Alcoa 2010 Annual Report Download - page 146
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The following table presents the fair value of pension and other postretirement plans’ assets classified under the
appropriate level of the fair value hierarchy:
December 31, 2010 Level 1 Level 2 Level 3 Total
Equity securities $1,348 $1,589 $ 504 $3,441
Debt securities 3,664 1,253 - 4,917
Other investments 268 52 808 1,128
Total* $5,280 $2,894 $1,312 $9,486
December 31, 2009 Level 1 Level 2 Level 3 Total
Equity securities $1,332 $1,523 $ 416 $3,271
Debt securities 3,748 968 - 4,716
Other investments 223 46 346 615
Total* $5,303 $2,537 $ 762 $8,602
* As of December 31, 2010, and 2009, the total fair value of pension and other postretirement plans’ assets excludes a
net receivable of $23 and $38, respectively, which represents interest and dividends earned on various investments.
Pension and other postretirement benefit plans’ assets classified as Level 3 in the fair value hierarchy represent other
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:
2010 2009
Balance at beginning of year $ 762 $ 832
Realized gains (losses) 34 (5)
Unrealized gains (losses) 125 (134)
Purchases, sales, issuances, and settlements 387 54
Foreign currency translation impact 4 15
Transfers in and (or) out of Level 3 - -
Balance at end of year $1,312 $ 762
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 and the Worker, Retiree,
and Employer Recovery Act of 2008 for U.S. plans. From time to time, Alcoa contributes additional amounts as
deemed appropriate. In 2010 and 2009, cash contributions to Alcoa’s pension plans were $113 and $128. Also in 2010,
Alcoa contributed newly issued shares (see Note R) of its common stock (valued at $600) to a master trust that holds
the assets of certain U.S. defined benefit pension plans in a private placement transaction. These shares were issued to
satisfy a portion of Alcoa’s future funding obligations to these plans, including a portion of the estimated minimum
required funding for 2011. The minimum required contribution to pension plans in 2011 is estimated to be $445
(reflects reduction associated with stock contribution in 2010), of which $110 is for non-U.S. plans (see Note Y).
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