which	Alcoa	currently	does	business	or	may	do	business	in	the	future to	terminate	or	attempt	to	negotiate	changes	in	existing

business	relationships,	or	to	consider	entering	into	business	relationships	with	parties	other	than	Alcoa.	These	disruptions	could	have	a	material	and	adverse	effect	on Alcoa's	businesses,	financial	condition,	results	of	operations	and	prospects,	or	the	businesses,	financial	condition,	results	of	operations	and	prospects	of	the	independent companies	resulting	from	the	separation.	The	effect	of	such	disruptions	could	be	exacerbated	by	any	delays	in	the	completion	of	the	separation.

# Item	1B.		UnresolvedStaff	Comments.

None.

# Item	2.		Properties.

Alcoa's	principal	office	is	located	at	390	Park	Avenue,	New	York,	New	York	10022-4608.	Alcoa's	corporate	center	is	located	at	201	Isabella	Street,	Pittsburgh,

Pennsylvania	15212-5858.	The	Alcoa	Technical	Center	for	research	and	development	is	located	at	100	Technical	Drive,	Alcoa	Center,	Pennsylvania	15069-0001.

Alcoa	leases	some	of	its	facilities;	however,	it	is	the	opinion	of	management	that	the	leases	do	not	materially	affect	the	continued	use	of	the	properties	or	the	properties' values.

Alcoa	believes	that	its	facilities	are	suitable	and	adequate	for	its	operations.	Although	no	title	examination	of	properties	owned	by	Alcoa	has	been	made	for	the	purpose of	this	report,	the	Company	knows	of	no	material	defects	in	title	to	any	such	properties.	See	Notes	A	and	H	to	the	financial	statements	for	information	on	properties, plants	and	equipment.

Alcoa	has	active	plants	and	holdings	under	the	following	segments	and	in	the	following	geographic	areas:

# ALUMINA

Bauxite:	See	the	tables	and	related	text	in	the	Bauxite	Interests	section	on	pages	3-10	of	this	report.

Alumina:	See	the	table	and	related	text	in	the	Alumina	Refining	Facilities	and	Capacity	section	on	pages	10-12	of	this	report.

# PRIMARY	METALS

See	the	table	and	related	text	in	the	Primary	Aluminum	Facilities	and	Capacity	section	on	pages	12-14	of	this	report.

See	the	table	and	related	text	in	the	Global	Rolled	Products	Facilities	section	on	page	14-15	of	this	report.

See	the	table	and	related	text	in	the	Engineered	Products	and	Solutions	Facilities	section	on	pages	15-18	of	this	report.

See	the	table	and	related	text	in	the	Transportation	and	Construction	Solutions	section	on	pages	18-19	of	this	report.

# Item	3.		Legal Proceedings.

In	the	ordinary	course	of	its	business,	Alcoa	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential.

# Litigation

# Italian	Energy	Matter

As	previously	reported,	before	2002,	Alcoa	purchased	power	in	Italy	in	the	regulated	energy	market	and	received	a	drawback	of	a	portion	of	the	price	of	power	under	a special	tariff	in	an	amount	calculated	in	accordance	with	a

published	resolution	of	the	Italian	Energy	Authority,	Energy	Authority	Resolution	n.	204/1999	("204/1999").	In	2001,	the	Energy	Authority	published	another resolution,	which	clarified	that	the	drawback	would	be	calculated	in	the	same	manner,	and	in	the	same	amount,	in	either	the	regulated	or	unregulated	market.	At	the beginning	of	2002,	Alcoa	left	the	regulated	energy	market	to	purchase	energy	in	the	unregulated	market.	Subsequently,	in	2004,	the	Energy	Authority	introduced regulation	no.	148/2004	which	set	forth	a	different	method	for	calculating	the	special	tariff	that	would	result	in	a	different	drawback	for	the	regulated	and	unregulated markets.	Alcoa	challenged	the	new	regulation	in	the	Administrative	Court	of	Milan	and	received	a	favorable	judgment	in	2006.	Following	this	ruling,	Alcoa	continued	to receive	the	power	price	drawback	in	accordance	with	the	original	calculation	method,	through	2009,	when	the	European	Commission	declared	all	such	special	tariffs	to be	impermissible	"state	aid."	In	2010,	the	Energy	Authority	appealed	the	2006	ruling	to	the	Consiglio	di	Stato	(final	court	of	appeal).	On	December	2,	2011,	the Consiglio	di	Stato	ruled	in	favor	of	the	Energy	Authority	and	against	Alcoa,	thus	presenting	the	opportunity	for	the	energy	regulators	to	seek	reimbursement	from	Alcoa of	an	amount	equal	to	the	difference	between	the	actual	drawback	amounts	received	over	the	relevant	time	period,	and	the	drawback	as	it	would	have	been	calculated	in accordance	with	regulation	148/2004.	On	February	23,	2012,	Alcoa	filed	its	appeal	of	the	decision	of	the	Consiglio	di	Stato	(this	appeal	was	subsequently	withdrawn	in March	2013).	On	March	26,	2012,	Alcoa	received	a	letter	from	the	agency	(Cassa	Conguaglio	per	il	Settore	Eletrico	(CCSE))	responsible	for	making	and	collecting payments	on	behalf	of	the	Energy	Authority	demanding	payment	in	the	amount	of	approximately	$110	million	(€85	million),	including	interest.	By	letter	dated	April	5, 2012,	Alcoa	informed	CCSE	that	it	disputes	the	payment	demand	of	CCSE	since	(i)	CCSE	was	not	authorized	by	the	Consiglio	di	Stato	decisions	to	seek	payment	of	any amount,	(ii)	the	decision	of	the	Consiglio	di	Stato	has	been	appealed	(see	above),	and	(iii)	in	any	event,	no	interest	should	be	payable.	On	April	29,	2012,	Law	No.	44	of 2012	("44/2012")	came	into	effect,	changing	the	method	to	calculate	the	drawback.	On	February	21,	2013,	Alcoa	received	a	revised	request	letter	from	CCSE demanding	Alcoa's	subsidiary,	Alcoa	Trasformazioni	S.r.l.,	make	a	payment	in	the	amount	of	$97	million	(€76	million),	including	interest,	which	reflects	a	revised calculation	methodology	by	CCSE	and	represents	the	high	end	of	the	range	of	reasonably	possible	loss	associated	with	this	matter	of	$0	to	$97	million	(€76	million). Alcoa	has	rejected	that	demand	and	has	formally	challenged	it	through	an	appeal	before	the	Administrative	Court	on	April	5,	2013.	The	Administrative	Court	scheduled a	hearing	for	December	19,	2013,	which	was	subsequently	postponed	until	April	17,	2014,	and	further	postponed	until	June	19,	2014.	On	this	date	the	Administrative Court	listened	to	Alcoa's	oral	argument,	and	on	September	2,	2014,	rendered	its	decision.	The	Administrative	Court	declared	the	payment	request	of	CCSE	and	the Energy	Authority	to	Alcoa	to	be	unsubstantiated	based	on	the	148/2004	resolution	with	respect	to	the	January	19,	2007	through	November	19,	2009	timeframe.	On December	18,	2014,	the	CCSE	and	the	Energy	Authority	appealed	the	Administrative	Court's	September	2,	2014	decision;	however,	a	date	for	the	hearing	has	not	been scheduled.	As	a	result	of	the	conclusion	of	the	European	Commission	Matter	on	January	26,	2016	described	below,	the	Company	has	modified	its	outlook	with	respect to	a	portion	of	the	pending	legal	proceedings	related	to	this	matter.	At	this	time,	the	Company	is	unable	to	reasonably	predict	the	ultimate	outcome	for	this	matter.

# European	Commission	Matter

As	previously	reported,	in	July	2006,	the	European	Commission	(EC)	announced	that	it	had	opened	an	investigation	to	establish	whether	an	extension	of	the	regulated electricity	tariff	granted	by	Italy	to	some	energy-intensive	industries	complied	with	European	Union	(EU)	state	aid	rules.	The	Italian	power	tariff	extended	the	tariff	that was	in	force	until	December	31,	2005	through	November	19,	2009	(Alcoa	had	been	incurring	higher	power	costs	at	its	smelters	in	Italy	subsequent	to	the	tariff	end	date through	the	end	of	2012).	The	extension	was	originally	through	2010,	but	the	date	was	changed	by	legislation	adopted	by	the	Italian	Parliament	effective	on	August	15, 2009.	Prior	to	expiration	of	the	tariff	in	2005,	Alcoa	had	been	operating	in	Italy	for	more	than	10	years	under	a	power	supply	structure	approved	by	the	EC	in	1996.	That measure	provided	a	competitive	power	supply	to	the	primary	aluminum	industry	and	was	not	considered	state	aid	from	the	Italian	Government.	The	EC's	announcement expressed	concerns	about	whether	Italy's	extension	of	the	tariff	beyond	2005	was	compatible	with	EU	legislation	and	potentially	distorted	competition	in	the	European market	of	primary	aluminum,	where	energy	is	an	important	part	of	the	production	costs.

On	November	19,	2009,	the	EC	announced	a	decision	in	this	matter	stating	that	the	extension	of	the	tariff	by	Italy	constituted	unlawful	state	aid,	in	part,	and,	therefore, the	Italian	Government	is	to	recover	a	portion	of	the	benefit	Alcoa	received	since	January	2006	(including	interest).	The	amount	of	this	recovery	was	to	be	based	on	a calculation	prepared	by	the	Italian	Government	(see	below).	In	late	2009,	after	discussions	with	legal	counsel	and	reviewing	the	bases	on	which	the	EC	decided, including	the	different	considerations	cited	in	the	EC	decision	regarding	Alcoa's	two	smelters	in	Italy,	Alcoa	recorded	a	charge	of	$250	million	(€173	million),	which included	$20	million	(€14	million)	to	write	off	a	receivable	from	the	Italian	Government	for	amounts	due	under	the	now	expired	tariff	structure	and	$230	million	(€159 million)	to	establish	a	reserve.	On	April	19,	2010,	Alcoa	filed	an	appeal	of	this	decision	with	the	General	Court	of	the	EU	(see	below).	Prior	to	2012,	Alcoa	was	involved in	other	legal	proceedings	related	to	this	matter	that	separately	sought	the	annulment	of	the	EC's	July	2006	decision	to	open	an	investigation	alleging	that	such	decision did	not	follow	the	applicable	procedural	rules	and	requested	injunctive	relief	to	suspend	the	effectiveness	of	the	EC's	November	19,	2009	decision.	However,	the decisions	by	the	General	Court,	and	subsequent	appeals	to	the	European	Court	of	Justice,	resulted	in	the	denial	of	these	remedies.

In	June	2012,	Alcoa	received	formal	notification	from	the	Italian	Government	with	a	calculated	recovery	amount	of	$375	million	(€303	million);	this	amount	was reduced	by	$65	million	(€53	million)	for	amounts	owed	by	the	Italian	Government	to	Alcoa,	resulting	in	a	net	payment	request	of	$310	million	(€250	million).	In	a notice	published	in	the	Official	Journal	of	the	European	Union	on	September	22,	2012,	the	EC	announced	that	it	had	filed	an	action	against	the	Italian	Government	on July	18,	2012	to	compel	it	to	collect	the	recovery	amount	(on	October	17,	2013,	the	European	Court	of	Justice	ordered	Italy	to	so	collect).	On	September	27,	2012,	Alcoa received	a	request	for	payment	in	full	of	the	$310	million	(€250	million)	by	October	31,	2012.	Following	discussions	with	the	Italian	Government	regarding	the	timing of	such	payment,	Alcoa	paid	the	requested	amount	in	five	quarterly	installments	of	$69	million	(€50	million)	beginning	in	October	2012	through	December	2013. Notwithstanding	the	payments	made,	Alcoa's	estimate	of	the	most	probable	loss	of	the	ultimate	outcome	of	this	matter	and	the	low	end	of	the	range	of	reasonably possible	loss,	which	is	$174	million	(€159	million)	to	$332	million	(€303	million),	remains	the	$174	million	(€159	million)	recorded	in	2009	(the	U.S.	dollar	amount reflects	the	effects	of	foreign	currency	movements	since	2009).	Alcoa	no	longer	has	a	reserve	for	this	matter;	instead,	Alcoa	has	a	noncurrent	asset	reflecting	the	excess of	the	total	of	the	five	payments	made	to	the	Italian	Government	over	the	reserve	recorded	in	2009.	At	December	31,	2015,	the	noncurrent	asset	was	$100	million	(€91 million)	(this	does	not	include	the	$58	million	(€53	million)	for	amounts	owed	by	the	Italian	Government	to	Alcoa	mentioned	above).

On	October	16,	2014,	Alcoa	received	notice	from	the	General	Court	of	the	EU	that	its	April	19,	2010	appeal	of	the	EC's	November	19,	2009	decision	was	denied.	On December	27,	2014,	Alcoa	filed	an	appeal	of	the	General	Court's	October	16,	2014	ruling	to	the	European	Court	of	Justice	(ECJ).	Following	submission	of	the	EC's response	to	the	appeal,	on	June	10,	2015,	Alcoa	filed	a	request	for	an	oral	hearing	before	the	ECJ;	no	decision	on	that	request	was	received.	On	January	26,	2016,	Alcoa was	informed	that	the	ECJ	had	dismissed	Alcoa's	December	27,	2014	appeal	of	the	General	Court's	October	16,	2014	ruling.	The	dismissal	of	Alcoa's	appeal	represents the	conclusion	of	the	legal	proceedings	in	this	matter.	There	will	be	no	further	reporting	of	this	matter.

Alcoa	is	involved	in	proceedings	under	the	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act,	also	known	as	Superfund	(CERCLA)	or analogous	state	provisions	regarding	the	usage,	disposal,	storage	or	treatment	of	hazardous	substances	at	a	number	of	sites	in	the	U.S.	The	Company	has	committed	to participate,	or	is	engaged	in	negotiations	with	federal	or	state	authorities	relative	to	its	alleged	liability	for	participation,	in	clean-up	efforts	at	several	such	sites.	The most	significant	of	these	matters,	including	the	remediation	of	the	Grasse	River	in	Massena,	NY,	are	discussed	in	the	Environmental	Matters	section	of	Note	N	to	the Consolidated	Financial	Statements	under	the	caption	"Environmental	Matters"	on	pages	130-134.

As	previously	reported,	in	August	2005,	Dany	Lavoie,	a	resident	of	Baie	Comeau	in	the	Canadian	Province	of	Québec,	filed	a	Motion	for	Authorization	to	Institute	a Class	Action	and	for	Designation	of	a	Class	Representative	against	Alcoa	Canada	Ltd.,	Alcoa	Limitée,	Societe	Canadienne	de	Metaux	Reynolds	Limitée	and	Canadian British	Aluminum	in	the

Superior	Court	of	Québec	in	the	District	of	Baie	Comeau.	Plaintiff	seeks	to	institute	the	class	action	on	behalf	of	a	putative	class	consisting	of	all	past,	present	and	future owners,	tenants	and	residents	of	Baie	Comeau's	St.	Georges	neighborhood.	He	alleges	that	defendants,	as	the	present	and	past	owners	and	operators	of	an	aluminum smelter	in	Baie	Comeau,	have	negligently	allowed	the	emission	of	certain	contaminants	from	the	smelter,	specifically	Polycyclic	Aromatic	Hydrocarbons	or	"PAHs," that	have	been	deposited	on	the	lands	and	houses	of	the	St.	Georges	neighborhood	and	its	environs	causing	damage	to	the	property	of	the	putative	class	and	causing health	concerns	for	those	who	inhabit	that	neighborhood.	Plaintiff	originally	moved	to	certify	a	class	action,	sought	to	compel	additional	remediation	to	be	conducted	by the	defendants	beyond	that	already	undertaken	by	them	voluntarily,	sought	an	injunction	against	further	emissions	in	excess	of	a	limit	to	be	determined	by	the	court	in consultation	with	an	independent	expert,	and	sought	money	damages	on	behalf	of	all	class	members.	In	May	2007,	the	court	authorized	a	class	action	suit	to	include	only people	who	suffered	property	damage	or	personal	injury	damages	caused	by	the	emission	of	PAHs	from	the	smelter.	In	September	2007,	plaintiffs	filed	the	claim	against the	original	defendants,	which	the	court	had	authorized	in	May.	Alcoa	has	filed	its	Statement	of	Defense	and	plaintiffs	filed	an	Answer	to	that	Statement.	Alcoa	also filed	a	Motion	for	Particulars	with	respect	to	certain	paragraphs	of	plaintiffs'	Answer	and	a	Motion	to	Strike	with	respect	to	certain	paragraphs	of	plaintiffs'	Answer.	In late	2010,	the	court	denied	these	motions.	The	Soderberg	smelting	process	that	plaintiffs	allege	to	be	the	source	of	emissions	of	concern	has	ceased	operations	and	has been	dismantled.	No	further	formal	court	proceedings	or	discovery	has	occurred,	while	technical	advisors	nominated	by	agreement	of	the	parties	confer	on	potential health	impacts	of	prior	emissions.	This	protocol	has	been	agreed	to	by	the	parties	who	have	also	advised	the	court	regarding	the	process.	Plaintiffs	have	filed	a	motion seeking	appointment	of	an	expert	to	advise	the	court	on	matters	of	sampling	of	homes	and	standards	for	interior	home	remediation.	Alcoa	has	announced	its	opposition to	that	motion.	Although	initially	setting	a	schedule	for	briefing,	during	January	2016,	the	court	notified	the	parties	that	it	was	suspending	that	schedule	until	further notice.	No	further	schedule	has	been	set.	Further	proceedings	in	the	case	will	await	resolution	of	the	motion.	At	this	stage	of	the	proceeding,	the	Company	is	unable	to reasonably	predict	an	outcome	or	to	estimate	a	range	of	reasonably	possible	loss.

As	previously	reported,	in	October	2006,	in	Barnett,	et	al.	v.	Alcoa	and	Alcoa	Fuels,	Inc.,	Warrick	Circuit	Court,	County	of	Warrick,	Indiana;	87-C01-0601-PL-499, forty-one	plaintiffs	sued	Alcoa	Inc.	and	a	subsidiary,	asserting	claims	similar	to	those	asserted	in	Musgrave	v.	Alcoa,	et	al.,	Warrick	Circuit	Court,	County	of	Warrick, Indiana;	87-C01-0601-CT-006.	In	November	2007,	Alcoa	Inc.	and	its	subsidiary	filed	a	motion	to	dismiss	the	Barnett	cases.	In	October	2008,	the	Warrick	County Circuit	Court	granted	Alcoa's	motions	to	dismiss,	dismissing	all	claims	arising	out	of	alleged	occupational	exposure	to	wastes	at	the	Squaw	Creek	Mine,	but	in November	2008,	the	trial	court	clarified	its	ruling,	indicating	that	the	order	does	not	dispose	of	plaintiffs'	personal	injury	claims	based	upon	alleged	"recreational"	or non-occupational	exposure.	Plaintiffs	also	filed	a	"second	amended	complaint"	in	response	to	the	court's	orders	granting	Alcoa's	motion	to	dismiss.	On	July	7,	2010,	the court	granted	the	parties'	joint	motions	for	a	general	continuance	of	trial	settings.	Discovery	in	this	matter	remains	stayed	.	The	Company	is	unable	to	reasonably	predict an	outcome	or	to	estimate	a	range	of	reasonably	possible	loss	because	plaintiffs	have	merely	alleged	that	their	medical	condition	is	attributable	to	exposure	to	materials	at the	Squaw	Creek	Mine	but	no	further	information	is	available	due	to	the	discovery	stay.

As	previously	reported,	in	1996,	Alcoa	acquired	the	Fusina,	Italy	smelter	and	rolling	operations	and	the	Portovesme,	Italy	smelter	(both	of	which	are	owned	by	Alcoa's subsidiary,	Alcoa	Trasformazioni	S.r.l.)	from	Alumix,	an	entity	owned	by	the	Italian	Government.	Alcoa	also	acquired	the	extrusion	plants	located	in	Feltre	and Bolzano,	Italy.	At	the	time	of	the	acquisition,	Alumix	indemnified	Alcoa	for	pre-existing	environmental	contamination	at	the	sites.	In	2004,	the	Italian	Ministry	of Environment	(MOE)	issued	orders	to	Alcoa	Trasformazioni	S.r.l.	and	Alumix	for	the	development	of	a	clean-up	plan	related	to	soil	contamination	in	excess	of	allowable limits	under	legislative	decree	and	to	institute	emergency	actions	and	pay	natural	resource	damages.	On	April	5,	2006,	Alcoa	Trasformazioni	S.r.l.'s	Fusina	site	was	also sued	by	the	MOE	and	Minister	of	Public	Works	(MOPW)	in	the	Civil	Court	of	Venice	for	an	alleged	liability	for	environmental	damages,	in	parallel	with	the	orders already	issued	by	the	MOE.	Alcoa	Trasformazioni	S.r.l.	appealed	the	orders,	defended	the	civil	case	for	environmental	damages	and	filed	suit	against	Alumix,	as discussed	below.	Similar	issues	also	existed	with	respect	to	the	Bolzano	and	Feltre	plants,	based	on	orders

issued	by	local	authorities	in	2006.	Most,	if	not	all,	of	the	underlying	activities	occurred	during	the	ownership	of	Alumix,	the	governmental	entity	that	sold	the	Italian plants	to	Alcoa.

As	noted	above,	in	response	to	the	2006	civil	suit	by	the	MOE	and	MOPW,	Alcoa	Trasformazioni	S.r.l.	filed	suit	against	Alumix	claiming	indemnification	under	the original	acquisition	agreement,	but	brought	that	suit	in	the	Court	of	Rome	due	to	jurisdictional	rules.	In	June	2008,	the	parties	(Alcoa	and	now	Ligestra	S.r.l.	(Ligestra), the	successor	to	Alumix)	signed	a	preliminary	agreement	by	which	they	have	committed	to	pursue	a	settlement.	The	Court	of	Rome	accepted	the	request,	and	postponed the	Court's	expert	technical	assessment,	reserving	its	ability	to	fix	the	deadline	depending	on	the	development	of	negotiations.	Alcoa	and	Ligestra	agreed	to	a	settlement in	December	2008	with	respect	to	the	Feltre	site.	Ligestra	paid	the	sum	of	1.08	million	Euros	and	Alcoa	committed	to	clean	up	the	site.	Further	postponements	were granted	by	the	Court	of	Rome,	and	the	next	hearing	is	fixed	for	December	20,	2016.	In	the	meantime,	Alcoa	Trasformazioni	S.r.l.	and	Ligestra	reached	a	preliminary agreement	for	settlement	of	the	liabilities	related	to	Fusina,	allocating	80%	and	20%	of	the	remediation	costs	to	Ligestra	and	Alcoa,	respectively.	In	January	2014,	a	final agreement	with	Ligestra	was	signed,	and	on	February	5,	2014,	Alcoa	signed	a	final	agreement	with	the	MOE	and	MOPW	settling	all	environmental	issues	at	the	Fusina site.	As	set	out	in	the	agreement	between	Alcoa	and	Ligestra,	those	two	parties	will	share	the	remediation	costs	and	environmental	damages	claimed	by	the	MOE	and MOPW.	The	remediation	project	filed	by	Alcoa	and	Ligestra	has	been	approved	by	the	MOE.	See	Note	N	to	the	Consolidated	Financial	Statements	under	the	caption "Fusina	and	Portovesme,	Italy"	on	page	131.	To	provide	time	for	settlement	with	Ligestra,	the	MOE	and	Alcoa	jointly	requested	and	the	Civil	Court	of	Venice	has granted	a	series	of	postponements	of	hearings	in	the	Venice	trial,	assuming	that	the	case	will	be	closed.	Following	the	settlement,	the	parties	caused	the	Court	to	dismiss the	proceedings.	The	proceedings	were,	however,	restarted	in	April	2015	by	the	MOE	and	MOPW	because	the	Ministers	had	not	ratified	the	settlement	of	February	5, 2014.	The	Ministers	announced	in	December	2015	that	they	will	ratify	the	settlement	in	the	following	months.

Alcoa	and	Ligestra	have	signed	a	similar	agreement	relating	to	the	Portovesme	site.	However,	that	agreement	is	contingent	upon	final	acceptance	of	the	proposed	soil remediation	project	for	Portovesme	that	was	rejected	by	the	MOE	in	the	fourth	quarter	of	2013.	Alcoa	submitted	a	revised	proposal	in	May	2014	and	a	further	revised proposal	in	February	2015,	in	agreement	with	Ligestra.	The	MOE	issued	a	Ministerial	Decree	approving	the	final	project	in	October	2015.	Work	on	the	soil	remediation project	will	commence	in	2016	and	is	expected	to	be	completed	in	2019.	Alcoa	and	Ligestra	are	now	working	on	a	final	groundwater	remediation	project	which	is expected	to	be	submitted	to	the	MOE	for	review	during	2016.	While	the	issuance	of	the	decree	for	the	soil	remediation	project	has	provided	reasonable	certainty regarding	liability	for	the	soil	remediation,	with	respect	to	the	groundwater	remediation	project	Alcoa	is	unable	to	reasonably	predict	an	outcome	or	to	estimate	a	range of	reasonably	possible	loss	beyond	what	is	described	in	Footnote	N	to	the	Consolidated	Financial	Statements	for	several	reasons.	First,	certain	costs	relating	to	the groundwater	remediation	are	not	yet	fixed.	In	connection	with	any	proposed	groundwater	remediation	plan	for	Portovesme,	the	Company	understands	that	the	MOE	has substantial	discretion	in	defining	what	must	be	managed	under	Italian	law,	as	well	as	the	extent	and	duration	of	that	remediation	program.	As	a	result,	the	scope	and	cost of	the	final	groundwater	remediation	plan	remain	uncertain	for	Portovesme;	Alcoa	and	Ligestra	are	still	negotiating	a	final	settlement	for	groundwater	remediation	at Portovesme,	for	an	allocation	of	the	cost	based	on	the	new	remediation	project	approved	by	the	MOE.	In	addition,	once	a	groundwater	remediation	project	is	submitted, should	a	final	settlement	with	Ligestra	not	be	reached,	Alcoa	should	be	held	responsible	only	for	its	share	of	pollution.	However,	the	area	is	impacted	by	many	sources of	pollution,	as	well	as	historical	pollution.	Consequently,	the	allocation	of	liabilities	would	need	a	very	complex	technical	evaluation	by	the	authorities	that	has	not	yet been	performed.

As	previously	reported,	on	November	30,	2010,	Alcoa	World	Alumina	Brasil	Ltda.	(AWAB)	received	notice	of	a	lawsuit	that	had	been	filed	by	the	public	prosecutors	of the	State	of	Pará	in	Brazil	in	November	2009.	The	suit	names	AWAB	and	the	State	of	Pará,	which,	through	its	Environmental	Agency,	had	issued	the	operating	license for	the	Company's	new	bauxite	mine	in	Juruti.	The	suit	concerns	the	impact	of	the	project	on	the	region's	water	system	and	alleges	that	certain	conditions	of	the	original installation	license	were	not	met	by	AWAB.	In	the	lawsuit,	plaintiffs	requested	a	preliminary	injunction	suspending	the	operating	license	and	ordering	payment	of compensation.	On	April	14,	2010,	the	court	denied	plaintiffs'	request.	AWAB	presented	its	defense	in	March	2011,	on	grounds	that	it	was	in	compliance	with	the	terms and	conditions	of	its	operating	license,	which	included	plans	to	mitigate	the	impact	of	the

project	on	the	region's	water	system.	In	April	2011,	the	State	of	Pará	defended	itself	in	the	case	asserting	that	the	operating	license	contains	the	necessary	plans	to mitigate	such	impact,	that	the	State	monitors	the	performance	of	AWAB's	obligations	arising	out	of	such	license,	that	the	licensing	process	is	valid	and	legal,	and	that the	suit	is	meritless.	The	Company's	position	is	that	any	impact	from	the	project	had	been	fully	repaired	when	the	suit	was	filed.	The	Company	also	believes	that	Jará Lake	has	not	been	affected	by	any	project	activity	and	any	evidence	of	pollution	from	the	project	would	be	unreliable.	Following	the	preliminary	injunction	request,	the plaintiffs	took	no	further	action	until	October	2014,	when	in	response	to	the	court's	request	and	as	required	by	statute,	they	restated	the	original	allegations	in	the lawsuit.	The	Company	is	not	certain	whether	or	when	the	action	will	proceed.	Given	that	this	proceeding	is	in	its	preliminary	stage	and	the	current	uncertainty	in	this case,	the	Company	is	unable	to	reasonably	predict	an	outcome	or	to	estimate	a	range	of	reasonably	possible	loss.

As	previously	reported,	by	an	amended	complaint	filed	April	21,	2005,	Alcoa	Global	Fasteners,	Inc.	was	added	as	a	defendant	in	Orange	County	Water	District	(OCWD) v.	Northrop	Corporation,	et	al.,	civil	action	04cc00715	(Superior	Court	of	California,	County	of	Orange).	OCWD	alleges	contamination	or	threatened	contamination	of	a drinking	water	aquifer	by	Alcoa,	certain	of	the	entities	that	preceded	Alcoa	at	the	same	locations	as	property	owners	and/or	operators,	and	other	current	and	former industrial	and	manufacturing	businesses	that	operated	in	Orange	County	in	past	decades.	OCWD	seeks	to	recover	the	cost	of	aquifer	remediation	and	attorney's	fees. Trial	on	statutory,	non-jury	claims	commenced	on	February	10,	2012,	and	continued	through	September	2012	when	the	case	was	submitted	to	the	court	for	decision.	On December	11,	2012,	the	court	issued	its	tentative	ruling	in	the	matter	dismissing	plaintiff	OCWD's	remaining	statutory	claims	against	all	defendants.	The	court's tentative	ruling	also	invited	further	briefing	on	the	decision	and	it	is	subject	to	modification.	On	January	21,	2013,	defendants	filed	a	joint	brief	responding	to	ten	specific questions	posed	by	the	court's	tentative	ruling.	The	joint	brief	argued	that	the	court	should	make	further	findings	of	fact	and	law	in	favor	of	the	defendants	in	response	to the	ten	questions.	Alcoa	Global	Fasteners,	Inc.	also	filed	a	separate	brief	on	two	of	the	questions	arguing	that	the	court	should	determine	that	it	is	neither	a	cause	of ground	water	contamination	nor	a	cause	of	plaintiff's	incurred	costs.	Remaining	in	the	case	at	this	time	are	common	law	trespass	and	nuisance	claims	for	a	Phase	II	trial which	has	not	been	scheduled.	OCWD	has	asserted	a	total	remedy	cost	of	at	least	$150	million	plus	attorneys'	fees;	however,	the	amount	in	controversy	at	this	stage	is limited	to	sums	already	expended	by	the	OCWD,	approximately	$4	million.	The	court	has	indicated	that	it	is	not	likely	to	grant	the	OCWD's	request	for	declaratory relief	as	to	future	sums	the	OCWD	expends.	On	February	28,	2013,	the	court	held	a	hearing	on	its	tentative	Statement	of	Decision	finding	that	OCWD	had	not	met	its burden	on	the	element	of	causation	and,	following	that	hearing,	on	May	10,	2013,	issued	a	supplemental	tentative	decision,	finding	that	plaintiff	had	not	met	its	burden of	proof.	On	that	date,	the	court	ordered	defendants	to	submit	a	proposed	statement	of	decision,	followed	by	filing	of	objections	and	counter-proposed	statement	of decision	by	the	plaintiff	and	responses	by	the	defendants.	All	filings	were	completed	by	September	23,	2013	at	which	time	the	matter	was	submitted	to	the	court	for	final decision.	On	October	29,	2013,	the	court	issued	its	final	Statement	of	Decision	("SOD")	which	resolved	the	statutory	law	liability	claims	of	the	Phase	I	trial	favorably	to Alcoa	and	the	other	Phase	I	trial	defendants.	The	plaintiff	and	the	trial	defendants	disagree	on	the	consequences	of	the	SOD	and	the	Phase	I	trial	on	the	remaining	two tort	claims	of	nuisance	and	trespass.	On	December	19,	2013,	the	court	held	a	Case	Management	Conference	and	approved	the	parties'	proposed	briefing	schedule regarding	remaining	issues.	On	June	20,	2014,	following	the	full	briefing	by	the	parties,	the	trial	court	entered	final	judgment	in	favor	of	Alcoa	and	the	other	trial defendants	on	the	remaining	tort	claims.	On	August	18,	2014,	the	OCWD	filed	a	notice	of	appeal	of	the	judgment	with	the	Superior	Court	of	the	County	of	Orange.	On October	14,	2015,	the	OCWD	submitted	its	opening	brief.	Defendants'	response	brief	is	due	March	14,	2016.

# St.	Croix	Proceedings

Abednego	and	Abraham	cases.	As	previously	reported,	on	January	14,	2010,	Alcoa	was	served	with	a	multi-plaintiff	action	complaint	involving	several	thousand individual	persons	claiming	to	be	residents	of	St.	Croix	who	are	alleged	to	have	suffered	personal	injury	or	property	damage	from	Hurricane	Georges	or	winds	blowing material	from	the	St.	Croix	Alumina,	L.L.C.	("SCA")	facility	on	the	island	of	St.	Croix	(U.S.	Virgin	Islands)	since	the	time	of	the	hurricane.	This	complaint,	Abednego, et	al.	v.	Alcoa,	et	al.	was	filed	in	the	Superior	Court	of	the	Virgin	Islands,	St.	Croix	Division.	Following	an	unsuccessful	attempt	by	Alcoa	and	SCA	to	remove	the	case to	federal	court,	the	case	has	been	lodged	in	the	Superior	Court.	The	complaint	names	as	defendants	the	same	entities	that	were	sued	in	a	February	1999

action	arising	out	of	the	impact	of	Hurricane	Georges	on	the	island	and	added	as	a	defendant	the	current	owner	of	the	alumina	facility	property.

Also	as	previously	reported,	on	March	1,	2012,	Alcoa	was	served	with	a	separate	multi-plaintiff	action	complaint	involving	approximately	200	individual	persons alleging	claims	essentially	identical	to	those	set	forth	in	the	Abednego	v.	Alcoa	complaint.	This	complaint,	Abraham,	et	al.	v.	Alcoa,	et	al.,	was	filed	on	behalf	of plaintiffs	previously	dismissed	in	the	federal	court	proceeding	involving	the	original	litigation	over	Hurricane	Georges	impacts.	The	matter	was	originally	filed	in	the Superior	Court	of	the	Virgin	Islands,	St.	Croix	Division,	on	March	30,	2011.

Alcoa	and	other	defendants	in	the	Abraham	and	Abednego	cases	filed	or	renewed	motions	to	dismiss	each	case	in	March	2012	and	August	2012	following	service	of	the Abraham	complaint	on	Alcoa	and	remand	of	the	Abednego	complaint	to	Superior	Court,	respectively.	By	order	dated	August	10,	2015,	the	Superior	Court	dismissed plaintiffs'	complaints	without	prejudice	to	re-file	the	complaints	individually,	rather	than	as	a	multi-plaintiff	filing.	The	order	also	preserves	the	defendants'	grounds	for dismissal	if	new,	individual	complaints	are	filed.

Glencore	Contractual	Indemnity	Claim.	As	previously	reported,	on	June	5,	2015,	Alcoa	World	Alumina	LLC	("AWA")	and	SCA	filed	a	complaint	in	Delaware Chancery	Court	for	a	declaratory	judgment	and	injunctive	relief	to	resolve	a	dispute	between	Alcoa	and	Glencore	Ltd.	("Glencore")	with	respect	to	claimed	obligations under	a	1995	asset	purchase	agreement	between	Alcoa	and	Glencore.	The	dispute	arose	from	Glencore's	demand	that	Alcoa	indemnify	it	for	liabilities	it	may	have	to	pay to	Lockheed	Martin	("Lockheed")	related	to	the	St.	Croix	alumina	refinery.	Lockheed	had	earlier	filed	suit	against	Glencore	in	federal	court	in	New	York	seeking indemnity	for	liabilities	it	had	incurred	and	would	incur	to	the	U.S.	Virgin	Islands	to	remediate	certain	properties	at	the	refinery	property	and	claimed	that	Glencore	was required	by	an	earlier,	1989	purchase	agreement	to	indemnify	it.	Glencore	had	demanded	that	Alcoa	indemnify	and	defend	it	in	the	Lockheed	case	and	threatened	to claim	over	against	Alcoa	in	the	New	York	action	despite	exclusive	jurisdiction	for	resolution	of	disputes	under	the	1995	purchase	agreement	being	in	Delaware.	After Glencore	conceded	that	it	was	not	seeking	to	add	Alcoa	to	the	New	York	action,	AWA	and	SCA	dismissed	their	complaint	in	the	Chancery	Court	case	and	on	August	6, 2015	filed	a	complaint	for	declaratory	judgment	in	Delaware	Superior	Court.	AWA	and	SCA	filed	a	motion	for	judgment	on	the	pleadings	on	September	16,	2015. Glencore	answered	AWA's	and	SCA's	complaint	and	asserted	counterclaims	on	August	27,	2015,	and	on	October	2,	2015	filed	its	own	motion	for	judgment	on	the pleadings.	Argument	on	the	parties'	motions	was	held	by	the	court	on	December	7,	2015	and	by	order	dated	February	8,	2016,	the	court	granted	Alcoa's	motion	and denied	Glencore's	motion	resulting	in	Alcoa	not	being	liable	to	indemnify	Glencore	for	the	Lockheed	action.	The	decision	also	leaves	for	pretrial	discovery	and	possible summary	judgment	or	trial	Glencore's	claims	for	costs	and	fees	it	incurred	in	defending	and	settling	an	earlier	Superfund	action	brought	against	Glencore	by	the Government	of	the	Virgin	Islands.	On	February	17,	2016,	Glencore	filed	notice	of	its	application	for	interlocutory	appeal	of	the	February	8	ruling.	AWA	and	SCA	have 10	days	to	respond.	The	Company	is	unable	to	reasonably	predict	an	outcome	for	the	remaining	claims.

# Other	Matters

As	previously	reported,	along	with	various	asbestos	manufacturers	and	distributors,	Alcoa	and	its	subsidiaries	as	premises	owners	are	defendants	in	several	hundred active	lawsuits	filed	on	behalf	of	persons	alleging	injury	predominantly	as	a	result	of	occupational	exposure	to	asbestos	at	various	Company	facilities.	In	addition,	an Alcoa	subsidiary	company	has	been	named,	along	with	a	large	common	group	of	industrial	companies,	in	a	pattern	complaint	where	the	Company's	involvement	is	not evident.	Since	1999,	several	thousand	such	complaints	have	been	filed.	To	date,	the	subsidiary	has	been	dismissed	from	almost	every	case	that	was	actually	placed	in line	for	trial.	Alcoa,	its	subsidiaries	and	acquired	companies,	all	have	had	numerous	insurance	policies	over	the	years	that	provide	coverage	for	asbestos	based	claims. Many	of	these	policies	provide	layers	of	coverage	for	varying	periods	of	time	and	for	varying	locations.	Alcoa	has	significant	insurance	coverage	and	believes	that	its reserves	are	adequate	for	its	known	asbestos	exposure	related	liabilities.	The	costs	of	defense	and	settlement	have	not	been	and	are	not	expected	to	be	material	to	the results	of	operations,	cash	flows,	and	financial	position	of	the	Company.

As	previously	reported,	on	August	2,	2013,	the	State	of	North	Carolina,	by	and	through	its	agency,	the	North	Carolina	Department	of	Administration,	filed	a	lawsuit against	Alcoa	Power	Generating	Inc.	(APGI)	in	Superior	Court,	Wake	County,	North	Carolina	(Docket	No.	13-CVS-10477).	The	lawsuit	asserts	ownership	of	certain submerged	lands	and

hydropower	generating	structures	situated	at	Alcoa's	Yadkin	Hydroelectric	Project	(the	"Yadkin	Project"),	including	the	submerged	riverbed	of	the	Yadkin	River throughout	the	Yadkin	Project	and	a	portion	of	the	hydroelectric	dams	that	Alcoa	owns	and	operates	pursuant	to	a	license	from	the	Federal	Energy	Regulatory Commission.	The	suit	seeks	declaratory	relief	regarding	North	Carolina's	alleged	ownership	interests	in	the	riverbed	and	the	dams	and	further	declaration	that	Alcoa	has no	right,	license	or	permission	from	North	Carolina	to	operate	the	Yadkin	Project.	By	notice	filed	on	September	3,	2013,	Alcoa	removed	the	matter	to	the	U.S.	District Court	for	the	Eastern	District	of	North	Carolina	(Docket	No.	Civil	Action	No.	5:	13-cv-633).	By	motion	filed	September	3,	2013,	the	Yadkin	Riverkeeper	sought permission	to	intervene	in	the	case.	On	September	25,	2013,	Alcoa	filed	its	answer	in	the	case	and	also	filed	its	opposition	to	the	motion	to	intervene	by	the	Yadkin Riverkeeper.	The	Court	denied	the	State's	Motion	to	Remand	and	initially	permitted	the	Riverkeeper	to	intervene	although	the	Riverkeeper	has	now	voluntarily withdrawn	as	an	intervening	party	and	will	participate	as	amicus.

On	July	21,	2014,	the	parties	each	filed	a	motion	for	summary	judgment.	On	November	20,	2014,	the	Court	denied	Alcoa's	motion	for	summary	judgment	and	denied	in part	and	granted	in	part	the	State	of	North	Carolina's	motions	for	summary	judgment.	The	Court	held	that	under	North	Carolina	law,	the	burden	of	proof	as	to	title	to property	is	shifted	to	a	private	party	opposing	a	state	claim	of	property	ownership.	The	court	conducted	a	trial	on	navigability	on	April	21-22,	2015,	and,	after	ruling orally	from	the	bench	on	April	22,	2015,	on	May	5,	2015,	entered	Findings	of	Fact	and	Conclusions	of	Law	as	to	Navigability,	ruling	in	APGI's	favor	that	the	state "failed	to	meet	its	burden	to	prove	that	the	Relevant	Segment,	as	stipulated	by	the	parties,	was	navigable	for	commerce	at	statehood."	Subsequently,	APGI	filed	a	motion for	summary	judgment	as	to	title;	the	state	filed	opposition	papers.	On	September	28,	2015,	the	Court	granted	summary	judgment	in	APGI's	favor	and	found	that	the evidence	demonstrates	that	APGI	holds	title	to	the	riverbed.	The	Court	further	directed	judgment	to	be	entered	in	APGI's	favor	and	closed	the	case.	On	October	13, 2015,	the	State	of	North	Carolina	filed	notice	of	its	appeal	to	the	United	States	Court	of	Appeals	for	the	Fourth	Circuit.

As	previously	reported,	in	September	2010,	following	a	corporate	income	tax	audit	covering	the	2003	through	2005	tax	years,	an	assessment	was	received	as	a	result	of Spain's	tax	authorities	disallowing	certain	interest	deductions	claimed	by	a	Spanish	consolidated	tax	group	owned	by	the	Company.	An	appeal	of	this	assessment	in Spain's	Central	Tax	Administrative	Court	by	the	Company	was	denied	in	October	2013.	In	December	2013,	the	Company	filed	an	appeal	of	the	assessment	in	Spain's National	Court.

Additionally,	following	a	corporate	income	tax	audit	of	the	same	Spanish	tax	group	for	the	2006	through	2009	tax	years,	Spain's	tax	authorities	issued	an	assessment	in July	2013	similarly	disallowing	certain	interest	deductions.	In	August	2013,	the	Company	filed	an	appeal	of	this	second	assessment	in	Spain's	Central	Tax Administrative	Court,	which	was	denied	in	January	2015.	The	Company	filed	an	appeal	of	this	second	assessment	in	Spain's	National	Court	in	March	2015.

The	combined	assessments	(remeasured	for	a	tax	rate	change	enacted	in	November	2014)	total	$263	million	(€241	million).	The	Company	believes	it	has	meritorious arguments	to	support	its	tax	position	and	intends	to	vigorously	litigate	the	assessments	through	Spain's	court	system.	However,	in	the	event	the	Company	is unsuccessful,	a	portion	of	the	assessments	may	be	offset	with	existing	net	operating	losses	available	to	the	Spanish	consolidated	tax	group.	Additionally,	it	is	possible that	the	Company	may	receive	similar	assessments	for	tax	years	subsequent	to	2009.	At	this	time,	the	Company	is	unable	to	reasonably	predict	an	outcome	for	this matter.

As	previously	reported,	between	2000	and	2002,	Alcoa	Alumínio	(Alumínio)	sold	approximately	2,000	metric	tons	of	metal	per	month	from	its	Poços	de	Caldas	facility, located	in	the	State	of	Minas	Gerais	(the	"State"),	to	Alfio,	a	customer	also	located	in	the	State.	Sales	in	the	State	were	exempted	from	value-added	tax	(VAT) requirements.	Alfio	subsequently	sold	metal	to	customers	outside	of	the	State,	but	did	not	pay	the	required	VAT	on	those	transactions.	In	July	2002,	Alumínio	received an	assessment	from	State	auditors	on	the	theory	that	Alumínio	should	be	jointly	and	severally	liable	with	Alfio	for	the	unpaid	VAT.	In	June	2003,	the	administrative tribunal	found	Alumínio	liable,	and	Alumínio	filed	a	judicial	case	in	the	State	in	February	2004	contesting	the	finding.	In	May	2005,	the	Court	of	First	Instance	found Alumínio	solely	liable,	and	a	panel	of	a	State	appeals	court	confirmed	this	finding	in	April	2006.

Alumínio	filed	a	special	appeal	to	the	Superior	Tribunal	of	Justice	(STJ)	in	Brasilia	(the	federal	capital	of	Brazil)	later	in	2006.	In	2011,	the	STJ	(through	one	of	its judges)	reversed	the	judgment	of	the	lower	courts,	finding	that	Alumínio	should	neither	be	solely	nor	jointly	and	severally	liable	with	Alfio	for	the	VAT,	which	ruling was	then	appealed	by	the	State.	In	August	2012,	the	STJ	agreed	to	have	the	case	reheard	before	a	five-judge	panel.	A	decision	from	this	panel	is	pending,	but	additional appeals	are	likely.	At	December	31,	2015,	the	assessment	totaled	$35	million	(R$135	million),	including	penalties	and	interest.	While	the	Company	believes	it	has meritorious	defenses,	the	Company	is	unable	to	reasonably	predict	an	outcome.

# Other	Contingencies

In	addition	to	the	matters	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,	safety	and	health,	and	tax	matters.	While	the	amounts	claimed	in	these	other	matters	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	liquidity	or	results	of	operations	in	a particular	period	could	be	materially	affected	by	one	or	more	of	these	other	matters.	However,	based	on	facts	currently	available,	management	believes	that	the disposition	of	these	other	matters	that	are	pending	or	asserted	will	not	have	a	material	adverse	effect,	individually	or	in	the	aggregate,	on	the	financial	position	of	the Company.

# Item	4.		Mine	Safety	Disclosures.

The	information	concerning	mine	safety	violations	or	other	regulatory	matters	required	by	Section	1503(a)	of	the	Dodd-Frank	Wall	Street	Reform	and	Consumer Protection	Act	and	Item	104	of	Regulation	S-K	(17	CFR	229.104)	is	included	in	Exhibit	95	of	this	report,	which	is	incorporated	herein	by	reference.

# PART	II

# Item	5.		Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

The	Company's	common	stock	is	listed	on	the	New	York	Stock	Exchange	where	it	trades	under	the	symbol	AA.	The	Company's	quarterly	high	and	low	trading	stock prices	and	dividends	per	common	share	for	2015	and	2014	are	shown	below.

|  |  | 2015 |  |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Quarter | High | Low | \t\t Dividend | High | Low | \t\t Dividend |
| First | $17.10 | $12.65\t\t\t\t $ | 0.03 | $12.97 | $9.82\t\t\t\t $ | 0.03 |
| Second | \t 14.29 | \t 11.15 | 0.03 | \t 15.18 | \t 12.34 | 0.03 |
| Third | \t 11.23 | 7.97 | 0.03 | \t 17.36 | \t 14.56 | 0.03 |
| Fourth | \t 11.18 | 7.81 | 0.03 | \t 17.75 | \t 13.71 | 0.03 |
| Year | \t 17.10 | 7.81\t\t\t\t $ | 0.12 | \t 17.75 | 9.82\t\t\t\t $ | 0.12 |

The	number	of	holders	of	record	of	common	stock	was	approximately	10,101	as	of	February	11,	2016.

# Stock	Performance	Graph

Poor's	500 ®	Materials	Index,	a	group	of	27	companies	categorized	by	Standard	&	Poor's	as	active	in	the	"materials"	market	sector.	Such	information	shall	not	be deemed	to	be	"filed."

| As	of	December	31, | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Alcoa\tInc. | \t\t$100 | $57 | $58 | $72 | $107 | $68 |
| ®\tIndex\nS&P\t500 | 100 | 102 | 118 | 157 | 178 | 181 |
| ®\tMaterials\tIndex\nS&P\t500 | 100 | 90 | 104 | 130 | 139 | 128 |

# Copyright ©	2016	Standard	&	Poor's,	a	division	of	The	McGraw-Hill	Companies	Inc.	All	rights	reserved.

# Source:	Research	Data	Group,	Inc.	(www.researchdatagroup.com/S&P.htm)

# Item	6. Selected	Financial	Data.

# (dollars	in	millions,	except	per-share	amounts	and	realized	prices;	shipments	in	thousands	of	metric	tons	[kmt])

| For	the	year	ended	December	31, | 2015 | 2014 | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Sales | $22,534 | $23,906 | $23,032 | $23,700 | $24,951 |
| Amounts\tattributable\tto\tAlcoa: |  |  |  |  |  |
| (Loss)\tincome\tfrom\tcontinuing\toperations | $(322) | $268 | $(2,285) | $191 | $614 |
| Loss\tfrom\tdiscontinued\toperations | - | - | - | - | (3) |
| Net\t(loss)\tincome | $(322) | $268 | $(2,285) | $191 | $611 |
| Earnings\tper\tshare\tattributable\tto\tAlcoa\tcommon\tshareholders: |  |  |  |  |  |
| Basic: |  |  |  |  |  |
| (Loss)\tincome\tfrom\tcontinuing\toperations | $(0.31) | $0.21 | $(2.14) | $0.18 | $0.58 |
| Loss\tfrom\tdiscontinued\toperations | - | - | - | - | (0.01) |
| Net\t(loss)\tincome | $(0.31) | $0.21 | $(2.14) | $0.18 | $0.57 |
| Diluted: |  |  |  |  |  |
| (Loss)\tincome\tfrom\tcontinuing\toperations | $(0.31) | $0.21 | $(2.14) | $0.18 | $0.55 |
| Loss\tfrom\tdiscontinued\toperations | - | - | - | - | - |
| Net\t(loss)\tincome | $(0.31) | $0.21 | $(2.14) | $0.18 | $0.55 |
| Shipments\tof\talumina\t(kmt) | \t 10,755 | \t 10,652 | 9,966 | 9,295 | 9,218 |
| Shipments\tof\taluminum\tproducts\t(kmt) | 4,537 | 4,794 | 4,994 | 5,197 | 5,037 |
| Alcoa's\taverage\trealized\tprice\tper\tmetric\tton\tof\tprimary\taluminum | $2,069 | $2,405 | $2,243 | $2,327 | $2,636 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | $0.12 | $0.12 | $0.12 | $0.12 | $0.12 |
| Total\tassets* | \t 36,528 | \t 37,363 | \t 35,696 | \t 40,129 | \t 40,083 |
| Total\tdebt | 9,103 | 8,852 | 8,319 | 8,829 | 9,371 |
| Cash\tprovided\tfrom\toperations | 1,582 | 1,674 | 1,578 | 1,497 | 2,193 |
| Capital\texpenditures | 1,180 | 1,219 | 1,193 | 1,261 | 1,287 |

* In	November	2015,	Alcoa	adopted	changes	issued	by	the	Financial	Accounting	Standards	Board	to	the	balance	sheet	classification	of	deferred	income	taxes	(see the	Recently	Adopted	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K).	Additionally,	for comparative	purposes,	management	elected	to	retrospectively	apply	these	changes	to	all	periods	presented.

The	data	presented	in	the	Selected	Financial	Data	table	should	be	read	in	conjunction	with	the	information	provided	in	Management's	Discussion	and	Analysis	of Financial	Condition	and	Results	of	Operations	in	Part	II	Item	7	and	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K.

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

# (dollars	in	millions,	except	per-share	amounts	and	ingot	prices;	production	and	shipments	in	thousands	of	metric	tons	[kmt])

# Our	Business

# Management	Review	of	2015	and	Outlook	for	the	Future

In	2015,	growth	in	global	aluminum	demand	reached	6%,	which	was	slightly	less	than	management's	projection	(7%)	at	the	end	of	2014.	However,	significant	market headwinds	negatively	impacted	the	smelting	portion	of	Alcoa's	upstream	operations	as	the	average	LME	price	(on	15-day	lag)	of	aluminum	declined	10%	and	regional premiums	decreased	substantially	(39%	in	the	United	States	and	Canada	and	44%	in	Europe)	compared	to	2014.	The	refining	portion	of	the	upstream	operations continued	to	make	progress	in	shifting	customer	pricing	away	from	the	LME	aluminum	price	to	a	mixture	of	alumina	index/spot	pricing;	however,	this	was overshadowed	by	a	decrease	in	the	average	alumina	index/spot	price.	Conversely,	Alcoa's	upstream	operations	realized	the	benefit	of	a	stronger	U.S.	dollar	in	2015 compared	to	2014.	In	the	midstream	operations,	after-tax	operating	income	was	stable	in	2015	from	2014	despite	generating	$1,052	less	revenue	due	to	the	closure	and divestiture	of	six	rolling	mills,	while	the	downstream	operations	received	the	benefit	of	$1,310	in	combined	revenue	combined	from	three	acquisitions.	Across	all operations,	cost	headwinds	continued	to	be	a	challenge;	however,	management	was	able	to	more	than	offset	these	with	net	productivity	improvements.

Separate	from	the	2015	operational	results,	management	initiated	a	number	of	portfolio	actions	during	the	year.	In	the	upstream	operations,	following	similar	actions taken	in	both	2014	and	2013,	smelting	capacity	of	217	kmt	was	curtailed	(another	230	kmt	will	be	curtailed	by	the	end	of	June	2016)	and	96	kmt	(all	of	which	was previously	curtailed)	was	permanently	closed	(another	269	kmt	will	be	closed	by	the	end	of	March	2016).	Additionally,	refining	capacity	of	1,705	kmt	was	curtailed (another	1,635	kmt	will	be	curtailed	by	the	end	of	June	2016).	Management	also	completed	the	divestiture	of	another	rolling	mill	(three	rolling	mills	were	previously divested	in	December	2014)	in	the	midstream	operations	that	was	no	longer	part	of	the	strategic	direction	of	Alcoa.	From	a	growth	perspective,	Alcoa	completed	the acquisition	of	two	businesses,	mostly	aerospace-related,	both	of	which	will	enhance	the	portfolio	of	Alcoa's	downstream	operations.

As	a	result	of	the	previously	mentioned	capacity	reductions,	Alcoa's	2015	results	were	negatively	impacted	by	significant	restructuring	charges	related	to	these	actions. Additionally,	developments	in	legal	matters	in	Italy,	an	assessment	of	the	realizability	of	certain	deferred	tax	assets,	and	an	impairment	of	goodwill	caused	unfavorable impacts	in	Alcoa's	2015	results.

Management	continued	its	focus	on	liquidity	and	cash	flows,	generating	incremental	improvements	in	procurement	efficiencies,	overhead	rationalization,	and	disciplined capital	spending.	This	focus	and	the	related	results	enabled	Alcoa	to	end	2015	with	a	solid	financial	position,	consistent	with	the	end	of	2014.

The	following	financial	information	reflects	certain	key	measures	of	Alcoa's	2015	results:

•Total	segment	after-tax	operating	income	of	$1,906,	a	decrease	of	3%	from	2014;

•	 Cash	from	operations	of	$1,582,	reduced	by	$470	in	pension	plan	contributions	and	a	$300	prepayment	to	secure	a	future	supply	of	gas	in	Australia;

•	 Capital	expenditures	of	$1,180,	under	$1,500	for	the	sixth	consecutive	year;

•	 Cash	on	hand	at	the	end	of	the	year	of	$1,919,	in	excess	of	$1,400	for	the	seventh	consecutive	year;

•Total	debt	of	$9,103,	Net	margin	of	$1,968,	and	Depreciation,	depletion,	and	amortization	of	$1,280	(Net	margin	is	equivalent	to	Sales	minus	the	following items:	Cost	of	goods	sold;	Selling,	general	administrative,	and	other	expenses;	Research	and	development	expenses;	and	Provision	for	depreciation, depletion,	and	amortization).

In	2016,	management	is	projecting	continued	growth	(increase	of	6%)	in	the	global	consumption	of	primary	aluminum,	a	slight	change	from	that	of	the	last	four	years, led	by	China	at	an	estimated	8%.	All	other	regions	in	the	world,	except	for	Brazil	and	Russia	(both	are	projected	to	be	flat	with	2015),	are	expected	to	have	positive growth	in	aluminum	demand	over	2015,	including	North	America	at	an	estimated	5%.	After	considering	forecasted	added	production,	along	with	expected	industry-wide capacity	reductions,	both	of	which	are	mainly	driven	by	China,	management	anticipates	a	deficit	in	the	aluminum	market.	For	alumina,	growth	in	global	consumption	is estimated	to	be	6%,	and	demand	is	expected	to	slightly	exceed	supply	due	to	capacity	reductions	in	China,	as	well	as	other	parts	of	the	world.

Management	also	anticipates	improved	market	conditions	for	value-add	products	in	the	aerospace,	building	and	construction,	packaging,	automotive,	and	industrial	gas turbine	global	end	markets,	despite	declines	in	certain	regions,	while	the	commercial	transportation	global	end	market	is	expected	to	decrease.	Many	of	the	conditions that	drove	these	markets	in	2015	will	continue	throughout	2016.

Aerospace	is	expected	to	be	driven	by	large	commercial	aircraft	due	to	a	greater	than	nine-year	order	backlog.	For	building	and	construction,	awarded	nonresidential contracts	are	projected	to	be	up	once	again	in	North	America	while	a	slight	decline	in	Europe	is	expected.	In	packaging,	growth	in	China	and	Europe,	mainly	driven	by the	penetration	of	aluminum	in	the	growing	beer	segment	and	the	conversion	from	steel	cans	to	aluminum	cans,	respectively,	is	expected	to	more	than	offset	a	slight decrease	in	North	America.	For	automotive,	growth	is	anticipated	in	the	United	States	(due	to	the	replacement	of	older	vehicles,	low	borrowing	rates,	and	the	decline	in gasoline	prices)	and	China	(due	to	evolving	emissions	policies	based	on	new	clean	air	legislation	enacted	in	2014	and	a	continued	increase	in	the	percentage	of	the population	driving	automobiles),	as	well	as	Europe.	Industrial	gas	turbines	are	expected	to	see	growth	as	a	result	of	new	demand	for	high	technology	turbines	and upgrades	of	existing	turbines.	In	commercial	transportation,	improving	conditions	in	both	Europe	and	China	are	expected	to	be	more	than	offset	by	weakness	in	North America,	due	to	high	inventory	levels	as	a	result	of	one	of	the	highest	production	years	ever	in	2015	and	projected	lower	orders.

Looking	ahead	over	the	next	year,	management	will	continue	to	focus	on	lowering	Alcoa's	refining	and	smelting	operations	on	the	respective	global	cost	curves	to	the 21st	and	38th	percentiles,	respectively.	At	December	31,	2015,	Alcoa's	refining	operations	were	at	the	23rd	percentile,	a	two-percentage	point	improvement	from	2014, and	its	smelting	operations	remained	at	the	43rd	percentile	on	the	respective	global	cost	curves.	Actions	taken	to	improve	Alcoa's	position	on	the	global	alumina	cost curve	included,	in	late	2014,	the	sale	of	an	ownership	interest	in	a	mining	and	refining	joint	venture	in	Jamaica	and	the	conversion	of	the	fuel	source	from	fuel	oil	to natural	gas	at	a	refinery	in	Spain,	and,	in	2015,	the	curtailment	of	1,330	kmt	of	high-cost	capacity	in	Suriname.	Actions	taken	in	the	smelting	operations	included,	in	late 2014,	the	sale	of	an	ownership	interest	in	a	smelter	in	the	United	States	and	the	renewal	of	a	power	contract	at	each	of	the	three	smelters	in	Canada,	and,	in	2015,	the curtailment	and	closure	of	170	kmt	combined	of	high-cost	capacity	in	Brazil.	Also,	both	the	refining	and	smelting	operations	benefitted	from	productivity	improvements, new	initiatives	as	well	as	the	full	realization	of	those	implemented	in	2014.	While	the	benefits	of	the	actions	in	the	refining	operations	can	be	seen	in	Alcoa's	improved position	on	the	global	alumina	cost	curve	at	the	end	of	2015,	the	benefits	from	the	actions	in	the	smelting	operations	were	offset	by	a	downward	shift	in	the	global aluminum	cost	curve,	primarily	due	to	the	strong	U.S.	dollar	and	curtailments/closures	of	capacity	from	other	smelting	industry	participants.

Other	actions	taken	in	2015	to	help	drive	a	lower	position	on	the	respective	global	cost	curves	include	additional	curtailments	and/or	closures	of	2,100	kmt	of	refining capacity	and	499	kmt	of	smelting	capacity,	all	within	the	United	States.	The	initiation	of	these	actions	occurred	late	in	2015	and	will	be	completed	during	the	first	half	of 2016;	therefore,	management	expects	to	realize	the	benefits	of	curtailing/closing	this	high-cost	capacity	during	2016.	Additionally,	Alcoa	has	initiatives	to	drive	further productivity	improvements	during	2016,	including	from	procurement	and	overhead	programs.	Furthermore,	the	smelter	and	the	refinery	at	the	joint	venture	in	Saudi Arabia	are	expected	to	provide	a	two-percentage	point	reduction	on	each	of	the	respective	global	cost	curves	by	the	end	of	2016	(from	2013).

Management	will	also	continue	to	focus	on	revenue	growth	for	both	the	midstream	and	downstream	operations,	which	is	expected	from	multiple	sources.	The	midstream operations	anticipate	positive	contributions	from	both	the	Davenport,	IA	rolling	mill	facility	and	Tennessee	rolling	mill	facility	(expansion	completed	in	September 2015),	both	of	which	serve	the	growing	demand	for	aluminum	sheet	in	the	U.S.	automotive	and	market	as	a	result	of	changing	emission	regulations.	Likewise,	the downstream	operations	expect	favorable	results	from	projects	completed	in	late	2014	and	throughout	2015	to	meet	growing	demand	in	both	the	aerospace	and commercial	transportation	end	markets.	These	projects	include	an	expansion	of	aluminum	lithium	capabilities	in	Lafayette,	IN,	expansions	in	LaPorte,	IN	and	Hampton, VA	to	provide	nickel-based	super	alloy	structural	components	and	airfoil	blades	for	jet	engines,	and	an	expansion	at	a	facility	in	Hungary	to	double	production	of aluminum	wheels.	Additionally,	the	downstream	operations	completed	three	acquisitions	(mostly	aerospace-related)	in	November	2014	through	July	2015	(see Engineered	Products	and	Solutions	in	Segment	Information	under	Results	of	Operations	below)	that	will	incrementally	increase	revenue.	Furthermore,	in	2014	and	2015, Alcoa	entered	into	a	number	of	multi-year	supply	agreements	related	to	the	aerospace	end	market	valued	at	approximately	$13,500,	including	six	contracts	valued	at more	than	$6,700	combined	with	four	major	customers	in	the	aerospace	end	market.	Under	one	of	these	six	contracts,	the	midstream	operations	will	supply	aluminum sheet	and	plate,	and	under	the	other	five	contracts,	the	downstream	operations	will	supply	jet	engine	components	(including	aluminum	and	aluminum-lithium	fan blades),	multi-material	fastening	systems,	titanium	plate	and	billet,	and	titanium	seat	track	assemblies.

In	addition	to	focusing	on	the	above-mentioned	operational	improvements,	management	has	committed	to	executing	the	following	transaction.	On	September	28,	2015, Alcoa	announced	that	its	Board	of	Directors	approved	a	plan	to	separate	into	two	independent,	publicly-traded	companies.	One	company	will	comprise	the	Alumina	and Primary	Metals	segments	and	the	other	company	will	comprise	the	Global	Rolled	Products,	Engineered	Products	and	Solutions,	and	Transportation	and	Construction Solutions	segments.	Alcoa	is	targeting	to	complete	the	separation	in	the	second	half	of	2016.	The	transaction	is	subject	to	a	number	of	conditions,	including,	but	not limited	to,	final	approval	by	Alcoa's	Board	of	Directors,	receipt	of	a	favorable	opinion	of	legal	counsel	with	respect	to	the	tax-free	nature	of	the	transaction	for	U.S. federal	income	tax	purposes,	and	the	effectiveness	of	a	Form	10	registration	statement	to	be	filed	with	the	U.S.	Securities	and	Exchange	Commission.	Upon	completion of	the	separation,	Alcoa	shareholders	will	own	all	of	the	outstanding	shares	of	both	companies.	Alcoa	may,	at	any	time	and	for	any	reason	until	the	proposed	transaction is	complete,	abandon	the	separation	plan	or	modify	or	change	its	terms.

# Results	of	Operations

# Earnings	Summary

Net	loss	attributable	to	Alcoa	for	2015	was	$322,	or	$0.31	per	diluted	share,	compared	with	Net	income	attributable	to	Alcoa	of	$268,	or	$0.21	per	share,	in	2014.	The decrease	in	results	of	$590	was	mostly	due	to	a	lower	average	realized	price	for	both	aluminum	and	alumina,	a	charge	for	legal	matters	in	Italy,	unfavorable	price/product mix	in	the	midstream	and	downstream	operations,	an	unfavorable	change	in	income	taxes	due	to	a	higher	amount	of	discrete	income	tax	charges	and	nondeductible items,	lower	energy	sales,	and	higher	costs.	These	negative	impacts	were	partially	offset	by	net	favorable	foreign	currency	movements,	net	productivity	improvements, higher	volume	in	the	midstream	and	downstream	operations,	and	lower	charges	and	expenses	related	to	a	number	of	portfolio	actions	(e.g.,	capacity	reductions, divestitures,	acquisitions).

Net	income	attributable	to	Alcoa	for	2014	was	$268,	or	$0.21	per	share,	compared	with	Net	loss	attributable	to	Alcoa	of	$2,285,	or	$2.14	per	share,	in	2013.	The improvement	in	results	of	$2,553	was	primarily	due	to	the	absence	of	all	of	the	following:	an	impairment	of	goodwill,	a	discrete	income	tax	charge	for	valuation allowances	on	certain	deferred	tax	assets,	and	charges	for	the	resolution	of	a	legal	matter.	Other	significant	changes	in	results	included	the	following:	higher	energy sales,	a	higher	average	realized	price	for	primary	aluminum,	net	productivity	improvements,	and	net	favorable	foreign	currency	movements.	These	other	changes	were mostly	offset	by	higher	charges	and	expenses	related	to	a	number	of	portfolio	actions	(e.g.,	capacity	reductions,	divestitures,	acquisitions),	higher	overall	input	costs,	and an	unfavorable	change	in	income	taxes	due	to	higher	operating	results.

Sales—Sales	for	2015	were	$22,534	compared	with	sales	of	$23,906	in	2014,	a	decline	of	$1,372,	or	6%.	The	decrease	was	primarily	due	to	the	absence	of	sales	related to	capacity	that	was	closed,	sold	or	curtailed	in	the	midstream	and	upstream	operations	(see	Global	Rolled	Products	and	Primary	Metals	in	Segment	Information	below), a	lower	average	realized	price	for	aluminum	in	both	the	upstream	and	midstream	operations	and	for	alumina	in	the	upstream	operations,	unfavorable	foreign	currency movements	in	the	midstream	and	downstream	operations,	and	lower	energy	sales	(both	as	a	result	of	lower	pricing	and	unfavorable	foreign	currency	movements).	These negative	impacts	were	partially	offset	by	the	addition	of	sales	from	three	recently	acquired	businesses	(see	Engineered	Products	and	Solutions	in	Segment	Information below),	higher	volume	across	all	segments,	favorable	product	mix	in	the	midstream	operations,	and	higher	buy/resell	activity	for	primary	aluminum.

Sales	for	2014	were	$23,906	compared	with	sales	of	$23,032	in	2013,	an	improvement	of	$874,	or	4%.	The	increase	was	mainly	the	result	of	higher	volumes	in	the midstream,	downstream,	and	alumina	portion	of	the	upstream	operations,	higher	energy	sales	resulting	from	excess	power	due	to	curtailed	smelter	capacity,	increased buy/resell	activity	for	primary	aluminum,	and	a	higher	average	realized	price	for	primary	aluminum.	These	positive	impacts	were	partially	offset	by	lower	primary aluminum	volumes,	including	those	related	to	curtailed	and	shutdown	smelter	capacity,	and	unfavorable	price/product	mix	in	the	midstream	operations.

Cost	of	Goods	Sold—COGS	as	a	percentage	of	Sales	was	80.2%	in	2015	compared	with	80.1%	in	2014.	The	percentage	was	negatively	impacted	by	a	lower	average realized	price	for	both	aluminum	and	alumina	in	the	upstream	operations,	unfavorable	price/product	mix	in	the	midstream	and	downstream	operations,	lower	energy sales,	and	higher	costs.	These	negative	impacts	were	mostly	offset	by	net	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar,	net	productivity improvements	across	all	segments,	higher	volume	in	the	midstream	and	downstream	operations,	a	favorable	LIFO	(last	in,	first	out)	adjustment	due	to	lower	prices	for aluminum	and	alumina	($208),	lower	inventory	write-downs	related	to	the	decisions	to	permanently	shut	down	and/or	curtail	capacity	in	the	upstream	and	midstream operations	(difference	of	$23—see	Restructuring	and	Other	Charges	below),	and	the	absence	of	costs	related	to	a	new	labor	agreement	that	covers	employees	at	10 locations	in	the	United	States	(see	below).

COGS	as	a	percentage	of	Sales	was	80.1%	in	2014	compared	with	83.7%	in	2013.	The	percentage	was	positively	impacted	by	net	productivity	improvements	across	all segments,	both	the	previously	mentioned	higher	energy	sales	and	higher	average	realized	price	for	primary	aluminum,	net	favorable	foreign	currency	movements	due	to	a stronger	U.S.	dollar,	lower	costs	for	caustic	and	carbon,	and	the	absence	of	costs	related	to	a	planned	maintenance	outage	in	2013	at	a	power	plant	in	Australia.	These positive	impacts	were	partially	offset	by	higher	costs	for	bauxite,	energy,	and	labor,	higher	inventory	write-downs	related	to	the	decisions	to	permanently	shut	down certain	smelter	and	rolling	mill	capacity	(difference	of	$58—see	Restructuring	and	Other	Charges	below),	and	costs	related	to	a	new	labor	agreement	that	covers employees	at	10	locations	in	the	United	States	(see	below).

On	June	6,	2014,	the	United	Steelworkers	ratified	a	new	five-year	labor	agreement	covering	approximately	6,100	employees	at	10	U.S.	locations;	the	previous	labor agreement	expired	on	May	15,	2014.	In	2014,	as	a	result	of	the	preparation	for	and	ratification	of	the	new	agreement,	Alcoa	recognized	$18	($12	after-tax)	in	COGS	for, among	other	items,	business	contingency	costs	and	a	one-time	signing	bonus	for	employees.	Additionally,	as	a	result	of	the	provisions	of	the	new	labor	agreement,	a significant	plan	amendment	was	adopted	by	one	of	Alcoa's	U.S.	pension	plans.	Accordingly,	this	plan	was	required	to	be	remeasured,	which	resulted	in	a	$13	decrease to	2014	net	periodic	benefit	cost.

Selling,	General	Administrative,	and	Other	Expenses—SG&A	expenses	were	$979,	or	4.3%	of	Sales,	in	2015	compared	with	$995,	or	4.2%	of	Sales,	in	2014.	The decrease	of	$16	was	principally	the	result	of	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar,	the	absence	of	SG&A	related	to	closed	and	sold locations,	and	lower	acquisition	costs	($15),	partially	offset	by	expenses	for	professional	and	consulting	services	related	to	the	planned	separation	of	Alcoa	($24—see Management	Review	of	2015	and	Outlook	for	the	Future	above)	and	new	SG&A	related	to	inorganic	growth	in	the	Engineered	Products	and	Solutions	segment.

SG&A	expenses	were	$995,	or	4.2%	of	Sales,	in	2014	compared	with	$1,008,	or	4.4%	of	Sales,	in	2013.	The	decline	of	$13	was	due	to	decreases	in	various	expenses, including	legal	and	consulting	fees	and	contract	services,	mostly	offset	by	costs	associated	with	the	acquisition	of	Firth	Rixson	($42—see	Engineered	Products	and Solutions	in	Segment	Information	below)	and	higher	stock-based	compensation	expense.

Research	and	Development	Expenses—R&D	expenses	were	$238	in	2015	compared	with	$218	in	2014	and	$192	in	2013.	The	increase	in	2015	as	compared	to	2014 was	mainly	driven	by	additional	spending	related	to	the	upgrade	of	a	Micromill™	in	San	Antonio,	TX,	which	was	completed	during	2015	and	began	production	of automotive	sheet	on	a	limited	basis,	for	the	Global	Rolled	Products	segment	and	additive	manufacturing	for	3-D	printing,	partially	offset	by	lower	spending	related	to inert	anode	and	carbothermic	technology	for	the	Primary	Metals	segment.	The	increase	in	2014	as	compared	to	2013	was	primarily	caused	by	spending	related	to	an upgrade	of	a	Micromill™	in	San	Antonio,	TX	for	the	Global	Rolled	Products	segment	and	additional	spending	related	to	inert	anode	and	carbothermic	technology	for the	Primary	Metals	segment.

Provision	for	Depreciation,	Depletion,	and	Amortization—The	provision	for	DD&A	was	$1,280	in	2015	compared	with	$1,371	in	2014.	The	decrease	of	$91,	or	7%, was	mostly	due	to	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar,	particularly	against	the	Australian	dollar	and	Brazilian	real,	and	the	absence	of DD&A	($71)	related	to	the	divestiture	and/or	permanent	closure	of	five	smelters,	six	rolling	mills,	one	refinery,	and	one	rod	mill	(see	Alumina,	Primary	Metals,	and Global	Rolled	Products	in	Segment	Information	below),	all	of	which	occurred	from	March	2014	through	June	2015.	These	positive	impacts	were	partially	offset	by	new DD&A	($93)	associated	with	three	acquisitions	that	occurred	from	November	2014	through	July	2015	(see	Engineered	Products	and	Solutions	in	Segment	Information below).

The	provision	for	DD&A	was	$1,371	in	2014	compared	with	$1,421	in	2013.	The	decrease	of	$50,	or	4%,	was	principally	the	result	of	favorable	foreign	currency movements	due	to	a	stronger	U.S.	dollar,	particularly	against	the	Australian	dollar	and	Brazilian	real,	and	a	reduction	in	expense	related	to	the	permanent	shutdown	of smelter	capacity	in	Australia,	Canada,	the	United	States,	and	Italy	that	occurred	at	different	points	during	both	2013	and	2014	(see	Primary	Metals	in	Segment Information	below).	These	items	were	somewhat	offset	by	new	DD&A	associated	with	both	the	acquisition	of	Firth	Rixson	in	November	2014	(see	Engineered	Products and	Solutions	in	Segment	Information	below)	and	assets	placed	into	service	in	January	2014	related	to	the	completed	automotive	expansion	at	the	Davenport,	IA	plant.

Impairment	of	Goodwill—In	2015	and	2013,	Alcoa	recognized	an	impairment	of	goodwill	in	the	amount	of	$25	and	$1,731	($1,719	after	noncontrolling	interest), respectively,	related	to	the	annual	impairment	review	of	the	soft	alloy	extrusion	business	in	Brazil	and	the	Primary	Metals	segment,	respectively,	(see	Goodwill	in Critical	Accounting	Policies	and	estimates	below).

Restructuring	and	Other	Charges—Restructuring	and	other	charges	for	each	year	in	the	three-year	period	ended	December	31,	2015	were	comprised	of	the	following:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Asset\timpairments | $335 | $406 | $116 |
| Layoff\tcosts | 299 | 259 | \t 201 |
| Legal\tmatters\tin\tItaly | 201 | - | - |
| Net\tloss\ton\tdivestitures\tof\tbusinesses | 161 | 332 | - |
| Resolution\tof\ta\tlegal\tmatter | - | - | \t 391 |
| Other | 213 | 199 | 82 |
| Reversals\tof\tpreviously\trecorded\tlayoff\tand\tother\texit\tcosts | (14) | (28) | (8) |
| Restructuring\tand\tother\tcharges | $1,195 | $1,168 | $782 |

Layoff	costs	were	recorded	based	on	approved	detailed	action	plans	submitted	by	the	operating	locations	that	specified	positions	to	be	eliminated,	benefits	to	be	paid under	existing	severance	plans,	union	contracts	or	statutory	requirements,	and	the	expected	timetable	for	completion	of	the	plans.

2015	Actions.	In	2015,	Alcoa	recorded	Restructuring	and	other	charges	of	$1,195	($836	after-tax	and	noncontrolling	interest),	which	were	comprised	of	the	following components:	$438	($281	after-tax	and	noncontrolling	interest)	for	exit	costs	related	to	decisions	to	permanently	shut	down	and	demolish	three	smelters	and	a	power station	(see	below);	$246	($118	after-tax	and	noncontrolling	interest)	for	the	curtailment	of	two	refineries	and	two	smelters	(see	below);	$201	(pre-	and	after-tax)	related to	legal	matters	in	Italy;	a	$161	($151	after-tax	and	noncontrolling	interest)	net	loss	related	to	the	March	2015	divestiture	of	a	rolling	mill	in	Russia	(see	Global	Rolled Products	in	Segment	Information	below)	and	post-closing	adjustments	associated	with	three	December	2014	divestitures;	$143	($102	after-tax	and	noncontrolling interest)	for	layoff	costs,	including	the	separation	of	approximately	2,100	employees	(425	in	the	Transportation	and	Construction	Solutions	segment,	645	in	the Engineered	Products	and	Solutions	segment,	380	in	the	Primary	Metals	segment,	90	in	the	Global	Rolled	Products	segment,	85	in	the	Alumina	segment,	and	475	in Corporate);	$34	($14	after-tax	and	noncontrolling	interest)	for	asset	impairments,	virtually	all	of	which	was	related	to	prior	capitalized	costs	for	an	expansion	project	at	a refinery	in	Australia	that	is	no	longer	being	pursued;	an	$18	($13	after-tax)	gain	on	the	sale	of	land	related	to	one	of	the	rolling	mills	in	Australia	that	was	permanently closed	in	December	2014	(see	2014	Actions	below);	a	net	charge	of	$4	(a	net	credit	of	$7	after-tax	and	noncontrolling	interest)	for	other	miscellaneous	items;	and	$14 ($11	after-tax	and	noncontrolling	interest)	for	the	reversal	of	a	number	of	small	layoff	reserves	related	to	prior	periods.

During	2015,	management	initiated	various	alumina	refining	and	aluminum	smelting	capacity	curtailments	and/or	closures.	The	curtailments	were	composed	of	the remaining	capacity	at	all	of	the	following:	the	São	Luís	smelter	in	Brazil	(74	kmt-per-year);	the	Suriname	refinery	(1,330	kmt-per-year);	the	Point	Comfort,	TX	refinery (2,010	kmt-per-year);	and	the	Wenatchee,	WA	smelter	(143	kmt-per-year).	All	of	the	curtailments	were	completed	in	2015	except	for	1,635	kmt-per-year	at	the	Point Comfort	refinery,	which	is	expected	to	be	completed	by	the	end	of	June	2016.	The	permanent	closures	were	composed	of	the	capacity	at	the	Warrick,	IN	smelter	(269 kmt-per-year)	(includes	the	closure	of	a	related	coal	mine)	and	the	infrastructure	of	the	Massena	East,	NY	smelter	(potlines	were	previously	shut	down	in	both	2013	and 2014—see	2013	Actions	and	2014	Actions	below),	as	the	modernization	of	this	smelter	is	no	longer	being	pursued.	The	shutdown	of	the	Warrick	smelter	is	expected	to be	completed	by	the	end	of	March	2016.

The	decisions	on	the	above	actions	were	part	of	a	separate	12-month	review	in	refining	(2,800	kmt-per-year)	and	smelting	(500	kmt-per-year)	capacity	initiated	by management	in	March	2015	for	possible	curtailment	(partial	or	full),	permanent	closure	or	divestiture.	While	many	factors	contributed	to	each	decision,	in	general,	these actions	were	initiated	to	maintain	competitiveness	amid	prevailing	market	conditions	for	both	alumina	and	aluminum.	Demolition	and	remediation	activities	related	to the	Warrick	smelter	and	the	Massena	East	location	will	begin	in	2016	and	are	expected	to	be	completed	by	the	end	of	2020.

Separate	from	the	actions	initiated	under	the	reviews	described	above,	in	mid-2015,	management	approved	the	permanent	shutdown	and	demolition	of	the	Poços	de Caldas	smelter	(capacity	of	96	kmt-per-year)	in	Brazil	and	the

Anglesea	power	station	(includes	the	closure	of	a	related	coal	mine)	in	Australia.	The	entire	capacity	at	Poços	de	Caldas	had	been	temporarily	idled	since	May	2014	and the	Anglesea	power	station	was	shut	down	at	the	end	of	August	2015.	Demolition	and	remediation	activities	related	to	the	Poços	de	Caldas	smelter	and	the	Anglesea power	station	began	in	late	2015	and	are	expected	to	be	completed	by	the	end	of	2026	and	2020,	respectively.

The	decision	on	the	Poços	de	Caldas	smelter	was	due	to	management's	conclusion	that	the	smelter	was	no	longer	competitive	as	a	result	of	challenging	global	market conditions	for	primary	aluminum,	which	led	to	the	initial	curtailment,	that	have	not	dissipated	and	higher	costs.	For	the	Anglesea	power	station,	the	decision	was	made because	a	sale	process	did	not	result	in	a	sale	and	there	would	have	been	imminent	operating	costs	and	financial	constraints	related	to	this	site	in	the	remainder	of	2015 and	beyond,	including	significant	costs	to	source	coal	from	available	resources,	necessary	maintenance	costs,	and	a	depressed	outlook	for	forward	electricity	prices.	The Anglesea	power	station	previously	supplied	approximately	40	percent	of	the	power	needs	for	the	Point	Henry	smelter,	which	was	closed	in	August	2014	(see	2014 Actions	below).

In	2015,	costs	related	to	the	shutdown	and	curtailment	actions	included	asset	impairments	of	$217,	representing	the	write-off	of	the	remaining	book	value	of	all	related properties,	plants,	and	equipment;	$156	for	the	layoff	of	approximately	3,100	employees	(1,800	in	the	Primary	Metals	segment	and	1,300	in	the	Alumina	segment), including	$30	in	pension	costs;	accelerated	depreciation	of	$84	related	to	certain	facilities	as	they	continued	to	operate	during	2015;	and	$227	in	other	exit	costs. Additionally	in	2015,	remaining	inventories,	mostly	operating	supplies	and	raw	materials,	were	written	down	to	their	net	realizable	value,	resulting	in	a	charge	of	$90 ($43	after-tax	and	noncontrolling	interest),	which	was	recorded	in	COGS.	The	other	exit	costs	of	$227	represent	$76	in	asset	retirement	obligations	and	$86	in environmental	remediation,	both	of	which	were	triggered	by	the	decisions	to	permanently	shut	down	and	demolish	the	aforementioned	structures	in	the	United	States, Brazil,	and	Australia	(includes	the	rehabilitation	of	a	related	coal	mine	in	each	of	Australia	and	the	United	States),	and	$65	in	supplier	and	customer	contract-related costs.

As	of	December	31,	2015,	approximately	1,500	of	the	5,200	employees	were	separated.	The	remaining	separations	for	2015	restructuring	programs	are	expected	to	be completed	by	the	end	of	2016.	In	2015,	cash	payments	of	$42	were	made	against	layoff	reserves	related	to	2015	restructuring	programs.

2014	Actions.	In	2014,	Alcoa	recorded	Restructuring	and	other	charges	of	$1,168	($703	after-tax	and	noncontrolling	interest),	which	were	comprised	of	the	following components:	$693	($443	after-tax	and	noncontrolling	interest)	for	exit	costs	related	to	decisions	to	permanently	shut	down	and	demolish	three	smelters	and	two	rolling mills	(see	below);	a	$332	($163	after-tax	and	noncontrolling	interest)	net	loss	for	the	divestitures	of	four	operations	(see	Alumina,	Primary	Metals,	and	Global	Rolled Products	in	Segment	Information	below);	$68	($45	after-tax	and	noncontrolling	interest)	for	the	temporary	curtailment	of	two	smelters	and	a	related	production slowdown	at	one	refinery	(see	below);	$51	($36	after-tax	and	noncontrolling	interest)	for	layoff	costs,	including	the	separation	of	approximately	1,120	employees	(470	in the	Engineered	Products	and	Solutions	segment,	360	in	the	Transportation	and	Construction	Solutions	segment,	45	in	the	Global	Rolled	Products	segment,	60	in	the Alumina	and	Primary	Metals	segments	combined,	and	185	in	Corporate);	$34	($26	after-tax)	for	asset	impairments	related	to	prior	capitalized	costs	for	a	modernization project	at	a	smelter	in	Canada	that	is	no	longer	being	pursued;	a	net	charge	of	$18	($11	after-tax	and	noncontrolling	interest)	for	other	miscellaneous	items,	including	$2 ($2	after-tax)	for	asset	impairments	and	accelerated	depreciation;	and	$28	($21	after-tax	and	noncontrolling	interest)	for	the	reversal	of	a	number	of	layoff	reserves related	to	prior	periods,	including	those	associated	with	a	smelter	in	Italy	due	to	changes	in	facts	and	circumstances	(see	below).

In	early	2014,	management	approved	the	permanent	shutdown	and	demolition	of	the	remaining	capacity	(84	kmt-per-year)	at	the	Massena	East,	NY	smelter	and	the	full capacity	(190	kmt-per-year)	at	the	Point	Henry	smelter	in	Australia.	The	capacity	at	Massena	East	was	fully	shut	down	by	the	end	of	March	2014	and	the	Point	Henry smelter	was	fully	shut	down	in	August	2014.	Demolition	and	remediation	activities	related	to	both	the	Massena	East	and	Point	Henry	smelters	began	in	late	2014	and	are expected	to	be	completed	by	the	end	of	2020	and	2018,	respectively.

The	decisions	on	the	Massena	East	and	Point	Henry	smelters	were	part	of	a	15-month	review	of	460	kmt	of	smelting	capacity	initiated	by	management	in	May	2013	(see 2013	Actions	below)	for	possible	curtailment.	Through	this	review,

management	determined	that	the	remaining	capacity	of	the	Massena	East	smelter	was	no	longer	competitive	and	the	Point	Henry	smelter	had	no	prospect	of	becoming financially	viable.	Management	also	initiated	the	temporary	curtailment	of	the	remaining	capacity	(62	kmt-per-year)	at	the	Poços	de	Caldas	smelter	and	additional capacity	(85	kmt-per-year)	at	the	São	Luís	smelter,	both	in	Brazil.	These	curtailments	were	completed	by	the	end	of	May	2014.	As	a	result	of	these	curtailments,	200 kmt-per-year	of	production	at	the	Poços	de	Caldas	refinery	was	reduced	by	the	end	of	June	2014.

Also	in	early	2014,	management	approved	the	permanent	shutdown	of	Alcoa's	two	rolling	mills	in	Australia,	Point	Henry	and	Yennora.	This	decision	was	made	due	to the	significant	impact	of	excess	can	sheet	capacity	in	both	Australia	and	Asia.	The	two	rolling	mills	had	a	combined	can	sheet	capacity	of	200	kmt-per-year	and	were closed	by	the	end	of	2014.	Demolition	and	remediation	activities	related	to	the	two	rolling	mills	began	in	mid-2015	and	are	expected	to	be	completed	by	the	end	of	2018.

Additionally,	in	August	2014,	management	approved	the	permanent	shutdown	and	demolition	of	the	capacity	(150	kmt-per-year)	at	the	Portovesme	smelter	in	Italy, which	had	been	idle	since	November	2012.	This	decision	was	made	because	the	fundamental	reasons	that	made	the	Portovesme	smelter	uncompetitive	remained unchanged,	including	the	lack	of	a	viable	long-term	power	solution.	Demolition	and	remediation	activities	related	to	the	Portovesme	smelter	will	begin	in	2016	and	are expected	to	be	completed	by	the	end	of	2020	(delayed	due	to	discussions	with	the	Italian	government	and	other	stakeholders).

In	2014,	costs	related	to	the	shutdown	and	curtailment	actions	included	$208	for	the	layoff	of	approximately	1,790	employees	(1,210	in	the	Primary	Metals	segment,	470 in	the	Global	Rolled	Products	segment,	80	in	the	Alumina	segment,	and	30	in	Corporate),	including	$26	in	pension	costs;	accelerated	depreciation	of	$204	related	to	the three	facilities	in	Australia	as	they	continued	to	operate	during	2014;	asset	impairments	of	$166	representing	the	write-off	of	the	remaining	book	value	of	all	related properties,	plants,	and	equipment;	and	$183	in	other	exit	costs.	Additionally	in	2014,	remaining	inventories,	mostly	operating	supplies	and	raw	materials,	were	written down	to	their	net	realizable	value,	resulting	in	a	charge	of	$67	($47	after-tax	and	noncontrolling	interest),	which	was	recorded	in	COGS.	The	other	exit	costs	of	$183 represent	$95	in	asset	retirement	obligations	and	$42	in	environmental	remediation,	both	of	which	were	triggered	by	the	decisions	to	permanently	shut	down	and demolish	the	aforementioned	structures	in	Australia,	Italy,	and	the	United	States,	and	$46	in	other	related	costs,	including	supplier	and	customer	contract-related	costs.

As	of	December	31,	2015,	approximately	2,500	of	the	2,870	employees	(previously	2,910)	were	separated.	The	total	number	of	employees	associated	with	2014 restructuring	programs	was	updated	to	reflect	employees,	who	were	initially	identified	for	separation,	accepting	other	positions	within	Alcoa	and	natural	attrition.	The remaining	separations	for	2014	restructuring	programs	are	expected	to	be	completed	by	the	end	of	2016.	In	2015	and	2014,	cash	payments	of	$62	and	$141,	respectively, were	made	against	layoff	reserves	related	to	2014	restructuring	programs.

2013	Actions.	In	2013,	Alcoa	recorded	Restructuring	and	other	charges	of	$782	($585	after-tax	and	noncontrolling	interests),	which	were	comprised	of	the	following components:	$391	($305	after-tax	and	noncontrolling	interest)	related	to	the	resolution	of	a	legal	matter;	$245	($183	after-tax)	for	exit	costs	related	to	the	permanent shutdown	and	demolition	of	certain	structures	at	three	smelter	locations	(see	below);	$87	($61	after-tax	and	noncontrolling	interests)	for	layoff	costs,	including	the separation	of	approximately	1,110	employees	(340	in	the	Primary	Metals	segment,	250	in	the	Global	Rolled	Products	segment,	220	in	the	Engineered	Products	and Solutions	segment,	85	in	the	Alumina	segment,	75	in	the	Transportation	and	Construction	Solutions	segment	and	140	in	Corporate),	of	which	590	relates	to	a	global overhead	reduction	program,	and	$9	in	pension	plan	settlement	charges	related	to	previously	separated	employees;	$25	($17	after-tax)	in	net	charges,	including	$12	($8 after-tax)	for	asset	impairments,	related	to	retirements	and/or	the	sale	of	previously	idled	structures;	$25	($13	after-tax	and	noncontrolling	interests)	for	asset	impairments related	to	the	write-off	of	capitalized	costs	for	projects	no	longer	being	pursued	due	to	the	market	environment;	a	net	charge	of	$17	($12	after-tax	and	noncontrolling interests)	for	other	miscellaneous	items,	including	$3	($2	after-tax)	for	asset	impairments;	and	$8	($6	after-tax	and	noncontrolling	interests)	for	the	reversal	of	a	number of	small	layoff	reserves	related	to	prior	periods.

In	May	2013,	management	approved	the	permanent	shutdown	and	demolition	of	two	potlines	(capacity	of	105	kmt-per-year)	that	utilize	Soderberg	technology	at	the Baie	Comeau	smelter	in	Québec,	Canada	(remaining	capacity	of	280

kmt-per-year	composed	of	two	prebake	potlines)	and	the	full	capacity	(44	kmt-per-year)	at	the	Fusina	smelter	in	Italy.	Additionally,	in	August	2013,	management approved	the	permanent	shutdown	and	demolition	of	one	potline	(capacity	of	41	kmt-per-year)	that	utilizes	Soderberg	technology	at	the	Massena	East,	NY	smelter (remaining	capacity	of	84	kmt-per-year	composed	of	two	Soderberg	potlines).	The	aforementioned	Soderberg	lines	at	Baie	Comeau	and	Massena	East	were	fully	shut down	by	the	end	of	September	2013	while	the	Fusina	smelter	was	previously	temporarily	idled	in	2010.	Demolition	and	remediation	activities	related	to	all	three facilities	began	in	late	2013	and	are	expected	to	be	completed	by	the	end	of	2016	for	Massena	East	and	by	the	end	of	2017	for	both	Baie	Comeau	and	Fusina.

The	decisions	on	the	Soderberg	lines	for	Baie	Comeau	and	Massena	East	were	part	of	a	15-month	review	of	460	kmt	of	smelting	capacity	initiated	by	management	in May	2013	for	possible	curtailment,	while	the	decision	on	the	Fusina	smelter	was	in	addition	to	the	capacity	being	reviewed.	Factors	leading	to	all	three	decisions	were	in general	focused	on	achieving	sustained	competitiveness	and	included,	among	others:	lack	of	an	economically	viable,	long-term	power	solution	(Italy);	changed	market fundamentals;	other	existing	idle	capacity;	and	restart	costs.

In	2013,	exit	costs	related	to	the	shutdown	actions	included	$114	for	the	layoff	of	approximately	550	employees	(Primary	Metals	segment),	including	$83	in	pension costs;	accelerated	depreciation	of	$58	(Baie	Comeau)	and	asset	impairments	of	$18	(Fusina	and	Massena	East)	representing	the	write-off	of	the	remaining	book	value	of all	related	properties,	plants,	and	equipment;	and	$55	in	other	exit	costs.	Additionally	in	2013,	remaining	inventories,	mostly	operating	supplies	and	raw	materials,	were written	down	to	their	net	realizable	value	resulting	in	a	charge	of	$9	($6	after-tax),	which	was	recorded	in	COGS.	The	other	exit	costs	of	$55	represent	$48	in	asset retirement	obligations	and	$5	in	environmental	remediation,	both	of	which	were	triggered	by	the	decisions	to	permanently	shut	down	and	demolish	these	structures,	and $2	in	other	related	costs.

As	of	December	31,	2015,	the	separations	associated	with	2013	restructuring	programs	were	essentially	complete.	In	2015,	2014,	and	2013,	cash	payments	of	$7,	$39, and	$33,	respectively,	were	made	against	layoff	reserves	related	to	2013	restructuring	programs.

Alcoa	does	not	include	Restructuring	and	other	charges	in	the	results	of	its	reportable	segments.	The	pretax	impact	of	allocating	such	charges	to	segment	results	would have	been	as	follows:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Alumina | $233 | $287 | $11 |
| Primary\tMetals | 691 | 553 | \t 295 |
| Global\tRolled\tProducts | 131 | 266 | 15 |
| Engineered\tProducts\tand\tSolutions | 49 | 13 | 12 |
| Transportation\tand\tConstruction\tSolutions | 8 | 10 | 16 |
| Segment\ttotal | \t 1,112 | \t 1,129 | \t 349 |
| Corporate | 83 | 39 | \t 433 |
| Total\trestructuring\tand\tother\tcharges | $1,195 | $1,168 | $782 |

Interest	Expense—Interest	expense	was	$498	in	2015	compared	with	$473	in	2014.	The	increase	of	$25,	or	5%,	was	primarily	due	to	an	8%	higher	average	debt	level, somewhat	offset	by	the	absence	of	fees	paid	associated	with	the	execution	and	termination	of	a	364-day	senior	unsecured	bridge	term	loan	facility	related	to	the	then- planned	acquisition	of	Firth	Rixson	($13—see	Engineered	Products	and	Solutions	in	Segment	Information	below).	The	higher	average	debt	level	was	mostly	attributable to	higher	outstanding	long-term	debt	due	to	the	September	2014	issuance	of	$1,250	in	5.125%	Notes,	the	proceeds	of	which	were	used	to	pay	a	portion	of	the	purchase price	of	the	Firth	Rixson	acquisition.

Interest	expense	was	$473	in	2014	compared	with	$453	in	2013.	The	increase	of	$20,	or	4%,	was	principally	caused	by	lower	capitalized	interest	($43),	largely	due	to	the progress	completed	at	the	aluminum	complex	in	Saudi	Arabia,	and	fees	paid	associated	with	the	execution	and	termination	of	a	364-day	senior	unsecured	bridge	term loan	facility	related	to	the	then-planned	acquisition	of	Firth	Rixson	($13—see	Engineered	Products	and	Solutions	in	Segment	Information	below).	These	items	were partially	offset	by	a	3%	lower	average	debt	level	and	lower	amortization	of	debt-related	costs

due	to	the	conversion	of	convertible	notes.	The	lower	average	debt	level	was	mostly	attributable	to	lower	outstanding	long-term	debt	due	to	the	March	2014	conversion of	$575	in	5.25%	Convertible	Notes	and	the	June	2013	repayment	of	$422	in	6.00%	Notes,	partially	offset	by	the	September	2014	issuance	of	$1,250	in	5.125%	Notes.

Other	Expenses	(Income),	net—Other	expenses,	net	was	$2	in	2015	compared	with	$47	in	2014.	The	decrease	of	$45	was	mainly	the	result	of	a	gain	on	the	sale	of	land both	around	the	Lake	Charles,	LA	anode	facility	and	at	Alcoa's	former	Sherwin,	TX	refinery	site	($49)	and	the	remaining	equity	investment	in	a	China	rolling	mill	($19) and	a	favorable	change	in	deferred	compensation.	These	items	were	somewhat	offset	by	the	absence	of	a	gain	on	the	sale	of	a	mining	interest	in	Suriname	($28)	and	a portion	of	an	equity	investment	in	a	China	rolling	mill	($14),	an	unfavorable	change	in	the	cash	surrender	value	of	company-owned	life	insurance,	and	a	net	unfavorable change	in	mark-to-market	derivative	contracts.

Other	expenses,	net	was	$47	in	2014	compared	with	Other	income,	net	of	$25	in	2013.	The	change	of	$72	was	mostly	due	to	an	unfavorable	change	in	mark-to-market derivative	aluminum	contracts	($42),	net	unfavorable	foreign	currency	movements	($34),	a	higher	equity	loss	related	to	Alcoa's	share	of	the	joint	venture	in	Saudi Arabia	due	to	start-up	costs	of	the	entire	complex,	including	restart	costs	for	one	of	the	smelter	potlines	that	was	previously	shut	down	due	to	a	period	of	instability,	and	a smaller	improvement	in	the	cash	surrender	value	of	company-owned	life	insurance.	These	items	were	somewhat	offset	by	a	gain	on	the	sale	of	a	mining	interest	in Suriname	($28)	and	a	portion	of	an	equity	investment	in	a	China	rolling	mill	($14).

Income	Taxes—Alcoa's	effective	tax	rate	was	179.4%	(provision	on	income)	in	2015	compared	with	the	U.S.	federal	statutory	rate	of	35%.	The	effective	tax	rate	differs from	the	U.S.	federal	statutory	rate	principally	due	to	a	$190	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	the	United	States	and Iceland	(see	Income	Taxes	in	Critical	Accounting	Policies	and	Estimates	below),	a	$201	charge	for	legal	matters	in	Italy	(see	Restructuring	and	Other	Charges	above) and	a	$25	impairment	of	goodwill	(see	Impairment	of	Goodwill	above)	that	are	nondeductible	for	income	tax	purposes,	a	loss	on	the	sale	of	a	rolling	mill	in	Russia	(see Global	Rolled	Products	in	Segment	Information	below)	for	which	no	tax	benefit	was	recognized,	a	$34	net	discrete	income	tax	charge	as	described	below,	and restructuring	charges	related	to	the	curtailment	of	a	refinery	in	Suriname	(see	Restructuring	and	Other	Charges	above),	a	portion	for	which	no	tax	benefit	was	recognized.

In	2015,	Alcoa	World	Alumina	and	Chemicals	(AWAC),	a	joint	venture	owned	60%	by	Alcoa	and	40%	by	Alumina	Limited	(Alcoa	consolidates	AWAC	for	financial reporting	purposes),	recognized	an	$85	discrete	income	tax	charge	for	a	valuation	allowance	on	certain	deferred	tax	assets	in	Suriname	(see	Income	Taxes	in	Critical Accounting	Policies	and	Estimates	below),	which	were	related	mostly	to	employee	benefits	and	tax	loss	carryforwards.	Alcoa	also	had	a	$51	deferred	tax	liability	related to	its	60%-share	of	these	deferred	tax	assets	that	was	written	off	as	a	result	of	the	valuation	allowance	recognized	by	AWAC.

Alcoa's	effective	tax	rate	was	64.4%	(provision	on	income)	in	2014	compared	with	the	U.S.	federal	statutory	rate	of	35%.	The	effective	tax	rate	differs	from	the	U.S. federal	statutory	rate	mainly	due	to	restructuring	charges	related	to	operations	in	Italy	(no	tax	benefit)	and	Australia	(benefit	at	a	lower	tax	rate)	(see	Restructuring	and Other	Charges	above),	a	$52	($31	after	noncontrolling	interest)	discrete	income	tax	charge	related	to	a	tax	rate	change	in	Brazil	(see	below),	a	loss	on	the	sale	of	three rolling	mills	in	Europe	(no	tax	benefit)	(see	Global	Rolled	Products	in	Segment	Information	below),	and	a	$27	($16	after	noncontrolling	interest)	discrete	income	tax charge	for	the	remeasurement	of	certain	deferred	tax	assets	of	a	subsidiary	in	Spain	due	to	a	November	2014	enacted	tax	rate	change	(from	30%	in	2014	to	28%	in	2015 to	25%	in	2016).	These	items	were	somewhat	offset	by	foreign	income	taxed	in	lower	rate	jurisdictions	and	a	$9	discrete	income	tax	benefit	for	the	release	of	a	valuation allowance	related	to	operations	in	Germany	due	to	the	initiation	of	a	tax	planning	strategy.

In	December	2011,	one	of	Alcoa's	subsidiaries	in	Brazil	applied	for	a	tax	holiday	related	to	its	expanded	mining	and	refining	operations.	During	2013,	the	application was	amended	and	re-filed	and,	separately,	a	similar	application	was	filed	for	another	one	of	the	Company's	subsidiaries	in	Brazil.	The	deadline	for	the	Brazilian government	to	deny	the	application	was	July	11,	2014.	Since	Alcoa	did	not	receive	notice	that	its	applications	were	denied,	the	tax	holiday	took	effect	automatically	on July	12,	2014.	As	a	result,	the	tax	rate	applicable	to	qualified	holiday	income	for	these

subsidiaries	decreased	significantly	(from	34%	to	15.25%),	resulting	in	future	cash	tax	savings	over	the	10-year	holiday	period	(retroactively	effective	as	of	January	1, 2013).	Additionally,	a	portion	of	one	of	the	subsidiaries	net	deferred	tax	asset	that	reverses	within	the	holiday	period	was	remeasured	at	the	new	tax	rate	(the	net	deferred tax	asset	of	the	other	subsidiary	was	not	remeasured	since	it	could	still	be	utilized	against	the	subsidiary's	future	earnings	not	subject	to	the	tax	holiday).	This remeasurement	resulted	in	a	decrease	to	that	subsidiary's	net	deferred	tax	asset	and	a	noncash	charge	to	earnings	of	$52	($31	after	noncontrolling	interest).

Alcoa's	effective	tax	rate	was	23.6%	in	2013	(provision	on	a	loss)	compared	with	the	U.S.	federal	statutory	rate	of	35%.	The	effective	tax	rate	differs	(by	(58.6)%	points) from	the	U.S.	federal	statutory	rate	primarily	due	to	a	$1,731	impairment	of	goodwill	(see	Impairment	of	Goodwill	above)	and	a	$209	charge	for	a	legal	matter	(see Restructuring	and	Other	Charges	above)	that	are	nondeductible	for	income	tax	purposes,	a	$372	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred tax	assets	in	Spain	and	the	United	States	(see	Income	Taxes	in	Critical	Accounting	Policies	and	Estimates	below),	restructuring	charges	related	to	operations	in	Canada (benefit	at	a	lower	tax	rate)	and	Italy	(no	tax	benefit)	(see	Restructuring	and	Other	Charges	above),	and	a	$9	discrete	income	tax	charge	related	to	prior	year	taxes	in Spain	and	Australia.	These	items	were	slightly	offset	by	an	$18	discrete	income	tax	benefit	related	to	new	U.S.	tax	legislation	(see	below).

On	January	2,	2013,	the	American	Taxpayer	Relief	Act	of	2012	was	signed	into	law	and	reinstated	various	expired	or	expiring	temporary	business	tax	provisions through	2013.	Two	specific	temporary	business	tax	provisions	that	expired	in	2011	and	impacted	Alcoa	are	the	look-through	rule	for	payments	between	related controlled	foreign	corporations	and	the	research	and	experimentation	credit.	The	expiration	of	these	two	provisions	resulted	in	Alcoa	recognizing	a	higher	income	tax provision	of	$18	in	2012.	As	tax	law	changes	are	accounted	for	in	the	period	of	enactment,	Alcoa	recognized	an	$18	discrete	income	tax	benefit	in	2013	related	to	the 2012	tax	year	to	reflect	the	extension	of	these	provisions.	Beginning	on	January	1,	2014,	these	two	provisions	once	again	expired.	On	December	19,	2014,	the	Tax Increase	Prevention	Act	of	2014	was	signed	into	law,	which	retroactively	extended	for	one	year	(i.e.	calendar	year	2014)	a	number	of	the	tax	provisions	that	expired	at the	end	of	2013,	including	the	two	specific	aforementioned	provisions.	Beginning	on	January	1,	2015,	these	two	provisions	once	again	expired.	On	December	18,	2015, the	Consolidated	Appropriations	Act,	2016	was	signed	into	law,	which	retroactively	(as	of	January	1,	2015)	extended	for	two	or	five	years	or	made	permanent	a	number of	the	tax	provisions	that	expired	at	the	end	of	2014,	including	the	two	specific	aforementioned	provisions.	The	look-through	rule	for	payments	between	related controlled	foreign	corporations	was	renewed	for	five	years	(through	2019)	and	the	research	and	experimentation	credit	was	made	permanent.

Management	anticipates	that	the	effective	tax	rate	in	2016	will	be	between	30%	and	35%.	However,	business	portfolio	actions,	changes	in	the	current	economic environment,	tax	legislation	or	rate	changes,	currency	fluctuations,	ability	to	realize	deferred	tax	assets,	and	the	results	of	operations	in	certain	taxing	jurisdictions	may cause	this	estimated	rate	to	fluctuate.

Noncontrolling	Interests—Net	income	attributable	to	noncontrolling	interests	was	$125	in	2015	compared	with	Net	loss	attributable	to	noncontrolling	interests	of	$91 in	2014	and	Net	income	attributable	to	noncontrolling	interests	of	$41	in	2013.	These	amounts	were	virtually	all	related	to	Alumina	Limited's	40%	ownership	interest	in AWAC.	In	2015,	AWAC	generated	income	compared	to	a	loss	in	both	2014	and	2013.

In	2015,	the	change	in	AWAC's	results	was	principally	due	to	improved	operating	results,	the	absence	of	restructuring	and	other	charges	related	to	both	the	permanent shutdown	of	the	Point	Henry	smelter	in	Australia	(see	Restructuring	and	Other	Charges	above)	and	the	divestiture	of	an	ownership	interest	in	a	mining	and	refining	joint venture	in	Jamaica	(see	Alumina	in	Segment	Information	below),	and	the	absence	of	a	combined	$79	($32	was	noncontrolling	interest's	share)	discrete	income	tax charge	related	to	a	respective	tax	rate	change	in	both	Brazil	and	Spain	(see	Income	Taxes	above).	These	positive	impacts	were	somewhat	offset	by	restructuring	charges related	to	the	curtailment	of	both	the	refinery	in	Suriname	and	in	Point	Comfort,	TX	and	the	permanent	closure	of	the	Anglesea	power	station	and	coal	mine	(see Restructuring	and	Other	Charges	above),	an	$85	($34	was	noncontrolling	interest's	share)	discrete	income	tax	charge	for	a	valuation	allowance	on	certain	deferred	tax assets	(see	Income	Taxes	above),	and	the	absence	of	a	$28	gain	($11	was	noncontrolling	interest's	share)	on	the	sale	of	a	mining	interest	in	Suriname.	The	improvement in

AWAC's	operating	results	was	largely	attributable	to	net	favorable	foreign	currency	movements,	net	productivity	improvements,	and	lower	input	costs,	slightly	offset	by a	lower	average	realized	alumina	price	(see	Alumina	in	Segment	Information	below).

In	2014,	AWAC	generated	a	smaller	loss	compared	to	2013	mainly	driven	by	the	absence	of	a	$384	charge	for	a	legal	matter	(see	below),	improved	operating	results,	and a	$28	gain	($11	was	noncontrolling	interest's	share)	on	the	sale	of	a	mining	interest	in	Suriname.	These	positive	impacts	were	mostly	offset	by	restructuring	and	other charges	associated	with	both	the	permanent	shutdown	of	the	Point	Henry	smelter	in	Australia	(see	Restructuring	and	Other	Charges	above)	and	the	divestiture	of	an ownership	interest	in	a	mining	and	refining	joint	venture	in	Jamaica	(see	Alumina	in	Segment	Information	below)	and	a	combined	$79	($32	was	noncontrolling	interest's share)	discrete	income	tax	charge	related	to	a	respective	tax	rate	change	in	both	Brazil	and	Spain	(see	Income	Taxes	above).	The	improvement	in	AWAC's	operating results	was	principally	due	to	net	favorable	foreign	currency	movements	and	net	productivity	improvements,	partially	offset	by	an	increase	in	input	costs	(see	Alumina in	Segment	Information	below).	Even	though	AWAC	generated	an	overall	loss	in	both	2014	and	2013,	the	noncontrolling	interest's	share	resulted	in	income	in	2013	due to	the	manner	in	which	the	charges	and	costs	related	to	a	legal	matter	were	allocated.	A	description	of	how	these	charges	and	costs	for	this	legal	matter	impacted Noncontrolling	interests	follows.

The	noncontrolling	interest's	share	of	AWAC's	charge	for	a	legal	matter	in	2013	and	2012	was	$58	(related	to	the	aforementioned	$384)	and	$34	(an	$85	charge	related to	the	civil	portion	of	the	same	legal	matter),	respectively.	In	2012,	the	$34	was	based	on	the	40%	ownership	interest	of	Alumina	Limited,	while,	in	2013,	the	$58	was based	on	15%.	The	application	of	a	different	percentage	was	due	to	the	criteria	in	a	2012	allocation	agreement	between	Alcoa	and	Alumina	Limited	related	to	this	legal matter	being	met.	Additionally,	the	$34	charge,	as	well	as	costs	related	to	this	legal	matter,	was	retroactively	adjusted	to	reflect	the	terms	of	the	allocation	agreement, resulting	in	a	credit	to	Noncontrolling	interests	of	$41	in	2013.	In	summary,	Noncontrolling	interests	included	a	charge	of	$17	and	$34	related	to	this	legal	matter	in 2013	and	2012,	respectively.

# Segment	Information

Alcoa's	operations	consist	of	five	worldwide	reportable	segments:	Alumina,	Primary	Metals,	Global	Rolled	Products,	Engineered	Products	and	Solutions,	and Transportation	and	Construction	Solutions	(see	below).	Segment	performance	under	Alcoa's	management	reporting	system	is	evaluated	based	on	a	number	of	factors; however,	the	primary	measure	of	performance	is	the	after-tax	operating	income	(ATOI)	of	each	segment.	Certain	items	such	as	the	impact	of	LIFO	inventory accounting;	metal	price	lag	(see	below);	interest	expense;	noncontrolling	interests;	corporate	expense	(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; and	other	items,	including	intersegment	profit	eliminations,	differences	between	tax	rates	applicable	to	the	segments	and	the	consolidated	effective	tax	rate,	and	other nonoperating	items	such	as	foreign	currency	transaction	gains/losses	and	interest	income	are	excluded	from	segment	ATOI.

Effective	in	the	second	quarter	of	2015,	management	removed	the	impact	of	metal	price	lag	from	the	results	of	the	Global	Rolled	Products	and	Engineered	Products	and Solutions	(now	Engineered	Products	and	Solutions	and	Transportation	and	Construction	Solutions—see	below)	segments	in	order	to	enhance	the	visibility	of	the underlying	operating	performance	of	these	businesses.	Metal	price	lag	describes	the	timing	difference	created	when	the	average	price	of	metal	sold	differs	from	the average	cost	of	the	metal	when	purchased	by	the	respective	segment.	In	general,	when	the	price	of	metal	increases,	metal	price	lag	is	favorable,	and	when	the	price	of metal	decreases,	metal	price	lag	is	unfavorable.	The	impact	of	metal	price	lag	is	now	reported	as	a	separate	line	item	in	Alcoa's	reconciliation	of	total	segment	ATOI	to consolidated	net	(loss)	income	attributable	to	Alcoa.	As	a	result,	this	change	does	not	impact	the	consolidated	results	of	Alcoa.	Segment	information	for	all	prior	periods presented	was	updated	to	reflect	this	change.

In	the	third	quarter	of	2015,	management	approved	a	realignment	of	Alcoa's	Engineered	Products	and	Solutions	segment	due	to	the	expansion	of	this	part	of	Alcoa's business	portfolio	through	both	organic	and	inorganic	growth.	This	realignment	consisted	of	moving	both	the	Alcoa	Wheel	and	Transportation	Products	and	Building and	Construction	Systems	business	units	to	a	new	reportable	segment	named	Transportation	and	Construction	Solutions.

Additionally,	the	Latin	American	soft	alloy	extrusions	business	previously	included	in	Corporate	was	moved	into	the	new	Transportation	and	Construction	Solutions segment.	The	remaining	Engineered	Products	and	Solutions	segment	consists	of	the	Alcoa	Fastening	Systems	and	Rings	(renamed	to	include	portions	of	the	Firth Rixson	business	acquired	in	November	2014),	Alcoa	Power	and	Propulsion	(includes	the	TITAL	business	acquired	in	March	2015),	Alcoa	Forgings	and	Extrusions (includes	the	other	portions	of	Firth	Rixson),	and	Alcoa	Titanium	and	Engineered	Products	(a	new	business	unit	that	consists	solely	of	the	RTI	International	Metals business	acquired	in	July	2015)	business	units.	Segment	information	for	all	prior	periods	presented	was	updated	to	reflect	the	new	segment	structure.

ATOI	for	all	reportable	segments	totaled	$1,906	in	2015,	$1,968	in	2014,	and	$1,267	in	2013.	The	following	information	provides	shipments,	sales,	and	ATOI	data	for each	reportable	segment,	as	well	as	certain	production,	realized	price,	and	average	cost	data,	for	each	of	the	three	years	in	the	period	ended	December	31,	2015.	See	Note Q	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K	for	additional	information.

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Alumina\tproduction\t(kmt) | \t 15,720 | \t 16,606 | \t 16,618 |
| Third-party\talumina\tshipments\t(kmt) | \t 10,755 | \t 10,652 | 9,966 |
| Alcoa's\taverage\trealized\tprice\tper\tmetric\tton\tof\talumina | $317 | $324 | $328 |
| Alcoa's\taverage\tcost\tper\tmetric\tton\tof\talumina* | $237 | $282 | $295 |
| Third-party\tsales | $3,455 | $3,509 | $3,326 |
| Intersegment\tsales | 1,687 | 1,941 | 2,235 |
| Total\tsales | $5,142 | $5,450 | $5,561 |
| ATOI | $746 | $370 | $259 |
| *\nIncludes\tall\tproduction-related\tcosts,\tincluding\traw\tmaterials\tconsumed;\tconversion\tcosts,\tsuch\tas\tlabor,\tmaterials,\tand\tutilities;\tdepreciation,\tdepletion,\tand |  |  |  |

* Includes	all	production-related	costs,	including	raw	materials	consumed;	conversion	costs,	such	as	labor,	materials,	and	utilities;	depreciation,	depletion,	and amortization;	and	plant	administrative	expenses.

This	segment	represents	a	portion	of	Alcoa's	upstream	operations	and	consists	of	the	Company's	worldwide	refining	system.	Alumina	mines	bauxite,	from	which alumina	is	produced	and	then	sold	directly	to	external	smelter	customers,	as	well	as	to	the	Primary	Metals	segment	(see	Primary	Metals	below),	or	to	customers	who process	it	into	industrial	chemical	products.	More	than	half	of	Alumina's	production	is	sold	under	supply	contracts	to	third	parties	worldwide,	while	the	remainder	is used	internally	by	the	Primary	Metals	segment.	Alumina	produced	by	this	segment	and	used	internally	is	transferred	to	the	Primary	Metals	segment	at	prevailing	market prices.	A	portion	of	this	segment's	third-party	sales	are	completed	through	the	use	of	agents,	alumina	traders,	and	distributors.	Generally,	the	sales	of	this	segment	are transacted	in	U.S.	dollars	while	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	the	Australian	dollar,	the Brazilian	real,	the	U.S.	dollar,	and	the	euro.

AWAC	is	an	unincorporated	global	joint	venture	between	Alcoa	and	Alumina	Limited	and	consists	of	a	number	of	affiliated	operating	entities,	which	own,	or	have	an interest	in,	or	operate	the	bauxite	mines	and	alumina	refineries	within	the	Alumina	segment	(except	for	the	Poços	de	Caldas	refinery	in	Brazil	and	a	portion	of	the	São Luĺs	refinery	in	Brazil).	Alcoa	owns	60%	and	Alumina	Limited	owns	40%	of	these	individual	entities,	which	are	consolidated	by	the	Company	for	financial	reporting purposes.	As	such,	the	results	and	analysis	presented	for	the	Alumina	segment	are	inclusive	of	Alumina	Limited's	40%	interest.

In	December	2014,	AWAC	completed	the	sale	of	its	ownership	stake	in	Jamalco,	a	bauxite	mine	and	alumina	refinery	joint	venture	in	Jamaica,	to	Noble	Group	Ltd. Jamalco	was	55%	owned	by	a	subsidiary	of	AWAC,	and,	while	owned	by	AWAC,	55%	of	both	the	operating	results	and	assets	and	liabilities	of	this	joint	venture	were included	in	the	Alumina	segment.	As	it	relates	to	AWAC's	previous	55%	ownership	stake,	the	refinery	(AWAC's	share	of	the	capacity	was	779	kmt-per-year)	generated sales	(third-party	and	intersegment)	of	approximately	$200	in	2013,	and	the	refinery	and	mine	combined,	at	the	time	of	divestiture,	had	approximately	500	employees. See	Restructuring	and	Other	Charges	in	Results	of	Operations	above.

In	2015,	alumina	production	decreased	by	886	kmt	compared	to	2014.	The	decline	was	mostly	the	result	of	the	absence	of	production	at	the	Jamalco	refinery	(see	above) and	lower	production	at	the	Suralco	(Suriname—see	below)	and	Poços	de	Caldas	(Brazil—see	below)	refineries,	slightly	offset	by	higher	production	at	the	San	Ciprian (Spain)	and	Point	Comfort	(Texas)	refineries.

In	March	2015,	management	initiated	a	12-month	review	of	2,800	kmt	in	refining	capacity	for	possible	curtailment	(partial	or	full),	permanent	closure	or	divestiture. This	review	is	part	of	management's	target	to	lower	Alcoa's	refining	operations	on	the	global	alumina	cost	curve	to	the	21st	percentile	(currently	23rd)	by	the	end	of 2016.	As	part	of	this	review,	in	2015,	management	decided	to	curtail	all	of	the	operating	capacity	at	both	the	Suralco	(1,330	kmt-per-year)	and	Point	Comfort	(2,010 kmt-per-year)	refineries.	The	curtailment	of	the	capacity	at	Suralco	was	completed	by	the	end	of	November	2015.	Management	is	currently	in	discussions	with	the Suriname	government	to	determine	the	best	long-term	solution	for	Suralco	due	to	limited	bauxite	reserves	and	the	absence	of	a	long-term	energy	alternative.	The curtailment	of	the	capacity	at	Point	Comfort	is	expected	to	be	completed	by	the	end	of	June	2016	(375	kmt-per-year	was	completed	by	the	end	of	December	2015). Suralco	and	Point	Comfort	have	nameplate	capacity	of	2,207	kmt-per-year	and	2,305	kmt-per-year,	respectively,	of	which	877	kmt	and	295	kmt,	respectively	was curtailed	prior	to	the	review.	See	Restructuring	and	Other	Charges	in	Results	of	Operations	above	for	a	description	of	the	associated	charges	related	to	these	actions.

In	2014,	alumina	production	decreased	by	12	kmt	compared	to	2013.	The	decline	was	mainly	driven	by	lower	production	at	the	Poços	de	Caldas,	Jamalco,	and	San Ciprian	refineries,	mostly	offset	by	higher	production	at	every	other	refinery	in	the	global	system.	The	Poços	de	Caldas	refinery	started	to	reduce	production	in	early 2014	in	response	to	management's	decision	to	fully	curtail	the	Poços	de	Caldas	smelter	by	the	end	of	May	2014	(see	Primary	Metals	below).	As	a	result,	management reduced	the	alumina	production	at	the	Poços	de	Caldas	refinery	by	approximately	200	kmt-per-year	by	mid-2014.	This	reduction	was	replaced	by	an	increase	in production	at	lower	cost	refineries	within	Alcoa's	global	system.	Additionally,	the	decrease	at	the	refinery	in	Jamaica	was	due	to	the	absence	of	production	for	one month	as	a	result	of	the	sale	of	the	ownership	stake	in	Jamalco	(see	above).

Third-party	sales	for	the	Alumina	segment	decreased	2%	in	2015	compared	with	2014,	largely	attributable	to	a	2%	decline	in	average	realized	price,	somewhat	offset	by a	1%	increase	in	volume.	The	change	in	average	realized	price	was	mostly	driven	by	a	decrease	in	both	the	average	alumina	index/spot	price	and	average	LME-based price,	somewhat	offset	by	a	higher	percentage	(75%	compared	to	68%)	of	smelter-grade	alumina	shipments	linked	to	an	alumina	index/spot	price	instead	of	an	LME- based	price.

Third-party	sales	for	this	segment	improved	6%	in	2014	compared	with	2013,	primarily	related	to	a	7%	improvement	in	volume.

Intersegment	sales	for	the	Alumina	segment	declined	13%	in	both	2015	compared	with	2014	and	2014	compared	with	2013.	The	decrease	in	both	periods	was	mostly	the result	of	lower	demand	from	the	Primary	Metals	segment,	as	a	result	of	the	closure,	curtailment	or	divestiture	of	a	number	of	smelters	(see	Primary	Metals	below),	and	a lower	average	realized	price.

ATOI	for	the	Alumina	segment	increased	$376	in	2015	compared	with	2014,	mainly	caused	by	net	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar, especially	against	the	Australian	dollar	and	Brazilian	real;	net	productivity	improvements;	and	lower	input	costs,	including	natural	gas,	fuel	oil,	and	transportation,	all	of which	were	slightly	offset	by	higher	labor	and	maintenance	costs.	These	positive	impacts	were	slightly	offset	by	the	previously	mentioned	lower	average	realized	price and	the	absence	of	a	gain	on	the	sale	of	a	mining	interest	in	Suriname	($18).

ATOI	for	this	segment	improved	$111	in	2014	compared	with	2013,	mostly	due	to	net	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar,	especially against	the	Australian	dollar,	net	productivity	improvements,	and	a	gain	on	the	sale	of	a	mining	interest	in	Suriname	($18).	These	positive	impacts	were	partially	offset by	higher	input	costs,	including	natural	gas	(particularly	higher	prices	in	Australia),	bauxite	(mainly	due	to	a	new	mining	site	in	Suriname),	and	labor	and	maintenance, all	of	which	were	somewhat	offset	by	lower	costs	for	caustic;	and	a	higher	equity	loss	due	to	start-up	costs	of	the	bauxite	mine	and	refinery	in	Saudi	Arabia.

In	2016,	alumina	production	will	be	approximately	2,500	kmt	lower,	mostly	due	to	the	curtailment	of	the	Point	Comfort	and	Suralco	refineries.	Also,	the	continued	shift towards	alumina	index	and	spot	pricing	is	expected	to	average	85%	of	third-party	smelter-grade	alumina	shipments.	Additionally,	net	productivity	improvements	are anticipated.

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Aluminum\tproduction\t(kmt) | \t 2,811 | \t 3,125 | \t 3,550 |
| Third-party\taluminum\tshipments\t(kmt) | \t 2,478 | \t 2,534 | \t 2,801 |
| Alcoa's\taverage\trealized\tprice\tper\tmetric\tton\tof\taluminum* | $2,069 | $2,405 | $2,243 |
| Alcoa's\taverage\tcost\tper\tmetric\tton\tof\taluminum** | $2,064 | $2,252 | $2,201 |
| Third-party\tsales | $5,591 | $6,800 | $6,596 |
| Intersegment\tsales | \t 2,170 | \t 2,931 | \t 2,621 |
| Total\tsales | $7,761 | $9,731 | $9,217 |
| ATOI | $155 | $594 | $(20) |

*Average	realized	price	per	metric	ton	of	aluminum	includes	three	elements:	a)	the	underlying	base	metal	component,	based	on	quoted	prices	from	the	LME;	b)	the regional	premium,	which	represents	the	incremental	price	over	the	base	LME	component	that	is	associated	with	the	physical	delivery	of	metal	to	a	particular	region (e.g.,	the	Midwest	premium	for	metal	sold	in	the	United	States);	and	c)	the	product	premium,	which	represents	the	incremental	price	for	receiving	physical	metal	in	a particular	shape	(e.g.,	billet,	slab,	rod,	etc.)	or	alloy.

**Includes	all	production-related	costs,	including	raw	materials	consumed;	conversion	costs,	such	as	labor,	materials,	and	utilities;	depreciation	and	amortization;	and plant	administrative	expenses.

This	segment	represents	a	portion	of	Alcoa's	upstream	operations	and	consists	of	the	Company's	worldwide	smelting	system.	Primary	Metals	purchases	alumina,	mostly from	the	Alumina	segment	(see	Alumina	above),	from	which	primary	aluminum	is	produced	and	then	sold	directly	to	external	customers	and	traders,	as	well	as	to Alcoa's	midstream	operations	and,	to	a	lesser	extent,	downstream	operations.	Results	from	the	sale	of	aluminum	powder,	scrap,	and	excess	energy	are	also	included	in this	segment,	as	well	as	the	results	of	aluminum	derivative	contracts	and	buy/resell	activity.	Primary	aluminum	produced	by	Alcoa	and	used	internally	is	transferred	to other	segments	at	prevailing	market	prices.	The	sale	of	primary	aluminum	represents	approximately	90%	of	this	segment's	third-party	sales.	Buy/resell	activity	occurs when	this	segment	purchases	metal	and	resells	such	metal	to	external	customers	or	the	midstream	and	downstream	operations	in	order	to	maximize	smelting	system efficiency	and	to	meet	customer	requirements.	Generally,	the	sales	of	this	segment	are	transacted	in	U.S.	dollars	while	costs	and	expenses	of	this	segment	are	transacted in	the	local	currency	of	the	respective	operations,	which	are	the	U.S.	dollar,	the	euro,	the	Norwegian	kroner,	Icelandic	krona,	the	Canadian	dollar,	the	Brazilian	real,	and the	Australian	dollar.

In	November	2014,	Alcoa	completed	the	sale	of	an	aluminum	rod	plant	located	in	Bécancour,	Québec,	Canada	to	Sural	Laminated	Products.	This	facility	takes	molten aluminum	and	shapes	it	into	the	form	of	a	rod,	which	is	used	by	customers	primarily	for	the	transportation	of	electricity.	While	owned	by	Alcoa,	the	operating	results	and assets	and	liabilities	of	this	plant	were	included	in	the	Primary	Metals	segment.	In	conjunction	with	this	transaction,	Alcoa	entered	into	a	multi-year	agreement	with	Sural Laminated	Products	to	supply	molten	aluminum	for	the	rod	plant.	The	aluminum	rod	plant	generated	sales	of	approximately	$200	in	2013	and,	at	the	time	of	divestiture, had	approximately	60	employees.	See	Restructuring	and	Other	Charges	in	Results	of	Operations	above.

In	December	2014,	Alcoa	completed	the	sale	of	its	50.33%	ownership	stake	in	the	Mt.	Holly	smelter	located	in	Goose	Creek,	South	Carolina	to	Century	Aluminum Company.	While	owned	by	Alcoa,	50.33%	of	both	the	operating	results	and	assets	and	liabilities	related	to	the	smelter	were	included	in	the	Primary	Metals	segment.	As it	relates	to	Alcoa's	previous	50.33%	ownership	stake,	the	smelter	(Alcoa's	share	of	the	capacity	was	115	kmt-per-year)	generated	sales	of	approximately	$280	in	2013 and,	at	the	time	of	divestiture,	had	approximately	250	employees.	See	Restructuring	and	Other	Charges	in	Results	of	Operations	above.

At	December	31,	2015,	Alcoa	had	778	kmt	of	idle	capacity	on	a	base	capacity	of	3,401	kmt.	In	2015,	idle	capacity	increased	113	kmt	compared	to	2014,	mostly	due	to the	curtailment	of	217	kmt	combined	at	a	smelter	in	each	the

United	States	and	Brazil,	partially	offset	by	the	permanent	closure	of	the	Poços	de	Caldas	smelter	in	Brazil	(96	kmt-per-year).	Base	capacity	declined	96	kmt	between December	31,	2015	and	2014	due	to	the	previously	mentioned	permanent	closure	of	the	Poços	de	Caldas	smelter.	A	detailed	description	of	each	of	these	actions	follows below.

At	December	31,	2014,	Alcoa	had	665	kmt	of	idle	capacity	on	a	base	capacity	of	3,497	kmt.	In	2014,	idle	capacity	increased	10	kmt	compared	to	2013	due	to	the curtailment	of	159	kmt	combined	at	two	smelters	in	Brazil,	mostly	offset	by	the	permanent	closure	of	the	Portovesme	smelter	in	Italy	(150	kmt-per-year).	Base	capacity declined	540	kmt	between	December	31,	2014	and	2013	due	to	the	permanent	closure	of	both	a	smelter	in	Australia	and	two	remaining	potlines	at	a	smelter	in	the	United States	(274	kmt	combined),	the	previously	mentioned	permanent	closure	of	the	Portovesme	smelter,	and	the	sale	of	Alcoa's	ownership	stake	in	the	Mt.	Holly	smelter (see	above).	A	detailed	description	of	each	of	these	actions	follows	below.

In	March	2015,	management	initiated	a	12-month	review	of	500	kmt	in	smelting	capacity	for	possible	curtailment	(partial	or	full),	permanent	closure	or	divestiture.	This review	is	part	of	management's	target	to	lower	Alcoa's	smelting	operations	on	the	global	aluminum	cost	curve	to	the	38th	percentile	(currently	43rd)	by	2016.	In summary,	under	this	review,	management	approved	the	curtailment	of	447	kmt-per-year	and	the	closure	of	269	kmt-per-year.	The	following	is	a	description	of	each action.

Also	in	March	2015,	management	decided	to	curtail	the	remaining	capacity	(74	kmt-per-year)	at	the	São	Luís	smelter	in	Brazil;	this	action	was	completed	in	April	2015. In	2013	and	2014	combined,	Alcoa	curtailed	capacity	of	194	kmt-per-year	at	the	São	Luís	smelter	under	a	prior	management	review	(see	below).

Additionally,	in	November	2015,	management	decided	to	curtail	the	remaining	capacity	at	the	Intalco	(230	kmt-per-year)	and	Wenatchee	(143	kmt-per-year)	smelters, both	in	Washington.	These	two	smelters	previously	had	curtailed	capacity	of	90	kmt-per-year	combined.	The	curtailment	of	the	remaining	capacity	at	Wenatchee	was completed	by	the	end	of	December	2015	and	the	curtailment	of	the	remaining	capacity	at	Intalco	is	expected	to	be	completed	by	the	end	of	June	2016.

Furthermore,	in	December	2015,	management	approved	the	permanent	closure	of	the	Warrick,	IN	smelter	(269	kmt-per-year).	This	decision	was	made	as	this	smelter	is no	longer	competitive	in	light	of	prevailing	market	conditions	for	the	price	of	aluminum.	The	shutdown	of	the	Warrick	smelter	is	expected	to	be	completed	by	the	end	of March	2016.

Separate	from	the	2015	smelting	capacity	review	described	above,	in	June	2015,	management	approved	the	permanent	closure	of	the	Poços	de	Caldas	smelter	effective immediately.	The	Poços	de	Caldas	smelter	had	been	temporarily	idle	since	May	2014	(see	below)	due	to	challenging	global	market	conditions	for	primary	aluminum	and higher	operating	costs,	which	made	the	smelter	uncompetitive.	The	decision	to	permanently	close	the	Poços	de	Caldas	smelter	was	based	on	the	fact	that	these underlying	conditions	had	not	improved.

In	May	2013,	management	initiated	a	15-month	review	of	460	kmt	in	smelting	capacity	for	possible	curtailment.	This	review	was	aimed	at	maintaining	Alcoa's competitiveness	despite	falling	aluminum	prices	and	focused	on	the	highest-cost	smelting	capacity	and	those	plants	that	have	long-term	risk	due	to	factors	such	as energy	costs	or	regulatory	uncertainty.	In	2014,	an	additional	250	kmt	of	smelting	capacity	was	included	in	the	review.	In	summary,	under	this	review,	management approved	the	closure	of	146	kmt-per-year	and	274	kmt-per-year	and	the	curtailment	of	131	kmt-per-year	and	159	kmt-per-year	in	2013	and	2014,	respectively.	The following	is	a	description	of	each	action.

Also	in	May	2013,	management	approved	the	permanent	closure	of	two	potlines	(105	kmt-per-year)	that	utilize	Soderberg	technology	at	the	Baie	Comeau	smelter	in Quebec,	Canada.	Additionally,	in	August	2013,	management	approved	the	permanent	closure	of	one	potline	(41	kmt-per-year)	that	utilizes	Soderberg	technology	at	the Massena	East,	NY	smelter.	The	shutdown	of	these	three	lines	was	completed	by	the	end	of	September	2013.	The	Baie	Comeau	smelter	has	a	remaining	capacity	of	280 kmt-per-year	composed	of	two	prebake	potlines	and	the	Massena	East	smelter	had	a	remaining	capacity	of	84	kmt-per-year	composed	of	two	Soderberg	potlines	(see below).

Additionally,	in	August	2013,	management	decided	to	curtail	97	kmt-per-year	at	the	São	Luís	smelter	and	31	kmt-per-year	at	the	Poços	de	Caldas	smelter.	This	action was	also	completed	by	the	end	of	September	2013.	An	additional	3	kmt-per-year	was	curtailed	at	the	Poços	de	Caldas	smelter	by	the	end	of	2013.

In	January	2014,	management	approved	the	permanent	closure	of	the	remaining	capacity	(84	kmt-per-year)	at	the	Massena	East	smelter,	which	represented	two Soderberg	potlines	that	were	no	longer	competitive.	This	shutdown	was	completed	by	the	end	of	March	2014.	In	February	2014,	management	approved	the	permanent closure	of	the	Point	Henry	smelter	(190	kmt-per-year)	in	Australia.	This	decision	was	made	as	management	determined	that	the	smelter	had	no	prospect	of	becoming financially	viable.	The	shutdown	of	the	Point	Henry	smelter	was	completed	in	August	2014.

Also,	in	March	2014,	management	decided	to	curtail	the	remaining	capacity	(62	kmt-per-year)	at	the	Poços	de	Caldas	smelter	and	additional	capacity	(85	kmt-per-year) at	the	São	Luís	smelter.	The	curtailment	of	this	capacity	was	completed	by	the	end	of	May	2014.	An	additional	12	kmt-per-year	was	curtailed	at	the	São	Luís	smelter during	the	remainder	of	2014.

Separate	from	the	2013-2014	smelting	capacity	review	described	above,	in	June	2013,	management	approved	the	permanent	closure	of	the	Fusina	smelter	(44	kmt-per- year)	in	Italy	as	the	underlying	conditions	that	led	to	the	idling	of	the	smelter	in	2010	had	not	fundamentally	changed,	including	low	aluminum	prices	and	the	lack	of	an economically	viable,	long-term	power	solution.	In	August	2014,	management	approved	the	permanent	closure	of	the	Portovesme	smelter,	which	had	been	idle	since November	2012.	This	decision	was	made	because	the	fundamental	reasons	that	made	the	Portovesme	smelter	uncompetitive	remained	unchanged,	including	the	lack	of	a viable	long-term	power	solution.

See	Restructuring	and	Other	Charges	in	Results	of	Operations	above	for	a	description	of	the	associated	charges	related	to	all	of	the	above	actions	in	2015,	2014,	and 2013.

In	2015,	aluminum	production	declined	by	314	kmt,	mainly	the	result	of	the	absence	of	and/or	lower	production	at	the	combined	four	smelters	(Point	Henry,	São	Luís, Massena	East,	and	Poços	de	Caldas)	impacted	by	the	2014	and	2015	capacity	reviews	and	at	the	smelter	divested	in	2014	(Mt.	Holly),	all	of	which	is	described	above.

In	2014,	aluminum	production	decreased	by	425	kmt,	mostly	due	to	lower	production	at	the	five	smelters	(São	Luís,	Massena	East,	Point	Henry,	Baie	Comeau,	and Poços	de	Caldas)	impacted	by	the	2013-2014	capacity	review	described	above.

Third-party	sales	for	the	Primary	Metals	segment	declined	18%	in	2015	compared	with	2014,	primarily	due	to	a	14%	drop	in	average	realized	price,	the	absence	of	sales (approximately	$585)	from	five	smelters	and	a	rod	mill	that	were	closed,	curtailed	or	divested	in	2014,	and	lower	energy	sales	in	Brazil,	due	to	both	a	decrease	in	energy prices	and	a	weaker	Brazilian	real.	These	negative	impacts	were	slightly	offset	by	higher	volume	in	the	remaining	smelter	portfolio	and	higher	buy/resell	activity.	The change	in	average	realized	price	was	largely	attributable	to	a	10%	lower	average	LME	price	(on	15-day	lag)	and	lower	regional	premiums,	which	dropped	by	an	average of	39%	in	the	United	States	and	Canada	and	44%	in	Europe.	The	higher	buy/resell	activity	was	primarily	related	to	the	fulfillment	of	customer	orders	with	aluminum purchased	from	the	smelter	at	the	Saudi	Arabia	joint	venture.

Third-party	sales	for	the	Primary	Metals	segment	increased	3%	in	2014	compared	with	2013,	mainly	due	to	higher	energy	sales	in	Brazil	resulting	from	excess	power due	to	curtailed	smelter	capacity,	higher	buy/resell	activity,	and	a	7%	increase	in	average	realized	price,	mostly	offset	by	lower	volumes,	including	from	the	five	smelters impacted	by	the	2013	and	2014	capacity	reductions.	The	change	in	average	realized	price	was	driven	by	higher	regional	premiums,	which	increased	by	an	average	of 84%	in	the	United	States	and	Canada	and	56%	in	Europe.

Intersegment	sales	for	the	Primary	Metals	segment	declined	26%	in	2015	compared	with	2014,	mainly	the	result	of	lower	demand	from	the	midstream	and	downstream businesses	and	a	decrease	in	average	realized	price.	The	decline	related	to	the	midstream	business	was	driven	by	the	absence	of	shipments	to	four	of	the	five	rolling	mills (the	fifth	mill

purchased	scrap	metal	from	third-parties)	that	were	either	divested	or	permanently	closed	in	December	2014	(see	Global	Rolled	Products	below).	Intersegment	sales	for this	segment	improved	12%	in	2014	compared	with	2013,	principally	due	to	an	increase	in	average	realized	price,	driven	by	higher	regional	premiums,	and	higher demand	from	the	midstream	and	downstream	businesses.

ATOI	for	the	Primary	Metals	segment	decreased	$439	in	2015	compared	with	2014,	primarily	caused	by	both	the	previously	mentioned	lower	average	realized aluminum	price	and	lower	energy	sales,	higher	energy	costs	(mostly	in	Spain	as	the	2014	interruptibility	rights	were	more	favorable	than	the	2015	structure),	and	an unfavorable	impact	related	to	the	curtailment	of	the	São	Luís	smelter.	These	negative	impacts	were	somewhat	offset	by	net	favorable	foreign	currency	movements	due	to a	stronger	U.S.	dollar	against	most	major	currencies,	net	productivity	improvements,	the	absence	of	a	write-off	of	inventory	related	to	the	permanent	closure	of	the Portovesme,	Point	Henry,	and	Massena	East	smelters	($44),	and	a	lower	equity	loss	related	to	the	joint	venture	in	Saudi	Arabia,	including	the	absence	of	restart	costs	for one	of	the	potlines	that	was	previously	shut	down	due	to	a	period	of	instability.

ATOI	for	this	segment	climbed	$614	in	2014	compared	with	2013,	principally	related	to	a	higher	average	realized	aluminum	price;	the	previously	mentioned	energy sales	in	Brazil;	net	productivity	improvements;	net	favorable	foreign	currency	movements	due	to	a	stronger	U.S.	dollar	against	all	major	currencies;	lower	costs	for carbon	and	alumina;	and	the	absence	of	costs	related	to	a	planned	maintenance	outage	in	2013	at	a	power	plant	in	Australia.	These	positive	impacts	were	slightly	offset by	an	unfavorable	impact	associated	with	the	2013	and	2014	capacity	reductions	described	above,	including	a	write-off	of	inventory	related	to	the	permanent	closure	of the	Portovesme,	Point	Henry,	and	Massena	East	smelters	($44),	and	higher	energy	costs	(particularly	in	Spain),	labor,	and	maintenance.

In	2016,	aluminum	production	will	be	approximately	450	kmt	lower	and	third-party	sales	will	reflect	the	absence	of	approximately	$400	both	as	a	result	of	the	2015 curtailment	and	closure	actions.	Also,	energy	sales	in	Brazil	will	be	negatively	impacted	by	a	decline	in	energy	prices,	while	net	productivity	improvements	are anticipated.

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Third-party\taluminum\tshipments\t(kmt) | \t 1,775 | \t 1,964 | \t 1,905 |
| Alcoa's\taverage\trealized\tprice\tper\tmetric\tton\tof\taluminum* | $3,514 | $3,743 | $3,730 |
| Third-party\tsales | $6,238 | $7,351 | $7,106 |
| Intersegment\tsales | 125 | 185 | 178 |
| Total\tsales | $6,363 | $7,536 | $7,284 |
| ATOI | $244 | $245 | $292 |

* Generally,	average	realized	price	per	metric	ton	of	aluminum	includes	two	elements:	a)	the	price	of	metal	(the	underlying	base	metal	component	plus	a	regional premium	–	see	the	footnote	to	the	table	in	Primary	Metals	above	for	a	description	of	these	two	components),	and	b)	the	conversion	price,	which	represents	the incremental	price	over	the	metal	price	component	that	is	associated	with	converting	primary	aluminum	into	sheet	and	plate.	In	this	circumstance,	the	metal	price component	is	a	pass-through	to	this	segment's	customers	with	limited	exception	(e.g.,	fixed-priced	contracts,	certain	regional	premiums).

This	segment	represents	Alcoa's	midstream	operations	and	produces	aluminum	sheet	and	plate	for	a	variety	of	end	markets.	Approximately	one-half	of	the	third-party shipments	in	this	segment	consist	of	sheet	sold	directly	to	customers	in	the	packaging	end	market	for	the	production	of	aluminum	cans	(beverage,	food,	and	pet	food). Seasonal	increases	in	can	sheet	sales	are	generally	experienced	in	the	second	and	third	quarters	of	the	year.	This	segment	also	includes	sheet	and	plate	sold	directly	to customers	and	through	distributors	related	to	the	aerospace,	automotive,	commercial	transportation,	building	and	construction,	and	industrial	products	(mainly	used	in the	production	of	machinery	and	equipment	and	consumer	durables)	end	markets.	A	small	portion	of	this	segment	also	produces	aseptic	foil	for	the	packaging	end market.	While	the	customer	base	for	flat-rolled	products	is	large,	a	significant	amount	of	sales	of	sheet	and	plate	is	to	a	relatively	small	number	of	customers.	In	this circumstance,	the	sales	and	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	mostly	the	U.S.	dollar,	the euro,	the	Russian	ruble,	the	Brazilian	real,	and	the	British	pound.

In	March	2015,	Alcoa	completed	the	sale	of	a	rolling	mill	located	in	Belaya	Kalitva,	Russia	to	a	wholly-owned	subsidiary	of	Stupino	Titanium	Company.	While	owned by	Alcoa,	the	operating	results	and	assets	and	liabilities	of	the	rolling	mill	were	included	in	the	Global	Rolled	Products	segment.	The	rolling	mill	generated	sales	of approximately	$130	in	2014	and,	at	the	time	of	divestiture,	had	approximately	1,870	employees.	See	Restructuring	and	Other	Charges	in	Results	of	Operations	above.

In	February	2014,	management	approved	the	permanent	shutdown	of	Alcoa's	two	rolling	mills	in	Australia,	Point	Henry	and	Yennora.	This	decision	was	made	due	to the	significant	impact	of	excess	can	sheet	capacity	in	both	Australia	and	Asia.	The	two	rolling	mills	had	a	combined	can	sheet	capacity	of	200	kmt-per-year	and	were closed	by	the	end	of	2014.	See	Restructuring	and	Other	Charges	in	Results	of	Operations	above	for	a	description	of	the	associated	charges.

In	December	2014,	Alcoa	completed	the	sale	of	three	rolling	mills	located	in	Spain	(Alicante	and	Amorebieta)	and	France	(Castelsarrasin)	to	a	subsidiary	of	Atlas Holdings	LLC.	While	owned	by	Alcoa,	the	operating	results	and	assets	and	liabilities	of	the	rolling	mills	were	included	in	the	Global	Rolled	Products	segment.	In conjunction	with	this	transaction,	Alcoa	entered	into	a	multi-year	agreement	with	the	buyer	to	supply	aluminum	for	the	rolling	mills.	The	rolling	mills	combined generated	sales	of	approximately	$500	in	2013	and,	at	the	time	of	divestiture,	had	approximately	750	employees.	See	Restructuring	and	Other	Charges	in	Results	of Operations	above.

Third-party	sales	for	the	Global	Rolled	Products	segment	declined	15%	in	2015	compared	with	2014,	primarily	driven	by	the	absence	of	sales	($1,052)	from	six	rolling mills	in	Australia,	Spain,	Russia,	and	France	(see	above),	unfavorable	pricing,	mostly	due	to	a	decrease	in	metal	prices	(both	LME	and	regional	premium	components), and	unfavorable	foreign	currency	movements,	mainly	the	result	of	a	weaker	euro,	Russian	ruble,	and	Brazilian	real.	These	negative	impacts	were	somewhat	offset	by increased	demand	of	the	remaining	rolling	portfolio	and	favorable	product	mix	(automotive	and	aerospace	versus	industrial	products).	The	volume	improvement	of	the remaining	portfolio	was	largely	attributable	to	the	automotive	(North	America)	and	can	sheet	packaging	(China)	end	markets,	slightly	offset	by	lower	demand	in	the industrial	products	end	market.

Third-party	sales	for	this	segment	improved	3%	in	2014	compared	with	2013,	principally	caused	by	increased	demand,	somewhat	offset	by	unfavorable	price/product mix	related	to	the	packaging,	aerospace,	and	industrial	products	end	markets.	Volume	improvements	were	mostly	driven	by	the	automotive	and	commercial transportation	end	markets.

ATOI	for	the	Global	Rolled	Products	segment	decreased	$1	in	2015	compared	with	2014,	primarily	attributable	to	unfavorable	price/product	mix,	largely	the	result	of overall	pricing	pressure	in	the	global	can	sheet	packaging	end	market,	and	higher	costs	related	to	growth	projects,	including	research	and	development	as	Alcoa	develops and	qualifies	products	from	a	new	Micromill™	production	process	and	the	ramp-up	of	the	Tennessee	automotive	expansion.	These	negative	impacts	were	virtually offset	by	net	productivity	improvements	across	most	businesses	and	higher	volumes	of	the	remaining	rolling	portfolio,	principally	driven	by	higher	demand	in	the automotive	end	market.

ATOI	for	this	segment	declined	$47	in	2014	compared	with	2013,	mainly	the	result	of	unfavorable	price/product	mix	related	to	the	packaging,	aerospace,	and	industrial products	end	markets;	higher	input	costs,	including	energy,	labor,	maintenance,	and	transportation;	a	larger	equity	loss	due	to	start-up	costs	related	to	the	rolling	mill	at the	joint	venture	in	Saudi	Arabia;	a	write-off	of	inventory	related	to	the	decision	to	permanently	shut	down	the	Point	Henry	and	Yennora	rolling	mills	($9);	and	costs (business	continuity	and	contract	specific)	related	to	a	new	labor	agreement	that	covers	employees	at	three	rolling	mills	in	the	United	States	($4)	(see	COGS	in	Results	of Operations	above).	These	negative	impacts	were	partially	offset	by	net	productivity	improvements	across	most	businesses	and	overall	higher	volumes.

In	2016,	demand	in	the	automotive	end	market	is	expected	to	remain	strong	and	the	automotive	expansion	at	the	Davenport,	IA	facility	will	operate	at	full	capacity	for the	entire	year	while	the	automotive	expansion	at	the	Tennessee	facility	will	continue	to	ramp-up,	both	of	which	will	serve	the	growing	demand	for	aluminum-intensive vehicles.	Also,	costs	related	to	the	ramp-up	of	the	Tennessee	facility	and	the	previously-idled	casthouse	in	Texarkana,	TX,	as	well	as	for	preparations	to	run	the	Warrick, IN	rolling	facility	on	cold	metal	as	a	result	of	the	planned	closure	of	the	Warrick	smelter	(see	Primary	Metals	above),	are	expected.	Additionally,	net	productivity improvements	are	anticipated.

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Third-party\tsales | $5,342 | $4,217 | $4,054 |
| ATOI | $595 | $579 | $569 |

This	segment	represents	a	portion	of	Alcoa's	downstream	operations	and	produces	products	that	are	used	mostly	in	the	aerospace	(commercial	and	defense),	commercial transportation,	and	power	generation	end	markets.	Such	products	include	fastening	systems	(titanium,	steel,	and	nickel	alloys)	and	seamless	rolled	rings	(mostly	nickel alloys);	and	investment	castings	(nickel	super	alloys,	titanium,	and	aluminum),	including	airfoils	and	forged	jet	engine	components	(e.g.,	jet	engine	disks),	all	of	which are	sold	directly	to	customers	and	through	distributors.	More	than	70%	of	the	third-party	sales	in	this	segment	are	from	the	aerospace	end	market.	A	small	part	of	this segment	also	produces	various	forging	and	extrusion	metal	products	for	the	oil	and	gas,	industrial	products,	automotive,	and	land	and	sea	defense	end	markets.	Seasonal decreases	in	sales	are	generally	experienced	in	the	third	quarter	of	the	year	due	to	the	European	summer	slowdown	across	all	end	markets.	Generally,	the	sales	and	costs and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	mostly	the	U.S.	dollar	and	the	euro.

In	March	2015,	Alcoa	completed	the	acquisition	of	an	aerospace	castings	company,	TITAL,	a	privately	held	company	with	approximately	650	employees	based	in Germany.	TITAL	produces	aluminum	and	titanium	investment	casting	products	for	the	aerospace	and	defense	end	markets.	In	2014,	TITAL	generated	sales	of approximately	$100.	The	purpose	of	this	acquisition	is	to	capture	increasing	demand	for	advanced	jet	engine	components	made	of	titanium,	establish	titanium-casting capabilities	in	Europe,	and	expand	existing	aluminum	casting	capacity.	The	operating	results	and	assets	and	liabilities	of	TITAL	were	included	within	the	Engineered Products	and	Solutions	segment	since	the	date	of	acquisition.

Also	in	March	2015,	Alcoa	signed	a	definitive	agreement	to	acquire	RTI	International	Metals,	Inc.	(RTI),	a	global	supplier	of	titanium	and	specialty	metal	products	and services	for	the	commercial	aerospace,	defense,	energy,	and	medical	device	end	markets.	On	July	23,	2015,	after	satisfying	all	customary	closing	conditions	and receiving	the	required	regulatory	and	RTI	shareholder	approvals,	Alcoa	completed	the	acquisition	of	RTI.	The	purpose	of	this	acquisition	is	to	expand	Alcoa's	range	of titanium	offerings	and	add	advanced	technologies	and	materials,	primarily	related	to	the	aerospace	end	market.	In	2014,	RTI	generated	net	sales	of	$794	and	had approximately	2,600	employees.	Alcoa	estimates	that	RTI	will	generate	approximately	$1,200	in	Third-party	sales	by	2019.	In	executing	its	integration	plan	for	RTI, Alcoa	expects	to	realize	annual	cost	savings	of	approximately	$100	by	2019	due	to	synergies	derived	from	procurement	and	productivity	improvements,	leveraging Alcoa's	global	shared	services,	and	driving	profitable	growth.	The	operating	results	and	assets	and	liabilities	of	RTI	were	included	within	the	Engineered	Products	and Solutions	segment	since	the	date	of	acquisition.

On	November	19,	2014,	after	satisfying	all	customary	closing	conditions	and	receiving	the	required	regulatory	approvals,	Alcoa	completed	the	acquisition	of	Firth Rixson,	a	global	leader	in	aerospace	jet	engine	components.	Firth	Rixson	manufactures	rings,	forgings,	and	metal	products	for	the	aerospace	end	market,	as	well	as	other markets	requiring	highly	engineered	material	applications.	The	purpose	of	this	acquisition	is	to	strengthen	Alcoa's	aerospace	business	and	position	the	Company	to capture	additional	aerospace	growth	with	a	broader	range	of	high-growth,	value-add	jet	engine	components.	This	business	generated	sales	of	approximately	$970	in	2014 and	has	13	operating	facilities	in	the	United	States,	United	Kingdom,	Europe,	and	Asia	employing	approximately	2,400	people	combined.	In	executing	its	integration plan	for	Firth	Rixson,	Alcoa	expects	to	realize	annual	cost	savings	of	more	than	$100	by	2019	due	to	synergies	derived	from	procurement	and	productivity improvements,	optimizing	internal	metal	supply,	and	leveraging	Alcoa's	global	shared	services.	The	operating	results	and	assets	and	liabilities	of	Firth	Rixson	were included	within	the	Engineered	Products	and	Solutions	segment	since	the	date	of	acquisition.

Third-party	sales	for	the	Engineered	Products	and	Solutions	segment	improved	27%	in	2015	compared	with	2014,	largely	attributable	to	the	third-party	sales	($1,310)	of three	acquired	businesses	(see	above),	primarily	aerospace-related,	and	higher	volumes	in	this	segment's	organic	businesses,	mostly	related	to	the	aerospace	end	market. These	positive	impacts	were	slightly	offset	by	unfavorable	foreign	currency	movements,	principally	driven	by	a	weaker	euro.

Third-party	sales	for	this	segment	increased	4%	in	2014	compared	with	2013,	primarily	due	to	higher	volumes	and	the	acquisition	of	Firth	Rixson	($81—see	above).	The higher	volumes	were	mostly	related	to	the	aerospace	(commercial)	and	commercial	transportation	end	markets,	somewhat	offset	by	lower	volumes	in	the	industrial	gas turbine	end	market.

ATOI	for	the	Engineered	Products	and	Solutions	segment	increased	$16	in	2015	compared	with	2014,	principally	the	result	of	net	productivity	improvements	across most	businesses,	a	positive	contribution	from	inorganic	growth,	and	overall	higher	volumes	in	this	segment's	organic	businesses.	These	positive	impacts	were	partially offset	by	unfavorable	price/product	mix,	higher	costs	related	to	growth	projects,	and	net	unfavorable	foreign	currency	movements,	primarily	related	to	a	weaker	euro.

ATOI	for	this	segment	climbed	$10	in	2014	compared	with	2013,	mainly	due	to	net	productivity	improvements	across	all	businesses	and	overall	higher	volumes, partially	offset	by	higher	costs,	primarily	labor,	and	unfavorable	product	mix.

In	2016,	demand	in	the	commercial	aerospace	end	market	is	expected	to	remain	strong,	driven	by	significant	order	backlog.	Also,	third-party	sales	will	include	a	positive impact	due	to	a	full	year	of	sales	related	to	the	acquisitions	of	RTI	and	TITAL.	Additionally,	net	productivity	improvements	are	anticipated	while	pricing	pressure	across all	markets	is	expected.

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Third-party\tsales | $1,882 | $2,021 | $1,951 |
| ATOI | $166 | $180 | $167 |

This	segment	represents	a	portion	of	Alcoa's	downstream	operations	and	produces	products	that	are	used	mostly	in	the	nonresidential	building	and	construction	and commercial	transportation	end	markets.	Such	products	include	integrated	aluminum	structural	systems,	architectural	extrusions,	and	forged	aluminum	commercial vehicle	wheels,	which	are	sold	directly	to	customers	and	through	distributors.	A	small	part	of	this	segment	also	produces	aluminum	products	for	the	industrial	products end	market.	Generally,	the	sales	and	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	mostly	the	U.S. dollar,	the	euro,	and	the	Brazilian	real.

Third-party	sales	for	the	Transportation	and	Construction	Solutions	segment	decreased	7%	in	2015	compared	with	2014,	primarily	driven	by	unfavorable	foreign currency	movements,	principally	caused	by	a	weaker	euro	and	Brazilian	real,	and	lower	volume	related	to	the	building	and	construction	end	market,	somewhat	offset	by higher	volume	related	to	the	commercial	transportation	end	market.

Third-party	sales	for	this	segment	increased	4%	in	2014	compared	with	2013,	mostly	the	result	of	higher	volume	related	to	the	commercial	transportation	and	building and	construction	end	markets,	somewhat	offset	by	lower	volume	in	the	industrial	products	and	market.

ATOI	for	the	Transportation	and	Construction	Solutions	segment	declined	$14	in	2015	compared	with	2014,	mainly	due	to	higher	costs,	net	unfavorable	foreign	currency movements,	primarily	related	to	a	weaker	euro	and	Brazilian	real,	and	unfavorable	price/product	mix.	These	negative	impacts	were	mostly	offset	by	net	productivity improvements	across	all	businesses.

ATOI	for	this	segment	improved	$13	in	2014	compared	with	2013,	principally	attributable	to	net	productivity	improvements	across	all	businesses	and	overall	higher volumes,	partially	offset	by	unfavorable	product	mix	and	higher	costs,	primarily	labor.

In	2016,	the	non-residential	building	and	construction	end	market	is	expected	to	improve	through	growth	in	North	America	but	will	be	slightly	offset	by	overall weakness	in	Europe.	Also,	North	America	build	rates	in	the	commercial

transportation	end	market	are	expected	to	decline	while	improvements	in	Europe	are	anticipated.	Additionally,	net	productivity	improvements	are	anticipated.

# Reconciliation	of	ATOI	to	Consolidated	Net	(Loss)	Income	Attributable	to	Alcoa

Items	required	to	reconcile	total	segment	ATOI	to	consolidated	net	(loss)	income	attributable	to	Alcoa	include:	the	impact	of	LIFO	inventory	accounting;	metal	price lag;	interest	expense;	noncontrolling	interests;	corporate	expense	(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;	and	other	items,	including	intersegment profit	eliminations,	differences	between	tax	rates	applicable	to	the	segments	and	the	consolidated	effective	tax	rate,	and	other	nonoperating	items	such	as	foreign currency	transaction	gains/losses	and	interest	income.

The	following	table	reconciles	total	segment	ATOI	to	consolidated	net	(loss)	income	attributable	to	Alcoa:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Total\tsegment\tATOI | $1,906 | $1,968 | $1,267 |
| Unallocated\tamounts\t(net\tof\ttax): |  |  |  |
| Impact\tof\tLIFO | 136 | (54) | 52 |
| Metal\tprice\tlag | (133) | 78 | (45) |
| Interest\texpense | (324) | (308) | (294) |
| Noncontrolling\tinterests | (125) | 91 | (41) |
| Corporate\texpense | (266) | (284) | (274) |
| Impairment\tof\tgoodwill | (25) | - | (1,731) |
| Restructuring\tand\tother\tcharges | (943) | (894) | (607) |
| Other | (548) | (329) | (612) |
| Consolidated\tnet\t(loss)\tincome\tattributable\tto\tAlcoa | $(322) | $268 | $(2,285) |

The	significant	changes	in	the	reconciling	items	between	total	segment	ATOI	and	consolidated	net	(loss)	income	attributable	to	Alcoa	for	2015	compared	with	2014 consisted	of:

•a	change	in	the	Impact	of	LIFO,	mostly	due	to	lower	prices	for	both	aluminum,	driven	by	both	lower	base	metal	prices	(LME)	and	regional	premiums,	and alumina	(decrease	in	price	at	December	31,	2015	indexed	to	December	31,	2014	compared	to	an	increase	in	price	at	December	31,	2014	indexed	to December	31,	2013);

•a	change	in	Metal	price	lag,	the	result	of	lower	prices	for	aluminum;

•an	increase	in	Interest	expense,	principally	caused	by	an	8%	higher	average	debt	level,	which	was	largely	attributable	to	higher	outstanding	long-term	debt due	to	the	September	2014	issuance	of	$1,250	in	5.125%	Notes,	somewhat	offset	by	the	absence	of	fees	paid	associated	with	the	execution	and	termination of	a	364-day	senior	unsecured	bridge	term	loan	facility	related	to	the	then-planned	acquisition	of	Firth	Rixson	($8);

•a	change	in	Noncontrolling	interests,	due	to	the	change	in	results	of	AWAC,	primarily	driven	by	improved	operating	results	and	lower	restructuring	and other	charges	related	to	a	number	of	portfolio	actions	(e.g.	capacity	reductions	and	a	divestiture),	slightly	offset	by	the	absence	of	a	gain	on	the	sale	of	a mining	interest	in	Suriname	($11	was	noncontrolling	interest's	share);

•a	decline	in	Corporate	expense,	largely	attributable	to	decreases	in	various	expenses,	including	lower	acquisition	costs	($13),	partially	offset	by	expenses related	to	the	planned	separation	of	Alcoa	($24);

•an	increase	in	Restructuring	and	other	charges,	mostly	the	result	of	a	charge	for	legal	matters	in	Italy,	partially	offset	by	lower	restructuring	and	other charges	associated	with	a	number	of	portfolio	actions	(e.g.	capacity	reductions	and	divestitures);	and

•a	change	in	Other,	primarily	due	to	a	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	the	United	States	and	Iceland ($190),	write-downs	of	inventories	related	to	various	shutdown	and	curtailment	actions	($75),	a	net	discrete	income	tax	charge	for	a	valuation	allowance	on certain	deferred

tax	assets	($34),	and	charges	for	separate	environmental	matters	in	both	Norway	and	Italy	($15),	somewhat	offset	by	a	discrete	income	tax	charge	related	to a	tax	rate	change	in	both	Brazil	and	Spain	($79)	and	higher	gains	on	various	asset	sales	($35).

The	significant	changes	in	the	reconciling	items	between	total	segment	ATOI	and	consolidated	net	income	(loss)	attributable	to	Alcoa	for	2014	compared	with	2013 consisted	of:

•a	change	in	the	Impact	of	LIFO,	mostly	due	to	higher	prices	for	aluminum,	driven	by	both	higher	base	metal	prices	(LME)	and	regional	premiums	(increase in	price	at	December	31,	2014	indexed	to	December	31,	2013	compared	to	a	decrease	in	price	at	December	31,	2013	indexed	to	December	31,	2012),	and the	absence	of	significant	reductions	in	LIFO	inventory	quantities,	which	caused	a	partial	liquidation	of	the	lower	cost	LIFO	inventory	base	in	2013 (income	of	$17	in	2013);

•a	change	in	Metal	price	lag,	the	result	of	higher	prices	for	aluminum;

•an	increase	in	Interest	expense,	primarily	the	result	of	lower	capitalized	interest	($28)	and	fees	paid	associated	with	the	execution	and	termination	of	a	364- day	senior	unsecured	bridge	term	loan	facility	related	to	the	then-planned	acquisition	of	Firth	Rixson	($8),	partially	offset	by	a	3%	lower	average	debt	level and	lower	amortization	of	debt-related	costs	due	to	the	conversion	of	convertible	notes;

•a	change	in	Noncontrolling	interests,	due	to	the	change	in	the	results	of	AWAC,	mainly	driven	by	restructuring	and	other	charges	associated	with	both	the permanent	shutdown	of	the	Point	Henry	smelter	in	Australia	and	the	divestiture	of	an	ownership	interest	in	a	mining	and	refining	joint	venture	in	Jamaica and	a	discrete	income	tax	charge	related	to	a	tax	rate	change	in	both	Brazil	and	Spain	($32	combined	was	noncontrolling	interest's	share),	partially	offset by	improved	operating	results,	the	absence	of	a	charge	for	a	legal	matter	($17	was	noncontrolling	interest's	share),	and	a	gain	on	the	sale	of	a	mining interest	in	Suriname	($11	was	noncontrolling	interest's	share);

•an	increase	in	Corporate	expense,	mostly	related	to	costs	associated	with	the	acquisition	of	Firth	Rixson	($34),	partially	offset	by	decreases	in	various expenses;

•an	increase	in	Restructuring	and	other	charges,	principally	caused	by	higher	costs	related	to	decisions	to	permanently	shut	down	and/or	temporarily	curtail refinery,	smelter	and/or	rolling	mill	capacity	and	a	net	loss	on	the	divestiture	of	four	operations,	partially	offset	by	the	absence	of	a	charge	for	a	legal	matter ($322);	and

•a	change	in	Other,	largely	attributable	to	the	absence	of	a	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	Spain	and	the United	States	($372),	slightly	offset	by	a	discrete	income	tax	charge	related	to	a	tax	rate	change	in	both	Brazil	and	Spain	($79).

See	the	Environmental	Matters	section	of	Note	N	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K.

# Liquidity	and	Capital	Resources

Alcoa	maintains	a	disciplined	approach	to	cash	management	and	strengthening	of	its	balance	sheet.	In	2015,	as	has	been	the	focus	since	2008,	management	initiated actions	to	significantly	improve	Alcoa's	cost	structure	and	liquidity,	providing	the	Company	with	the	ability	to	operate	effectively.	Such	actions	include	procurement efficiencies	and	overhead	rationalization	to	reduce	costs,	working	capital	initiatives	to	yield	significant	cash	improvements,	and	maintaining	a	sustainable	level	of	capital expenditures.	In	2016,	this	approach	will	continue	with	the	ultimate	goal	of	generating	cash	from	operations	that	exceeds	capital	expenditures.

Along	with	the	foregoing	actions,	cash	provided	from	operations	and	financing	activities	is	expected	to	be	adequate	to	cover	Alcoa's	operational	and	business	needs	over the	next	12	months.	For	an	analysis	of	long-term	liquidity,	see	Contractual	Obligations	and	Off-Balance	Sheet	Arrangements	below.

At	December	31,	2015,	cash	and	cash	equivalents	of	Alcoa	were	$1,919,	of	which	$1,107	was	held	outside	the	United	States.	Alcoa	has	a	number	of	commitments	and obligations	related	to	the	Company's	growth	strategy	in	foreign	jurisdictions,	resulting	in	the	need	for	cash	outside	the	United	States.	As	such,	management	does	not have	a	current	expectation	of	repatriating	cash	held	in	foreign	jurisdictions.

# Cash	from	Operations

Cash	provided	from	operations	in	2015	was	$1,582	compared	with	$1,674	in	2014.	The	decrease	of	$92,	or	5%,	was	due	to	a	negative	change	in	noncurrent	assets	of $328,	lower	operating	results	(net	(loss)	income	plus	net	add-back	for	noncash	transactions	in	earnings)	and	a	negative	change	in	noncurrent	liabilities	of	$18,	mostly offset	by	a	positive	change	associated	with	working	capital	of	$572	and	lower	pension	contributions	of	$31.

The	components	of	the	positive	change	in	working	capital	were	as	follows:

•a	favorable	change	of	$524	in	receivables,	mostly	driven	by	lower	customer	sales	as	a	result	of	closed,	divested,	and	curtailed	locations	and	lower	metal prices;

•a	positive	change	of	$291	in	inventories,	largely	attributable	to	the	absence	of	inventory	build	related	to	the	ramp-up	of	automotive	production	at	the Davenport,	IA	plant	and	customer	requirements	related	to	smelters	that	have	been	curtailed	or	shut	down;

•a	favorable	change	of	$71	in	prepaid	expenses	and	other	current	assets;

•a	negative	change	of	$346	in	accounts	payable,	trade,	principally	the	result	of	timing	of	payments;

•a	positive	change	of	$14	in	accrued	expenses,	mainly	caused	by	a	smaller	payment	to	the	United	States	government	due	to	the	resolution	of	a	legal	matter (see	below);	and

•a	favorable	change	of	$18	in	taxes,	including	income	taxes.

The	unfavorable	change	in	noncurrent	assets	was	mostly	related	to	a	$300	prepayment	made	under	a	natural	gas	supply	agreement	in	Australia	(see	below).

On	April	8,	2015,	Alcoa's	majority-owned	subsidiary,	Alcoa	of	Australia	Limited	(AofA),	which	is	part	of	AWAC,	secured	a	new	12-year	gas	supply	agreement	to power	its	three	alumina	refineries	in	Western	Australia	beginning	in	July	2020.	This	agreement	was	conditional	on	the	completion	of	a	third-party	acquisition	of	the related	energy	assets	from	the	then-current	owner,	which	occurred	in	June	2015.	The	terms	of	AofA's	gas	supply	agreement	require	a	prepayment	of	$500	to	be	made	in two	installments.	The	first	installment	of	$300	was	made	at	the	time	of	the	completion	of	the	third-party	acquisition	and	the	second	installment	of	$200	will	be	made	in April	2016	(previously	was	scheduled	in	January	2016).

Cash	provided	from	operations	in	2014	was	$1,674	compared	with	$1,578	in	2013.	The	increase	of	$96,	or	6%,	was	due	to	higher	operating	results	(net	income	plus	net add-back	for	noncash	transactions	in	earnings)	and	a	positive	change	in	noncurrent	assets	of	$114,	mostly	offset	by	a	negative	change	associated	with	working	capital	of $620,	a	negative	change	in	noncurrent	liabilities	of	$138,	and	higher	pension	contributions	of	$39.

The	components	of	the	negative	change	in	working	capital	were	as	follows:

•an	unfavorable	change	of	$171	in	receivables,	primarily	related	to	higher	customer	sales;

•a	negative	change	of	$380	in	inventories,	largely	attributable	to	inventory	build	for	the	ramp-up	of	automotive	production	at	the	Davenport,	IA	plant	and customer	requirements	related	to	smelters	that	were	curtailed	or	shut	down	in	2014;

•an	unfavorable	change	of	$16	in	prepaid	expenses	and	other	current	assets;

•a	negative	change	of	$70	in	accounts	payable,	trade,	principally	the	result	of	timing	of	payments;

•an	unfavorable	change	of	$33	in	accrued	expenses,	mainly	caused	by	$139	in	higher	payments	for	layoff	and	other	exit	costs	associated	with	restructuring actions	and	an	$88	payment	to	the	United	States	government	due	to	the	resolution	of	a	legal	matter	(see	below),	partially	offset	by	the	absence	of	$148 (€109)	in	payments	to	the	Italian	government	related	to	a	November	2009	European	Commission	decision	on	electricity	pricing	for	certain	energy-intensive industries;	and

•a	positive	change	of	$50	in	taxes,	including	income	taxes,	mostly	driven	by	higher	pretax	income.

The	higher	pension	contributions	of	$39	were	principally	driven	by	special	termination	benefits	of	$86	for	employees	affected	by	the	2013	shutdown	of	capacity	at	a smelter	in	Canada.

On	August	8,	2014,	the	Highway	and	Transportation	Funding	Act	(HATFA)	was	signed	into	law	by	the	United	States	government.	HATFA,	in	part,	provides	temporary relief	for	employers	who	sponsor	defined	benefit	pension	plans	related	to	funding	contributions	under	the	Employee	Retirement	Income	Security	Act	of	1974. Specifically,	HATFA	modifies	the	interest	rates	that	had	been	set	in	2012	by	the	Moving	Ahead	for	Progress	in	the	21 	Century	Act.	This	relief	had	an	immediate	impact on	the	calculation	of	the	then	remaining	funding	contributions	in	2014,	resulting	in	a	reduction	of	$100	in	minimum	required	pension	funding. st

In	2014,	Alcoa	World	Alumina	LLC,	a	majority-owned	subsidiary	of	Alcoa,	and	Alcoa	Inc.	paid	a	combined	$88	to	the	United	States	government	due	to	the	resolution of	a	legal	matter.	Additionally,	another	$74	was	paid	in	2015	and	will	be	paid	in	each	of	the	three	subsequent	years,	2016	(paid	in	January	2016)	through	2018.

# Financing	Activities

Cash	used	for	financing	activities	was	$441	in	2015	compared	with	cash	provided	from	financing	activities	of	$2,250	in	2014	and	cash	used	for	financing	activities	of $679	in	2013.

The	use	of	cash	in	2015	was	principally	the	result	of	$2,030	in	payments	on	debt,	mostly	related	to	the	repayment	of	borrowings	under	certain	revolving	credit	facilities (see	below)	and	the	repayment	of	convertible	notes	assumed	in	conjunction	with	the	acquisition	of	RTI	(see	below);	$223	in	dividends	paid	to	shareholders;	and	$104	in net	cash	paid	to	the	noncontrolling	interest	in	AWAC,	Alumina	Limited.	These	items	were	mostly	offset	by	$1,901	in	additions	to	debt,	virtually	all	of	which	was	the result	of	borrowings	under	certain	revolving	credit	facilities	(see	below).

The	source	of	cash	in	2014	was	mostly	driven	by	$2,878	in	additions	to	debt,	virtually	all	of	which	was	the	result	of	$1,238	in	net	proceeds	from	the	issuance	of	new senior	debt	securities	used	for	the	acquisition	of	Firth	Rixson	(see	below)	and	$1,640	in	borrowings	under	certain	revolving	credit	facilities	(see	below);	net	proceeds	of $1,211	from	the	issuance	of	mandatory	convertible	preferred	stock	related	to	the	aforementioned	acquisition;	and	$150	in	proceeds	from	employee	exercises	of 17.3	million	stock	options	at	a	weighted	average	exercise	price	of	$8.70	(not	in	millions).	These	items	were	somewhat	offset	by	$1,723	in	payments	on	debt,	mostly related	to	$1,640	for	the	repayment	of	borrowings	under	certain	revolving	credit	facilities	(see	below),	and	$161	in	dividends	paid	to	shareholders.

The	use	of	cash	in	2013	was	primarily	due	to	$2,317	in	payments	on	debt,	mainly	related	to	$1,850	for	the	repayment	of	borrowings	under	certain	credit	facilities	(see below),	a	$422	early	repayment	of	6.00%	Notes	due	July	2013,	and	$27	for	previous	borrowings	on	the	loans	supporting	the	Estreito	hydroelectric	power	project	in Brazil;	$132	in	dividends	paid	to	shareholders;	and	net	cash	paid	to	noncontrolling	interests	of	$97,	most	of	which	relates	to	Alumina	Limited's	share	of	AWAC.	These items	were	partially	offset	by	$1,852	in	additions	to	debt,	virtually	all	of	which	was	the	result	of	borrowings	under	certain	credit	facilities	(see	below).

In	July	2015,	through	the	acquisition	of	RTI	(see	Engineered	Products	and	Solutions	in	Segment	Information	above),	Alcoa	assumed	the	obligation	to	repay	two	tranches of	convertible	debt;	one	tranche	was	due	and	settled	in	cash	on	December	1,	2015	(principal	amount	of	$115)	and	the	other	tranche	is	due	October	15,	2019	(principal amount	of	$403),	unless	earlier	converted	or	purchased	by	Alcoa	at	the	holder's	option	upon	a	fundamental	change.	Upon	conversion	of	the	2019	convertible	notes	in accordance	with	their	terms,	holders	will	receive,	at	Alcoa's	election,	cash,

shares	of	common	stock	(up	to	27,990,966	shares),	or	a	combination	of	cash	and	shares.	On	the	maturity	date,	each	holder	of	outstanding	notes	will	be	entitled	to	receive on	such	date	$1,000	(not	in	millions)	in	cash	for	each	$1,000	(not	in	millions)	in	principal	amount	of	notes,	together	with	accrued	and	unpaid	interest	to,	but	not including,	the	maturity	date.

On	July	25,	2014,	Alcoa	entered	into	a	Five-Year	Revolving	Credit	Agreement	(the	"Credit	Agreement")	with	a	syndicate	of	lenders	and	issuers	named	therein.	The Credit	Agreement	provides	a	$4,000	senior	unsecured	revolving	credit	facility	(the	"Credit	Facility"),	the	proceeds	of	which	are	to	be	used	to	provide	working	capital	or for	other	general	corporate	purposes	of	Alcoa.	Subject	to	the	terms	and	conditions	of	the	Credit	Agreement,	Alcoa	may	from	time	to	time	request	increases	in	lender commitments	under	the	Credit	Facility,	not	to	exceed	$500	in	aggregate	principal	amount,	and	may	also	request	the	issuance	of	letters	of	credit,	subject	to	a	letter	of credit	sublimit	of	$1,000	under	the	Credit	Facility.

The	Credit	Facility	was	scheduled	to	mature	on	July	25,	2019;	however,	on	July	7,	2015,	Alcoa	received	approval	for	a	one-year	extension	of	the	maturity	date	by	the lenders	and	issuers	that	support	the	Credit	Facility.	As	such,	the	Credit	Facility	now	matures	on	July	25,	2020,	unless	extended	or	earlier	terminated	in	accordance	with the	provisions	of	the	Credit	Agreement.	Alcoa	may	make	one	additional	one-year	extension	request	during	the	remaining	term	of	the	Credit	Facility,	subject	to	the	lender consent	requirements	set	forth	in	the	Credit	Agreement.	Under	the	provisions	of	the	Credit	Agreement,	Alcoa	will	pay	a	fee	of	0.25%	(based	on	Alcoa's	long-term	debt ratings	as	of	December	31,	2015)	of	the	total	commitment	per	annum	to	maintain	the	Credit	Facility.

The	Credit	Facility	is	unsecured	and	amounts	payable	under	it	will	rank	pari	passu	with	all	other	unsecured,	unsubordinated	indebtedness	of	Alcoa.	Borrowings	under the	Credit	Facility	may	be	denominated	in	U.S.	dollars	or	euros.	Loans	will	bear	interest	at	a	base	rate	or	a	rate	equal	to	LIBOR,	plus,	in	each	case,	an	applicable	margin based	on	the	credit	ratings	of	Alcoa's	outstanding	senior	unsecured	long-term	debt.	The	applicable	margin	on	base	rate	loans	and	LIBOR	loans	will	be	0.50%	and 1.50%	per	annum,	respectively,	based	on	Alcoa's	long-term	debt	ratings	as	of	December	31,	2015.	Loans	may	be	prepaid	without	premium	or	penalty,	subject	to customary	breakage	costs.

The	Credit	Agreement	replaces	Alcoa's	Five-Year	Revolving	Credit	Agreement,	dated	as	of	July	25,	2011	(the	"Former	Credit	Agreement"),	which	was	scheduled	to mature	on	July	25,	2017.	The	Former	Credit	Agreement,	which	had	a	total	capacity	of	$3,750	and	was	undrawn,	was	terminated	effective	July	25,	2014.

The	Credit	Agreement	includes	covenants	substantially	similar	to	those	in	the	Former	Credit	Agreement,	including,	among	others,	(a)	a	leverage	ratio,	(b)	limitations	on Alcoa's	ability	to	incur	liens	securing	indebtedness	for	borrowed	money,	(c)	limitations	on	Alcoa's	ability	to	consummate	a	merger,	consolidation	or	sale	of	all	or substantially	all	of	its	assets,	and	(d)	limitations	on	Alcoa's	ability	to	change	the	nature	of	its	business.	As	of	December	31,	2015,	Alcoa	was	in	compliance	with	all	such covenants.

The	obligation	of	Alcoa	to	pay	amounts	outstanding	under	the	Credit	Facility	may	be	accelerated	upon	the	occurrence	of	an	"Event	of	Default"	as	defined	in	the	Credit Agreement.	Such	Events	of	Default	include,	among	others,	(a)	Alcoa's	failure	to	pay	the	principal	of,	or	interest	on,	borrowings	under	the	Credit	Facility,	(b)	any representation	or	warranty	of	Alcoa	in	the	Credit	Agreement	proving	to	be	materially	false	or	misleading,	(c)	Alcoa's	breach	of	any	of	its	covenants	contained	in	the Credit	Agreement,	and	(d)	the	bankruptcy	or	insolvency	of	Alcoa.

There	were	no	amounts	outstanding	at	December	31,	2015	and	no	amounts	were	borrowed	during	2015	and	2014	under	the	Credit	Facility.	Also,	there	were	no	amounts borrowed	during	2014	related	to	the	Former	Credit	Agreement.

In	addition	to	the	Credit	Agreement	above,	Alcoa	has	a	number	of	other	credit	agreements	that	provide	a	combined	borrowing	capacity	of	$990,	as	of	December	31, 2015,	of	which	$890	is	due	to	expire	in	2016	and	$100	is	due	to	expire	in	2017.	The	purpose	of	any	borrowings	under	these	credit	arrangements	is	to	provide	for	working capital	requirements	and	for	other	general	corporate	purposes.	The	covenants	contained	in	all	these	arrangements	are	the	same	as	the	Credit	Agreement	(see	above).

In	February	2014,	Alcoa's	automatic	shelf	registration	statement	filed	with	the	Securities	and	Exchange	Commission	expired.	On	July	11,	2014,	Alcoa	filed	a	new	shelf registration	statement,	which	was	amended	on	July	25,	2014	and	became	effective	on	July	30,	2014,	for	up	to	$5,000	of	securities	on	an	unallocated	basis	for	future issuance.	As	of	December	31,	2015,	$2,500	in	securities	were	issued	under	the	new	shelf	registration	statement.

In	September	2014,	Alcoa	completed	two	public	securities	offerings	under	its	shelf	registration	statement	for	(i)	$1,250	of	25	million	depositary	shares,	each representing	a	1/10th	interest	in	a	share	of	Alcoa's	5.375%	Class	B	Mandatory	Convertible	Preferred	Stock,	Series	1,	par	value	$1	per	share,	liquidation	preference	$500 per	share,	and	(ii)	$1,250	of	5.125%	Notes	due	2024.	The	net	proceeds	of	the	offerings	were	used	to	finance	the	cash	portion	of	the	acquisition	of	Firth	Rixson	(see Engineered	Products	and	Solutions	in	Segment	Information	above).

Alcoa's	cost	of	borrowing	and	ability	to	access	the	capital	markets	are	affected	not	only	by	market	conditions	but	also	by	the	short-	and	long-term	debt	ratings	assigned to	Alcoa's	debt	by	the	major	credit	rating	agencies.

On	March	9,	2015,	Standard	and	Poor's	Ratings	Services	(S&P)	affirmed	the	following	ratings	for	Alcoa:	long-term	debt	at	BBB-	and	short-term	debt	at	A-3. Additionally,	S&P	changed	the	current	outlook	from	negative	to	stable.	On	September	28,	2015	S&P	issued	a	statement	that	these	ratings	and	outlook	for	Alcoa	were not	affected	by	Alcoa's	plan	to	separate	into	two	publicly-traded	companies.

On	April	16,	2015	Fitch	affirmed	the	following	ratings	for	Alcoa:	long-term	debt	at	BB+	and	short-term	debt	at	B.	Additionally,	Fitch	changed	the	current	outlook	from stable	to	positive.	On	September	30,	2015,	Fitch	placed	these	ratings	on	"ratings	watch	positive"	based	on	Alcoa's	plan	to	separate	into	two	publicly-traded	companies.

On	April	30,	2015,	Moody's	Investor	Service	(Moody's)	affirmed	the	following	ratings	for	Alcoa;	long-term	debt	at	Ba1	and	short-term	debt	at	Speculative	Grade Liquidity	Rating-1.	Additionally,	Moody's	changed	the	current	outlook	from	stable	to	positive.	On	September	28,	2015,	Moody's	affirmed	these	ratings	and	changed	the current	outlook	from	positive	to	developing	based	on	Alcoa's	plan	to	separate	into	two	publicly-traded	companies.	On	January	21,	2016,	Moody's	placed	Alcoa's	long- term	debt	rating	under	review	and	changed	the	current	outlook	from	developing	to	rating	under	review,	while	leaving	Alcoa's	short-term	debt	rating	unchanged.

# Investing	Activities

The	use	of	cash	in	2015	was	mainly	due	to	$1,180	in	capital	expenditures	(includes	costs	related	to	environmental	control	in	new	and	expanded	facilities	of	$141),	38% of	which	related	to	growth	projects,	including	the	aerospace	expansion	at	the	La	Porte,	IN	plant,	the	automotive	expansion	at	the	Alcoa,	TN	plant,	the	aerospace expansion	(thick	plate	stretcher)	at	the	Davenport,	IA	plant,	the	aerospace	expansion	(isothermal	press)	at	the	Savannah,	GA	plant	(Firth	Rixson),	and	the	specialty	foil expansion	at	the	Itapissuma	plant	in	Brazil;	$205	(net	of	cash	acquired)	for	the	acquisition	of	TITAL	(see	Engineered	Products	and	Solutions	in	Segment	Information above);	and	$134	in	additions	to	investments,	including	the	purchase	of	$70	in	equities	and	fixed	income	securities	held	by	Alcoa's	captive	insurance	company	and equity	contributions	of	$29	related	to	the	aluminum	complex	joint	venture	in	Saudi	Arabia.	These	items	were	somewhat	offset	by	$302	in	cash	acquired	with	RTI International	Metals	(see	Engineered	Products	and	Solutions	in	Segment	Information	above);	$112	in	proceeds	from	the	sale	of	assets	and	businesses,	composed	of	three land	sales	in	Australia	and	the	United	States	combined	and	post-closing	adjustments	related	to	an	ownership	stake	in	a	smelter,	four	rolling	mills,	and	an	ownership	stake in	a	bauxite	mine/alumina	refinery	divested	from	December	2014	through	March	2015;	and	$40	in	sales	of	investments,	related	to	the	sale	of	$21	in	equities	and	fixed income	securities	held	by	Alcoa's	captive	insurance	company	and	$19	in	proceeds	from	the	sale	of	the	remaining	portion	of	an	equity	investment	in	a	China	rolling	mill.

The	use	of	cash	in	2014	was	principally	due	to	$2,385	(net	of	cash	acquired)	for	the	acquisition	of	Firth	Rixson	(see	Engineered	Products	and	Solutions	in	Segment Information	above);	$1,219	in	capital	expenditures	(includes	costs	related	to	environmental	control	in	new	and	expanded	facilities	of	$129),	40%	of	which	related	to growth	projects,	including	the	automotive	expansions	at	the	Alcoa,	TN	and	Davenport,	IA	fabrication	plants,	the	aerospace	expansion	at	the	La	Porte,	IN	plant,	the aluminum-lithium	capacity	expansion	at	the	Lafayette,	IN	plant,	and	the	specialty	foil	expansion	at	the	Itapissuma	plant	in	Brazil;	and	$195	in	additions	to	investments, including	equity	contributions	of	$120	related	to	the	aluminum	complex	joint	venture	in	Saudi	Arabia	and	the	purchase	of	$49	in	equities	and	fixed	income	securities held	by	Alcoa's	captive	insurance	company.	These	items	were	slightly	offset	by	$253	in	proceeds	from	the	sale	of	assets	and	businesses,	largely	attributable	to	the	sale	of an	ownership	stake	in	a	bauxite	mine	and	refinery	in	Jamaica	(see	Alumina	in	Segment	Information	above),	an	ownership	stake	in	a	smelter	in	the	United	States	(see Primary	Metals	in	Segment	Information	above),	three	rolling	mills	in	Spain	and	France	combined	(see	Global	Rolled	Products	in	Segment	Information	above),	and	a	rod plant	in	Canada	(see	Primary	Metals	in	Segment	Information	above);	and	$57	in	sales	of	investments,	mostly	related	to	$42	in	combined	proceeds	from	the	sale	of	a mining	interest	in	Suriname	and	a	portion	of	an	equity	investment	in	a	China	rolling	mill.

The	use	of	cash	in	2013	was	primarily	due	to	$1,193	in	capital	expenditures	(includes	costs	related	to	environmental	control	in	new	and	expanded	facilities	of	$143), 34%	of	which	related	to	growth	projects,	including	the	automotive	expansion	at	the	Davenport,	IA	fabrication	plant,	the	aluminum-lithium	capacity	expansion	at	the Lafayette,	IN	plant,	and	the	automotive	sheet	expansion	at	the	Alcoa,	TN	plant;	and	$293	in	additions	to	investments,	including	equity	contributions	of	$171	related	to the	aluminum	complex	joint	venture	in	Saudi	Arabia	and	the	purchase	of	$54	in	equities	and	fixed	income	securities	held	by	Alcoa's	captive	insurance	company.	These items	were	slightly	offset	by	a	net	change	in	restricted	cash	of	$170,	mostly	related	to	the	release	of	funds	to	be	used	for	capital	expenditures	of	the	automotive expansion	at	the	Davenport,	IA	fabrication	plant	(see	Noncash	Financing	and	Investing	Activities	below).

# Noncash	Financing	and	Investing	Activities

In	July	2015,	Alcoa	purchased	all	outstanding	shares	of	RTI	common	stock	in	a	stock-for-stock	transaction	valued	at	$870.	As	a	result,	Alcoa	issued	87	million	shares	of its	common	stock	to	consummate	this	transaction,	which	was	not	reflected	in	Alcoa's	Statement	of	Consolidated	Cash	Flows	as	it	represents	a	noncash	financing activity.

In	early	2014,	holders	of	$575	principal	amount	of	Alcoa's	5.25%	Convertible	Notes	due	March	15,	2014	(the	"2014	Notes")	exercised	their	option	to	convert	the	2014 Notes	into	89	million	shares	of	Alcoa	common	stock.	The	conversion	rate	for	the	2014	Notes	was	155.4908	shares	of	Alcoa's	common	stock	per	$1,000	(in	full	dollars) principal	amount	of	notes,	equivalent	to	a	conversion	price	of	$6.43	per	share.	The	difference	between	the	$575	principal	amount	of	the	2014	Notes	and	the	$89	par value	of	the	issued	shares	increased	Additional	capital	on	Alcoa's	Consolidated	Balance	Sheet.	This	transaction	was	not	reflected	in	Alcoa's	Statement	of	Consolidated Cash	Flows	as	it	represents	a	noncash	financing	activity.

In	late	2014,	Alcoa	paid	$2,995	(net	of	cash	acquired)	to	acquire	Firth	Rixson	(see	Engineered	Products	and	Solutions	in	Segment	Information	above).	A	portion	of	this consideration	was	paid	through	the	issuance	of	37	million	shares	in	Alcoa	common	stock	valued	at	$610.	The	issuance	of	common	stock	was	not	reflected	in	Alcoa's Statement	of	Consolidated	Cash	Flows	as	it	represents	a	noncash	investing	activity.

In	August	2012,	Alcoa	received	a	loan	of	$250	for	the	purpose	of	financing	all	or	part	of	the	cost	of	acquiring,	constructing,	reconstructing,	and	renovating	certain facilities	at	Alcoa's	rolling	mill	plant	in	Davenport,	IA.	Because	this	loan	can	only	be	used	for	this	purpose,	the	net	proceeds	of	$248	were	classified	as	restricted	cash. Since	restricted	cash	is	not	part	of	cash	and	cash	equivalents,	this	transaction	was	not	reflected	in	Alcoa's	Statement	of	Consolidated	Cash	Flows	as	it	represents	a noncash	activity.	As	funds	were	expended	for	the	project,	the	release	of	the	cash	was	reflected	as	both	an	inflow	on	the	Net	change	in	restricted	cash	line	and	an	outflow on	the	Capital	expenditures	line	in	the	Investing	Activities	section	of	the	Statement	of	Consolidated	Cash	Flows.	At	December	31,	2013	and	2012,	Alcoa	had	$13	and $171,	respectively,	of	restricted	cash	remaining	related	to	this	transaction.	In	2014,	the	remaining	funds	were	expended	on	the	project.

# Contractual	Obligations	and	Off-Balance	Sheet	Arrangements

Contractual	Obligations.	Alcoa	is	required	to	make	future	payments	under	various	contracts,	including	long-term	purchase	obligations,	financing	arrangements,	and lease	agreements.	Alcoa	also	has	commitments	to	fund	its	pension	plans,	provide	payments	for	other	postretirement	benefit	plans,	and	fund	capital	projects.	As	of December	31,	2015,	a	summary	of	Alcoa's	outstanding	contractual	obligations	is	as	follows	(these	contractual	obligations	are	grouped	in	the	same	manner	as	they	are classified	in	the	Statement	of	Consolidated	Cash	Flows	in	order	to	provide	a	better	understanding	of	the	nature	of	the	obligations	and	to	provide	a	basis	for	comparison	to historical	information):

|  | Total | 2016 | 2017-2018 | 2019-2020 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tactivities: |  |  |  |  |  |
| Energy-related\tpurchase\tobligations | $16,555 | $1,311 | $2,128 | $2,009 | $11,107 |
| Raw\tmaterial\tpurchase\tobligations | 6,970 | \t 1,612 | 1,183 | 815 | 3,360 |
| Other\tpurchase\tobligations | 1,317 | 166 | 328 | 328 | 495 |
| Operating\tleases | 853 | 243 | 298 | 174 | 138 |
| Interest\trelated\tto\ttotal\tdebt | 3,817 | 500 | 933 | 723 | 1,661 |
| Estimated\tminimum\trequired\tpension\tfunding | 2,150 | 300 | 850 | 1,000 | - |
| Other\tpostretirement\tbenefit\tpayments | 2,095 | 230 | 450 | 440 | 975 |
| Layoff\tand\tother\trestructuring\tpayments | 250 | 235 | 15 | - | - |
| Deferred\trevenue\tarrangements | 147 | 20 | 41 | 34 | 52 |
| Uncertain\ttax\tpositions | 52 | - | - | - | 52 |
| Financing\tactivities: |  |  |  |  |  |
| Total\tdebt | 9,102 | 59 | 1,810 | 2,158 | 5,075 |
| Dividends\tto\tshareholders | - | - | - | - | - |
| Investing\tactivities: |  |  |  |  |  |
| Capital\tprojects | 861 | 586 | 223 | 52 | - |
| Equity\tcontributions | 10 | 10 | - | - | - |
| Payments\trelated\tto\tacquisitions | 150 | - | - | 150 | - |
| Totals | $44,329 | $5,272 | $8,259 | $7,883 | $22,915 |

# Obligations	for	Operating	Activities

Energy-related	purchase	obligations	consist	primarily	of	electricity	and	natural	gas	contracts	with	expiration	dates	ranging	from	1	year	to	32	years.	Raw	material obligations	consist	mostly	of	bauxite	(relates	to	Alcoa's	bauxite	mine	interests	in	Guinea	and	Brazil),	caustic	soda,	alumina,	aluminum	fluoride,	calcined	petroleum coke,	cathode	blocks,	and	various	metals	with	expiration	dates	ranging	from	less	than	1	year	to	18	years.	Other	purchase	obligations	consist	principally	of	freight	for bauxite	and	alumina	with	expiration	dates	ranging	from	1	to	16	years.	Many	of	these	purchase	obligations	contain	variable	pricing	components,	and,	as	a	result,	actual cash	payments	may	differ	from	the	estimates	provided	in	the	preceding	table.	Operating	leases	represent	multi-year	obligations	for	certain	land	and	buildings,	alumina refinery	process	control	technology,	plant	equipment,	vehicles,	and	computer	equipment.

Interest	related	to	total	debt	is	based	on	interest	rates	in	effect	as	of	December	31,	2015	and	is	calculated	on	debt	with	maturities	that	extend	to	2042.	The	effect	of outstanding	interest	rate	swaps,	which	are	accounted	for	as	fair	value	hedges,	was	included	in	interest	related	to	total	debt.	As	of	December	31,	2015,	these	hedges effectively	convert	the	interest	rate	from	fixed	to	floating	on	$200	of	debt	through	2018.	As	the	contractual	interest	rates	for	certain	debt	and	interest	rate	swaps	are variable,	actual	cash	payments	may	differ	from	the	estimates	provided	in	the	preceding	table.

Estimated	minimum	required	pension	funding	and	postretirement	benefit	payments	are	based	on	actuarial	estimates	using	current	assumptions	for	discount	rates,	long- term	rate	of	return	on	plan	assets,	rate	of	compensation	increases,	and	health	care	cost	trend	rates,	among	others.	The	minimum	required	contributions	for	pension funding	are	estimated	to	be	$300	for	2016,	$375	for	2017,	$475	for	2018,	$425	for	2019,	and	$575	for	2020.	These	expected	pension	contributions	reflect	the	impacts	of the	Pension	Protection	Act	of	2006;	the	Worker,	Retiree,	and	Employer	Recovery	Act	of	2008;	the	Moving	Ahead	for	Progress	in	the	21 	Century	Act	of	2012;	the Highway	and	Transportation	Funding st

Act	of	2014;	and	the	Bipartisan	Budget	Act	of	2015.	Other	postretirement	benefit	payments	are	expected	to	approximate	$220	to	$230	annually	for	years	2016	through 2020	and	$195	annually	for	years	2021	through	2025.	Such	payments	will	be	slightly	offset	by	subsidy	receipts	related	to	Medicare	Part	D,	which	are	estimated	to	be approximately	$15	to	$20	annually	for	years	2016	through	2025.	Alcoa	has	determined	that	it	is	not	practicable	to	present	pension	funding	and	other	postretirement benefit	payments	beyond	2020	and	2025,	respectively.

Layoff	and	other	restructuring	payments	expected	to	be	paid	within	one	year	primarily	relate	to	severance	costs.	Amounts	scheduled	to	be	paid	beyond	one	year	are related	to	ongoing	site	remediation	work	and	special	layoff	benefit	payments.

Deferred	revenue	arrangements	require	Alcoa	to	deliver	alumina	and	sheet	and	plate	to	certain	customers	over	the	specified	contract	period	(through	2027	for	an	alumina contract	and	through	2020	for	a	sheet	and	plate	contract).	While	these	obligations	are	not	expected	to	result	in	cash	payments,	they	represent	contractual	obligations	for which	the	Company	would	be	obligated	if	the	specified	product	deliveries	could	not	be	made.

Uncertain	tax	positions	taken	or	expected	to	be	taken	on	an	income	tax	return	may	result	in	additional	payments	to	tax	authorities.	The	amount	in	the	preceding	table includes	interest	and	penalties	accrued	related	to	such	positions	as	of	December	31,	2015.	The	total	amount	of	uncertain	tax	positions	is	included	in	the	"Thereafter" column	as	the	Company	is	not	able	to	reasonably	estimate	the	timing	of	potential	future	payments.	If	a	tax	authority	agrees	with	the	tax	position	taken	or	expected	to	be taken	or	the	applicable	statute	of	limitations	expires,	then	additional	payments	will	not	be	necessary.

# Obligations	for	Financing	Activities

Total	debt	amounts	in	the	preceding	table	represent	the	principal	amounts	of	all	outstanding	debt,	including	short-term	borrowings	and	long-term	debt.	Maturities	for long-term	debt	extend	to	2042.

Alcoa	has	historically	paid	quarterly	dividends	on	its	preferred	and	common	stock.	Including	dividends	on	preferred	stock,	Alcoa	paid	$223	in	dividends	to	shareholders during	2015.	This	amount	includes	dividends	related	to	a	new	class	of	preferred	stock	issued	in	September	2014	(see	Financing	Activities	in	Liquidity	and	Capital Resources	above).	Because	all	dividends	are	subject	to	approval	by	Alcoa's	Board	of	Directors,	amounts	are	not	included	in	the	preceding	table	unless	such authorization	has	occurred.	There	were	$17	of	preferred	stock	dividends	approved	to	be	paid	on	January	1,	2016;	however,	Alcoa	paid	the	dividends	on	December	31, 2015.	As	of	December	31,	2015,	there	were	1,310,610,141	shares	of	outstanding	common	stock	and	546,024	and	2,500,000	shares	of	outstanding	Class	A	and	Class	B preferred	stock,	respectively.	The	annual	Class	A	and	Class	B	preferred	stock	dividends	are	at	the	rate	of	$3.75	and	$26.8750	per	share,	respectively,	and	the	annual common	stock	dividend	is	$0.12	per	share.

# Obligations	for	Investing	Activities

Capital	projects	in	the	preceding	table	only	include	amounts	approved	by	management	as	of	December	31,	2015.	Funding	levels	may	vary	in	future	years	based	on anticipated	construction	schedules	of	the	projects.	It	is	expected	that	significant	expansion	projects	will	be	funded	through	various	sources,	including	cash	provided	from operations.	Total	capital	expenditures	are	anticipated	to	be	approximately	$1,400	in	2016.

Equity	contributions	represent	Alcoa's	committed	investment	related	to	a	joint	venture	in	Saudi	Arabia.	Alcoa	is	a	participant	in	a	joint	venture	to	develop	a	new aluminum	complex	in	Saudi	Arabia,	comprised	of	a	bauxite	mine,	alumina	refinery,	aluminum	smelter,	and	rolling	mill,	which	requires	the	Company	to	contribute approximately	$1,100.	As	of	December	31,	2015,	Alcoa	has	made	equity	contributions	of	$981.	Based	on	changes	to	both	the	project's	capital	investment	and	equity	and debt	structure	from	the	initial	plans,	the	estimated	$1,100	equity	contribution	may	be	reduced.	The	timing	of	the	amounts	included	in	the	preceding	table	may	vary	based on	changes	in	anticipated	construction	schedules	of	the	project.

Payments	related	to	acquisitions	are	based	on	provisions	in	certain	acquisition	agreements	that	state	additional	funds	are	due	to	the	seller	from	Alcoa	if	the	businesses acquired	achieve	stated	financial	and	operational	thresholds.	Amounts

are	only	presented	in	the	preceding	table	if	it	is	has	been	determined	that	payment	is	more	likely	than	not	to	occur.	In	connection	with	the	acquisition	of	Firth	Rixson	(see Engineered	Products	and	Solutions	in	Segment	Information	above),	Alcoa	entered	into	an	earn-out	agreement,	which	states	that	Alcoa	will	make	earn-out	payments	up	to an	aggregate	maximum	amount	of	$150	through	2020.	The	amounts	in	the	preceding	table	represent	Alcoa's	best	estimate	of	when	the	payments	may	be	made.

Off-Balance	Sheet	Arrangements.	At	December	31,	2015,	Alcoa	has	maximum	potential	future	payments	for	guarantees	issued	on	behalf	of	a	third	party	of	$478. These	guarantees	expire	at	various	times	between	2017	and	2024	and	relate	to	project	financing	for	the	aluminum	complex	in	Saudi	Arabia.	Alcoa	also	has	outstanding bank	guarantees	related	to	tax	matters,	outstanding	debt,	workers	compensation,	environmental	obligations,	energy	contracts,	and	customs	duties,	among	others.	The total	amount	committed	under	these	guarantees,	which	expire	at	various	dates	between	2016	and	2023	was	$320	at	December	31,	2015.

Alcoa	has	outstanding	letters	of	credit	primarily	related	to	workers'	compensation,	energy	contracts	(including	$200	related	to	an	expected	April	2016	prepayment	under a	gas	supply	contract),	and	leasing	obligations.	The	total	amount	committed	under	these	letters	of	credit,	which	automatically	renew	or	expire	at	various	dates,	mostly	in 2016,	was	$510	at	December	31,	2015.	Alcoa	also	has	outstanding	surety	bonds	primarily	related	to	tax	matters,	contract	performance,	workers	compensation, environmental-related	matters,	and	customs	duties.	The	total	amount	committed	under	these	bonds,	which	automatically	renew	or	expire	at	various	dates,	mostly	in 2016,	was	$159	at	December	31,	2015.

# Critical	Accounting	Policies	and	Estimates

The	preparation	of	the	Consolidated	Financial	Statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America	requires management	to	make	certain	judgments,	estimates,	and	assumptions	regarding	uncertainties	that	affect	the	amounts	reported	in	the	Consolidated	Financial	Statements and	disclosed	in	the	accompanying	Notes.	Areas	that	require	significant	judgments,	estimates,	and	assumptions	include	accounting	for	derivatives	and	hedging	activities; environmental	and	litigation	matters;	asset	retirement	obligations;	the	testing	of	goodwill,	equity	investments,	and	properties,	plants,	and	equipment	for	impairment; estimating	fair	value	of	businesses	to	be	divested;	pension	plans	and	other	postretirement	benefits	obligations;	stock-based	compensation;	and	income	taxes.

Management	uses	historical	experience	and	all	available	information	to	make	these	judgments,	estimates,	and	assumptions,	and	actual	results	may	differ	from	those	used to	prepare	the	Company's	Consolidated	Financial	Statements	at	any	given	time.	Despite	these	inherent	limitations,	management	believes	that	Management's	Discussion and	Analysis	of	Financial	Condition	and	Results	of	Operations	and	the	Consolidated	Financial	Statements	and	accompanying	Notes	provide	a	meaningful	and	fair perspective	of	the	Company.

A	summary	of	the	Company's	significant	accounting	policies	is	included	in	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K. Management	believes	that	the	application	of	these	policies	on	a	consistent	basis	enables	the	Company	to	provide	the	users	of	the	Consolidated	Financial	Statements	with useful	and	reliable	information	about	the	Company's	operating	results	and	financial	condition.

Derivatives	and	Hedging.	Derivatives	are	held	for	purposes	other	than	trading	and	are	part	of	a	formally	documented	risk	management	program.	For	derivatives designated	as	fair	value	hedges,	Alcoa	measures	hedge	effectiveness	by	formally	assessing,	at	least	quarterly,	the	historical	high	correlation	of	changes	in	the	fair	value of	the	hedged	item	and	the	derivative	hedging	instrument.	For	derivatives	designated	as	cash	flow	hedges,	Alcoa	measures	hedge	effectiveness	by	formally	assessing,	at least	quarterly,	the	probable	high	correlation	of	the	expected	future	cash	flows	of	the	hedged	item	and	the	derivative	hedging	instrument.	The	ineffective	portions	of	both types	of	hedges	are	recorded	in	sales	or	other	income	or	expense	in	the	current	period.	If	the	hedging	relationship	ceases	to	be	highly	effective	or	it	becomes	probable that	an	expected	transaction	will	no	longer	occur,	future	gains	or	losses	on	the	derivative	instrument	are	recorded	in	other	income	or	expense.

Alcoa	accounts	for	interest	rate	swaps	related	to	its	existing	long-term	debt	and	hedges	of	firm	customer	commitments	for	aluminum	as	fair	value	hedges.	As	a	result,	the fair	values	of	the	derivatives	and	changes	in	the	fair	values	of	the

underlying	hedged	items	are	reported	in	other	current	and	noncurrent	assets	and	liabilities	in	the	Consolidated	Balance	Sheet.	Changes	in	the	fair	values	of	these derivatives	and	underlying	hedged	items	generally	offset	and	are	recorded	each	period	in	sales	or	interest	expense,	consistent	with	the	underlying	hedged	item.

Alcoa	accounts	for	hedges	of	foreign	currency	exposures	and	certain	forecasted	transactions	as	cash	flow	hedges.	The	fair	values	of	the	derivatives	are	recorded	in	other current	and	noncurrent	assets	and	liabilities	in	the	Consolidated	Balance	Sheet.	The	effective	portions	of	the	changes	in	the	fair	values	of	these	derivatives	are	recorded in	other	comprehensive	income	and	are	reclassified	to	sales,	cost	of	goods	sold,	or	other	income	or	expense	in	the	period	in	which	earnings	are	impacted	by	the	hedged items	or	in	the	period	that	the	transaction	no	longer	qualifies	as	a	cash	flow	hedge.	These	contracts	cover	the	same	periods	as	known	or	expected	exposures,	generally	not exceeding	five	years.

If	no	hedging	relationship	is	designated,	the	derivative	is	marked	to	market	through	earnings.

Cash	flows	from	derivatives	are	recognized	in	the	Statement	of	Consolidated	Cash	Flows	in	a	manner	consistent	with	the	underlying	transactions.

Environmental	Matters.	Expenditures	for	current	operations	are	expensed	or	capitalized,	as	appropriate.	Expenditures	relating	to	existing	conditions	caused	by	past operations,	which	will	not	contribute	to	future	revenues,	are	expensed.	Liabilities	are	recorded	when	remediation	costs	are	probable	and	can	be	reasonably	estimated.	The liability	may	include	costs	such	as	site	investigations,	consultant	fees,	feasibility	studies,	outside	contractors,	and	monitoring	expenses.	Estimates	are	generally	not discounted	or	reduced	by	potential	claims	for	recovery.	Claims	for	recovery	are	recognized	as	agreements	are	reached	with	third	parties.	The	estimates	also	include	costs related	to	other	potentially	responsible	parties	to	the	extent	that	Alcoa	has	reason	to	believe	such	parties	will	not	fully	pay	their	proportionate	share.	The	liability	is continuously	reviewed	and	adjusted	to	reflect	current	remediation	progress,	prospective	estimates	of	required	activity,	and	other	factors	that	may	be	relevant,	including changes	in	technology	or	regulations.

Litigation	Matters.	For	asserted	claims	and	assessments,	liabilities	are	recorded	when	an	unfavorable	outcome	of	a	matter	is	deemed	to	be	probable	and	the	loss	is reasonably	estimable.	Management	determines	the	likelihood	of	an	unfavorable	outcome	based	on	many	factors	such	as	the	nature	of	the	matter,	available	defenses	and case	strategy,	progress	of	the	matter,	views	and	opinions	of	legal	counsel	and	other	advisors,	applicability	and	success	of	appeals	processes,	and	the	outcome	of	similar historical	matters,	among	others.	Once	an	unfavorable	outcome	is	deemed	probable,	management	weighs	the	probability	of	estimated	losses,	and	the	most	reasonable loss	estimate	is	recorded.	If	an	unfavorable	outcome	of	a	matter	is	deemed	to	be	reasonably	possible,	then	the	matter	is	disclosed	and	no	liability	is	recorded.	With respect	to	unasserted	claims	or	assessments,	management	must	first	determine	that	the	probability	that	an	assertion	will	be	made	is	likely,	then,	a	determination	as	to	the likelihood	of	an	unfavorable	outcome	and	the	ability	to	reasonably	estimate	the	potential	loss	is	made.	Legal	matters	are	reviewed	on	a	continuous	basis	to	determine	if there	has	been	a	change	in	management's	judgment	regarding	the	likelihood	of	an	unfavorable	outcome	or	the	estimate	of	a	potential	loss.

Asset	Retirement	Obligations.	Alcoa	recognizes	asset	retirement	obligations	(AROs)	related	to	legal	obligations	associated	with	the	normal	operation	of	Alcoa's bauxite	mining,	alumina	refining,	and	aluminum	smelting	facilities.	These	AROs	consist	primarily	of	costs	associated	with	spent	pot	lining	disposal,	closure	of	bauxite residue	areas,	mine	reclamation,	and	landfill	closure.	Alcoa	also	recognizes	AROs	for	any	significant	lease	restoration	obligation,	if	required	by	a	lease	agreement,	and for	the	disposal	of	regulated	waste	materials	related	to	the	demolition	of	certain	power	facilities.	The	fair	values	of	these	AROs	are	recorded	on	a	discounted	basis,	at	the time	the	obligation	is	incurred,	and	accreted	over	time	for	the	change	in	present	value.	Additionally,	Alcoa	capitalizes	asset	retirement	costs	by	increasing	the	carrying amount	of	the	related	long-lived	assets	and	depreciating	these	assets	over	their	remaining	useful	life.

Certain	conditional	asset	retirement	obligations	(CAROs)	related	to	alumina	refineries,	aluminum	smelters,	and	fabrication	facilities	have	not	been	recorded	in	the Consolidated	Financial	Statements	due	to	uncertainties	surrounding	the	ultimate	settlement	date.	A	CARO	is	a	legal	obligation	to	perform	an	asset	retirement	activity	in which	the	timing	and/or	method	of	settlement	are	conditional	on	a	future	event	that	may	or	may	not	be	within	Alcoa's	control.	Such

uncertainties	exist	as	a	result	of	the	perpetual	nature	of	the	structures,	maintenance	and	upgrade	programs,	and	other	factors.	At	the	date	a	reasonable	estimate	of	the ultimate	settlement	date	can	be	made,	Alcoa	would	record	an	ARO	for	the	removal,	treatment,	transportation,	storage	and/or	disposal	of	various	regulated	assets	and hazardous	materials	such	as	asbestos,	underground	and	aboveground	storage	tanks,	polychlorinated	biphenyls,	various	process	residuals,	solid	wastes,	electronic equipment	waste,	and	various	other	materials.	Such	amounts	may	be	material	to	the	Consolidated	Financial	Statements	in	the	period	in	which	they	are	recorded.	If	Alcoa was	required	to	demolish	all	such	structures	immediately,	the	estimated	CARO	as	of	December	31,	2015	ranges	from	less	than	$1	to	$46	per	structure	(156	structures)	in today's	dollars.

Goodwill.	Goodwill	is	not	amortized;	instead,	it	is	reviewed	for	impairment	annually	(in	the	fourth	quarter)	or	more	frequently	if	indicators	of	impairment	exist	or	if	a decision	is	made	to	sell	or	exit	a	business.	A	significant	amount	of	judgment	is	involved	in	determining	if	an	indicator	of	impairment	has	occurred.	Such	indicators	may include	deterioration	in	general	economic	conditions,	negative	developments	in	equity	and	credit	markets,	adverse	changes	in	the	markets	in	which	an	entity	operates, increases	in	input	costs	that	have	a	negative	effect	on	earnings	and	cash	flows,	or	a	trend	of	negative	or	declining	cash	flows	over	multiple	periods,	among	others.	The fair	value	that	could	be	realized	in	an	actual	transaction	may	differ	from	that	used	to	evaluate	the	impairment	of	goodwill.

Goodwill	is	allocated	among	and	evaluated	for	impairment	at	the	reporting	unit	level,	which	is	defined	as	an	operating	segment	or	one	level	below	an	operating	segment. Alcoa	has	ten	reporting	units,	of	which	four	are	included	in	the	Engineered	Products	and	Solutions	segment	and	three	are	included	in	the	Transportation	and Construction	Solutions	segment.	The	remaining	three	reporting	units	are	the	Alumina	segment,	the	Primary	Metals	segment	(all	goodwill	was	impaired	in	2013—see below),	and	the	Global	Rolled	Products	segment.	More	than	70%	of	Alcoa's	total	goodwill	is	allocated	to	two	reporting	units	as	follows:	Alcoa	Fastening	Systems	and Rings	(AFSR)	($2,232)	and	Alcoa	Power	and	Propulsion	(APP)	($1,695)	businesses,	both	of	which	are	included	in	the	Engineered	Products	and	Solutions	segment. These	amounts	include	an	allocation	of	Corporate's	goodwill.

In	November	2014,	Alcoa	acquired	Firth	Rixson	(see	Engineered	Products	and	Solutions	in	Segment	Information	under	Results	of	Operations	above),	and,	as	a	result recognized	$1,801	in	goodwill.	This	amount	was	allocated	between	the	AFSR	and	Alcoa	Forgings	and	Extrusion	reporting	units,	which	is	part	of	the	Engineered Products	and	Solutions	segment.	In	March	and	July	2015,	Alcoa	acquired	TITAL	and	RTI,	respectively,	(see	Engineered	Products	and	Solutions	in	Segment	Information under	Results	of	Operations	above)	and	recognized	$118	and	$240,	respectively,	in	goodwill.	The	goodwill	amount	related	to	TITAL	was	allocated	to	the	APP	reporting unit	and	the	amount	related	to	RTI	was	allocated	to	Alcoa	Titanium	and	Engineered	Products,	a	new	Alcoa	reporting	unit	that	consists	solely	of	the	acquired	RTI business	and	is	part	of	the	Engineered	Products	and	Solutions	segment.

In	reviewing	goodwill	for	impairment,	an	entity	has	the	option	to	first	assess	qualitative	factors	to	determine	whether	the	existence	of	events	or	circumstances	leads	to	a determination	that	it	is	more	likely	than	not	(greater	than	50%)	that	the	estimated	fair	value	of	a	reporting	unit	is	less	than	its	carrying	amount.	If	an	entity	elects	to perform	a	qualitative	assessment	and	determines	that	an	impairment	is	more	likely	than	not,	the	entity	is	then	required	to	perform	the	existing	two-step	quantitative impairment	test	(described	below),	otherwise	no	further	analysis	is	required.	An	entity	also	may	elect	not	to	perform	the	qualitative	assessment	and,	instead,	proceed directly	to	the	two-step	quantitative	impairment	test.	The	ultimate	outcome	of	the	goodwill	impairment	review	for	a	reporting	unit	should	be	the	same	whether	an	entity chooses	to	perform	the	qualitative	assessment	or	proceeds	directly	to	the	two-step	quantitative	impairment	test.

Alcoa's	policy	for	its	annual	review	of	goodwill	is	to	perform	the	qualitative	assessment	for	all	reporting	units	not	subjected	directly	to	the	two-step	quantitative impairment	test.	Generally,	management	will	proceed	directly	to	the	two-step	quantitative	impairment	test	for	two	to	three	reporting	units	(based	on	facts	and circumstances)	during	each	annual	review	of	goodwill.	This	policy	will	result	in	each	of	the	nine	reporting	units	with	goodwill	being	subjected	to	the	two-step quantitative	impairment	test	at	least	once	during	every	three-year	period.

Under	the	qualitative	assessment,	various	events	and	circumstances	(or	factors)	that	would	affect	the	estimated	fair	value	of	a	reporting	unit	are	identified	(similar	to impairment	indicators	above).	These	factors	are	then	classified	by	the

type	of	impact	they	would	have	on	the	estimated	fair	value	using	positive,	neutral,	and	adverse	categories	based	on	current	business	conditions.	Additionally,	an assessment	of	the	level	of	impact	that	a	particular	factor	would	have	on	the	estimated	fair	value	is	determined	using	high,	medium,	and	low	weighting.	Furthermore, management	considers	the	results	of	the	most	recent	two-step	quantitative	impairment	test	completed	for	a	reporting	unit	and	compares	the	weighted	average	cost	of capital	(WACC)	between	the	current	and	prior	years	for	each	reporting	unit.

During	the	2015	annual	review	of	goodwill,	management	performed	the	qualitative	assessment	for	seven	reporting	units,	the	Alumina	segment,	the	four	reporting	units in	the	Engineered	Products	and	Solutions	segment,	including	AFSR	and	APP,	and	two	reporting	units	in	the	Transportation	and	Construction	Solutions	segment. Management	concluded	that	it	was	not	more	likely	than	not	that	the	estimated	fair	values	of	the	seven	reporting	units	were	less	than	their	carrying	values.	As	such,	no further	analysis	was	required.

Under	the	two-step	quantitative	impairment	test,	the	evaluation	of	impairment	involves	comparing	the	current	fair	value	of	each	reporting	unit	to	its	carrying	value, including	goodwill.	Alcoa	uses	a	discounted	cash	flow	(DCF)	model	to	estimate	the	current	fair	value	of	its	reporting	units	when	testing	for	impairment,	as	management believes	forecasted	cash	flows	are	the	best	indicator	of	such	fair	value.	A	number	of	significant	assumptions	and	estimates	are	involved	in	the	application	of	the	DCF model	to	forecast	operating	cash	flows,	including	markets	and	market	share,	sales	volumes	and	prices,	production	costs,	tax	rates,	capital	spending,	discount	rate,	and working	capital	changes.	Most	of	these	assumptions	vary	significantly	among	the	reporting	units.	Cash	flow	forecasts	are	generally	based	on	approved	business	unit operating	plans	for	the	early	years	and	historical	relationships	in	later	years.	The	betas	used	in	calculating	the	individual	reporting	units'	WACC	rate	are	estimated	for each	business	with	the	assistance	of	valuation	experts.

In	the	event	the	estimated	fair	value	of	a	reporting	unit	per	the	DCF	model	is	less	than	the	carrying	value,	additional	analysis	would	be	required.	The	additional	analysis would	compare	the	carrying	amount	of	the	reporting	unit's	goodwill	with	the	implied	fair	value	of	that	goodwill,	which	may	involve	the	use	of	valuation	experts.	The implied	fair	value	of	goodwill	is	the	excess	of	the	fair	value	of	the	reporting	unit	over	the	fair	value	amounts	assigned	to	all	of	the	assets	and	liabilities	of	that	unit	as	if the	reporting	unit	was	acquired	in	a	business	combination	and	the	fair	value	of	the	reporting	unit	represented	the	purchase	price.	If	the	carrying	value	of	goodwill	exceeds its	implied	fair	value,	an	impairment	loss	equal	to	such	excess	would	be	recognized,	which	could	significantly	and	adversely	impact	reported	results	of	operations	and shareholders'	equity.

During	the	2015	annual	review	of	goodwill,	management	proceeded	directly	to	the	two-step	quantitative	impairment	test	for	two	reporting	units	as	follows:	Global Rolled	Products	segment	and	the	soft	alloys	extrusion	business	in	Brazil	(hereafter	"SAE"),	which	is	included	in	the	Transportation	and	Construction	Solutions	segment. The	estimated	fair	value	of	the	Global	Rolled	Products	segment	was	substantially	in	excess	of	its	respective	carrying	value,	resulting	in	no	impairment.	For	SAE,	the estimated	fair	value	as	determined	by	the	DCF	model	was	lower	than	the	associated	carrying	value.	As	a	result,	management	performed	the	second	step	of	the impairment	analysis	in	order	to	determine	the	implied	fair	value	of	the	SAE	reporting	unit's	goodwill.	The	results	of	the	second-step	analysis	showed	that	the	implied fair	value	of	the	goodwill	was	zero.	Therefore,	in	the	fourth	quarter	of	2015,	Alcoa	recorded	a	goodwill	impairment	of	$25.	The	impairment	of	the	SAE	goodwill	resulted from	headwinds	from	the	recent	downturn	in	the	Brazilian	economy	and	the	continued	erosion	of	gross	margin	despite	the	execution	of	cost	reduction	strategies.	As	a result	of	the	goodwill	impairment,	there	is	no	goodwill	remaining	for	the	SAE	reporting	unit.

Goodwill	impairment	tests	in	prior	years	indicated	that	goodwill	was	not	impaired	for	any	of	the	Company's	reporting	units,	except	for	the	Primary	Metals	segment	in 2013	(see	below),	and	there	were	no	triggering	events	since	that	time	that	necessitated	an	impairment	test.

In	2013,	for	Primary	Metals,	the	estimated	fair	value	as	determined	by	the	DCF	model	was	lower	than	the	associated	carrying	value.	As	a	result,	management	performed the	second	step	of	the	impairment	analysis	in	order	to	determine	the	implied	fair	value	of	Primary	Metals'	goodwill.	The	results	of	the	second-step	analysis	showed	that the	implied	fair	value	of	goodwill	was	zero.	Therefore,	in	the	fourth	quarter	of	2013,	Alcoa	recorded	a	goodwill	impairment	of	$1,731	($1,719	after	noncontrolling interest).	As	a	result	of	the	goodwill	impairment,	there	is	no	goodwill	remaining	for	the	Primary	Metals	reporting	unit.

The	impairment	of	Primary	Metals'	goodwill	resulted	from	several	causes:	the	prolonged	economic	downturn;	a	disconnect	between	industry	fundamentals	and	pricing that	has	resulted	in	lower	metal	prices;	and	the	increased	cost	of	alumina,	a	key	raw	material,	resulting	from	expansion	of	the	Alumina	Price	Index	throughout	the industry.	All	of	these	factors,	exacerbated	by	increases	in	discount	rates,	continue	to	place	significant	downward	pressure	on	metal	prices	and	operating	margins,	and	the resulting	estimated	fair	value,	of	the	Primary	Metals	business.	As	a	result,	management	decreased	the	near-term	and	long-term	estimates	of	the	operating	results	and	cash flows	utilized	in	assessing	Primary	Metals'	goodwill	for	impairment.	The	valuation	of	goodwill	for	the	second	step	of	the	goodwill	impairment	analysis	is	considered	a level	3	fair	value	measurement,	which	means	that	the	valuation	of	the	assets	and	liabilities	reflect	management's	own	judgments	regarding	the	assumptions	market participants	would	use	in	determining	the	fair	value	of	the	assets	and	liabilities.

Equity	Investments.	Alcoa	invests	in	a	number	of	privately-held	companies,	primarily	through	joint	ventures	and	consortia,	which	are	accounted	for	on	the	equity method.	The	equity	method	is	applied	in	situations	where	Alcoa	has	the	ability	to	exercise	significant	influence,	but	not	control,	over	the	investee.	Management	reviews equity	investments	for	impairment	whenever	certain	indicators	are	present	suggesting	that	the	carrying	value	of	an	investment	is	not	recoverable.	This	analysis	requires	a significant	amount	of	judgment	from	management	to	identify	events	or	circumstances	indicating	that	an	equity	investment	is	impaired.	The	following	items	are	examples of	impairment	indicators:	significant,	sustained	declines	in	an	investee's	revenue,	earnings,	and	cash	flow	trends;	adverse	market	conditions	of	the	investee's	industry	or geographic	area;	the	investee's	ability	to	continue	operations	measured	by	several	items,	including	liquidity;	and	other	factors.	Once	an	impairment	indicator	is identified,	management	uses	considerable	judgment	to	determine	if	the	impairment	is	other	than	temporary,	in	which	case	the	equity	investment	is	written	down	to	its estimated	fair	value.	An	impairment	that	is	other	than	temporary	could	significantly	and	adversely	impact	reported	results	of	operations.

Properties,	Plants,	and	Equipment.	Properties,	plants,	and	equipment	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	amount	of	such	assets	(asset	group)	may	not	be	recoverable.	Recoverability	of	assets	is	determined	by	comparing	the	estimated	undiscounted	net	cash	flows	of the	operations	related	to	the	assets	(asset	group)	to	their	carrying	amount.	An	impairment	loss	would	be	recognized	when	the	carrying	amount	of	the	assets	(asset	group) exceeds	the	estimated	undiscounted	net	cash	flows.	The	amount	of	the	impairment	loss	to	be	recorded	is	calculated	as	the	excess	of	the	carrying	value	of	the	assets	(asset group)	over	their	fair	value,	with	fair	value	determined	using	the	best	information	available,	which	generally	is	a	DCF	model.	The	determination	of	what	constitutes	an asset	group,	the	associated	estimated	undiscounted	net	cash	flows,	and	the	estimated	useful	lives	of	assets	also	require	significant	judgments.

Discontinued	Operations	and	Assets	Held	For	Sale.	The	fair	values	of	all	businesses	to	be	divested	are	estimated	using	accepted	valuation	techniques	such	as	a	DCF model,	valuations	performed	by	third	parties,	earnings	multiples,	or	indicative	bids,	when	available.	A	number	of	significant	estimates	and	assumptions	are	involved	in the	application	of	these	techniques,	including	the	forecasting	of	markets	and	market	share,	sales	volumes	and	prices,	costs	and	expenses,	and	multiple	other	factors. Management	considers	historical	experience	and	all	available	information	at	the	time	the	estimates	are	made;	however,	the	fair	value	that	is	ultimately	realized	upon	the divestiture	of	a	business	may	differ	from	the	estimated	fair	value	reflected	in	the	Consolidated	Financial	Statements.

Pension	and	Other	Postretirement	Benefits.	Liabilities	and	expenses	for	pension	and	other	postretirement	benefits	are	determined	using	actuarial	methodologies	and incorporate	significant	assumptions,	including	the	interest	rate	used	to	discount	the	future	estimated	liability,	the	expected	long-term	rate	of	return	on	plan	assets,	and several	assumptions	relating	to	the	employee	workforce	(salary	increases,	health	care	cost	trend	rates,	retirement	age,	and	mortality).

The	interest	rate	used	to	discount	future	estimated	liabilities	is	determined	using	a	Company-specific	yield	curve	model	(above-median)	developed	with	the	assistance	of an	external	actuary.	The	cash	flows	of	the	plans'	projected	benefit	obligations	are	discounted	using	a	single	equivalent	rate	derived	from	yields	on	high	quality	corporate bonds,	which	represent	a	broad	diversification	of	issuers	in	various	sectors,	including	finance	and	banking,	consumer	products,	transportation,	insurance,	and pharmaceutical,	among	others.	The	yield	curve	model	parallels	the	plans'	projected	cash	flows,	which	have	an	average	duration	of	10	years,	and	the	underlying	cash flows	of	the	bonds	included	in	the	model

exceed	the	cash	flows	needed	to	satisfy	the	Company's	plans'	obligations	multiple	times.	In	2015,	2014,	and	2013,	the	discount	rate	used	to	determine	benefit obligations	for	U.S.	pension	and	other	postretirement	benefit	plans	was	4.29%,	4.00%,	and	4.80%,	respectively.	The	impact	on	the	liabilities	of	a	change	in	the	discount rate	of	1/4	of	1%	would	be	approximately	$430	and	either	a	charge	or	credit	of	approximately	$15	to	after-tax	earnings	in	the	following	year.

In	conjunction	with	the	annual	measurement	of	the	funded	status	of	Alcoa's	pension	and	other	postretirement	benefit	plans	at	December	31,	2015,	management	elected to	change	the	manner	in	which	the	interest	cost	component	of	net	periodic	benefit	cost	will	be	determined	in	2016	and	beyond.	Previously,	the	interest	cost	component was	determined	by	multiplying	the	single	equivalent	rate	described	above	and	the	aggregate	discounted	cash	flows	of	the	plans'	projected	benefit	obligations.	Under	the new	methodology,	the	interest	cost	component	will	be	determined	by	aggregating	the	product	of	the	discounted	cash	flows	of	the	plans'	projected	benefit	obligations	for each	year	and	an	individual	spot	rate	(referred	to	as	the	"spot	rate"	approach).	This	change	will	result	in	a	lower	interest	cost	component	of	net	periodic	benefit	cost under	the	new	methodology	compared	to	the	previous	methodology	of	approximately	$100	($65	after-tax)	in	2016.	Management	believes	this	new	methodology,	which represents	a	change	in	an	accounting	estimate,	is	a	better	measure	of	the	interest	cost	as	each	year's	cash	flows	are	specifically	linked	to	the	interest	rates	of	bond payments	in	the	same	respective	year.

The	expected	long-term	rate	of	return	on	plan	assets	is	generally	applied	to	a	five-year	market-related	value	of	plan	assets	(a	four-year	average	or	the	fair	value	at	the plan	measurement	date	is	used	for	certain	non-U.S.	plans).	The	process	used	by	management	to	develop	this	assumption	is	one	that	relies	on	a	combination	of	historical asset	return	information	and	forward-looking	returns	by	asset	class.	As	it	relates	to	historical	asset	return	information,	management	focuses	on	the	annual,	10-year moving,	and	20-year	moving	averages	when	developing	this	assumption.	Management	also	incorporates	expected	future	returns	on	current	and	planned	asset	allocations using	information	from	various	external	investment	managers	and	consultants,	as	well	as	management's	own	judgment.

For	2015,	2014,	and	2013,	management	used	7.75%,	8.00%,	and	8.50%	as	its	expected	long-term	rate	of	return,	which	was	based	on	the	prevailing	and	planned	strategic asset	allocations,	as	well	as	estimates	of	future	returns	by	asset	class.	These	rates	fell	within	the	respective	range	of	the	20-year	moving	average	of	actual	performance and	the	expected	future	return	developed	by	asset	class.	In	2015,	the	decrease	of	25	basis	points	in	the	expected	long-term	rate	of	return	was	due	to	a	decrease	in	the	20- year	moving	average	of	actual	performance.	For	2016,	management	anticipates	that	7.75%	will	be	the	expected	long-term	rate	of	return.

A	change	in	the	assumption	for	the	expected	long-term	rate	of	return	on	plan	assets	of	1/4	of	1%	would	impact	after-tax	earnings	by	approximately	$20	for	2015.

During	2014,	an	independent	U.S.	organization	that	publishes	standard	mortality	rates	based	on	statistical	analysis	and	studies	issued	updated	mortality	tables.	The	rates within	these	standard	tables	are	used	by	actuaries	as	one	of	the	many	assumptions	when	measuring	a	company's	projected	benefit	obligation	for	pension	and	other postretirement	benefit	plans.	The	funded	status	of	all	of	Alcoa's	pension	and	other	postretirement	benefit	plans	are	measured	as	of	December	31	each	calendar	year. During	the	measurement	process	at	the	end	of	2014,	Alcoa,	with	the	assistance	of	an	external	actuary,	considered	the	rates	in	the	new	mortality	tables,	along	with specific	data	related	to	Alcoa's	retiree	population,	to	develop	the	mortality-related	assumptions	used	to	measure	the	benefit	obligation	of	various	U.S.	benefit	plans.	As	a result,	Alcoa	recognized	a	charge	of	approximately	$100	($65	after-tax)	in	other	comprehensive	loss	related	to	the	updated	mortality	assumptions.

In	2015,	a	net	charge	of	$10	(after-tax	and	noncontrolling	interest)	was	recorded	in	other	comprehensive	loss,	primarily	due	to	the	unfavorable	performance	of	the	plan assets,	which	was	mostly	offset	by	the	amortization	of	actuarial	losses	and	a	30	basis	point	increase	in	the	discount	rate.	In	2014,	a	net	charge	of	$69	(after-tax	and noncontrolling	interest)	was	recorded	in	other	comprehensive	loss,	primarily	due	to	an	80	basis	point	decrease	in	the	discount	rate	and	a	change	in	the	mortality assumption	(see	above),	which	was	mostly	offset	by	the	favorable	performance	of	the	plan	assets	and	the	amortization	of	actuarial	losses.	In	2013,	a	net	benefit	of	$531 (after-tax	and	noncontrolling	interest)	was	recorded	in	other	comprehensive	loss,	primarily	due	to	a	65	basis	point	increase	in	the	discount	rate	and	the	amortization	of actuarial	losses.

Stock-based	Compensation.	Alcoa	recognizes	compensation	expense	for	employee	equity	grants	using	the	non-substantive	vesting	period	approach,	in	which	the expense	(net	of	estimated	forfeitures)	is	recognized	ratably	over	the	requisite	service	period	based	on	the	grant	date	fair	value.	The	fair	value	of	new	stock	options	is estimated	on	the	date	of	grant	using	a	lattice-pricing	model.	Determining	the	fair	value	of	stock	options	at	the	grant	date	requires	judgment,	including	estimates	for	the average	risk-free	interest	rate,	dividend	yield,	volatility,	and	exercise	behavior.	These	assumptions	may	differ	significantly	between	grant	dates	because	of	changes	in	the actual	results	of	these	inputs	that	occur	over	time.

As	part	of	Alcoa's	stock-based	compensation	plan	design,	individuals	who	are	retirement-eligible	have	a	six-month	requisite	service	period	in	the	year	of	grant.	As	a result,	a	larger	portion	of	expense	will	be	recognized	in	the	first	half	of	each	year	for	these	retirement-eligible	employees.	Compensation	expense	recorded	in	2015, 2014,	and	2013	was	$92	($61	after-tax),	$87	($58	after-tax),	and	$71	($48	after-tax),	respectively.	Of	these	amounts,	$17,	$15,	and	$14	in	2015,	2014,	and	2013, respectively,	pertains	to	the	acceleration	of	expense	related	to	retirement-eligible	employees.

Most	plan	participants	can	choose	whether	to	receive	their	award	in	the	form	of	stock	options,	stock	awards,	or	a	combination	of	both.	This	choice	is	made	before	the grant	is	issued	and	is	irrevocable.

Income	Taxes.	The	provision	for	income	taxes	is	determined	using	the	asset	and	liability	approach	of	accounting	for	income	taxes.	Under	this	approach,	the	provision for	income	taxes	represents	income	taxes	paid	or	payable	(or	received	or	receivable)	for	the	current	year	plus	the	change	in	deferred	taxes	during	the	year.	Deferred	taxes represent	the	future	tax	consequences	expected	to	occur	when	the	reported	amounts	of	assets	and	liabilities	are	recovered	or	paid,	and	result	from	differences	between the	financial	and	tax	bases	of	Alcoa's	assets	and	liabilities	and	are	adjusted	for	changes	in	tax	rates	and	tax	laws	when	enacted.

Valuation	allowances	are	recorded	to	reduce	deferred	tax	assets	when	it	is	more	likely	than	not	(greater	than	50%)	that	a	tax	benefit	will	not	be	realized.	In	evaluating the	need	for	a	valuation	allowance,	management	considers	all	potential	sources	of	taxable	income,	including	income	available	in	carryback	periods,	future	reversals	of taxable	temporary	differences,	projections	of	taxable	income,	and	income	from	tax	planning	strategies,	as	well	as	all	available	positive	and	negative	evidence.	Positive evidence	includes	factors	such	as	a	history	of	profitable	operations,	projections	of	future	profitability	within	the	carryforward	period,	including	from	tax	planning strategies,	and	Alcoa's	experience	with	similar	operations.	Existing	favorable	contracts	and	the	ability	to	sell	products	into	established	markets	are	additional	positive evidence.	Negative	evidence	includes	items	such	as	cumulative	losses,	projections	of	future	losses,	or	carryforward	periods	that	are	not	long	enough	to	allow	for	the utilization	of	a	deferred	tax	asset	based	on	existing	projections	of	income.	Deferred	tax	assets	for	which	no	valuation	allowance	is	recorded	may	not	be	realized	upon changes	in	facts	and	circumstances,	resulting	in	a	future	charge	to	establish	a	valuation	allowance.	Existing	valuation	allowances	are	re-examined	under	the	same standards	of	positive	and	negative	evidence.	If	it	is	determined	that	it	is	more	likely	than	not	that	a	deferred	tax	asset	will	be	realized,	the	appropriate	amount	of	the valuation	allowance,	if	any,	is	released.	Deferred	tax	assets	and	liabilities	are	also	re-measured	to	reflect	changes	in	underlying	tax	rates	due	to	law	changes	and	the granting	and	lapse	of	tax	holidays.

In	2013,	Alcoa	recognized	a	$372	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	Spain	and	the	United	States.	Of	this	amount,	a $237	valuation	allowance	was	established	on	the	full	value	of	the	deferred	tax	assets	related	to	a	Spanish	consolidated	tax	group.	These	deferred	tax	assets	have	an expiration	period	ranging	from	2016	(for	certain	credits)	to	an	unlimited	life	(for	operating	losses).	After	weighing	all	available	positive	and	negative	evidence,	as described	above,	management	determined	that	it	was	no	longer	more	likely	than	not	that	Alcoa	will	realize	the	tax	benefit	of	these	deferred	tax	assets.	This	was	mainly driven	by	a	decline	in	the	outlook	of	the	Primary	Metals	business	(2013	realized	prices	were	the	lowest	since	2009)	combined	with	prior	year	cumulative	losses	of	the Spanish	consolidated	tax	group.	During	2014,	the	underlying	value	of	the	deferred	tax	assets	decreased	due	to	a	remeasurement	as	a	result	of	the	enactment	of	new	tax rates	in	Spain	beginning	in	2015	(see	Income	Taxes	in	Earnings	Summary	under	Results	of	Operations	above),	the	sale	of	a	member	of	the	Spanish	consolidated	tax group,	and	a	change	in	foreign	currency	exchange	rates.	As	a	result,	the	valuation	allowance	decreased	by	the	same	amount.	At	December	31,	2015,	the	amount	of	the valuation	allowance	was	$149.	This	valuation	allowance	was	reevaluated	as	of	December	31,	2015,	and	no	change	to	the	allowance	was	deemed	necessary	based	on	all available	evidence.	The	need

for	this	valuation	allowance	will	be	assessed	on	a	continuous	basis	in	future	periods	and,	as	a	result,	a	portion	or	all	of	the	allowance	may	be	reversed	based	on	changes in	facts	and	circumstances.

The	remaining	$135	recognized	in	2013	relates	to	a	valuation	allowance	established	on	a	portion	of	available	foreign	tax	credits	in	the	United	States.	These	credits	can be	carried	forward	for	10	years,	and	have	an	expiration	period	ranging	from	2016	to	2023	as	of	December	31,	2013	(2016	to	2025	as	of	December	31,	2015).	After weighing	all	available	positive	and	negative	evidence,	as	described	above,	management	determined	that	it	was	no	longer	more	likely	than	not	that	Alcoa	will	realize	the full	tax	benefit	of	these	foreign	tax	credits.	This	was	primarily	due	to	lower	foreign	sourced	taxable	income	after	consideration	of	tax	planning	strategies	and	after	the inclusion	of	earnings	from	foreign	subsidiaries	projected	to	be	distributable	as	taxable	foreign	dividends.	This	valuation	allowance	was	reevaluated	as	of	December	31, 2015,	and	due	to	reductions	in	foreign	sourced	taxable	income,	a	$134	discrete	income	tax	charge	was	recognized.	Additionally,	$15	of	foreign	tax	credits	expired	at	the end	of	2015	resulting	in	a	corresponding	decrease	to	the	valuation	allowance.	At	December	31,	2015,	the	amount	of	the	valuation	allowance	was	$254.	The	need	for	this valuation	allowance	will	be	assessed	on	a	continuous	basis	in	future	periods	and,	as	a	result,	an	increase	or	decrease	to	this	allowance	may	result	based	on	changes	in facts	and	circumstances.

In	2015,	Alcoa	recognized	an	additional	$141	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	Iceland	and	Suriname.	Of	this amount,	an	$85	valuation	allowance	was	established	on	the	full	value	of	the	deferred	tax	assets	in	Suriname,	which	were	related	mostly	to	employee	benefits	and	tax	loss carryforwards.	These	deferred	tax	assets	have	an	expiration	period	ranging	from	2016	to	2022.	The	remaining	$56	charge	relates	to	a	valuation	allowance	established	on a	portion	of	the	deferred	tax	assets	recorded	in	Iceland.	These	deferred	tax	assets	have	an	expiration	period	ranging	from	2017	to	2023.	After	weighing	all	available positive	and	negative	evidence,	as	described	above,	management	determined	that	it	was	no	longer	more	likely	than	not	that	Alcoa	will	realize	the	tax	benefit	of	either	of these	deferred	tax	assets.	This	was	mainly	driven	by	a	decline	in	the	outlook	of	the	Primary	Metals	business,	combined	with	prior	year	cumulative	losses	and	a	short expiration	period.	The	need	for	this	valuation	allowance	will	be	assessed	on	a	continuous	basis	in	future	periods	and,	as	a	result,	a	portion	or	all	of	the	allowance	may	be reversed	based	on	changes	in	facts	and	circumstances.

Tax	benefits	related	to	uncertain	tax	positions	taken	or	expected	to	be	taken	on	a	tax	return	are	recorded	when	such	benefits	meet	a	more	likely	than	not	threshold. Otherwise,	these	tax	benefits	are	recorded	when	a	tax	position	has	been	effectively	settled,	which	means	that	the	statute	of	limitation	has	expired	or	the	appropriate taxing	authority	has	completed	their	examination	even	though	the	statute	of	limitations	remains	open.	Interest	and	penalties	related	to	uncertain	tax	positions	are recognized	as	part	of	the	provision	for	income	taxes	and	are	accrued	beginning	in	the	period	that	such	interest	and	penalties	would	be	applicable	under	relevant	tax	law until	such	time	that	the	related	tax	benefits	are	recognized.

# Related	Party	Transactions

Alcoa	buys	products	from	and	sells	products	to	various	related	companies,	consisting	of	entities	in	which	Alcoa	retains	a	50%	or	less	equity	interest,	at	negotiated	prices between	the	two	parties.	These	transactions	were	not	material	to	the	financial	position	or	results	of	operations	of	Alcoa	for	all	periods	presented.

# Recently	Adopted	Accounting	Guidance

See	the	Recently	Adopted	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K.

# Recently	Issued	Accounting	Guidance

See	the	Recently	Issued	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K.

# Item	7A. Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

See	the	Derivatives	section	of	Note	X	to	the	Consolidated	Financial	Statements	in	Part	II	Item	8	of	this	Form	10-K.

# Item	8. Financial	Statements	and	Supplementary	Data.

# Management's	Reports	to	Alcoa	Shareholders

# Management's	Report	on	Financial	Statements	and	Practices

The	accompanying	Consolidated	Financial	Statements	of	Alcoa	Inc.	and	its	subsidiaries	(the	"Company")	were	prepared	by	management,	which	is	responsible	for	their integrity	and	objectivity.	The	statements	were	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America	and	include	amounts that	are	based	on	management's	best	judgments	and	estimates.	The	other	financial	information	included	in	the	annual	report	is	consistent	with	that	in	the	financial statements.

Management	also	recognizes	its	responsibility	for	conducting	the	Company's	affairs	according	to	the	highest	standards	of	personal	and	corporate	conduct.	This responsibility	is	characterized	and	reflected	in	key	policy	statements	issued	from	time	to	time	regarding,	among	other	things,	conduct	of	its	business	activities	within	the laws	of	the	host	countries	in	which	the	Company	operates	and	potentially	conflicting	outside	business	interests	of	its	employees.	The	Company	maintains	a	systematic program	to	assess	compliance	with	these	policies.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

Management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	for	the	Company.	In	order	to	evaluate	the	effectiveness	of internal	control	over	financial	reporting,	as	required	by	Section	404	of	the	Sarbanes-Oxley	Act,	management	has	conducted	an	assessment,	including	testing,	using	the criteria	in	Internal	Control—Integrated	Framework	(2013),	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	The Company's	system	of	internal	control	over	financial	reporting	is	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	The	Company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	Company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America,	and	that	receipts	and	expenditures	of	the	Company	are	being	made	only	in accordance	with	authorizations	of	management	and	directors	of	the	Company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of unauthorized	acquisition,	use,	or	disposition	of	the	Company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

Based	on	the	assessment,	management	has	concluded	that	the	Company	maintained	effective	internal	control	over	financial	reporting	as	of	December	31,	2015,	based	on criteria	in	Internal	Control—Integrated	Framework	(2013)	issued	by	the	COSO.

The	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2015	has	been	audited	by	PricewaterhouseCoopers	LLP,	an independent	registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	herein.

RTI	International	Metals	has	been	excluded	from	management's	assessment	of	internal	control	over	financial	reporting	as	of	December	31,	2015,	as	it	was	acquired	by the	Company	in	a	purchase	business	combination	in	July	2015.	RTI	International	Metals	is	a	100%	owned	subsidiary	whose	total	assets	(excluding	goodwill	and intangible	assets)	and	total	sales	represent	5%	and	1%,	respectively,	of	the	related	consolidated	financial	statement	amounts	of	the	Company	as	of	and	for	the	year	ended December	31,	2015.

# /s/	Klaus	Kleinfeld

Klaus	Kleinfeld Chairman	and Chief	Executive	Officer /s/	William	F.	Oplinger William	F.	Oplinger Executive	Vice	President	and Chief	Financial	Officer

# Report	of	Independent	Registered	Public	Accounting	Firm

# To	the	Shareholders	and	Board	of	Directors	of	Alcoa	Inc.

In	our	opinion,	the	accompanying	consolidated	balance	sheet	and	the	related	statements	of	consolidated	operations,	consolidated	comprehensive	loss,	changes	in consolidated	equity,	and	consolidated	cash	flows	present	fairly,	in	all	material	respects,	the	financial	position	of	Alcoa	Inc.	and	its	subsidiaries	(the	"Company")	at December	31,	2015	and	2014,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2015	in	conformity with	accounting	principles	generally	accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal control	over	financial	reporting	as	of	December	31,	2015,	based	on	criteria	established	in	Internal	Control—Integrated	Framework	(2013)	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	The	Company's	management	is	responsible	for	these	financial	statements,	for	maintaining	effective internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	opinions	on	these	financial	statements	and	on	the	Company's internal	control	over	financial	reporting	based	on	our	integrated	audits.	We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are free	of	material	misstatement	and	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audits	of	the	financial statements	included	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements,	assessing	the	accounting	principles	used	and significant	estimates	made	by	management,	and	evaluating	the	overall	financial	statement	presentation.	Our	audit	of	internal	control	over	financial	reporting	included obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we	considered	necessary	in	the circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

As	disclosed	in	Recently	Adopted	Accounting	Guidance	in	Note	A	to	the	consolidated	financial	statements,	the	Company	changed	the	classification	of	current	deferred income	tax	assets	and	liabilities	in	the	consolidated	balance	sheet	at	December	31,	2015	and	2014.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America.	A	company's internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit preparation	of	financial	statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America,	and	that	receipts	and	expenditures	of	the company	are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(iii)	provide	reasonable	assurance	regarding prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

As	described	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting,	management	has	excluded	RTI	International	Metals	from	its assessment	of	internal	control	over	financial	reporting	as	of	December	31,	2015	because	it	was	acquired	by	the	Company	in	a	purchase	business	combination	in	July 2015.	We	have	also	excluded	RTI	International	Metals	from	our	audit	of	internal	control	over	financial	reporting.	RTI	International	Metals	is	a	100%	owned	subsidiary whose	total	assets	(excluding	goodwill	and	intangible	assets)	and	total	sales	represent	5%	and	1%,	respectively,	of	the	related	consolidated	financial	statement	amounts of	the	Company	as	of	and	for	the	year	ended	December	31,	2015.

# /s/	PricewaterhouseCoopers	LLP

PricewaterhouseCoopers	LLP Pittsburgh,	Pennsylvania February	19,	2016

# Alcoa	and	subsidiaries

# Statement	of	Consolidated	Operations

# (in	millions,	except	per-share	amounts)

| For	the	year	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(Q) | $22,534 | $23,906 | $23,032 |
| Cost\tof\tgoods\tsold\t(exclusive\tof\texpenses\tbelow) | \t 18,069 | \t 19,137 | \t 19,286 |
| Selling,\tgeneral\tadministrative,\tand\tother\texpenses | 979 | 995 | 1,008 |
| Research\tand\tdevelopment\texpenses | 238 | 218 | 192 |
| Provision\tfor\tdepreciation,\tdepletion,\tand\tamortization | 1,280 | 1,371 | 1,421 |
| Impairment\tof\tgoodwill\t(A\t&\tE) | 25 | - | 1,731 |
| Restructuring\tand\tother\tcharges\t(D) | 1,195 | 1,168 | 782 |
| Interest\texpense\t(V) | 498 | 473 | 453 |
| Other\texpenses\t(income),\tnet\t(O) | 2 | 47 | (25) |
| Total\tcosts\tand\texpenses | \t 22,286 | \t 23,409 | \t 24,848 |
| Income\t(loss)\tbefore\tincome\ttaxes | 248 | 497 | (1,816) |
| Provision\tfor\tincome\ttaxes\t(T) | 445 | 320 | 428 |
| Net\t(loss)\tincome | (197) | 177 | (2,244) |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 125 | (91) | 41 |
| Net\t(Loss)\tIncome\tAttributable\tto\tAlcoa | (322) | $268 | $(2,285) |
| Amounts\tAttributable\tto\tAlcoa\tCommon\tShareholders\t(S): |  |  |  |
| Net\t(loss)\tincome | (391) | $247 | $(2,287) |
| Earnings\tper\tshare: |  |  |  |
| Basic | $(0.31) | $0.21 | $(2.14) |
| Diluted | $(0.31) | $0.21 | $(2.14) |

The	accompanying	notes	are	an	integral	part	of	the	consolidated	financial	statements.

# Statement	of	Consolidated	Comprehensive	Loss

# (in	millions)

|  |  |  |  | Noncontrolling | Noncontrolling |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Alcoa |  |  | Interests |  |  | Total |  |
| For\tthe\tyear\tended\tDecember\t31, | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Net\t(loss)\tincome | $(322) | $268 | $(2,285) | $125 | $(91) | $41 | $(197) | $177 | $(2,244) |
| Other\tcomprehensive\tloss,\tnet\tof\ttax\t(B): |  |  |  |  |  |  |  |  |  |
| Change\tin\tunrecognized\tnet\tactuarial\tloss\tand\tprior\tservice |  |  |  |  |  |  |  |  |  |
| cost/benefit\trelated\tto\tpension\tand\tother\tpostretirement |  |  |  |  |  |  |  |  |  |
| benefits | (10) | (69) | 531 | 8 | (13) | 26 | (2) | (82) | 557 |
| Foreign\tcurrency\ttranslation\tadjustments | (1,566) | (1,025) | (968) | (429) | (241) | (367) | (1,995) | (1,266) | (1,335) |
| Net\tchange\tin\tunrealized\tgains\ton\tavailable-for-sale |  |  |  |  |  |  |  |  |  |
| securities | (5) | (2) | (1) | - | - | - | (5) | (2) | (1) |
| Net\tchange\tin\tunrecognized\tlosses\ton\tcash\tflow\thedges | 827 | 78 | 181 | (1) | - | 3 | 826 | 78 | 184 |
| Total\tOther\tcomprehensive\tloss,\tnet\tof\ttax | (754) | (1,018) | (257) | (422) | (254) | (338) | (1,176) | (1,272) | (595) |
| Comprehensive\tloss | $(1,076) | $(750) | $(2,542) | $(297) | $(345) | $(297) | $(1,373) | $(1,095) | $(2,839) |

# Consolidated	Balance	Sheet

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents\t(X) | $1,919 | $1,877 |
| Receivables\tfrom\tcustomers,\tless\tallowances\tof\t$13\tin\t2015\tand\t$14\tin\t2014\t(U) | 1,340 | 1,395 |
| Other\treceivables\t(U) | 522 | 733 |
| Inventories\t(G) | 3,442 | 3,082 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 730 | 761 |
| Total\tcurrent\tassets | 7,953 | 7,848 |
| Properties,\tplants,\tand\tequipment,\tnet\t(H) | \t 14,815 | \t 16,426 |
| Goodwill\t(A\t&\tE) | 5,401 | 5,247 |
| Investments\t(I) | 1,685 | 1,944 |
| Deferred\tincome\ttaxes\t(T) | 2,668 | 3,139 |
| Other\tnoncurrent\tassets\t(J) | 4,006 | 2,759 |
| Total\tAssets | $36,528 | $37,363 |
| Liabilities |  |  |
| Current\tliabilities: |  |  |
| Short-term\tborrowings\t(K\t&\tX) | $38 | $54 |
| Accounts\tpayable,\ttrade | 2,889 | 3,152 |
| Accrued\tcompensation\tand\tretirement\tcosts | 850 | 937 |
| Taxes,\tincluding\tincome\ttaxes | 239 | 265 |
| Other\tcurrent\tliabilities | 1,174 | 1,021 |
| Long-term\tdebt\tdue\twithin\tone\tyear\t(K\t&\tX) | 21 | 29 |
| Total\tcurrent\tliabilities | 5,211 | 5,458 |
| Long-term\tdebt,\tless\tamount\tdue\twithin\tone\tyear\t(K\t&\tX) | 9,044 | 8,769 |
| Accrued\tpension\tbenefits\t(W) | 3,298 | 3,291 |
| Accrued\tother\tpostretirement\tbenefits\t(W) | 2,106 | 2,155 |
| Other\tnoncurrent\tliabilities\tand\tdeferred\tcredits\t(L) | 2,738 | 2,896 |
| Total\tliabilities | \t 22,397 | \t 22,569 |
| Contingencies\tand\tcommitments\t(N) |  |  |
| Equity |  |  |
| Alcoa\tshareholders'\tequity: |  |  |
| Preferred\tstock\t(R) | 55 | 55 |
| Mandatory\tconvertible\tpreferred\tstock\t(R) | 3 | 3 |
| Common\tstock\t(R) | 1,391 | 1,304 |
| Additional\tcapital | \t 10,019 | 9,284 |
| Retained\tearnings | 8,834 | 9,379 |
| Treasury\tstock,\tat\tcost | (2,825) | (3,042) |
| Accumulated\tother\tcomprehensive\tloss\t(B) | (5,431) | (4,677) |
| Total\tAlcoa\tshareholders'\tequity | \t 12,046 | \t 12,306 |
| Noncontrolling\tinterests\t(M) | 2,085 | 2,488 |
| Total\tequity | \t 14,131 | \t 14,794 |
| Total\tLiabilities\tand\tEquity | $36,528 | $37,363 |

# Statement	of	Consolidated	Cash	Flows

| For	the	year	ended	December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tfrom\tOperations |  |  |  |
| Net\t(loss)\tincome | $(197) | $177 | $(2,244) |
| Adjustments\tto\treconcile\tnet\t(loss)\tincome\tto\tcash\tfrom\toperations: |  |  |  |
| Depreciation,\tdepletion,\tand\tamortization | 1,280 | 1,372 | 1,422 |
| Deferred\tincome\ttaxes\t(T) | 34 | (35) | 178 |
| Equity\tincome,\tnet\tof\tdividends | 158 | 104 | 77 |
| Impairment\tof\tgoodwill\t(A\t&\tE) | 25 | - | 1,731 |
| Restructuring\tand\tother\tcharges\t(D) | 1,195 | 1,168 | 782 |
| Net\tgain\tfrom\tinvesting\tactivities—asset\tsales\t(O) | (74) | (47) | (10) |
| Net\tperiodic\tpension\tbenefit\tcost\t(W) | 485 | 423 | 516 |
| Stock-based\tcompensation\t(R) | 92 | 87 | 71 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tpayment\tarrangements | (9) | (9) | - |
| Other | (32) | 66 | 4 |
| Changes\tin\tassets\tand\tliabilities,\texcluding\teffects\tof\tacquisitions,\tdivestitures,\tand\tforeign\tcurrency\ttranslation\tadjustments: |  |  |  |
| Decrease\t(increase)\tin\treceivables | 212 | (312) | (141) |
| (Increase)\tdecrease\tin\tinventories | (64) | (355) | 25 |
| Decrease\t(increase)\tin\tprepaid\texpenses\tand\tother\tcurrent\tassets | 46 | (25) | (9) |
| (Decrease)\tincrease\tin\taccounts\tpayable,\ttrade | (90) | 256 | 326 |
| (Decrease)\tin\taccrued\texpenses | (437) | (451) | (418) |
| Increase\t(decrease)\tin\ttaxes,\tincluding\tincome\ttaxes | 25 | 7 | (43) |
| Pension\tcontributions\t(W) | (470) | (501) | (462) |
| (Increase)\tin\tnoncurrent\tassets | (370) | (42) | (156) |
| (Decrease)\tincrease\tin\tnoncurrent\tliabilities | (227) | (209) | (71) |
| Cash\tprovided\tfrom\toperations | 1,582 | 1,674 | 1,578 |
| Financing\tActivities |  |  |  |
| Net\tchange\tin\tshort-term\tborrowings\t(original\tmaturities\tof\tthree\tmonths\tor\tless)\t(K) | (16) | (2) | 5 |
| Additions\tto\tdebt\t(original\tmaturities\tgreater\tthan\tthree\tmonths)\t(K) | 1,901 | 2,878 | 1,852 |
| Debt\tissuance\tcosts | (3) | (17) | (3) |
| Payments\ton\tdebt\t(original\tmaturities\tgreater\tthan\tthree\tmonths)\t(K) | (2,030) | (1,723) | (2,317) |
| Proceeds\tfrom\texercise\tof\temployee\tstock\toptions\t(R) | 25 | 150 | 13 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tpayment\tarrangements | 9 | 9 | - |
| Issuance\tof\tmandatory\tconvertible\tpreferred\tstock\t(R) | - | 1,211 | - |
| Dividends\tpaid\tto\tshareholders | (223) | (161) | (132) |
| Distributions\tto\tnoncontrolling\tinterests | (106) | (120) | (109) |
| Contributions\tfrom\tnoncontrolling\tinterests\t(M) | 2 | 53 | 12 |
| Acquisitions\tof\tnoncontrolling\tinterests\t(M\t&\tP) | - | (28) | - |
| Cash\t(used\tfor)\tprovided\tfrom\tfinancing\tactivities | (441) | 2,250 | (679) |
| Investing\tActivities |  |  |  |
| Capital\texpenditures | (1,180) | (1,219) | (1,193) |
| Acquisitions,\tnet\tof\tcash\tacquired\t(F\t&\tP) | 97 | (2,385) | - |
| Proceeds\tfrom\tthe\tsale\tof\tassets\tand\tbusinesses\t(F) | 112 | 253 | 13 |
| Additions\tto\tinvestments\t(I\t&\tN) | (134) | (195) | (293) |
| Sales\tof\tinvestments\t(I) | 40 | 57 | - |
| Net\tchange\tin\trestricted\tcash | (20) | (2) | 170 |
| Other | 25 | 31 | 13 |
| Cash\tused\tfor\tinvesting\tactivities | (1,060) | (3,460) | (1,290) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (39) | (24) | (33) |
| Net\tchange\tin\tcash\tand\tcash\tequivalents | 42 | 440 | (424) |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 1,877 | 1,437 | 1,861 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $1,919 | $1,877 | $1,437 |

# Statement	of	Changes	in	Consolidated	Equity

|  |  | Mandatory |  |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | convertible |  |  |  |  | Accumulated |  |  |
|  | Preferred\nstock | preferred\nstock | Common\nstock | Additional\ncapital | Retained\nearnings | Treasury\nstock | other\tcompre-\nhensive\tloss | Noncontrolling\ninterests | Total\nequity |
| Balance\tat\tDecember\t31,\t2012 | 55 | - | 1,178 | 7,560 | 11,689 | (3,881) | (3,402) | 3,324 | \t 16,523 |
| Net\t(loss)\tincome | - | - | - | - | (2,285) | - | - | 41 | (2,244) |
| Other\tcomprehensive\tloss\t(B) | - | - | - | - | - | - | (257) | (338) | (595) |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred\t@\t$3.75\tper\tshare | - | - | - | - | (2) | - | - | - | (2) |
| Common\t@\t$0.12\tper\tshare | - | - | - | - | (130) | - | - | - | (130) |
| Stock-based\tcompensation\t(R) | - | - | - | 71 | - | - | - | - | 71 |
| Common\tstock\tissued:\tcompensation\tplans\t(R) | - | - | - | (122) | - | 119 | - | - | (3) |
| Distributions | - | - | - | - | - | - | - | (109) | (109) |
| Contributions\t(M) | - | - | - | - | - | - | - | 12 | 12 |
| Other | - | - | - | - | - | - | - | (1) | (1) |
| Balance\tat\tDecember\t31,\t2013 | 55 | - | 1,178 | 7,509 | 9,272 | (3,762) | (3,659) | 2,929 | \t 13,522 |
| Net\t(loss)\tincome | - | - | - | - | 268 | - | - | (91) | 177 |
| Other\tcomprehensive\tloss\t(B) | - | - | - | - | - | - | (1,018) | (254) | (1,272) |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred–Class\tA\t@ |  |  |  |  |  |  |  |  |  |
| $3.75\tper\tshare | - | - | - | - | (2) | - | - | - | (2) |
| Preferred–Class\tB\t@ |  |  |  |  |  |  |  |  |  |
| $7.53993\tper\tshare | - | - | - | - | (19) | - | - | - | (19) |
| Common\t@\t$0.12\tper\tshare | - | - | - | - | (140) | - | - | - | (140) |
| Stock-based\tcompensation\t(R) | - | - | - | 87 | - | - | - | - | 87 |
| Common\tstock\tissued:\tcompensation\tplans\t(R) | - | - | - | (584) | - | 720 | - | - | 136 |
| Issuance\tof\tmandatory\tconvertible\tpreferred\tstock\t(R) | - | 3 | - | 1,210 | - | - | - | - | 1,213 |
| Issuance\tof\tcommon\tstock\t(F,\tK,\t&\tR) | - | - | 126 | 1,059 | - | - | - | - | 1,185 |
| Distributions | - | - | - | - | - | - | - | (120) | (120) |
| Contributions\t(M) | - | - | - | - | - | - | - | 53 | 53 |
| Purchase\tof\tequity\tfrom\tnoncontrolling\tinterest\t(F) | - | - | - | 3 | - | - | - | (31) | (28) |
| Other | - | - | - | - | - | - | - | 2 | 2 |
| Balance\tat\tDecember\t31,\t2014 | $55 | $3 | $1,304 | $9,284 | $9,379 | $(3,042) | $(4,677) | $2,488 | $14,794 |
| Net\t(loss)\tincome | - | - | - | - | (322) | - | - | 125 | (197) |
| Other\tcomprehensive\tloss\t(B) | - | - | - | - | - | - | (754) | (422) | (1,176) |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred–Class\tA\t@ |  |  |  |  |  |  |  |  |  |
| $3.75\tper\tshare | - | - | - | - | (2) | - | - | - | (2) |
| Preferred–Class\tB\t@ |  |  |  |  |  |  |  |  |  |
| $26.8750\tper\tshare | - | - | - | - | (67) | - | - | - | (67) |
| Common\t@\t$0.12\tper\tshare | - | - | - | - | (154) | - | - | - | (154) |
| Equity\toption\ton\tconvertible\tnotes\t(F) | - | - | - | 55 | - | - | - | - | 55 |
| Stock-based\tcompensation\t(R) | - | - | - | 92 | - | - | - | - | 92 |
| Common\tstock\tissued:\tcompensation\tplans\t(R) | - | - | - | (195) | - | 217 | - | - | 22 |
| Issuance\tof\tcommon\tstock\t(F,\tK,\t&\tR) | - | - | 87 | 783 | - | - | - | - | 870 |
| Distributions | - | - | - | - | - | - | - | (106) | (106) |
| Contributions\t(M) | - | - | - | - | - | - | - | 2 | 2 |
| Other | - | - | - | - | - | - | - | (2) | (2) |
| Balance\tat\tDecember\t31,\t2015 | $55 | $3 | $1,391 | $10,019 | $8,834 | $(2,825) | $(5,431) | $2,085 | $14,131 |

# Notes	to	the	Consolidated	Financial	Statements

# (dollars	in	millions,	except	per-share	amounts)

# A.	Summary	of	Significant	Accounting	Policies

Basis	of	Presentation.	The	Consolidated	Financial	Statements	of	Alcoa	Inc.	and	subsidiaries	("Alcoa"	or	the	"Company")	are	prepared	in	conformity	with	accounting principles	generally	accepted	in	the	United	States	of	America	(GAAP)	and	require	management	to	make	certain	judgments,	estimates,	and	assumptions.	These	may affect	the	reported	amounts	of	assets	and	liabilities	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements.	They	also	may	affect	the reported	amounts	of	revenues	and	expenses	during	the	reporting	period.	Actual	results	could	differ	from	those	estimates	upon	subsequent	resolution	of	identified	matters. Certain	prior	year	amounts	have	been	reclassified	to	conform	to	the	current	year	presentation.

Principles	of	Consolidation.	The	Consolidated	Financial	Statements	include	the	accounts	of	Alcoa	and	companies	in	which	Alcoa	has	a	controlling	interest. Intercompany	transactions	have	been	eliminated.	The	equity	method	of	accounting	is	used	for	investments	in	affiliates	and	other	joint	ventures	over	which	Alcoa	has significant	influence	but	does	not	have	effective	control.	Investments	in	affiliates	in	which	Alcoa	cannot	exercise	significant	influence	are	accounted	for	on	the	cost method.

Management	also	evaluates	whether	an	Alcoa	entity	or	interest	is	a	variable	interest	entity	and	whether	Alcoa	is	the	primary	beneficiary.	Consolidation	is	required	if	both of	these	criteria	are	met.	Alcoa	does	not	have	any	variable	interest	entities	requiring	consolidation.

Related	Party	Transactions.	Alcoa	buys	products	from	and	sells	products	to	various	related	companies,	consisting	of	entities	in	which	Alcoa	retains	a	50%	or	less equity	interest,	at	negotiated	prices	between	the	two	parties.	These	transactions	were	not	material	to	the	financial	position	or	results	of	operations	of	Alcoa	for	all	periods presented.

Cash	Equivalents.	Cash	equivalents	are	highly	liquid	investments	purchased	with	an	original	maturity	of	three	months	or	less.

Inventory	Valuation.	Inventories	are	carried	at	the	lower	of	cost	or	market,	with	cost	for	approximately	half	of	U.S.	and	Canadian	inventories	determined	under	the	last- in,	first-out	(LIFO)	method.	The	cost	of	other	inventories	is	principally	determined	under	the	average-cost	method.

Properties,	Plants,	and	Equipment.	Properties,	plants,	and	equipment	are	recorded	at	cost.	Depreciation	is	recorded	principally	on	the	straight-line	method	at	rates based	on	the	estimated	useful	lives	of	the	assets.	For	greenfield	assets,	which	refer	to	the	construction	of	new	assets	on	undeveloped	land,	the	units	of	production	method is	used	to	record	depreciation.	These	assets	require	a	significant	period	(generally	greater	than	one-year)	to	ramp-up	to	full	production	capacity.	As	a	result,	the	units	of production	method	is	deemed	a	more	systematic	and	rational	method	for	recognizing	depreciation	on	these	assets.	Depreciation	is	recorded	on	temporarily	idled	facilities until	such	time	management	approves	a	permanent	shutdown.	The	following	table	details	the	weighted-average	useful	lives	of	structures	and	machinery	and	equipment by	reporting	segment	(numbers	in	years):

| Segment | Structures | Machinery	and	equipment |
| :--- | :--- | :--- |
| Alumina: |  |  |
| Alumina\trefining | 30 | 27 |
| Bauxite\tmining | 34 | 17 |
| Primary\tMetals: |  |  |
| Aluminum\tsmelting | 36 | 22 |
| Power\tgeneration | 31 | 22 |
| Global\tRolled\tProducts | 31 | 21 |
| Engineered\tProducts\tand\tSolutions | 29 | 18 |
| Transportation\tand\tConstruction\tSolutions | 28 | 19 |

Gains	or	losses	from	the	sale	of	assets	are	generally	recorded	in	other	income	or	expenses	(see	policy	below	for	assets	classified	as	held	for	sale	and	discontinued operations).	Repairs	and	maintenance	are	charged	to	expense	as	incurred.	Interest	related	to	the	construction	of	qualifying	assets	is	capitalized	as	part	of	the	construction costs.

Properties,	plants,	and	equipment	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	such	assets	(asset group)	may	not	be	recoverable.	Recoverability	of	assets	is	determined	by	comparing	the	estimated	undiscounted	net	cash	flows	of	the	operations	related	to	the	assets (asset	group)	to	their	carrying	amount.	An	impairment	loss	would	be	recognized	when	the	carrying	amount	of	the	assets	(asset	group)	exceeds	the	estimated undiscounted	net	cash	flows.	The	amount	of	the	impairment	loss	to	be	recorded	is	calculated	as	the	excess	of	the	carrying	value	of	the	assets	(asset	group)	over	their	fair value,	with	fair	value	determined	using	the	best	information	available,	which	generally	is	a	discounted	cash	flow	(DCF)	model.	The	determination	of	what	constitutes	an asset	group,	the	associated	estimated	undiscounted	net	cash	flows,	and	the	estimated	useful	lives	of	assets	also	require	significant	judgments.

Mineral	Rights.	Alcoa	recognizes	mineral	rights	upon	specific	acquisitions	of	land	that	include	such	underlying	rights,	primarily	in	Jamaica	(in	December	2014,	Alcoa divested	its	ownership	stake	in	the	joint	venture	in	Jamaica—see	Note	F).	This	land	is	purchased	for	the	sole	purpose	of	mining	bauxite.	The	underlying	bauxite	reserves are	known	at	the	time	of	acquisition	based	on	associated	drilling	and	analysis	and	are	considered	to	be	proven	reserves.	The	acquisition	cost	of	the	land	and	mineral rights	are	amortized	as	the	bauxite	is	produced	based	on	the	level	of	minable	tons	determined	at	the	time	of	purchase.	Mineral	rights	are	included	in	Properties,	plants, and	equipment	on	the	accompanying	Consolidated	Balance	Sheet.

Deferred	Mining	Costs.	Alcoa	recognizes	deferred	mining	costs	during	the	development	stage	of	a	mine	life	cycle.	Such	costs	include	the	construction	of	access	and haul	roads,	detailed	drilling	and	geological	analysis	to	further	define	the	grade	and	quality	of	the	known	bauxite,	and	overburden	removal	costs.	These	costs	relate	to sections	of	the	related	mines	where	Alcoa	is	either	currently	extracting	bauxite	or	is	preparing	for	production	in	the	near	term.	These	sections	are	outlined	and	planned incrementally	and	generally	are	mined	over	periods	ranging	from	one	to	five	years,	depending	on	mine	specifics.	The	amount	of	geological	drilling	and	testing	necessary to	determine	the	economic	viability	of	the	bauxite	deposit	being	mined	is	such	that	the	reserves	are	considered	to	be	proven,	and	the	mining	costs	are	amortized	based	on this	level	of	reserves.	Deferred	mining	costs	are	included	in	Other	noncurrent	assets	on	the	accompanying	Consolidated	Balance	Sheet.

Goodwill	and	Other	Intangible	Assets.	Goodwill	is	not	amortized;	instead,	it	is	reviewed	for	impairment	annually	(in	the	fourth	quarter)	or	more	frequently	if indicators	of	impairment	exist	or	if	a	decision	is	made	to	sell	or	exit	a	business.	A	significant	amount	of	judgment	is	involved	in	determining	if	an	indicator	of impairment	has	occurred.	Such	indicators	may	include	deterioration	in	general	economic	conditions,	negative	developments	in	equity	and	credit	markets,	adverse changes	in	the	markets	in	which	an	entity	operates,	increases	in	input	costs	that	have	a	negative	effect	on	earnings	and	cash	flows,	or	a	trend	of	negative	or	declining	cash flows	over	multiple	periods,	among	others.	The	fair	value	that	could	be	realized	in	an	actual	transaction	may	differ	from	that	used	to	evaluate	the	impairment	of goodwill.

In	November	2014,	Alcoa	acquired	Firth	Rixson	(see	Note	F),	and,	as	a	result	recognized	$1,801	in	goodwill.	This	amount	was	allocated	between	the	AFSR	and	Alcoa Forgings	and	Extrusion	reporting	units,	which	is	part	of	the	Engineered	Products	and	Solutions	segment.	In	March	and	July	2015,	Alcoa	acquired	TITAL	and	RTI, respectively,

(see	Note	F)	and	recognized	$118	and	$240,	respectively,	in	goodwill.	The	goodwill	amount	related	to	TITAL	was	allocated	to	the	APP	reporting	unit	and	the	amount related	to	RTI	was	allocated	to	Alcoa	Titanium	and	Engineered	Products,	a	new	Alcoa	reporting	unit	that	consists	solely	of	the	acquired	RTI	business	and	is	part	of	the Engineered	Products	and	Solutions	segment.

Under	the	qualitative	assessment,	various	events	and	circumstances	(or	factors)	that	would	affect	the	estimated	fair	value	of	a	reporting	unit	are	identified	(similar	to impairment	indicators	above).	These	factors	are	then	classified	by	the	type	of	impact	they	would	have	on	the	estimated	fair	value	using	positive,	neutral,	and	adverse categories	based	on	current	business	conditions.	Additionally,	an	assessment	of	the	level	of	impact	that	a	particular	factor	would	have	on	the	estimated	fair	value	is determined	using	high,	medium,	and	low	weighting.	Furthermore,	management	considers	the	results	of	the	most	recent	two-step	quantitative	impairment	test	completed for	a	reporting	unit	and	compares	the	weighted	average	cost	of	capital	(WACC)	between	the	current	and	prior	years	for	each	reporting	unit.

Under	the	two-step	quantitative	impairment	test,	the	evaluation	of	impairment	involves	comparing	the	current	fair	value	of	each	reporting	unit	to	its	carrying	value, including	goodwill.	Alcoa	uses	a	DCF	model	to	estimate	the	current	fair	value	of	its	reporting	units	when	testing	for	impairment,	as	management	believes	forecasted cash	flows	are	the	best	indicator	of	such	fair	value.	A	number	of	significant	assumptions	and	estimates	are	involved	in	the	application	of	the	DCF	model	to	forecast operating	cash	flows,	including	markets	and	market	share,	sales	volumes	and	prices,	production	costs,	tax	rates,	capital	spending,	discount	rate,	and	working	capital changes.	Most	of	these	assumptions	vary	significantly	among	the	reporting	units.	Cash	flow	forecasts	are	generally	based	on	approved	business	unit	operating	plans	for the	early	years	and	historical	relationships	in	later	years.	The	betas	used	in	calculating	the	individual	reporting	units'	WACC	rate	are	estimated	for	each	business	with	the assistance	of	valuation	experts.

Intangible	assets	with	indefinite	useful	lives	are	not	amortized	while	intangible	assets	with	finite	useful	lives	are	amortized	generally	on	a	straight-line	basis	over	the periods	benefited.	The	following	table	details	the	weighted-average	useful	lives	of	software	and	other	intangible	assets	by	reporting	segment	(numbers	in	years):

| Segment | Software | Other	intangible	assets |
| :--- | :--- | :--- |
| Alumina | 7 | 15 |
| Primary\tMetals | 6 | 37 |
| Global\tRolled\tProducts | 9 | 14 |
| Engineered\tProducts\tand\tSolutions | 7 | 32 |
| Transportation\tand\tConstruction\tSolutions | 8 | 23 |

Equity	Investments.	Alcoa	invests	in	a	number	of	privately-held	companies,	primarily	through	joint	ventures	and	consortia,	which	are	accounted	for	using	the	equity method.	The	equity	method	is	applied	in	situations	where	Alcoa	has	the	ability	to	exercise	significant	influence,	but	not	control,	over	the	investee.	Management	reviews equity	investments	for	impairment	whenever	certain	indicators	are	present	suggesting	that	the	carrying	value	of	an	investment	is	not	recoverable.	This	analysis	requires	a significant	amount	of	judgment	from	management	to	identify	events	or	circumstances	indicating	that	an	equity	investment	is	impaired.	The	following	items	are	examples of	impairment	indicators:	significant,	sustained	declines	in	an	investee's	revenue,	earnings,	and	cash

flow	trends;	adverse	market	conditions	of	the	investee's	industry	or	geographic	area;	the	investee's	ability	to	continue	operations	measured	by	several	items,	including liquidity;	and	other	factors.	Once	an	impairment	indicator	is	identified,	management	uses	considerable	judgment	to	determine	if	the	impairment	is	other	than	temporary, in	which	case	the	equity	investment	is	written	down	to	its	estimated	fair	value.	An	impairment	that	is	other	than	temporary	could	significantly	and	adversely	impact reported	results	of	operations.

Revenue	Recognition.	Alcoa	recognizes	revenue	when	title,	ownership,	and	risk	of	loss	pass	to	the	customer,	all	of	which	occurs	upon	shipment	or	delivery	of	the product	and	is	based	on	the	applicable	shipping	terms.	The	shipping	terms	vary	across	all	businesses	and	depend	on	the	product,	the	country	of	origin,	and	the	type	of transportation	(truck,	train,	or	vessel).

Alcoa	periodically	enters	into	long-term	supply	contracts	with	alumina	and	aluminum	customers	and	receives	advance	payments	for	product	to	be	delivered	in	future periods.	These	advance	payments	are	recorded	as	deferred	revenue,	and	revenue	is	recognized	as	shipments	are	made	and	title,	ownership,	and	risk	of	loss	pass	to	the customer	during	the	term	of	the	contracts.	Deferred	revenue	is	included	in	Other	current	liabilities	and	Other	noncurrent	liabilities	and	deferred	credits	on	the accompanying	Consolidated	Balance	Sheet.

Certain	conditional	asset	retirement	obligations	(CAROs)	related	to	alumina	refineries,	aluminum	smelters,	and	fabrication	facilities	have	not	been	recorded	in	the Consolidated	Financial	Statements	due	to	uncertainties	surrounding	the	ultimate	settlement	date.	A	CARO	is	a	legal	obligation	to	perform	an	asset	retirement	activity	in which	the	timing

and/or	method	of	settlement	are	conditional	on	a	future	event	that	may	or	may	not	be	within	Alcoa's	control.	Such	uncertainties	exist	as	a	result	of	the	perpetual	nature of	the	structures,	maintenance	and	upgrade	programs,	and	other	factors.	At	the	date	a	reasonable	estimate	of	the	ultimate	settlement	date	can	be	made,	Alcoa	would record	an	ARO	for	the	removal,	treatment,	transportation,	storage,	and/or	disposal	of	various	regulated	assets	and	hazardous	materials	such	as	asbestos,	underground and	aboveground	storage	tanks,	polychlorinated	biphenyls	(PCBs),	various	process	residuals,	solid	wastes,	electronic	equipment	waste,	and	various	other	materials. Such	amounts	may	be	material	to	the	Consolidated	Financial	Statements	in	the	period	in	which	they	are	recorded.

Valuation	allowances	are	recorded	to	reduce	deferred	tax	assets	when	it	is	more	likely	than	not	that	a	tax	benefit	will	not	be	realized.	In	evaluating	the	need	for	a valuation	allowance,	management	considers	all	potential	sources	of	taxable	income,	including	income	available	in	carryback	periods,	future	reversals	of	taxable temporary	differences,	projections	of	taxable	income,	and	income	from	tax	planning	strategies,	as	well	as	all	available	positive	and	negative	evidence.	Positive	evidence includes	factors	such	as	a	history	of	profitable	operations,	projections	of	future	profitability	within	the	carryforward	period,	including	from	tax	planning	strategies,	and Alcoa's	experience	with	similar	operations.	Existing	favorable	contracts	and	the	ability	to	sell	products	into	established	markets	are	additional	positive	evidence. Negative	evidence	includes	items	such	as	cumulative	losses,	projections	of	future	losses,	or	carryforward	periods	that	are	not	long	enough	to	allow	for	the	utilization	of	a deferred	tax	asset	based	on	existing	projections	of	income.	Deferred	tax	assets	for	which	no	valuation	allowance	is	recorded	may	not	be	realized	upon	changes	in	facts and	circumstances,	resulting	in	a	future	charge	to	establish	a	valuation	allowance.	Existing	valuation	allowances	are	re-examined	under	the	same	standards	of	positive and	negative	evidence.	If	it	is	determined	that	it	is	more	likely	than	not	that	a	deferred	tax	asset	will	be	realized,	the	appropriate	amount	of	the	valuation	allowance,	if any,	is	released.	Deferred	tax	assets	and	liabilities	are	also	re-measured	to	reflect	changes	in	underlying	tax	rates	due	to	law	changes	and	the	granting	and	lapse	of	tax holidays.

Derivatives	and	Hedging.	Derivatives	are	held	for	purposes	other	than	trading	and	are	part	of	a	formally	documented	risk	management	program.	For	derivatives designated	as	fair	value	hedges,	Alcoa	measures	hedge	effectiveness	by	formally	assessing,	at	inception	and	at	least	quarterly,	the	historical	high	correlation	of	changes in	the	fair	value	of	the

hedged	item	and	the	derivative	hedging	instrument.	For	derivatives	designated	as	cash	flow	hedges,	Alcoa	measures	hedge	effectiveness	by	formally	assessing,	at inception	and	at	least	quarterly,	the	probable	high	correlation	of	the	expected	future	cash	flows	of	the	hedged	item	and	the	derivative	hedging	instrument.	The	ineffective portions	of	both	types	of	hedges	are	recorded	in	sales	or	other	income	or	expense	in	the	current	period.	If	the	hedging	relationship	ceases	to	be	highly	effective	or	it becomes	probable	that	an	expected	transaction	will	no	longer	occur,	future	gains	or	losses	on	the	derivative	instrument	are	recorded	in	other	income	or	expense.

Alcoa	accounts	for	interest	rate	swaps	related	to	its	existing	long-term	debt	and	hedges	of	firm	customer	commitments	for	aluminum	as	fair	value	hedges.	As	a	result,	the fair	values	of	the	derivatives	and	changes	in	the	fair	values	of	the	underlying	hedged	items	are	reported	in	other	current	and	noncurrent	assets	and	liabilities	in	the Consolidated	Balance	Sheet.	Changes	in	the	fair	values	of	these	derivatives	and	underlying	hedged	items	generally	offset	and	are	recorded	each	period	in	sales	or	interest expense,	consistent	with	the	underlying	hedged	item.

Foreign	Currency.	The	local	currency	is	the	functional	currency	for	Alcoa's	significant	operations	outside	the	United	States,	except	for	certain	operations	in	Canada, Russia,	and	Iceland,	where	the	U.S.	dollar	is	used	as	the	functional	currency.	The	determination	of	the	functional	currency	for	Alcoa's	operations	is	made	based	on	the appropriate	economic	and	management	indicators.

Acquisitions.	Alcoa's	business	acquisitions	are	accounted	for	using	the	acquisition	method.	The	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities	assumed based	on	their	estimated	fair	values.	Any	excess	purchase	price	over	the	fair	value	of	the	net	assets	acquired	is	recorded	as	goodwill.	For	all	acquisitions,	operating results	are	included	in	the	Statement	of	Consolidated	Operations	from	the	date	of	the	acquisition.

Discontinued	Operations	and	Assets	Held	For	Sale.	For	those	businesses	where	management	has	committed	to	a	plan	to	divest,	each	business	is	valued	at	the	lower	of its	carrying	amount	or	estimated	fair	value	less	cost	to	sell.	If	the	carrying	amount	of	the	business	exceeds	its	estimated	fair	value,	an	impairment	loss	is	recognized.	Fair value	is	estimated	using	accepted	valuation	techniques	such	as	a	DCF	model,	valuations	performed	by	third	parties,	earnings	multiples,	or	indicative	bids,	when available.	A	number	of	significant	estimates	and	assumptions	are	involved	in	the	application	of	these	techniques,	including	the	forecasting	of	markets	and	market	share, sales	volumes	and	prices,	costs	and	expenses,	and	multiple	other	factors.	Management	considers	historical	experience	and	all	available	information	at	the	time	the estimates	are	made;	however,	the	fair	value	that	is	ultimately	realized	upon	the	divestiture	of	a	business	may	differ	from	the	estimated	fair	value	reflected	in	the Consolidated	Financial	Statements.	Depreciation,	depletion,	and	amortization	expense	is	not	recorded	on	assets	of	a	business	to	be	divested	once	they	are	classified	as held	for	sale.	Businesses	to	be	divested	are	classified	in	the	Consolidated	Financial	Statements	as	either	discontinued	operations	or	held	for	sale.

For	businesses	classified	as	discontinued	operations,	the	balance	sheet	amounts	and	results	of	operations	are	reclassified	from	their	historical	presentation	to	assets	and liabilities	of	operations	held	for	sale	on	the	Consolidated	Balance	Sheet	and	to	discontinued	operations	on	the	Statement	of	Consolidated	Operations,	respectively,	for	all periods	presented.	The	gains	or	losses	associated	with	these	divested	businesses	are	recorded	in	discontinued	operations	on	the

Statement	of	Consolidated	Operations.	The	Statement	of	Consolidated	Cash	Flows	is	also	reclassified	for	assets	and	liabilities	of	operations	held	for	sale	and discontinued	operations	for	all	periods	presented.	Additionally,	segment	information	does	not	include	the	assets	or	operating	results	of	businesses	classified	as discontinued	operations	for	all	periods	presented.	These	businesses	are	expected	to	be	disposed	of	within	one	year.

For	businesses	classified	as	held	for	sale	that	do	not	qualify	for	discontinued	operations	treatment,	the	balance	sheet	and	cash	flow	amounts	are	reclassified	from	their historical	presentation	to	assets	and	liabilities	of	operations	held	for	sale	for	all	periods	presented.	The	results	of	operations	continue	to	be	reported	in	continuing operations.	The	gains	or	losses	associated	with	these	divested	businesses	are	recorded	in	restructuring	and	other	charges	on	the	Statement	of	Consolidated	Operations. The	segment	information	includes	the	assets	and	operating	results	of	businesses	classified	as	held	for	sale	for	all	periods	presented.	Management	expects	that	Alcoa	will have	continuing	involvement	with	these	businesses	following	their	divestiture,	primarily	in	the	form	of	equity	participation,	or	ongoing	aluminum	or	other	significant supply	contracts.

Recently	Adopted	Accounting	Guidance.	On	January	1,	2015,	Alcoa	adopted	changes	issued	by	the	Financial	Accounting	Standards	Board	(FASB)	to	reporting discontinued	operations	and	disclosures	of	disposals	of	components	of	an	entity.	These	changes	require	a	disposal	of	a	component	to	meet	a	higher	threshold	in	order	to be	reported	as	a	discontinued	operation	in	an	entity's	financial	statements.	The	threshold	is	defined	as	a	strategic	shift	that	has,	or	will	have,	a	major	effect	on	an	entity's operations	and	financial	results	such	as	a	disposal	of	a	major	geographical	area	or	a	major	line	of	business.	Additionally,	the	following	two	criteria	have	been	removed from	consideration	of	whether	a	component	meets	the	requirements	for	discontinued	operations	presentation:	(i)	the	operations	and	cash	flows	of	a	disposal	component have	been	or	will	be	eliminated	from	the	ongoing	operations	of	an	entity	as	a	result	of	the	disposal	transaction,	and	(ii)	an	entity	will	not	have	any	significant	continuing involvement	in	the	operations	of	the	disposal	component	after	the	disposal	transaction.	Furthermore,	equity	method	investments	now	may	qualify	for	discontinued operations	presentation.	These	changes	also	require	expanded	disclosures	for	all	disposals	of	components	of	an	entity,	whether	or	not	the	threshold	for	reporting	as	a discontinued	operation	is	met,	related	to	profit	or	loss	information	and/or	asset	and	liability	information	of	the	component.	The	adoption	of	these	changes	had	no	impact on	the	Consolidated	Financial	Statements.	This	guidance	will	need	to	be	considered	in	the	event	Alcoa	initiates	a	disposal	of	a	component.

In	September	2015,	the	FASB	issued	changes	to	the	accounting	for	measurement-period	adjustments	related	to	business	combinations.	Currently,	an	acquiring	entity	is required	to	retrospectively	adjust	the	balance	sheet	amounts	of	the	acquiree	recognized	at	the	acquisition	date	with	a	corresponding	adjustment	to	goodwill	during	the measurement	period,	as	well	as	revise	comparative	information	for	prior	periods	presented	within	financial	statements	as	needed,	including	revising	income	effects,	such as	depreciation	and	amortization,	as	a	result	of	changes	made	to	the	balance	sheet	amounts	of	the	acquiree.	Such	adjustments	are	required	when	new	information	is obtained	about	facts	and	circumstances	that	existed	as	of	the	acquisition	date	that,	if	known,	would	have	affected	the	measurement	of	the	amounts	initially	recognized	or would	have	resulted	in	the	recognition	of	additional	assets	or	liabilities.	The	measurement	period	is	the	period	after	the	acquisition	date	during	which	the	acquirer	may adjust	the	balance	sheet	amounts	recognized	for	a	business	combination	(generally	up	to	one	year	from	the	date	of	acquisition).	The	changes	eliminate	the	requirement	to make	such	retrospective	adjustments,	and,	instead	require	the	acquiring	entity	to	record	these	adjustments	in	the	reporting	period	they	are	determined.	Additionally,	the changes	require	the	acquiring	entity	to	present	separately	on	the	face	of	the	income	statement	or	disclose	in	the	notes	to	the	financial	statements	the	portion	of	the	amount recorded	in	current-period	income	by	line	item	that	would	have	been	recorded	in	previous	reporting	periods	if	the	adjustment	to	the	balance	sheet	amounts	had	been recognized	as	of	the	acquisition	date.	These	changes	were	to	become	effective	for	Alcoa	on	January	1,	2016;	however,	early	adoption	is	permitted.	As	such,	Alcoa elected	to	early	adopt	these	changes	upon	issuance	and	applied	the	new	requirements	to	three	acquisitions	(see	Note	F).	In	2015,	Alcoa	recognized	adjustments	to	the original	balance	sheet	amounts	of	these	three	acquisitions,	resulting	in	the	recognition	of	amounts	in	current	period	operations	that	would	have	been	recorded	in	previous reporting	periods	had	the	adjustments	to	the	balance	sheet	amounts	been	recognized	as	of	the	respective	acquisition	date.	Such	amounts	recorded	in	current	period operations	were	not	material	to	the	Statement	of	Consolidated	Operations	for	the	year	ended	December	31,	2015.

In	November	2015,	the	FASB	issued	changes	to	the	balance	sheet	classification	of	deferred	taxes,	which	Alcoa	immediately	adopted.	These	changes	simplify	the presentation	of	deferred	income	taxes	by	requiring	all	deferred

income	tax	assets	and	liabilities	to	be	classified	as	noncurrent	in	a	classified	balance	sheet.	The	current	requirement	that	deferred	tax	assets	and	liabilities	of	a	tax-paying component	of	an	entity	be	offset	and	presented	as	a	single	amount	is	not	affected	by	these	changes.	As	such,	all	deferred	income	tax	assets	and	liabilities	were	classified in	the	Deferred	income	taxes	and	Other	noncurrent	liabilities	and	deferred	credits,	respectively,	line	items	on	the	December	31,	2015	Consolidated	Balance	Sheet. Additionally,	management	elected	to	update	the	December	31,	2014	Consolidated	Balance	Sheet	for	these	changes	for	comparative	purposes.	As	a	result	$421	of	current deferred	income	tax	assets	(previously	reported	in	Prepaid	expenses	and	other	current	assets)	and	$83	of	current	deferred	income	tax	liabilities	(previously	reported	in Taxes,	including	income	taxes)	were	reclassified	to	the	aforementioned	noncurrent	asset	($385)	and	liability	($47)	line	items	on	the	December	31,	2014	Consolidated Balance	Sheet.

Recently	Issued	Accounting	Guidance.	In	January	2015,	the	FASB	issued	changes	to	the	presentation	of	extraordinary	items.	Such	items	are	defined	as	transactions	or events	that	are	both	unusual	in	nature	and	infrequent	in	occurrence,	and,	currently,	are	required	to	be	presented	separately	in	an	entity's	income	statement,	net	of	income tax,	after	income	from	continuing	operations.	The	changes	eliminate	the	concept	of	an	extraordinary	item	and,	therefore,	the	presentation	of	such	items	will	no	longer	be required.	Notwithstanding	this	change,	an	entity	will	still	be	required	to	present	and	disclose	a	transaction	or	event	that	is	both	unusual	in	nature	and	infrequent	in occurrence	in	the	notes	to	the	financial	statements.	These	changes	become	effective	for	Alcoa	on	January	1,	2016.	Management	has	determined	that	the	adoption	of these	changes	will	not	have	an	impact	on	the	Consolidated	Financial	Statements.

In	February	2015,	the	FASB	issued	changes	to	the	analysis	that	an	entity	must	perform	to	determine	whether	it	should	consolidate	certain	types	of	legal	entities.	These changes	(i)	modify	the	evaluation	of	whether	limited	partnerships	and	similar	legal	entities	are	variable	interest	entities	or	voting	interest	entities,	(ii)	eliminate	the presumption	that	a	general	partner	should	consolidate	a	limited	partnership,	(iii)	affect	the	consolidation	analysis	of	reporting	entities	that	are	involved	with	variable interest	entities,	particularly	those	that	have	fee	arrangements	and	related	party	relationships,	and	(iv)	provide	a	scope	exception	from	consolidation	guidance	for reporting	entities	with	interests	in	legal	entities	that	are	required	to	comply	with	or	operate	in	accordance	with	requirements	that	are	similar	to	those	in	Rule	2a-7	of	the Investment	Company	Act	of	1940	for	registered	money	market	funds.	These	changes	become	effective	for	Alcoa	on	January	1,	2016.	Management	is	currently evaluating	the	potential	impact	of	these	changes	on	the	Consolidated	Financial	Statements.

In	April	2015,	the	FASB	issued	changes	to	the	presentation	of	debt	issuance	costs.	Currently,	such	costs	are	required	to	be	presented	as	a	deferred	asset	in	an	entity's balance	sheet	and	amortized	into	interest	expense	over	the	term	of	the	related	debt	instrument.	The	changes	require	that	debt	issuance	costs	be	presented	in	an	entity's balance	sheet	as	a	direct	deduction	from	the	carrying	value	of	the	related	debt	liability.	The	amortization	of	debt	issuance	costs	remains	unchanged.	These	changes become	effective	for	Alcoa	on	January	1,	2016.	In	August	2015,	the	FASB	issued	an	update	to	these	changes	based	on	an	announcement	of	the	staff	of	the	U.S. Securities	and	Exchange	Commission.	This	change	provides	an	exception	to	the	April	2015	FASB	changes	allowing	debt	issuance	costs	related	to	line-of-credit arrangements	to	continue	to	be	presented	as	an	asset	regardless	of	whether	there	are	any	outstanding	borrowings	under	such	arrangement.	This	additional	change	also becomes	effective	for	Alcoa	on	January	1,	2016.	Management	has	determined	that	the	adoption	of	all	of	these	changes	will	result	in	a	decrease	of	$58	to	both	Other noncurrent	assets	and	Long-term	debt,	less	amount	due	within	one	year	on	the	accompanying	Consolidated	Balance	Sheet.

In	July	2015,	the	FASB	issued	changes	to	the	subsequent	measurement	of	inventory.	Currently,	an	entity	is	required	to	measure	its	inventory	at	the	lower	of	cost	or market,	whereby	market	can	be	replacement	cost,	net	realizable	value,	or	net	realizable	value	less	an	approximately	normal	profit	margin.	The	changes	require	that inventory	be	measured	at	the	lower	of	cost	and	net	realizable	value,	thereby	eliminating	the	use	of	the	other	two	market	methodologies.	Net	realizable	value	is	defined	as the	estimated	selling	prices	in	the	ordinary	course	of	business	less	reasonably	predictable	costs	of	completion,	disposal,	and	transportation.	These	changes	do	not	apply	to inventories	measured	using	LIFO	(last-in,	first-out)	or	the	retail	inventory	method.	Currently,	Alcoa	applies	the	net	realizable	value	market	option	to	measure	non-LIFO inventories	at	the	lower	of	cost	or	market.	These	changes	become	effective	for	Alcoa	on	January	1,	2017.	Management	has	determined	that	the	adoption	of	these changes	will	not	have	an	impact	on	the	Consolidated	Financial	Statements.

In	May	2014,	the	FASB	issued	changes	to	the	recognition	of	revenue	from	contracts	with	customers.	These	changes	created	a	comprehensive	framework	for	all	entities in	all	industries	to	apply	in	the	determination	of	when	to	recognize	revenue,	and,	therefore,	supersede	virtually	all	existing	revenue	recognition	requirements	and guidance.	This	framework	is	expected	to	result	in	less	complex	guidance	in	application	while	providing	a	consistent	and	comparable	methodology	for	revenue recognition.	The	core	principle	of	the	guidance	is	that	an	entity	should	recognize	revenue	to	depict	the	transfer	of	promised	goods	or	services	to	customers	in	an	amount that	reflects	the	consideration	to	which	the	entity	expects	to	be	entitled	in	exchange	for	those	goods	or	services.	To	achieve	this	principle,	an	entity	should	apply	the following	steps:	(i)	identify	the	contract(s)	with	a	customer,	(ii)	identify	the	performance	obligations	in	the	contract(s),	(iii)	determine	the	transaction	price,	(iv)	allocate the	transaction	price	to	the	performance	obligations	in	the	contract(s),	and	(v)	recognize	revenue	when,	or	as,	the	entity	satisfies	a	performance	obligation.	In	August 2015,	the	FASB	deferred	the	effective	date	by	one	year,	making	these	changes	effective	for	Alcoa	on	January	1,	2018.	Management	is	currently	evaluating	the	potential impact	of	these	changes	on	the	Consolidated	Financial	Statements.

In	August	2014,	the	FASB	issued	changes	to	the	disclosure	of	uncertainties	about	an	entity's	ability	to	continue	as	a	going	concern.	Under	GAAP,	continuation	of	a reporting	entity	as	a	going	concern	is	presumed	as	the	basis	for	preparing	financial	statements	unless	and	until	the	entity's	liquidation	becomes	imminent.	Even	if	an entity's	liquidation	is	not	imminent,	there	may	be	conditions	or	events	that	raise	substantial	doubt	about	the	entity's	ability	to	continue	as	a	going	concern.	Because	there is	no	guidance	in	GAAP	about	management's	responsibility	to	evaluate	whether	there	is	substantial	doubt	about	an	entity's	ability	to	continue	as	a	going	concern	or	to provide	related	note	disclosures,	there	is	diversity	in	practice	whether,	when,	and	how	an	entity	discloses	the	relevant	conditions	and	events	in	its	financial	statements. As	a	result,	these	changes	require	an	entity's	management	to	evaluate	whether	there	are	conditions	or	events,	considered	in	the	aggregate,	that	raise	substantial	doubt about	the	entity's	ability	to	continue	as	a	going	concern	within	one	year	after	the	date	that	financial	statements	are	issued.	Substantial	doubt	is	defined	as	an	indication that	it	is	probable	that	an	entity	will	be	unable	to	meet	its	obligations	as	they	become	due	within	one	year	after	the	date	that	financial	statements	are	issued.	If management	has	concluded	that	substantial	doubt	exists,	then	the	following	disclosures	should	be	made	in	the	financial	statements:	(i)	principal	conditions	or	events	that raised	the	substantial	doubt,	(ii)	management's	evaluation	of	the	significance	of	those	conditions	or	events	in	relation	to	the	entity's	ability	to	meet	its	obligations, (iii)	management's	plans	that	alleviated	the	initial	substantial	doubt	or,	if	substantial	doubt	was	not	alleviated,	management's	plans	that	are	intended	to	at	least	mitigate the	conditions	or	events	that	raise	substantial	doubt,	and	(iv)	if	the	latter	in	(iii)	is	disclosed,	an	explicit	statement	that	there	is	substantial	doubt	about	the	entity's	ability to	continue	as	a	going	concern.	These	changes	become	effective	for	Alcoa	for	the	2016	annual	period.	Management	has	determined	that	the	adoption	of	these	changes will	not	have	an	impact	on	the	Consolidated	Financial	Statements.	Subsequent	to	adoption,	this	guidance	will	need	to	be	applied	by	management	at	the	end	of	each annual	period	and	interim	period	therein	to	determine	what,	if	any,	impact	there	will	be	on	the	Consolidated	Financial	Statements	in	a	given	reporting	period.

# B.	Accumulated	Other	Comprehensive	Loss

The	following	table	details	the	activity	of	the	four	components	that	comprise	Accumulated	other	comprehensive	loss	for	both	Alcoa's	shareholders	and	noncontrolling interests:

|  |  | Alcoa |  | Noncontrolling	Interests | Noncontrolling	Interests |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Pension\tand\tother\tpostretirement\tbenefits\t(W) |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(3,601) | $(3,532) | $(4,063) | $(64) | $(51) | $(77) |
| Other\tcomprehensive\t(loss)\tincome: |  |  |  |  |  |  |
| Unrecognized\tnet\tactuarial\tloss\tand\tprior\tservice\tcost/benefit | (478) | (492) | 281 | 5 | (22) | 28 |
| Tax\tbenefit\t(expense) | 170 | 167 | (88) | (1) | 7 | (9) |
| Total\tOther\tcomprehensive\t(loss)\tincome\tbefore\treclassifications,\tnet\tof\ttax | (308) | (325) | 193 | 4 | (15) | 19 |
| Amortization\tof\tnet\tactuarial\tloss\tand\tprior\tservice\tcost/benefit^(1) | 458 | 394 | 520 | 6 | 3 | 11 |
| Tax\texpense^(2) | (160) | (138) | (182) | (2) | (1) | (4) |
| Total\tamount\treclassified\tfrom\tAccumulated\tother\tcomprehensive\tloss,\tnet\tof |  |  |  |  |  |  |
| tax^(8) | 298 | 256 | 338 | 4 | 2 | 7 |
| Total\tOther\tcomprehensive\t(loss)\tincome | (10) | (69) | 531 | 8 | (13) | 26 |
| Balance\tat\tend\tof\tperiod | $(3,611) | $(3,601) | $(3,532) | $(56) | $(64) | $(51) |
| Foreign\tcurrency\ttranslation |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(846) | $179 | $1,147 | $(351) | $(110) | $257 |
| Other\tcomprehensive\tloss^(3) | (1,566) | (1,025) | (968) | (429) | (241) | (367) |
| Balance\tat\tend\tof\tperiod | $(2,412) | $(846) | $179 | $(780) | $(351) | $(110) |
| Available-for-sale\tsecurities |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $- | $2 | $3 | $- | $- | $- |
| Other\tcomprehensive\tloss^(4) | (5) | (2) | (1) | - | - | - |
| Balance\tat\tend\tof\tperiod | $(5) | $- | $2 | $- | $- | $- |
| Cash\tflow\thedges\t(X) |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(230) | $(308) | $(489) | $(2) | $(2) | $(5) |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |  |  |
| Net\tchange\tfrom\tperiodic\trevaluations | 1,138 | 78 | 205 | (1) | - | 4 |
| Tax\texpense | (340) | (21) | (43) | - | - | (1) |
| Total\tOther\tcomprehensive\tincome\tbefore\treclassifications,\tnet\tof\ttax | 798 | 57 | 162 | (1) | - | 3 |
| Net\tamount\treclassified\tto\tearnings: |  |  |  |  |  |  |
| Aluminum\tcontracts^(5) | 21 | 27 | 18 | - | - | - |
| Energy\tcontracts^(6) | 6 | - | - | - | - | - |
| Foreign\texchange\tcontracts^(5) | 5 | (3) | 2 | - | - | - |
| Interest\trate\tcontracts^(7) | 1 | 1 | 2 | - | - | - |
| Nickel\tcontracts^(6) | 2 | - | - | - | - | - |
| Sub-total | 35 | 25 | 22 | - | - | - |
| Tax\t(expense)^(2) | (6) | (4) | (3) | - | - | - |
| Total\tamount\treclassified\tfrom\tAccumulated\tother\tcomprehensive |  |  |  |  |  |  |
| loss,\tnet\tof\ttax^(8) | 29 | 21 | 19 | - | - | - |
| Total\tOther\tcomprehensive\tincome\t(loss) | 827 | 78 | 181 | (1) | - | 3 |
| Balance\tat\tend\tof\tperiod | $597 | $(230) | $(308) | $(3) | $(2) | $(2) |

These	amounts	were	included	in	the	computation	of	net	periodic	benefit	cost	for	pension	and	other	postretirement	benefits	(see	Note	W). (1)

These	amounts	were	included	in	Provision	for	income	taxes	on	the	accompanying	Statement	of	Consolidated	Operations. (2)

In	all	periods	presented,	there	were	no	tax	impacts	related	to	rate	changes	and	no	amounts	were	reclassified	to	earnings. (3)

In	all	periods	presented,	unrealized	and	realized	gains	and	losses	related	to	these	securities	were	immaterial.	Realized	gains	and	losses	were	included	in	Other expenses	(income),	net	on	the	accompanying	Statement	of	Consolidated	Operations. (4)

These	amounts	were	included	in	Sales	on	the	accompanying	Statement	of	Consolidated	Operations. (5)

These	amounts	were	included	in	Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations. (6)

These	amounts	were	included	in	Interest	expense	on	the	accompanying	Statement	of	Consolidated	Operations. (7)

A	positive	amount	indicates	a	corresponding	charge	to	earnings	and	a	negative	amount	indicates	a	corresponding	benefit	to	earnings.	These	amounts	were reflected	on	the	accompanying	Statement	of	Consolidated	Operations	in	the	line	items	indicated	in	footnotes	1	through	7. (8)

# C.	Asset	Retirement	Obligations

Alcoa	has	recorded	AROs	related	to	legal	obligations	associated	with	the	normal	operations	of	bauxite	mining,	alumina	refining,	and	aluminum	smelting	facilities. These	AROs	consist	primarily	of	costs	associated	with	spent	pot	lining	disposal,	closure	of	bauxite	residue	areas,	mine	reclamation,	and	landfill	closure.	Alcoa	also recognizes	AROs	for	any	significant	lease	restoration	obligation,	if	required	by	a	lease	agreement,	and	for	the	disposal	of	regulated	waste	materials	related	to	the demolition	of	certain	power	facilities.

In	addition	to	AROs,	certain	CAROs	related	to	alumina	refineries,	aluminum	smelters,	and	fabrication	facilities	have	not	been	recorded	in	the	Consolidated	Financial Statements	due	to	uncertainties	surrounding	the	ultimate	settlement	date.	Such	uncertainties	exist	as	a	result	of	the	perpetual	nature	of	the	structures,	maintenance	and upgrade	programs,	and	other	factors.	At	the	date	a	reasonable	estimate	of	the	ultimate	settlement	date	can	be	made	(e.g.,	planned	demolition),	Alcoa	would	record	an ARO	for	the	removal,	treatment,	transportation,	storage,	and/or	disposal	of	various	regulated	assets	and	hazardous	materials	such	as	asbestos,	underground	and aboveground	storage	tanks,	PCBs,	various	process	residuals,	solid	wastes,	electronic	equipment	waste,	and	various	other	materials.	If	Alcoa	was	required	to	demolish	all such	structures	immediately,	the	estimated	CARO	as	of	December	31,	2015	ranges	from	less	than	$1	to	$46	per	structure	(156	structures)	in	today's	dollars.

The	following	table	details	the	carrying	value	of	recorded	AROs	by	major	category	(of	which	$97	and	$76	was	classified	as	a	current	liability	as	of	December	31,	2015 and	2014,	respectively):

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Spent\tpot\tlining\tdisposal | $141 | $170 |
| Closure\tof\tbauxite\tresidue\tareas | \t 165 | \t 178 |
| Mine\treclamation | \t 191 | \t 167 |
| Demolition* | \t 117 | \t 114 |
| Landfill\tclosure | 30 | 31 |
| Other | 4 | 3 |
|  | $648 | $663 |
| * |  |  |

* In	2015	and	2014,	AROs	were	recorded	as	a	result	of	management's	decision	to	permanently	shut	down	and	demolish	certain	structures	(see	Note	D).

The	following	table	details	the	changes	in	the	total	carrying	value	of	recorded	AROs:

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $663 | $629 |
| Accretion\texpense | 19 | 25 |
| Payments | (74) | (84) |
| Liabilities\tincurred | 96 | \t 144 |
| Divestitures* | - | (20) |
| Foreign\tcurrency\ttranslation\tand\tother | (56) | (31) |
| Balance\tat\tend\tof\tyear | $648 | $663 |
| * |  |  |

* In	2014,	this	amount	relates	to	the	sale	of	an	interest	in	a	bauxite	mine	and	alumina	refinery	in	Jamaica	and	a	smelter	in	the	United	States	(see	Note	F).

# D.	Restructuring	and	Other	Charges

Restructuring	and	other	charges	for	each	year	in	the	three-year	period	ended	December	31,	2015	were	comprised	of	the	following:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Asset\timpairments | $335 | $406 | $116 |
| Layoff\tcosts | 299 | 259 | \t 201 |
| Legal\tmatters\tin\tItaly\t(N) | 201 | - | - |
| Net\tloss\ton\tdivestitures\tof\tbusinesses\t(F) | 161 | 332 | - |
| Resolution\tof\ta\tlegal\tmatter\t(N) | - | - | \t 391 |
| Other | 213 | 199 | 82 |
| Reversals\tof\tpreviously\trecorded\tlayoff\tand\tother\texit\tcosts | (14) | (28) | (8) |
| Restructuring\tand\tother\tcharges | $1,195 | $1,168 | $782 |

2015	Actions.	In	2015,	Alcoa	recorded	Restructuring	and	other	charges	of	$1,195	($836	after-tax	and	noncontrolling	interest),	which	were	comprised	of	the	following components:	$438	($281	after-tax	and	noncontrolling	interest)	for	exit	costs	related	to	decisions	to	permanently	shut	down	and	demolish	three	smelters	and	a	power station	(see	below);	$246	($118	after-tax	and	noncontrolling	interest)	for	the	curtailment	of	two	refineries	and	two	smelters	(see	below);	$201	(pre-	and	after-tax)	related to	legal	matters	in	Italy	(see	Note	N);	a	$161	($151	after-tax	and	noncontrolling	interest)	net	loss	related	to	the	March	2015	divestiture	of	a	rolling	mill	in	Russia	and post-closing	adjustments	associated	with	three	December	2014	divestitures	(see	Note	F);	$143	($102	after-tax	and	noncontrolling	interest)	for	layoff	costs,	including	the separation	of	approximately	2,100	employees	(425	in	the	Transportation	and	Construction	Solutions	segment,	645	in	the	Engineered	Products	and	Solutions	segment, 380	in	the	Primary	Metals	segment,	90	in	the	Global	Rolled	Products	segment,	85	in	the	Alumina	segment,	and	475	in	Corporate);	$34	($14	after-tax	and	noncontrolling interest)	for	asset	impairments,	virtually	all	of	which	was	related	to	prior	capitalized	costs	for	an	expansion	project	at	a	refinery	in	Australia	that	is	no	longer	being pursued;	an	$18	($13	after-tax)	gain	on	the	sale	of	land	related	to	one	of	the	rolling	mills	in	Australia	that	was	permanently	closed	in	December	2014	(see	2014	Actions below);	a	net	charge	of	$4	(a	net	credit	of	$7	after-tax	and	noncontrolling	interest)	for	other	miscellaneous	items;	and	$14	($11	after-tax	and	noncontrolling	interest)	for the	reversal	of	a	number	of	small	layoff	reserves	related	to	prior	periods.

During	2015,	management	initiated	various	alumina	refining	and	aluminum	smelting	capacity	curtailments	and/or	closures.	The	curtailments	were	composed	of	the remaining	capacity	at	all	of	the	following:	the	São	Luís	smelter	in	Brazil	(74,000	metric-tons-per-year);	the	Suriname	refinery	(1,330,000	metric-tons-per-year);	the Point	Comfort,	TX

refinery	(2,010,000	metric-tons-per-year);	and	the	Wenatchee,	WA	smelter	(143,000	metric-tons-per-year).	All	of	the	curtailments	were	completed	in	2015	except	for 1,635,000	metric-tons-per-year	at	the	Point	Comfort	refinery,	which	is	expected	to	be	completed	by	the	end	of	June	2016.	The	permanent	closures	were	composed	of	the capacity	at	the	Warrick,	IN	smelter	(269,000	metric-tons-per-year)	(includes	the	closure	of	a	related	coal	mine)	and	the	infrastructure	of	the	Massena	East,	NY	smelter (potlines	were	previously	shut	down	in	both	2013	and	2014—see	2013	Actions	and	2014	Actions	below),	as	the	modernization	of	this	smelter	is	no	longer	being	pursued. The	shutdown	of	the	Warrick	smelter	is	expected	to	be	completed	by	the	end	of	March	2016.

The	decisions	on	the	above	actions	were	part	of	a	separate	12-month	review	in	refining	(2,800,000	metric-tons-per-year)	and	smelting	(500,000	metric-tons-per-year) capacity	initiated	by	management	in	March	2015	for	possible	curtailment	(partial	or	full),	permanent	closure	or	divestiture.	While	many	factors	contributed	to	each decision,	in	general,	these	actions	were	initiated	to	maintain	competitiveness	amid	prevailing	market	conditions	for	both	alumina	and	aluminum.	Demolition	and remediation	activities	related	to	the	Warrick	smelter	and	the	Massena	East	location	will	begin	in	2016	and	are	expected	to	be	completed	by	the	end	of	2020.

Separate	from	the	actions	initiated	under	the	reviews	described	above,	in	mid-2015,	management	approved	the	permanent	shutdown	and	demolition	of	the	Poços	de Caldas	smelter	(capacity	of	96,000	metric-tons-per-year)	in	Brazil	and	the	Anglesea	power	station	(includes	the	closure	of	a	related	coal	mine)	in	Australia.	The	entire capacity	at	Poços	de	Caldas	had	been	temporarily	idled	since	May	2014	and	the	Anglesea	power	station	was	shut	down	at	the	end	of	August	2015.	Demolition	and remediation	activities	related	to	the	Poços	de	Caldas	smelter	and	the	Anglesea	power	station	began	in	late	2015	and	are	expected	to	be	completed	by	the	end	of	2026	and 2020,	respectively.

In	2015,	costs	related	to	the	shutdown	and	curtailment	actions	included	asset	impairments	of	$217,	representing	the	write-off	of	the	remaining	book	value	of	all	related properties,	plants,	and	equipment;	$156	for	the	layoff	of	approximately	3,100	employees	(1,800	in	the	Primary	Metals	segment	and	1,300	in	the	Alumina	segment), including	$30	in	pension	costs	(see	Note	W);	accelerated	depreciation	of	$84	related	to	certain	facilities	as	they	continued	to	operate	during	2015;	and	$227	in	other	exit costs.	Additionally	in	2015,	remaining	inventories,	mostly	operating	supplies	and	raw	materials,	were	written	down	to	their	net	realizable	value,	resulting	in	a	charge	of $90	($43	after-tax	and	noncontrolling	interest),	which	was	recorded	in	Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations.	The	other	exit costs	of	$227	represent	$76	in	asset	retirement	obligations	and	$86	in	environmental	remediation,	both	of	which	were	triggered	by	the	decisions	to	permanently	shut down	and	demolish	the	aforementioned	structures	in	the	United	States,	Brazil,	and	Australia	(includes	the	rehabilitation	of	a	related	coal	mine	in	each	of	Australia	and the	United	States),	and	$65	in	supplier	and	customer	contract-related	costs.

2014	Actions.	In	2014,	Alcoa	recorded	Restructuring	and	other	charges	of	$1,168	($703	after-tax	and	noncontrolling	interest),	which	were	comprised	of	the	following components:	$693	($443	after-tax	and	noncontrolling	interest)	for	exit	costs	related	to	decisions	to	permanently	shut	down	and	demolish	three	smelters	and	two	rolling mills	(see	below);	a	$332	($163	after-tax	and	noncontrolling	interest)	net	loss	for	the	divestitures	of	four	operations	(see	Note	F);	$68	($45	after-tax	and	noncontrolling interest)	for	the	temporary	curtailment	of	two	smelters	and	a	related	production	slowdown

at	one	refinery	(see	below);	$51	($36	after-tax	and	noncontrolling	interest)	for	layoff	costs,	including	the	separation	of	approximately	1,120	employees	(470	in	the Engineered	Products	and	Solutions	segment,	360	in	the	Transportation	and	Construction	Solutions	segment,	45	in	the	Global	Rolled	Products	segment,	60	in	the Alumina	and	Primary	Metals	segments	combined,	and	185	in	Corporate);	$34	($26	after-tax)	for	asset	impairments	related	to	prior	capitalized	costs	for	a	modernization project	at	a	smelter	in	Canada	that	is	no	longer	being	pursued;	a	net	charge	of	$18	($11	after-tax	and	noncontrolling	interest)	for	other	miscellaneous	items,	including	$2 ($2	after-tax)	for	asset	impairments	and	accelerated	depreciation;	and	$28	($21	after-tax	and	noncontrolling	interest)	for	the	reversal	of	a	number	of	layoff	reserves related	to	prior	periods,	including	those	associated	with	a	smelter	in	Italy	due	to	changes	in	facts	and	circumstances	(see	below).

In	early	2014,	management	approved	the	permanent	shutdown	and	demolition	of	the	remaining	capacity	(84,000	metric-tons-per-year)	at	the	Massena	East,	NY	smelter and	the	full	capacity	(190,000	metric-tons-per-year)	at	the	Point	Henry	smelter	in	Australia.	The	capacity	at	Massena	East	was	fully	shut	down	by	the	end	of	March 2014	and	the	Point	Henry	smelter	was	fully	shut	down	in	August	2014.	Demolition	and	remediation	activities	related	to	both	the	Massena	East	and	Point	Henry	smelters began	in	late	2014	and	are	expected	to	be	completed	by	the	end	of	2020	and	2018,	respectively.

The	decisions	on	the	Massena	East	and	Point	Henry	smelters	were	part	of	a	15-month	review	of	460,000	metric	tons	of	smelting	capacity	initiated	by	management	in May	2013	(see	2013	Actions	below)	for	possible	curtailment.	Through	this	review,	management	determined	that	the	remaining	capacity	of	the	Massena	East	smelter	was no	longer	competitive	and	the	Point	Henry	smelter	had	no	prospect	of	becoming	financially	viable.	Management	also	initiated	the	temporary	curtailment	of	the remaining	capacity	(62,000	metric-tons-per-year)	at	the	Poços	de	Caldas	smelter	and	additional	capacity	(85,000	metric-tons-per-year)	at	the	São	Luís	smelter,	both	in Brazil.	These	curtailments	were	completed	by	the	end	of	May	2014.	As	a	result	of	these	curtailments,	200,000	metric-tons-per-year	of	production	at	the	Poços	de	Caldas refinery	was	reduced	by	the	end	of	June	2014.

Also	in	early	2014,	management	approved	the	permanent	shutdown	of	Alcoa's	two	rolling	mills	in	Australia,	Point	Henry	and	Yennora.	This	decision	was	made	due	to the	significant	impact	of	excess	can	sheet	capacity	in	both	Australia	and	Asia.	The	two	rolling	mills	had	a	combined	can	sheet	capacity	of	200,000	metric-tons-per-year and	were	closed	by	the	end	of	2014.	Demolition	and	remediation	activities	related	to	the	two	rolling	mills	began	in	mid-2015	and	are	expected	to	be	completed	by	the end	of	2018.

Additionally,	in	August	2014,	management	approved	the	permanent	shutdown	and	demolition	of	the	capacity	(150,000	metric-tons-per-year)	at	the	Portovesme	smelter in	Italy,	which	had	been	idle	since	November	2012.	This	decision	was	made	because	the	fundamental	reasons	that	made	the	Portovesme	smelter	uncompetitive	remained unchanged,	including	the	lack	of	a	viable	long-term	power	solution.	Demolition	and	remediation	activities	related	to	the	Portovesme	smelter	will	begin	in	2016	and	are expected	to	be	completed	by	the	end	of	2020	(delayed	due	to	discussions	with	the	Italian	government	and	other	stakeholders).

In	2014,	costs	related	to	the	shutdown	and	curtailment	actions	included	$208	for	the	layoff	of	approximately	1,790	employees	(1,210	in	the	Primary	Metals	segment,	470 in	the	Global	Rolled	Products	segment,	80	in	the	Alumina	segment,	and	30	in	Corporate),	including	$26	in	pension	costs	(see	Note	W);	accelerated	depreciation	of	$204 related	to	the	three	facilities	in	Australia	as	they	continued	to	operate	during	2014;	asset	impairments	of	$166	representing	the	write-off	of	the	remaining	book	value	of	all related	properties,	plants,	and	equipment;	and	$183	in	other	exit	costs.	Additionally	in	2014,	remaining	inventories,	mostly	operating	supplies	and	raw	materials,	were written	down	to	their	net	realizable	value,	resulting	in	a	charge	of	$67	($47	after-tax	and	noncontrolling	interest),	which	was	recorded	in	Cost	of	goods	sold	on	the accompanying	Statement	of	Consolidated	Operations.	The	other	exit	costs	of	$183	represent	$95	in	asset	retirement	obligations	and	$42	in	environmental	remediation, both	of	which	were	triggered	by	the	decisions	to	permanently	shut	down	and	demolish	the	aforementioned	structures	in	Australia,	Italy,	and	the	United	States,	and	$46	in other	related	costs,	including	supplier	and	customer	contract-related	costs.

2013	Actions.	In	2013,	Alcoa	recorded	Restructuring	and	other	charges	of	$782	($585	after-tax	and	noncontrolling	interests),	which	were	comprised	of	the	following components:	$391	($305	after-tax	and	noncontrolling	interest)	related	to	the	resolution	of	a	legal	matter	(see	Government	Investigations	under	Litigation	in	Note	N); $245	($183	after-tax)	for	exit	costs	related	to	the	permanent	shutdown	and	demolition	of	certain	structures	at	three	smelter	locations	(see	below);	$87	($61	after-tax	and noncontrolling	interests)	for	layoff	costs,	including	the	separation	of	approximately	1,110	employees	(340	in	the	Primary	Metals	segment,	250	in	the	Global	Rolled Products	segment,	220	in	the	Engineered	Products	and	Solutions	segment,	85	in	the	Alumina	segment,	75	in	the	Transportation	and	Construction	Solutions	segment	and 140	in	Corporate),	of	which	590	relates	to	a	global	overhead	reduction	program,	and	$9	in	pension	plan	settlement	charges	related	to	previously	separated	employees; $25	($17	after-tax)	in	net	charges,	including	$12	($8	after-tax)	for	asset	impairments,	related	to	retirements	and/or	the	sale	of	previously	idled	structures;	$25	($13	after- tax	and	noncontrolling	interests)	for	asset	impairments	related	to	the	write-off	of	capitalized	costs	for	projects	no	longer	being	pursued	due	to	the	market	environment;	a net	charge	of	$17	($12	after-tax	and	noncontrolling	interests)	for	other	miscellaneous	items,	including	$3	($2	after-tax)	for	asset	impairments;	and	$8	($6	after-tax	and noncontrolling	interests)	for	the	reversal	of	a	number	of	small	layoff	reserves	related	to	prior	periods.

In	May	2013,	management	approved	the	permanent	shutdown	and	demolition	of	two	potlines	(capacity	of	105,000	metric-tons-per-year)	that	utilize	Soderberg technology	at	the	Baie	Comeau	smelter	in	Québec,	Canada	(remaining	capacity	of	280,000	metric-tons-per-year	composed	of	two	prebake	potlines)	and	the	full	capacity (44,000	metric-tons-per-year)	at	the	Fusina	smelter	in	Italy.	Additionally,	in	August	2013,	management	approved	the	permanent	shutdown	and	demolition	of	one	potline (capacity	of	41,000	metric-tons-per-year)	that	utilizes	Soderberg	technology	at	the	Massena	East,	NY	smelter	(remaining	capacity	of	84,000	metric-tons-per-year composed	of	two	Soderberg	potlines).	The	aforementioned	Soderberg	lines	at	Baie	Comeau	and	Massena	East	were	fully	shut	down	by	the	end	of	September	2013	while the	Fusina	smelter	was	previously	temporarily	idled	in	2010.	Demolition	and	remediation	activities	related	to	all	three	facilities	began	in	late	2013	and	are	expected	to	be completed	by	the	end	of	2016	for	Massena	East	and	by	the	end	of	2017	for	both	Baie	Comeau	and	Fusina.

The	decisions	on	the	Soderberg	lines	for	Baie	Comeau	and	Massena	East	were	part	of	a	15-month	review	of	460,000	metric	tons	of	smelting	capacity	initiated	by management	in	May	2013	for	possible	curtailment,	while	the	decision	on	the	Fusina	smelter	was	in	addition	to	the	capacity	being	reviewed.	Factors	leading	to	all	three decisions	were	in	general	focused	on	achieving	sustained	competitiveness	and	included,	among	others:	lack	of	an	economically	viable,	long-term	power	solution	(Italy); changed	market	fundamentals;	other	existing	idle	capacity;	and	restart	costs.

In	2013,	exit	costs	related	to	the	shutdown	actions	included	$114	for	the	layoff	of	approximately	550	employees	(Primary	Metals	segment),	including	$83	in	pension costs	(see	Note	W);	accelerated	depreciation	of	$58	(Baie	Comeau)	and	asset	impairments	of	$18	(Fusina	and	Massena	East)	representing	the	write-off	of	the	remaining book	value	of	all	related	properties,	plants,	and	equipment;	and	$55	in	other	exit	costs.	Additionally	in	2013,	remaining	inventories,	mostly	operating	supplies	and	raw materials,	were	written	down	to	their	net	realizable	value	resulting	in	a	charge	of	$9	($6	after-tax),	which	was	recorded	in	Cost	of	goods	sold	on	the	accompanying Statement	of	Consolidated	Operations.	The	other	exit	costs	of	$55	represent	$48	in	asset	retirement	obligations	and	$5	in	environmental	remediation,	both	of	which	were triggered	by	the	decisions	to	permanently	shut	down	and	demolish	these	structures,	and	$2	in	other	related	costs.

Activity	and	reserve	balances	for	restructuring	charges	were	as	follows:

|  | Layoff | Other |  |
| :--- | :--- | :--- | :--- |
|  | costs | exit\tcosts | Total |
| Reserve\tbalances\tat\tDecember\t31,\t2012 | $59 | $52 | $111 |
| 2013: |  |  |  |
| Cash\tpayments | (63) | (11) | (74) |
| Restructuring\tcharges | 201 | 85 | 286 |
| Other* | (101) | (84) | (185) |
| Reserve\tbalances\tat\tDecember\t31,\t2013 | 96 | 42 | 138 |
| 2014: |  |  |  |
| Cash\tpayments | (191) | (22) | (213) |
| Restructuring\tcharges | 259 | 194 | 453 |
| Other* | (66) | (180) | (246) |
| Reserve\tbalances\tat\tDecember\t31,\t2014 | 98 | 34 | 132 |
| 2015: |  |  |  |
| Cash\tpayments | (111) | (12) | (123) |
| Restructuring\tcharges | 299 | 233 | 532 |
| Other* | (60) | (231) | (291) |
| Reserve\tbalances\tat\tDecember\t31,\t2015 | $226 | $24 | $250 |
| * |  |  |  |

* Other	includes	reversals	of	previously	recorded	restructuring	charges	and	the	effects	of	foreign	currency	translation.	In	2015,	2014,	and	2013,	Other	for	layoff	costs also	included	a	reclassification	of	$35,	$26,	and	$92,	respectively,	in	pension	and/or	other	postretirement	benefits	costs,	as	these	obligations	were	included	in	Alcoa's separate	liability	for	pension	and	other	postretirement	benefits	obligations	(see	Note	W).	Additionally	in	2015,	2014,	and	2013,	Other	for	other	exit	costs	also included	a	reclassification	of	the	following	restructuring	charges:	$76,	$95,	and	$58,	respectively,	in	asset	retirement	and	$86,	$47,	and	$12,	respectively,	in environmental	obligations,	as	these	liabilities	were	included	in	Alcoa's	separate	reserves	for	asset	retirement	obligations	(see	Note	C)	and	environmental	remediation (see	Note	N).

The	remaining	reserves	are	expected	to	be	paid	in	cash	during	2016,	with	the	exception	of	approximately	$10	to	$15,	which	is	expected	to	be	paid	over	the	next	several years	for	ongoing	site	remediation	work	and	special	layoff	benefit	payments.

# E.	Goodwill	and	Other	Intangible	Assets

The	following	table	details	the	changes	in	the	carrying	amount	of	goodwill:

|  | Alumina | Primary<br>Metals | Global<br>Rolled<br>Products | Engineered<br>Products<br>and<br>Solutions | Transportation<br>and<br>Construction<br>Solutions | Corporate* | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2013: |  |  |  |  |  |  |  |
| Goodwill | $9 | $989 | $218 | $2,606 | $117 | $1,235 | $5,174 |
| Accumulated\timpairment |  |  |  |  |  |  |  |
| losses | - | (989) | - | - | (28) | (742) | (1,759) |
|  | 9 | - | 218 | 2,606 | 89 | 493 | 3,415 |
| Acquisitions\t(F) | - | - | - | 1,898 | - | - | 1,898 |
| Divestitures\t(F) | (3) | - | - | - | - | - | (3) |
| Translation | 2 | - | (8) | (46) | (3) | (8) | (63) |
| Balance\tat\tDecember\t31,\t2014: |  |  |  |  |  |  |  |
| Goodwill | 8 | 989 | 210 | 4,458 | 114 | 1,227 | 7,006 |
| Accumulated\timpairment |  |  |  |  |  |  |  |
| losses | - | (989) | - | - | (28) | (742) | (1,759) |
|  | 8 | - | 210 | 4,458 | 86 | 485 | 5,247 |
| Acquisitions\t(F) | - | - | - | 261 | - | - | 261 |
| Divestitures\t(F) | - | - | (1) | - | - | - | (1) |
| Impairment | - | - | - | - | (25) | - | (25) |
| Translation | (2) | - | (8) | (59) | (3) | (9) | (81) |
| Balance\tat\tDecember\t31,\t2015: |  |  |  |  |  |  |  |
| Goodwill | 6 | 989 | 201 | 4,660 | 111 | 1,218 | 7,185 |
| Accumulated\timpairment |  |  |  |  |  |  |  |
| losses | - | (989) | - | - | (53) | (742) | (1,784) |
|  | 6 | - | 201 | 4,660 | 58 | 476 | 5,401 |
| *\nAs\tof\tDecember\t31,\t2015,\tthe\tamount\treflected\tin\tCorporate\tis\tallocated\tto\tfour\tof\tAlcoa's\tfive\treportable\tsegments\t($146\tto\tAlumina,\t$59\tto\tGlobal\tRolled |  |  |  |  |  |  |  |

* As	of	December	31,	2015,	the	amount	reflected	in	Corporate	is	allocated	to	four	of	Alcoa's	five	reportable	segments	($146	to	Alumina,	$59	to	Global	Rolled Products,	$253	to	Engineered	Products	and	Solutions,	and	$18	to	Transportation	and	Construction	Solutions)	included	in	the	table	above	for	purposes	of	impairment testing	(see	Note	A).	This	goodwill	is	reflected	in	Corporate	for	segment	reporting	purposes	because	it	is	not	included	in	management's	assessment	of	performance	by the	four	reportable	segments.

In	2015	and	2013,	Alcoa	recognized	an	impairment	of	goodwill	in	the	amount	of	$25	and	$1,731	($1,719	after	noncontrolling	interest),	respectively,	related	to	the	annual impairment	review	of	the	soft	alloy	extrusion	business	in	Brazil	(included	in	the	Transportation	and	Construction	Solutions	segment)	and	the	Primary	Metals	segment, respectively,	(see	Goodwill	and	Other	Intangible	Assets	policy	in	Note	A).

Other	intangible	assets,	which	are	included	in	Other	noncurrent	assets	on	the	accompanying	Consolidated	Balance	Sheet,	were	as	follows:

|  | carrying | Accumulated |
| :--- | :--- | :--- |
| December\t31,\t2015 | amount | amortization |
| Computer\tsoftware | $969 | $(801) |
| Patents\tand\tlicenses | 135 | (104) |
| Other\tintangibles* | 988 | (74) |
| Total\tamortizable\tintangible\tassets | 2,092 | (979) |
| Indefinite-lived\ttrade\tnames\tand\ttrademarks | 45 | - |
| Total\tother\tintangible\tassets | $2,137 | $(979) |
| * |  |  |

* As	of	December	31,	2015,	Other	intangibles	include	amounts	related	to	the	acquisitions	of	Firth	Rixson,	TITAL,	and	RTI	(see	Note	F).

|  | carrying | Accumulated |
| :--- | :--- | :--- |
| December\t31,\t2014 | amount | amortization |
| Computer\tsoftware | $973 | $(775) |
| Patents\tand\tlicenses | 133 | (98) |
| Other\tintangibles* | 493 | (35) |
| Total\tamortizable\tintangible\tassets | 1,599 | (908) |
| Indefinite-lived\ttrade\tnames\tand\ttrademarks | 46 | - |
| Total\tother\tintangible\tassets | $1,645 | $(908) |
| * |  |  |

* As	of	December	31,	2014,	Other	intangibles	include	amounts	related	to	the	acquisition	of	Firth	Rixson	(see	Note	F).

Computer	software	consists	primarily	of	software	costs	associated	with	an	enterprise	business	solution	(EBS)	within	Alcoa	to	drive	common	systems	among	all businesses.

Amortization	expense	related	to	the	intangible	assets	in	the	tables	above	for	the	years	ended	December	31,	2015,	2014,	and	2013	was	$77,	$69,	and	$73,	respectively, and	is	expected	to	be	in	the	range	of	approximately	$75	to	$85	annually	from	2016	to	2020.

# F.	Acquisitions	and	Divestitures

Pro	forma	results	of	the	Company,	assuming	all	acquisitions	described	below	were	made	at	the	beginning	of	the	earliest	prior	period	presented,	would	not	have	been materially	different	from	the	results	reported.

2015	Acquisitions.	In	March	2015,	Alcoa	completed	the	acquisition	of	an	aerospace	structural	castings	company,	TITAL,	for	$204	(€188)	in	cash	(an	additional	$1 (€1)	was	paid	in	September	2015	to	settle	working	capital	in	accordance	with	the	purchase	agreement).	This	transaction	is	no	longer	subject	to	post-closing	adjustments. TITAL,	a	privately	held	company	with	approximately	650	employees	based	in	Germany,	produces	aluminum	and	titanium	investment	casting	products	for	the	aerospace and	defense	end	markets.	The	purpose	of	this	acquisition	is	to	capture	increasing	demand	for	advanced	jet	engine	components	made	of	titanium,	establish	titanium- casting	capabilities	in	Europe,	and	expand	existing	aluminum	casting	capacity.	The	assets,	including	the	associated	goodwill,	and	liabilities	of	this	business	were included	within	Alcoa's	Engineered	Products	and	Solutions	segment	since	the	date	of	acquisition.	Based	on	the	preliminary	allocation	of	the	purchase	price,	goodwill	of $118	was	recorded	for	this	transaction,	none	of	which	is	estimated	to	be	deductible	for	income	tax	purposes.	The	final	allocation	of	the	purchase	price	will	be	based	on management's	best	estimates,	including	a	third-party	valuation	of	certain	assets	acquired,	which	may	result	in	the	identification	of	other	intangible	assets.	This	valuation is	expected	to	be	completed	in	March	2016.

Also	in	March	2015,	Alcoa	signed	a	definitive	agreement	to	acquire	RTI	International	Metals,	Inc.	(RTI),	a	U.S.	company	that	was	publicly	traded	on	the	New	York Stock	Exchange	under	the	ticker	symbol	"RTI."	On	July	23,	2015,	after	satisfying	all	customary	closing	conditions	and	receiving	the	required	regulatory	and	RTI shareholder	approvals,	Alcoa	completed	the	acquisition	of	RTI.	Alcoa	purchased	all	outstanding	shares	of	RTI	common	stock	in	a	stock-for-stock	transaction	valued	at $870	(based	on	the	$9.96	per	share	July	23,	2015	closing	price	of	Alcoa's	common	stock).	Each	issued	and	outstanding	share	of	RTI	common	stock	prior	to	the completion	of	the	transaction	was	converted	into	the	right	to	receive	2.8315	shares	of	Alcoa	common	stock.	In	total,	Alcoa	issued	87,397,414	shares	of	its	common	stock to	consummate	this	transaction,	which	was	not	reflected	in	the	accompanying	Statement	of	Consolidated	Cash	Flows	as	it	represents	a	noncash	financing	activity.	The exchange	ratio	was	the	quotient	of	a	$41	per	RTI	common	share	acquisition	price	and	the	$14.48	per	share	March	6,	2015	closing	price	of	Alcoa's	common	stock.	In addition	to	the	transaction	price,	Alcoa	also	paid	$25	($19	after-tax)	in	professional	fees	and	costs	related	to	this	acquisition.	This	amount	was	recorded	in	Selling, general	administrative,	and	other	expenses	on	the	accompanying	Statement	of	Consolidated	Operations.

RTI	is	a	global	supplier	of	titanium	and	specialty	metal	products	and	services	for	the	commercial	aerospace,	defense,	energy,	and	medical	device	end	markets.	The purpose	of	this	acquisition	is	to	expand	Alcoa's	range	of	titanium	offerings	and	add	advanced	technologies	and	materials,	primarily	related	to	the	aerospace	end	market. In	2014,	RTI	generated	net	sales	of	$794	and	had	approximately	2,600	employees.	The	operating	results	and	assets	and	liabilities	of	RTI	were	included	within	Alcoa's Engineered	Products	and	Solutions	segment	since	the	date	of	acquisition.	Third-party	sales	and	after-tax	operating	income	(Alcoa's	primary	segment	performance measure—see	Note	Q)	of	RTI	from	the	acquisition	date	through	December	31,	2015	were	$309	and	less	than	$(1),	respectively.

The	following	table	represents	the	preliminary	allocation	of	the	purchase	price	by	major	asset	acquired	and	liability	assumed,	as	well	as	the	amount	of	goodwill recognized:

The	amounts	in	the	table	above	are	subject	to	change	based,	in	part,	on	management's	review	of	a	third-party	valuation	of	the	assets	acquired	and	liabilities	assumed, which	is	expected	to	be	completed	in	mid-2016.

As	reflected	in	the	table	above,	Alcoa	recognized	goodwill	of	$240,	which	represents	the	earnings	growth	potential	of	RTI,	Alcoa's	ability	to	expand	its	titanium capabilities	in	the	aerospace	market,	and	expected	synergies	from	combining	the	operations	of	the	two	companies.	This	goodwill	was	allocated	to	a	new	Alcoa	reporting unit	associated	with	the	Engineered	Products	and	Solutions	segment,	Alcoa	Titanium	and	Engineered	Products,	which	consists	solely	of	the	acquired	RTI	business.	None of	this	goodwill	is	deductible	for	income	tax	purposes.

The	other	noncurrent	assets	in	the	table	above	include	an	estimate	for	intangible	assets	of	$73,	most	of	which	were	included	in	Alcoa's	other	intangibles	class	(see	Note E).	The	specific	identification	and	weighted-average	amortization	period	for	these	intangible	assets	is	dependent	on	the	final	valuation.

As	part	of	this	acquisition,	Alcoa	assumed	the	obligation	to	repay	two	tranches	of	convertible	debt;	one	tranche	was	due	and	settled	in	cash	on	December	1,	2015 (principal	amount	of	$115)	and	the	other	tranche	is	due	on	October	15,	2019	(principal	amount	of	$403).	Upon	conversion	of	the	2019	convertible	notes	in	accordance with	their	terms,	holders	will	receive,	at	Alcoa's	election,	cash,	shares	of	common	stock	(up	to	27,990,966	shares),	or	a	combination	of	cash	and	shares.	This	cash conversion	feature	requires	the	convertible	notes	to	be	bifurcated	into	a	liability	component	and	an	equity	component.	The	fair	value	of	the	liability	component	was determined	by	calculating	the	net	present	value	of	the	cash	flows	of	the	convertible	notes	using	the	interest	rate	of	a	similar	instrument	without	a	conversion	feature.	The fair	value	of	the	equity	component	is	the	difference	between	the	fair	value	of	the	entire	instrument	on	the	date	of	acquisition	and	the	fair	value	of	the	liability	and	is included	as	Additional	capital	on	the	accompanying	Consolidated	Balance	Sheet.

2015	Divestitures.	In	2015,	Alcoa	completed	the	divestiture	of	an	operation	in	Russia	(see	below)	and	had	post-closing	adjustments,	as	provided	for	in	the	respective purchase	agreements,	related	to	three	divestitures	completed	in	December	2014	(see	2014	Divestitures	below).	The	divestiture	and	post-closing	adjustments	combined resulted	in	net	cash	received	of	$30	and	a	net	loss	of	$161	($151	after-tax	and	noncontrolling	interest),	which	was	recorded	in	Restructuring	and	other	charges	(see	Note D)	on	the	accompanying	Statement	of	Consolidated	Operations.	These	four	divestitures	are	no	longer	subject	to	post-closing	adjustments.

In	March	2015,	Alcoa	completed	the	sale	of	a	rolling	mill	located	in	Belaya	Kalitva,	Russia	to	a	wholly-owned	subsidiary	of	Stupino	Titanium	Company.	While	owned by	Alcoa,	the	operating	results	and	assets	and	liabilities	of	the	rolling	mill	were	included	in	the	Global	Rolled	Products	segment.	The	rolling	mill	generated	sales	of approximately	$130	in	2014	and,	at	the	time	of	divestiture,	had	approximately	1,870	employees.

2014	Acquisitions.	In	June	2014,	Alcoa	signed	a	purchase	agreement	to	acquire	an	aerospace	jet	engine	components	company,	Firth	Rixson,	from	Oak	Hill	Capital Partners	for	$2,850.	The	purchase	price	was	composed	of	$2,350	in	cash	and	$500	of	Alcoa	common	stock.	The	common	stock	component	was	equivalent	to	36,523,010 shares	at	a	per	share	price	of	$13.69,	as	determined	in	the	agreement.	In	conjunction	with	the	purchase	agreement,	Alcoa	also	entered	into	an	earn-out	agreement,	which states	that	Alcoa	will	make	earn-out	payments	up	to	an	aggregate	maximum	amount	of	$150	through	December	31,	2020	upon	certain	conditions	(see	below	for additional	information).	On	November	19,	2014,	after	satisfying	all	customary	closing	conditions	and	receiving	the	required	regulatory	approvals,	Alcoa	completed	the acquisition	of	Firth	Rixson	for	$2,995.	The	purchase	price	was	composed	of	$2,385	in	cash	(net	of	cash	acquired)	and	$610	of	Alcoa	common	stock.	The	cash	portion	of the	transaction	price	increased	by	$35	due	to	working	capital	and	other	adjustments	based	on	the	provisions	of	the	purchase	agreement.	The	common	stock	portion	of	the transaction	price	was	based	on	the	closing	market	price	($16.69	per	share)	of	Alcoa's	common	stock	on	the	acquisition	date.	This	transaction	is	subject	to	certain	post- closing	adjustments	as	defined	in	the	purchase	agreement.

In	addition	to	the	transaction	price,	Alcoa	also	paid	$42	($34	after-tax)	in	professional	fees	and	costs	related	to	this	acquisition.	This	amount	was	recorded	in	Selling, general	administrative,	and	other	expenses	on	the	accompanying	Statement	of	Consolidated	Operations.	Additionally,	Alcoa	recorded	$13	($8	after-tax)	in	Interest expense	on	the	accompanying	Statement	of	Consolidated	Operations	for	costs	associated	with	the	execution	(in	June	2014)	and	termination	(in	September	2014)	of	a $2,500	364-day	senior	unsecured	bridge	term	loan	facility.	This	facility	was	entered	into	for	the	purpose	of	financing	all	or	a	portion	of	the	cash	consideration	for	this acquisition	and	to	pay	fees	and	expenses	incurred	in	connection	therewith.	However,	in	September	2014,	the	facility	was	no	longer	necessary	as	Alcoa	completed	the issuance	of	$2,500	in	debt	(see	Note	K)	and	equity	(see	Note	R)	instruments	to	finance	the	acquisition.

Firth	Rixson	manufactures	rings,	forgings,	and	metal	products	for	the	aerospace	end	market,	as	well	as	other	markets	requiring	highly	engineered	material	applications. This	business	has	13	operating	facilities	in	the	United	States,	United	Kingdom,	Europe,	and	Asia	employing	approximately	2,400	people	combined.	The	purpose	of	this acquisition	is	to	strengthen	Alcoa's	aerospace	business	and	position	the	Company	to	capture	additional	aerospace	growth	with	a	broader	range	of	high-growth,	value-add jet	engine	components.	The	operating	results	and	assets	and	liabilities	of	Firth	Rixson	were	included	within	the	Engineered	Products	and	Solutions	segment	since	the date	of	acquisition.	Third-party	sales	and	after-tax	operating	income	(Alcoa's	primary	segment	performance	measure—see	Note	Q)	of	Firth	Rixson	from	the	acquisition date	through	December	31,	2014	were	$81	and	$(12),	respectively.

The	following	table	represents	the	final	allocation	of	the	purchase	price	by	major	asset	acquired	and	liability	assumed,	as	well	as	the	amount	of	goodwill	recognized	and the	net	present	value	of	the	potential	earn-out:

As	reflected	in	the	table	above,	Alcoa	recognized	goodwill	of	$1,801,	which	represents	the	earnings	growth	potential	of	Firth	Rixson	and	expected	synergies	from combining	the	operations	of	the	two	companies.	The	goodwill	was	allocated	to	two	of	Alcoa's	reporting	units	associated	with	the	Engineered	Products	and	Solutions segment,	Alcoa	Fastening	Systems	and	Rings	($1,117)	and	Alcoa	Forging	and	Extrusions	($684),	on	a	relative	fair	value	basis.	None	of	the	goodwill	is	deductible	for income	tax	purposes.

The	other	noncurrent	assets	in	the	table	above	represent	intangible	assets,	which	were	included	in	the	other	intangibles	class	(see	Note	E).	These	intangible	assets	consist primarily	of	customer	relationships	and	contracts,	backlog,	qualifications,	and	technology,	and	have	a	weighted-average	amortization	period	of	35	years.

The	contingent	consideration	liability	presented	in	the	table	above	represents	the	net	present	value	of	the	potential	earn-out	of	$150	(Level	3	in	the	fair	value	hierarchy— see	Note	X).	This	earn-out	is	contingent	on	the	Firth	Rixson	forging	business	in	Savannah,	Georgia	achieving	certain	identified	financial	targets	through	December	31, 2020.	Management	has	determined	that	payment	of	the	maximum	amount	is	probable	based	on	the	forecasted	financial	performance	of	this	location.	It	is	estimated	that the	earn-out	will	be	paid	in	2019	through	2020.	The	fair	value	of	this	liability	will	be	updated	in	future	periods	with	any	change	resulting	in	a	corresponding	charge	or credit	to	earnings.

In	August	2014,	Alcoa	completed	the	acquisition	of	the	30%	outstanding	noncontrolling	interest	in	the	aluminum	brazing	sheet	venture	in	Kunshan	City,	China	from Shanxi	Yuncheng	Engraving	Group	for	$28.	The	$3	difference	between	the	purchase	price	and	the	carrying	value	of	the	noncontrolling	interest	on	Alcoa's	Consolidated Balance	Sheet	was	included	in	Additional	capital.

2014	Divestitures.	In	2014,	Alcoa	completed	the	divestiture	of	four	operations	as	described	below.	Combined,	these	transactions	yielded	net	cash	proceeds	of	$247	and resulted	in	a	net	loss	of	$332	($163	after-tax	and	noncontrolling	interest),	which	was	recorded	in	Restructuring	and	other	charges	(see	Note	D)	on	the	accompanying Statement	of	Consolidated	Operations.	All	four	transactions	were	subject	to	certain	post-closing	adjustments	as	defined	in	the	respective	purchase	agreements	as	of December	31,	2014	(see	2015	Divestitures	above).

In	November	2014,	Alcoa	completed	the	sale	of	an	aluminum	rod	plant	located	in	Bécancour,	Québec,	Canada	to	Sural	Laminated	Products.	This	facility	takes	molten aluminum	and	shapes	it	into	the	form	of	a	rod,	which	is	used	by	customers	primarily	for	the	transportation	of	electricity.	While	owned	by	Alcoa,	the	operating	results	and assets	and	liabilities	of	this	plant	were	included	in	the	Primary	Metals	segment.	In	conjunction	with	this	transaction,	Alcoa	entered	into	a	multi-year	agreement	with	Sural Laminated	Products	to	supply	molten	aluminum	for	the	rod	plant.	The	aluminum	rod	plant	generated	sales	of	approximately	$200	in	2013	and,	at	the	time	of	divestiture, had	approximately	60	employees.

In	December	2014,	Alcoa's	majority-owned	subsidiary	(60%),	Alcoa	World	Alumina	and	Chemicals	(AWAC),	completed	the	sale	of	its	ownership	stake	in	a	bauxite mine	and	alumina	refinery	joint	venture	in	Jamaica	to	Noble	Group	Ltd.	The	joint	venture	was	55%	owned	by	a	subsidiary	of	AWAC,	which	is	40%	owned	by	Alumina Limited.	While	owned	by	AWAC,	55%	of	both	the	operating	results	and	assets	and	liabilities	of	this	joint	venture	were	included	in	the	Alumina	segment.	As	it	relates	to AWAC's	previous	55%	ownership	stake,	the	refinery	(AWAC's	share	of	the	capacity	was	778,800	metric-tons-per-year)	generated	sales	(third-party	and	intersegment) of	approximately	$200	in	2013,	and	the	refinery	and	mine	combined,	at	the	time	of	divestiture,	had	approximately	500	employees.

Also	in	December	2014,	Alcoa	completed	the	sale	of	its	50.33%	ownership	stake	in	the	Mt.	Holly	smelter	located	in	Goose	Creek,	South	Carolina	to	Century	Aluminum Company.	While	owned	by	Alcoa,	50.33%	of	both	the	operating	results	and	assets	and	liabilities	related	to	the	smelter	were	included	in	the	Primary	Metals	segment.	As it	relates	to	Alcoa's	previous	50.33%	ownership	stake,	the	smelter	(Alcoa's	share	of	the	capacity	was	115,000	metric-tons-per-year)	generated	sales	of	approximately $280	in	2013	and,	at	the	time	of	divestiture,	had	approximately	250	employees.

Additionally	in	December	2014,	Alcoa	completed	the	sale	of	three	rolling	mills	located	in	Spain	(Alicante	and	Amorebieta)	and	France	(Castelsarrasin)	to	a	subsidiary of	Atlas	Holdings	LLC.	While	owned	by	Alcoa,	the	operating	results	and	assets	and	liabilities	of	the	rolling	mills	were	included	in	the	Global	Rolled	Products	segment. In	conjunction	with	this	transaction,	Alcoa	entered	into	a	multi-year	agreement	with	the	buyer	to	supply	aluminum	for	the	rolling	mills.	The	rolling	mills	combined generated	sales	of	approximately	$500	in	2013	and,	at	the	time	of	divestiture,	had	approximately	750	employees.

# G.	Inventories

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Finished\tgoods | $811 | $768 |
| Work-in-process | \t 1,272 | \t 1,035 |
| Bauxite\tand\talumina | 445 | 578 |
| Purchased\traw\tmaterials | 720 | 508 |
| Operating\tsupplies | 194 | 193 |
|  | $3,442 | $3,082 |

At	December	31,	2015	and	2014,	the	total	amount	of	inventories	valued	on	a	LIFO	basis	was	$1,373	and	$1,514,	respectively.	If	valued	on	an	average-cost	basis,	total inventories	would	have	been	$559	and	$767	higher	at	December	31,	2015	and	2014,	respectively.	During	2015	and	2013,	reductions	in	LIFO	inventory	quantities	caused partial	liquidations	of	the	lower	cost	LIFO	inventory	base.	These	liquidations	resulted	in	the	recognition	of	income	of	$1	($1	after-tax)	in	2015	and	$26	($17	after-tax)	in 2013.

# H.	Properties,	Plants,	and	Equipment,	Net

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Land\tand\tland\trights,\tincluding\tmines* | $481 | $548 |
| Structures: |  |  |
| Alumina: |  |  |
| Alumina\trefining | 2,387 | 2,750 |
| Bauxite\tmining | 1,054 | 1,403 |
| Primary\tMetals: |  |  |
| Aluminum\tsmelting | 3,567 | 3,725 |
| Power\tgeneration | 518 | 645 |
| Global\tRolled\tProducts | 1,298 | 1,276 |
| Engineered\tProducts\tand\tSolutions* | 658 | 547 |
| Transportation\tand\tConstruction\tSolutions | 239 | 239 |
| Other | 619 | 715 |
|  | \t 10,340 | \t 11,300 |
| Machinery\tand\tequipment: |  |  |
| Alumina: |  |  |
| Alumina\trefining | 3,709 | 4,165 |
| Bauxite\tmining | 428 | 524 |
| Primary\tMetals: |  |  |
| Aluminum\tsmelting | 6,831 | 7,210 |
| Power\tgeneration | 1,044 | 1,080 |
| Global\tRolled\tProducts | 5,372 | 5,333 |
| Engineered\tProducts\tand\tSolutions* | 2,745 | 2,402 |
| Transportation\tand\tConstruction\tSolutions | 682 | 669 |
| Other | 750 | 820 |
|  | \t 21,561 | \t 22,203 |
|  | 32,382 | 34,051 |
| Less:\taccumulated\tdepreciation,\tdepletion,\tand\tamortization | 18,872 | 19,091 |
|  | 13,510 | 14,960 |
| Construction\twork-in-progress* | 1,305 | 1,466 |
|  | $14,815 | $16,426 |
| * |  |  |

* As	of	December	31,	2015	and	2014,	these	line	items	include	amounts	related	to	the	acquisitions	of	Firth	Rixson,	TITAL,	and/or	RTI	(see	Note	F).

As	of	December	31,	2015	and	2014,	the	net	carrying	value	of	temporarily	idled	smelting	assets	was	$324	and	$419,	representing	778	kmt	and	665	kmt	of	idle	capacity, respectively.	Also,	as	of	December	31,	2015	and	2014,	the	net	carrying	value	of	temporarily	idled	refining	assets	was	$53	and	$62,	representing	2,801	kmt	and	1,216 kmt	of	idle	capacity,	respectively.

# I.	Investments

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Equity\tinvestments | $1,476 | $1,780 |
| Other\tinvestments | 209 | 164 |
|  | $1,685 | $1,944 |

Equity	Investments.	As	of	December	31,	2015	and	2014,	Equity	investments	included	an	interest	in	a	project	to	develop	a	fully-integrated	aluminum	complex	in	Saudi Arabia	(see	below);	bauxite	mining	interests	in	Guinea	(45%	of	Halco	Mining,	Inc.)	and	Brazil	(18.2%	of	Mineração	Rio	do	Norte	S.A.);	two	hydroelectric	power projects	in	Brazil	(see	Note	N);	a	natural	gas	pipeline	in	Australia	(see	Note	N);	a	smelter	operation	in	Canada	(50%	of	Pechiney	Reynolds	Quebec,	Inc.);	and	a hydroelectric	power	company	in	Canada	(40%	of	Manicouagan	Power	Limited	Partnership).	Pechiney	Reynolds	Quebec,	Inc.	owns	a	50.1%	interest	in	the	Bécancour smelter	in	Quebec,	Canada	thereby	entitling	Alcoa	to	a	25.05%	interest	in	the	smelter.	Through	two	wholly-owned	Canadian	subsidiaries,	Alcoa	also	owns	49.9%	of	the Bécancour	smelter.	Halco	Mining,	Inc.	owns	100%	of	Boké	Investment	Company,	which	owns	51%	of	Compagnie	des	Bauxites	de	Guinée.	The	investments	in	the bauxite	mining	interests	in	Guinea	and	Brazil	and	the	natural	gas	pipeline	in	Australia	are	held	by	wholly-owned	subsidiaries	of	Alcoa	World	Alumina	and	Chemicals (AWAC),	which	is	owned	60%	by	Alcoa	and	40%	by	Alumina	Limited.	In	2015,	2014,	and	2013,	Alcoa	received	$152,	$86,	and	$89,	respectively,	in	dividends	from	its equity	investments.

Alcoa	and	Saudi	Arabian	Mining	Company	(known	as	"Ma'aden")	have	a	30-year	(from	December	2009)	joint	venture	shareholders'	agreement	(automatic	extension for	an	additional	20	years,	unless	the	parties	agree	otherwise	or	unless	earlier	terminated)	setting	forth	the	terms	for	the	development,	construction,	ownership,	and operation	of	an	integrated	aluminum	complex	in	Saudi	Arabia.	Specifically,	the	project	being	developed	by	the	joint	venture	consists	of:	(i)	a	bauxite	mine	for	the extraction	of	approximately	4,000	kmt	of	bauxite	from	the	Al	Ba'itha	bauxite	deposit	near	Quiba	in	the	northern	part	of	Saudi	Arabia;	(ii)	an	alumina	refinery	with	an initial	capacity	of	1,800	kmt;	(iii)	a	primary	aluminum	smelter	with	an	initial	capacity	of	740	kmt;	and	(iv)	a	rolling	mill	with	an	initial	capacity	of	380	kmt.	The refinery,	smelter,	and	rolling	mill	have	been	constructed	in	an	industrial	area	at	Ras	Al	Khair	on	the	east	coast	of	Saudi	Arabia.	The	facilities	use	critical	infrastructure, including	power	generation	derived	from	reserves	of	natural	gas,	as	well	as	port	and	rail	facilities,	developed	by	the	government	of	Saudi	Arabia.	First	production	from the	smelter,	rolling	mill,	and	mine	and	refinery	occurred	in	December	of	2012,	2013,	and	2014,	respectively.

In	2012,	Alcoa	and	Ma'aden	agreed	to	expand	the	capabilities	of	the	rolling	mill	to	include	a	capacity	of	100	kmt	dedicated	to	supplying	aluminum	automotive,	building and	construction,	and	foil	stock	sheet.	First	production	related	to	the	expanded	capacity	occurred	in	2014.	This	expansion	is	not	expected	to	result	in	additional	equity investment	(see	below)	due	to	significant	savings	anticipated	from	a	change	in	the	project	execution	strategy	of	the	initial	380	kmt	capacity	of	the	rolling	mill.

The	joint	venture	is	owned	74.9%	by	Ma'aden	and	25.1%	by	Alcoa	and	consists	of	three	separate	companies	as	follows:	one	each	for	the	mine	and	refinery,	the	smelter, and	the	rolling	mill.	Following	the	signing	of	the	joint	venture	shareholders'	agreement,	Alcoa	paid	Ma'aden	$80	representing	the	initial	investment	in	the	project.	In addition,	Alcoa	paid	$56	to	Ma'aden,	representing	Alcoa's	pro	rata	share	of	certain	agreed	upon	pre-incorporation	costs	incurred	by	Ma'aden	prior	to	formation	of	the joint	venture.

Ma'aden	and	Alcoa	have	put	and	call	options,	respectively,	whereby	Ma'aden	can	require	Alcoa	to	purchase	from	Ma'aden,	or	Alcoa	can	require	Ma'aden	to	sell	to Alcoa,	a	14.9%	interest	in	the	joint	venture	at	the	then	fair	market	value.	These	options	may	only	be	exercised	in	a	six-month	window	that	opens	five	years	after	the Commercial	Production	Date	(as	defined	in	the	joint	venture	shareholders'	agreement)	and,	if	exercised,	must	be	exercised	for	the	full	14.9%	interest.	The	Commercial Production	Date	for	the	smelting	company	was	declared	on	September	1,	2014.	There	have	not	been	similar	declarations	yet	for	the	rolling	mill	company	and	the	mining and	refining	company.

The	Alcoa	affiliate	that	holds	Alcoa's	interests	in	the	smelting	company	and	the	rolling	mill	company	is	wholly	owned	by	Alcoa,	and	the	Alcoa	affiliate	that	holds Alcoa's	interests	in	the	mining	and	refining	company	is	wholly	owned	by	AWAC.	Except	in	limited	circumstances,	Alcoa	may	not	sell,	transfer	or	otherwise	dispose	of or	encumber	or	enter	into	any	agreement	in	respect	of	the	votes	or	other	rights	attached	to	its	interests	in	the	joint	venture	without	Ma'aden's	prior	written	consent.

A	number	of	Alcoa	employees	perform	various	types	of	services	for	the	smelting,	rolling	mill,	and	refining	and	mining	companies	as	part	of	the	construction	of	the	fully- integrated	aluminum	complex.	At	December	31,	2015	and	2014,	Alcoa	had	an	outstanding	receivable	of	$19	and	$30,	respectively,	from	the	smelting,	rolling	mill,	and refining	and	mining	companies	for	labor	and	other	employee-related	expenses.

Capital	investment	in	the	project	is	expected	to	total	approximately	$10,800	(SAR	40.5	billion)	and	has	been	funded	through	a	combination	of	equity	contributions	by the	joint	venture	partners	and	project	financing	by	the	joint	venture,	which	has	been	guaranteed	by	both	partners	(see	below).	Both	the	equity	contributions	and	the guarantees	of	the	project	financing	are	based	on	the	joint	venture's	partners'	ownership	interests.	Originally,	it	was	estimated	that	Alcoa's	total	equity	investment	in	the joint	venture	would	be	approximately	$1,100,	of	which	Alcoa	has	contributed	$981,	including	$29	and	$120	in	2015	and	2014,	respectively.	Based	on	changes	to	both the	project's	capital	investment	and	equity	and	debt	structure	from	the	initial	plans,	the	estimated	$1,100	equity	contribution	may	be	reduced.	As	of	December	31,	2015 and	2014,	the	carrying	value	of	Alcoa's	investment	in	this	project	was	$928	and	$983,	respectively.

The	smelting	and	rolling	mill	companies	have	project	financing	totaling	$4,311	(reflects	principal	payments	made	through	December	31,	2015),	of	which	$1,082 represents	Alcoa's	share	(the	equivalent	of	Alcoa's	25.1%	interest	in	the	smelting	and	rolling	mill	companies).	In	conjunction	with	the	financings,	Alcoa	issued guarantees	on	behalf	of	the	smelting	and	rolling	mill	companies	to	the	lenders	in	the	event	that	such	companies	default	on	their	debt	service	requirements	through	2017 and	2020	for	the	smelting	company	and	2018	and	2021	for	the	rolling	mill	company	(Ma'aden	issued	similar	guarantees	for	its	74.9%	interest).	Alcoa's	guarantees	for the	smelting	and	rolling	mill	companies	cover	total	debt	service	requirements	of	$142	in	principal	and	up	to	a	maximum	of	approximately	$50	in	interest	per	year	(based on	projected	interest	rates).	At	December	31,	2015	and	2014,	the	combined	fair	value	of	the	guarantees	was	$7	and	$8,	respectively,	which	was	included	in	Other noncurrent	liabilities	and	deferred	credits	on	the	accompanying	Consolidated	Balance	Sheet.

The	mining	and	refining	company	has	project	financing	totaling	$2,232,	of	which	$560	represents	AWAC's	25.1%	interest	in	the	mining	and	refining	company.	In conjunction	with	the	financings,	Alcoa,	on	behalf	of	AWAC,	issued	guarantees	to	the	lenders	in	the	event	that	the	mining	and	refining	company	defaults	on	its	debt service	requirements	through	2019	and	2024	(Ma'aden	issued	similar	guarantees	for	its	74.9%	interest).	Alcoa's	guarantees	for	the	mining	and	refining	company	cover total	debt	service	requirements	of	$120	in	principal	and	up	to	a	maximum	of	approximately	$30	in	interest	per	year	(based	on	projected	interest	rates).	At	December	31, 2015	and	2014,	the	combined	fair	value	of	the	guarantees	was	$3	and	$4,	respectively,	which	was	included	in	Other	noncurrent	liabilities	and	deferred	credits	on	the accompanying	Consolidated	Balance	Sheet.	In	the	event	Alcoa	would	be	required	to	make	payments	under	the	guarantees,	40%	of	such	amount	would	be	contributed	to Alcoa	by	Alumina	Limited,	consistent	with	its	ownership	interest	in	AWAC.

In	June	2013,	all	three	joint	venture	companies	entered	into	a	20-year	gas	supply	agreement	with	Saudi	Aramco,	replacing	the	previous	authorized	gas	allocation	of	the Ministry	of	Petroleum	and	Mineral	Resources	of	Saudi	Arabia	(the	"Ministry	of	Petroleum").	The	gas	supply	agreement	provides	sufficient	fuel	to	meet	manufacturing process	requirements	as	well	as	fuel	to	the	adjacent	combined	water	and	power	plant	being	constructed	by	Saline	Water	Conversion	Corporation,	which	is	owned	by	the government	of	Saudi	Arabia	and	is	responsible	for	desalinating	sea	water	and	producing	electricity	for	Saudi	Arabia.	The	combined	water	and	power	plant	will	convert the	three	joint	venture	companies'	gas	into	electricity	and	water	at	cost,	which	will	be	supplied	to	the	refinery,	smelter,	and	rolling	mill.	A	$60	letter	of	credit	previously provided	to	the	Ministry	of	Petroleum	by	Ma'aden	(Alcoa	is	responsible	for	its	pro	rata	share)	under	the	gas	allocation	was	terminated	in	June	2015	due	to	the completion	of	certain	auxiliary	rolling	facilities.

The	parties	subject	to	the	joint	venture	shareholders'	agreement	may	not	sell,	transfer,	or	otherwise	dispose	of,	pledge,	or	encumber	any	interests	in	the	joint	venture	until certain	milestones	have	been	met	as	defined	in	both	agreements.	Under	the	joint	venture	shareholders'	agreement,	upon	the	occurrence	of	an	unremedied	event	of	default by	Alcoa,	Ma'aden	may	purchase,	or,	upon	the	occurrence	of	an	unremedied	event	of	default	by	Ma'aden,	Alcoa	may	sell,	its	interest	for	consideration	that	varies depending	on	the	time	of	the	default.

Other	Investments.	As	of	December	31,	2015	and	2014,	Other	investments	included	$193	and	$153,	respectively,	in	exchange-traded	fixed	income	and	equity securities,	which	are	classified	as	available-for-sale	and	are	carried	at	fair	value	with	unrealized	gains	and	losses	recognized	in	other	comprehensive	income.	Unrealized and	realized	gains	and	losses	related	to	these	securities	were	immaterial	in	2015,	2014,	and	2013.

# J.	Other	Noncurrent	Assets

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Intangibles,\tnet\t(E) | $1,158 | $737 |
| Fair\tvalue\tof\tderivative\tcontracts\t(X) | \t 1,008 | 163 |
| Cash\tsurrender\tvalue\tof\tlife\tinsurance | 492 | 506 |
| Gas\tsupply\tprepayment\t(N) | 288 | - |
| Prepaid\tgas\ttransmission\tcontract\t(N) | 268 | 295 |
| Value-added\ttax\treceivable | 233 | 294 |
| Deferred\tmining\tcosts,\tnet | 203 | 209 |
| Unamortized\tdebt\texpense | 58 | 65 |
| Prepaid\tpension\tbenefit\t(W) | 44 | 53 |
| Advance\trelated\tto\tEuropean\tCommission\tMatter\tin\tItaly\t(N) | - | 111 |
| Other | 254 | 326 |
|  | $4,006 | $2,759 |

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| 5.55%\tNotes,\tdue\t2017 | $750 | $750 |
| 6.50%\tBonds,\tdue\t2018 | 250 | 250 |
| 6.75%\tNotes,\tdue\t2018 | 750 | 750 |
| 5.72%\tNotes,\tdue\t2019 | 750 | 750 |
| 1.63%\tConvertible\tNotes,\tdue\t2019* | 403 | - |
| 6.150%\tNotes,\tdue\t2020 | \t 1,000 | \t 1,000 |
| 5.40%\tNotes,\tdue\t2021 | \t 1,250 | \t 1,250 |
| 5.87%\tNotes,\tdue\t2022 | 627 | 627 |
| 5.125%\tNotes,\tdue\t2024 | \t 1,250 | \t 1,250 |
| 5.90%\tNotes,\tdue\t2027 | 625 | 625 |
| 6.75%\tBonds,\tdue\t2028 | 300 | 300 |
| 5.95%\tNotes\tdue\t2037 | 625 | 625 |
| BNDES\tLoans,\tdue\t2015-2029\t(see\tbelow\tfor\tweighted\taverage\trates) | 174 | 267 |
| Iowa\tFinance\tAuthority\tLoan,\tdue\t2042\t(4.75%) | 250 | 250 |
| Other** | 61 | 104 |
|  | \t 9,065 | \t 8,798 |
| Less:\tamount\tdue\twithin\tone\tyear | 21 | 29 |
|  | $9,044 | $8,769 |

* Amount	was	assumed	in	conjunction	with	the	acquisition	of	RTI	(see	Note	F).

** Other	includes	various	financing	arrangements	related	to	subsidiaries,	unamortized	debt	discounts	related	to	the	outstanding	notes	and	bonds	listed	in	the	table	above,

an	equity	option	related	to	the	convertible	notes	due	in	2019	(see	Note	F),	and	adjustments	to	the	carrying	value	of	long-term	debt	related	to	an	interest	swap	contract accounted	for	as	a	fair	value	hedge	(see	Derivatives	in	Note	X).

Public	Debt—In	early	2014,	holders	of	$575	principal	amount	of	Alcoa's	5.25%	Convertible	Notes	due	March	15,	2014	(the	"2014	Notes")	exercised	their	option	to convert	the	2014	Notes	into	89	million	shares	of	Alcoa	common	stock.	The	conversion	rate	for	the	2014	Notes	was	155.4908	shares	of	Alcoa's	common	stock	per $1,000	(in	full	dollars)	principal	amount	of	notes,	equivalent	to	a	conversion	price	of	$6.43	per	share.	The	difference	between	the	$575	principal	amount	of	the	2014 Notes	and	the	$89	par	value	of	the	issued	shares	increased	Additional	capital	on	the	accompanying	Consolidated	Balance	Sheet.	This	transaction	was	not	reflected	in	the accompanying	Statement	of	Consolidated	Cash	Flows	as	it	represents	a	noncash	financing	activity.

In	September	2014,	Alcoa	completed	a	public	debt	offering	under	its	shelf	registration	statement	for	$1,250	of	5.125%	Notes	due	2024	(the	"2024	Notes").	Alcoa received	$1,238	in	net	proceeds	from	the	public	debt	offering	reflecting	an	original	issue	discount.	The	net	proceeds	were	used,	together	with	the	net	proceeds	of	newly issued	mandatory	convertible	preferred	stock	(see	Note	R),	to	finance	the	cash	portion	of	the	acquisition	of	Firth	Rixson	(see	Note	F).	The	original	issue	discount	was deferred	and	is	being	amortized	to	interest	expense	over	the	term	of	the	2024	Notes.	Interest	on	the	2024	Notes	will	be	paid	semi-annually	in	April	and	October, commencing	April	2015.	Alcoa	has	the	option	to	redeem	the	2024	Notes,	as	a	whole	or	in	part,	at	any	time	or	from	time	to	time,	on	at	least	30	days,	but	not	more	than	60 days,	prior	notice	to	the	holders	of	the	2024	Notes	at	a	redemption	price	specified	in	the	2024	Notes.	The	2024	Notes	are	subject	to	repurchase	upon	the	occurrence	of	a change	in	control	repurchase	event	(as	defined	in	the	2024	Notes)	at	a	repurchase	price	in	cash	equal	to	101%	of	the	aggregate	principal	amount	of	the	2024	Notes repurchased,	plus	any	accrued	and	unpaid	interest	on	the	2024	Notes	repurchased.	The	2024	Notes	rank	pari	passu	with	Alcoa's	other	unsecured	unsubordinated indebtedness.

BNDES	Loans—Alcoa	Alumínio	(Alumínio)	has	a	loan	agreement	with	Brazil's	National	Bank	for	Economic	and	Social	Development	(BNDES)	that	provides	for	a financing	commitment	of	$397	(R$687),	which	is	divided	into	three	subloans	and	was	used	to	pay	for	certain	expenditures	of	the	Estreito	hydroelectric	power	project. Interest	on	the	three	subloans	is	a	Brazil	real	rate	of	interest	equal	to	BNDES'	long-term	interest	rate,	7.00%	and	5.00%	as	of	December	31,	2015	and	2014,	respectively, plus	a	weighted-average	margin	of	1.48%.	Principal	and	interest	are	payable	monthly,	which	began	in	October	2011	and	end	in	September	2029	for	two	of	the	subloans totaling	R$667	and	began	in	July	2012	and	end	in	June	2018	for	the	subloan	of	R$20.	This	loan	may	be	repaid	early	without	penalty	with	the	approval	of	BNDES.

Alumínio	has	another	loan	agreement	with	BNDES	that	provides	for	a	financing	commitment	of	$85	(R$177),	which	also	was	used	to	pay	for	certain	expenditures	of	the Estreito	hydroelectric	power	project.	Interest	on	the	loan	is	a	Brazil	real	rate	of	interest	equal	to	BNDES'	long-term	interest	rate	plus	a	margin	of	1.55%.	Principal	and interest	are	payable	monthly,	which	began	in	January	2013	and	end	in	September	2029.	This	loan	may	be	repaid	early	without	penalty	with	the	approval	of	BNDES.	As of	December	31,	2015	and	2014,	Alumínio's	outstanding	borrowings	were	$38	(R146)	and	$58	(R$156),	respectively,	and	the	interest	rate	was	6.55%.	During	2015	and 2014,	Alumínio	repaid	$3	(R$10)	and	$5	(R$11),	respectively,	of	outstanding	borrowings.

Credit	Facilities.	On	July	25,	2014,	Alcoa	entered	into	a	Five-Year	Revolving	Credit	Agreement	(the	"Credit	Agreement")	with	a	syndicate	of	lenders	and	issuers named	therein.	The	Credit	Agreement	provides	a	$4,000	senior	unsecured	revolving	credit	facility	(the	"Credit	Facility"),	the	proceeds	of	which	are	to	be	used	to	provide working	capital	or	for	other	general	corporate	purposes	of	Alcoa.	Subject	to	the	terms	and	conditions	of	the	Credit	Agreement,	Alcoa	may	from	time	to	time	request increases	in	lender	commitments	under	the	Credit	Facility,	not	to	exceed	$500	in	aggregate	principal	amount,	and	may	also	request	the	issuance	of	letters	of	credit, subject	to	a	letter	of	credit	sublimit	of	$1,000	under	the	Credit	Facility.

There	were	no	amounts	outstanding	at	December	31,	2015	and	2014	and	no	amounts	were	borrowed	during	2015	or	2014	under	the	Credit	Facility.	Also,	there	were	no amounts	borrowed	during	2014	related	to	the	Former	Credit	Agreement.

In	2015	and	2014,	Alcoa	borrowed	and	repaid	$1,890	and	$1,640,	respectively,	under	the	respective	credit	arrangements.	The	weighted-average	interest	rate	and weighted-average	days	outstanding	of	the	respective	borrowings	during	2015,	2014,	and	2013	were	1.61%,	1.54%,	and	1.57%,	respectively,	and	69	days,	67	days,	and 213	days,	respectively.

Short-Term	Borrowings.	At	December	31,	2015	and	2014,	Short-term	borrowings	were	$38	and	$54,	respectively.	These	amounts	included	$32	and	$50	at December	31,	2015	and	2014,	respectively,	related	to	accounts	payable	settlement	arrangements	with	certain	vendors	and	third-party	intermediaries.	These	arrangements provide	that,	at	the	vendor's	request,	the	third-party	intermediary	advances	the	amount	of	the	scheduled	payment	to	the	vendor,	less	an	appropriate	discount,	before	the scheduled	payment	date	and	Alcoa	makes	payment	to	the	third-party	intermediary	on	the	date	stipulated	in	accordance	with	the	commercial	terms	negotiated	with	its vendors.	Alcoa	records	imputed	interest	related	to	these	arrangements	in	Interest	expense	on	the	accompanying	Statement	of	Consolidated	Operations.

Commercial	Paper.	Alcoa	had	no	outstanding	commercial	paper	at	December	31,	2015	and	2014.	In	2015	and	2014,	the	average	outstanding	commercial	paper	was $198	and	$257,	respectively.	Commercial	paper	matures	at	various	times	within	one	year	and	had	an	annual	weighted	average	interest	rate	of	0.6%,	0.6%,	and	0.8% during	2015,	2014,	and	2013,	respectively.

# L.	Other	Noncurrent	Liabilities	and	Deferred	Credits

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Environmental\tremediation\t(N) | $554 | $473 |
| Asset\tretirement\tobligations\t(C) | 551 | 587 |
| Income\ttaxes\t(T) | 521 | 377 |
| Accrued\tcompensation\tand\tretirement\tcosts | 329 | 346 |
| Fair\tvalue\tof\tderivative\tcontracts\t(X) | 208 | 376 |
| Liability\trelated\tto\tthe\tresolution\tof\ta\tlegal\tmatter\t(N) | 148 | 222 |
| Contingent\tpayment\trelated\tto\tan\tacquisition\t(F) | 130 | 130 |
| Deferred\talumina\tsales\trevenue | 84 | 93 |
| Deferred\tcredit\trelated\tto\tderivative\tcontract\t(X) | - | 62 |
| Other | 213 | 230 |
|  | $2,738 | $2,896 |

# M.	Noncontrolling	Interests

The	following	table	summarizes	the	noncontrolling	shareholders'	interests	in	the	equity	of	certain	Alcoa	majority-owned	consolidated	subsidiaries:

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Alcoa\tWorld\tAlumina\tand\tChemicals | $2,071 | $2,474 |
| Other | 14 | 14 |
|  | $2,085 | $2,488 |

In	2015,	2014,	and	2013,	Alcoa	received	$2,	$43,	and	$9,	respectively,	in	contributions	from	the	noncontrolling	shareholder	(Alumina	Limited)	of	Alcoa	World Alumina	and	Chemicals.

In	August	2014,	Alcoa	acquired	the	30%	outstanding	noncontrolling	interest	in	its	aluminum	brazing	sheet	venture	in	Kunshan	City,	China	(see	Note	F).

In	2013,	Noncontrolling	interests	included	a	charge	of	$17	related	to	a	legal	matter	(see	Settlement	with	Alumina	Limited	under	Litigation	in	Note	N).

# N.	Contingencies	and	Commitments

# Contingencies

# Alba	Matter

Civil	Suit.	On	February	27,	2008,	Alcoa	Inc.	received	notice	that	Aluminium	Bahrain	B.S.C.	("Alba")	had	filed	suit	against	Alcoa,	Alcoa	World	Alumina	LLC ("AWA"),	and	William	Rice	(collectively,	the	"Alcoa	Parties"),	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	alleged	that certain	Alcoa	entities	and	their	agents,	including	Victor	Phillip	Dahdaleh,	had	engaged	in	a	conspiracy	over	a	period	of	15	years	to	defraud	Alba.	The	complaint	further alleged	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	alleged	that	Alcoa	and	the	other	defendants	violated	the	Racketeer	Influenced	and	Corrupt	Organizations	Act	(RICO)	and	committed	fraud. Alba	claimed	damages	in	excess	of	$1,000.	Alba's	complaint	sought	treble	damages	with	respect	to	its	RICO	claims;	compensatory,	consequential,	exemplary,	and punitive	damages;	rescission	of	the	2005	alumina	supply	contract;	and	attorneys'	fees	and	costs.

On	October	9,	2012,	the	Alcoa	Parties,	without	admitting	any	liability,	entered	into	a	settlement	agreement	with	Alba.	The	agreement	called	for	AWA	to	pay	Alba	$85	in two	equal	installments,	one-half	at	time	of	settlement	and	one-half	one	year	later,	and	for	the	case	against	the	Alcoa	Parties	to	be	dismissed	with	prejudice.	Additionally, AWA	and	Alba	entered	into	a	long-term	alumina	supply	agreement.	On	October	9,	2012,	pursuant	to	the	settlement	agreement,	AWA	paid	Alba	$42.5,	and	all	claims against	the	Alcoa	Parties	were	dismissed	with	prejudice.	On	October	9,	2013	pursuant	to	the	settlement	agreement,	AWA	paid	the	remaining	$42.5.	Based	on	the settlement	agreement,	in	the	2012	third	quarter,	Alcoa	recorded	a	$40	charge	in	addition	to	the	$45	charge	it	recorded	in	the	2012	second	quarter	in	respect	of	the	suit (see	Agreement	with	Alumina	Limited	below).

Government	Investigations.	On	February	26,	2008,	Alcoa	Inc.	advised	the	Department	of	Justice	("DOJ")	and	the	Securities	and	Exchange	Commission	("SEC")	that	it had	recently	become	aware	of	the	claims	by	Alba	as	alleged	in	the	Alba	civil	suit,	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.	The	SEC	subsequently commenced	a	concurrent	investigation.	Alcoa	has	been	cooperating	with	the	government	since	that	time.

In	the	past	year,	Alcoa	had	been	seeking	settlements	of	both	investigations.	In	the	second	quarter	of	2013,	Alcoa	proposed	to	settle	the	DOJ	matter	by	offering	the	DOJ	a cash	payment	of	$103.	Based	on	this	offer,	Alcoa	recorded	a	charge	of	$103	in	the	2013	second	quarter.	Also	in	the	second	quarter	of	2013,	Alcoa	exchanged	settlement offers	with	the	SEC.	However,	the	SEC	staff	rejected	Alcoa's	offer	of	$60	and	no	charge	was	recorded.	During	the	remainder	of	2013,	settlement	discussions	with	both the	DOJ	and	the	SEC	continued.

On	January	9,	2014,	Alcoa	resolved	the	investigations	by	the	DOJ	and	the	SEC.	The	settlement	with	the	DOJ	was	reached	with	AWA.	Under	the	terms	of	a	plea agreement	entered	into	with	the	DOJ,	effective	January	9,	2014,	AWA	pled	guilty	to	one	count	of	violating	the	anti-bribery	provisions	of	the	Foreign	Corrupt	Practices Act	of	1977,	as	amended	(the	"FCPA").	As	part	of	the	DOJ	resolution,	AWA	agreed	to	pay	a	total	of	$223,	including	a	fine	of	$209	payable	in	five	equal	installments over	four	years.	The	first	installment	of	$41.8,	plus	a	one-time	administrative	forfeiture	of	$14,	was	paid	in	the	first	quarter	of	2014,	the	second	installment	of	$41.8	was paid	in	the	first	quarter	of	2015,	and	the	remaining	installments	of	$41.8	each	will	be	paid	in	the	first	quarters	of	2016	through	2018	(the	third	installment	was	paid	on January	8,	2016).	The	DOJ	is	bringing	no	case	against	Alcoa	Inc.

Effective	January	9,	2014,	the	Company	also	settled	civil	charges	filed	by	the	SEC	in	an	administrative	proceeding	relating	to	the	anti-bribery,	internal	controls,	and books	and	records	provisions	of	the	FCPA.	Under	the	terms	of	the	settlement	with	the	SEC,	the	Company	agreed	to	a	settlement	amount	of	$175,	but	will	be	given	credit for	the	$14	one-time	forfeiture	payment,	which	is	part	of	the	DOJ	resolution,	resulting	in	a	total	cash	payment	to	the	SEC	of	$161	payable	in	five	equal	installments	over four	years.	The	first	and	second	installments	of	$32.2	each	were	paid	to	the	SEC	in	the	first	quarter	of	2014	and	2015,	respectively,	and	the	remaining	installments	of $32.2	each	will	be	paid	in	the	first	quarters	of	2016	through	2018	(the	third	installment	was	paid	on	January	25,	2016).

There	was	no	allegation	in	the	filings	by	the	DOJ	and	there	was	no	finding	by	the	SEC	that	anyone	at	Alcoa	Inc.	knowingly	engaged	in	the	conduct	at	issue.

Based	on	the	resolutions	with	both	the	DOJ	and	SEC,	in	the	2013	fourth	quarter,	Alcoa	recorded	a	$288	charge,	which	includes	legal	costs	of	$7,	in	addition	to	the	$103 charge	it	recorded	in	the	2013	second	quarter	in	respect	of	the	investigations	(see	Agreement	with	Alumina	Limited	below).

Agreement	with	Alumina	Limited.	AWA	is	a	U.S.-based	Alcoa	World	Alumina	and	Chemicals	("AWAC")	company	organized	under	the	laws	of	Delaware	that	owns, directly	or	indirectly,	alumina	refineries	and	bauxite	mines	in	the	Atlantic	region.	AWAC	is	an	unincorporated	global	bauxite	mining	and	alumina	refining	venture between	Alcoa	and	Alumina	Limited.	AWAC	consists	of	a	number	of	affiliated	operating	entities,	including	AWA,	which	own,	or	have	an	interest	in,	or	operate	bauxite mines	and	alumina	refineries	in	eight	countries	(seven	as	of	December	31,	2014	due	to	the	divestiture	of	an	ownership	interest	in	a	mining	and	refining	joint	venture	in Jamaica—see	Note	F).	Alcoa	owns	60%	and	Alumina	Limited	owns	40%	of	these	individual	entities,	which	are	consolidated	by	the	Company	for	financial	reporting purposes.

In	October	2012,	Alcoa	and	Alumina	Limited	entered	into	an	agreement	to	allocate	the	costs	of	the	Alba	civil	settlement	and	all	legal	fees	associated	with	this	matter (including	the	government	investigations	discussed	above)	between	Alcoa	and	Alumina	Limited	on	an	85%	and	15%	basis,	respectively,	but	this	would	occur	only	if	a settlement	is	reached	with	the	DOJ	and	the	SEC	regarding	their	investigations.	As	such,	the	$85	civil	settlement	in	2012	and	all	legal	costs	associated	with	the	civil	suit and	government	investigations	incurred	prior	to	2013	were	allocated	on	a	60%	and	40%	basis	in	the	respective	periods	on	Alcoa's	Statement	of	Consolidated	Operations. As	a	result	of	the	resolutions	of	the	government	investigations,	the	$384	charge	and	legal	costs	incurred	in	2013	were	allocated	on	an	85%	and	15%	basis	per	the allocation	agreement	with	Alumina	Limited.	Additionally,	the	$85	civil	settlement	from	2012	and	all	legal	costs	associated	with	the	civil	suit	and	government investigations	incurred	prior	to	2013	were	reallocated	on	the	85%	and	15%	basis.	The	following	table	details	the	activity	related	to	the	Alba	matter:

|  |  | 2013 |  |  | 2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Alumina |  |  | Alumina |  |
|  | Alcoa | Limited | Total | Alcoa | Limited | Total |
| Government\tinvestigations^(1) | $326 | $58 | $ 384 | $-\t\t\t\t $-\t\t\t\t $- | $-\t\t\t\t $-\t\t\t\t $- | $-\t\t\t\t $-\t\t\t\t $- |
| Civil\tsuit^(1) | - | - | - | 51 | 34 | 85 |
| Reallocation\tof\tcivil\tsuit | 21 | (21) | - | - | - | - |
| Reallocation\tof\tlegal\tcosts | 20 | (20) | - | - | - | - |
| Loss\tbefore\tincome\ttaxes | 367 | 17 | 384 | 51 | 34 | 85 |
| Benefit\tfor\tincome\ttaxes | 66 | - | 66 | 18 | - | 18 |
| Net\tloss^(2) | $301 | $17 | $ 318 | $33 | $34 | $67 |
| (1) |  |  |  |  |  |  |

The	amount	in	the	Total	column	was	recorded	in	Restructuring	and	other	charges	(see	Note	D). (1)

In	2013	and	2012,	the	amount	for	Alcoa	was	included	in	Net	(loss)	income	attributable	to	Alcoa,	and	the	amount	for	Alumina	Limited	was	included	in	Net income	(loss)	attributable	to	noncontrolling	interests. (2)

On	June	5,	2015,	AWA	and	St.	Croix	Alumina,	L.L.C.	("SCA")	filed	a	complaint	in	Delaware	Chancery	Court	for	a	declaratory	judgment	and	injunctive	relief	to	resolve a	dispute	between	Alcoa	and	Glencore	Ltd.	("Glencore")	with	respect	to	claimed	obligations	under	a	1995	asset	purchase	agreement	between	Alcoa	and	Glencore.	The dispute	arose	from	Glencore's	demand	that	Alcoa	indemnify	it	for	liabilities	it	may	have	to	pay	to	Lockheed	Martin	("Lockheed")	related	to	the	St.	Croix	alumina refinery.	Lockheed	had	earlier	filed	suit	against	Glencore	in	federal	court	in	New	York	seeking	indemnity	for	liabilities	it	had	incurred	and	would	incur	to	the	U.S.	Virgin Islands	to	remediate	certain	properties	at	the	refinery	property	and	claimed	that	Glencore	was	required	by	an	earlier,	1989	purchase	agreement	to	indemnify	it.	Glencore had	demanded	that	Alcoa	indemnify	and	defend	it	in	the	Lockheed	case	and	threatened	to	claim	over	against	Alcoa	in	the	New	York	action	despite	exclusive	jurisdiction for	resolution	of	disputes	under	the	1995	purchase	agreement	being	in	Delaware.	After	Glencore	conceded	that	it	was	not	seeking	to	add	Alcoa	to	the	New	York	action, AWA	and	SCA	dismissed	their	complaint	in	the	Chancery	Court	case	and	on	August	6,	2015	filed	a	complaint	for	declaratory	judgment	in	Delaware	Superior	Court. AWA	and	SCA	filed	a	motion	for	judgment	on	the	pleadings	on	September	16,	2015.	Glencore	answered	AWA's	and	SCA's	complaint	and	asserted	counterclaims	on August	27,	2015,	and	on	October	2,	2015	filed	its	own	motion	for	judgment	on	the	pleadings.	Argument	on	the	parties'	motions	was	held	by	the	court	on	December	7, 2015,	and	by	order	dated	February	8,	2016,	Alcoa's	motion	was	granted	and	Glencore's	motion	was	denied	resulting	in	Alcoa	not	being	liable	to	indemnify	Glencore	for the	Lockheed	action.	On	February	17,

2016,	Glencore	filed	notice	of	its	application	for	interlocutory	appeal	of	the	February	8	ruling.	AWA	and	SCA	have	10	days	to	respond.	At	this	time,	the	Company	is unable	to	reasonably	predict	the	ultimate	outcome	for	this	matter.

Before	2002,	Alcoa	purchased	power	in	Italy	in	the	regulated	energy	market	and	received	a	drawback	of	a	portion	of	the	price	of	power	under	a	special	tariff	in	an amount	calculated	in	accordance	with	a	published	resolution	of	the	Italian	Energy	Authority,	Energy	Authority	Resolution	n.	204/1999	("204/1999").	In	2001,	the Energy	Authority	published	another	resolution,	which	clarified	that	the	drawback	would	be	calculated	in	the	same	manner,	and	in	the	same	amount,	in	either	the regulated	or	unregulated	market.	At	the	beginning	of	2002,	Alcoa	left	the	regulated	energy	market	to	purchase	energy	in	the	unregulated	market.	Subsequently,	in	2004, the	Energy	Authority	introduced	regulation	no.	148/2004,	which	set	forth	a	different	method	for	calculating	the	special	tariff	that	would	result	in	a	different	drawback for	the	regulated	and	unregulated	markets.	Alcoa	challenged	the	new	regulation	in	the	Administrative	Court	of	Milan	and	received	a	favorable	judgment	in	2006. Following	this	ruling,	Alcoa	continued	to	receive	the	power	price	drawback	in	accordance	with	the	original	calculation	method,	through	2009,	when	the	European Commission	declared	all	such	special	tariffs	to	be	impermissible	"state	aid."	In	2010,	the	Energy	Authority	appealed	the	2006	ruling	to	the	Consiglio	di	Stato	(final	court of	appeal).	On	December	2,	2011,	the	Consiglio	di	Stato	ruled	in	favor	of	the	Energy	Authority	and	against	Alcoa,	thus	presenting	the	opportunity	for	the	energy regulators	to	seek	reimbursement	from	Alcoa	of	an	amount	equal	to	the	difference	between	the	actual	drawback	amounts	received	over	the	relevant	time	period,	and	the drawback	as	it	would	have	been	calculated	in	accordance	with	regulation	148/2004.	On	February	23,	2012,	Alcoa	filed	its	appeal	of	the	decision	of	the	Consiglio	di Stato	(this	appeal	was	subsequently	withdrawn	in	March	2013).	On	March	26,	2012,	Alcoa	received	a	letter	from	the	agency	(Cassa	Conguaglio	per	il	Settore	Eletrico (CCSE))	responsible	for	making	and	collecting	payments	on	behalf	of	the	Energy	Authority	demanding	payment	in	the	amount	of	approximately	$110	(€85),	including interest.	By	letter	dated	April	5,	2012,	Alcoa	informed	CCSE	that	it	disputes	the	payment	demand	of	CCSE	since	(i)	CCSE	was	not	authorized	by	the	Consiglio	di	Stato decisions	to	seek	payment	of	any	amount,	(ii)	the	decision	of	the	Consiglio	di	Stato	has	been	appealed	(see	above),	and	(iii)	in	any	event,	no	interest	should	be	payable. On	April	29,	2012,	Law	No.	44	of	2012	("44/2012")	came	into	effect,	changing	the	method	to	calculate	the	drawback.	On	February	21,	2013,	Alcoa	received	a	revised request	letter	from	CSSE	demanding	Alcoa's	subsidiary,	Alcoa	Trasformazioni	S.r.l.,	make	a	payment	in	the	amount	of	$97	(€76),	including	interest,	which	reflects	a revised	calculation	methodology	by	CCSE	and	represents	the	high	end	of	the	range	of	reasonably	possible	loss	associated	with	this	matter	of	$0	to	$97	(€76).	Alcoa	has rejected	that	demand	and	has	formally	challenged	it	through	an	appeal	before	the	Administrative	Court	on	April	5,	2013.	The	Administrative	Court	scheduled	a	hearing for	December	19,	2013,	which	was	subsequently	postponed	until	April	17,	2014,	and	further	postponed	until	June	19,	2014.	On	this	date,	the	Administrative	Court listened	to	Alcoa's	oral	argument,	and	on	September	2,	2014,	rendered	its	decision.	The	Administrative	Court	declared	the	payment	request	of	CCSE	and	the	Energy Authority	to	Alcoa	to	be	unsubstantiated	based	on	the	148/2004	resolution	with	respect	to	the	January	19,	2007	through	November	19,	2009	timeframe.	On December	18,	2014,	the	CCSE	and	the	Energy	Authority	appealed	the	Administrative	Court's	September	2,	2014	decision;	however,	a	date	for	the	hearing	has	not	been scheduled.	As	a	result	of	the	conclusion	of	the	European	Commission	Matter	on	January	26,	2016	described	below,	management	has	modified	its	outlook	with	respect	to a	portion	of	the	pending	legal	proceedings	related	to	this	matter.	As	such,	a	charge	of	$37	(€34)	was	recorded	in	Restructuring	and	other	charges	for	the	year	ended December	31,	2015	on	the	accompanying	Statement	of	Consolidated	Operations	to	establish	a	partial	reserve	for	this	matter.	At	this	time,	the	Company	is	unable	to reasonably	predict	the	ultimate	outcome	for	this	matter.

European	Commission	Matter.	In	July	2006,	the	European	Commission	(EC)	announced	that	it	had	opened	an	investigation	to	establish	whether	an	extension	of	the regulated	electricity	tariff	granted	by	Italy	to	some	energy-intensive	industries	complied	with	European	Union	(EU)	state	aid	rules.	The	Italian	power	tariff	extended	the tariff	that	was	in	force	until	December	31,	2005	through	November	19,	2009	(Alcoa	had	been	incurring	higher	power	costs	at	its	smelters	in	Italy	subsequent	to	the	tariff end	date	through	the	end	of	2012).	The	extension	was	originally	through	2010,	but	the	date	was	changed	by	legislation	adopted	by	the	Italian	Parliament	effective	on August	15,	2009.	Prior	to	expiration	of	the	tariff	in	2005,	Alcoa	had	been	operating	in	Italy	for	more	than	10	years	under	a	power	supply	structure	approved	by	the	EC	in 1996.	That	measure	provided	a	competitive	power	supply	to	the	primary	aluminum	industry	and	was	not	considered	state	aid	from	the	Italian	Government.	The	EC's announcement	expressed	concerns	about	whether	Italy's	extension	of	the	tariff	beyond	2005	was	compatible	with	EU	legislation	and	potentially	distorted	competition	in the	European	market	of	primary	aluminum,	where	energy	is	an	important	part	of	the	production	costs.

On	November	19,	2009,	the	EC	announced	a	decision	in	this	matter	stating	that	the	extension	of	the	tariff	by	Italy	constituted	unlawful	state	aid,	in	part,	and,	therefore, the	Italian	Government	is	to	recover	a	portion	of	the	benefit	Alcoa	received	since	January	2006	(including	interest).	The	amount	of	this	recovery	was	to	be	based	on	a calculation	prepared	by	the	Italian	Government	(see	below).	In	late	2009,	after	discussions	with	legal	counsel	and	reviewing	the	bases	on	which	the	EC	decided, including	the	different	considerations	cited	in	the	EC	decision	regarding	Alcoa's	two	smelters	in	Italy,	Alcoa	recorded	a	charge	of	$250	(€173),	which	included	$20 (€14)	to	write	off	a	receivable	from	the	Italian	Government	for	amounts	due	under	the	now	expired	tariff	structure	and	$230	(€159)	to	establish	a	reserve.	On	April	19, 2010,	Alcoa	filed	an	appeal	of	this	decision	with	the	General	Court	of	the	EU	(see	below).	Prior	to	2012,	Alcoa	was	involved	in	other	legal	proceedings	related	to	this matter	that	separately	sought	the	annulment	of	the	EC's	July	2006	decision	to	open	an	investigation	alleging	that	such	decision	did	not	follow	the	applicable	procedural rules	and	requested	injunctive	relief	to	suspend	the	effectiveness	of	the	EC's	November	19,	2009	decision.	However,	the	decisions	by	the	General	Court,	and	subsequent appeals	to	the	European	Court	of	Justice,	resulted	in	the	denial	of	these	remedies.

In	June	2012,	Alcoa	received	formal	notification	from	the	Italian	Government	with	a	calculated	recovery	amount	of	$375	(€303);	this	amount	was	reduced	by	$65 (€53)	for	amounts	owed	by	the	Italian	Government	to	Alcoa,	resulting	in	a	net	payment	request	of	$310	(€250).	In	a	notice	published	in	the	Official	Journal	of	the European	Union	on	September	22,	2012,	the	EC	announced	that	it	had	filed	an	action	against	the	Italian	Government	on	July	18,	2012	to	compel	it	to	collect	the recovery	amount	(on	October	17,	2013,	the	European	Court	of	Justice	ordered	Italy	to	so	collect).	On	September	27,	2012,	Alcoa	received	a	request	for	payment	in	full of	the	$310	(€250)	by	October	31,	2012.	Following	discussions	with	the	Italian	Government	regarding	the	timing	of	such	payment,	Alcoa	paid	the	requested	amount	in five	quarterly	installments	of	$69	(€50)	beginning	in	October	2012	through	December	2013.

On	October	16,	2014,	Alcoa	received	notice	from	the	General	Court	of	the	EU	that	its	April	19,	2010	appeal	of	the	EC's	November	19,	2009	decision	was	denied.	On December	27,	2014,	Alcoa	filed	an	appeal	of	the	General	Court's	October	16,	2014	ruling	to	the	European	Court	of	Justice	(ECJ).	Following	submission	of	the	EC's response	to	the	appeal,	on	June	10,	2015,	Alcoa	filed	a	request	for	an	oral	hearing	before	the	ECJ;	no	decision	on	that	request	was	received.	On	January	26,	2016,	Alcoa was	informed	that	the	ECJ	had	dismissed	Alcoa's	December	27,	2014	appeal	of	the	General	Court's	October	16,	2014	ruling.	The	dismissal	of	Alcoa's	appeal	represents the	conclusion	of	the	legal	proceedings	in	this	matter.	Prior	to	this	dismissal,	Alcoa	had	a	noncurrent	asset	of	$100	(€91)	reflecting	the	excess	of	the	total	of	the	five payments	made	to	the	Italian	Government	over	the	reserve	recorded	in	2009.	As	a	result,	this	noncurrent	asset,	along	with	the	$58	(€53)	for	amounts	owed	by	the	Italian Government	to	Alcoa	mentioned	above	plus	$6	(€6)	for	interest	previously	paid,	was	written-off.	A	charge	of	$164	(€150)	was	recorded	in	Restructuring	and	other charges	for	the	year	ended	December	31,	2015	on	the	accompanying	Statement	of	Consolidated	Operations	(see	Note	D).

As	a	result	of	the	EC's	November	19,	2009	decision,	management	had	contemplated	ceasing	operations	at	its	Italian	smelters	due	to	uneconomical	power	costs.	In February	2010,	management	agreed	to	continue	to	operate	its	smelters	in	Italy	for	up	to	six	months	while	a	long-term	solution	to	address	increased	power	costs	could	be negotiated.	Over	a	portion	of	this	time,	a	long-term	solution	was	not	able	to	be	reached	related	to	the	Fusina	smelter,	therefore,	in	May	2010,	Alcoa	and	the	Italian Government	agreed	to	a	temporary	idling	of	the	Fusina	smelter.	As	of	September	30,	2010,	the	Fusina	smelter	was	fully	curtailed	(44,000	metric-tons-per-year).	For	the Portovesme	smelter,	Alcoa	executed	a	new	power	agreement	effective	September	1,	2010	through	December	31,	2012,	replacing	the	short-term,	market-based	power contract	that	was	in	effect	since	early	2010.	This	new	agreement	along	with	interruptibility	rights	(i.e.	compensation	for	power	interruptions	when	grids	are	overloaded) granted	to	Alcoa	for	the	Portovesme	smelter	provided	additional	time	to	negotiate	a	long-term	solution	(the	EC	had	previously	determined	that	the	interruptibility	rights were	not	considered	state	aid).

At	the	end	of	2011,	as	part	of	a	restructuring	of	Alcoa's	global	smelting	system,	management	decided	to	curtail	operations	at	the	Portovesme	smelter	during	2012	due	to the	uncertain	prospects	for	viable,	long-term	power,	along	with	rising	raw	materials	costs	and	falling	global	aluminum	prices	(mid-2011	to	late	2011).	As	of December	31,	2012,	the	Portovesme	smelter	was	fully	curtailed	(150,000	metric-tons-per-year).

In	June	2013	and	August	2014,	Alcoa	decided	to	permanently	shut	down	and	demolish	the	Fusina	and	Portovesme	smelters,	respectively,	due	to	persistent	uneconomical conditions	(see	Note	D).

Environmental	Matters.	Alcoa	participates	in	environmental	assessments	and	cleanups	at	more	than	100	locations.	These	include	owned	or	operating	facilities	and adjoining	properties,	previously	owned	or	operating	facilities	and	adjoining	properties,	and	waste	sites,	including	Superfund	(Comprehensive	Environmental	Response, Compensation	and	Liability	Act	(CERCLA))	sites.

A	liability	is	recorded	for	environmental	remediation	when	a	cleanup	program	becomes	probable	and	the	costs	can	be	reasonably	estimated.	As	assessments	and cleanups	proceed,	the	liability	is	adjusted	based	on	progress	made	in	determining	the	extent	of	remedial	actions	and	related	costs.	The	liability	can	change	substantially due	to	factors	such	as	the	nature	and	extent	of	contamination,	changes	in	remedial	requirements,	and	technological	changes,	among	others.

Alcoa's	remediation	reserve	balance	was	$604	and	$543	at	December	31,	2015	and	2014	(of	which	$50	and	$70	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	2015,	the	remediation	reserve	was	increased	by	$115	due	to	a	charge	of	$52	related	to	the	planned	demolition	of	the	remaining	structures	at	the	Massena	East	smelter location	(see	Note	D),	a	charge	of	$29	related	to	the	planned	demolition	of	the	Poços	de	Caldas	smelter	and	the	Anglesea	power	station	(see	Note	D),	a	charge	of	$12 related	to	the	Mosjøen	location	(see	below),	a	charge	of	$7	related	to	the	Portovesme	location	(see	below),	and	a	net	charge	of	$15	associated	with	a	number	of	other sites.	In	2014,	the	remediation	reserve	was	increased	by	$61	due	to	a	charge	of	$42	related	to	the	planned	demolition	of	certain	structures	at	the	Massena	East,	NY,	Point Henry	and	Yennora,	Australia,	and	Portovesme,	Italy	locations	(see	Note	D),	a	charge	of	$3	related	to	the	Portovesme	location	(see	below),	and	a	net	charge	of	$16 associated	with	a	number	of	other	sites.	Of	the	changes	to	the	remediation	reserve	in	2015	and	2014,	$86	and	$47,	respectively,	was	recorded	in	Restructuring	and	other charges,	while	the	remainder	was	recorded	in	Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations.

Payments	related	to	remediation	expenses	applied	against	the	reserve	were	$43	and	$46	in	2015	and	2014,	respectively.	These	amounts	include	expenditures	currently mandated,	as	well	as	those	not	required	by	any	regulatory	authority	or	third	party.	In	2015,	the	change	in	the	reserve	also	reflects	a	decrease	of	$16	due	to	the	effects	of foreign	currency	translation	and	an	increase	of	$5	related	to	the	acquisition	of	Firth	Rixson	(see	Note	F).	In	2014,	the	change	in	the	reserve	also	reflects	an	increase	of $19	due	to	the	effects	of	foreign	currency	translation	and	a	reclassification	of	amounts	included	in	other	reserves	within	Other	noncurrent	liabilities	and	deferred	credits on	Alcoa's	Consolidated	Balance	Sheet	as	of	December	31,	2013.

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.

The	following	discussion	provides	details	regarding	the	current	status	of	certain	significant	reserves	related	to	current	or	former	Alcoa	sites.

Massena	West,	NY—Alcoa	has	an	ongoing	remediation	project	related	to	the	Grasse	River,	which	is	adjacent	to	Alcoa's	Massena	plant	site.	Many	years	ago,	it	was determined	that	sediments	and	fish	in	the	river	contain	varying	levels	of	polychlorinated	biphenyls	(PCBs).	The	project,	which	was	selected	by	the	U.S.	Environmental Protection	Agency	(EPA)	in	a	Record	of	Decision	(ROD)	issued	in	April	2013,	is	aimed	at	capping	PCB	contaminated	sediments	with	concentration	in	excess	of	one	part per	million	in	the	main	channel	of	the	river	and	dredging	PCB	contaminated	sediments	in	the	near-shore	areas	where	total	PCBs	exceed	one	part	per	million.	At December	31,	2015	and	2014,	the	reserve	balance	associated	with	this	matter	was	$234	and	$239,	respectively.	Alcoa	is	in	the	planning	and	design	phase,	which	is expected	to	be	completed	in	2017.	Subsequently	in	2017,	the	actual	remediation	fieldwork	is	expected	to	commence	and	take	approximately	four	years.	The	majority	of the	project	funding	is	expected	to	be	spent	between	2017	and	2021.

Sherwin,	TX—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	bauxite	residue	waste disposal	areas	(known	as	the	Copano	facility).	Alcoa's	share	of	the	closure	costs	is	proportional	to	the	total	period	of	operation	of	the	active	waste	disposal	areas.	At December	31,	2015	and	2014,	the	reserve	balance	associated	with	Sherwin	was	$30	and	$32,	respectively.	Approximately	half	of	the	project	funding	is	expected	to	be spent	through	2019.	The	remainder	is	not	expected	to	be	spent	in	the	foreseeable	future	as	it	is	dependent	upon	the	operating	life	of	the	active	waste	disposal	areas.

East	St.	Louis,	IL—Alcoa	has	an	ongoing	remediation	project	related	to	an	area	used	for	the	disposal	of	bauxite	residue	from	former	alumina	refining	operations.	The project,	which	was	selected	by	the	EPA	in	a	ROD	issued	in	July	2012,	is	aimed	at	implementing	a	soil	cover	over	the	affected	area.	On	November	1,	2013,	the	U.S. Department	of	Justice	lodged	a	consent	decree	on	behalf	of	the	EPA	for	Alcoa	to	conduct	the	work	outlined	in	the	ROD.	This	consent	decree	was	entered	as	final	in February	2014	by	the	U.S.	Department	of	Justice.	As	a	result,	Alcoa	began	construction	in	March	2014;	this	project	is	expected	to	be	completed	by	the	end	of	March 2016	(Alcoa	has	a	second	project	in	East	St.	Louis	that	is	separate	from	the	matter	presented	herein	on	which	Alcoa	is	expecting	an	EPA	decision	in	2016—any resulting	liability	is	not	expected	to	be	material).	At	December	31,	2015	and	2014,	the	reserve	balance	associated	with	this	matter	was	$8	and	$15,	respectively.

Fusina	and	Portovesme,	Italy—In	1996,	Alcoa	acquired	the	Fusina	smelter	and	rolling	operations	and	the	Portovesme	smelter,	both	of	which	are	owned	by	Alcoa's subsidiary	Alcoa	Trasformazioni	S.r.l.	("Trasformazioni"),	from	Alumix,	an	entity	owned	by	the	Italian	Government.	At	the	time	of	the	acquisition,	Alumix	indemnified Alcoa	for	pre-existing	environmental	contamination	at	the	sites.	In	2004,	the	Italian	Ministry	of	Environment	and	Protection	of	Land	and	Sea	(MOE)	issued	orders	to Trasformazioni	and	Alumix	for	the	development	of	a	clean-up	plan	related	to	soil	contamination	in	excess	of	allowable	limits	under	legislative	decree	and	to	institute emergency	actions	and	pay	natural	resource	damages.	Trasformazioni	appealed	the	orders	and	filed	suit	against	Alumix,	among	others,	seeking	indemnification	for	these liabilities	under	the	provisions	of	the	acquisition	agreement.	In	2009,	Ligestra	S.r.l.	("Ligestra"),	Alumix's	successor,	and	Trasformazioni	agreed	to	a	stay	of	the	court proceedings	while	investigations	were	conducted	and	negotiations	advanced	towards	a	possible	settlement.

In	December	2009,	Trasformazioni	and	Ligestra	reached	an	initial	agreement	for	settlement	of	the	liabilities	related	to	Fusina	while	negotiations	continued	related	to Portovesme	(see	below).	The	agreement	outlined	an	allocation	of	payments	to	the	MOE	for	emergency	action	and	natural	resource	damages	and	the	scope	and	costs	for	a proposed	soil	remediation	project,	which	was	formally	presented	to	the	MOE	in	mid-2010.	The	agreement	was	contingent	upon	final	acceptance	of	the	remediation project	by	the	MOE.	As	a	result	of	entering	into	this	agreement,	Alcoa	increased	the	reserve	by	$12	in	2009	for	Fusina.	Based	on	comments	received	from	the	MOE	and local	and	regional	environmental	authorities,	Trasformazioni	submitted	a	revised	remediation	plan	in	the	first	half	of	2012;	however,	such	revisions	did	not	require	any change	to	the	existing	reserve.	In	October	2013,	the	MOE	approved	the	project	submitted	by	Alcoa,	resulting	in	no	adjustment	to	the	reserve.

In	January	2014,	in	anticipation	of	Alcoa	reaching	a	final	administrative	agreement	with	the	MOE,	Alcoa	and	Ligestra	entered	into	a	final	agreement	related	to	Fusina	for allocation	of	payments	to	the	MOE	for	emergency	action	and	natural	resource	damages	and	the	costs	for	the	approved	soil	remediation	project.	The	agreement	resulted	in Ligestra	assuming	50%	to	80%	of	all	payments	and	remediation	costs.	On	February	27,	2014,	Alcoa	and	the	MOE	reached	a	final	administrative	agreement	for	conduct of	work.	The	agreement	includes	both	a	soil	and	groundwater	remediation	project	estimated	to	cost	$33	(€24)	and	requires	payments	of	$25	(€18)	to	the	MOE	for emergency	action	and	natural	resource	damages.	The	remediation	projects	are	slated	to	begin	as	soon	as	Alcoa	receives	final	approval	from	the	Ministry	of Infrastructure.	Based	on	the	final	agreement	with	Ligestra,	Alcoa's	share	of	all	costs	and	payments	is	$17	(€12),	of	which	$9	(€6)	related	to	the	damages	will	be	paid annually	over	a	10-year	period,	which	began	in	April	2014,	and	was	previously	fully	reserved.

Separately,	in	2009,	due	to	additional	information	derived	from	the	site	investigations	conducted	at	Portovesme,	Alcoa	increased	the	reserve	by	$3.	In	November	2011, Trasformazioni	and	Ligestra	reached	an	agreement	for	settlement	of	the	liabilities	related	to	Portovesme,	similar	to	the	one	for	Fusina.	A	proposed	soil	remediation project	for	Portovesme	was	formally	presented	to	the	MOE	in	June	2012.	Neither	the	agreement	with	Ligestra	nor	the	proposal	to	the	MOE	resulted	in	a	change	to	the reserve	for	Portovesme.	In	November	2013,	the	MOE	rejected	the	proposed	soil	remediation	project	and	requested	a	revised	project	be	submitted.	In	May	2014, Trasformazioni	and	Ligestra	submitted	a	revised	soil	remediation	project	that	addressed	certain	stakeholders'	concerns.	Alcoa	increased	the	reserve	by	$3	in	2014	to reflect	the	estimated	higher	costs	associated	with	the	revised	soil	remediation	project,	as	well	as	current	operating	and	maintenance	costs	of	the	Portovesme	site.

In	October	2014,	the	MOE	required	a	further	revised	project	be	submitted	to	reflect	the	removal	of	a	larger	volume	of	contaminated	soil	than	what	had	been	proposed, as	well	as	design	changes	for	the	cap	related	to	the	remaining	contaminated	soil	left	in	place	and	the	expansion	of	an	emergency	containment	groundwater	pump	and treatment	system	that	was	previously	installed.	Trasformazioni	and	Ligestra	submitted	the	further	revised	soil	remediation	project	in	February	2015.	As	a	result,	Alcoa increased	the	reserve	by	$7	in	March	2015	to	reflect	the	increase	in	the	estimated	costs	of	the	project.	In	October	2015,	Alcoa	received	a	final	ministerial	decree approving	the	February	2015	revised	soil	remediation	project.	Work	on	the	soil	remediation	project	will	commence	in	2016	and	is	expected	to	be	completed	in	2019. Alcoa	and	Ligestra	are	now	working	on	a	final	groundwater	remediation	project,	which	will	be	submitted	to	the	MOE	for	review	during	2016.	The	ultimate	outcome	of this	matter	may	result	in	a	change	to	the	existing	reserve	for	Portovesme.

Baie	Comeau,	Quebec,	Canada—In	August	2012,	Alcoa	presented	an	analysis	of	remediation	alternatives	to	the	Quebec	Ministry	of	Sustainable	Development, Environment,	Wildlife	and	Parks	(MDDEP),	in	response	to	a	previous	request,	related	to	known	PCBs	and	polycyclic	aromatic	hydrocarbons	(PAHs)	contained	in sediments	of	the	Anse	du	Moulin	bay.	As	such,	Alcoa	increased	the	reserve	for	Baie	Comeau	by	$25	in	2012	to	reflect	the	estimated	cost	of	Alcoa's	recommended alternative,	consisting	of	both	dredging	and	capping	of	the	contaminated	sediments.	In	July	2013,	Alcoa	submitted	the	Environmental	Impact	Assessment	for	the	project to	the	MDDEP.	The	MDDEP	notified	Alcoa	that	the	project	as	it	was	submitted	was	approved	and	a	final	mistrial	decree	was	issued	in	July	2015.	As	a	result,	no	further adjustment	to	the	reserve	was	required	in	2015.	The	decree	provides	final	approval	for	the	project	and	allows	Alcoa	to	start	work	on	the	final	project	design,	which	is expected	to	be	completed	in	2016	with	construction	on	the	project	expected	to	begin	in	2017.	Completion	of	the	final	project	design	and	bidding	of	the	project	may	result in	additional	liability	in	a	future	period.

Mosjøen,	Norway—In	September	2012,	Alcoa	presented	an	analysis	of	remediation	alternatives	to	the	Norwegian	Environmental	Agency	(NEA)	(formerly	the Norwegian	Climate	and	Pollution	Agency,	or	"Klif"),	in	response	to	a	previous	request,	related	to	known	PAHs	in	the	sediments	located	in	the	harbor	and	extending	out into	the	fjord.	As	such,	Alcoa	increased	the	reserve	for	Mosjøen	by	$20	in	2012	to	reflect	the	estimated	cost	of	the	baseline	alternative	for	dredging	of	the	contaminated sediments.	A	proposed	project	reflecting	this	alternative	was	formally	presented	to	the	NEA	in	June	2014,	and	was	resubmitted	in	late	2014	to	reflect	changes	by	the NEA.	The	revised	proposal	did	not	result	in	a	change	to	the	reserve	for	Mosjøen.

In	April	2015,	the	NEA	notified	Alcoa	that	the	revised	project	was	approved	and	required	submission	of	the	final	project	design	before	issuing	a	final	order.	Alcoa completed	and	submitted	the	final	project	design,	which	identified	a	need	to	stabilize	the	related	wharf	structure	to	allow	for	the	sediment	dredging	in	the	harbor.	As	a result,	Alcoa	increased	the	reserve	for	Mosjøen	by	$11	in	June	2015	to	reflect	the	estimated	cost	of	the	wharf	stabilization.	Also	in	June	2015,	the	NEA	issued	a	final order	approving	the	project	as	well	as	the	final	project	design.	In	September	2015,	Alcoa	increased	the	reserve	by	$1	to	reflect	the	potential	need	(based	on	prior experience	with	similar	projects)	to	perform	additional	dredging	if	the	results	of	sampling,	which	is	required	by	the	order,	don't	achieve	the	required	cleanup	levels. Project	construction	will	commence	in	2016	and	is	expected	to	be	completed	by	the	end	of	2017.

Tax.	In	September	2010,	following	a	corporate	income	tax	audit	covering	the	2003	through	2005	tax	years,	an	assessment	was	received	as	a	result	of	Spain's	tax authorities	disallowing	certain	interest	deductions	claimed	by	a	Spanish	consolidated	tax	group	owned	by	the	Company.	An	appeal	of	this	assessment	in	Spain's	Central Tax	Administrative	Court	by	the	Company	was	denied	in	October	2013.	In	December	2013,	the	Company	filed	an	appeal	of	the	assessment	in	Spain's	National	Court.

The	combined	assessments	(remeasured	for	a	tax	rate	change	enacted	in	November	2014—see	Note	T)	total	$263	(€241).	The	Company	believes	it	has	meritorious arguments	to	support	its	tax	position	and	intends	to	vigorously	litigate	the	assessments	through	Spain's	court	system.	However,	in	the	event	the	Company	is unsuccessful,	a	portion	of	the	assessments	may	be	offset	with	existing	net	operating	losses	available	to	the	Spanish	consolidated	tax	group.	Additionally,	it	is	possible that	the	Company	may	receive	similar	assessments	for	tax	years	subsequent	to	2009.	At	this	time,	the	Company	is	unable	to	reasonably	predict	an	outcome	for	this matter.

In	March	2013,	Alcoa's	subsidiary,	Alcoa	World	Alumina	Brasil	(AWAB),	was	notified	by	the	Brazilian	Federal	Revenue	Office	(RFB)	that	approximately	$110 (R$220)	of	value	added	tax	credits	previously	claimed	are	being	disallowed	and	a	penalty	of	50%	assessed.	Of	this	amount,	AWAB	received	$41	(R$82)	in	cash	in	May 2012.	The	value	added	tax	credits	were	claimed	by	AWAB	for	both	fixed	assets	and	export	sales	related	to	the	Juruti	bauxite	mine	and	São	Luís	refinery	expansion.	The RFB	has	disallowed	credits	they	allege	belong	to	the	consortium	in	which	AWAB	owns	an	interest	and	should	not	have	been	claimed	by	AWAB.	Credits	have	also	been disallowed	as	a	result	of	challenges	to	apportionment	methods	used,	questions	about	the	use	of	the	credits,	and	an	alleged	lack	of	documented	proof.	AWAB	presented defense	of	its	claim	to	the	RFB	on	April	8,	2013.	If	AWAB	is	successful	in	this	administrative	process,	the	RFB	would	have	no	further	recourse.	If	unsuccessful	in	this process,	AWAB	has	the	option	to	litigate	at	a	judicial	level.	Separately	from	the	AWAB's	administrative	appeal,	in	June	2015,	new	tax	law	was	enacted	repealing	the provisions	in	the	tax	code	that	were	the	basis	for	the	RFB	assessing	a	50%	penalty	in	this	matter.	As	such,	the	estimated	range	of	reasonably	possible	loss	is	$0	to	$27 (R$103),	whereby	the	maximum	end	of	this	range	represents	the	portion	of	the	disallowed	credits	applicable	to	the	export	sales	and	excludes	the	50%	penalty. Additionally,	the	estimated	range	of	disallowed	credits	related	to	AWAB's	fixed	assets	is	$0	to	$30	(R$117),	which	would	increase	the	net	carrying	value	of	AWAB's fixed	assets	if	ultimately	disallowed.	It	is	management's	opinion	that	the	allegations	have	no	basis;	however,	at	this	time,	management	is	unable	to	reasonably	predict	an outcome	for	this	matter.

Between	2000	and	2002,	Alcoa	Alumínio	(Alumínio)	sold	approximately	2,000	metric	tons	of	metal	per	month	from	its	Poços	de	Caldas	facility,	located	in	the	State	of Minas	Gerais	(the	"State"),	to	Alfio,	a	customer	also	located	in	the	State.	Sales	in	the	State	were	exempted	from	value-added	tax	(VAT)	requirements.	Alfio	subsequently sold	metal	to	customers	outside	of	the	State,	but	did	not	pay	the	required	VAT	on	those	transactions.	In	July	2002,	Alumínio	received	an	assessment	from	State	auditors on	the	theory	that	Alumínio	should	be	jointly	and	severally	liable	with	Alfio	for	the	unpaid	VAT.	In	June	2003,	the	administrative	tribunal	found	Alumínio	liable,	and Alumínio	filed	a	judicial	case	in	the	State	in	February	2004	contesting	the	finding.	In	May	2005,	the	Court	of	First	Instance	found	Alumínio	solely	liable,	and	a	panel	of a	State	appeals	court	confirmed	this	finding	in	April	2006.	Alumínio	filed	a	special	appeal	to	the	Superior	Tribunal	of	Justice	(STJ)	in	Brasilia	(the	federal	capital	of Brazil)	later	in	2006.	In	2011,	the	STJ	(through	one	of	its	judges)	reversed	the	judgment	of	the	lower	courts,	finding	that	Alumínio	should	neither	be	solely	nor	jointly and	severally	liable	with	Alfio	for	the	VAT,	which	ruling	was	then	appealed	by	the	State.	In	August	2012,	the	STJ	agreed	to	have	the	case	reheard	before	a	five-judge panel.	A	decision	from	this	panel	is	pending,	but	additional	appeals	are	likely.	At	December	31,	2015,	the	assessment	totaled	$35	(R$135),	including	penalties	and interest.	While	the	Company	believes	it	has	meritorious	defenses,	the	Company	is	unable	to	reasonably	predict	an	outcome.

Other.	In	addition	to	the	matters	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,	safety	and	health,	and	tax	matters.	While	the	amounts	claimed	in	these	other	matters	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	liquidity	or	results	of	operations	in	a particular	period	could	be	materially	affected	by	one	or	more	of	these	other	matters.	However,	based	on	facts	currently	available,	management	believes	that	the disposition	of	these	other	matters	that	are	pending	or	asserted	will	not	have	a	material	adverse	effect,	individually	or	in	the	aggregate,	on	the	financial	position	of	the Company.

# Commitments

Investments.	Alumínio,	a	wholly-owned	subsidiary	of	Alcoa,	is	a	participant	in	four	consortia	that	each	owns	a	hydroelectric	power	project	in	Brazil.	The	purpose	of Alumínio's	participation	is	to	increase	its	energy	self-sufficiency	and	provide	a	long-term,	low-cost	source	of	power	for	its	two	smelters	(see	below)	and	one	refinery. These	projects	are	known	as	Machadinho,	Barra	Grande,	Serra	do	Facão,	and	Estreito.

Alumínio	committed	to	taking	a	share	of	the	output	of	the	Machadinho	and	Barra	Grande	projects	each	for	30	years	and	the	Serra	do	Facão	and	Estreito	projects	each	for 26	years	at	cost	(including	cost	of	financing	the	project).	In	the	event	that	other	participants	in	any	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.

The	Machadinho	project	reached	full	capacity	in	2002.	Alumínio's	investment	in	this	project	is	30.99%,	which	entitles	Alumínio	to	approximately	120	megawatts	of assured	power.	The	Machadinho	consortium	is	an	unincorporated	joint	venture,	and,	therefore,	Alumínio's	share	of	the	assets	and	liabilities	of	the	consortium	are reflected	in	the	respective	lines	on	the	accompanying	Consolidated	Balance	Sheet.

The	Barra	Grande	project	reached	full	capacity	in	2006.	Alumínio's	investment	in	this	project	is	42.18%	and	is	accounted	for	under	the	equity	method.	This	entitles Alumínio	to	approximately	160	megawatts	of	assured	power.	Alumínio's	total	investment	in	this	project	was	$94	(R$374)	and	$132	(R$355)	at	December	31,	2015	and 2014,	respectively.

The	Serra	do	Facão	project	reached	full	capacity	in	2010.	Alumínio's	investment	in	this	project	is	34.97%	and	is	accounted	for	under	the	equity	method.	This	entitles Alumínio	to	approximately	65	megawatts	of	assured	power.	Alumínio's	total	investment	in	this	project	was	$52	(R$208)	and	$66	(R$178)	at	December	31,	2015	and 2014,	respectively.

The	Estreito	project	reached	full	capacity	in	March	2013.	Alumínio's	investment	in	this	project	is	25.49%,	which	entitles	Alumínio	to	approximately	150	megawatts	of assured	power.	The	Estreito	consortium	is	an	unincorporated	joint	venture,	and,	therefore,	Alumínio's	share	of	the	assets	and	liabilities	of	the	consortium	are	reflected	in the	respective	lines	on	the	accompanying	Consolidated	Balance	Sheet.	As	of	December	31,	2015,	construction	of	the	Estreito	project	is	essentially	complete.

Prior	to	October	2013,	Alumínio's	power	self-sufficiency	satisfied	approximately	70%	of	a	total	energy	demand	of	approximately	690	megawatts	from	two	smelters (São	Luís	(Alumar)	and	Poços	de	Caldas)	and	one	refinery	(Poços	de	Caldas)	in	Brazil.	Since	that	time,	the	total	energy	demand	has	declined	by	approximately	675 megawatts	due	to	capacity	curtailments	of	both	smelters	in	both	2013	and	2014,	as	well	as	the	eventual	permanent	closure	of	the	Poços	de	Caldas	smelter	in	2015.

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,	which	is	classified	as	an	equity	investment,	was	made	in	order	to	secure	a competitively	priced	long-term	supply	of	natural	gas	to	Alcoa's	refineries	in	Western	Australia.	Alcoa	made	additional	contributions	of	$141	(A$176)	for	its	share	of	the pipeline	capacity	expansion	and	other	operational	purposes	of	the	consortium	through	September	2011.	No	further	expansion	of	the	pipeline's	capacity	is	planned	at	this time.	In	late	2011,	the	consortium	initiated	a	three-year	equity	call	plan	to	improve	its	capitalization	structure.	This	plan	required	Alcoa	to	contribute	$39	(A$40),	all	of which	was	made	through	December	31,	2014.	Following	the	completion	of	the	three-year	equity	call	plan	in	December	2014,	the	consortium	initiated	a	new	equity	call plan	to	further	improve	its	capitalization	structure.	This	plan	requires	Alcoa	to	contribute	$30	(A$36)	through	mid	2016,	of	which	$17	(A$22)	was	made	through December	31,	2015,	including	$16	(A$21)	in	2015.	In	addition	to	its	equity	ownership,	Alcoa	has	an	agreement	to	purchase	gas	transmission	services	from	the	DBNGP. At	December	31,	2015,	Alcoa	has	an	asset	of	$268	(A$368)	representing	prepayments	made	under	the	agreement	for	future	gas	transmission	services.	Alcoa's	maximum exposure	to	loss	on	the	investment	and	the	related	contract	is	approximately	$380	(A$520)	as	of	December	31,	2015.

On	April	8,	2015,	Alcoa's	majority-owned	subsidiary,	Alcoa	of	Australia	Limited	(AofA),	which	is	part	of	AWAC,	secured	a	new	12-year	gas	supply	agreement	to power	its	three	alumina	refineries	in	Western	Australia	beginning	in	July	2020.	This	agreement	was	conditional	on	the	completion	of	a	third-party	acquisition	of	the related	energy	assets	from	the	then-current	owner,	which	occurred	in	June	2015.	The	terms	of	AofA's	gas	supply	agreement	require	a	prepayment	of	$500	to	be	made	in two	installments.	The	first	installment	of	$300	was	made	at	the	time	of	the	completion	of	the	third-party	acquisition	and	the	second	installment	of	$200	will	be	made	in April	2016	(previously	was	scheduled	in	January	2016).	At	December	31,	2015,	Alcoa	has	an	asset	of	$288	(A$395),	which	was	included	in	Other	noncurrent	assets	on the	accompanying	Consolidated	Balance	Sheet,	representing	the	first	installment.

Guarantees.	At	December	31,	2015,	Alcoa	has	maximum	potential	future	payments	for	guarantees	issued	on	behalf	of	a	third	party	of	$478.	These	guarantees	expire	at various	times	between	2017	and	2024	and	relate	to	project	financing	for	the	aluminum	complex	in	Saudi	Arabia	(see	Note	I).	Alcoa	also	has	outstanding	bank	guarantees related	to	tax	matters,	outstanding	debt,	workers	compensation,	environmental	obligations,	energy	contracts,	and	customs	duties,	among	others.	The	total	amount committed	under	these	guarantees,	which	expire	at	various	dates	between	2016	and	2023	was	$320	at	December	31,	2015.

Letters	of	Credit.	Alcoa	has	outstanding	letters	of	credit	primarily	related	to	workers'	compensation,	energy	contracts	(including	$200	related	to	an	expected	April 2016	prepayment	under	a	gas	supply	contract—see	Investments	above),	and	leasing	obligations.	The	total	amount	committed	under	these	letters	of	credit,	which automatically	renew	or	expire	at	various	dates,	mostly	in	2016,	was	$510	at	December	31,	2015.

Surety	Bonds.	Alcoa	has	outstanding	surety	bonds	primarily	related	to	tax	matters,	contract	performance,	workers	compensation,	environmental-related	matters,	and customs	duties.	The	total	amount	committed	under	these	bonds,	which	automatically	renew	or	expire	at	various	dates,	mostly	in	2016,	was	$159	at	December	31,	2015.

# O.	Other	Expenses	(Income),	Net

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Equity\tloss | $89 | $92 | $68 |
| Interest\tincome | (16) | (19) | (13) |
| Foreign\tcurrency\tlosses\t(gains),\tnet | - | 1 | (33) |
| Net\tgain\tfrom\tasset\tsales | (74) | (47) | (10) |
| Net\tloss\t(gain)\ton\tmark-to-market\tderivative\tcontracts\t(X) | 23 | 15 | (29) |
| Other,\tnet | (20) | 5 | (8) |
|  | $2 | $47 | $(25) |

In	2015,	Net	gain	from	asset	sales	included	a	$49	gain	related	to	the	sale	of	land	around	both	the	Lake	Charles,	LA	anode	facility	and	at	Alcoa's	former	Sherwin,	TX refinery	site,	and	a	$19	gain	related	to	the	sale	of	the	remaining	equity	investment	in	a	China	rolling	mill.	In	2014,	Net	gain	from	asset	sales	included	a	$28	gain	and	a $14	gain	related	to	the	sale	of	a	mining	interest	in	Suriname	and	an	equity	investment	in	a	China	rolling	mill,	respectively.

# P.	Cash	Flow	Information

Cash	paid	for	interest	and	income	taxes	was	as	follows:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Interest,\tnet\tof\tamount\tcapitalized | $487 | $441 | $433 |
| Income\ttaxes,\tnet\tof\tamount\trefunded | $345 | \t 301 | \t 200 |

The	details	related	to	cash	paid	for	acquisitions	(including	of	a	noncontrolling	interest	in	2014)	were	as	follows:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Assets\tacquired | $2,003 | $3,515 | $- |
| Liabilities\tassumed | (868) | (345) | - |
| Contingent\tconsideration\tliability | - | (130) | - |
| Equity\tissued | (870) | (610) | - |
| Noncontrolling\tinterest\tacquired | - | 31 | - |
| Increase\tin\tAlcoa's\tshareholders'\tequity | (60) | (3) | - |
| Cash\tpaid | 205 | \t 2,458 | - |
| Less:\tcash\tacquired | 302 | 45 | - |
| Net\tcash\tpaid | $(97) | $2,413 | $- |

Noncash	Financing	and	Investing	Activities.	In	July	2015,	Alcoa	purchased	all	outstanding	shares	of	RTI	common	stock	in	a	stock-for-stock	transaction	valued	at $870	(see	Note	F).	As	a	result,	Alcoa	issued	87	million	shares	of	its	common	stock	to	consummate	this	transaction,	which	was	not	reflected	in	the	accompanying Statement	of	Consolidated	Cash	Flows	as	it	represents	a	noncash	financing	activity.

In	early	2014,	holders	of	$575	principal	amount	of	Alcoa's	5.25%	Convertible	Notes	due	March	15,	2014	(the	"2014	Notes")	exercised	their	option	to	convert	the	2014 Notes	into	89	million	shares	of	Alcoa	common	stock	(see	Note	K).	This	transaction	was	not	reflected	in	the	accompanying	Statement	of	Consolidated	Cash	Flows	as	it represents	a	noncash	financing	activity.

In	late	2014,	Alcoa	paid	$2,995	(net	of	cash	acquired)	to	acquire	Firth	Rixson	(see	Note	F).	A	portion	of	this	consideration	was	paid	through	the	issuance	of	37	million shares	in	Alcoa	common	stock	valued	at	$610.	The	issuance	of	common	stock	was	not	reflected	in	the	accompanying	Statement	of	Consolidated	Cash	Flows	as	it represents	a	noncash	investing	activity.

# Q.	Segment	and	Geographic	Area	Information

Alcoa	is	primarily	a	producer	of	aluminum	products.	Aluminum	and	alumina	represent	approximately	80%	of	Alcoa's	revenues.	Nonaluminum	products	include precision	castings	and	aerospace	and	industrial	fasteners.	Alcoa's	products	are	used	worldwide	in	transportation	(including	aerospace,	automotive,	truck,	trailer,	rail,	and shipping),	packaging,	building	and	construction,	oil	and	gas,	defense,	and	industrial	applications.	Alcoa's	segments	are	organized	by	product	on	a	worldwide	basis. Segment	performance	under	Alcoa's	management	reporting	system	is	evaluated	based	on	a	number	of	factors;	however,	the	primary	measure	of	performance	is	the	after- tax	operating	income	(ATOI)	of	each	segment.	Certain	items	such	as	the	impact	of	LIFO	inventory	accounting;	metal	price	lag	(see	below);	interest	expense; noncontrolling	interests;	corporate	expense	(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;	and	other	items,	including	intersegment	profit eliminations,	differences	between	tax	rates	applicable	to	the	segments	and	the	consolidated	effective	tax	rate,	and	other	nonoperating	items	such	as	foreign	currency transaction	gains/losses	and	interest	income	are	excluded	from	segment	ATOI.	Segment	assets	exclude,	among	others,	cash	and	cash	equivalents;	deferred	income	taxes; goodwill	not	allocated	to	businesses	for	segment	reporting	purposes;	corporate	fixed	assets;	and	LIFO	reserves.

The	accounting	policies	of	the	segments	are	the	same	as	those	described	in	the	Summary	of	Significant	Accounting	Policies	(see	Note	A).	Transactions	among	segments are	established	based	on	negotiation	among	the	parties.	Differences	between	segment	totals	and	Alcoa's	consolidated	totals	for	line	items	not	reconciled	are	in Corporate.

In	the	third	quarter	of	2015,	management	approved	a	realignment	of	Alcoa's	Engineered	Products	and	Solutions	segment	due	to	the	expansion	of	this	part	of	Alcoa's business	portfolio	through	both	organic	and	inorganic	growth.	This	realignment	consisted	of	moving	both	the	Alcoa	Wheel	and	Transportation	Products	and	Building and	Construction	Systems	business	units	to	a	new	reportable	segment	named	Transportation	and	Construction	Solutions.	Additionally,	the	Latin	American	soft	alloy extrusions	business	previously	included	in	Corporate	was	moved	into	the	new	Transportation	and	Construction	Solutions	segment.	The	remaining	Engineered	Products and	Solutions	segment	consists	of	the	Alcoa	Fastening	Systems	and	Rings	(renamed	to	include	portions	of	the	Firth	Rixson	business	acquired	in	November	2014),	Alcoa Power	and	Propulsion	(includes	the	TITAL	business	acquired	in	March	2015),	Alcoa	Forgings	and	Extrusions	(includes	the	other	portions	of	Firth	Rixson),	and	Alcoa Titanium	and	Engineered	Products	(a	new	business	unit	that	consists	solely	of	the	RTI	International	Metals	business	acquired	in	July	2015)	business	units.	Segment information	for	all	prior	periods	presented	was	updated	to	reflect	the	new	segment	structure.

# Alcoa's	operations	consist	of	five	worldwide	reportable	segments	as	follows:

Alumina.	This	segment	represents	a	portion	of	Alcoa's	upstream	operations	and	consists	of	the	Company's	worldwide	refining	system.	Alumina	mines	bauxite,	from which	alumina	is	produced	and	then	sold	directly	to	external	smelter	customers,	as	well	as	to	the	Primary	Metals	segment	(see	Primary	Metals	below),	or	to	customers who	process	it	into	industrial	chemical	products.	More	than	half	of	Alumina's	production	is	sold	under	supply	contracts	to	third	parties	worldwide,	while	the	remainder	is used	internally	by	the	Primary	Metals	segment.	Alumina	produced	by	this	segment	and	used	internally	is	transferred	to	the	Primary	Metals	segment	at	prevailing	market prices.	A	portion	of	this	segment's	third-party	sales	are	completed	through	the	use	of	agents,	alumina	traders,	and	distributors.

Primary	Metals.	This	segment	represents	a	portion	of	Alcoa's	upstream	operations	and	consists	of	the	Company's	worldwide	smelting	system.	Primary	Metals purchases	alumina,	mostly	from	the	Alumina	segment	(see	Alumina	above),	from	which	primary	aluminum	is	produced	and	then	sold	directly	to	external	customers	and traders,	as	well	as	to	Alcoa's	midstream	operations	and,	to	a	lesser	extent,	downstream	operations.	Results	from	the	sale	of	aluminum	powder,	scrap,	and	excess	energy are	also	included	in	this	segment,	as	well	as	the	results	of	aluminum	derivative	contracts	and	buy/resell	activity.	Primary	aluminum	produced	by	Alcoa	and	used internally	is	transferred	to	other	segments	at	prevailing	market	prices.	The	sale	of	primary	aluminum	represents	approximately	90%	of	this	segment's	third-party	sales. Buy/resell	activity	occurs	when	this	segment	purchases	metal	and	resells	such	metal	to	external	customers	or	the	midstream	and	downstream	operations	in	order	to maximize	smelting	system	efficiency	and	to	meet	customer	requirements.

Global	Rolled	Products.	This	segment	represents	Alcoa's	midstream	operations	and	produces	aluminum	sheet	and	plate	for	a	variety	of	end	markets.	Approximately one-half	of	the	third-party	shipments	in	this	segment	consist	of	sheet	sold	directly	to	customers	in	the	packaging	end	market	for	the	production	of	aluminum	cans (beverage,	food,	and	pet	food).	Seasonal	increases	in	can	sheet	sales	are	generally	experienced	in	the	second	and	third	quarters	of	the	year.	This	segment	also	includes sheet	and	plate	sold	directly	to	customers	and	through	distributors	related	to	the	aerospace,	automotive,	commercial	transportation,	building	and	construction,	and industrial	products	(mainly	used	in	the	production	of	machinery	and	equipment	and	consumer	durables)	end	markets.	A	small	portion	of	this	segment	also	produces aseptic	foil	for	the	packaging	end	market.	While	the	customer	base	for	flat-rolled	products	is	large,	a	significant	amount	of	sales	of	sheet	and	plate	is	to	a	relatively	small number	of	customers.

Engineered	Products	and	Solutions.	This	segment	represents	a	portion	of	Alcoa's	downstream	operations	and	produces	products	that	are	used	mostly	in	the	aerospace (commercial	and	defense),	commercial	transportation,	and	power	generation	end	markets.	Such	products	include	fastening	systems	(titanium,	steel,	and	nickel	alloys) and	seamless	rolled	rings	(mostly	nickel	alloys);	and	investment	castings	(nickel	super	alloys,	titanium,	and	aluminum),	including	airfoils	and	forged	jet	engine components	(e.g.,	jet	engine	disks),	all	of	which	are	sold	directly	to	customers	and	through	distributors.	More	than	70%	of	the	third-party	sales	in	this	segment	are	from the	aerospace	end	market.	A	small	part	of	this	segment	also	produces	various	forging	and	extrusion	metal	products	for	the	oil	and	gas,	industrial	products,	automotive, and	land	and	sea	defense	end	markets.	Seasonal	decreases	in	sales	are	generally	experienced	in	the	third	quarter	of	the	year	due	to	the	European	summer	slowdown across	all	end	markets.

Transportation	and	Construction	Solutions.	This	segment	represents	a	portion	of	Alcoa's	downstream	operations	and	produces	products	that	are	used	mostly	in	the nonresidential	building	and	construction	and	commercial	transportation	end	markets.	Such	products	include	integrated	aluminum	structural	systems,	architectural extrusions,	and	forged	aluminum	commercial	vehicle	wheels,	which	are	sold	directly	to	customers	and	through	distributors.	A	small	part	of	this	segment	also	produces aluminum	products	for	the	industrial	products	end	market.

The	operating	results	and	assets	of	Alcoa's	reportable	segments	were	as	follows:

|  | Alumina | Primary<br>Metals | Global<br>Rolled<br>Products | Engineered<br>Products<br>and<br>Solutions | Transportation<br>and<br>Construction<br>Solutions | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 2015 |  |  |  |  |  |  |
| Sales: |  |  |  |  |  |  |
| Third-party\tsales | $3,455 | $5,591 | $6,238 | $5,342 | $1,882 | $22,508 |
| Intersegment\tsales | 1,687 | 2,170 | 125 | - | - | 3,982 |
| Total\tsales | $5,142 | $7,761 | $6,363 | $5,342 | $1,882 | $26,490 |
| Profit\tand\tloss: |  |  |  |  |  |  |
| Equity\tloss | $(41) | $(12) | $(32) | $- | $- | $(85) |
| Depreciation,\tdepletion,\tand\tamortization | 296 | 429 | 227 | 233 | 43 | 1,228 |
| Income\ttaxes | 300 | (28) | 109 | 282 | 63 | 726 |
| ATOI | 746 | 155 | 244 | 595 | 166 | 1,906 |
| 2014 |  |  |  |  |  |  |
| Sales: |  |  |  |  |  |  |
| Third-party\tsales | $3,509 | $6,800 | $7,351 | $4,217 | $2,021 | $23,898 |
| Intersegment\tsales | 1,941 | 2,931 | 185 | - | - | 5,057 |
| Total\tsales | $5,450 | $9,731 | $7,536 | $4,217 | $2,021 | $28,955 |
| Profit\tand\tloss: |  |  |  |  |  |  |
| Equity\tloss | $(29) | $(34) | $(27) | $- | $- | $(90) |
| Depreciation,\tdepletion,\tand\tamortization | 387 | 494 | 235 | 137 | 42 | 1,295 |
| Income\ttaxes | 153 | 203 | 89 | 298 | 69 | 812 |
| ATOI | 370 | 594 | 245 | 579 | 180 | 1,968 |
| 2013 |  |  |  |  |  |  |
| Sales: |  |  |  |  |  |  |
| Third-party\tsales | $3,326 | $6,596 | $7,106 | $4,054 | $1,951 | $23,033 |
| Intersegment\tsales | 2,235 | 2,621 | 178 | - | - | 5,034 |
| Total\tsales | $5,561 | $9,217 | $7,284 | $4,054 | $1,951 | $28,067 |
| Profit\tand\tloss: |  |  |  |  |  |  |
| Equity\tloss | $(4) | $(51) | $(13) | $- | $- | $(68) |
| Depreciation,\tdepletion,\tand\tamortization | 426 | 526 | 226 | 124 | 42 | 1,344 |
| Income\ttaxes | 66 | (74) | 123 | 286 | 67 | 468 |
| ATOI | 259 | (20) | 292 | 569 | 167 | 1,267 |
| 2015 |  |  |  |  |  |  |
| Assets: |  |  |  |  |  |  |
| Capital\texpenditures | $184 | $156 | $307 | $383 | $77 | $1,107 |
| Equity\tinvestments | 667 | 634 | 217 | - | - | 1,518 |
| Goodwill | 6 | - | 201 | 4,660 | 58 | 4,925 |
| Total\tassets | 6,165 | 7,324 | 4,498 | 10,732 | 947 | \t 29,666 |
| 2014 |  |  |  |  |  |  |
| Assets: |  |  |  |  |  |  |
| Capital\texpenditures | $246 | $176 | $389 | $249 | $72 | $1,132 |
| Equity\tinvestments | 669 | 890 | 226 | - | - | 1,785 |
| Goodwill | 8 | - | 210 | 4,458 | 86 | 4,762 |
| Total\tassets | 7,350 | 9,308 | 4,908 | 8,800 | 975 | \t 31,341 |

The	following	tables	reconcile	certain	segment	information	to	consolidated	totals:

Sales	by	major	product	grouping	were	as	follows:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales: |  |  |  |
| Alumina | $3,333 | $3,401 | $3,151 |
| Primary\taluminum | 5,085 | 6,011 | 6,194 |
| Flat-rolled\taluminum | 6,238 | 7,351 | 7,106 |
| Investment\tcastings | 1,812 | 1,784 | 1,807 |
| Fastening\tsystems | 2,168 | 1,647 | 1,505 |
| Architectural\taluminum\tsystems | 951 | 1,002 | 977 |
| Aluminum\twheels | 790 | 786 | 702 |
| Other\textruded\tand\tforged\tproducts | 1,332 | 1,019 | 1,015 |
| Other | 825 | 905 | 575 |
|  | $22,534 | $23,906 | $23,032 |

Geographic	information	for	sales	was	as	follows	(based	upon	the	country	where	the	point	of	sale	occurred):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales: |  |  |  |
| United\tStates^(1) | $12,425 | $12,103 | $11,766 |
| Spain^(2)\t(3) | 2,853 | 3,359 | 2,282 |
| Australia | 2,196 | 3,028 | 3,240 |
| Brazil | 854 | 1,398 | 1,221 |
| France | 802 | 915 | 862 |
| United\tKingdom | 698 | 464 | 475 |
| Hungary | 622 | 630 | 555 |
| China | 565 | 415 | 259 |
| Russia | 455 | 642 | 683 |
| Canada | 308 | 143 | 123 |
| Germany | 264 | 229 | 230 |
| Italy | 139 | 150 | 157 |
| Netherlands^(3) | 34 | 36 | 524 |
| Norway^(2) | 30 | 31 | 283 |
| Other | 289 | 363 | 372 |
|  | $22,534 | $23,906 | $23,032 |
| (1)\nSales\tof\ta\tportion\tof\tthe\talumina\tfrom\tAlcoa's\trefineries\tin\tSuriname,\tBrazil,\tAustralia,\tand\tJamaica\t(prior\tto\tdivestiture—see\tNote\tF)\tand\tmost\tof\tthe\taluminum |  |  |  |

Sales	of	a	portion	of	the	alumina	from	Alcoa's	refineries	in	Suriname,	Brazil,	Australia,	and	Jamaica	(prior	to	divestiture—see	Note	F)	and	most	of	the	aluminum from	Alcoa's	smelters	in	Canada	occurred	in	the	United	States. (1)

In	2015	and	2014,	Sales	of	the	aluminum	from	Alcoa's	smelter	in	Iceland	occurred	in	Spain.	In	2013,	Sales	of	the	aluminum	from	Alcoa's	smelter	in	Iceland occurred	in	both	Spain	and	the	Netherlands. (3)

Geographic	information	for	long-lived	assets	was	as	follows	(based	upon	the	physical	location	of	the	assets):

# R.	Preferred	and	Common	Stock

Preferred	Stock.	Alcoa	has	two	classes	of	preferred	stock:	Class	A	Preferred	Stock	and	Class	B	Serial	Preferred	Stock.	Class	A	Preferred	Stock	has	660,000	shares authorized	at	a	par	value	of	$100	per	share	with	an	annual	$3.75	cumulative	dividend	preference	per	share.	There	were	546,024	of	such	shares	outstanding	at December	31,	2015	and	2014.	Class	B	Serial	Preferred	Stock	has	10	million	shares	authorized	at	a	par	value	of	$1	per	share.	There	were	2.5	million	of	such	shares outstanding	at	December	31,	2015	and	2014	(see	below).

In	September	2014,	Alcoa	completed	a	public	offering	under	its	shelf	registration	statement	for	$1,250	of	25	million	depositary	shares,	each	of	which	represents	a	1/10th interest	in	a	share	of	Alcoa's	5.375%	Class	B	Mandatory	Convertible	Preferred	Stock,	Series	1,	par	value	$1	per	share,	liquidation	preference	$500	per	share	(the "Mandatory	Convertible	Preferred	Stock").	The	25	million	depositary	shares	are	equivalent	to	2.5	million	shares	of	Mandatory	Convertible	Preferred	Stock.	Each depositary	share	entitles	the	holder,	through	the	depositary,	to	a	proportional	fractional	interest	in	the	rights	and	preferences	of	a	share	of	Mandatory	Convertible Preferred	Stock,	including	conversion,	dividend,	liquidation,	and	voting	rights,	subject	to	terms	of	the	deposit	agreement.	Alcoa	received	$1,213	in	net	proceeds	from	the public	offering	reflecting	an	underwriting	discount.	The	net	proceeds	were	used,	together	with	the	net	proceeds	of	issued	debt	(see	Note	K),	to	finance	the	cash	portion	of the	acquisition	of	Firth	Rixson	(see	Note	F).	The	underwriting	discount	was	recorded	as	a	decrease	to	Additional	capital	on	the	accompanying	Consolidated	Balance Sheet.

The	Mandatory	Convertible	Preferred	Stock	constitutes	a	series	of	Alcoa's	Class	B	Serial	Preferred	Stock,	which	ranks	senior	to	Alcoa's	common	stock	and	junior	to Alcoa's	Class	A	Preferred	Stock	and	existing	and	future	indebtedness.	Dividends	on	the	Mandatory	Convertible	Preferred	Stock	are	cumulative	in	nature	and	are	paid	at the	rate	of	$26.8750	per	annum	per	share,	which	commenced	January	1,	2015	(paid	on	December	30,	2014).	Holders	of	the	Mandatory	Convertible	Preferred	Stock generally	have	no	voting	rights.

On	the	mandatory	conversion	date,	October	1,	2017,	all	outstanding	shares	of	Mandatory	Convertible	Preferred	Stock	will	automatically	convert	into	shares	of	Alcoa's common	stock.	Based	on	the	Applicable	Market	Value	(as	defined	in	the	terms	of	the	Mandatory	Convertible	Preferred	Stock)	of	Alcoa's	common	stock	on	the mandatory	conversion	date,	each	share	of	Mandatory	Convertible	Preferred	Stock	will	be	convertible	into	not	more	than	30.9406	shares	of	common	stock	and	not	less than	25.7838	shares	of	common	stock,	subject	to	certain	anti-dilution	and	other	adjustments	as	described	in	the	terms	of	the	Mandatory	Convertible	Preferred	Stock.	At any	time	prior	to	October	1,	2017,	a	holder	may	elect	to	convert	shares	of	Mandatory	Convertible	Preferred	Stock,	in	whole	or	in	part	(but	in	no	event	less	than	one	share of	Mandatory	Convertible	Preferred	Stock),	at	the	minimum	conversion	rate	of	25.7838	shares	of	common	stock,	subject	to	certain	anti-dilution	and	other	adjustments	as described	in	the	terms	of	the	Mandatory	Convertible	Preferred	Stock.	Alcoa	does	not	have	the	right	to	redeem	the	Mandatory	Convertible	Preferred	Stock.

If	Alcoa	undergoes	a	fundamental	change,	as	defined	in	the	terms	of	the	Mandatory	Convertible	Preferred	Stock,	holders	may	elect	to	convert	their	Mandatory Convertible	Preferred	Stock,	in	whole	or	in	part	(but	in	no	event	less	than	one	share	of	Mandatory	Convertible	Preferred	Stock),	into	shares	of	Alcoa's	common	stock. The	per	share	conversion	rate	under	a	fundamental	change	is	not	less	than	25.2994	shares	of	common	stock	and	not	more	than	30.9406	shares	of	common	stock. Holders	who	elect	to	convert	will	also	receive	any	accumulated	and	unpaid	dividends	and	a	Fundamental	Change	Dividend	Make-whole	Amount	(as	defined	in	the	terms of	the	Mandatory	Convertible	Preferred	Stock)	equal	to	the	present	value	of	all	remaining	dividend	payments	on	the	Mandatory	Convertible	Preferred	Stock.

In	July	2015,	Alcoa	issued	87	million	shares	of	common	stock	as	consideration	paid	to	acquire	RTI	(see	Note	F).

In	early	2014,	Alcoa	issued	89	million	shares	of	common	stock	under	the	terms	of	Alcoa's	5.25%	Convertible	Notes	due	March	15,	2014	(see	Note	K).	Also,	in November	2014,	Alcoa	issued	37	million	shares	of	common	stock	as	part	of	the	consideration	paid	to	acquire	an	aerospace	business,	Firth	Rixson	(see	Note	F).

As	of	December	31,	2015,	77	million	shares	of	common	stock	were	reserved	for	issuance	under	Alcoa's	stock-based	compensation	plans,	respectively.	Alcoa	issues shares	from	treasury	stock	to	satisfy	the	exercise	of	stock	options	and	the	conversion	of	stock	awards.

Share	Activity	(number	of	shares)

|  | Common	stock |  |
| :--- | :--- | :--- |
|  | Treasury | Outstanding |
| Balance\tat\tend\tof\t2012 | 110,694,604 | 1,067,211,953 |
| Conversion\tof\tconvertible\tnotes | - | 310 |
| Issued\tfor\tstock-based\tcompensation\tplans | (3,798,899) | 3,798,899 |
| Balance\tat\tend\tof\t2013 | 106,895,705 | 1,071,011,162 |
| Conversion\tof\tconvertible\tnotes | - | 89,383,953 |
| Private\tplacement | - | 36,523,010 |
| Issued\tfor\tstock-based\tcompensation\tplans | (19,745,536) | 19,745,536 |
| Balance\tat\tend\tof\t2014 | 87,150,169 | 1,216,663,661 |
| Acquisition\tof\tRTI | - | 87,397,414 |
| Issued\tfor\tstock-based\tcompensation\tplans | (6,099,066) | 6,099,066 |
| Balance\tat\tend\tof\t2015 | 81,051,103 | 1,310,160,141 |

# Stock-based	Compensation

Alcoa	has	a	stock-based	compensation	plan	under	which	stock	options	and	stock	awards	are	granted	in	January	each	year	to	eligible	employees.	Most	plan	participants can	choose	whether	to	receive	their	award	in	the	form	of	stock	options,	stock	awards,	or	a	combination	of	both.	This	choice	is	made	before	the	grant	is	issued	and	is irrevocable.	Stock	options	are	granted	at	the	closing	market	price	of	Alcoa's	common	stock	on	the	date	of	grant	and	vest	over	a	three-year	service	period	(1/3	each	year) with	a	ten-year	contractual	term.	Stock	awards	also	vest	over	a	three-year	service	period	from	the	date	of	grant	and	certain	of	these	awards	also	include	performance conditions.	In	2015,	2014,	and	2013,	the	final	number	of	performance	stock	awards	earned	will	be	based	on	Alcoa's	achievement	of	sales	and	profitability	targets	over the	respective	three-year	period.	One-third	of	the	award	will	be	earned	each	year	based	on	the	performance	against	the	pre-established	targets	for	that	year.	The performance	stock	awards	earned	over	the	three-year	period	vest	at	the	end	of	the	third	year.

In	2015,	2014,	and	2013,	Alcoa	recognized	stock-based	compensation	expense	of	$92	($61	after-tax),	$87	($58	after-tax),	and	$71	($48	after-tax),	respectively,	of	which approximately	80%,	80%,	and	70%,	respectively,	related	to	stock	awards	(there	was	no	stock-based	compensation	expense	capitalized	in	2015,	2014,	or	2013).	At December	31,	2015,	there	was	$71	(pretax)	of	unrecognized	compensation	expense	related	to	non-vested	stock	option	grants	and	non-vested	stock	award	grants.	This expense	is	expected	to	be	recognized	over	a	weighted	average	period	of	1.6	years.	As	part	of	Alcoa's	stock-based	compensation	plan	design,	individuals	who	are retirement-eligible	have	a	six-month	requisite	service	period	in	the	year	of	grant.	As	a	result,	a	larger	portion	of	expense	will	be	recognized	in	the	first	half	of	each	year for	these	retirement-eligible	employees.	Of	the	total	pretax	compensation	expense	recognized	in	2015,	2014,	and	2013,	$17,	$15,	and	$14,	respectively,	pertains	to	the acceleration	of	expense	related	to	retirement-eligible	employees.

Stock-based	compensation	expense	is	based	on	the	grant	date	fair	value	of	the	applicable	equity	grant.	For	stock	awards,	the	fair	value	was	equivalent	to	the	closing market	price	of	Alcoa's	common	stock	on	the	date	of	grant.	For	stock	options,	the	fair	value	was	estimated	on	the	date	of	grant	using	a	lattice-pricing	model,	which generated	a	result	of	$4.47,	$2.84,	and	$2.24	per	option	in	2015,	2014,	and	2013,	respectively.	The	lattice-pricing	model	uses	a	number	of	assumptions	to	estimate	the fair	value	of	a	stock	option,	including	an	average	risk-free	interest	rate,	dividend	yield,	volatility,	exercise	behavior,	and	contractual	life.	The	following	paragraph describes	in	detail	the	assumptions	used	to	estimate	the	fair	value	of	stock	options	granted	in	2015	(the	assumptions	used	to	estimate	the	fair	value	of	stock	options granted	in	2014	and	2013	were	not	materially	different).

The	range	of	average	risk-free	interest	rates	(0.07-1.83%)	was	based	on	a	yield	curve	of	interest	rates	at	the	time	of	the	grant	based	on	the	contractual	life	of	the	option. The	dividend	yield	(0.8%)	was	based	on	a	one-year	average.	Volatility	(32-41%)	was	based	on	historical	and	implied	volatilities	over	the	term	of	the	option.	Alcoa utilized	historical	option	forfeiture	data	to	estimate	annual	pre-	and	post-vesting	forfeitures	(7%).	Exercise	behavior	(50%)	was	based	on	a	weighted	average	exercise ratio	(exercise	patterns	for	grants	issued	over	the	number	of	years	in	the	contractual	option	term)	of	an	option's	intrinsic	value	resulting	from	historical	employee exercise	behavior.	Based	upon	the	other	assumptions	used	in	the	determination	of	the	fair	value,	the	life	of	an	option	(5.9	years)	was	an	output	of	the	lattice-pricing model.	The	activity	for	stock	options	and	stock	awards	during	2015	was	as	follows	(options	and	awards	in	millions):

|  |  | Weighted |  | Weighted |
| :--- | :--- | :--- | :--- | :--- |
|  | Number\tof\noptions | average\nexercise\tprice | Number\tof\nawards | average\tFMV\nper\taward |
| Outstanding,\tJanuary\t1,\t2015 | 32 | 11.26 | 19 | 9.98 |
| Granted | 3 | 15.55 | 7 | 14.85 |
| Assumed\tat\tAcquisition | 2 | 11.24 | 1 | 9.96 |
| Exercised | (3) | 8.95 | - | - |
| Converted | - | - | (5) | 10.08 |
| Expired\tor\tforfeited | (1) | 13.39 | (1) | 11.64 |
| Performance\tshare\tadjustment | - | - | (1) | 10.96 |
| Outstanding,\tDecember\t31,\t2015 | 33 | 11.91 | 20 | 11.38 |

As	of	December	31,	2015,	the	number	of	stock	options	outstanding	had	a	weighted	average	remaining	contractual	life	of	6.08	years	and	a	total	intrinsic	value	of	$8. Additionally,	23.3	million	of	the	stock	options	outstanding	were	fully	vested	and	exercisable	and	had	a	weighted	average	remaining	contractual	life	of	5.25	years,	a weighted	average	exercise	price	of	$11.82,	and	a	total	intrinsic	value	of	$5	as	of	December	31,	2015.	In	2015,	2014,	and	2013,	the	cash	received	from	stock	option exercises	was	$25,	$150,	and	$13	and	the	total	tax	benefit	realized	from	these	exercises	was	$6,	$28,	and	$1,	respectively.	The	total	intrinsic	value	of	stock	options exercised	during	2015,	2014,	and	2013	was	$19,	$84,	and	$2,	respectively.

# S.	Earnings	Per	Share

Basic	earnings	per	share	(EPS)	amounts	are	computed	by	dividing	earnings,	after	the	deduction	of	preferred	stock	dividends	declared	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	attributable	to	Alcoa	common	shareholders	was	as	follows	(shares	in	millions):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\t(loss)\tincome\tattributable\tto\tAlcoa | $(322) | $268 | $(2,285) |
| Less:\tpreferred\tstock\tdividends\tdeclared | 69 | 21 | 2 |
| Net\t(loss)\tincome\tavailable\tto\tAlcoa\tcommon\tshareholders—basic | (391) | 247 | (2,287) |
| Add:\tdividends\trelated\tto\tmandatory\tconvertible\tpreferred\tstock | - | - | - |
| Add:\tinterest\texpense\trelated\tto\tconvertible\tnotes | - | - | - |
| Net\t(loss)\tincome\tavailable\tto\tAlcoa\tcommon\tshareholders—diluted | $(391) | $247 | $(2,287) |
| Average\tshares\toutstanding—basic | \t 1,259 | \t 1,162 | 1,070 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Stock\toptions | - | 7 | - |
| Stock\tand\tperformance\tawards | - | 11 | - |
| Mandatory\tconvertible\tpreferred\tstock | - | - | - |
| Convertible\tnotes | - | - | - |
| Average\tshares\toutstanding—diluted | \t 1,259 | \t 1,180 | 1,070 |

In	2015,	basic	average	shares	outstanding	and	diluted	average	shares	outstanding	were	the	same	because	the	effect	of	potential	shares	of	common	stock	was	anti-dilutive since	Alcoa	generated	a	net	loss.	As	a	result,	77	million	share	equivalents	related	to	mandatory	convertible	preferred	were	not	included	in	the	computation	of	diluted EPS.	Additionally,	20	million	stock	awards,	33	million	stock	options,	and	15	million	(weighted-average)	share	equivalents	related	to	convertible	debt	(acquired	from RTI—see	Note	F)	were	not	included	in	the	computation	of	diluted	EPS.	Had	Alcoa	generated	net	income	in	2015,	77	million,	15	million,	12	million,	and	3	million potential	shares	of	common	stock	related	to	the	mandatory	convertible	preferred	stock,	convertible	notes,	stock	awards,	and	stock	options,	respectively,	would	have been	included	in	diluted	average	shares	outstanding.

In	2014,	16	million	and	22	million	share	equivalents	related	to	convertible	notes	and	mandatory	convertible	preferred	stock,	respectively,	were	not	included	in	the computation	of	diluted	EPS	because	their	effect	was	anti-dilutive.

In	2013,	basic	average	shares	outstanding	and	diluted	average	shares	outstanding	were	the	same	because	the	effect	of	potential	shares	of	common	stock	was	anti-dilutive since	Alcoa	generated	a	net	loss.	As	a	result,	89	million	share	equivalents	related	to	convertible	notes,	16	million	stock	awards,	and	12	million	stock	options	were	not included	in	the	computation	of	diluted	EPS.	Had	Alcoa	generated	sufficient	income	from	continuing	operations	in	2013,	89	million,	9	million,	and	2	million	potential shares	of	common	stock	related	to	the	convertible	notes,	stock	awards,	and	stock	options,	respectively,	would	have	been	included	in	diluted	average	shares	outstanding.

Options	to	purchase	26	million,	3	million,	and	12	million	shares	of	common	stock	at	a	weighted	average	exercise	price	of	$12.75,	$16.24,	and	$15.81	per	share	were outstanding	as	of	December	31,	2015,	2014,	and	2013,	respectively,	but	were	not	included	in	the	computation	of	diluted	EPS	because	they	were	anti-dilutive,	as	the exercise	prices	of	the	options	were	greater	than	the	average	market	price	of	Alcoa's	common	stock.

# T.	Income	Taxes

The	components	of	income	(loss)	before	income	taxes	were	as	follows:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| United\tStates | $(607) | $(125) | $(1,269) |
| Foreign | 855 | 622 | (547) |
|  | $248 | $497 | $(1,816) |

The	provision	for	income	taxes	consisted	of	the	following:

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal* | $3 | $(3) | $14 |
| Foreign | 409 | \t 357 | \t 235 |
| State\tand\tlocal | (1) | 1 | 1 |
|  | 411 | \t 355 | \t 250 |
| Deferred: |  |  |  |
| Federal* | (108) | 7 | 84 |
| Foreign | 142 | (41) | 95 |
| State\tand\tlocal | - | (1) | (1) |
|  | 34 | (35) | \t 178 |
| Total | $445 | $320 | $428 |

* Includes	U.S.	taxes	related	to	foreign	income

The	exercise	of	employee	stock	options	generated	a	tax	benefit	of	$3	and	$9	in	2015	and	2014,	respectively,	and	a	tax	charge	of	$1	in	2013,	representing	only	the difference	between	compensation	expense	recognized	for	financial	reporting	and	tax	purposes.	These	amounts	decreased	equity	and	increased	either	current	taxes payable	or	deferred	tax	assets	(not	operating	losses)	in	the	respective	periods.

Alcoa	has	unamortized	tax-deductible	goodwill	of	$27	resulting	from	intercompany	stock	sales	and	reorganizations.	Alcoa	recognizes	the	tax	benefits	(at	a	28%	rate	in 2015	and	will	be	at	a	rate	of	25%	in	2016	and	later	years)	associated	with	this	tax-deductible	goodwill	as	it	is	being	amortized	for	local	income	tax	purposes	rather	than in	the	period	in	which	the	transaction	is	consummated.

A	reconciliation	of	the	U.S.	federal	statutory	rate	to	Alcoa's	effective	tax	rate	was	as	follows	(the	effective	tax	rate	for	2015	and	2014	was	a	provision	on	income	and	for 2013	was	a	provision	on	a	loss):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| U.S.\tfederal\tstatutory\trate | 35.0% | 35.0% | 35.0% |
| Taxes\ton\tforeign\toperations | 0.4 | (3.2) | 0.7 |
| Permanent\tdifferences\ton\trestructuring\tand\tother\tcharges\tand\tasset\tdisposals | 2.7 | (3.5) | (0.8) |
| Non-deductible\tacquisition\tcosts | 5.2 | 1.7 | - |
| Equity\tincome/loss | 4.9 | 3.2 | (0.7) |
| Noncontrolling\tinterests^(1) | 11.4 | 6.8 | (3.1) |
| Statutory\ttax\trate\tand\tlaw\tchanges^(2) | (0.8) | 17.9 | 0.6 |
| Tax\tholidays^(3) | (11.3) | 6.1 | - |
| Tax\tcredits | (3.6) | (1.3) | 0.2 |
| Changes\tin\tvaluation\tallowances | 135.3 | 3.5 | (23.2) |
| Impairment\tof\tgoodwill | 3.6 | - | (33.3) |
| Company-owned\tlife\tinsurance/split-dollar\tnet\tpremiums | (2.2) | (2.2) | 1.1 |
| Other | (1.2) | 0.4 | (0.1) |
| Effective\ttax\trate | 179.4% | 64.4% | (23.6)% |
| (1) | In\t2014,\tthe\tnoncontrolling\tinterests'\timpact\ton\tAlcoa's\teffective\ttax\trate\twas\tmostly\tdue\tto\tthe\tnoncontrolling\tinterest's\tshare\tof\ta\tloss\ton\tthe\tdivestiture\tof\tan | In\t2014,\tthe\tnoncontrolling\tinterests'\timpact\ton\tAlcoa's\teffective\ttax\trate\twas\tmostly\tdue\tto\tthe\tnoncontrolling\tinterest's\tshare\tof\ta\tloss\ton\tthe\tdivestiture\tof\tan | In\t2014,\tthe\tnoncontrolling\tinterests'\timpact\ton\tAlcoa's\teffective\ttax\trate\twas\tmostly\tdue\tto\tthe\tnoncontrolling\tinterest's\tshare\tof\ta\tloss\ton\tthe\tdivestiture\tof\tan |

(1) In	2014,	the	noncontrolling	interests'	impact	on	Alcoa's	effective	tax	rate	was	mostly	due	to	the	noncontrolling	interest's	share	of	a	loss	on	the	divestiture	of	an ownership	interest	in	a	mining	and	refining	joint	venture	in	Jamaica	(see	Note	F).

(2) In	November	2014,	Spain	enacted	corporate	tax	reform	that	changed	the	corporate	tax	rate	from	30%	in	2014	to	28%	in	2015	to	25%	in	2016.	As	a	result,	Alcoa remeasured	certain	deferred	tax	assets	related	to	Spanish	subsidiaries.

(3) In	2014,	a	tax	holiday	for	certain	Alcoa	subsidiaries	in	Brazil	became	effective	(see	below).

The	components	of	net	deferred	tax	assets	and	liabilities	were	as	follows:

|  | Deferred | Deferred | Deferred | Deferred |
| :--- | :--- | :--- | :--- | :--- |
|  | tax | tax | tax | tax |
| December\t31, | assets | liabilities | assets | liabilities |
| Depreciation | $194 | $1,353 | $147 | $1,187 |
| Employee\tbenefits | 2,517 | 34 | 2,413 | 37 |
| Loss\tprovisions | 486 | 9 | 441 | 10 |
| Deferred\tincome/expense | 37 | 294 | 30 | 230 |
| Tax\tloss\tcarryforwards | 1,917 | - | 2,075 | - |
| Tax\tcredit\tcarryforwards | 693 | - | 625 | - |
| Derivatives\tand\thedging\tactivities | - | 276 | 5 | 39 |
| Other | 680 | 339 | 521 | 297 |
|  | 6,524 | 2,305 | 6,257 | 1,800 |
| Valuation\tallowance | (2,037) | - | (1,668) | - |
|  | $4,487 | $2,305 | $4,589 | $1,800 |

The	following	table	details	the	expiration	periods	of	the	deferred	tax	assets	presented	above:

|  | Expires | Expires |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | within | within | No |  |  |
| December\t31,\t2015 | 10\tyears | 11-20\tyears | expiration* | Other* | Total |
| Tax\tloss\tcarryforwards | $361 | $694 | $862 | $- | $1,917 |
| Tax\tcredit\tcarryforwards | 492 | 103 | 98 | - | 693 |
| Other | - | - | 473 | 3,441 | 3,914 |
| Valuation\tallowance | (596) | (704) | (423) | (314) | (2,037) |
|  | $257 | $93 | $1,010 | $3,127 | $4,487 |
| * |  |  |  |  |  |

* Deferred	tax	assets	with	no	expiration	may	still	have	annual	limitations	on	utilization.	Other	represents	deferred	tax	assets	whose	expiration	is	dependent	upon	the reversal	of	the	underlying	temporary	difference.	A	substantial	amount	of	Other	relates	to	employee	benefits	that	will	become	deductible	for	tax	purposes	over	an extended	period	of	time	as	contributions	are	made	to	employee	benefit	plans	and	payments	are	made	to	retirees.

The	total	deferred	tax	asset	(net	of	valuation	allowance)	is	supported	by	projections	of	future	taxable	income	exclusive	of	reversing	temporary	differences	(58%)	and taxable	temporary	differences	that	reverse	within	the	carryforward	period	(42%).

Valuation	allowances	are	recorded	to	reduce	deferred	tax	assets	when	it	is	more	likely	than	not	(greater	than	50%)	that	a	tax	benefit	will	not	be	realized.	In	evaluating the	need	for	a	valuation	allowance,	management	considers	all	potential	sources	of	taxable	income,	including	income	available	in	carryback	periods,	future	reversals	of taxable	temporary	differences,	projections	of	taxable	income,	and	income	from	tax	planning	strategies,	as	well	as	all	available	positive	and	negative	evidence.	Positive evidence	includes	factors	such	as	a	history	of	profitable	operations,	projections	of	future	profitability	within	the	carryforward	period,	including	from	tax	planning strategies,	and	Alcoa's	experience	with	similar	operations.	Existing	favorable	contracts	and	the	ability	to	sell	products	into	established	markets	are	additional	positive evidence.	Negative	evidence	includes	items	such	as	cumulative	losses,	projections	of	future	losses,	or	carryforward	periods	that	are	not	long	enough	to	allow	for	the utilization	of	a	deferred	tax	asset	based	on	existing	projections	of	income.	In	certain	jurisdictions,	deferred	tax	assets	related	to	cumulative	losses	exist	without	a valuation	allowance	where	in	management's	judgment	the	weight	of	the	positive	evidence	more	than	offsets	the	negative	evidence	of	the	cumulative	losses.	Upon changes	in	facts	and	circumstances,	management	may	conclude	that	deferred	tax	assets	for	which	no	valuation	allowance	is	currently	recorded	may	not	be	realized, resulting	in	a	future	charge	to	establish	a	valuation	allowance.	Existing	valuation	allowances	are	re-examined	under	the	same	standards	of	positive	and	negative evidence.	If	it	is	determined	that	it	is	more	likely	than	not	that	a	deferred	tax	asset	will	be	realized,	the	appropriate	amount	of	the	valuation	allowance,	if	any,	is	released. Deferred	tax	assets	and	liabilities	are	also	re-measured	to	reflect	changes	in	underlying	tax	rates	due	to	law	changes	and	the	granting	and	lapse	of	tax	holidays.

In	2013,	Alcoa	recognized	a	$372	discrete	income	tax	charge	for	valuation	allowances	on	certain	deferred	tax	assets	in	Spain	and	the	United	States.	Of	this	amount,	a $237	valuation	allowance	was	established	on	the	full	value	of	the	deferred	tax	assets	related	to	a	Spanish	consolidated	tax	group.	These	deferred	tax	assets	have	an expiration	period	ranging	from	2016	(for	certain	credits)	to	an	unlimited	life	(for	operating	losses).	After	weighing	all	available	positive	and	negative	evidence,	as described	above,	management	determined	that	it	was	no	longer	more	likely	than	not	that	Alcoa	will	realize	the	tax	benefit	of	these	deferred	tax	assets.	This	was	mainly driven	by	a	decline	in	the	outlook	of	the	Primary	Metals	business	(2013	realized	prices	were	the	lowest	since	2009)	combined	with	prior	year	cumulative	losses	of	the Spanish	consolidated	tax	group.	During	2014,	the	underlying	value	of	the	deferred	tax	assets	decreased	due	to	a	remeasurement	as	a	result	of	the	enactment	of	new	tax rates	in	Spain	beginning	in	2015,	the	sale	of	a	member	of	the	Spanish	consolidated	tax	group,	and	a	change	in	foreign	currency	exchange	rates.	As	a	result	the	valuation allowance	decreased	by	the	same	amount.	At	December	31,	2015,	the	amount	of	the	valuation	allowance	was	$149.	This	valuation	allowance	was	reevaluated	as	of December	31,	2015,	and	no	change	to	the	allowance	was	deemed	necessary	based	on	all	available	evidence.	The	need	for	this	valuation	allowance	will	be	assessed	on	a continuous	basis	in	future	periods	and,	as	a	result,	a	portion	or	all	of	the	allowance	may	be	reversed	based	on	changes	in	facts	and	circumstances.

In	December	2011,	one	of	Alcoa's	subsidiaries	in	Brazil	applied	for	a	tax	holiday	related	to	its	expanded	mining	and	refining	operations.	During	2013,	the	application was	amended	and	re-filed	and,	separately,	a	similar	application	was	filed	for	another	one	of	the	Company's	subsidiaries	in	Brazil.	The	deadline	for	the	Brazilian government	to	deny	the	application	was	July	11,	2014.	Since	Alcoa	did	not	receive	notice	that	its	applications	were	denied,	the	tax	holiday	took	effect	automatically	on July	12,	2014.	As	a	result,	the	tax	rate	applicable	to	qualified	holiday	income	for	these	subsidiaries	decreased	significantly	(from	34%	to	15.25%),	resulting	in	future cash	tax	savings	over	the	10-year	holiday	period	(retroactively	effective	as	of	January	1,	2013).	Additionally,	a	portion	of	one	of	the	subsidiaries	net	deferred	tax	asset that	reverses	within	the	holiday	period	was	remeasured	at	the	new	tax	rate	(the	net	deferred	tax	asset	of	the	other	subsidiary	was	not	remeasured	since	it	could	still	be utilized	against	the	subsidiary's	future	earnings	not	subject	to	the	tax	holiday).	This	remeasurement	resulted	in	a	decrease	to	that	subsidiary's	net	deferred	tax	asset	and	a noncash	charge	to	earnings	of	$52	($31	after	noncontrolling	interest).

The	following	table	details	the	changes	in	the	valuation	allowance:

| December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $1,668 | $1,804 | $1,400 |
| Increase\tto\tallowance | 472 | 117 | 471 |
| Release\tof\tallowance | (42) | (77) | (41) |
| Acquisitions\tand\tdivestitures\t(F) | 29 | (37) | - |
| U.S.\tstate\ttax\tapportionment\tand\ttax\trate\tchanges | (45) | (80) | (32) |
| Foreign\tcurrency\ttranslation | (45) | (59) | 6 |
| Balance\tat\tend\tof\tyear | $2,037 | $1,668 | $1,804 |

The	cumulative	amount	of	Alcoa's	foreign	undistributed	net	earnings	for	which	no	deferred	taxes	have	been	provided	was	approximately	$4,000	at	December	31,	2015. Alcoa	has	a	number	of	commitments	and	obligations	related	to	the	Company's	growth	strategy	in	foreign	jurisdictions.	As	such,	management	has	no	plans	to	distribute such	earnings	in	the	foreseeable	future,	and,	therefore,	has	determined	it	is	not	practicable	to	determine	the	related	deferred	tax	liability.

Alcoa	and	its	subsidiaries	file	income	tax	returns	in	the	U.S.	federal	jurisdiction	and	various	states	and	foreign	jurisdictions.	With	a	few	minor	exceptions,	Alcoa	is	no longer	subject	to	income	tax	examinations	by	tax	authorities	for	years	prior	to	2006.	All	U.S.	tax	years	prior	to	2015	have	been	audited	by	the	Internal	Revenue	Service.

Various	state	and	foreign	jurisdiction	tax	authorities	are	in	the	process	of	examining	Alcoa's	income	tax	returns	for	various	tax	years	through	2014.

A	reconciliation	of	the	beginning	and	ending	amount	of	unrecognized	tax	benefits	(excluding	interest	and	penalties)	was	as	follows:

| December	31, | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $35 | $63 | $66 |
| Additions\tfor\ttax\tpositions\tof\tthe\tcurrent\tyear | 2 | 2 | 2 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 15 | 5 | 11 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (2) | (4) | (2) |
| Settlements\twith\ttax\tauthorities | (2) | (29) | (8) |
| Expiration\tof\tthe\tstatute\tof\tlimitations | (1) | - | (2) |
| Foreign\tcurrency\ttranslation | (4) | (2) | (4) |
| Balance\tat\tend\tof\tyear | $43 | $35 | $63 |

For	all	periods	presented,	a	portion	of	the	balance	at	end	of	year	pertains	to	state	tax	liabilities,	which	are	presented	before	any	offset	for	federal	tax	benefits.	The	effect of	unrecognized	tax	benefits,	if	recorded,	that	would	impact	the	annual	effective	tax	rate	for	2015,	2014,	and	2013	would	be	approximately	12%,	4%,	and	(1)%, respectively,	of	pretax	book	income	(loss).	Alcoa	does	not	anticipate	that	changes	in	its	unrecognized	tax	benefits	will	have	a	material	impact	on	the	Statement	of Consolidated	Operations	during	2016	(see	Other	Matters	in	Note	N	for	a	matter	for	which	no	reserve	has	been	recognized).

It	is	Alcoa's	policy	to	recognize	interest	and	penalties	related	to	income	taxes	as	a	component	of	the	Provision	for	income	taxes	on	the	accompanying	Statement	of Consolidated	Operations.	In	2015,	2014,	and	2013,	Alcoa	recognized	$8,	$1,	and	$2,	respectively,	in	interest	and	penalties.	Due	to	the	expiration	of	the	statute	of limitations,	settlements	with	tax	authorities,	and	refunded	overpayments,	Alcoa	also	recognized	interest	income	of	$2,	$5,	and	$12	in	2015,	2014,	and	2013,	respectively. As	of	December	31,	2015	and	2014,	the	amount	accrued	for	the	payment	of	interest	and	penalties	was	$9.

# U.	Receivables

# Sale	of	Receivables	Programs

Alcoa	has	an	arrangement	with	three	financial	institutions	to	sell	certain	customer	receivables	without	recourse	on	a	revolving	basis.	The	sale	of	such	receivables	is completed	through	the	use	of	a	bankruptcy	remote	special	purpose	entity,	which	is	a	consolidated	subsidiary	of	Alcoa.	This	arrangement	provides	for	minimum	funding of	$200	up	to	a	maximum	of	$500	for	receivables	sold.	On	March	30,	2012,	Alcoa	initially	sold	$304	of	customer	receivables	in	exchange	for	$50	in	cash	and	$254	of deferred	purchase	price	under	this	arrangement.	Alcoa	has	received	additional	net	cash	funding	of	$200	for	receivables	sold	($1,258	in	draws	and	$1,058	in	repayments) since	the	program's	inception	(no	draws	or	repayments	occurred	in	2015),	including	$40	($710	in	draws	and	$670	in	repayments)	in	2014.

As	of	December	31,	2015	and	2014,	the	deferred	purchase	price	receivable	was	$249	and	$356,	respectively,	which	was	included	in	Other	receivables	on	the accompanying	Consolidated	Balance	Sheet.	The	deferred	purchase	price	receivable	is	reduced	as	collections	of	the	underlying	receivables	occur;	however,	as	this	is	a revolving	program,	the	sale	of	new	receivables	will	result	in	an	increase	in	the	deferred	purchase	price	receivable.	The	net	change	in	the	deferred	purchase	price receivable	was	reflected	in	the	Decrease	(increase)	in	receivables	line	item	on	the	accompanying	Statement	of	Consolidated	Cash	Flows.	This	activity	is	reflected	as	an operating	cash	flow	because	the	related	customer	receivables	are	the	result	of	an	operating	activity	with	an	insignificant,	short-term	interest	rate	risk.

In	2015	and	2014,	the	gross	cash	outflows	and	inflows	associated	with	the	deferred	purchase	price	receivable	were	$6,893	and	$7,001,	respectively,	and	$7,381	and $7,272,	respectively.	The	gross	amount	of	receivables	sold	and	total	cash	collected	under	this	program	since	its	inception	was	$24,598	and	$24,099	respectively.	Alcoa services	the	customer	receivables	for	the	financial	institutions	at	market	rates;	therefore,	no	servicing	asset	or	liability	was	recorded.

# Allowance	for	Doubtful	Accounts

The	following	table	details	the	changes	in	the	allowance	for	doubtful	accounts	related	to	customer	receivables	and	other	receivables:

|  | Customer	receivables | Customer	receivables | Customer	receivables | Other	receivables | Other	receivables | Other	receivables |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31, | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Balance\tat\tbeginning\tof\tyear | $14 | $20 | $39 | $41 | $47 | $74 |
| Provision\tfor\tdoubtful\taccounts | 5 | 2 | 3 | 8 | 8 | 29 |
| Write\toff\tof\tuncollectible\taccounts | (4) | (3) | (19) | (2) | (4) | (39) |
| Recoveries\tof\tprior\twrite-offs | - | (2) | (3) | 1 | (7) | (10) |
| Other | (2) | (3) | - | 1 | (3) | (7) |
| Balance\tat\tend\tof\tyear | $13 | $14 | $20 | $49 | $41 | $47 |

# V.	Interest	Cost	Components

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Amount\tcharged\tto\texpense | $498 | $473 | $453 |
| Amount\tcapitalized | 57 | 56 | 99 |
|  | $555 | $529 | $552 |

# W.	Pension	and	Other	Postretirement	Benefits

Alcoa	maintains	pension	plans	covering	most	U.S.	employees	and	certain	employees	in	foreign	locations.	Pension	benefits	generally	depend	on	length	of	service,	job grade,	and	remuneration.	Substantially	all	benefits	are	paid	through	pension	trusts	that	are	sufficiently	funded	to	ensure	that	all	plans	can	pay	benefits	to	retirees	as	they become	due.	Most	salaried	and	non-bargaining	hourly	U.S.	employees	hired	after	March	1,	2006	participate	in	a	defined	contribution	plan	instead	of	a	defined	benefit plan.

On	June	6,	2014,	the	United	Steelworkers	ratified	a	new	five-year	labor	agreement	covering	approximately	6,100	employees	at	10	U.S.	locations;	the	previous	labor agreement	expired	on	May	15,	2014.	In	2014,	as	a	result	of	the	preparation	for	and	ratification	of	the	new	agreement,	Alcoa	recognized	$18	($12	after-tax)	in	Cost	of goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations	for,	among	other	items,	business	contingency	costs	and	a	one-time	signing	bonus	for	employees. Additionally,	as	a	result	of	the	provisions	of	the	new	labor	agreement,	a	significant	plan	amendment	was	adopted	by	one	of	Alcoa's	U.S.	pension	plans.	Accordingly,	this plan	was	required	to	be	remeasured,	and	through	this	process,	the	discount	rate	was	updated	from	4.80%	at	December	31,	2013	to	4.25%	at	May	31,	2014.	The	plan remeasurement	resulted	in	an	increase	to	both	Alcoa's	pension	liability	of	$100	and	a	combination	of	the	plan's	unrecognized	net	actuarial	loss	and	prior	service	cost (included	in	Accumulated	other	comprehensive	loss)	of	$65	(after-tax).	The	plan	remeasurement	also	resulted	in	a	$13	decrease	to	2014	net	periodic	benefit	cost.

Alcoa	also	maintains	health	care	and	life	insurance	postretirement	benefit	plans	covering	eligible	U.S.	retired	employees	and	certain	retirees	from	foreign	locations. Generally,	the	medical	plans	are	unfunded	and	pay	a	percentage	of	medical	expenses,	reduced	by	deductibles	and	other	coverage.	Life	benefits	are	generally	provided	by insurance	contracts.	Alcoa	retains	the	right,	subject	to	existing	agreements,	to	change	or	eliminate	these	benefits.	All	salaried	and	certain	non-bargaining	hourly	U.S. employees	hired	after	January	1,	2002	and	certain	bargaining	hourly	U.S.	employees	hired	after	July	1,	2010	are	not	eligible	for	postretirement	health	care	benefits.	All salaried	and	certain	hourly	U.S.	employees	that	retire	on	or	after	April	1,	2008	are	not	eligible	for	postretirement	life	insurance	benefits.

Effective	January	1,	2015,	Alcoa	no	longer	offers	postretirement	health	care	benefits	to	Medicare-eligible,	primarily	non-bargaining,	U.S.	retirees	through	Company- sponsored	plans.	Qualifying	retirees	(hired	prior	to	January	1,	2002),	both	current	and	future,	may	access	these	benefits	in	the	marketplace	by	purchasing	coverage directly	from	insurance	carriers.	This	change	resulted	in	the	adoption	of	a	significant	plan	amendment	by	certain	Alcoa	U.S.	postretirement	benefit	plans	in	August	2014. Accordingly,	these	plans	were	required	to	be	remeasured,	and	through	this	process,	the	discount	rate	was	updated	from	4.80%	at	December	31,	2013	to	4.15%	at August	31,	2014.	The	remeasurement	of	the	plans	resulted	in	a	decrease	to	both	Alcoa's	other	postretirement	benefits	liability	of	$90	and	a	combination	of	the	plans' unrecognized	net	actuarial	loss	and	prior	service	benefit	(included	in	Accumulated	other	comprehensive	loss)	of	$59	(after-tax).	The	remeasurement	of	the	plans	also resulted	in	a	$7	decrease	to	2014	net	periodic	benefit	cost.

The	funded	status	of	all	of	Alcoa's	pension	and	other	postretirement	benefit	plans	are	measured	as	of	December	31	each	calendar	year.

# Obligations	and	Funded	Status

|  | Pension	benefits | Pension	benefits | postretirement	benefits | postretirement	benefits |
| :--- | :--- | :--- | :--- | :--- |
| December\t31, | 2015 | 2014 | \t\t\t\t2015 | \t\t\t\t2014 |
| Change\tin\tbenefit\tobligation |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $15,019 | $13,730 | $2,368 | $2,592 |
| Service\tcost | 187 | 182 | 14 | 15 |
| Interest\tcost | 583 | 640 | 92 | 114 |
| Amendments | 18 | 33 | - | (111) |
| Actuarial\t(gains)\tlosses | (222) | 1,552 | 26 | 16 |
| Acquisitions\t(F) | 188 | 455 | 48 | - |
| Divestitures\t(F) | - | (142) | - | (10) |
| Settlements | (72) | (134) | - | - |
| Curtailments | (12) | - | (6) | - |
| Benefits\tpaid,\tnet\tof\tparticipants'\tcontributions | (1,033) | (1,051) | (235) | (264) |
| Medicare\tPart\tD\tsubsidy\treceipts | - | - | 15 | 19 |
| Foreign\tcurrency\ttranslation\timpact | (409) | (246) | (3) | (3) |
| Benefit\tobligation\tat\tend\tof\tyear* | $14,247 | $15,019 | $2,319 | $2,368 |
| Change\tin\tplan\tassets |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $11,717 | $10,580 | $- | $- |
| Actual\treturn\ton\tplan\tassets | 24 | 1,764 | - | - |
| Employer\tcontributions | 479 | 507 | - | - |
| Participants'\tcontributions | 21 | 25 | - | - |
| Benefits\tpaid | (1,015) | (1,038) | - | - |
| Administrative\texpenses | (55) | (54) | - | - |
| Acquisitions\t(F) | 164 | 431 | - | - |
| Divestitures\t(F) | - | (164) | - | - |
| Settlements | (72) | (134) | - | - |
| Foreign\tcurrency\ttranslation\timpact | (335) | (200) | - | - |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear* | $10,928 | $11,717 | $- | $- |
| Funded\tstatus* | $(3,319) | $(3,302) | $(2,319) | $(2,368) |
| Less:\tAmounts\tattributed\tto\tjoint\tventure\tpartners | (30) | (33) | - | - |
| Net\tfunded\tstatus | $(3,289) | $(3,269) | $(2,319) | $(2,368) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheet\tconsist\tof: |  |  |  |  |
| Noncurrent\tassets | $44 | $53 | $- | $- |
| Current\tliabilities | (35) | (31) | (213) | (213) |
| Noncurrent\tliabilities | (3,298) | (3,291) | (2,106) | (2,155) |
| Net\tamount\trecognized | $(3,289) | $(3,269) | $(2,319) | $(2,368) |
| Amounts\trecognized\tin\tAccumulated\tOther\tComprehensive\tLoss\tconsist\tof: |  |  |  |  |
| Net\tactuarial\tloss | $5,351 | $5,379 | $398 | $392 |
| Prior\tservice\tcost\t(benefit) | 70 | 102 | (106) | (144) |
| Total,\tbefore\ttax\teffect | 5,421 | 5,481 | 292 | 248 |
| Less:\tAmounts\tattributed\tto\tjoint\tventure\tpartners | 38 | 43 | - | - |
| Net\tamount\trecognized,\tbefore\ttax\teffect | $5,383 | $5,438 | $292 | $248 |
| Other\tChanges\tin\tPlan\tAssets\tand\tBenefit\tObligations\tRecognized\tin\tOther\tComprehensive |  |  |  |  |
| Loss\tconsist\tof: |  |  |  |  |
| Net\tactuarial\tloss | $440 | $572 | $23 | $15 |
| Amortization\tof\taccumulated\tnet\tactuarial\tloss | (468) | (391) | (17) | (13) |
| Prior\tservice\t(benefit)\tcost | (7) | 26 | 1 | (112) |
| Amortization\tof\tprior\tservice\t(cost)\tbenefit | (25) | (18) | 37 | 25 |
| Total,\tbefore\ttax\teffect | (60) | 189 | 44 | (85) |
| Less:\tAmounts\tattributed\tto\tjoint\tventure\tpartners | (5) | 5 | - | - |
| Net\tamount\trecognized,\tbefore\ttax\teffect | $(55) | $184 | $44 | $(85) |
| * |  |  |  |  |

# Pension	Plan	Benefit	Obligations

|  | 2015 | 2014 |
| :--- | :--- | :--- |
| The\tprojected\tbenefit\tobligation\tand\taccumulated\tbenefit\tobligation\tfor\tall\tdefined\tbenefit\tpension\tplans\twas\tas\tfollows: |  |  |
| Projected\tbenefit\tobligation | $14,247 | $15,019 |
| Accumulated\tbenefit\tobligation | \t 13,832 | \t 14,553 |
| The\taggregate\tprojected\tbenefit\tobligation\tand\tfair\tvalue\tof\tplan\tassets\tfor\tpension\tplans\twith\tprojected\tbenefit\tobligations\tin\texcess\tof |  |  |
| plan\tassets\twas\tas\tfollows: |  |  |
| Projected\tbenefit\tobligation | \t 14,146 | \t 14,151 |
| Fair\tvalue\tof\tplan\tassets | \t 10,786 | \t 10,777 |
| The\taggregate\taccumulated\tbenefit\tobligation\tand\tfair\tvalue\tof\tplan\tassets\tfor\tpension\tplans\twith\taccumulated\tbenefit\tobligations\tin\texcess |  |  |
| of\tplan\tassets\twas\tas\tfollows: |  |  |
| Accumulated\tbenefit\tobligation | \t 12,510 | \t 13,112 |
| Fair\tvalue\tof\tplan\tassets | 9,512 | \t 10,144 |

# Components	of	Net	Periodic	Benefit	Cost

|  | Pension	benefits^(1) | Pension	benefits^(1) |  | Other	postretirement	benefits^(2) | Other	postretirement	benefits^(2) | Other	postretirement	benefits^(2) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Service\tcost | $175 | $166 | $194 | $14 | $15 | $17 |
| Interest\tcost | 577 | 630 | 602 | 92 | 114 | 114 |
| Expected\treturn\ton\tplan\tassets | (753) | (782) | (788) | - | - | - |
| Recognized\tnet\tactuarial\tloss | 468 | 391 | 489 | 17 | 13 | 35 |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | 16 | 18 | 19 | (37) | (25) | (18) |
| Settlements^(3) | 16 | 26 | 9 | - | - | - |
| Curtailments^(4) | 9 | - | 6 | (4) | - | - |
| Special\ttermination\tbenefits^(5) | 16 | - | 77 | - | - | - |
| Net\tperiodic\tbenefit\tcost^(6) | $524 | $449 | $608 | $82 | $117 | $148 |
| (1) |  |  |  |  |  |  |

In	2015,	2014,	and	2013,	net	periodic	benefit	cost	for	other	postretirement	benefits	reflects	a	reduction	of	$34,	$38,	and	$55,	respectively,	related	to	the recognition	of	the	federal	subsidy	awarded	under	Medicare	Part	D. (2)

In	2015,	settlements	were	due	to	workforce	reductions	(see	Note	D)	and	the	payment	of	lump	sum	benefits	and/or	purchases	of	annuity	contracts.	In	2014, settlements	were	due	to	workforce	reductions	(see	Note	D).	In	2013,	settlements	were	due	to	the	payment	of	lump	sum	benefits	and/or	purchases	of	annuity contracts. (3)

In	2015	and	2013,	curtailments	were	due	to	elimination	of	benefits	or	workforce	reductions	(see	Note	D). (4)

In	2015	and	2013,	special	termination	benefits	were	due	to	workforce	reductions	(see	Note	D). (5)

Amounts	attributed	to	joint	venture	partners	are	not	included. (6)

# Amounts	Expected	to	be	Recognized	in	Net	Periodic	Benefit	Cost

# Assumptions

Weighted	average	assumptions	used	to	determine	benefit	obligations	for	U.S.	pension	and	other	postretirement	benefit	plans	were	as	follows	(assumptions	for	non-U.S plans	did	not	differ	materially):

| December	31, | 2015 | 2014 |
| :--- | :--- | :--- |
| Discount\trate | \t4.29% | \t4.00% |
| Rate\tof\tcompensation\tincrease | \t3.5 | \t3.5 |

The	discount	rate	is	determined	using	a	Company-specific	yield	curve	model	(above-median)	developed	with	the	assistance	of	an	external	actuary.	The	cash	flows	of	the plans'	projected	benefit	obligations	are	discounted	using	a	single	equivalent	rate	derived	from	yields	on	high	quality	corporate	bonds,	which	represent	a	broad diversification	of	issuers	in	various	sectors,	including	finance	and	banking,	consumer	products,	transportation,	insurance,	and	pharmaceutical,	among	others.	The	yield curve	model	parallels	the	plans'	projected	cash	flows,	which	have	an	average	duration	of	10	years,	and	the	underlying	cash	flows	of	the	bonds	included	in	the	model exceed	the	cash	flows	needed	to	satisfy	the	Company's	plans'	obligations	multiple	times.

The	rate	of	compensation	increase	is	based	upon	actual	experience.	For	2016,	the	rate	of	compensation	increase	will	be	3.5%,	which	approximates	the	five-year	average.

Weighted	average	assumptions	used	to	determine	net	periodic	benefit	cost	for	U.S.	pension	and	other	postretirement	benefit	plans	were	as	follows	(assumptions	for	non- U.S	plans	did	not	differ	materially):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Discount\trate* | \t4.00% | \t4.80% | \t4.15% |
| Expected\tlong-term\trate\tof\treturn\ton\tplan\tassets | \t7.75 | \t8.00 | \t8.50 |
| Rate\tof\tcompensation\tincrease | \t3.50 | \t3.50 | \t3.50 |
| * |  |  |  |

* In	all	periods	presented,	the	respective	discount	rates	were	used	to	determine	net	periodic	benefit	cost	for	most	U.S.	pension	plans	for	the	full	annual	period. However,	the	discount	rates	for	a	limited	number	of	plans	were	updated	during	2015,	2014,	and	2013	to	reflect	the	remeasurement	of	these	plans	due	to	new	union labor	agreements,	settlements,	and/or	curtailments.	The	updated	discount	rates	used	were	not	significantly	different	from	the	discount	rates	presented.

For	2015,	2014,	and	2013,	the	expected	long-term	rate	of	return	used	by	management	was	based	on	the	prevailing	and	planned	strategic	asset	allocations,	as	well	as estimates	of	future	returns	by	asset	class.	These	rates	fell	within	the	respective	range	of	the	20-year	moving	average	of	actual	performance	and	the	expected	future	return developed	by	asset	class.	In	2015,	the	decrease	of	25	basis	points	in	the	expected	long-term	rate	of	return	was	due	to	a	decrease	in	the	20-year	moving	average	of	actual performance.	For	2016,	management	anticipates	that	7.75%	will	be	the	expected	long-term	rate	of	return.

Assumed	health	care	cost	trend	rates	for	U.S.	other	postretirement	benefit	plans	were	as	follows	(assumptions	for	non-U.S	plans	did	not	differ	materially):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Health\tcare\tcost\ttrend\trate\tassumed\tfor\tnext\tyear | 5.5% | 5.5% | 5.5% |
| Rate\tto\twhich\tthe\tcost\ttrend\trate\tgradually\tdeclines | 4.5% | 4.5% | 4.5% |
| Year\tthat\tthe\trate\treaches\tthe\trate\tat\twhich\tit\tis\tassumed\tto\tremain | \t2019 | \t2018 | \t2017 |

The	assumed	health	care	cost	trend	rate	is	used	to	measure	the	expected	cost	of	gross	eligible	charges	covered	by	Alcoa's	other	postretirement	benefit	plans.	For	2016,	a 5.5%	trend	rate	will	be	used,	reflecting	management's	best	estimate	of	the	change	in	future	health	care	costs	covered	by	the	plans.	The	plans'	actual	annual	health	care cost	trend	experience	over	the	past	three	years	has	ranged	from	4.0%.	to	9.6%	Management	does	not	believe	this	three-year	range	is	indicative	of	expected	increases	for future	health	care	costs	over	the	long-term.

Assumed	health	care	cost	trend	rates	have	an	effect	on	the	amounts	reported	for	the	health	care	plan.	A	one-percentage	point	change	in	these	assumed	rates	would	have the	following	effects:

# Plan	Assets

Alcoa's	pension	plans'	investment	policy	and	weighted	average	asset	allocations	at	December	31,	2015	and	2014,	by	asset	class,	were	as	follows:

|  |  | Plan	assets |  |
| :--- | :--- | :--- | :--- |
|  |  | at |  |
|  |  | December\t31, |  |
| Asset\tclass | Policy\trange | 2015 | 2014 |
| Equities | 20–55% | 30% | 33% |
| Fixed\tincome | 25–55% | 43 | 45 |
| Other\tinvestments | 15–35% | 27 | 22 |
| Total |  | 100% | 100% |

The	principal	objectives	underlying	the	investment	of	the	pension	plans'	assets	are	to	ensure	that	Alcoa	can	properly	fund	benefit	obligations	as	they	become	due	under	a broad	range	of	potential	economic	and	financial	scenarios,	maximize	the	long-term	investment	return	with	an	acceptable	level	of	risk	based	on	such	obligations,	and broadly	diversify	investments	across	and	within	various	asset	classes	to	protect	asset	values	against	adverse	movements.	Specific	objectives	for	long-term	investment strategy	include	reducing	the	volatility	of	pension	assets	relative	to	pension	liabilities	and	achieving	risk	factor	diversification	across	the	balance	of	the	asset	portfolio.	A portion	of	the	assets	are	matched	to	the	interest	rate	profile	of	the	benefit	obligation	through	long	duration	fixed	income	investments	and	exposure	to	broad	equity	risk has	been	decreased	and	diversified	through	investments	in	discretionary	and

systematic	macro	hedge	funds,	long/short	equity	hedge	funds,	and	global	and	emerging	market	equities.	Investments	are	further	diversified	by	strategy,	asset	class, geography,	and	sector	to	enhance	returns	and	mitigate	downside	risk.	A	large	number	of	external	investment	managers	are	used	to	gain	broad	exposure	to	the	financial markets	and	to	mitigate	manager-concentration	risk.

Investment	practices	comply	with	the	requirements	of	the	Employee	Retirement	Income	Security	Act	of	1974	(ERISA)	and	other	applicable	laws	and	regulations.	The use	of	derivative	instruments	is	permitted	where	appropriate	and	necessary	for	achieving	overall	investment	policy	objectives.	Currently,	the	use	of	derivative instruments	is	not	significant	when	compared	to	the	overall	investment	portfolio.

The	following	section	describes	the	valuation	methodologies	used	by	the	trustees	to	measure	the	fair	value	of	pension	plan	assets,	including	an	indication	of	the	level	in the	fair	value	hierarchy	in	which	each	type	of	asset	is	generally	classified	(see	Note	X	for	the	definition	of	fair	value	and	a	description	of	the	fair	value	hierarchy).

Equities.	These	securities	consist	of:	(i)	direct	investments	in	the	stock	of	publicly	traded	U.S.	and	non-U.S.	companies	and	are	valued	based	on	the	closing	price reported	in	an	active	market	on	which	the	individual	securities	are	traded	(generally	classified	in	Level	1);	(ii)	the	plans'	share	of	commingled	funds	that	are	invested	in the	stock	of	publicly	traded	companies	and	are	valued	at	the	net	asset	value	of	shares	held	at	December	31	(included	in	Level	1	if	quoted	in	an	active	market,	otherwise these	investments	are	included	in	Level	2);	and	(iii)	direct	investments	in	long/short	equity	hedge	funds	and	private	equity	(limited	partnerships	and	venture	capital partnerships)	and	are	valued	by	investment	managers	based	on	the	most	recent	financial	information	available,	which	typically	represents	significant	unobservable	data (generally	classified	as	Level	3).

Fixed	income.	These	securities	consist	of:	(i)	U.S.	government	debt	and	are	generally	valued	using	quoted	prices	(included	in	Level	1);	(ii)	publicly	traded	U.S.	and	non- U.S.	fixed	interest	obligations	(principally	corporate	bonds	and	debentures)	and	are	valued	through	consultation	and	evaluation	with	brokers	in	the	institutional	market using	quoted	prices	and	other	observable	market	data	(included	in	Level	2);	(iii)	cash	and	cash	equivalents,	which	consist	of	government	securities	in	commingled	funds, and	are	generally	valued	using	observable	market	data	(included	in	Level	2);	and	(iv)	commercial	and	residential	mortgage-backed	securities	and	are	valued	by investment	managers	based	on	the	most	recent	financial	information	available,	which	typically	represents	significant	unobservable	data	(generally	classified	as	Level	3).

Other	investments.	These	investments	include,	among	others:	(i)	exchange	traded	funds,	such	as	gold,	and	real	estate	investment	trusts	and	are	valued	based	on	the closing	price	reported	in	an	active	market	on	which	the	investments	are	traded	(included	in	Level	1);	(ii)	the	plans'	share	of	commingled	funds	that	are	invested	in	real estate	investment	trusts	and	are	valued	at	the	net	asset	value	of	shares	held	at	December	31	(generally	included	in	Level	3,	however,	if	fair	value	is	able	to	be	determined through	the	use	of	quoted	market	prices	of	similar	assets	or	other	observable	market	data,	then	the	investments	are	classified	in	Level	2);	and	(iii)	direct	investments	of discretionary	and	systematic	macro	hedge	funds	and	private	real	estate	(includes	limited	partnerships)	and	are	valued	by	investment	managers	based	on	the	most	recent financial	information	available,	which	typically	represents	significant	unobservable	data	(generally	classified	as	Level	3,	however,	if	fair	value	is	able	to	be	determined through	the	use	of	quoted	market	prices	of	similar	assets	or	other	observable	market	data,	then	the	investments	are	classified	in	Level	2).

The	fair	value	methods	described	above	may	not	be	indicative	of	net	realizable	value	or	reflective	of	future	fair	values.	Additionally,	while	Alcoa	believes	the	valuation methods	used	by	the	plans'	trustees	are	appropriate	and	consistent	with	other	market	participants,	the	use	of	different	methodologies	or	assumptions	to	determine	the	fair value	of	certain	financial	instruments	could	result	in	a	different	fair	value	measurement	at	the	reporting	date.

The	following	table	presents	the	fair	value	of	pension	plan	assets	classified	under	the	appropriate	level	of	the	fair	value	hierarchy:

| December	31,	2015 | Level	1 | Level	2 | Level	3 | Total |
| :--- | :--- | :--- | :--- | :--- |
| Equities: |  |  |  |  |
| Equity\tsecurities | $826 | $929 | $170 | $1,925 |
| Long/short\tequity\thedge\tfunds | - | - | 932 | 932 |
| Private\tequity | - | - | 466 | 466 |
|  | $826 | $929 | $1,568 | $3,323 |
| Fixed\tincome: |  |  |  |  |
| Intermediate\tand\tlong\tduration\tgovernment/credit | $2,496 | $1,255 | $- | $3,751 |
| Other | - | 952 | - | 952 |
|  | $2,496 | $2,207 | $- | $4,703 |
| Other\tinvestments: |  |  |  |  |
| Real\testate | $158 | $16 | $562 | $736 |
| Discretionary\tand\tsystematic\tmacro\thedge\tfunds | - | - | 1,671 | 1,671 |
| Other | 126 | - | 367 | 493 |
|  | $284 | $16 | $2,600 | $2,900 |
| Total* | $3,606 | $3,152 | $4,168 | $10,926 |

| December	31,	2014 | Level	1 | Level	2 | Level	3 | Total |
| :--- | :--- | :--- | :--- | :--- |
| Equities |  |  |  |  |
| Equity\tsecurities | $1,156 | $1,131 | $176 | $2,463 |
| Long/short\tequity\thedge\tfunds | - | - | 963 | 963 |
| Private\tequity | - | - | 543 | 543 |
|  | $1,156 | $1,131 | $1,682 | $3,969 |
| Fixed\tincome: |  |  |  |  |
| Intermediate\tand\tlong\tduration\tgovernment/credit | $2,998 | $1,900 | $- | $4,898 |
| Other | - | 413 | - | 413 |
|  | $2,998 | $2,313 | $- | $5,311 |
| Other\tinvestments: |  |  |  |  |
| Real\testate | $152 | $18 | $459 | $629 |
| Discretionary\tand\tsystematic\tmacro\thedge\tfunds | - | - | 1,408 | 1,408 |
| Other | 140 | - | 376 | 516 |
|  | $292 | $18 | $2,243 | $2,553 |
| Total**\n*\nAs\tof\tDecember\t31,\t2015,\tthe\ttotal\tfair\tvalue\tof\tpension\tplans'\tassets\texcludes\ta\tnet\treceivable\tof\t$2\twhich\trepresents\tsecurities\tsold\tnot\tyet\tsettled\tplus\tinterest\tand | $4,446 | $3,462 | $3,925 | $11,833 |

* As	of	December	31,	2015,	the	total	fair	value	of	pension	plans'	assets	excludes	a	net	receivable	of	$2	which	represents	securities	sold	not	yet	settled	plus	interest	and dividends	earned	on	various	investments.

** As	of	December	31,	2014,	the	total	fair	value	of	pension	plans'	assets	excludes	a	net	payable	of	$116,	which	represents	assets	related	to	divested	businesses	(see Note	F)	to	be	transferred	to	the	buyers'	pension	plans	less	securities	sold	not	yet	settled	plus	interest	and	dividends	earned	on	various	investments.

Pension	plan	assets	classified	as	Level	3	in	the	fair	value	hierarchy	represent	investments	in	which	the	trustees	have	used	significant	unobservable	inputs	in	the	valuation model.	The	following	table	presents	a	reconciliation	of	activity	for	such	investments:

|  | 2015 | 2014 |
| :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $3,925 | $3,421 |
| Realized\tgains | 118 | 180 |
| Unrealized\tgains | 94 | 146 |
| Purchases | 640 | 868 |
| Sales | (481) | (768) |
| Issuances | - | - |
| Settlements | - | - |
| Acquisitions\t(F) | 12 | 117 |
| Foreign\tcurrency\ttranslation\timpact | (140) | (39) |
| Transfers\tin\tand/or\tout\tof\tLevel\t3* | - | - |
| Balance\tat\tend\tof\tyear | $4,168 | $3,925 |
| * |  |  |

* In	2015	and	2014,	there	were	no	transfers	of	financial	instruments	into	or	out	of	Level	3.

# Funding	and	Cash	Flows

It	is	Alcoa's	policy	to	fund	amounts	for	pension	plans	sufficient	to	meet	the	minimum	requirements	set	forth	in	applicable	country	benefits	laws	and	tax	laws,	including the	Pension	Protection	Act	of	2006;	the	Worker,	Retiree,	and	Employer	Recovery	Act	of	2008;	the	Moving	Ahead	for	Progress	in	the	21 	Century	Act	of	2012;	the Highway	and	Transportation	Funding	Act	of	2014;	and	the	Bipartisan	Budget	Act	of	2015	for	U.S.	plans.	From	time	to	time,	Alcoa	contributes	additional	amounts	as deemed	appropriate.	In	2015	and	2014,	cash	contributions	to	Alcoa's	pension	plans	were	$470	and	$501.	The	minimum	required	contribution	to	pension	plans	in	2016	is estimated	to	be	$300,	of	which	$218	is	for	U.S.	plans. st

Benefit	payments	expected	to	be	paid	to	pension	and	other	postretirement	benefit	plans'	participants	and	expected	Medicare	Part	D	subsidy	receipts	are	as	follows:

|  |  | Gross	Other |  | Net	Other |
| :--- | :--- | :--- | :--- | :--- |
|  | Pension | postretirement | Medicare\tPart\tD | postretirement |
| Year\tended\tDecember\t31, | benefits | benefits | subsidy\treceipts | benefits |
| 2016 | $910 | $230 | $15 | $215 |
| 2017 | 900 | 225 | 15 | 210 |
| 2018 | 910 | 225 | 15 | 210 |
| 2019 | 910 | 220 | 15 | 205 |
| 2020 | 920 | 220 | 20 | 200 |
| 2021\tthrough\t2025 | 4,650 | 975 | 80 | 895 |
|  | $9,200 | $2,095 | $160 | $1,935 |

# Defined	Contribution	Plans

Alcoa	sponsors	savings	and	investment	plans	in	several	countries,	including	the	United	States	and	Australia.	Expenses	related	to	these	plans	were	$142	in	2015,	$151	in 2014,	and	$149	in	2013.	In	the	United	States,	employees	may	contribute	a	portion	of	their	compensation	to	the	plans,	and	Alcoa	matches	a	portion	of	these	contributions in	equivalent	form	of	the	investments	elected	by	the	employee.	Prior	to	January	1,	2014,	Alcoa's	match	was	mostly	in	company	stock.

# X.	Derivatives	and	Other	Financial	Instruments

Fair	Value.	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	(i)	market	participant	assumptions	developed	based	on	market	data	obtained	from	independent sources	(observable	inputs)	and	(ii)	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:

•Level	1—Unadjusted	quoted	prices	in	active	markets	that	are	accessible	at	the	measurement	date	for	identical,	unrestricted	assets	or	liabilities.

•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.

•Level	3—Inputs	that	are	both	significant	to	the	fair	value	measurement	and	unobservable.

Derivatives.	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.

Alcoa's	commodity	and	derivative	activities	are	subject	to	the	management,	direction,	and	control	of	the	Strategic	Risk	Management	Committee	(SRMC),	which	is composed	of	the	chief	executive	officer,	the	chief	financial	officer,	and	other	officers	and	employees	that	the	chief	executive	officer	selects.	The	SRMC	meets	on	a periodic	basis	to	review	derivative	positions	and	strategy	and	reports	to	Alcoa's	Board	of	Directors	on	the	scope	of	its	activities.

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.	Alcoa	is	not	involved	in	trading	activities	for	energy,	weather	derivatives,	or	other	nonexchange	commodity	trading activities.

A	number	of	Alcoa's	aluminum,	energy,	and	foreign	exchange	contracts	are	classified	as	Level	1	and	an	interest	rate	contract	is	classified	as	Level	2	under	the	fair	value hierarchy.	These	energy,	foreign	exchange,	and	interest	rate	contracts	are	not	material	to	Alcoa's	Consolidated	Financial	Statements	for	all	periods	presented	except	as follows	for	two	foreign	exchange	contracts.	Alcoa	had	a	forward	contract	to	purchase	$53	(C$58)	to	mitigate	the	foreign	currency	risk	related	to	a	Canadian- denominated	loan,	which	was	repaid	on	August	31,	2014	upon	maturity.	The	forward	contract	expired	on	August	5,	2014	and	a	gain	of	$1	was	recognized	in	Other expenses,	net	on	the	accompanying	Statement	of	Consolidated	Operations	in	2014.	Also,	Alcoa	had	a	forward	contract	to	purchase	$231	(R$543)	to	mitigate	the	foreign currency	risk	associated	with	a	potential	future	transaction	denominated	in	Brazilian	reais.	This	contract	expired	on	March	31,	2014	and	a	loss	of	$4	was	recognized	in Other	expenses,	net	on	the	accompanying	Statement	of	Consolidated	Operations	in	2014.

For	the	aluminum	contracts	classified	as	Level	1,	the	total	fair	value	of	derivatives	recorded	as	assets	and	liabilities	was	$8	and	$58	and	$2	and	$31	at	December	31, 2015	and	2014,	respectively.	These	contracts	were	entered	into	to	either	hedge	forecasted	sales	or	purchases	of	aluminum	in	order	to	manage	the	associated	aluminum price	risk.	Certain	of	these	contracts	are	designated	as	hedging	instruments,	either	fair	value	or	cash	flow,	and	the	remaining	are	not	designated	as	such.	Combined,	Alcoa recognized	a	net	gain	of	$19,	a	net	loss	of	$15,	and	a	net	gain	of	$4	in	Sales	on	the	accompanying	Statement	of	Consolidated	Operations	in	2015,	2014,	and	2013, respectively,	related	to	these	aluminum	contracts.	Additionally,	for	the	contracts	designated	as	cash	flow	hedges,	Alcoa	recognized	an	unrealized	gain	of	$9	in	Other comprehensive	loss	in	2013.

In	addition	to	the	Level	1	and	2	derivative	instruments	described	above,	Alcoa	has	nine	derivative	instruments	classified	as	Level	3	under	the	fair	value	hierarchy.	These instruments	are	composed	of	seven	embedded	aluminum	derivatives,	an	energy	contract,	and	an	embedded	credit	derivative,	all	of	which	relate	to	energy	supply contracts	associated	with	eight	smelters	and	three	refineries.	Five	of	the	embedded	aluminum	derivatives	and	the	energy	contract	were	designated	as	cash	flow	hedging instruments	and	two	of	the	embedded	aluminum	derivatives	and	the	embedded	credit	derivative	were	not	designated	as	hedging	instruments.

The	following	section	describes	the	valuation	methodologies	used	by	Alcoa	to	measure	its	Level	3	derivative	instruments	at	fair	value.	Derivative	instruments	classified as	Level	3	in	the	fair	value	hierarchy	represent	those	in	which	management	has	used	at	least	one	significant	unobservable	input	in	the	valuation	model.	Alcoa	uses	a discounted	cash	flow	model	to	fair	value	all	Level	3	derivative	instruments.	Where	appropriate,	the	description	below	includes	the	key	inputs	to	those	models	and	any significant	assumptions.	These	valuation	models	are	reviewed	and	tested	at	least	on	an	annual	basis.

Inputs	in	the	valuation	models	for	Level	3	derivative	instruments	are	composed	of	the	following:	(i)	quoted	market	prices	(e.g.,	aluminum	prices	on	the	10-year	London Metal	Exchange	(LME)	forward	curve	and	energy	prices),	(ii)	significant	other	observable	inputs	(e.g.,	information	concerning	time	premiums	and	volatilities	for	certain option	type	embedded	derivatives	and	regional	premiums	for	aluminum	contracts),	and	(iii)	unobservable	inputs	(e.g.,	aluminum	and	energy	prices	beyond	those	quoted in	the	market).	For	periods	beyond	the	term	of	quoted	market	prices	for	aluminum,	Alcoa	estimates	the	price	of	aluminum	by	extrapolating	the	10-year	LME	forward curve.	Additionally,	for	periods	beyond	the	term	of	quoted	market	prices	for	energy,	management	has	developed	a	forward	curve	based	on	independent	consultant market	research.	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).	If	a	significant	input	that	is unobservable	in	one	period	becomes	observable	in	a	subsequent	period,	the	related	asset	or	liability	would	be	transferred	to	the	appropriate	classification	(Level	1	or	2) in	the	period	of	such	change	(there	were	no	such	transfers	in	the	periods	presented).

Alcoa	has	embedded	derivatives	in	two	power	contracts	that	index	the	price	of	power	to	the	LME	price	of	aluminum.	Additionally,	in	late	2014,	Alcoa	renewed	three power	contracts,	each	of	which	contain	an	embedded	derivative	that	indexes	the	price	of	power	to	the	LME	price	of	aluminum	plus	the	Midwest	premium.	The embedded	derivatives	in	these	five	power	contracts	are	primarily	valued	using	observable	market	prices;	however,	due	to	the	length	of	the	contracts,	the	valuation models	also	require	management	to	estimate	the	long-term	price	of	aluminum	based	upon	an	extrapolation	of	the	10-year	LME	forward	curve	and/or	5-year	Midwest premium	curve.	Significant	increases	or	decreases	in	the	actual	LME	price	beyond	10	years	and/or	the	Midwest	premium	beyond	5	years	would	result	in	a	higher	or lower	fair	value	measurement.	An	increase	in	actual	LME	price	and/or	the	Midwest	premium	over	the	inputs	used	in	the	valuation	models	will	result	in	a	higher	cost	of power	and	a	corresponding	decrease	to	the	derivative	asset	or	increase	to	the	derivative	liability.	The	embedded	derivatives	have	been	designated	as	cash	flow	hedges	of forward	sales	of	aluminum.	Unrealized	gains	and	losses	were	included	in	Other	comprehensive	loss	on	the	accompanying	Consolidated	Balance	Sheet	while	realized gains	and	losses	were	included	in	Sales	on	the	accompanying	Statement	of	Consolidated	Operations.

Also,	Alcoa	has	a	power	contract	separate	from	above	that	contains	an	LME-linked	embedded	derivative.	The	embedded	derivative	is	valued	using	the	probability	and interrelationship	of	future	LME	prices,	Australian	dollar	to	U.S.	dollar	exchange	rates,	and	the	U.S.	consumer	price	index.	Significant	increases	or	decreases	in	the	LME price	would	result	in	a	higher	or	lower	fair	value	measurement.	An	increase	in	actual	LME	price	over	the	inputs	used	in	the	valuation	model	will	result	in	a	higher	cost	of power	and	a	corresponding	decrease	to	the	derivative	asset.	This	embedded	derivative	did	not	qualify	for	hedge	accounting	treatment.	Unrealized	gains	and	losses	from the	embedded	derivative	were	included	in	Other	expenses	(income),	net	on	the	accompanying	Statement	of	Consolidated	Operations	while	realized	gains	and	losses	were included	in	Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations	as	electricity	purchases	were	made	under	the	contract.	At	the	time	this derivative	asset	was	recognized,	an	equivalent	amount	was	recognized	as	a	deferred	credit	in	Other	noncurrent	liabilities	and	deferred	credits	on	the

accompanying	Consolidated	Balance	Sheet	(see	Note	L).	This	deferred	credit	is	recognized	in	Other	expenses	(income),	net	on	the	accompanying	Statement	of Consolidated	Operations	as	power	is	received	over	the	life	of	the	contract.	Alcoa	had	a	similar	power	contract	and	related	embedded	derivative	associated	with	another smelter	and	rolling	mill	combined;	however,	the	contract	and	related	derivative	instrument	matured	in	July	2014.

Additionally,	Alcoa	has	a	natural	gas	supply	contract,	which	has	an	LME-linked	ceiling.	This	embedded	derivative	is	valued	using	probabilities	of	future	LME aluminum	prices	and	the	price	of	Brent	crude	oil	(priced	on	Platts),	including	the	interrelationships	between	the	two	commodities	subject	to	the	ceiling.	Any	change	in the	interrelationship	would	result	in	a	higher	or	lower	fair	value	measurement.	An	LME	ceiling	was	embedded	into	the	contract	price	to	protect	against	an	increase	in	the price	of	oil	without	a	corresponding	increase	in	the	price	of	LME.	An	increase	in	oil	prices	with	no	similar	increase	in	the	LME	price	would	limit	the	increase	of	the price	paid	for	natural	gas.	This	embedded	derivative	did	not	qualify	for	hedge	accounting	treatment.	Unrealized	gains	and	losses	from	the	embedded	derivative	were included	in	Other	expenses	(income),	net	on	the	accompanying	Statement	of	Consolidated	Operations	while	realized	gains	and	losses	were	included	in	Cost	of	goods	sold on	the	accompanying	Statement	of	Consolidated	Operations	as	gas	purchases	were	made	under	the	contract.

Furthermore,	Alcoa	has	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.	Management	uses	market	prices,	historical	relationships,	and	forecast	services	to	determine	fair	value.	Significant	increases or	decreases	in	any	of	these	inputs	would	result	in	a	lower	or	higher	fair	value	measurement.	A	wider	credit	spread	between	Alcoa	and	the	counterparty	would	result	in	a higher	cost	of	power	and	a	corresponding	increase	in	the	derivative	liability.	This	embedded	derivative	did	not	qualify	for	hedge	accounting	treatment.	Unrealized	gains and	losses	were	included	in	Other	expenses	(income),	net	on	the	accompanying	Statement	of	Consolidated	Operations	while	realized	gains	and	losses	were	included	in Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated	Operations	as	electricity	purchases	were	made	under	the	contract.

Finally,	Alcoa	has	a	derivative	contract	that	will	hedge	the	anticipated	power	requirements	at	one	of	its	smelters	once	the	existing	power	contract	expires	in	September 2016.	Beyond	the	term	where	market	information	is	available,	management	has	developed	a	forward	curve,	for	valuation	purposes,	based	on	independent	consultant market	research.	Significant	increases	or	decreases	in	the	power	market	may	result	in	a	higher	or	lower	fair	value	measurement.	Lower	prices	in	the	power	market	would cause	a	decrease	in	the	derivative	asset.	The	derivative	contract	has	been	designated	as	a	cash	flow	hedge	of	future	purchases	of	electricity.	Unrealized	gains	and	losses on	this	contract	were	recorded	in	Other	comprehensive	loss	on	the	accompanying	Consolidated	Balance	Sheet.	Once	the	designated	hedge	period	begins	in	September 2016,	realized	gains	and	losses	will	be	recorded	in	Cost	of	goods	sold	as	electricity	purchases	are	made	under	the	power	contract.	Alcoa	had	a	similar	contract	related	to another	smelter	once	the	prior	existing	contract	expired	in	2014,	but	elected	to	terminate	the	new	contract	in	early	2013.	This	election	was	available	to	Alcoa	under	the terms	of	the	contract	and	was	made	due	to	a	projection	that	suggested	the	contract	would	be	uneconomical.	Prior	to	termination,	the	new	contract	was	accounted	for	in the	same	manner.

The	following	table	presents	quantitative	information	related	to	the	significant	unobservable	inputs	described	above	for	Level	3	derivative	contracts:

* The	fair	value	of	the	energy	contract	reflected	as	a	liability	in	this	table	is	lower	by	$2	compared	to	the	respective	amount	reflected	in	the	Level	3	tables	presented below.	This	is	due	to	the	fact	that	this	contract	is	in	a	liability	position	for	the	current	portion	but	is	in	an	asset	position	for	the	noncurrent	portion,	and	is	reflected	as such	on	the	accompanying	Consolidated	Balance	Sheet.	However,	this	derivative	is	reflected	as	a	net	liability	in	the	above	table	for	purposes	of	presenting	the assumptions	utilized	to	measure	the	fair	value	of	the	derivative	instrument	in	its	entirety.

The	fair	values	of	Level	3	derivative	instruments	recorded	as	assets	and	liabilities	in	the	accompanying	Consolidated	Balance	Sheet	were	as	follows:

|  | December	31, | December	31, |
| :--- | :--- | :--- |
| Asset\tDerivatives | 2015 | 2014 |
| Derivatives\tdesignated\tas\thedging\tinstruments: |  |  |
| Prepaid\texpenses\tand\tother\tcurrent\tassets: |  |  |
| Embedded\taluminum\tderivatives | $72 | $24 |
| Other\tnoncurrent\tassets: |  |  |
| Embedded\taluminum\tderivative | 994 | 73 |
| Energy\tcontract | 2 | 2 |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments | $1,068 | $99 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |
| Prepaid\texpenses\tand\tother\tcurrent\tassets: |  |  |
| Embedded\taluminum\tderivatives | $69 | $98 |
| Other\tnoncurrent\tassets: |  |  |
| Embedded\taluminum\tderivatives | - | 71 |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $69 | $169 |
| Total\tAsset\tDerivatives | $1,137 | $268 |
| Liability\tDerivatives |  |  |
| Derivatives\tdesignated\tas\thedging\tinstruments: |  |  |
| Other\tcurrent\tliabilities: |  |  |
| Embedded\taluminum\tderivative | $9 | $24 |
| Energy\tcontract | 4 | - |
| Other\tnoncurrent\tliabilities\tand\tdeferred\tcredits: |  |  |
| Embedded\taluminum\tderivatives | 160 | 352 |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments | $173 | $376 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |
| Other\tcurrent\tliabilities: |  |  |
| Embedded\tcredit\tderivative | $6 | $2 |
| Other\tnoncurrent\tliabilities\tand\tdeferred\tcredits: |  |  |
| Embedded\tcredit\tderivative | 29 | 16 |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $35 | $18 |
| Total\tLiability\tDerivatives | $208 | $394 |

The	following	table	shows	the	net	fair	values	of	the	Level	3	derivative	instruments	at	December	31,	2015	and	the	effect	on	these	amounts	of	a	hypothetical	change (increase	or	decrease	of	10%)	in	the	market	prices	or	rates	that	existed	as	of	December	31,	2015:

| (increase	or	decrease	of	10%)	in	the	market	prices	or	rates	that	existed	as	of	December	31,	2015: |  |  |
| :--- | :--- | :--- |
|  | Fair\tvalue | Index\tchange |
|  | asset/(liability) | of\t+\t/\t-\t10% |
| Embedded\taluminum\tderivatives | $966 | $340 |
| Embedded\tcredit\tderivative | (35) | 4 |
| Energy\tcontract | (2) | 136 |

The	following	tables	present	a	reconciliation	of	activity	for	Level	3	derivative	contracts:

|  | Assets |  |  | Liabilities |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Embedded |  | Embedded | Embedded |  |
|  | aluminum | Energy | aluminum | credit | Energy |
| 2015 | derivatives | contract | derivatives | derivative | contract |
| Opening\tbalance—January\t1,\t2015 | $266 | $2 | $376 | $18 | $- |
| Total\tgains\tor\tlosses\t(realized\tand\tunrealized)\tincluded\tin: |  |  |  |  |  |
| Sales | 5 | - | (16) | - | - |
| Cost\tof\tgoods\tsold | (99) | - | - | - | - |
| Other\texpenses,\tnet | (8) | (2) | - | 17 | 1 |
| Other\tcomprehensive\tloss | 964 | 1 | (191) | - | 3 |
| Purchases,\tsales,\tissuances,\tand\tsettlements* | - | - | - | - | - |
| Transfers\tinto\tand/or\tout\tof\tLevel\t3* | - | - | - | - | - |
| Foreign\tcurrency\ttranslation | 7 | 1 | - | - | - |
| Closing\tbalance—December\t31,\t2015 | $1,135 | $2 | $169 | $35 | $4 |
| Change\tin\tunrealized\tgains\tor\tlosses\tincluded\tin\tearnings\tfor |  |  |  |  |  |
| derivative\tcontracts\theld\tat\tDecember\t31,\t2015: |  |  |  |  |  |
| Sales | $- | $- | $- | $- | $- |
| Cost\tof\tgoods\tsold | - | - | - | - | - |
| Other\texpenses,\tnet | (8) | (2) | - | (17) | 1 |

* In	2015,	there	were	no	purchases,	sales,	issuances	or	settlements	of	Level	3	derivative	instruments.	Additionally,	there	were	no	transfers	of	derivative	instruments	into or	out	of	Level	3.

|  | Embedded |  | Embedded | Embedded |
| :--- | :--- | :--- | :--- | :--- |
|  | aluminum | Energy | aluminum | credit |
| 2014 | derivatives | contract | derivatives | derivative |
| Opening\tbalance—January\t1,\t2014 | $349 | $6 | $410 | $21 |
| Total\tgains\tor\tlosses\t(realized\tand\tunrealized)\tincluded\tin: |  |  |  |  |
| Sales | (1) | - | (27) | - |
| Cost\tof\tgoods\tsold | (163) | - | - | (1) |
| Other\texpenses,\tnet | (15) | - | - | (2) |
| Other\tcomprehensive\tloss | 71 | (4) | (7) | - |
| Purchases,\tsales,\tissuances,\tand\tsettlements* | - | - | - | - |
| Transfers\tinto\tand/or\tout\tof\tLevel\t3* | - | - | - | - |
| Foreign\tcurrency\ttranslation | 23 | - | - | - |
| Closing\tbalance—December\t31,\t2014 | $266 | $2 | $376 | $18 |
| Change\tin\tunrealized\tgains\tor\tlosses\tincluded\tin\tearnings\tfor\tderivative\tcontracts |  |  |  |  |
| held\tat\tDecember\t31,\t2014: |  |  |  |  |
| Sales | $- | $- | $- | $- |
| Cost\tof\tgoods\tsold | - | - | - | - |
| Other\texpenses,\tnet | (15) | - | - | (2) |

* In	November	2014,	three	new	embedded	derivatives	were	contained	within	renewed	power	contracts;	however,	there	was	no	amount	included	for	issuances	as	the	fair value	on	the	date	of	issuance	was	zero.	There	were	no	purchases,	sales	or	settlements	of	Level	3	derivative	instruments.	Additionally,	there	were	no	transfers	of derivative	instruments	into	or	out	of	Level	3.

# Derivatives	Designated	As	Hedging	Instruments—Cash	Flow	Hedges

For	derivative	instruments	that	are	designated	and	qualify	as	cash	flow	hedges,	the	effective	portion	of	unrealized	gains	or	losses	on	the	derivative	is	reported	as	a component	of	other	comprehensive	income	(OCI).	Realized	gains	or	losses	on	the	derivative	are	reclassified	from	OCI	into	earnings	in	the	same	period	or	periods	during which	the	hedged	transaction	impacts	earnings.	Gains	and	losses	on	the	derivative	representing	either	hedge	ineffectiveness	or	hedge	components	excluded	from	the assessment	of	effectiveness	are	recognized	directly	in	earnings	immediately.

Alcoa	has	five	Level	3	embedded	aluminum	derivatives	and	one	Level	3	energy	contract	(a	second	one	was	terminated	in	early	2013)	that	have	been	designated	as	cash flow	hedges	as	follows.

Embedded	aluminum	derivatives.	Alcoa	has	entered	into	energy	supply	contracts	that	contain	pricing	provisions	related	to	the	LME	aluminum	price.	The	LME-linked pricing	features	are	considered	embedded	derivatives.	Five	of	these	embedded	derivatives	have	been	designated	as	cash	flow	hedges	of	forward	sales	of	aluminum,	three of	which	were	new	derivatives	contained	in	three	power	contracts	that	were	renewed	in	late	2014.	At	December	31,	2015	and	2014,	these	embedded	aluminum derivatives	hedge	forecasted	aluminum	sales	of	3,307	kmt	and	3,610	kmt,	respectively.

In	2015,	2014,	and	2013,	Alcoa	recognized	an	unrealized	gain	of	$1,155,	$78,	and	$190,	respectively,	in	Other	comprehensive	loss	related	to	these	five	derivative instruments.	Additionally,	Alcoa	reclassified	a	realized	loss	of	$21,	$28,	and	$29	from	Accumulated	other	comprehensive	loss	to	Sales	in	2015,	2014,	and	2013, respectively.	There	was	no	ineffectiveness	related	to	these	five	derivative	instruments	in	2015,	2014,	and	2013.	Assuming	market	rates	remain	constant	with	the	rates	at December	31,	2015,	a	realized	gain	of	$45	is	expected	to	be	recognized	in	Sales	over	the	next	12	months.

Energy	contract.	Alcoa	has	a	derivative	contract	that	will	hedge	the	anticipated	power	requirements	at	one	of	its	smelters	once	the	existing	power	contract	expires	in 2016.	Alcoa	had	a	similar	contract	related	to	another	smelter	once	the	prior	existing	contract	expired	in	2014,	but	elected	to	terminate	the	new	contract	in	early	2013	(see additional	information	in	description	of	Level	3	derivative	contracts	above).	At	December	31,	2015	and	2014,	this	energy	contract	hedges	forecasted	electricity purchases	of	59,409,328	megawatt	hours.	In	2015,	2014,	and	2013,	Alcoa	recognized	an	unrealized	loss	of	$2,	an	unrealized	loss	of	$4,	and	an	unrealized	gain	of	$3, respectively,	in	Other	comprehensive	loss.	Additionally,	Alcoa	recognized	a	loss	of	$3	in	Other	expenses,	net	related	to	hedge	ineffectiveness	in	2015.	There	was	no ineffectiveness	related	to	the	respective	energy	contracts	outstanding	in	2014	and	2013.

# Derivatives	Not	Designated	As	Hedging	Instruments

Alcoa	has	two	Level	3	embedded	aluminum	derivatives	and	one	Level	3	embedded	credit	derivative	that	do	not	qualify	for	hedge	accounting	treatment.	As	such,	gains and	losses	related	to	the	changes	in	fair	value	of	these	instruments	are	recorded	directly	in	earnings.	In	2015,	2014,	and	2013,	Alcoa	recognized	a	loss	of	$25,	a	loss	of $13,	and	a	gain	of	$36,	respectively,	in	Other	expenses	(income),	net,	of	which	a	loss	of	$8,	a	loss	of	$15,	and	a	gain	of	$28,	respectively,	related	to	the	two	embedded aluminum	derivatives	and	a	loss	of	$17,	a	gain	of	$2,	and	a	gain	of	$8,	respectively,	related	to	the	embedded	credit	derivative.

# Material	Limitations

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.

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.

Other	Financial	Instruments.	The	carrying	values	and	fair	values	of	Alcoa's	other	financial	instruments	were	as	follows:

|  | 2015 |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Fair | Carrying | Fair |
| December\t31, | value | value | value | value |
| Cash\tand\tcash\tequivalents | $1,919 | $1,919 | $1,877 | $1,877 |
| Restricted\tcash | 37 | 37 | 20 | 20 |
| Noncurrent\treceivables | 17 | 17 | 17 | 17 |
| Available-for-sale\tsecurities | 193 | 193 | 153 | 153 |
| Short-term\tborrowings | 38 | 38 | 54 | 54 |
| Commercial\tpaper | - | - | - | - |
| Long-term\tdebt\tdue\twithin\tone\tyear | 21 | 21 | 29 | 29 |
| Contingent\tpayment\trelated\tto\tan\tacquisition | 130 | 130 | 130 | 130 |
| Long-term\tdebt,\tless\tamount\tdue\twithin\tone\tyear | 9,044 | \t 8,922 | 8,769 | \t 9,445 |

The	following	methods	were	used	to	estimate	the	fair	values	of	other	financial	instruments:

Cash	and	cash	equivalents,	Restricted	cash,	Short-term	borrowings,	and	Commercial	paper.	The	carrying	amounts	approximate	fair	value	because	of	the	short maturity	of	the	instruments.	The	fair	value	amounts	for	Cash	and	cash	equivalents,	Restricted	cash,	and	Commercial	paper	were	classified	in	Level	1,	and	Short-term borrowings	were	classified	in	Level	2.

Noncurrent	receivables.	The	fair	value	of	noncurrent	receivables	was	based	on	anticipated	cash	flows,	which	approximates	carrying	value,	and	was	classified	in	Level	2 of	the	fair	value	hierarchy.

Available-for-sale	securities.	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.

Contingent	payment	related	to	an	acquisition	(see	Note	F).	The	fair	value	was	based	on	the	net	present	value	of	expected	future	cash	flows	and	was	classified	in	Level 3	of	the	fair	value	hierarchy.

Long-term	debt	due	within	one	year	and	Long-term	debt,	less	amount	due	within	one	year.	The	fair	value	was	based	on	quoted	market	prices	for	public	debt	and on	interest	rates	that	are	currently	available	to	Alcoa	for	issuance	of	debt	with	similar	terms	and	maturities	for	non-public	debt.	The	fair	value	amounts	for	all	Long-term debt	were	classified	in	Level	2	of	the	fair	value	hierarchy.

# Y.	Proposed	Separation	Transaction

On	September	28,	2015,	Alcoa	announced	that	its	Board	of	Directors	approved	a	plan	to	separate	into	two	independent,	publicly-traded	companies.	One	company	will comprise	the	Alumina	and	Primary	Metals	segments	and	the	other	company	will	comprise	the	Global	Rolled	Products,	Engineered	Products	and	Solutions,	and Transportation	and	Construction	Solutions	segments.	Alcoa	is	targeting	to	complete	the	separation	in	the	second	half	of	2016.	The	transaction	is	subject	to	a	number	of conditions,	including,	but	not	limited	to,	final	approval	by	Alcoa's	Board	of	Directors,	receipt	of	a	favorable	opinion	of	legal	counsel	with	respect	to	the	tax-free	nature of	the	transaction	for	U.S.	federal	income	tax	purposes,	and	the	effectiveness	of	a	Form	10	registration	statement	to	be	filed	with	the	U.S.	Securities	and	Exchange Commission.	Upon	completion	of	the	separation,	Alcoa	shareholders	will	own	all	of	the	outstanding	shares	of	both	companies.	Alcoa	may,	at	any	time	and	for	any reason	until	the	proposed	transaction	is	complete,	abandon	the	separation	plan	or	modify	or	change	its	terms.	In	2015,	Alcoa	recognized	$24	(pre-	and	after-tax)	in Selling,	general	administrative,	and	other	expenses	on	the	accompanying	Statement	of	Consolidated	Operations	for	costs	related	to	the	proposed	separation	transaction.

# Z.	Subsequent	Events

Management	evaluated	all	activity	of	Alcoa	and	concluded	that	no	subsequent	events	have	occurred	that	would	require	recognition	in	the	Consolidated	Financial Statements	or	disclosure	in	the	Notes	to	the	Consolidated	Financial	Statements,	except	as	described	below.

On	January	26,	2016,	the	European	Court	of	Justice	issued	a	decision	in	connection	with	legal	proceedings	related	to	whether	the	extension	of	energy	tariffs	by	Italy	to Alcoa	constituted	unlawful	state	aid	(see	European	Commission	Matters	in	Note	N).	In	addition,	a	separate	but	related	matter	was	also	updated	as	a	result	of	the aforementioned	decision	(see	Other	Matters	in	the	Litigation	section	of	Note	N).

# Supplemental	Financial	Information	(unaudited)

# Quarterly	Data

|  |  | First | Second | Third | Fourth* | Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 2015 |  |  |  |  |  |  |
| Sales |  | $5,819 | $5,897 | $5,573 | $5,245 | $22,534 |
| Net\tincome\t(loss)\tattributable\tto\tAlcoa | Net\tincome\t(loss)\tattributable\tto\tAlcoa | $195 | $140 | $44 | $(701) | $(322) |
| Earnings\tper\tshare\tattributable\tto\tAlcoa\tcommon\tshareholders**: |  |  |  |  |  |  |
| Basic | Basic | $0.15 | $0.10 | $0.02 | $(0.55) | $(0.31) |
|  | Diluted | $0.14 | $0.10 | $0.02 | $(0.55) | $(0.31) |
| 2014 |  |  |  |  |  |  |
| Sales |  | $5,454 | $5,836 | $6,239 | $6,377 | $23,906 |
| Net\t(loss)\tincome\tattributable\tto\tAlcoa | Net\t(loss)\tincome\tattributable\tto\tAlcoa | $(178) | $138 | $149 | $159 | $268 |
| Earnings\tper\tshare\tattributable\tto\tAlcoa\tcommon\tshareholders**: |  |  |  |  |  |  |
| Basic | Basic | $(0.16) | $0.12 | $0.13 | $0.12 | $0.21 |
|  | Diluted | $(0.16) | $0.12 | $0.12 | $0.11 | $0.21 |
| * | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto | In\tthe\tfourth\tquarter\tof\t2015,\tAlcoa\trecorded\trestructuring\tand\tother\tcharges\tof\t$735\t($507\tafter-tax\tand\tnoncontrolling\tinterest),\twhich\twere\tprimarily\trelated\tto |

* In	the	fourth	quarter	of	2015,	Alcoa	recorded	restructuring	and	other	charges	of	$735	($507	after-tax	and	noncontrolling	interest),	which	were	primarily	related	to closures	and/or	curtailments	of	a	number	of	smelters	and	refineries	(see	Note	D)	and	a	charge	for	legal	matters	in	Italy	(see	Note	N);	a	discrete	income	tax	charge	of $190	for	valuation	allowances	on	certain	deferred	tax	assets	in	the	United	States	and	Iceland	(see	Note	T);	and	an	impairment	of	goodwill	of	$25	(see	Goodwill	and Other	Intangible	Assets	in	Notes	A	and	E).	In	the	fourth	quarter	of	2014,	Alcoa	recorded	a	net	loss	of	$332	($163	after-tax	and	noncontrolling	interest)	related	to	the divestiture	of	four	operations	(see	Notes	D	and	F).

** Per	share	amounts	are	calculated	independently	for	each	period	presented;	therefore,	the	sum	of	the	quarterly	per	share	amounts	may	not	equal	the	per	share	amounts for	the	year.

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

# Item	9A.		Controls	and	Procedures.

(a)	Evaluation	of	Disclosure	Controls	and	Procedures

Alcoa's	Chief	Executive	Officer	and	Chief	Financial	Officer	have	evaluated	the	Company's	disclosure	controls	and	procedures,	as	defined	in	Rules	13a-15(e)	and	15d- 15(e)	of	the	Securities	Exchange	Act	of	1934,	as	of	the	end	of	the	period	covered	by	this	report,	and	they	have	concluded	that	these	controls	and	procedures	are	effective.

(b)	Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting

Management's	Report	on	Internal	Control	over	Financial	Reporting	is	included	in	Part	II,	Item	8	of	this	Form	10-K	beginning	on	page	89.

(c)	Attestation	Report	of	the	Registered	Public	Accounting	Firm

The	effectiveness	of	Alcoa's	internal	control	over	financial	reporting	as	of	December	31,	2015	has	been	audited	by	PricewaterhouseCoopers	LLP,	an	independent registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	in	Part	II,	Item	8	of	this	Form	10-K	on	page	90.

(d)	Changes	in	Internal	Control	over	Financial	Reporting

There	have	been	no	changes	in	internal	control	over	financial	reporting	during	the	fourth	quarter	of	2015,	that	have	materially	affected,	or	are	reasonably	likely	to materially	affect,	the	Company's	internal	control	over	financial	reporting.

# Item	9B.		Other	Information.

# PART	III

# Item	10.		Directors,	Executive	Officers	and	Corporate	Governance.

The	information	required	by	Item	401	of	Regulation	S-K	regarding	directors	is	contained	under	the	caption	"Item	1	Election	of	Directors"	of	the	Proxy	Statement	and	is incorporated	by	reference.	The	information	required	by	Item	401	of	Regulation	S-K	regarding	executive	officers	is	set	forth	in	Part	I,	Item	1	of	this	report	under "Executive	Officers	of	the	Registrant".

The	information	required	by	Item	405	of	Regulation	S-K	is	contained	under	the	caption	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	of	the	Proxy Statement	and	is	incorporated	by	reference.

The	Company's	Code	of	Ethics	for	the	CEO,	CFO	and	Other	Financial	Professionals	is	publicly	available	on	the	Company's	Internet	website	at	http://www.alcoa.com under	the	section	"About	Alcoa—Corporate	Governance."	The	remaining	information	required	by	Item	406	of	Regulation	S-K	is	contained	under	the	captions "Corporate	Governance"	and	"Corporate	Governance—Business	Conduct	Policies	and	Code	of	Ethics"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Items	407(c)(3),	(d)(4)	and	(d)(5)	of	Regulation	S-K	is	included	under	the	captions	"Item	1	Election	of	Directors—Nominating	Board Candidates—Procedures	and	Director	Qualifications"	and	"Corporate	Governance—Committees	of	the	Board—Audit	Committee"	of	the	Proxy	Statement	and	is incorporated	by	reference.

# Item	11.			Executive	Compensation.

The	information	required	by	Item	402	of	Regulation	S-K	is	contained	under	the	captions	"Director	Compensation",	"Executive	Compensation"	(excluding	the information	under	the	caption	"—Compensation	Committee	Report")	and	"Corporate	Governance—Recovery	of	Incentive	Compensation"	of	the	Proxy	Statement.	Such information	is	incorporated	by	reference.

The	information	required	by	Items	407(e)(4)	and	(e)(5)	of	Regulation	S-K	is	contained	under	the	captions	"Corporate	Governance—Compensation	Committee Interlocks	and	Insider	Participation"	and	"Executive	Compensation—Compensation	Committee	Report"	of	the	Proxy	Statement.	Such	information	(other	than	the Compensation	Committee	Report,	which	shall	not	be	deemed	to	be	"filed")	is	incorporated	by	reference.

# Item	12.		Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

The	information	required	by	Item	201(d)	of	Regulation	S-K	relating	to	securities	authorized	for	issuance	under	equity	compensation	plans	is	contained	under	the	caption "Equity	Compensation	Plan	Information"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Item	403	of	Regulation	S-K	is	contained	under	the	captions	"Alcoa	Stock	Ownership—Stock	Ownership	of	Certain	Beneficial	Owners"	and "—Stock	Ownership	of	Directors	and	Executive	Officers"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

# Item	13.		Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

The	information	required	by	Item	404	of	Regulation	S-K	is	contained	under	the	captions	"Executive	Compensation"	(excluding	the	information	under	the	caption "Compensation	Committee	Report")	and	"Corporate	Governance—Related	Person	Transactions"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Item	407(a)	of	Regulation	S-K	regarding	director	independence	is	contained	under	the	captions	"Item	1	Election	of	Directors"	and "Corporate	Governance"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

# Item		14.	Principal	Accounting	Fees	and	Services.

The	information	required	by	Item	9(e)	of	Schedule	14A	is	contained	under	the	captions	"Item	2	Ratification	of	the	Appointment	of	the	Independent	Registered	Public Accounting	Firm—Report	of	the	Audit	Committee"	and	"—Audit	and	Non-Audit	Fees"	of	the	Proxy	Statement	and	in	Attachment	A	(Pre-Approval	Policies	and Procedures	for	Audit	and	Non-Audit	Services)	thereto	and	is	incorporated	by	reference.

# PART	IV

# Item	15.		Exhibits,	Financial	Statement	Schedules.

(a)	The	consolidated	financial	statements	and	exhibits	listed	below	are	filed	as	part	of	this	report.

(1)	The	Company's	consolidated	financial	statements,	the	notes	thereto	and	the	report	of	the	Independent	Registered	Public	Accounting Firm	are	on	pages	90	through	168	of	this	report.

(2)	Financial	statement	schedules	have	been	omitted	because	they	are	not	applicable,	not	required,	or	the	required	information	is	included	in the	consolidated	financial	statements	or	notes	thereto.

Exhibit Number Description* 		2. Share	Purchase	Agreement,	dated	as	of	June	25,	2014,	by	and	among	Alcoa	Inc.,	Alcoa	IH	Limited,	FR	Acquisition	Corporation	(US),	Inc.,	FR Acquisitions	Corporation	(Europe)	Limited,	FR	Acquisition	Finance	Subco	(Luxembourg),	S.à.r.l.	and	Oak	Hill	Capital	Partners	III,	L.P.	and	Oak Hill	Capital	Management	Partners	III,	L.P.,	collectively	in	their	capacity	as	the	Seller	Representative,	incorporated	by	reference	to	exhibit	2.1	to the	Company's	Current	Report	on	Form	8-K	dated	June	26,	2014.

		3(a). Articles	of	the	Registrant,	as	amended	effective	September	22,	2014,	incorporated	by	reference	to	exhibit	3(a)	to	the	Company's	Quarterly	Report on	Form	10-Q	for	the	quarter	ended	September	30,	2014.

		4(c)(1). First	Supplemental	Indenture,	dated	as	of	January	25,	2007,	between	Alcoa	Inc.	and	The	Bank	of	New	York	Trust	Company,	N.A.,	as	successor	to J.P.	Morgan	Trust	Company,	National	Association	(formerly	Chase	Manhattan	Trust	Company,	National	Association),	as	successor	Trustee	to PNC	Bank,	National	Association,	as	Trustee,	incorporated	by	reference	to	exhibit	99.4	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	January	25,	2007.

		4(c)(2). Second	Supplemental	Indenture,	dated	as	of	July	15,	2008,	between	Alcoa	Inc.	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as successor	in	interest	to	J.	P.	Morgan	Trust	Company,	National	Association	(formerly	Chase	Manhattan	Trust	Company,	National	Association,	as successor	to	PNC	Bank,	National	Association),	as	Trustee,	incorporated	by	reference	to	exhibit	4(c)	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	July	15,	2008.

		4(k). Deposit	Agreement,	dated	September	22,	2014,	among	Alcoa	Inc.,	Computershare	Trust	Company,	N.A.,	Computershare	Inc.,	and	the	holders from	time	to	time	of	the	depositary	receipts	evidencing	the	Depositary	Shares	(including	Form	of	Depositary	Receipt),	incorporated	by	reference	to exhibit	4.1	to	the	Company's	Current	Report	on	Form	8-K	dated	September	22,	2014.

		4(l). Form	of	Depositary	Receipt	for	Deposit	Agreement,	dated	September	22,	2014,	among	Alcoa	Inc.,	Computershare	Trust	Company,	N.A., Computershare	Inc.,	and	the	holders	from	time	to	time	of	the	depositary	receipts	evidencing	the	Depositary	Shares,	incorporated	by	reference	to exhibit	A	to	exhibit	4.1	to	the	Company's	Current	Report	on	Form	8-K	dated	September	22,	2014.

		4(m). Indenture,	dated	as	of	December	14,	2010,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company,	N.A.,	as	Trustee.

		4(n). Third	Supplemental	Indenture,	dated	as	of	April	17,	2013,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company, N.A.,	as	Trustee.

		4(o). Fourth	Supplemental	Indenture,	dated	as	of	July	23,	2015,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company, N.A.,	as	Trustee,	incorporated	by	reference	to	Exhibit	4.1	on	Form	8-K	dated	July	23,	2015.

		4(p). Alcoa	Retirement	Savings	Plan	for	Bargaining	Employees,	as	Amended	and	Restated	effective	January	1,	2015.

		4(q). Alcoa	Retirement	Savings	Plan	for	Hourly	Non-Bargaining	Employees,	as	Amended	and	Restated	effective	January	1,	2015.

		4(r). Alcoa	Retirement	Savings	Plan	for	Fastener	Systems	Employees,	as	Amended	and	Restated	effective	January	1,	2015.

10(a). Alcoa's	Summary	of	the	Key	Terms	of	the	AWAC	Agreements,	incorporated	by	reference	to	exhibit	99.2	to	the	Company's	Current	Report	on Form	8-K	(Commission	file	number	1-3610)	dated	November	28,	2001.

10(b). Charter	of	the	Strategic	Council	executed	December	21,	1994,	incorporated	by	reference	to	exhibit	99.3	to	the	Company's	Current	Report	on	Form 8-K	(Commission	file	number	1-3610)	dated	November	28,	2001.

10(c). Amended	and	Restated	Limited	Liability	Company	Agreement	of	Alcoa	Alumina	&	Chemicals,	L.L.C.	dated	as	of	December	31,	1994, incorporated	by	reference	to	exhibit	99.4	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	28, 2001.

10(d). Shareholders'	Agreement	dated	May	10,	1996	between	Alcoa	International	Holdings	Company	and	WMC	Limited,	incorporated	by	reference	to exhibit	99.5	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	28,	2001.

10(e). Side	Letter	of	May	16,	1995	clarifying	transfer	restrictions,	incorporated	by	reference	to	exhibit	99.6	to	the	Company's	Current	Report	on	Form 8-K	(Commission	file	number	1-3610)	dated	November	28,	2001.

10(f). Enterprise	Funding	Agreement,	dated	September	18,	2006,	between	Alcoa	Inc.,	certain	of	its	affiliates	and	Alumina	Limited,	incorporated	by reference	to	exhibit	10(f)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31, 2006.

10(f)(1). Amendments	to	Enterprise	Funding	Agreement,	effective	January	25,	2008,	between	Alcoa	Inc.,	certain	of	its	affiliates	and	Alumina	Limited, incorporated	by	reference	to	exhibit	10(f)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year ended	December	31,	2007.

10(g). Earnout	Agreement,	dated	as	of	June	25,	2014,	by	and	among	Alcoa	Inc.,	FR	Acquisition	Finance	Subco	(Luxembourg),	S.à.r.l.	and	Oak	Hill Capital	Partners	III,	L.P.	and	Oak	Hill	Capital	Management	Partners	III,	L.P.,	collectively	in	their	capacity	as	the	Seller	Representative, incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	dated	June	26,	2014.

10(g)(1). Registration	Rights	Agreement,	dated	as	of	November	19,	2014,	by	and	between	Alcoa	Inc.	and	Firth	Rixson	(Cyprus)	Limited,	incorporated	by reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	dated	November	20,	2014.

10(h). Five-Year	Revolving	Credit	Agreement,	dated	as	of	July	25,	2014,	among	Alcoa	Inc.,	the	Lenders	and	Issuers	named	therein,	Citibank,	N.A.,	as Administrative	Agent	for	the	Lenders	and	Issuers,	and	JPMorgan	Chase	Bank,	N.A.,	as	Syndication	Agent,	incorporated	by	reference	to	exhibit 10.2	to	the	Company's	Current	Report	on	Form	8-K	dated	July	31,	2014.

10(h)(1). Extension	Request	and	Amendment	Letter,	dated	as	of	June	5,	2015,	among	Alcoa	Inc.,	each	lender	and	issuer	party	thereto,	and	Citibank,	N.A., as	Administrative	Agent,	effective	July	7,	2015,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	dated July	13,	2015.

10(j). Settlement	Agreement,	dated	as	of	October	9,	2012,	by	and	between	Aluminium	Bahrain	B.S.C.,	Alcoa	Inc.,	Alcoa	World	Alumina	LLC,	and William	Rice,	incorporated	by	reference	to	exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	September	30, 2012.

10(k). Plea	Agreement	dated	January	8,	2014,	between	the	United	States	of	America	and	Alcoa	World	Alumina	LLC,	incorporated	by	reference	to exhibit	10(l)	to	the	Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2013.

10(l). Offer	of	Settlement	of	Alcoa	Inc.	before	the	Securities	and	Exchange	Commission	dated	December	27,	2013,	incorporated	by	reference	to	exhibit 10(m)	to	the	Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2013.

10(m). Securities	and	Exchange	Commission	Order	dated	January	9,	2014,	incorporated	by	reference	to	exhibit	10(n)	to	the	Company's	Annual	Report on	Form	10-K	for	the	year	ended	December	31,	2013.

10(n). Agreement,	dated	February	1,	2016,	by	and	between	Elliott	Associates,	L.P.,	Elliott	International,	L.P.,	Elliott	International	Capital	Advisors	Inc. and	Alcoa	Inc.,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	dated	February	1,	2016.

10(o). Alcoa	Internal	Revenue	Code	Section	162(m)	Compliant	Annual	Cash	Incentive	Compensation	Plan,	incorporated	by	reference	to	Attachment	D to	the	Company's	Definitive	Proxy	Statement	on	Form	DEF	14A,	filed	March	7,	2011.

10(p). 2004	Summary	Description	of	the	Alcoa	Incentive	Compensation	Plan,	incorporated	by	reference	to	exhibit	10(g)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(p)(1). Incentive	Compensation	Plan	of	Alcoa	Inc.,	as	revised	and	restated	effective	November	8,	2007,	incorporated	by	reference	to	exhibit	10(k)(1)	to the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(p)(2). Amendment	to	Incentive	Compensation	Plan	of	Alcoa	Inc.,	effective	December	18,	2009,	incorporated	by	reference	to	exhibit	10(n)(2)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(q). Employees'	Excess	Benefits	Plan,	Plan	C,	as	amended	and	restated	effective	December	31,	2007,	incorporated	by	reference	to	exhibit	10(l)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(q)(1). Amendments	to	Employees'	Excess	Benefits	Plan,	Plan	C,	effective	December	29,	2008,	incorporated	by	reference	to	exhibit	10(l)(1)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2008.

10(q)(2). Amendment	to	Employees'	Excess	Benefits	Plan	C,	effective	December	18,	2009,	incorporated	by	reference	to	exhibit	10(o)(2)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(q)(3). Amendment	to	Employees'	Excess	Benefits	Plan	C,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(p)(3)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(q)(4). Amendments	to	Employees'	Excess	Benefits	Plan	C,	effective	January	1,	2012,	incorporated	by	reference	to	exhibit	10(o)(4)	to	the	Company's Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2011.

10(q)(5). Amendment	to	Employees'	Excess	Benefits	Plan	C,	effective	September	1,	2014,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	September	30,	2014.

10(r). Deferred	Fee	Plan	for	Directors,	as	amended	effective	July	9,	1999,	incorporated	by	reference	to	exhibit	10(g)(1)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	1999.

10(s). Restricted	Stock	Plan	for	Non-Employee	Directors,	as	amended	effective	March	10,	1995,	incorporated	by	reference	to	exhibit	10(h)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1994.

10(s)(1). Amendment	to	Restricted	Stock	Plan	for	Non-Employee	Directors,	effective	November	10,	1995,	incorporated	by	reference	to	exhibit	10(h)(1)	to the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1995.

10(t). Description	of	Changes	to	Non-Employee	Director	Compensation	and	Stock	Ownership	Guidelines,	effective	January	1,	2011,	incorporated	by reference	to	exhibit	10(b)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September 30,	2010.

10(u). Summary	of	2013	Non-Employee	Director	Compensation	and	Stock	Ownership	Guidelines,	incorporated	by	reference	to	exhibit	10(mm)	to	the Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2012.

10(v). Fee	Continuation	Plan	for	Non-Employee	Directors,	incorporated	by	reference	to	exhibit	10(k)	to	the	Company's	Annual	Report	on	Form	10-K (Commission	file	number	1-3610)	for	the	year	ended	December	31,	1989.

10(v)(1). Amendment	to	Fee	Continuation	Plan	for	Non-Employee	Directors,	effective	November	10,	1995,	incorporated	by	reference	to	exhibit	10(i)(1)	to the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1995.

10(v)(2). Second	Amendment	to	the	Fee	Continuation	Plan	for	Non-Employee	Directors,	effective	September	15,	2006,	incorporated	by	reference	to	exhibit 10.2	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	September	20,	2006.

10(w). Deferred	Compensation	Plan,	as	amended	effective	October	30,	1992,	incorporated	by	reference	to	exhibit	10(k)	to	the	Company's	Annual	Report on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1992.

10(w)(2). Amendment	to	Deferred	Compensation	Plan,	effective	June	1,	1995,	incorporated	by	reference	to	exhibit	10(j)(2)	to	the	Company's	Annual	Report on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1995.

10(w)(3). Amendment	to	Deferred	Compensation	Plan,	effective	November	1,	1998,	incorporated	by	reference	to	exhibit	10(j)(3)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1999.

10(w)(4). Amendments	to	Deferred	Compensation	Plan,	effective	January	1,	1999,	incorporated	by	reference	to	exhibit	10(j)(4)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1999.

10(w)(5). Amendments	to	Deferred	Compensation	Plan,	effective	January	1,	2000,	incorporated	by	reference	to	exhibit	10(j)(5)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2000.

10(w)(6). Amendments	to	Deferred	Compensation	Plan,	effective	January	1,	2005,	incorporated	by	reference	to	exhibit	10(q)(6)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2005.

10(w)(7). Amendments	to	Deferred	Compensation	Plan,	effective	November	1,	2007	incorporated	by	reference	to	exhibit	10(p)(7)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(w)(8). Amendments	to	Deferred	Compensation	Plan,	effective	December	29,	2008,	incorporated	by	reference	to	exhibit	10(p)(8)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2008.

10(w)(9). Amendment	to	Deferred	Compensation	Plan,	effective	April	1,	2009,	incorporated	by	reference	to	exhibit	10(s)(9)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(w)(10). Amendment	to	Deferred	Compensation	Plan,	effective	December	18,	2009,	incorporated	by	reference	to	exhibit	10(s)(10)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(w)(11). Amendment	to	Deferred	Compensation	Plan,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(u)(11)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(w)(12). Amendment	to	the	Amendment	dated	as	of	December	30,	2010	to	Deferred	Compensation	Plan,	effective	January	1,	2011,	incorporated	by reference	to	exhibit	10(t)(12)	to	the	Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2012.

10(w)(13). Amendment	to	Deferred	Compensation	Plan,	effective	January	1,	2013,	incorporated	by	reference	to	exhibit	10(t)(13)	to	the	Company's	Annual Report	on	Form	10-K	for	the	year	ended	December	31,	2012.

10(x). Summary	of	the	Executive	Split	Dollar	Life	Insurance	Plan,	dated	November	1990,	incorporated	by	reference	to	exhibit	10(m)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1990.

10(y). Amended	and	Restated	Dividend	Equivalent	Compensation	Plan,	effective	January	1,	1997,	incorporated	by	reference	to	exhibit	10(h)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(z). Form	of	Indemnity	Agreement	between	the	Company	and	individual	directors	or	officers,	incorporated	by	reference	to	exhibit	10(j)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1987.

10(aa). 2004	Alcoa	Stock	Incentive	Plan,	as	amended	through	November	11,	2005,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(bb). 2009	Alcoa	Stock	Incentive	Plan,	incorporated	by	reference	to	Attachment	C	to	the	Company's	Definitive	Proxy	Statement	on	Form	DEF	14A (Commission	file	number	1-3610)	filed	March	16,	2009.

10(bb)(1). Amended	and	Restated	2009	Alcoa	Stock	Incentive	Plan,	dated	February	15,	2011,	incorporated	by	reference	to	exhibit	10(z)(1)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(cc). Terms	and	Conditions	for	Special	Retention	Awards	under	the	2009	Alcoa	Stock	Incentive	Plan,	effective	January	1,	2010,	incorporated	by reference	to	exhibit	10(e)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	March	31, 2010.

10(dd). Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	as	amended	and	restated	effective	December	31,	2007,	incorporated	by	reference	to exhibit	10(u)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(dd)(1). Amendment	to	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	effective	December	29,	2008,	incorporated	by	reference	to	exhibit	10(u) (1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2008.

10(dd)(2). Amendment	to	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	effective	December	16,	2009,	incorporated	by	reference	to	exhibit	10(y) (2)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(dd)(4). Amendment	to	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(bb)(4) to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(dd)(5). Amendments	to	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	effective	January	1,	2012,	incorporated	by	reference	to	exhibit	10(aa)(5) to	the	Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2011.

10(dd)(6). Amendment	to	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives,	effective	September	1,	2014,	incorporated	by	reference	to	exhibit	10(d)	to the	Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	September	30,	2014.

10(ee). Deferred	Fee	Estate	Enhancement	Plan	for	Directors,	effective	July	10,	1998,	incorporated	by	reference	to	exhibit	10(r)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1998.

10(ff). Alcoa	Inc.	Change	in	Control	Severance	Plan,	as	amended	and	restated	effective	November	8,	2007,	incorporated	by	reference	to	exhibit	10(x)	to the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(ff)(1). Amendment	to	Alcoa	Inc.	Change	in	Control	Severance	Plan,	effective	December	16,	2009,	incorporated	by	reference	to	exhibit	10(bb)(1)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(gg). Form	of	Agreement	for	Stock	Option	Awards,	effective	January	1,	2004,	incorporated	by	reference	to	exhibit	10(a)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(hh). Form	of	Agreement	for	Stock	Awards,	effective	January	1,	2004,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's	Quarterly	Report	on Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(ii). Form	of	Agreement	for	Performance	Share	Awards,	effective	January	1,	2004,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(jj). Stock	Option	Award	Rules,	revised	January	1,	2004,	incorporated	by	reference	to	exhibit	10(d)	to	the	Company's	Quarterly	Report	on	Form	10-Q (Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(kk). Stock	Awards	Rules,	effective	January	1,	2004,	incorporated	by	reference	to	exhibit	10(e)	to	the	Company's	Quarterly	Report	on	Form	10-Q (Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(ll). Performance	Share	Awards	Rules,	effective	January	1,	2004,	incorporated	by	reference	to	exhibit	10(f)	to	the	Company's	Quarterly	Report	on Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(mm). 2005	Deferred	Fee	Plan	for	Directors,	as	amended,	effective	January	1,	2016,	incorporated	by	reference	to	exhibit	10(a)	to	the	Company's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	2015	.

10(nn). Global	Pension	Plan,	effective	January	1,	1998,	incorporated	by	reference	to	exhibit	10(jj)	to	the	Company's	Annual	Report	on	Form	10-K (Commission	file	number	1-3610)	for	the	year	ended	December	31,	2004.

10(nn)(1). Amendments	to	Global	Pension	Plan,	incorporated	by	reference	to	exhibit	10(jj)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission file	number	1-3610)	for	the	year	ended	December	31,	2004.

10(nn)(2). Amendments	to	Global	Pension	Plan,	effective	January	1,	2005,	incorporated	by	reference	to	exhibit	10(gg)(2)	to	the	Company's	Annual	Report on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2005.

10(nn)(3). Amendments	to	Global	Pension	Plan,	effective	December	1,	2005,	incorporated	by	reference	to	exhibit	10(gg)(3)	to	the	Company's	Annual	Report on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2005.

10(nn)(4). Amendments	to	Global	Pension	Plan,	effective	December	29,	2008,	incorporated	by	reference	to	exhibit	10(ff)(4)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2008.

10(nn)(5). Amendments	to	Global	Pension	Plan,	effective	July	1,	2009,	incorporated	by	reference	to	exhibit	10(jj)(5)	to	the	Company's	Annual	Report	on Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(nn)(6). Amendments	to	Global	Pension	Plan,	effective	December	18,	2009,	incorporated	by	reference	to	exhibit	10(jj)(6)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(nn)(7). Amendment	to	Global	Pension	Plan,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(mm)(7)	to	the	Company's	Annual	Report on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(nn)(8). Amendment	to	Global	Pension	Plan,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(kk)(8)	to	the	Company's	Annual	Report	on Form	10-K	for	the	year	ended	December	31,	2012.

10(oo). Executive	Severance	Agreement,	as	amended	and	restated	effective	December	8,	2008,	between	Alcoa	Inc.	and	Klaus	Kleinfeld,	incorporated	by reference	to	exhibit	10(gg)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31, 2008.

10(oo)(1). Form	of	Executive	Severance	Agreement	between	the	Company	and	new	officers	entered	into	after	July	22,	2010,	incorporated	by	reference	to exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2010.

10(pp). Form	of	Award	Agreement	for	Stock	Options,	effective	January	1,	2006,	incorporated	by	reference	to	exhibit	10.2	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(qq). Form	of	Award	Agreement	for	Stock	Awards,	effective	January	1,	2006,	incorporated	by	reference	to	exhibit	10.3	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(rr). Form	of	Award	Agreement	for	Performance	Share	Awards,	effective	January	1,	2006,	incorporated	by	reference	to	exhibit	10.4	to	the	Company's Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(ss). Form	of	Award	Agreement	for	Performance	Stock	Options,	effective	January	1,	2006,	incorporated	by	reference	to	exhibit	10.5	to	the	Company's Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(tt). Form	of	Award	Agreement	for	Stock	Options,	effective	May	8,	2009,	incorporated	by	reference	to	exhibit	10.2	to	the	Company's	Current	Report on	Form	8-K	(Commission	file	number	1-3610)	dated	May	13,	2009.

10(uu). Terms	and	Conditions	for	Stock	Options,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's	Quarterly	Report on	Form	10-Q	for	the	quarter	ended	June	30,	2011.

10(vv). Form	of	Award	Agreement	for	Restricted	Share	Units,	effective	May	8,	2009,	incorporated	by	reference	to	exhibit	10.3	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	13,	2009.

10(ww). Terms	and	Conditions	for	Restricted	Share	Units,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's	Quarterly Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2011.

10(xx). Summary	Description	of	Equity	Choice	Program	for	Performance	Equity	Award	Participants,	dated	November	2005,	incorporated	by	reference	to exhibit	10.6	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(yy). Reynolds	Metals	Company	Benefit	Restoration	Plan	for	New	Retirement	Program,	as	amended	through	December	31,	2005,	incorporated	by reference	to	exhibit	10(rr)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31, 2005.

10(yy)(1). Amendments	to	the	Reynolds	Metals	Company	Benefit	Restoration	Plan	for	New	Retirement	Program,	effective	December	18,	2009,	incorporated by	reference	to	exhibit	10(tt)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December 31,	2009.

10(yy)(2). Amendments	to	the	Reynolds	Metals	Company	Benefit	Restoration	Plan	for	New	Retirement	Program,	effective	January	1,	2012,	incorporated	by reference	to	exhibit	10(xx)(2)	to	the	Company's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2011.

10(yy)(3). Amendment	to	Reynolds	Metals	Company	Benefit	Restoration	Plan	for	New	Retirement	Program,	effective	September	1,	2014,	incorporated	by reference	to	exhibit	10(e)	to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	September	30,	2014.

10(zz). Global	Expatriate	Employee	Policy	(pre-January	1,	2003),	incorporated	by	reference	to	exhibit	10(uu)	to	the	Company's	Annual	Report	on	Form 10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2005.

10(aaa). Form	of	Special	Retention	Stock	Award	Agreement,	effective	July	14,	2006,	incorporated	by	reference	to	exhibit	10.3	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	September	20,	2006.

10(bbb). Omnibus	Amendment	to	Rules	and	Terms	and	Conditions	of	all	Awards	under	the	2004	Alcoa	Stock	Incentive	Plan,	effective	January	1,	2007, incorporated	by	reference	to	exhibit	10(tt)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended December	31,	2007.

10(ccc). Letter	Agreement,	dated	August	14,	2007,	between	Alcoa	Inc.	and	Klaus	Kleinfeld,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2007.

10(ddd). Employment	Offer	Letter,	dated	April	2,	2012,	between	Alcoa	Inc.	and	Audrey	Strauss,	incorporated	by	reference	to	exhibit	10(b)	to	the Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2012.

10(eee). Director	Plan:	You	Make	a	Difference	Award,	incorporated	by	reference	to	exhibit	10(uu)	to	the	Company's	Annual	Report	on	Form	10-K (Commission	on	file	number	1-3610)	for	the	year	ended	December	31,	2008.

10(fff). Form	of	Award	Agreement	for	Stock	Options,	effective	January	1,	2010,	incorporated	by	reference	to	exhibit	10(ddd)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(ggg). 2013	Alcoa	Stock	Incentive	Plan,	incorporated	by	reference	to	exhibit	10(a)	to	the	Company's	Current	Report	on	Form	8-K	dated	May	8,	2013.

10(hhh). Alcoa	Inc.	Terms	and	Conditions	for	Stock	Option	Awards,	effective	May	3,	2013,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's Current	Report	on	Form	8-K	dated	May	8,	2013.

10(iii). Alcoa	Inc.	Terms	and	Conditions	for	Restricted	Share	Units,	effective	May	3,	2013,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's Current	Report	on	Form	8-K	dated	May	8,	2013.

10(jjj). Terms	and	Conditions	(Australian	Addendum)	2013	Alcoa	Stock	Incentive	Plan,	effective	May	3,	2013,	incorporated	by	reference	to	exhibit	10(d) to	the	Company's	Current	Report	on	Form	8-K	dated	May	8,	2013.

10(kkk). Amendment	to	Employees'	Excess	Benefits	Plan	C,	effective	August	11,	2014.

10(lll). Amendment	to	Deferred	Compensation	Plan,	effective	August	11,	2014.

10(mmm). Amendment	to	Deferred	Compensation	Plan,	effective	January	1,	2016.

10(nnn). RTI	International	Metals,	Inc.	2014	Stock	and	Incentive	Plan,	incorporated	by	reference	to	Exhibit	4(a)	to	the	Company's	Current	Report	on	Form 8-K	dated	July	23,	2015.

10(ooo). RTI	International	Metals,	Inc.	2004	Stock	Plan,	incorporated	by	reference	to	Exhibit	4(b)	to	the	Company's	Current	Report	on	Form	8-K	dated July	23,	2015.

10(ppp). Alcoa	Inc.	Terms	and	Conditions	for	Special	Retention	Awards	under	the	2013	Alcoa	Stock	Incentive	Plan,	incorporated	by	reference	to	exhibit 10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2013.

10(qqq). Summary	of	2015	Non-Employee	Director	Compensation	and	Stock	Ownership	Guidelines,	incorporated	by	reference	to	exhibit	10(a)	to	the Company's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	2015.

* Exhibit	Nos.	10(o)	through	10(qqq)	are	management	contracts	or	compensatory	plans	required	to	be	filed	as	Exhibits	to	this	Form	10-K.

Amendments	and	modifications	to	other	Exhibits	previously	filed	have	been	omitted	when	in	the	opinion	of	the	registrant	such	Exhibits	as	amended	or	modified	are	no longer	material	or,	in	certain	instances,	are	no	longer	required	to	be	filed	as	Exhibits.

No	other	instruments	defining	the	rights	of	holders	of	long-term	debt	of	the	registrant	or	its	subsidiaries	have	been	filed	as	Exhibits	because	no	such	instruments	met	the threshold	materiality	requirements	under	Regulation	S-K.	The	registrant	agrees,	however,	to	furnish	a	copy	of	any	such	instruments	to	the	Commission	upon	request.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the undersigned,	thereunto	duly	authorized.

Robert	S.	Collins

Vice	President	and	Controller

(Also	signing	as	Principal	Accounting	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in	the capacities	and	on	the	dates	indicated.

Arthur	D.	Collins,	Jr.,	Kathryn	S.	Fuller,	Sean	O.	Mahoney,	Michael	G.	Morris,	E.	Stanley	O'Neal,	James	W.	Owens,	John	C.	Plant,	Dr.	L.	Rafael	Reif,	Carol	L. Roberts,	Patricia	F.	Russo,	Ulrich	R.	Schmidt,	Sir	Martin	Sorrell,	Ratan	N.	Tata	and	Ernesto	Zedillo,	each	as	a	Director,	on	February	19,	2016,	by	Robert	S.	Collins, their	Attorney-in-Fact.*

*By /s/	Robert	S.	Collins

					Attorney-in-Fact



Question: what was the increase in the settlements with tax authorities as a percent of the tax liabilities observed during 2013 and 2014?
Answer: 7.87%