Alcoa 2010 Annual Report Download - page 140

The following table details the changes in the allowance for doubtful accounts related to customer receivables and
other receivables:
Customer receivables Other receivables
December 31, 2010 2009 2010 2009
Balance at beginning of year $ 70 $65 $90 $79
Provision for doubtful accounts (7) 9 1 6
Write off of uncollectible accounts (10) (8) (1) (1)
Recoveries of prior write-offs (4) (1) (3) (6)
Other (4) 5 - 12
Balance at end of year $ 45 $70 $87 $90
V. Interest Cost Components
2010 2009 2008
Amount charged to expense $494 $470 $407
Amount capitalized 96 165 167
$590 $635 $574
W. Pension and Other Postretirement Benefits
Alcoa maintains pension plans covering most U.S. employees and certain employees in foreign locations. Pension
benefits generally depend on length of service, job grade, and remuneration. Substantially all benefits are paid through
pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. Most
U.S. salaried and non-union hourly employees hired after March 1, 2006 participate in a defined contribution plan
instead of a defined benefit plan.
Alcoa also maintains health care and life insurance benefit plans covering eligible U.S. retired employees and certain
retirees from foreign locations. Generally, the medical plans pay a percentage of medical expenses, reduced by
deductibles and other coverages. These plans are generally unfunded, except for certain benefits funded through a trust.
Life benefits are generally provided by insurance contracts. Alcoa retains the right, subject to existing agreements, to
change or eliminate these benefits. All U.S. salaried and certain hourly employees hired after January 1, 2002 are not
eligible for postretirement health care benefits. All U.S. salaried and certain hourly employees that retire on or after
April 1, 2008 are not eligible for postretirement life insurance benefits.
For the year-ended December 31, 2008, Alcoa adopted a change issued by the FASB requiring an employer to measure
the funded status of each of its benefit plans as of the date of its year-end statement of financial position. This provision
resulted in a charge of $9, which was recorded as an adjustment to December 31, 2008 retained earnings. Prior to the
effective date of this change, the funded status of most of Alcoa’s pension and other postretirement benefit plans were
already measured as of December 31st.
On June 24, 2010, the United Steelworkers ratified a new four-year labor agreement covering approximately 5,400
employees at 11 U.S. locations; the previous labor agreement expired on May 31, 2010. In 2010, as a result of the
preparation for and ratification of the new agreement, Alcoa recognized $20 ($13 after-tax) in Cost of goods sold on
the accompanying Statement of Consolidated Operations for strike preparation costs, a one-time signing bonus for
employees, and an increase to pension net periodic benefit cost (see below). Additionally, as a result of the provisions
of the new labor agreement, a significant plan amendment was adopted by one of Alcoa’s U.S. pension plans.
Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated from
6.15% at December 31, 2009 to 5.95% at May 31, 2010. The plan remeasurement resulted in an increase to both
Alcoa’s pension liability of $166 and the plan’s unrecognized net actuarial loss (included in other comprehensive loss)
of $108 (after-tax). The plan remeasurement also resulted in an increase to 2010 net periodic benefit cost of $9.
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