Alcoa 2010 Annual Report Download - page 71

On May 7, 2010, Standard and Poor’s Ratings Services (S&P) affirmed the following ratings for Alcoa: long-term debt
at BBB- and short-term debt at A-3. S&P did not change the current outlook from negative.
On March 30, 2010, Moody’s Investors Service (Moody’s) confirmed the following ratings for Alcoa: long-term debt
at Baa3 and short-term debt at Prime-3. Moody’s removed all ratings from credit watch and the current outlook was
changed from stable to negative.
On February 22, 2010, Fitch Ratings (Fitch) affirmed the following ratings for Alcoa: long-term debt at BBB- and
short-term debt at F3. Fitch did not change the current outlook from negative.
Investing Activities
Cash used for investing activities was $1,272 in 2010 compared with $721 in 2009 and $2,410 in 2008.
The use of cash in 2010 was primarily due to $1,015 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $87), 44% of which related to growth projects, including the Estreito
hydroelectric power project, Juruti bauxite mine development, and São Luís refinery expansion; $352 in additions to
investments, mostly for the contributions of $197 related to the joint venture in Saudi Arabia and purchase of $126 in
available-for-sale securities held by Alcoa’s captive insurance company; and $72 for acquisitions, principally related to
the purchase of a new building and construction systems business; slightly offset by $141 in sales of investments,
virtually all of which related to the sale of available-for-sale securities held by Alcoa’s captive insurance company.
The use of cash in 2009 was mainly due to $1,622 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $59), 68% of which related to growth projects, including the São Luís
refinery expansion, Juruti bauxite mine development, and Estreito hydroelectric power project; $181 in additions to
investments, mostly for $83 in available-for-sale securities held by Alcoa’s captive insurance company and an $80
interest in a new joint venture in Saudi Arabia; and a net cash outflow of $65 for the divestiture of assets and
businesses, including a cash outflow of $204 for the EES business, cash inflows of $111 for the collection of a note
related to the 2007 sale of the Three Oaks mine and the sale of property in Vancouver, WA, and a cash inflow of $20
for the sale of the Shanghai (China) foil plant; all of which was partially offset by $1,031 from sales of investments,
mostly related to the receipt of $1,021 for the sale of the Shining Prospect investment; and a net cash inflow of $112
from acquisitions, mainly due to $97 from the acquisition of a BHP Billiton subsidiary in the Republic of Suriname and
$18 from the Elkem/Sapa AB exchange transaction.
The use of cash in 2008 was principally due to $3,438 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $241), 58% of which related to growth projects, including the São Luís
refinery expansion, Juruti bauxite mine development, Estreito hydroelectric power project, and flat-rolled products
projects in Bohai (China) and Russia; $1,303 in additions to investments, mostly related to the $1,200 investment made
in Shining Prospect Pte. Ltd. to acquire common stock of Rio Tinto plc; and $417 in acquisitions for the purchase of
two aerospace fastener manufacturing businesses ($276), the buyout of outstanding noncontrolling interests in Bohai
($79) and Russia ($15), and a contingent payment made to Camargo Corrêa Group related to the 2003 acquisition of
40.9% of Alcoa Alumínio S.A. ($47); all of which was partially offset by $2,710 in proceeds from the sale of assets
and businesses, mostly due to the $2,651 in net proceeds from the sale of the businesses within the former Packaging
and Consumer segment.
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