Alcoa 2012 Annual Report Download - page 161
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The following table presents Alcoa’s derivative contract assets and liabilities that are measured and recognized at fair
value on a recurring basis classified under the appropriate level of the fair value hierarchy (there were no transfers in or
out of Levels 1 and 2 during the periods presented):
December 31, 2012 2011
Assets:
Level 1 $ 27 $ 57
Level 2 45 47
Level 3 550 12
Margin held (26) (22)
Total $596 $ 94
Liabilities:
Level 1 $ 15 $ 64
Level 2 26 44
Level 3 638 630
Margin posted - (1)
Total $679 $737
Financial instruments classified as Level 3 in the fair value hierarchy represent derivative contracts in which
management has used at least one significant unobservable input in the valuation model. The following tables present a
reconciliation of activity for such derivative contracts:
Assets Liabilities
2012
Aluminum
contracts
Energy
contracts
Aluminum
contracts
Embedded
credit
derivative
Energy
contracts
Opening balance—January 1, 2012 $ 10 $2 $602 $28 $-
Total gains or losses (realized and unrealized)
included in:
Sales (8) - (33) - -
Cost of goods sold (107) - - (1) -
Other income, net 16 - - 3 -
Other comprehensive loss 10 1 39 - -
Purchases, sales, issuances, and settlements* 596 - - - -
Transfers into and (or) out of Level 3* - - - - -
Foreign currency translation 30 - - - -
Closing balance—December 31, 2012 $ 547 $3 $608 $30 $-
Change in unrealized gains or losses included in
earnings for derivative contracts held at
December 31, 2012:
Sales $ - $ - $ - $ - $-
Cost of goods sold - - - - -
Other income, net 16 - - 3 -
* In July 2012, two embedded derivatives contained within existing power contracts became subject to derivative
accounting under GAAP (see below). The amount reflected in this table represents the initial fair value of these
embedded derivatives and was classified as an issuance of Level 3 financial instruments. There were no purchases,
sales or settlements of Level 3 financial instruments. Additionally, there were no transfers of financial instruments
into or out of Level 3.
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