Alcoa 2013 Annual Report Download

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Advancing each generation.
Repositioning
for the Future
ANNUAL REPORT
2013
1990
Alcoa introduces new
family of lightweight,
high-strength alloys
for aerospace
2002
Alcoa Dura-Bright®
wheels rolling with style
2011
Alcoa debuts EcoCleanâ„¢
self-cleaning building surfaces
2012
Alcoa launches ColorKast®
technology—a breakthrough
in consumer electronics
2013
Alcoa meeting growing
demand for aluminum-
intensive vehicles

Table of contents

  • Page 1
    ... 2002 Alcoa Dura-Bright® wheels rolling with style 2012 Alcoa launches ColorKast® technology-a breakthrough in consumer electronics 2013 Alcoa meeting growing demand for aluminumintensive vehicles 1990 Alcoa introduces new family of lightweight, high-strength alloys for aerospace Repositioning...

  • Page 2
    ... 20, 2014 (the record date for the 2014 annual shareholders' meeting). Q // 2013 Sales: $23.0 Billion BY SEGMENT BY GEOGRAPHIC AREA // Number of Employees 2013 2012 2011 $0.3 $3.3 6% $7.1 17% 51% 26% $6.6 Global Rolled Products Primary Metals Engineered Products and Solutions Alumina Other United...

  • Page 3
    Alcoa celebrated 125 years since its founding with a global day of service on October 1, 2013.

  • Page 4
    ... and development in lightweighting automotive technologies, investing in plant expansions in Iowa and Tennessee and building a rolling mill in Saudi Arabia. Alcoa will be providing the innovative solutions our customers will want to become more competitive. The experience of Alcoa's wheels business...

  • Page 5
    ... in service were developed by Alcoa. Today, every Western commercial aircraft uses Alcoa fasteners and every Western commercial and military aircraft engine is built with Alcoa nickel super-alloy investment castings. With $4 billion of annual revenues from the aerospace sector, 60% from non-aluminum...

  • Page 6
    ... and Solutions; GRP: Global Rolled Products; GPP: Global Primary Products represents the Alumina and Primary Metals segments combined. n n n We aggressively managed sustaining capital while investing in the value-add businesses. The combined capital spend for 2013 was $357 million below our target...

  • Page 7
    ... Engineered Products and Solutions, part of Alcoa's value-add portfolio, performed against targets set in 2010 and generated $970 million incremental revenue from share gains through innovation, while growing adjusted EBITDA margins from 2010 to 2013. ADJUSTED EBITDA MARGIN 21.5% 16.8% 2010 2013...

  • Page 8
    ...-Alcoa joint venture rolling mill for both can and automotive sheet. Global Rolled Products, which forms part of Alcoa's value-add portfolio, generated $740 million incremental value-add revenue from 2010 to 2013 at historically high average adjusted EBITDA per metric ton levels. ADJUSTED EBITDA...

  • Page 9
    ... global cost curves. At the end of 2013, Alcoa had 16% of its highest cost smelting capacity ofï¬,ine. While we worked to improve our cost base, Alcoa also increased its mix of value-add products in the upstream. In 2013, approximately 60% of Primary Metals' third-party sales were value-add...

  • Page 10
    Air travel. Fuel-efficient cars. Smart buildings. Infinitely recyclable packaging. The latest electronic gadgets. For 125 years, Alcoa has made possible the products that shape our everyday lives, improving how we travel, work and connect.

  • Page 11
    ... core of our Company. Our innovation cornerstone is the Alcoa Technical Center (ATC), the world's largest light metals research and development center, located outside of Pittsburgh, Pennsylvania. The ATC has become a destination for customers seeking to solve problems, develop new products and draw...

  • Page 12
    ... aircraft performance Alcoa invests more than $40 million each year to develop new products and cutting-edge aerospace technologies as part of its approximately $4 billion aerospace business. Since the beginning of aviation, Alcoa's teams have worked side-by-side with aircraft manufacturers to...

  • Page 13
    ... "Level E," which is given to products that can protect buildings and the people inside them. Photo courtesy of Key Glass LLC Reinventing the wheel alloy Alcoa invented the forged aluminum wheel, and in 2013, rolled out the most advanced aluminum wheel alloy in 45 years. This new material opens the...

  • Page 14
    // Our Values Alcoa is a values-based company. Our Values-Integrity, Respect, Innovation, Excellence and Environment, Health and Safety-guide our work and help us accomplish our goals the right way. They also align us with our stakeholders, from employees, customers and suppliers to investors and ...

  • Page 15
    ...specified in its charter) Pennsylvania 25-0317820 (State of incorporation) (I.R.S. Employer Identification No.) 390 Park Avenue, New York, New York 10022-4608 (Address of principal executive offices) (Zip code) Registrant's telephone numbers: Investor Relations 212) 836-2674 Office of the Secretary...

  • Page 16
    ... 13. Item 14. Part IV Item 15. Exhibits, Financial Statement Schedules ...Signatures ...166 177 Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships...

  • Page 17
    ...as required by applicable law. Overview Alcoa is a global leader in lightweight metals engineering and manufacturing. Alcoa's innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aircraft, automobiles, commercial transportation, packaging, building...

  • Page 18
    ... tables and related discussion of the Company's Bauxite Interests, Alumina Refining and Primary Aluminum Facilities and Capacities, Global Rolled Products, Engineered Products and Solutions and Corporate Facilities provide additional description of Alcoa's businesses. The Alumina segment primarily...

  • Page 19
    ...low in relation to annual production levels, they are consistent with historical levels of reserves for our mining locations. Given the Company's extensive bauxite resources, the abundant supply of bauxite globally and the length of the Company's rights to bauxite, it is not cost-effective to invest...

  • Page 20
    ...) date. Clarendon Alumina Production Ltd. is wholly-owned by the Government of Jamaica. Alcoa World Alumina LLC (AWA LLC) owns 100% of N.V. Alcoa Minerals of Suriname (AMS). Suralco and AMS are parts of the AWAC group of companies which are owned 60% by Alcoa and 40% by Alumina Limited. The mining...

  • Page 21
    ...Alumina Company is a joint venture owned by Saudi Arabian Mining Company (Ma'aden) (74.9%) and AWA Saudi Limited (25.1%). AWA Saudi Limited is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina Limited. Kingdom of Saudi Arabia-Al Ba'itha: Bauxite reserves and mine plans...

  • Page 22
    ... in this declaration is AWAC share only (25.1%). The Al Ba'itha Mine is due to begin production during 2014. Brazil-Trombetas-MRN: Declared reserves are as of December 31, 2013. The CP Report for December 31, 2013 will be issued in February 2014. Declared and annual production tonnages reflect the...

  • Page 23
    ... the ore; mine services offices and workshops; power generation; water supply; stockpiles; rail sidings. At the port: Mine and rail administrative offices and services; port control facilities with stockpiles and ship loader. Mine and port facilities are operating. Mine & Location Australia-Darling...

  • Page 24
    ... in 1999. Currently the mine is in development. Production is to begin in 2014. The company will generate electricity at the mine site from fuel oil. The mine will include fixed plants for crushing and train loading; workshops and ancillary services; power plant; and water supply. There will be...

  • Page 25
    ... in the mine and refinery. For additional information regarding the joint venture, see the Equity Investments section of Note I to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data). Glossary of Bauxite Mining Related Terms Term Alcoa Ore Reserves...

  • Page 26
    ... table: Alcoa Worldwide Alumina Refining Capacity Alcoa Nameplate Consolidated Capacity1 Capacity2 (000 MTPY) (000 MTPY) 2,190 2,190 4,234 4,234 2,555 2,555 390 390 Country Australia Brazil Facility Kwinana Pinjarra Wagerup Poços de Caldas São Luís (Alumar) Jamaica Spain Suriname United...

  • Page 27
    .... The named company or an affiliate holds this interest. Clarendon Alumina Production Ltd. is wholly-owned by the Government of Jamaica. AWA LLC owns 100% of N.V. Alcoa Minerals of Suriname (AMS). AWA LLC is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina Limited. In...

  • Page 28
    ... the minority interest of Alumina Limited in facilities owned by AofA. From these facilities, Alcoa takes 100% of the production allocated to AofA. The named company or an affiliate holds this interest. In December 2008, approximately 15,000 mtpy annualized production was idled at the Portland...

  • Page 29
    ...plan schedule for the Baie-Comeau smelter, Alcoa stated that it would permanently close the plant's two Soderberg potlines. The closure, which was completed in August, involved 105,000 mtpy of capacity and was part of the 460,000 mtpy of smelting capacity Alcoa announced was under review in May 2013...

  • Page 30
    ... sheet facility located in Qinhuangdao, China. The third business is discussed below, under the Engineered Products and Solutions segment. In order to meet rising demand for aluminum auto sheet from the automotive market, the Company invested in a $300 million expansion of its Davenport Works plant...

  • Page 31
    ... aluminum lithium production at its Technical Center in Alcoa Center, PA in the third quarter of 2012. In June of 2013, Alcoa also completed its expansion at its Kitts Green plant in the United Kingdom, creating additional aluminum lithium casting capacity. Alcoa and VSMPO-AVISMA Corporation signed...

  • Page 32
    ...be integrated into this company in 2014, during the next phase of the joint venture. One of these businesses will be an aerospace and industrial fastener facility located in Suzhou, China. The other two businesses are discussed above, under the Global Rolled Products segment. Engineered Products and...

  • Page 33
    ... (100%) Alcoa (100%) United States Products Extrusions and Forgings Extrusions and Forgings Extrusions Architectural Products Aerospace and Industrial Gas Turbine Castings and Alloy Fasteners Fasteners Architectural Products Fasteners Architectural Products Extrusions Fasteners Fasteners Fasteners...

  • Page 34
    ...2013 for each of the Company's reportable segments are listed below. Alumina Bauxite Caustic soda Electricity Fuel oil Lime (CaO) Natural gas Primary Metals Alloying materials Alumina Aluminum fluoride Calcined petroleum coke Cathode blocks Electricity Liquid pitch Natural gas Global Rolled Products...

  • Page 35
    ...of the Company's total alumina refining production costs. Electric power accounts for approximately 26% of the Company's primary aluminum production costs. Alcoa generates approximately 20% of the power used at its smelters worldwide and generally purchases the remainder under long-term arrangements...

  • Page 36
    ... U.S. The Company generally purchases power under longterm contracts. APGI owns and operates the Yadkin hydroelectric project, consisting of four dams in North Carolina, and the Warrick coal-fired power plant located in Indiana. For several years, APGI has been pursuing a new long-term license for...

  • Page 37
    ... smelter in South Carolina purchases electricity from Santee Cooper under a contract that was amended and restated in 2012, and expires December 31, 2015. The contract includes a provision for follow-on service at the then current rate schedule for industrial customers. Australia - Electricity Power...

  • Page 38
    ... Brazil (Alumínio's share is 35%). Development of this concession has not yet begun. Europe - Electricity Alcoa's smelters at San Ciprián, La Coruña and Avilés, Spain purchase electricity under bilateral power contracts. The contracts that commenced in May 2009 expired on December 31, 2012...

  • Page 39
    ... gas, in October 2013, Alumina Española SA (AE) and Gas Natural Transporte SDG SL (GN) signed a take or pay gas pipeline utilization agreement. Pursuant to that agreement, the ultimate shareholders of AE, Alcoa Inc. and Alumina Limited, have agreed to guarantee the payment of AE's contracted gas...

  • Page 40
    ... Board (TMRB) or Center of Excellence (CoE) consisting of members from various worldwide locations. Each TMRB or CoE is responsible for formulating and communicating a technology strategy for the corresponding process area, developing and managing the technology portfolio and ensuring the global...

  • Page 41
    ... in 2014 a commercial truck wheel using the MagnaForceâ„¢ alloy. A number of products were commercialized in 2013 including new fasteners, aluminum lithium (Al-Li) and more traditional 7xxx series alloys for various aerospace applications, numerous innovations in the building and construction market...

  • Page 42
    ... key corporate positions in financial analysis and planning and as director of investor relations. He also has held key positions in the Global Primary Products business, including as controller, operational excellence director, chief financial officer and chief operating officer. As chief operating...

  • Page 43
    ... Primary Products and as Vice-President, Energy Development for Global Primary Products. Since joining Alcoa in July 1999, he has also worked in line positions as the Works Manager at Wenatchee Works in Washington, and as Carbon Plant Manager at Tennessee Operations. The Company's executive officers...

  • Page 44
    ... energy contracts upon expiration or to negotiate new arrangements on cost-effective terms or due to the unavailability of energy at competitive rates; or curtailment of one or more smelters due to a regulatory authority's determination that power supply interruptibility rights granted to Alcoa...

  • Page 45
    ... the revenues of the Engineered Products and Solutions segment, while improving margins that exceed historical levels, by $1.2 billion, with 75% expected to be generated from innovation and share gains. • For more information regarding Alcoa's targets, see "Management Review of 2013 and...

  • Page 46
    ... Mining Company, to develop a fully integrated aluminum complex (including a bauxite mine, alumina refinery, aluminum smelter and rolling mill) in the Kingdom of Saudi Arabia. In November 2012, Alcoa and China Power Investment Corporation (CPI) established a joint venture company to produce high-end...

  • Page 47
    ...will exceed capital spending continues to be an Alcoa target. Insufficient cash generation may negatively impact Alcoa's ability to fund as planned its sustaining and growth capital projects. Over the long term, Alcoa's ability to take advantage of improved aluminum or other market conditions may be...

  • Page 48
    ... things, potential claims relating to product liability, health and safety, environmental matters, intellectual property rights, government contracts, taxes, and compliance with U.S. and foreign export laws, anti-bribery laws, competition laws and sales and trading practices. Alcoa could be subject...

  • Page 49
    ... in which Alcoa operates. The Company may realize increased capital expenditures resulting from required compliance with revised or new legislation or regulations, costs to purchase or profits from sales of, allowances or credits under a "cap and trade" system, increased insurance premiums and...

  • Page 50
    ...in the discount rate or lower-than-expected investment returns on plan assets could have a material negative effect on our cash flows. Adverse capital market conditions could result in reductions in the fair value of plan assets and increase the Company's liabilities related to such plans, adversely...

  • Page 51
    .... Alcoa is working on new developments for a number of strategic projects in all business segments, including advanced smelting process technologies such as inert anode and carbothermic technology, alloy development, engineered finishes and product design and manufacturing. For more information on...

  • Page 52
    ... office is located at 390 Park Avenue, New York, New York 10022-4608. Alcoa's corporate center is located at 201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858. The Alcoa Technical Center for research and development is located at 100 Technical Drive, Alcoa Center, Pennsylvania 15069. Alcoa...

  • Page 53
    ... quarters of 2015-2018. The DOJ is bringing no case against Alcoa Inc. Effective January 9, 2014, the Company also settled civil charges filed by the SEC in an administrative proceeding relating to the anti-bribery, internal controls, and books and records provisions of the FCPA. Under the terms...

  • Page 54
    ...As previously reported, on March 6, 2009, the Philadelphia Gas Works Retirement Fund filed a shareholder derivative suit in the civil division of the Court of Common Pleas of Philadelphia County, Pennsylvania. This action was brought against certain officers and directors of Alcoa claiming breach of...

  • Page 55
    ... November 19, 2009 (Alcoa had been incurring higher power costs at its smelters in Italy subsequent to the tariff end date through the end of 2012). The extension was originally through 2010, but the date was changed by legislation adopted by the Italian Parliament effective on August 15, 2009...

  • Page 56
    ...and on October 17, 2013, the ECJ ordered Italy to so collect. On September 27, 2012, Alcoa received a request for payment in full of the $310 million (â,¬250 million) by October 31, 2012. Following discussions with the Italian Government regarding the timing of such payment, Alcoa paid the requested...

  • Page 57
    ... the jury verdict in favor of Alcoa. The Court of Appeals also affirmed the trial court's pre-trial ruling dismissing Mr. Musgrave's work-related exposure claims as barred by Indiana's Workers' Compensation Act. The Musgraves' petition for rehearing filed on September 5, 2013 was denied by the Court...

  • Page 58
    ... extrusion plants located in Feltre and Bolzano, Italy. At the time of the acquisition, Alumix indemnified Alcoa for pre-existing environmental contamination at the sites. In 2004, the Italian Ministry of Environment (MOE) issued orders to Alcoa Trasformazioni S.r.l. and Alumix for the development...

  • Page 59
    ... Alcoa Global Fasteners, Inc. also filed a separate brief on two of the questions arguing that the court should determine that it is neither a cause of ground water contamination nor a cause of plaintiffs' incurred costs. Remaining in the case at this time are common law trespass and nuisance claims...

  • Page 60
    ... claims in the case which would resolve the personal property damage claims of the 12 remaining individual plaintiffs. On March 12, 2012, final judgment was entered in the District Court for the District of the Virgin Islands. Alcoa's share of the settlement is fully insured. On March 23, 2012...

  • Page 61
    ...Alcoa or Reynolds Metals Company and spouses and dependents of such retirees alleging violation of the Employee Retirement Income Security Act (ERISA) and the Labor-Management Relations Act by requiring plaintiffs, beginning January 1, 2007, to pay health insurance premiums and increased co-payments...

  • Page 62
    ... filed a Joint Rule 26(f) Report and Discovery Plan which was modified by the Court on January 8, 2014. The order provides that the case will be ready for trial on October 31, 2014 and provides a schedule for discovery and other pretrial activity. At this time, the Company is unable to reasonably...

  • Page 63
    ... available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company. Item 4. Mine Safety Disclosures. The information concerning mine safety...

  • Page 64
    ... Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company's common stock is listed on the New York Stock Exchange where it trades under the symbol AA. The Company's quarterly high and low trading stock prices and dividends per common share for 2013 and 2012 are...

  • Page 65
    ... 2009 2010 2011 2012 Alcoa Inc. $100 $147 $142 $ 81 $ 82 ® S&P 500 Index 100 126 146 149 172 ® S&P 500 Materials Index 100 149 182 164 188 © Copyright 2014 Standard & Poor's, a division of The McGraw-Hill Companies Inc. All rights reserved. Source: Research Data Group, Inc. (www.researchdatagroup...

  • Page 66
    ... Business Alcoa is a global leader in lightweight metals engineering and manufacturing. Alcoa's innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas...

  • Page 67
    ...increases in aluminum demand over 2013 with China (10%) expected to have the highest growth rate in 2014. After considering forecasted added production, along with few industry-wide capacity curtailments, management anticipates a balanced aluminum market. For alumina, growth in global consumption is...

  • Page 68
    ... 2015) to meet rising U.S. automotive demand due to changing emission regulations and the construction of the rolling mill as part of a joint venture in Saudi Arabia (began in December 2013, additional automotive capacity by the end of 2014). For the downstream operations, the expansion of aluminum...

  • Page 69
    ... 2013 were $23,032 compared with sales of $23,700 in 2012, a decline of $668, or 3%. The decrease was primarily due to lower primary aluminum volumes, including those related to curtailed and shutdown smelter capacity; a decline in realized prices for aluminum, driven by lower London Metal Exchange...

  • Page 70
    ... increase related to assets placed into service associated with a new hydroelectric power project in Brazil (Estreito) and higher DD&A due to the capitalization of new haul roads and the write-off of old haul roads no longer in use for mining sites in Australia. Impairment of Goodwill-In 2013, Alcoa...

  • Page 71
    ... viable, long-term power solution (Italy); changed market fundamentals; other existing idle capacity; and restart costs. The remaining 183 kmt of smelting capacity subject to this review is expected to be completed during the first half of 2014 (see Primary Metals in Segment Information below...

  • Page 72
    ... (820 in the Primary Metals segment, 470 in the Global Rolled Products segment, 160 in the Alumina segment, 20 in the Engineered Products and Solutions segment, and 130 in Corporate), including the effects of planned smelter curtailments (see below); $23 ($12 after-tax and noncontrolling interests...

  • Page 73
    ... economically viable, long-term power solution; changed market fundamentals; cost competitiveness; required future capital investment; and restart costs. The asset impairments of $127 represent the write off of the remaining book value of properties, plants, and equipment related to these facilities...

  • Page 74
    ... benefit recognized by the consortium related to an investment in a natural gas pipeline in Australia (Alcoa World Alumina and Chemicals' share of the benefit was $24); the absence of a gain on the sale of land in Australia ($43); and a net unfavorable change in mark-to-market derivative contracts...

  • Page 75
    ... 2006 related to the sale of the home exteriors business for an adjustment to an outstanding obligation, which was part of the terms of sale. Segment Information Alcoa's operations consist of four worldwide reportable segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products...

  • Page 76
    ... consists of the Company's worldwide refinery system, including the mining of bauxite, which is then refined into alumina. Alumina is mainly sold directly to internal and external smelter customers worldwide or is sold to customers who process it into industrial chemical products. A portion of this...

  • Page 77
    ... of Alcoa's upstream operations and consists of the Company's worldwide smelter system. Primary Metals receives alumina, mostly from the Alumina segment, and produces primary aluminum used by Alcoa's fabricating businesses, as well as sold to external customers and traders. Results from the sale of...

  • Page 78
    ... review is aimed at maintaining Alcoa's competitiveness despite falling aluminum prices and will focus on the highest-cost smelting capacity and those plants that have long-term risk due to factors such as energy costs or regulatory uncertainty. As part of this review, also in May 2013, management...

  • Page 79
    ... smelters in Italy, Spain, and Brazil and the permanent shutdown of certain capacity in Canada and the U.S. Also contributing to the decrease was a 4% decline in average realized prices, somewhat offset by higher energy sales related to excess power, mostly in Brazil, and favorable product mix...

  • Page 80
    ... 183 kmt of smelting capacity subject to the management review initiated in May 2013 will be completed (in January 2014 management decided to permanently shut down the remaining 84 kmt at the Massena East smelter). Global Rolled Products Third-party aluminum shipments (kmt) Alcoa's average realized...

  • Page 81
    ... Alcoa's downstream operations and includes titanium, aluminum, and super alloy investment castings; fasteners; aluminum wheels; integrated aluminum structural systems; architectural extrusions; and forgings and hard alloy extrusions. These products, which are used in the aerospace, automotive...

  • Page 82
    ...input costs, and a favorable change in charges allocated to Noncontrolling interest related to a legal matter (see Noncontrolling Interests in Earnings Summary above); an Impairment of goodwill related to the annual impairment review of the Primary Metals segment (see Goodwill in Critical Accounting...

  • Page 83
    ... of long-term liquidity, see Contractual Obligations and Off-Balance Sheet Arrangements below. At December 31, 2013, cash and cash equivalents of Alcoa were $1,437, of which $544 was held outside the U.S. Alcoa has a number of commitments and obligations related to the Company's growth strategy in...

  • Page 84
    ..., 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 (â,¬250) related to a November 2009...

  • Page 85
    ... relates to Alumina Limited's share of AWAC; and $131 in dividends paid to shareholders. As a result of an agreement between Alcoa and Alumina Limited in September 2012, Alcoa of Australia (part of the AWAC group of companies) made minimum dividend payments to Alumina Limited of $100 in 2013. Alcoa...

  • Page 86
    ... February 2014 and December 2014 (two of these agreements were originally due to expire in 2013). The purpose of any borrowings under all arrangements in both 2013 and 2012 was to provide working capital and for other general corporate purposes, including contributions to Alcoa's pension plans. The...

  • Page 87
    ...cash in 2013 was primarily due to $1,193 in capital expenditures (includes costs related to environmental control in new and expanded facilities of $143), 34% of which related to growth projects, including the automotive expansion at the Davenport, IA fabrication plant, the aluminum-lithium capacity...

  • Page 88
    ...investments, mostly for the equity contributions of $249 related to the aluminum complex joint venture in Saudi Arabia and purchase of $41 in available-for-sale securities held by Alcoa's captive insurance company; and $239 (net of cash acquired) for the acquisition of an aerospace fastener business...

  • Page 89
    ... benefit payments are based on actuarial estimates using current assumptions for discount rates, long-term rate of return on plan assets, rate of compensation increases, and health care cost trend rates, among others. The minimum required contributions for pension funding are estimated 2014 2015...

  • Page 90
    ... to be paid beyond one year are related to lease termination costs, ongoing site remediation work, and special termination benefit payments. Deferred revenue arrangements require Alcoa to deliver alumina and sheet and plate to certain customers over the specified contract period (through 2027 for an...

  • Page 91
    ... in receivables line item on the Statement of Consolidated Cash Flows. This activity is reflected as an operating cash flow because the related customer receivables are the result of an operating activity with an insignificant, short-term interest rate risk. In 2013 and 2012, the gross cash outflows...

  • Page 92
    ..., equity investments, and properties, plants, and equipment for impairment; estimating fair value of businesses to be divested; pension plans and other postretirement benefits obligations; stock-based compensation; and income taxes. Management uses historical experience and all available information...

  • Page 93
    ... in the Engineered Products and Solutions segment. The remaining four reporting units are the Alumina segment, the Primary Metals segment, the Global Rolled Products segment, and the soft alloy extrusions business in Brazil, which is included in Corporate. More than 80% of Alcoa's total goodwill is...

  • Page 94
    ... of operations and shareholders' equity. During the 2013 annual review of goodwill, management proceeded directly to the two-step quantitative impairment test for seven reporting units as follows: the Primary Metals segment, the Alumina segment, the soft alloy extrusions business in Brazil, and...

  • Page 95
    ... increases in discount rates, continue to place significant downward pressure on metal prices and operating margins, and the resulting estimated fair value, of the Primary Metals business. As a result, management decreased the near-term and long-term estimates of the operating results and cash flows...

  • Page 96
    ... long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality). The interest rate used to discount future estimated liabilities is determined using a Company-specific yield curve...

  • Page 97
    ..., annual forfeiture rate, and exercise behavior. These assumptions may differ significantly between grant dates because of changes in the actual results of these inputs that occur over time. Equity grants are issued in January each year. As part of Alcoa's stock-based compensation plan design...

  • Page 98
    ... as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized. Related Party Transactions Alcoa buys products from and sells products to...

  • Page 99
    ... their integrity and objectivity. The statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on management's best judgments and estimates. The other financial information included in the annual report is...

  • Page 100
    ... Registered Public Accounting Firm To the Shareholders and Board of Directors of Alcoa Inc. In our opinion, the accompanying consolidated balance sheet and the related statements of consolidated operations, consolidated comprehensive loss, changes in consolidated equity, and consolidated cash flows...

  • Page 101
    ... and subsidiaries Statement of Consolidated Operations (in millions, except per-share amounts) For the year ended December 31, Sales (Q) Cost of goods sold (exclusive of expenses below) Selling, general administrative, and other expenses Research and development expenses Provision for depreciation...

  • Page 102
    ... Statement of Consolidated Comprehensive Loss (in millions) Noncontrolling Interests 2013 2012 2011 $ 41 $ (29) $ 194 For the year ended December 31, Net (loss) income Other comprehensive loss, net of tax (B): Change in unrecognized net actuarial loss and prior service cost/benefit related...

  • Page 103
    ..., plants, and equipment, net (H) Goodwill (A & E) Investments (I) Deferred income taxes (T) Other noncurrent assets (J) Total Assets Liabilities Current liabilities: Short-term borrowings (K & X) Accounts payable, trade Accrued compensation and retirement costs Taxes, including income taxes Other...

  • Page 104
    ... Deferred income taxes (T) Equity income, net of dividends Impairment of goodwill (A & E) Restructuring and other charges (D) Net gain from investing activities-asset sales (O) Loss from discontinued operations Stock-based compensation (R) Excess tax benefits from stock-based payment arrangements...

  • Page 105
    ... at December 31, 2012 Net (loss) income Other comprehensive loss Cash dividends declared: Preferred @ $3.75 per share Common @ $0.12 per share Stock-based compensation (R) Common stock issued: compensation plans (R) Distributions Contributions (M) Other Balance at December 31, 2013 $55 55 55 $55...

  • Page 106
    ... details the weighted-average useful lives of structures and machinery and equipment by reporting segment (numbers in years): Segment Alumina: Alumina refining Bauxite mining Primary Metals: Aluminum smelting Power generation Global Rolled Products Engineered Products and Solutions Structures 30 31...

  • Page 107
    ... in the Engineered Products and Solutions segment. The remaining four reporting units are the Alumina segment, the Primary Metals segment, the Global Rolled Products segment, and the soft alloy extrusions business in Brazil, which is included in Corporate. More than 80% of Alcoa's total goodwill is...

  • Page 108
    ... of operations and shareholders' equity. During the 2013 annual review of goodwill, management proceeded directly to the two-step quantitative impairment test for seven reporting units as follows: the Primary Metals segment, the Alumina segment, the soft alloy extrusions business in Brazil, and...

  • Page 109
    ... by reporting segment (numbers in years): Segment Alumina Primary Metals Global Rolled Products Engineered Products and Solutions Software 10 8 9 11 Other intangible assets 34 39 17 19 Equity Investments. Alcoa invests in a number of privately-held companies, primarily through joint ventures and...

  • Page 110
    ... terms. The shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation (truck, train, or vessel). Alcoa periodically enters into long-term supply contracts with alumina and aluminum customers and receives advance payments for product...

  • Page 111
    ...part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized. Stock-Based Compensation. Alcoa recognizes compensation expense for employee equity...

  • Page 112
    ... or expense. Alcoa accounts for interest rate swaps related to its existing long-term debt and hedges of firm customer commitments for aluminum as fair value hedges. As a result, the fair values of the derivatives and changes in the fair values of the underlying hedged items are reported in other...

  • Page 113
    ... and presentation of earnings per share. Management elected to present the two-statement option. Other than the change in presentation, the adoption of these changes had no impact on the Consolidated Financial Statements. Goodwill and Other Intangible Assets-On January 1, 2013, Alcoa adopted changes...

  • Page 114
    ... to become effective for Alcoa for any goodwill impairment test performed on January 1, 2012 or later; however, early adoption is permitted. Alcoa elected to early adopt these changes in conjunction with management's annual review of goodwill in the fourth quarter of 2011 (see Goodwill and Other...

  • Page 115
    ... is not an indication of a condition that is other than market, performance, or service if an employee share-based payment award's exercise price is denominated in the currency of a market in which a substantial portion of the entity's equity securities trade and differs from the functional currency...

  • Page 116
    ... financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. Previously, there was diversity in practice as no explicit guidance existed. These changes become effective for Alcoa on January 1, 2014. Management...

  • Page 117
    ...reclassified to earnings: Aluminum contracts(5) Energy contracts(6) Foreign exchange contracts(5) Interest rate contracts(7) Sub-total Tax (expense) benefit(2) Total amount reclassified from Accumulated other comprehensive loss, net of tax(8) Total Other comprehensive income (loss) Balance at end of...

  • Page 118
    ... 1 through 7. C. Asset Retirement Obligations Alcoa has recorded AROs related to legal obligations associated with the normal operations of bauxite mining, alumina refining, and aluminum smelting facilities. These AROs consist primarily of costs associated with spent pot lining disposal, closure of...

  • Page 119
    ...for layoff costs, including the separation of approximately 1,110 employees (340 in the Primary Metals segment, 260 in the Engineered Products and Solutions segment, 250 in the Global Rolled Products segment, 85 in the Alumina segment, and 175 in Corporate), of which 590 relates to a global overhead...

  • Page 120
    ... (820 in the Primary Metals segment, 470 in the Global Rolled Products segment, 160 in the Alumina segment, 20 in the Engineered Products and Solutions segment, and 130 in Corporate), including the effects of planned smelter curtailments (see below); $23 ($12 after-tax and noncontrolling interests...

  • Page 121
    ... economically viable, long-term power solution; changed market fundamentals; cost competitiveness; required future capital investment; and restart costs. The asset impairments of $127 represent the write off of the remaining book value of properties, plants, and equipment related to these facilities...

  • Page 122
    ..., respectively. The remaining reserves are expected to be paid in cash during 2014, with the exception of approximately $30 to $35, which is expected to be paid over the next several years for lease termination costs, ongoing site remediation work, and special separation benefit payments. 106

  • Page 123
    ... 31, 2013, $493 of the amount reflected in Corporate is allocated to three of Alcoa's four reportable segments ($158 to Alumina, $61 to Global Rolled Products, and $274 to Engineered Products and Solutions) included in the table above for purposes of impairment testing (see Note A). This goodwill is...

  • Page 124
    ... properties, plants, and equipment and intangible assets, along with an allocation of goodwill ($94) from the Primary Metals reporting unit, were classified as held for sale. 2011 Acquisitions. On March 9, 2011, Alcoa completed an acquisition of the aerospace fastener business of TransDigm Group Inc...

  • Page 125
    ...-tax) in 2012, and $2 ($1 after-tax) in 2011. H. Properties, Plants, and Equipment, Net December 31, Land and land rights, including mines Structures: Alumina: Alumina refining Bauxite mining Primary Metals: Aluminum smelting Power generation Global Rolled Products Engineered Products and Solutions...

  • Page 126
    ... by wholly-owned subsidiaries of Alcoa World Alumina and Chemicals (AWAC), which is owned 60% by Alcoa and 40% by Alumina Limited. In 2013, 2012, and 2011, Alcoa received $89, $101, and $100, respectively, in dividends from its equity investments. Alcoa and Saudi Arabian Mining Company (known as "Ma...

  • Page 127
    ... as part of the construction of the fully-integrated aluminum complex. At December 31, 2013 and 2012, Alcoa had an outstanding receivable of $31 and $28, respectively, from the smelting, rolling mill, and refining and mining companies for labor and other employee-related expenses. Capital investment...

  • Page 128
    ... 31, Cash surrender value of life insurance Intangibles, net (E) Value-added tax receivable Prepaid gas transmission contract (N) Fair value of derivative contracts (X) Deferred mining costs, net Advance related to European Commission Matter in Italy (N) Prepaid pension benefit (W) Unamortized...

  • Page 129
    ...long-term debt related to interest swap contracts accounted for as fair value hedges (see Derivatives in Note X). The principal amount of long-term debt maturing in each of the next five years is $658 in 2014, $30 in 2015, $30 in 2016, $778 in 2017, and $1,046 in 2018. Public Debt-In May 2013, Alcoa...

  • Page 130
    ... advanced the cash necessary to the consortium to pay for the expenditures supported by this loan. Interest on the loan is a Brazil real rate of interest equal to BNDES' long-term interest rate plus a margin of 1.55%. Principal and interest are payable monthly, which began in January 2013 and end in...

  • Page 131
    ... discount, before the scheduled payment date and Alcoa makes payment to the third-party intermediary on the date stipulated in accordance with the commercial terms negotiated with its vendors. Alcoa records imputed interest related to these arrangements as interest expense in the Statement...

  • Page 132
    ... Fair value of derivative contracts (X) Income taxes (T) Accrued compensation and retirement costs Liability related to the resolution of a legal matter (N) Deferred credit related to derivative contract (X) Deferred alumina sales revenue Other 2013 $ 544 461 420 403 342 296 157 101 247 $2,971 2012...

  • Page 133
    ... quarters of 2015-2018. The DOJ is bringing no case against Alcoa Inc. Effective January 9, 2014, the Company also settled civil charges filed by the SEC in an administrative proceeding relating to the anti-bribery, internal controls, and books and records provisions of the FCPA. Under the terms...

  • Page 134
    ... activity related to the Alba matter: 2013 2012 Alumina Alumina Alcoa Limited Total Alcoa Limited Total Government investigations(1) $326 $ 58 $384 $ $ $ Civil suit(1) 51 34 85 Reallocation of civil suit 21 (21) Reallocation of legal costs 20 (20) Loss before income taxes 367 17 384 51 34 85 Benefit...

  • Page 135
    ... St. Croix Alumina L.L.C. and Alcoa World Alumina, LLC (collectively referred to as "Alcoa") in the Territorial Court of the Virgin Islands, Division of St. Croix for claims related to the sale of Alcoa's former St. Croix alumina refinery to Plaintiffs. Alcoa thereafter removed the case to federal...

  • Page 136
    ... November 19, 2009 (Alcoa had been incurring higher power costs at its smelters in Italy subsequent to the tariff end date through the end of 2012). The extension was originally through 2010, but the date was changed by legislation adopted by the Italian Parliament effective on August 15, 2009...

  • Page 137
    ... to uneconomical power costs. In February 2010, management agreed to continue to operate its smelters in Italy for up to six months while a long-term solution to address increased power costs could be negotiated. Over a portion of this time, a long-term solution was not able to be reached related to...

  • Page 138
    ... except for the aforementioned $12 in 2013, were recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. Payments related to remediation expenses applied against the reserve were $40 and $22 in 2013 and 2012, respectively. These amounts include expenditures currently...

  • Page 139
    ... to new information related to the amount of storage capacity in the waste disposal areas and revised assumptions regarding Alcoa's share of the obligation based on the operating plan provided by Sherwin. As such, Alcoa reduced the reserve associated with Sherwin by $30 in 2012. At December 31, 2013...

  • Page 140
    ... 2013, Alcoa's subsidiary, Alcoa World Alumina Brasil (AWAB), was notified by the Brazilian Federal Revenue Office (RFB) that approximately $110 (R$220) of value added tax credits previously claimed are being disallowed and a penalty of 50% assessed. Of this amount, AWAB received $41 (R$82) in cash...

  • Page 141
    ...per month from its Poços de Caldas facility, located in the State of Minas Gerais (the "State"), to Alfio, a customer also located in the State. Sales in the State were exempted from value-added tax (VAT) requirements. Alfio subsequently sold metal to customers outside of the State, but did not pay...

  • Page 142
    ...-owned subsidiary of Alcoa, is a participant in four consortia that each owns a hydroelectric power project in Brazil. The purpose of Alumínio's participation is to increase its energy self-sufficiency and provide a long-term, low-cost source of power for its two smelters and one refinery. These...

  • Page 143
    ... purchase commitments for energy, raw materials, and other goods and services, which total $3,319 in 2014, $1,802 in 2015, $1,628 in 2016, $1,552 in 2017, $1,838 in 2018, and $9,856 thereafter. Operating Leases. Certain land and buildings, alumina refinery process control technology, plant equipment...

  • Page 144
    ... tax benefit by the consortium (Alcoa World Alumina and Chemicals' share of the benefit was $24). Also in 2011, Net gain from asset sales included a $43 gain related to the sale of land in Australia. P. Cash Flow Information Cash paid for interest and income taxes was as follows: 2013 $433 200 2012...

  • Page 145
    ... of aluminum products. Aluminum and alumina represent more than 80% of Alcoa's revenues. Nonaluminum products include precision castings and aerospace and industrial fasteners. Alcoa's products are used worldwide in transportation (including aerospace, automotive, truck, trailer, rail, and shipping...

  • Page 146
    ... small number of customers. Engineered Products and Solutions. This segment represents Alcoa's downstream operations and includes titanium, aluminum, and super alloy investment castings; fasteners; aluminum wheels; integrated aluminum structural systems; architectural extrusions; and forgings...

  • Page 147
    ... and assets of Alcoa's reportable segments were as follows: Global Rolled Products Engineered Products and Solutions Alumina 2013 Sales: Third-party sales Intersegment sales Total sales Profit and loss: Equity loss Depreciation, depletion, and amortization Income taxes ATOI 2012 Sales: Third-party...

  • Page 148
    ... by major product grouping were as follows: 2013 Sales: Alumina Primary aluminum Flat-rolled aluminum Investment castings Fastening systems Architectural aluminum systems Aluminum wheels Other extruded aluminum and forged products Other $ 3,151 6,194 7,106 1,807 1,505 977 702 1,015 575 $23,032 2012...

  • Page 149
    ..., Sales that occurred in the Netherlands include aluminum from Alcoa's smelter in Iceland. Geographic information for long-lived assets was as follows (based upon the physical location of the assets): December 31, Long-lived assets: U.S. Brazil Australia Iceland Canada Norway Russia Spain Jamaica...

  • Page 150
    ...statement dated February 18, 2011) for resale by the master trust, as selling stockholder. As of December 31, 2013, 110 million and 119 million shares of common stock were reserved for issuance upon conversion of convertible notes and under Alcoa's stock-based compensation plans, respectively. Alcoa...

  • Page 151
    ...eligible employees. Of the total compensation expense before income taxes included in the table above, $14, $13, and $18 in 2013, 2012, and 2011, respectively, pertains to the acceleration of expense related to retirement-eligible employees. The fair value of new options was estimated on the date of...

  • Page 152
    ...- $34.84 Total Intrinsic Value $38 1 $39 In addition to stock option awards, the Company grants stock awards and performance share awards, both of which vest three years from the date of grant. Performance share awards are issued at target and the final award amount is determined at the end of the...

  • Page 153
    ... periods: Stock-based compensation expense (pretax) $36 18 1 $55 2014 2015 2016 Totals S. Earnings Per Share Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared and dividends and undistributed earnings allocated to...

  • Page 154
    ... the effect of potential shares of common stock was anti-dilutive since Alcoa generated a loss from continuing operations. As a result, 89 million share equivalents related to convertible notes, 16 million stock awards, and 12 million stock options were not included in the computation of diluted EPS...

  • Page 155
    ... stock sales/reorganizations Change in legal structure of investments Interest income related to income tax positions Company-owned life insurance/split-dollar net premiums Other Effective tax rate The components of net deferred tax assets and liabilities were as follows: 2013 2012 December...

  • Page 156
    ... difference. A substantial amount of Other relates to employee benefits that will become deductible for tax purposes over an extended period of time as contributions are made to employee benefit plans and payments are made to retirees. The total deferred tax asset (net of valuation allowance) is...

  • Page 157
    ... net earnings for which no deferred taxes have been provided was approximately $5,200 at December 31, 2013. Alcoa has a number of commitments and obligations related to the Company's growth strategy in foreign jurisdictions. As such, management has no plans to distribute such earnings in...

  • Page 158
    ... in receivables line item on the accompanying Statement of Consolidated Cash Flows. This activity is reflected as an operating cash flow because the related customer receivables are the result of an operating activity with an insignificant, short-term interest rate risk. In 2013 and 2012, the gross...

  • Page 159
    ...-offs Other Balance at end of year V. Interest Cost Components Amount charged to expense Amount capitalized 2013 $453 99 $552 2012 $490 93 $583 2011 $524 101 $625 W. Pension and Other Postretirement Benefits Alcoa maintains pension plans covering most U.S. employees and certain employees in...

  • Page 160
    ... of year Service cost Interest cost Amendments Actuarial (gains) losses Settlements Benefits paid, net of participants' contributions Medicare Part D subsidy receipts Foreign currency translation impact Benefit obligation at end of year* Change in plan assets Fair value of plan assets at beginning...

  • Page 161
    ... benefit cost for U.S pension plans was $391, $288, and $190, respectively. In 2013, 2012, and 2011, net periodic benefit cost for other postretirement benefits reflects a reduction of $55, $64, and $43, respectively, related to the recognition of the federal subsidy awarded under Medicare Part...

  • Page 162
    ... discount rates presented. The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets (a four-year average or the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop...

  • Page 163
    ...gross eligible charges covered by Alcoa's other postretirement benefit plans. For 2014, a 5.5% trend rate will be used, reflecting management's best estimate of the change in future health care costs covered by the plans. The plans' actual annual health care cost trend experience over the past three...

  • Page 164
    ...active market, otherwise these investments are included in Level 2); and (iii) direct investments in long/short equity hedge funds and private equity (limited partnerships and venture capital partnerships) and are valued by investment managers based on the most recent financial information available...

  • Page 165
    ... the fair value of pension plan assets classified under the appropriate level of the fair value hierarchy: December 31, 2013 Equities: Equity securities Long/short equity hedge funds Private equity Fixed income: Intermediate and long duration government/credit Other Other investments: Real estate...

  • Page 166
    ...and Australia. Expenses related to these plans were $149 in 2013, $146 in 2012, and $139 in 2011. In the U.S., employees may contribute a portion of their compensation to the plans, and Alcoa matches, mostly in company stock, a portion of these contributions. Effective January 1, 2014, Alcoa's match...

  • Page 167
    ... the chief executive officer selects. The SRMC meets on a periodic basis to review derivative positions and strategy and reports to Alcoa's Board of Directors on the scope of its activities. The aluminum, energy, interest rate, and foreign exchange contracts are held for purposes other than trading...

  • Page 168
    ... and its overall risk management strategies. **All margin posted is in the form of cash and is valued under a Level 1 technique. The levels that correspond to the margin posted in the table above reference the level of the corresponding liability for which it is posted. Alcoa elected to net the...

  • Page 169
    ...Aluminum contracts Embedded credit derivative Energy contracts Foreign exchange contracts Interest rate contracts Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date...

  • Page 170
    ... models are reviewed and tested at least on an annual basis. Derivative contracts are valued using quoted market prices and significant other observable and unobservable inputs. Such financial instruments consist of aluminum, energy, interest rate, and foreign exchange contracts. The fair values for...

  • Page 171
    ... of financial instruments into or out of Level 3. Assets Liabilities Embedded Aluminum credit contracts derivative $602 $28 Aluminum Energy 2012 contracts contracts Opening balance-January 1, 2012 $ 10 $2 Total gains or losses (realized and unrealized) included in: Sales (8) (33) Cost of goods sold...

  • Page 172
    ... hedge the anticipated power requirements at Alcoa's Portland smelter in Australia once the existing contract expires in 2016. This derivative hedges forecasted power purchases through December 2036. Beyond the term where market information is available, management has developed a forward curve, for...

  • Page 173
    ...a power contract that indexes the difference between the long-term debt ratings of Alcoa and the counterparty from any of the three major credit rating agencies is included in Level 3. Management uses market prices, historical relationships, and forecast services to determine fair value. Significant...

  • Page 174
    ... 2014 to 2017. Interest Rates. Alcoa uses interest rate swaps to help maintain a strategic balance between fixed- and floating-rate debt and to manage overall financing costs. As of December 31, 2013, the Company had pay floating, receive fixed interest rate swaps that were designated as fair value...

  • Page 175
    ... from Accumulated OCI into Earnings (Effective Portion)* 2013 2012 2011 Aluminum contracts Energy contracts Foreign exchange contracts Interest rate contracts Interest rate contracts Total $158 1 3 $162 $(10) $72 Sales (3) Cost of goods sold 1 Sales (2) Interest expense (2) (5) Other income...

  • Page 176
    ... in Other income, net) entered into to minimize Alcoa's price risk related to other customer sales and certain pricing arrangements. The embedded credit derivative relates to a power contract that indexes the difference between the long-term debt ratings of Alcoa and the counterparty from any of the...

  • Page 177
    ... The carrying values and fair values of Alcoa's other financial instruments were as follows: 2013 December 31, Cash and cash equivalents Restricted cash Noncurrent receivables Available-for-sale securities Short-term borrowings Commercial paper Long-term debt due within one year Long-term debt, less...

  • Page 178
    ... Financial Information (unaudited) Quarterly Data (in millions, except per-share amounts) First 2013 Sales Net income (loss) attributable to Alcoa common shareholders Earnings per share attributable to Alcoa common shareholders**: Basic Diluted 2012 Sales Net income (loss) attributable to Alcoa...

  • Page 179
    ... Management's Annual Report on Internal Control over Financial Reporting Management's Report on Internal Control over Financial Reporting is included in Part II, Item 8 of this Form 10-K beginning on page 83. (c) Attestation Report of the Registered Public Accounting Firm The effectiveness of Alcoa...

  • Page 180
    ... is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table gives information about Alcoa's common stock that could be issued under the company's equity compensation plans as of December 31, 2013. Number...

  • Page 181
    ... under the captions "Executive Compensation" (excluding the information under the caption "Compensation Committee Report"), "Corporate Governance-Director Independence and Related Person Transactions" of the Proxy Statement and is incorporated by reference. The information required by Item 407...

  • Page 182
    ... effective January 17, 2014, incorporated by reference to exhibit 3 to the Company's Current Report on Form 8-K dated January 23, 2014. Articles. See Exhibit 3(a) above. By-Laws. See Exhibit 3(b) above. Form of Indenture, dated as of September 30, 1993, between Alcoa Inc. and The Bank of New York...

  • Page 183
    ...'s Current Report on Form 8-K, dated April 21, 2011. Alcoa Retirement Savings Plan for Fastener Systems Employees, incorporated by reference to exhibit 4(e) to the Company's Form S-8 Registration Statement dated July 27, 2012. Alcoa Retirement Savings Plan for Bargaining Employees, incorporated by...

  • Page 184
    ... Alumina LLC. Offer of Settlement of Alcoa Inc. before the Securities and Exchange Commission dated December 27, 2013. Securities and Exchange Commission Order dated January 9, 2014. Employees' Excess Benefits Plan, Plan A, incorporated by reference to exhibit 10(b) to the Company's Annual Report...

  • Page 185
    ... to Employees' Excess Benefits Plan A, effective January 1, 2012, incorporated by reference to exhibit 10(l)(7) to the Company's Annual Report on Form 10-K for the year ended December 31, 2011. Alcoa Internal Revenue Code Section 162(m) Compliant Annual Cash Incentive Compensation Plan, incorporated...

  • Page 186
    ... Stock Plan for Non-Employee Directors, effective November 10, 1995, incorporated by reference to exhibit 10(h)(1) to the Company's Annual Report on Form 10-K (Commission file number 1-3610) for the year ended December 31, 1995. Description of Changes to Non-Employee Director Compensation and Stock...

  • Page 187
    ... Executive Split Dollar Life Insurance Plan, dated November 1990, incorporated by reference to exhibit 10(m) to the Company's Annual Report on Form 10-K (Commission file number 1-3610) for the year ended December 31, 1990. Amended and Restated Dividend Equivalent Compensation Plan, effective January...

  • Page 188
    ... 2009 Alcoa Stock Incentive Plan, dated February 15, 2011, incorporated by reference to exhibit 10(z)(1) to the Company's Annual Report on Form 10-K for the year ended December 31, 2010. Terms and Conditions for Special Retention Awards under the 2009 Alcoa Stock Incentive Plan, effective January...

  • Page 189
    ... file number 1-3610) for the quarter ended September 30, 2004. 2005 Deferred Fee Plan for Directors, as amended, effective January 17, 2013, incorporated by reference to exhibit 10(jj) to the Company's Annual Report on Form 10-K for the year ended December 31, 2012. Global Pension Plan, effective...

  • Page 190
    .... Amendments to the Reynolds Metals Company Benefit Restoration Plan for New Retirement Program, effective January 1, 2012, incorporated by reference to exhibit 10(xx)(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 2011. Global Expatriate Employee Policy (pre-January...

  • Page 191
    ... to the Company's Annual Report on Form 10-K for the year ended December 31, 2009. 2013 Alcoa Stock Incentive Plan, incorporated by reference to exhibit 10(a) to the Company's Current Report on Form 8-K dated May 8, 2013. Alcoa Inc. Terms and Conditions for Stock Option Awards, effective May 3, 2013...

  • Page 192
    ... * Exhibit Nos. 10(o) through 10(mmm) are management contracts or compensatory plans required to be filed as Exhibits to this Form 10...be filed as Exhibits. No other instruments defining the rights of holders of long-term debt of the registrant or its subsidiaries have been filed as Exhibits because ...

  • Page 193
    ... signing as Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date Chairman and Chief Executive...

  • Page 194
    ... of the interest factor in rents: Consolidated Proportionate share of 50 percent-owned persons Fixed charges added to earnings Interest capitalized: Consolidated Proportionate share of 50 percent-owned persons Preferred stock dividend requirements of majority-owned subsidiaries Total fixed charges...

  • Page 195
    ... Corporation Delaware Howmet Castings & Services, Inc. Delaware Alcoa International Holdings Company Delaware Alcoa Australian Holdings Pty. Ltd. Australia Alcoa of Australia Limited1 Australia Alcoa of Australia Rolled Products Pty. Ltd. Australia Alcoa (China) Investment Company Ltd. China Alcoa...

  • Page 196
    ...) of Alcoa Inc. and its subsidiaries of our report dated February 13, 2014 relating to the Alcoa Inc. consolidated financial statements and the effectiveness of internal control over financing reporting, which appears in this Form 10-K. PricewaterhouseCoopers LLP Pittsburgh, Pennsylvania February...

  • Page 197
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 13, 2014 3. 4. Name: Klaus...

  • Page 198
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 13, 2014 3. 4. Name: William...

  • Page 199
    ... Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 13, 2014 Name: Klaus Kleinfeld Title: Chairman and Chief Executive Officer Dated: February 13, 2014...

  • Page 200
    ... N to the Consolidated Financial Statements in Part II Item 8 of Alcoa's 2013 Form 10-K). (2) Reflects the cumulative effect of the accounting change for conditional asset retirement obligations in 2005 and asset retirement obligations in 2003. Primary aluminum product shipments are not synonymous...

  • Page 201
    ... of February 20, 2014 (the record date for the 2014 annual shareholders' meeting). Represents earnings per share on net (loss) income attributable to Alcoa common shareholders. Book value per share = (Total shareholders' equity minus Preferred stock) divided by Common stock outstanding, end of year.

  • Page 202
    ... impairment of goodwill ($1,719), a net insurance recovery related to the March 2012 cast house fire at the Massena, NY location ($22), a net favorable change in certain mark-to-market energy derivative contracts ($15), an unfavorable impact related to a temporary shutdown of one of the two smelter...

  • Page 203
    ... Capital = Working Capital divided by (Sales/number of days in the quarter). $1,422 285 1,707 2,893 2,816 $1,784 $5,765 28 $1,221 248 1,469 2,705 2,960 $1,214 $5,585 20 * The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial...

  • Page 204
    ...meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. * On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products and Engineered Products and Solutions...

  • Page 205
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  • Page 206
    ... President Group President, Engineered Products and Solutions John A. Kenna Vice President Tax Audrey Strauss Executive Vice President Chief Legal Officer and Secretary Jeffrey D. Heeter Assistant General Counsel Graeme W. Bottger Executive Vice President President, Global Business Services Chief...

  • Page 207
    ...is to pay common stock dividends at rates competitive with other investments of equal risk and consistent with the need to reinvest earnings for long-term growth. Cash dividend decisions are made by Alcoa's Board of Directors and are reviewed on a regular basis. Stock Listing COMMON New York Stock...

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    1888 Alcoa Corporate Center 201 Isabella Street Pittsburgh, PA 15212-5858 Tel: 1.412.553.4545 Fax: 1.412.553.4498 www.alcoa.com Alcoa Inc. is incorporated in the Commonwealth of Pennsylvania 1962 Alcoa introduces easy-open aluminum can technology 1940 Alcoa provides aluminum for defense ...