Alcoa 2013 Annual Report Download - page 62

resolution of the appeal. On December 17, 2013 the United States Supreme Court docketed the plaintiffs’ petition for
writ of certiorari to the Sixth Circuit Court of Appeals as Charles Curtis, et al., Individually and on Behalf of All
Others Similarly Situated, Petitioners v. Alcoa Inc., et al., Docket No.13-728. Alcoa’s opposition to the Petition was
filed on January 16, 2014 and Petitioners filed their reply on January 29, 2014.
As previously reported, on August 2, 2013, the State of North Carolina, by and through its agency, the North Carolina
Department of Administration, filed a lawsuit against Alcoa Power Generating, Inc. in Superior Court, Wake County,
North Carolina (Docket No. 13-CVS-10477). The lawsuit asserts ownership of certain submerged lands and
hydropower generating structures situated at Alcoa’s Yadkin Hydroelectric Project (the “Yadkin Project”), including
the submerged riverbed of the Yadkin River throughout the Yadkin Project and a portion of the hydroelectric dams that
Alcoa owns and operates pursuant to a license from the Federal Energy Regulatory Commission. The suit seeks
declaratory relief regarding North Carolina’s alleged ownership interests in the riverbed and the dams and further
declaration that Alcoa has no right, license or permission from North Carolina to operate the Yadkin Project. By notice
filed on September 3, 2013, Alcoa removed the matter to the U.S. District Court for the Eastern District of North
Carolina (Docket No. Civil Action No. 5:13-cv-633). By motion filed September 3, 2013, the Yadkin Riverkeeper
sought permission to intervene in the case. On September 25, 2013, Alcoa filed its answer in the case and also filed its
opposition to the motion to intervene by the Yadkin Riverkeeper. The Court denied the State’s Motion to Remand and
initially permitted the Riverkeeper to intervene although the Riverkeeper has now voluntarily withdrawn as an
intervening party and will participate as amicus. The parties 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 predict an outcome for this matter.
In September 2010, following a corporate income tax audit covering the 2003 through 2005 tax years, an assessment
was received as a result of Spain’s tax authorities disallowing certain interest deductions claimed by a Spanish
consolidated tax group owned by the Company. An appeal of this assessment in Spain’s Central Tax Administrative
Court by the Company was denied in October 2013. In December 2013, the Company filed an appeal of the assessment
in Spain’s National Court.
Additionally, following a corporate income tax audit of the same Spanish tax group for the 2006 through 2009 tax
years, Spain’s tax authorities issued an assessment in July 2013 similarly disallowing certain interest deductions. In
August 2013, the Company filed an appeal of this second assessment in Spain’s Central Tax Administrative Court.
The combined assessments total $334 million (€242 million). The Company believes it has meritorious arguments to
support its tax position and intends to vigorously litigate the assessments through Spain’s court system. However, in
the event the Company is unsuccessful, a portion of the assessments may be offset with existing net operating losses
available to the Spanish consolidated tax group. Additionally, it is possible that the Company may receive similar
assessments for tax years subsequent to 2009. At this time, the Company is unable to reasonably predict an outcome for
this matter.
Between 2000 and 2002, Alumínio sold approximately 2,000 metric tons of metal 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 the required VAT on those transactions. In July 2002, Alumínio received an assessment from
State auditors on the theory that Alumínio should be jointly and severally liable with Alfio for the unpaid VAT. In June
2003, the administrative tribunal found Alumínio liable, and Alumínio filed a judicial case in the State in February
2004 contesting the finding. In May 2005, the Court of First Instance found Alumínio solely liable, and a panel of a
State appeals court confirmed this finding in April 2006. Alumínio filed a special appeal to the Superior Tribunal of
Justice (STJ) in Brasilia (the federal capital of Brazil) later in 2006. In 2011, the STJ (through one of its judges)
reversed the judgment of the lower courts, finding that Alumínio should neither be solely nor jointly and severally
liable with Alfio for the VAT, which ruling was then appealed by the State. In June 2012, the STJ agreed to have the
46