Alcoa 2011 Annual Report Download - page 152

The following table presents the fair value of pension and other postretirement plans’ assets classified under the
appropriate level of the fair value hierarchy:
December 31, 2011 Level 1 Level 2 Level 3 Total
Equity securities* $ 941 $1,166 $1,383 $ 3,490
Debt securities 1,223 3,880 211 5,314
Other investments 295 74 1,166 1,535
Total** $2,459 $5,120 $2,760 $10,339
December 31, 2010 Level 1 Level 2 Level 3 Total
Equity securities $1,348 $1,589 $ 504 $ 3,441
Debt securities 808 3,922 187 4,917
Other investments 268 52 808 1,128
Total** $2,424 $5,563 $1,499 $ 9,486
* At December 31, 2011, Level 1 equity securities include $36 of Alcoa common stock related to the January 2011
plan contribution (see Funding and Cash Flows section below).
**As of December 31, 2011, the total fair value of pension and other postretirement plans’ assets excludes a net
payable of $20, which represents securities purchased not yet settled less interest and dividends earned on various
investments. As of December 31, 2010, the total fair value of pension and other postretirement plans’ assets excludes
a net receivable of $23, which represents interest and dividends earned on various investments less securities
purchased not yet settled.
Pension and other postretirement benefit plans’ assets classified as Level 3 in the fair value hierarchy represent other
investments in which the trustees have used significant unobservable inputs in the valuation model. The following table
presents a reconciliation of activity for such investments:
2011 2010
Balance at beginning of year $1,499 $ 920
Realized gains 67 35
Unrealized gains 100 130
Purchases 1,221 497
Sales (124) (87)
Issuances --
Settlements --
Foreign currency translation impact (3) 4
Transfers in and (or) out of Level 3* - -
Balance at end of year $2,760 $1,499
* In 2011 and 2010, there were no transfers of financial instruments into or out of Level 3
Funding and Cash Flows
It is Alcoa’s policy to fund amounts for pension plans sufficient to meet the minimum requirements set forth in
applicable country benefits laws and tax laws, including the Pension Protection Act of 2006 and the Worker, Retiree,
and Employer Recovery Act of 2008 for U.S. plans. From time to time, Alcoa contributes additional amounts as
deemed appropriate. In 2011 and 2010, cash contributions to Alcoa’s pension plans were $336 and $113. Also in both
2011 and 2010, Alcoa contributed newly issued shares (see Note R) of its common stock (valued at $600) to a master
trust that holds the assets of certain U.S. defined benefit pension plans in a private placement transaction. These shares
were issued to satisfy the estimated minimum required funding and to provide additional funding towards maintaining
an approximately 80% funded status of Alcoa’s U.S. pension plans. The minimum required contribution to pension
plans in 2012 is estimated to be $650, of which $115 is for non-U.S. plans.
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