Alcoa 2009 Annual Report Download - page 134

The cumulative amount of Alcoa’s foreign undistributed net earnings for which no deferred taxes have been provided
was $8,138 at December 31, 2009. Management has no plans to distribute such earnings in the foreseeable future. It is
not practical to determine the deferred tax liability on these earnings.
Alcoa and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign
jurisdictions. With a few minor exceptions, Alcoa is no longer subject to income tax examinations by tax authorities for
years prior to 2002. All U.S. tax years prior to 2008 have been audited by the Internal Revenue Service. Various state
and foreign jurisdiction tax authorities are in the process of examining Alcoa’s income tax returns for various tax years
through 2007.
A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is
as follows:
December 31, 2009 2008 2007
Balance at beginning of year $24 $ 33 $22
Additions based on tax positions related to the current year 1 - 3
Additions for tax positions of prior years 24 11 14
Reductions for tax positions of prior years - (10) (7)
Settlements (5) (7) -
Foreign currency translation 4 (3) 1
Balance at end of year $48 $ 24 $33
For all periods presented, a portion of the balance at end of year pertains to state tax liabilities, which are presented
before any offset for federal tax benefits. The effect of unrecognized tax benefits, if recorded, that would impact the
2009 annual effective tax rate would be approximately 1% of pretax book income. Alcoa does not anticipate that
changes in its unrecognized tax benefits will have a material impact on the Statement of Consolidated Operations
during 2010.
It is Alcoa’s policy to recognize interest and penalties related to income taxes as a component of the Provision for
income taxes on the accompanying Statement of Consolidated Operations. In 2009, 2008, and 2007, Alcoa recognized
$5, $1, and $2, respectively, in interest and penalties. As of December 31, 2009 and 2008, the amount accrued for the
payment of interest and penalties was $16 and $9, respectively.
U. Accounts Receivable Securitizations
Alcoa has a program to sell a senior undivided interest in certain customer receivables, without recourse, on a
continuous basis to a third-party for cash. This program was renewed on October 29, 2009 and expires on October 28,
2010. In August 2008, Alcoa increased the capacity of this program from $100 to $250. As of December 31, 2009 and
2008, Alcoa derecognized $250 in Receivables from customers on the accompanying Consolidated Balance Sheet
under this program (see Note A). Alcoa services the customer receivables for the third-party at market rates; therefore,
no servicing asset or liability was recorded.
Alcoa had an existing program with a different third-party to sell certain customer receivables. The sale of receivables
under this program was conducted through a qualifying special purpose entity (QSPE) that was bankruptcy remote,
and, therefore, was not consolidated by Alcoa. Effective August 31, 2008, Alcoa terminated this program and all
outstanding customer receivables were collected by the QSPE through the end of 2008.
126