Derivatives And Other Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Derivatives And Other Financial Instruments

Fair Value Of Outstanding Derivative Contracts Recorded As Assets

Asset Derivatives	June 30, 2011		December 31, 2010
Derivatives designated as hedging instruments:
Prepaid expenses and other current assets:
Aluminum contracts	$	31	$	48
Foreign exchange contracts		2		2
Interest rate contracts		15		19
Other noncurrent assets:
Aluminum contracts		10		22
Energy contracts		27		9
Interest rate contracts		25		62
Total derivatives designated as hedging instruments	$	110	$	162

Derivatives not designated as hedging instruments*:
Prepaid expenses and other current assets:
Aluminum contracts	$	2	$	3
Other noncurrent assets:
Foreign exchange contracts		2		1
Total derivatives not designated as hedging instruments	$	4	$	4
Less margin held:
Prepaid expenses and other current assets:
Aluminum contracts	$	—	$	4
Interest rate contracts		6		13
Other noncurrent assets:
Interest rate contracts		—		2
Sub-total	$	6	$	19
Total Asset Derivatives	$	108	$	147

* See the "Other" section within Note P for additional information on Alcoa's purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategies.

Fair Value Of Outstanding Derivative Contracts Recorded As Liabilities

Liability Derivatives	June 30, 2011		December 31, 2010
Derivatives designated as hedging instruments:
Other current liabilities:
Aluminum contracts	$	68	$	89
Other noncurrent liabilities and deferred credits:
Aluminum contracts		723		647
Total derivatives designated as hedging instruments	$	791	$	736
Derivatives not designated as hedging instruments*:
Other current liabilities:
Aluminum contracts	$	52	$	52
Energy contracts		21		62
Other noncurrent liabilities and deferred credits:
Aluminum contracts		32		33
Embedded credit derivative		21		23
Total derivatives not designated as hedging instruments	$	126	$	170
Less margin posted:
Other current liabilities:
Aluminum contracts	$	2	$	4
Energy contracts		11		37
Sub-total	$	13	$	41
Total Liability Derivatives	$	904	$	865

* See the "Other" section within Note P for additional information on Alcoa's purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategies.

Derivative Contract Assets And Liabilities That Are Measured And Recognized At Fair Value On A Recurring Basis

Assets:
Level 1	$	46		$	76
Level 2		40			81
Level 3		28			9
Margin held*		(6	)		(19	)
Total	$	108		$	147
Liabilities:
Level 1	$	9		$	35
Level 2		84			83
Level 3		824			788
Margin posted*		(13	)		(41	)
Total	$	904		$	865

* Margin held represents cash collateral received related to interest rate contracts included in Level 2 and margin posted represents cash collateral paid related to aluminum contracts included in Level 1 and energy contracts included in Level 3. At December 31, 2010, margin held also represents cash collateral received related to aluminum contracts included in Level 1. Alcoa elected to net the margin held and posted against the fair value amounts recognized for derivative instruments executed with the same counterparties under master netting arrangements.

Reconciliation Of Activity For Derivative Contracts On A Net Basis

	Second quarter ended			Six months ended
	June 30, 2011			June 30, 2011
Balance at beginning of period	$	969		$	779
Total gains or losses (realized and unrealized) included in:
Sales – (decrease)		(19	)		(37	)
Cost of goods sold – (increase)		(6	)		(11	)
Other (income) expenses, net – (increase)		(13	)		(34	)
Other comprehensive income – (increase) decrease		(135	)		99
Purchases, sales, issuances, and settlements*		—			—
Transfers into and (or) out of Level 3*		—			—
Balance at end of period	$	796		$	796
Total gains or losses included in earnings attributable to the change in unrealized gains or losses relating to derivative contracts still held at June 30, 2011:
Sales	$	—		$	—
Cost of goods sold		—			—
Other (income) expenses, net – (increase)		(14	)		(36	)

* There were no purchases, sales, issuances, or settlements of Level 3 financial instruments. Additionally, there were no transfers of financial instruments into or out of Level 3.

Gains And Losses On Derivatives

Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)												Location of Gain or (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion)*												Location of Gain or (Loss) Recognized in Earnings on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Earnings on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)**
	Second quarter ended June 30,						Six months ended June 30,							Second quarter ended June  30,						Six months ended June 30,							Second quarter ended June  30,					Six months ended June 30,
	2011			2010			2011			2010				2011			2010			2011			2010				2011			2010		2011		2010
Aluminum contracts	$	97		$	291		$	(92	)	$	234		Sales	$	(38	)	$	(53	)	$	(76	)	$	(64	)	Other (income) expenses, net	$	(1	)	$	1	$	—	$	3
Energy contracts		8			(3	)		8			(13	)	Cost of goods sold		(3	)		(7	)		(6	)		(11	)	Other (income) expenses, net		—			—		—		—
Energy contracts		—			—			—			(1	)	Other (income) expenses, net		—			—			—			—		Other (income) expenses, net		—			—		—		—
Foreign exchange contracts		1			(1	)		2			(7	)	Sales		1			(1	)		2			(4	)	Other (income) expenses, net		—			—		—		—
Interest rate contracts		(2	)		—			(2	)		—		Other (income) expenses, net		(2	)		—			(2	)		—		Other (income) expenses, net		—			—		—		—
Total	$	104		$	287		$	(84	)	$	213			$	(42	)	$	(61	)	$	(82	)	$	(79	)		$	(1	)	$	1	$	—	$	3

* Assuming market rates remain constant with the rates at June 30, 2011, a loss of $62 is expected to be recognized in earnings over the next 12 months.

** For all periods presented, the amount of gain or (loss) recognized in earnings related to the ineffective portion of the hedging relationships.

Outstanding Forward Contracts That Were Entered Into Hedge Forward Transactions

	June 30,		December 31,
	2011		2010
Aluminum contracts (kmt)		1,194		1,285
Energy contracts (electricity – megawatt hours)		100,578,295		100,578,295
Foreign exchange contracts	$	10	$	20

Fair Value Gains And Losses On Derivatives Contracts

Derivatives Not   Designated as       Hedging     Instruments	Location of Gain or (Loss) Recognized in Earnings on Derivatives	Amount of Gain or (Loss) Recognized in Earnings on Derivatives
		Second quarter ended June  30,						Six months ended June  30,
		2011			2010			2011			2010
Aluminum contracts	Sales	$	(2	)	$	(5	)	$	1		$	(4	)
Aluminum contracts	Other (income) expenses, net		3			23			(11	)		15
Embedded credit derivative	Other (income) expenses, net		(6	)		(3	)		3			(9	)
Energy contract	Other (income) expenses, net		19			14			31			(19	)
Foreign exchange contracts	Other (income) expenses, net		2			(4	)		4			(1	)
Total		$	16		$	25		$	28		$	(18	)

Carrying Value And Fair Values Of Other Financial Instruments

	June 30, 2011				December 31, 2010
	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,260	$	1,260	$	1,543	$	1,543
Restricted cash		1		1		1		1
Noncurrent receivables		26		26		23		23
Available-for-sale securities		95		95		93		93
Short-term borrowings		65		65		92		92
Long-term debt due within one year		510		510		231		231
Long-term debt, less amount due within one year		8,773		10,012		8,842		9,882