| Alcoa | ||
| 390 Park Avenue | ||
| New York, New York 10022 USA | ||
| Lawrence R. Purtell | ||
| Executive Vice President and General Counsel; Chief Compliance Officer | ||
| 212 836 2650 | ||
VIA EDGAR, facsimile 202 551 9215 and US Certified Mail
March 31, 2006
Ms. Cecilia D. Blye, Chief
Office of Global Security Risk
United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 5546
100 F Street, N.E.
Washington, D.C. 20549-5546
| Re: | Alcoa Inc. |
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed February 17, 2006
File No. 1-3610
Dear Ms. Blye:
On behalf of Alcoa Inc. (“Alcoa”), this letter is in response to your letter of March 20, 2006 requesting supplemental information with respect to Alcoa’s Form 10-K for the year ended December 31, 2005.
Set forth below are Alcoa’s responses to the comments raised in your letter. For the convenience of the staff of the Commission, we have restated in this letter each of the comments in your letter and numbered each of the responses to correspond with the numbers of the comments in your letter.
Cecilia D. Blye
Page 2 of 3
General
| 1. | We note from page 83 of Exhibit 10(uu) that employees working abroad may opt for certain Alcoa-sponsored insurance covering Iran and Syria, countries identified as state sponsors of terrorism by the U.S. State Department and subject to sanctions administered by the U.S. Commerce Department’s Bureau of Industry and Security and the U.S. Treasury Department’s Office of Foreign Assets Control. We note that the Form 10-K does not contain any information relating to operations in, or ties to, Iran or Syria. Please describe your operations in, and ties to, these countries, if any, and discuss their materiality to you in light of their status as state sponsors of terrorism. Please also discuss whether the operations, either individually or in the aggregate, constitute a material investment risk to your security holders. Your response should describe your current, historical and anticipated operations in, and contacts with, Iran and Syria, including through subsidiaries, affiliates, joint ventures and other direct and indirect arrangements. |
Exhibit 10(uu) is a 120-page expatriate benefits manual provided to employees of Alcoa who accept employment outside the United States or Canada. The portion of the expatriate manual in question, pages 81 through 85, was copied from a third party insurance company brochure. A copy of the insurance company’s brochure and a copy of the relevant pages of the Alcoa expatriate manual are attached for reference.
The list of countries on page 83 of the expatriate employee manual is not a list prepared by Alcoa and was not intended to be a list of countries in which Alcoa has operations or employees. Alcoa does not now have, and never has placed, an expatriate employee in Iran or Syria.
Based on our records, Alcoa has no current, historical or anticipated operations in, or ties to, Iran and Syria, either directly or through subsidiaries, affiliates, joint ventures or other direct or indirect arrangements. On this basis, a materiality analysis is not applicable.
| 2. | Your materiality analysis should address materiality in quantitative terms, including the approximate dollar amount of revenues, assets and liabilities associated with Iran and Syria. Please also address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company’s reputation and share value. In this regard, we note that Arizona and Louisiana have adopted legislation requiring their state retirement systems to prepare reports regarding state pension fund assets invested in, and/or permitting divestment of state pension fund assets from, companies that do business with countries identified as state sponsors of terrorism. Your |
Cecilia D. Blye
Page 3 of 3
materiality analysis should address the potential impact of the investor sentiment evidenced by the referenced legislative actions directed toward companies operating in Iran and Syria. Please also address the impact of any regulatory compliance programs you have implemented in connection with business in Iran and Syria, and any internal risk assessment undertaken in connection with business in those countries.
Please see the response to Comment # 1. Regarding Alcoa’s regulatory compliance programs, it is Alcoa’s policy that no Alcoa location, wherever located throughout the world, will conduct business with any U.S. embargoed country, whether or not it is legally permitted to do so. This policy is fully supported by Alcoa senior management, is reinforced in the company’s export compliance manual and is stressed at all internal export compliance seminars.
We acknowledge that:
| • | Alcoa is responsible for the adequacy and accuracy of the disclosures in our Form 10-K filing; |
| • | Staff comments or changes to disclosures in response to staff comments do not foreclose the Commission from taking any action with respect to the Form 10-K filing; and |
| • | Alcoa may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
Very truly yours,
Lawrence R. Purtell
Attachments
Chubb International Personal Insurance brochure
Pages 81 through 85 of Exhibit 10 (uu) of Alcoa Inc. Form 10-K
 |
International Personal Insurance | |
| Application | ||
| Please read these guidelines before completing your application for personal insurance abroad. This information will help you select the coverages you need and determine the corresponding premium. | ||
| Coverage Options | Five personal insurance coverages are available to you while you are residing abroad. | |
| • Personal Property at your residence and in storage (US$200 deductible) | ||
| • Valuable Articles (no deductible) | ||
| • Personal Liability (no deductible) | ||
| • Personal Excess Liability (no deductible) | ||
| • Political Risk (US$200 deductible) | ||
| Coverage is applicable anywhere in the world during the policy term. Your policy is effective on the date you indicate on the application. This date will be shown on the Coverage Summary of your policy. Your policy is cancelled when you complete your overseas assignment and return permanently to the United States or Canada. | ||
| Coverage Selection Guidelines | ||
| Personal Property |
Personal Property coverage is available for property at your premises outside the United States and Canada, and separately for property placed in storage. You must purchase a minimum of US$10,000 Personal Property coverage. When selecting a limit for Personal Property coverage, you should estimate an amount that accurately reflects the total cost to replace your household goods and personal property at today’s prices. For both Personal Property and Valuable Articles (see below), we recommend that you utilize the Chubb International Personal Property Inventory as an organizational tool. | |
| Valuable Articles |
There are two types of Valuable Articles coverage: “jewelry” and “all other.” Write a complete description of each item to be insured and its value on the Valuable Articles schedule included in this kit. Attach the schedule to your application. Enter the total value, rounded to the nearest US$100, on the application as well. Please enclose appraisals for items worth more than US$5,000. | |
| Personal Liability |
You may elect to purchase one of three limits of Personal Liability coverage: US$100,000, US$250,000, or US$500,000. Please note the International Personal Insurance program does not provide primary automobile or watercraft insurance; however, coverage may be obtained from a local carrier abroad. | |
| Personal Excess Liability |
Additional liability coverage is available in limits of US $1, $3, or $5 million. If you wish to purchase Personal Excess Liability coverage, you must purchase a limit of US$500,000 for Personal Liability. If you plan to own or operate an automobile or boat while abroad, you must have in effect primary liability limits that are the foreign currency equivalent of: US$25,000 combined single limit or US$15,000/25,000/ 10,000 for automobile; US$100,000 combined single limit for watercraft. | |
continued
Page 1 of 6
| Political Risk | Political Risk covers perils of war or civil war and insurrection, or acts of sabotage or terrorism. If you wish to purchase Political Risk coverage, the limit is established automatically as the sum of Personal Property (including property in storage, only if desired) and Valuable Articles coverage amounts, multiplied by the rate per US$100 in the appropriate zone. If you elect to include property in storage, use the political risk rate for the zone in which you reside. | |
| Rating Information | This section will help you determine your total premium for each of the coverages you choose to purchase. Please bear in mind that the minimum premium for this policy is US$250. | |
| Coverage limits for household goods, valuable articles and political risk are available in US$100 increments. The rates for these coverages are based on your foreign location as noted in the Country Classifications list. Using the zone in which your foreign residence is located, you can calculate your premium for these three coverages (see Premium Calculation). Please note that coverage is only available for residences located outside the United States and Canada. | ||
| Country Classifications | Zone A | Sweden | Hong Kong | United Arab | ||||
| Australia | Switzerland | Hungary | Emirates | |||||
| Austria | Taiwan | Indonesia | Czech Republic | |||||
| Belgium | United Kingdom | Israel | Slovenia | |||||
| Denmark | Ivory Coast | |||||||
| Finland | Zone B | Kenya | Zone C | |||||
| France | Argentina | Malaysia | Any country not | |||||
| Germany | Bahamas | Malta | listed in zones | |||||
| Iceland | Bahrain | Mexico | A, B or D | |||||
| Ireland | Barbados | Morocco | ||||||
| Italy | Bermuda | Portugal | Zone D | |||||
| Japan | Brazil | Qatar | Algeria | |||||
| Luxembourg | Chile | Saudi Arabia | Bosnia | |||||
| Monaco | Costa Rica | South Korea | Iran | |||||
| Netherlands | Dominican Rep. | Thailand | Iraq | |||||
| New Zealand | Ecuador | Trinidad & | Libya | |||||
| Norway | Fiji | Tobago | Serbia | |||||
| Singapore | Gabon | Uruguay | Syria | |||||
| Spain | Greece | Venezuela | ||||||
| Country classifications subject to change. | ||||||||
continued
Page 2 of 6
| Worksheet | ||
| Rates | ||
| Household Goods/ Valuable Articles | Select the corresponding rate per US$100 of coverage. Multiply it by the amount you choose for each coverage; e.g. US$1000 of coverage x .86 = US$8.60 of premium. |
| Personal Property | Valuable Articles | |||||||||||
| At Premises | Commercial Storage |
Jewelry | All Other | |||||||||
| Zone A | $ | .86 | $ | .80 | $ | 2.25 | $ | .73 | ||||
| Zone B | 1.12 | .80 | 2.70 | 1.20 | ||||||||
| Zone C | 1.35 | .80 | 3.15 | 1.48 | ||||||||
| Zone D | 1.90 | .80 | 3.95 | 2.11 | ||||||||
| Liability | Select the appropriate premium based on the amounts of insurance you wish to purchase. |
| Personal Liability | Personal Excess Liability* | ||||||||
| Limit | Premium | Limit | Premium | ||||||
| US$100,000 | $ | 50 | US$ | 1 Million | $ | 45 | |||
| 250,000 | 108 | 3 Million | 130 | ||||||
| 500,000 | 158 | 5 Million | 245 | ||||||
| * US $500,000 personal liability limit must be chosen before excess liability may be purchased. | ||
| Political Risk | Select the zone where you reside and the corresponding rate per US$100 of coverage, and multiply it by the total limit you have chosen for personal property, optional property in storage, jewelry and other valuable articles. | |
| Zone A | $ | .05 | Zone C | $ | .25 | |||
| Zone B | .16 | Zone D | .40 |
| Premium Calculation | You may use this section to calculate the premium for each of the coverages you have chosen to purchase. To complete the application on the next page, you need only enter the appropriate coverage limits in the spaces provided under Coverage Options. | |||||||||||
| Coverage |
Amount of Coverage |
Rate Per $100 |
Premium | |||||||||
| Household Goods/ | Property at Premises |
X | = | |||||||||
| Valuable Articles | Property in storage |
X | = | |||||||||
| Jewelry |
X | = | ||||||||||
| Other Valuable Articles |
X | = | ||||||||||
| Liability | Personal Liability |
X | = | |||||||||
| Personal Excess |
X | = | ||||||||||
| Political Risk | Property at Premises/ |
X |
= | |||||||||
| Property in storage |
X | = | ||||||||||
| Total Premium | = | |||||||||||
continued
Page 3 of 6
|
|
International Personal Insurance | |
| Application | ||
| This policy is intended to cover your personal property and personal liabilities while you are on assignment for your company or organization outside the United States and Canada. | ||
| Client Information | Please check the appropriate box: | |
| ¨ New Policy ¨ Policy Change ¨ Renewal Policy | ||
| Name (First) ____________________ (Middle) _____________ (Last) ____________________ | ||
| Address of foreign residence _____________________________________________________ | ||
| _____________________________________________________________________________ | ||
| City or Town ___________________________________ Country _______________________ | ||
| Employer ____________________________________________________________________ | ||
| ¨ If your insurance premium is being paid directly by your employer, check this box and provide the name or title of the person responsible for payment. | ||
| Name and Title _________________________________________________________________ | ||
| Company Address ______________________________________________________________ | ||
| City ___________________________ State _____________________ Zip _________________ | ||
| Date coverage becomes effective: / / (see coverage options) | ||
| Producer Producer Sub Producer Name _____________________ No. ______________________ No. ______________________ | ||
| (Company Use Only) | ||
| Coverage Options | Use this section to select coverages and amounts for each. If you wish not to purchase one or more of these coverages, write “NO COVERAGE” in place of a coverage amount. If you wish to change an existing limit, simply enter the new amount in the space provided. Please refer to the guidelines before completing this section. | |
| Personal Property Limit | $ for household goods and personal belongings at premises. | |
| $ for household goods and personal belongings at a commercial storage facility or warehouse. | ||
continued
Page 4 of 6
| Valuable Articles Limit | $ in total for jewelry, rounded to the nearest $100. | |
| $ in total for other valuable articles, rounded to the nearest $100. | ||
| Personal Liability Limit | Select one limit for bodily injury, property damage and personal injury coverage: | |
| ¨ No Coverage ¨ $100,000 ¨ 250,000 ¨ 500,000 | ||
| Personal Excess Liability Limit | Select one limit for excess bodily injury, property damage and personal injury coverage:
¨ No Coverage ¨ $1 Million ¨ 3 Million ¨ 5 Million | |
| Political Risk Limit | $ (see Political Risk guidelines) | |
| ¨ Check here if the amount above includes your property at a commercial storage facility or warehouse. | ||
| Currency | All amounts in this application are stated in US dollars. | |
| However, if you work for a Canadian-based employer, all amounts stated or pre-printed in this application are deemed to be in Canadian dollars. For example, you must purchase a minimum of 10,000 Canadian dollars of Personal Property coverage. | ||
| Payment | Please do not include payment when submitting your application. Your policy will be accompanied by a statement for the amount due. | |
| What to do with your Application... | Once you have made your coverage selections and provided the necessary background information, please tear off and return this application to the individual or location indicated by your employer’s human resources or personnel department. If you have any questions about your personal insurance coverage overseas, contact your insurance agent/broker or your employer. | |
continued
Page 5 of 6
 | ||
| Chubb Group of Insurance Companies Warren, New Jersey 07059 | ||
| Chubb Insurance Company of Canada Toronto, Ontario M5E1S2 | ||
| Form 11-03-0034 (Ed. 1/98) | ||
Page 6 of 6
Please read these guidelines before completing your application for personal insurance abroad. This information will help you select the coverages you need and determine the corresponding premium.
Coverage Options
Five personal insurance coverages are available to you while you are residing abroad.
| • | Personal Property at your residence and in storage (US$200 deductible) |
| • | Valuable Articles (no deductible) |
| • | Personal Liability (no deductible) |
| • | Personal Excess Liability (no deductible) |
| • | Political Risk (US$200 deductible) |
Coverage is applicable anywhere in the world during the policy term. Your policy is effective on the date you indicate on the application. This date will be shown on the Coverage Summary of your policy. Your policy is canceled when you complete your overseas assignment and return permanently to the United States or Canada.
Coverage Selection Guidelines
Personal Property
Personal Property coverage is available for property at your premises outside the United States and Canada, and separately for property placed in storage. You must purchase a minimum of US$10,000 Personal Property coverage. When selecting a limit for Personal Property coverage, you should estimate an amount that accurately reflects the total cost to replace your household goods and personal property at today’s prices. For both Personal Property and Valuable Articles (see below), we recommend that you utilize the Chubb International Personal Property Inventory as an organizational tool.
Valuable Articles
There are two types of Valuable Articles coverage: “jewelry” and “all other”. Write a complete description of each item to be insured and its value on the Valuable Articles schedule included in this kit. Attach the schedule to your application. Enter the total value, rounded to the nearest US$100, on the application as well. Please enclose appraisals for items worth more than US$5,000.
Personal Liability
You may elect to purchase one of three limits of Personal Liability coverage: US$100,000, US$250,000, or US$500,000. Please note the International Personal Insurance program does not provide primary automobile or watercraft insurance; however, coverage may be obtained from a local carrier abroad.
ORIENTATION – September 1, 2002 Rev 2
Page 81 of 120
Personal Excess Liability
Additional liability coverage is available in limits of US $1, $3, or $5 million. If you wish to purchase Personal Excess Liability coverage, you must purchase a limit of US$500,00 for Personal Liability. If you plan to own or operate an automobile or boat while abroad, you must have in effect primary liability limits that are the foreign currency equivalent of: US$25,000 combined single limit or US$15,000/25,000/10,000 for automobile; US$100,000 combined single limit for watercraft.
Political Risk
Political Risk covers perils of war or civil war and insurrection, or acts of sabotage or terrorism. If you wish to purchase Political Risk coverage, the limit is established automatically as the sum of Personal Property (including property in storage, only if desired) and Valuable Articles coverage amounts, multiplied by the rate per US$100 in the appropriate zone in which you reside.
Rating Information
This section will help you determine your total premium for each of the coverages you choose to purchase. Please bear in mind that the minimum premium for this policy is US$250
Coverage limits for the household goods, valuable articles and political risk are available in US$100 increments. The rates for these coverages are based on your foreign locations as noted the Country Classification list. Using the zone in which your foreign residence is located, you can calculate your premium for these coverages (see Premium Calculation). Please note that coverage is only available for residences located outside the United States and Canada.
ORIENTATION – September 1, 2002 Rev 2
Page 82 of 120
| Country Classification |
Zone A |
Zone B |
Zone C |
Zone D | ||||
| Australia Austria Belgium Denmark Finland France Germany Iceland Ireland Italy Japan Luxembourg Monaco Netherlands New Zealand Norway Singapore Spain Sweden Switzerland Taiwan United Kingdom |
Argentina Bahamas Bahrain Barbados Bermuda Brazil Chile Costa Rica Dominican Rep. Ecuador Fiji Gabon Greece Hong Kong Hungary Indonesia Israel Ivory Coast Kenya Malaysia Malta Mexico Morocco Portugal Qatar Saudi Arabia South Korea Thailand Trinidad & Tobago Uruguay Venezuela United Arab Emirates Czech Republic Slovenia |
Any country not listed in zones A, B, or D | Algeria Bosnia Iran Iraq Libya Serbia Syria | |||||
Country classifications subject to change.
ORIENTATION – September 1, 2002 Rev 2
Page 83 of 120
Rates
Household Goods/
Valuable Articles
Select the corresponding rate per US$100 of coverage. Multiply it by the amount you choose for each coverage; e.g. US$1000 of coverage x .86 = US$8.60 of premium.
| Personal Property | Valuable Articles | |||||||||||
| At Premises | Commercial Storage |
Jewelry | All Other | |||||||||
| Zone A |
$ | .86 | $ | .80 | $ | 2.25 | $ | .73 | ||||
| Zone B |
$ | 1.12 | $ | .80 | $ | 2.70 | $ | 1.20 | ||||
| Zone C |
$ | 1.35 | $ | .80 | $ | 3.15 | $ | 1.48 | ||||
| Zone D |
$ | 1.90 | $ | .80 | $ | 3.95 | $ | 2.11 | ||||
Liability
Select the appropriate premium based on the amounts of insurance you wish to purchase.
| Personal Liability | Personal Excess Liability* | ||||||||||
| Limit | Premium | Limit | Premium | ||||||||
| US$100,000 | $ | 50 | US$ | 1 Million | $ | 45 | |||||
| 250,000 | 108 | 3 Million | 130 | ||||||||
| 500,000 | 158 | 5 Million | 245 | ||||||||
| * | US $500,000 personal liability limit must be chosen before excess liability may be purchased. |
Political Risk
Select the zone where you reside and the corresponding rate per US$100 of coverage, and multiply it by the total limit you have chosen for personal property, optional property in storage, jewelry and other valuable articles.
| Zone A |
$ | .05 | Zone C | $ | .25 | |||
| Zone B |
$ | .16 | Zone D | $ | .40 |
| Premium Calculation | You may use this section to calculate the premium for each of the coverages you have chosen to purchase. To complete the application on the next page, you need only enter the appropriate coverage limits in the spaces provided under Coverage Options. |
ORIENTATION – September 1, 2002 Rev 2
Page 84 of 120
| Coverage |
Amount of Coverage |
Rate per $100 |
Premium | |||||
| Household Goods/ Valuable Articles |
Property at premises |
X | _______ | = | ||||
| Property in storage |
X | _______ | = | |||||
| Jewelry |
X | _______ | = | |||||
| Other Valuable Articles |
X | _______ | = | |||||
| Liability |
Personal Liability |
X | _______ | = | ||||
| Personal Liability |
X | _______ | = | |||||
| Political Risk |
Property at Premises/ Valuable Articles |
X | _______ | = | ||||
| Property in storage |
X | _______ | = | |||||
| Total Premium |
= | |||||||
Complete Application
ORIENTATION – September 1, 2002 Rev 2
Page 85 of 120