|
Derivatives and Other Financial Instruments (Tables)
|
9 Months Ended |
|
Sep. 30, 2013
|
| Derivative Instruments And Hedging Activities Disclosure [Abstract] |
|
| Schedule of Fair Values and Corresponding Level of Fair Value Hierarchy of Outstanding Derivative Contracts Recorded as Assets |
The fair values and corresponding classifications under the
appropriate level of the fair value hierarchy of outstanding
derivative contracts recorded as assets in the accompanying
Consolidated Balance Sheet were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives
|
|
Level |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
$ |
3 |
|
|
$ |
23 |
|
|
Aluminum contracts
|
|
3 |
|
|
8 |
|
|
|
7 |
|
|
Foreign exchange contracts
|
|
1 |
|
|
5 |
|
|
|
— |
|
|
Interest rate contracts
|
|
2 |
|
|
6 |
|
|
|
8 |
|
|
Other noncurrent assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
|
— |
|
|
|
3 |
|
|
Energy contracts
|
|
3 |
|
|
4 |
|
|
|
3 |
|
|
Interest rate contracts
|
|
2 |
|
|
30 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
|
|
$ |
56 |
|
|
$ |
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments*:
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
3 |
|
$ |
175 |
|
|
$ |
211 |
|
|
Other noncurrent assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
3 |
|
|
198 |
|
|
|
329 |
|
|
Foreign exchange contracts
|
|
1 |
|
|
— |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
$ |
373 |
|
|
$ |
541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less margin held**:
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
$ |
— |
|
|
$ |
9 |
|
|
Interest rate contracts
|
|
2 |
|
|
6 |
|
|
|
8 |
|
|
Other noncurrent assets:
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
2 |
|
|
1 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total
|
|
|
|
$ |
7 |
|
|
$ |
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Asset Derivatives
|
|
|
|
$ |
422 |
|
|
$ |
596 |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
See the “Other” section
within Note M for additional information on Alcoa’s purpose
for entering into derivatives not designated as hedging instruments
and its overall risk management strategies. |
| ** |
All margin held is in the form of
cash and is valued under a Level 1 technique. The levels that
correspond to the margin held in the table above reference the
level of the corresponding asset for which it is held. Alcoa
elected to net the margin held against the fair value amounts
recognized for derivative instruments executed with the same
counterparties under master netting arrangements. |
|
| Schedule of Fair Values and Corresponding Level of Fair Value Hierarchy of Outstanding Derivative Contracts Recorded as Liabilities |
The fair values and corresponding classifications under the
appropriate level of the fair value hierarchy of outstanding
derivative contracts recorded as liabilities in the accompanying
Consolidated Balance Sheet were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Liability Derivatives
|
|
Level |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
$ |
42 |
|
|
$ |
13 |
|
|
Aluminum contracts
|
|
3 |
|
|
25 |
|
|
|
35 |
|
|
Other noncurrent liabilities and deferred credits:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
|
10 |
|
|
|
1 |
|
|
Aluminum contracts
|
|
3 |
|
|
426 |
|
|
|
573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
|
|
$ |
503 |
|
|
$ |
622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments*:
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
$ |
3 |
|
|
$ |
1 |
|
|
Aluminum contracts
|
|
2 |
|
|
— |
|
|
|
21 |
|
|
Embedded credit derivative
|
|
3 |
|
|
3 |
|
|
|
3 |
|
|
Other noncurrent liabilities and deferred credits:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
2 |
|
|
— |
|
|
|
5 |
|
|
Embedded credit derivative
|
|
3 |
|
|
25 |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
$ |
31 |
|
|
$ |
57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less margin posted**:
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
$ |
14 |
|
|
$ |
— |
|
|
Other noncurrent liabilities and deferred credits:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
1 |
|
|
4 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total
|
|
|
|
$ |
18 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liability Derivatives
|
|
|
|
$ |
516 |
|
|
$ |
679 |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
See the “Other” section
within Note M for additional information on Alcoa’s purpose
for entering into derivatives not designated as hedging instruments
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 margin posted against the fair value amounts
recognized for derivative instruments executed with the same
counterparties under master netting arrangements. |
|
| Gross Amounts of Recognized Derivative Assets and Liabilities and Gross Amounts Offset in Accompanying Consolidated Balance Sheet |
The gross amounts of recognized derivative assets and liabilities
and gross amounts offset in the accompanying Consolidated Balance
Sheet were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets |
|
|
Liabilities |
|
| |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
Gross amounts recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
$ |
44 |
|
|
$ |
72 |
|
|
$ |
78 |
|
|
$ |
69 |
|
|
Interest rate contracts
|
|
|
36 |
|
|
|
45 |
|
|
|
7 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
80 |
|
|
$ |
117 |
|
|
$ |
85 |
|
|
$ |
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amounts offset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts(1)
|
|
$ |
(41 |
) |
|
$ |
(55 |
) |
|
$ |
(41 |
) |
|
$ |
(55 |
) |
|
Interest rate contracts(2)
|
|
|
(7 |
) |
|
|
(17 |
) |
|
|
(7 |
) |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(48 |
) |
|
$ |
(72 |
) |
|
$ |
(48 |
) |
|
$ |
(72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts presented in the Consolidated Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
$ |
3 |
|
|
$ |
17 |
|
|
$ |
37 |
|
|
$ |
14 |
|
|
Interest rate contracts
|
|
|
29 |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
32 |
|
|
$ |
45 |
|
|
$ |
37 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
The amounts under Assets and
Liabilities as of September 30, 2013 include $18 of margin
posted with counterparties. The amounts under Assets and
Liabilities as of December 31, 2012 include $9 of margin held
from counterparties. |
| (2) |
The amounts under Assets and
Liabilities as of September 30, 2013 and December 31,
2012 represent margin held from the counterparty. |
|
| Schedule of Derivative Contract Assets and Liabilities that are Measured and Recognized at Fair Value on Recurring Basis |
The following table presents Alcoa’s derivative contract
assets and liabilities that are measured and recognized at fair
value on a recurring basis classified under the appropriate level
of the fair value hierarchy (there were no transfers in or out of
Levels 1 and 2 during the periods presented):
|
|
|
|
|
|
|
|
|
| |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
$ |
8 |
|
|
$ |
27 |
|
|
Level 2
|
|
|
36 |
|
|
|
45 |
|
|
Level 3
|
|
|
385 |
|
|
|
550 |
|
|
Margin held
|
|
|
(7 |
) |
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
422 |
|
|
$ |
596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
$ |
55 |
|
|
$ |
15 |
|
|
Level 2
|
|
|
— |
|
|
|
26 |
|
|
Level 3
|
|
|
479 |
|
|
|
638 |
|
|
Margin posted
|
|
|
(18 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
516 |
|
|
$ |
679 |
|
|
|
|
|
|
|
|
|
|
|
| Schedule of Reconciliation of Activity for Derivative Contracts |
Financial instruments classified as Level 3 in the fair value
hierarchy represent derivative contracts in which management has
used at least one significant unobservable input in the valuation
model. The following tables present a reconciliation of activity
for such derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets |
|
|
Liabilities |
|
|
Third quarter ended September 30, 2013
|
|
Aluminum
contracts |
|
|
Energy
contracts |
|
|
Aluminum
contracts |
|
|
Embedded
credit
derivative |
|
|
Opening balance – June 30, 2013
|
|
$ |
432 |
|
|
$ |
— |
|
|
$ |
395 |
|
|
$ |
39 |
|
|
Total gains or losses (realized and unrealized) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
(1 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
— |
|
|
Cost of goods sold
|
|
|
(49 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other income, net
|
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
Other comprehensive loss
|
|
|
(12 |
) |
|
|
4 |
|
|
|
61 |
|
|
|
— |
|
|
Purchases, sales, issuances, and settlements*
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Transfers into and (or) out of Level 3*
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign currency translation
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance – September 30, 2013
|
|
$ |
381 |
|
|
$ |
4 |
|
|
$ |
451 |
|
|
$ |
28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses included in earnings for
derivative contracts held at September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Cost of goods sold
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other income, net
|
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
| * |
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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets |
|
|
Liabilities |
|
|
Nine months ended September 30, 2013
|
|
Aluminum
contracts |
|
|
Energy
contracts |
|
|
Aluminum
contracts |
|
|
Embedded
credit
derivative |
|
|
Opening balance – January 1, 2013
|
|
$ |
547 |
|
|
$ |
3 |
|
|
$ |
608 |
|
|
$ |
30 |
|
|
Total gains or losses (realized and unrealized) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
(4 |
) |
|
|
— |
|
|
|
(19 |
) |
|
|
— |
|
|
Cost of goods sold
|
|
|
(151 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other income, net
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
Other comprehensive income
|
|
|
4 |
|
|
|
1 |
|
|
|
(138 |
) |
|
|
— |
|
|
Purchases, sales, issuances, and settlements*
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Transfers into and (or) out of Level 3*
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign currency translation
|
|
|
(35 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance – September 30, 2013
|
|
$ |
381 |
|
|
$ |
4 |
|
|
$ |
451 |
|
|
$ |
28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses included in earnings for
derivative contracts held at September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Cost of goods sold
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other income, net
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
| * |
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. |
|
| Schedule of Quantitative Information for Level 3 Derivative Contracts |
The following table presents quantitative information for Level 3
derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fair value at
September 30,
2013* |
|
|
Valuation technique
|
|
Unobservable input
|
|
Range
($ in full amounts)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contract
|
|
$ |
— |
|
|
Discounted cash flow |
|
Interrelationship of future aluminum and oil prices
|
|
Aluminum: $1,785 per metric ton in 2013 to $2,295 per metric ton in
2018
Oil: $109 per barrel in 2013 to $89 per barrel in 2018
|
|
Aluminum contract
|
|
|
373 |
|
|
Discounted cash flow |
|
Interrelationship of future aluminum prices, foreign currency
exchange rates, and the U.S. consumer price index (CPI)
|
|
Aluminum: $1,803 per metric ton in 2013 to $2,141 per metric ton in
2016
Foreign currency: A$1 = $0.93 in 2013 to $0.87 in 2016
CPI: 1982 base year of 100 and 232 in 2013 to 249 in 2016
|
|
Aluminum contract
|
|
|
5 |
|
|
Discounted cash flow |
|
Interrelationship of LME price to overall energy price
|
|
Aluminum: $1,899 per metric ton in 2013 to $2,355 per metric ton in
2019
|
|
Energy contracts
|
|
|
4 |
|
|
Discounted cash flow |
|
Price of electricity beyond forward curve
|
|
$80 per megawatt hour in 2013 to $154 per megawatt hour in 2036
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum contracts
|
|
|
448 |
|
|
Discounted cash flow |
|
Price of aluminum beyond forward curve
|
|
$2,589 per metric ton in 2023 to $2,766 per metric ton in 2027
|
|
Embedded credit derivative
|
|
|
28 |
|
|
Discounted cash flow |
|
Credit spread between Alcoa and counterparty
|
|
1.18% to 2.28%
(1.73% median)
|
* The fair value of aluminum contracts reflected as assets and
liabilities in this table are both lower by $3 compared to the
respective amounts reflected in the Level 3 reconciliations
presented above. This is due to the fact that Alcoa has a contract
that is in an asset position for the current portion but is in a
liability position for the long-term portion, and is reflected as
such on the accompanying Consolidated Balance Sheet. However, this
contract is reflected as a net asset in this table for purposes of
presenting the fair value technique and assumptions utilized to
measure the contract in its entirety.
|
| Schedule of Gain or Loss on Hedged Items and Derivative Contracts |
The gain or loss on the hedged items are included in the same line
items as the loss or gain on the related derivative contracts as
follows (there were no contracts that ceased to qualify as a fair
value hedge in any of the periods presented):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in Fair Value Hedging Relationships
|
|
Location of Gain
or (Loss)
Recognized in
Earnings on
Derivatives |
|
Amount of Gain or (Loss)
Recognized in Earnings on Derivatives |
|
| |
|
Third quarter ended
September 30, |
|
|
Nine months ended
September 30, |
|
| |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
Aluminum contracts*
|
|
Sales |
|
$ |
20 |
|
|
$ |
66 |
|
|
$ |
(110 |
) |
|
$ |
9 |
|
|
Interest rate contracts
|
|
Interest expense |
|
|
3 |
|
|
|
3 |
|
|
|
8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$ |
23 |
|
|
$ |
69 |
|
|
$ |
(102 |
) |
|
$ |
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged Items in Fair Value Hedging Relationships
|
|
Location of Gain
or (Loss)
Recognized in
Earnings on
Hedged Items |
|
Amount of Gain or (Loss)
Recognized in Earnings on Hedged Items |
|
| |
|
Third quarter ended
September 30, |
|
|
Nine months ended
September 30, |
|
| |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
Aluminum contracts
|
|
Sales |
|
$ |
(2 |
) |
|
$ |
(71 |
) |
|
$ |
132 |
|
|
$ |
(30 |
) |
|
Interest rate contracts
|
|
Interest expense |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$ |
(5 |
) |
|
$ |
(74 |
) |
|
$ |
124 |
|
|
$ |
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
In the third quarter and nine months
ended September 30, 2013, the gain and loss recognized in
earnings includes a gain of $18 and $22, respectively, related to
the ineffective portion of the hedging relationships. In the third
quarter and nine months ended September 30, 2012, the loss
recognized in earnings includes a loss of $5 and $22, respectively,
related to the ineffective portion of the hedging
relationships. |
|
| Schedule of Gains and Losses on Derivative Excluded from Assessment of Effectiveness Recognized in Current Earnings |
Gains and losses on the derivative representing either hedge
ineffectiveness or hedge components excluded from the assessment of
effectiveness are recognized in current earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)** |
|
| |
Third
quarter
ended
September 30, |
|
|
Nine months
ended
September 30, |
|
|
|
Third
quarter
ended
September 30, |
|
|
Nine months
ended
September 30, |
|
|
|
Third
quarter
ended
September 30, |
|
|
Nine months
ended
September 30, |
|
| |
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
Aluminum contracts
|
|
$ |
(61 |
) |
|
$ |
(138 |
) |
|
$ |
117 |
|
|
$ |
(72 |
) |
|
Sales
|
|
$ |
(4 |
) |
|
$ |
18 |
|
|
$ |
(11 |
) |
|
$ |
20 |
|
|
Other (income) expenses, net
|
|
$ |
— |
|
|
$ |
(3 |
) |
|
$ |
(2 |
) |
|
$ |
6 |
|
|
Energy contracts
|
|
|
1 |
|
|
|
2 |
|
|
|
— |
|
|
|
(3 |
) |
|
Cost of goods sold
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other (income) expenses, net
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign exchange contracts
|
|
|
3 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
Sales
|
|
|
(2 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
Other (income) expenses, net
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Interest rate contracts
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Interest expense
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Other (income) expenses, net
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Interest rate contracts
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
(2 |
) |
|
Other (income) expenses, net
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other (income) expenses, net
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
(56 |
) |
|
$ |
(135 |
) |
|
$ |
120 |
|
|
$ |
(77 |
) |
|
|
|
$ |
(6 |
) |
|
$ |
18 |
|
|
$ |
(14 |
) |
|
$ |
19 |
|
|
|
|
$ |
— |
|
|
$ |
(3 |
) |
|
$ |
(2 |
) |
|
$ |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
Assuming market rates remain constant
with the rates at September 30, 2013, a loss of $14 is
expected to be recognized in earnings over the next 12 months. |
| ** |
For both the third quarter and nine
months ended September 30, 2013, there was no ineffectiveness
related to the derivatives in cash flow hedging relationships.
There was less than $1 and $(2) recognized in earnings related to
the amount excluded from the assessment of hedge effectiveness for
the third quarter and nine months ended September 30, 2013,
respectively. For the third quarter and nine months ended
September 30, 2012, the amount of gain or (loss) recognized in
earnings represents $(5) and $5, respectively, related to the
ineffective portion of the hedging relationships. There was also $2
and $1 recognized in earnings related to the amount excluded from
the assessment of hedge effectiveness for the third quarter and
nine months ended September 30, 2012, respectively. |
|
| Schedule of Outstanding Forward Contracts that were Entered into Hedge Forecasted Transactions |
Alcoa had the following outstanding forward contracts that were
entered into to hedge forecasted transactions:
|
|
|
|
|
|
|
|
|
| |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
|
Aluminum contracts (000 metric tons)
|
|
|
906 |
|
|
|
1,120 |
|
|
Energy contracts:
|
|
|
|
|
|
|
|
|
|
Electricity (megawatt hours)
|
|
|
59,409,328 |
|
|
|
100,578,295 |
|
|
Natural gas (million British thermal units)
|
|
|
19,550,000 |
|
|
|
19,160,000 |
|
|
Foreign exchange contracts
|
|
$ |
350 |
|
|
$ |
71 |
|
|
| Schedule of Fair Value Gains and Losses on Derivatives Contracts Recorded in Earnings |
Alcoa has certain derivative contracts that do not qualify for
hedge accounting treatment and, therefore, the fair value gains and
losses on these contracts are recorded in earnings as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
| |
|
Third quarter ended
September 30, |
|
|
Nine months ended
September 30, |
|
| |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
Aluminum contracts
|
|
Sales
|
|
$ |
1 |
|
|
$ |
3 |
|
|
$ |
(6 |
) |
|
$ |
— |
|
|
Aluminum contracts
|
|
Other (income) expenses, net
|
|
|
4 |
|
|
|
(9 |
) |
|
|
19 |
|
|
|
(6 |
) |
|
Embedded credit derivative
|
|
Other (income) expenses, net
|
|
|
11 |
|
|
|
2 |
|
|
|
2 |
|
|
|
(8 |
) |
|
Foreign exchange contracts
|
|
Other (income) expenses, net
|
|
|
2 |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$ |
18 |
|
|
$ |
(1 |
) |
|
$ |
12 |
|
|
$ |
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Schedule of Carrying Values and Fair Values of Other Financial Instruments |
The carrying values and fair values of Alcoa’s other
financial instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2013 |
|
|
December 31, 2012 |
|
| |
|
Carrying
value |
|
|
Fair
value |
|
|
Carrying
value |
|
|
Fair
value |
|
|
Cash and cash equivalents
|
|
$ |
1,017 |
|
|
$ |
1,017 |
|
|
$ |
1,861 |
|
|
$ |
1,861 |
|
|
Restricted cash
|
|
|
59 |
|
|
|
59 |
|
|
|
189 |
|
|
|
189 |
|
|
Noncurrent receivables
|
|
|
19 |
|
|
|
19 |
|
|
|
20 |
|
|
|
20 |
|
|
Available-for-sale securities
|
|
|
95 |
|
|
|
95 |
|
|
|
67 |
|
|
|
67 |
|
|
Short-term borrowings
|
|
|
59 |
|
|
|
59 |
|
|
|
53 |
|
|
|
53 |
|
|
Commercial paper
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Long-term debt due within one year
|
|
|
655 |
|
|
|
829 |
|
|
|
465 |
|
|
|
477 |
|
|
Long-term debt, less amount due within one year
|
|
|
7,630 |
|
|
|
7,757 |
|
|
|
8,311 |
|
|
|
9,028 |
|
|