Alcoa 2015 Annual Report Download - page 151

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
Alcoa
Alumina
Limited Total Alcoa
Alumina
Limited Total
Government investigations(1) $326 $ 58 $384 $ - $ - $ -
Civil suit(1) ---513485
Reallocation of civil suit 21 (21) - - - -
Reallocation of legal costs 20 (20) - - - -
Loss before income taxes 367 17 384 51 34 85
Benefit for income taxes 66 - 66 18 - 18
Net loss(2) $301 $ 17 $318 $33 $34 $67
(1) The amount in the Total column was recorded in Restructuring and other charges (see Note D).
(2) 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.
Other Matters
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,
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