Alcoa 2015 Annual Report Download - page 174

In 2015 and 2014, the gross cash outflows and inflows associated with the deferred purchase price receivable were
$6,893 and $7,001, respectively, and $7,381 and $7,272, respectively. The gross amount of receivables sold and total
cash collected under this program since its inception was $24,598 and $24,099 respectively. Alcoa services the
customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded.
Allowance for Doubtful Accounts
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, 2015 2014 2013 2015 2014 2013
Balance at beginning of year $14 $20 $ 39 $41 $47 $ 74
Provision for doubtful accounts 5 2 3 8 8 29
Write off of uncollectible accounts (4) (3) (19) (2) (4) (39)
Recoveries of prior write-offs - (2) (3) 1 (7) (10)
Other (2) (3) - 1 (3) (7)
Balance at end of year $13 $14 $ 20 $49 $41 $ 47
V. Interest Cost Components
2015 2014 2013
Amount charged to expense $498 $473 $453
Amount capitalized 57 56 99
$555 $529 $552
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
salaried and non-bargaining hourly U.S. employees hired after March 1, 2006 participate in a defined contribution plan
instead of a defined benefit plan.
On June 6, 2014, the United Steelworkers ratified a new five-year labor agreement covering approximately 6,100
employees at 10 U.S. locations; the previous labor agreement expired on May 15, 2014. In 2014, as a result of the
preparation for and ratification of the new agreement, Alcoa recognized $18 ($12 after-tax) in Cost of goods sold on
the accompanying Statement of Consolidated Operations for, among other items, business contingency costs and a one-
time signing bonus for employees. 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 4.80% at December 31, 2013 to 4.25% at
May 31, 2014. The plan remeasurement resulted in an increase to both Alcoa’s pension liability of $100 and a
combination of the plan’s unrecognized net actuarial loss and prior service cost (included in Accumulated other
comprehensive loss) of $65 (after-tax). The plan remeasurement also resulted in a $13 decrease to 2014 net periodic
benefit cost.
Alcoa also maintains health care and life insurance postretirement benefit plans covering eligible U.S. retired
employees and certain retirees from foreign locations. Generally, the medical plans are unfunded and pay a percentage
of medical expenses, reduced by deductibles and other coverage. Life benefits are generally provided by insurance
contracts. Alcoa retains the right, subject to existing agreements, to change or eliminate these benefits. All salaried and
certain non-bargaining hourly U.S. employees hired after January 1, 2002 and certain bargaining hourly U.S.
employees hired after July 1, 2010 are not eligible for postretirement health care benefits. All salaried and certain
hourly U.S. employees that retire on or after April 1, 2008 are not eligible for postretirement life insurance benefits.
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