Alcoa 2013 Annual Report Download - page 84

$53 in prepaid expenses and other current assets, mostly caused by the sale of excess carbon credits in Australia; a
positive change of $338 in accounts payable, trade, principally the result of timing of payments, including a policy
change in Alcoa’s vendor payment process; an unfavorable change of $252 in accrued expenses, largely attributable to
a decrease in deferred revenue and payments made to the Italian Government (see below); and a negative change of
$58 in taxes, including income taxes.
The unfavorable change in noncurrent assets was mostly related to an increase in deferred mining costs in Australia
and the absence of value-added tax receipts in Brazil. The negative change in noncurrent liabilities was largely
attributable to the absence of a net increase in the environmental reserve of $194 related to five remediation matters.
In 2014, Alcoa World Alumina LLC, a majority-owned subsidiary of Alcoa, and Alcoa Inc. will pay a combined $88 to
the United States government due to the resolution of a legal matter (paid on January 22, 2014). Additionally, another
$74 will be paid in each of the four subsequent years, 2015 through 2018.
Cash from operations in 2012 was $1,497 compared with $2,193 in 2011. The decrease of $696, or 32%, was primarily
due to lower operating results, higher pension contributions of $225, and an unfavorable change associated with
working capital of $141, somewhat offset by a favorable change of $445 in noncurrent liabilities and a positive change
of $163 in noncurrent assets.
The higher pension contributions were principally driven by the fact that in 2012 all contributions to the U.S. pension
plans were made in cash, whereas, in 2011, a $600 noncash contribution to the U.S. pension plans was made in the
form of Company common stock.
The major components of the unfavorable change in working capital were as follows: a favorable change of $219 in
receivables, primarily related to fewer uncollected receivables related to sales programs and lower customer sales; a
positive change of $435 in inventories, mostly due to lower levels of on-hand alumina and aluminum products and a
decrease in the LME price of aluminum; a negative change of $139 in prepaid expenses and other current assets,
largely attributable to the absence of a reduction in collateral posted related to mark-to-market derivative contracts and
an increase in both excess carbon emission credits and prepayments for natural gas in Australia; an unfavorable change
of $406 in accounts payable, trade, principally the result of timing of payments; a negative change of $150 in accrued
expenses, largely attributable to a payment made to the Italian Government (see below), a decrease in deferred revenue,
a payment made in the civil portion of a litigation matter (see below), and the absence of a charge related to the former
St. Croix location; and a negative change of $100 in taxes, including income taxes, mainly due to less income taxes
caused by lower operating results, somewhat offset by an income tax refund received for the carryback of a loss from a
prior year in Canada.
The favorable change in noncurrent liabilities was primarily caused by a net increase in the environmental reserve of
$194 related to five remediation matters, higher accrual for pension plans, and an increase in deferred revenue related
to a contract to deliver sheet and plate to a customer beginning in 2014.
In June 2012, Alcoa received formal notification from the Italian Government requesting a net payment of
$310 (€250) related to a November 2009 European Commission decision on electricity pricing for smelters. Alcoa
commenced payment of the requested amount in five quarterly installments of $69 (€50) beginning in October 2012
through December 2013.
On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law by the
United States government. MAP-21, 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, MAP-21 allows for the use of a 25-year average interest rate within an upper and lower range for
purposes of determining minimum funding obligations instead of an average interest rate for the two most recent years.
This relief had an immediate impact on the calculation of the then remaining funding contributions in 2012, resulting in
68