Alcoa 2009 Annual Report Download - page 138

The remeasurement of these pension and postretirement benefit plans generated a net increase and a decrease in 2009
annual net periodic benefit cost of $9 and less than $1, respectively. Also, the pension plans’ PBO and plan assets
decreased by $197 and $74, respectively, and the postretirement benefit plans’ APBO decreased by $1 due to the
remeasurements. Additionally, Alcoa recorded a credit of $144 ($94 after-tax) for pension plans and a charge of $1
(less than $1 after-tax) for postretirement benefit plans in accumulated other comprehensive loss due to the
remeasurement of the curtailed plans.
Also in 2009, Alcoa recorded a settlement charge of $14 as a component of net periodic benefit cost related to its
pension benefits due to significant lump sum benefit payments. Additionally, Alcoa recorded a curtailment gain of $1
related to two pension plans outside the U.S.
2008. As disclosed in Note F, Alcoa completed the sale of its Packaging and Consumer businesses to Rank in
February 2008. In September 2008, Alcoa announced that it was temporarily idling the remaining production at its
smelter in Rockdale (see Note D for additional information). As a result, certain U.S. and non-U.S. pension and
postretirement benefit plans were remeasured and Alcoa recognized curtailment losses of $2 and $9, respectively, due
to the significant reduction in the expected aggregate years of future service of the employees of the Packaging and
Consumer businesses and the Rockdale smelter. The curtailment losses include recognition of the change in the
pension plans’ PBO or the postretirement benefit plans’ APBO and a portion of the previously unrecognized prior
service cost reflecting the reduction in expected future service. The remeasurement of these pension and postretirement
benefit plans generated an increase and decrease in 2008 annual net periodic benefit cost of $23 and $10 for pension
plans and postretirement benefit plans, respectively. Also, the pension plans’ PBO and plan assets decreased by $26
and $248, respectively, and the postretirement benefit plans’ APBO and plan assets decreased by $131 and $10,
respectively.
Also in 2008, as part of the sale of the Packaging and Consumer businesses, Rank assumed the obligations of certain
other U.S. and non-U.S. pension plans with PBOs of $71 and plan assets of $46. Rank’s assumption of these
obligations resulted in a settlement of the pension plan obligations for Alcoa. The settlement of these obligations
resulted in the recognition of previously deferred actuarial losses in the amount of $14. Additionally, Alcoa recorded
$4 less in 2008 annual net periodic benefit cost due to the settlement of these pension plans.
Due to the remeasurement of these curtailed and settled plans, Alcoa recorded a charge of $220 ($144 after-tax) for
pension plans and a credit of $107 ($69 after-tax) for postretirement benefit plans to accumulated other comprehensive
loss in 2008. In addition, a charge of $30 was recorded in accumulated other comprehensive loss due to the
reclassification of deferred taxes related to the Medicare Part D prescription drug subsidy.
Lastly in 2008, Alcoa recorded a settlement charge of $6 as a component of net periodic benefit cost related to its
pension benefits due to significant lump sum benefit payments.
2007. In 2007, Alcoa recorded a curtailment charge of $2 and curtailment income of $3 as a component of net periodic
benefit cost related to its pension benefits and postretirement benefits, respectively. The curtailment charge of $2 was
due to the contribution of Alcoa’s soft alloy extrusion business to the Sapa AB joint venture (see Note I). The
curtailment income of $3 consisted of income of $7 due to the elimination of the retiree life insurance benefit for
certain U.S. employees who retire on or after April 1, 2008 and a charge of $4 related to Alcoa’s soft alloy extrusion
business.
Also in 2007, Alcoa recorded a settlement credit of $2 as a component of net periodic benefit cost related to its pension
benefits due to significant lump sum benefit payments.
Medicare Part D
Alcoa pays a portion of the prescription drug cost for eligible retirees under certain of its postretirement benefit plans.
These benefits were determined to be actuarially equivalent to the Medicare Part D prescription drug benefit of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003. As a result, the net periodic benefit cost for
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