Alcoa 2009 Annual Report Download - page 69

The source of cash in 2009 was primarily due to $1,049 in additions to long-term debt, mainly driven by net proceeds
of $562 from the issuance of $575 in convertible notes and $394 in borrowings under loans that support the São Luís
refinery expansion, Juruti bauxite mine development, and Estreito hydroelectric power project in Brazil; net proceeds
of $876 from the issuance of 172.5 million shares of common stock; and net cash received from noncontrolling
interests of $340, principally related to Alumina Limited’s share of AWAC; all of which was mostly offset by a $1,535
decrease in outstanding commercial paper, partly due to tightening in the credit markets and a reduction in market
availability as a result of the change in Alcoa’s credit ratings in early 2009; $228 in dividends paid to shareholders; a
$292 net change in short-term borrowings ($1,300 was borrowed and repaid under Alcoa’s $1,900 364-day senior
unsecured revolving credit facility in early 2009 and $255 in new loans to support Alcoa Alumínio’s export operations
was borrowed and repaid during 2009), mostly the result of repayments of working capital loans in Spain and Asia and
a $155 decrease in accounts payable settlement arrangements; and payments on long-term debt of $156, including $97
related to the loans in Brazil for growth projects.
The source of cash in 2008 was principally the result of $2,253 in additions to long-term debt, mainly driven by net
proceeds of $1,489 from the July 2008 public debt offering and $721 in borrowings under the loans in Brazil for
growth projects; a $679 increase in outstanding commercial paper to support operations and capital spending; net cash
received from noncontrolling interests of $348, principally related to Alumina Limited’s share of AWAC; and $177 in
proceeds from employees exercising their stock options; all of which was partially offset by $1,082 for the repurchase
of common stock; $556 in dividends paid to shareholders; payments on long-term debt of $204, mainly due to a
repayment of $150 for 6.625% Notes due March 2008; and a $96 net change in short-term borrowings, mostly the
result of a $78 decrease in accounts payable settlement arrangements.
The use of cash in 2007 was primarily due to $2,496 for the repurchase of common stock; payments on long-term debt
of $873, primarily related to the January 2007 purchase of $333 of outstanding 4.25% Notes due August 2007 and the
repayment of the remaining $459 of outstanding 4.25% Notes in August 2007; a $617 decrease in outstanding
commercial paper, mostly due to the repayment of commercial paper with proceeds from the issuance of new long-
term debt; and $590 in dividends paid to shareholders; all of which was partially offset by $2,050 in additions to long-
term debt, principally due to proceeds of $1,994 from the issuance of new 5.55% Notes due 2017, 5.9% Notes due
2027, and 5.95% Notes due 2037; $835 in proceeds from employees exercising their stock options; and net cash
received from noncontrolling interests of $106, principally related to Alumina Limited’s share of AWAC.
Alcoa maintains a Five-Year Revolving Credit Agreement, dated as of October 2, 2007 (the “Credit Agreement”), with
a syndicate of lenders and issuers named therein. The Credit Agreement provides a $3,250 senior unsecured revolving
credit facility (the “Credit Facility”), the proceeds of which are to be used to provide working capital or for other
general corporate purposes of Alcoa, including support of Alcoa’s commercial paper program. Subject to the terms and
conditions of the Credit Agreement, Alcoa may from time to time request increases in lender commitments under the
Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit,
subject to a letter of credit sub-limit of $500 under the Credit Facility.
The Credit Facility matures on October 2, 2012, unless extended or earlier terminated in accordance with the
provisions of the Credit Agreement. Alcoa may make two one-year extension requests during the term of the Credit
Facility, with any extension being subject to the lender consent requirements set forth in the Credit Agreement. In order
to maintain the Credit Facility, Alcoa pays a fee of 0.125% per annum, based on Alcoa’s long-term debt ratings as of
December 31, 2009, of the total commitment.
The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured,
unsubordinated indebtedness of Alcoa. Borrowings under the Credit Facility may be denominated in U.S. dollars or
euros. Loans will bear interest at (i) a base rate or (ii) a rate equal to LIBOR plus an applicable margin based on the
credit ratings of Alcoa’s outstanding senior unsecured long-term debt. The applicable margin on LIBOR loans will be
0.475% per annum based on Alcoa’s long-term debt ratings as of December 31, 2009. Loans may be prepaid without
premium or penalty, subject to customary breakage costs.
61