Alcoa 2010 Annual Report Download - page 72

Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations. Alcoa is required to make future payments under various contracts, including long-term
purchase obligations, debt agreements, and lease agreements. Alcoa also has commitments to fund its pension plans,
provide payments for other postretirement benefit plans, and finance capital projects. As of December 31, 2010, a
summary of Alcoa’s outstanding contractual obligations is as follows (these contractual obligations are grouped in the
same manner as they are classified in the Statement of Consolidated Cash Flows in order to provide a better
understanding of the nature of the obligations and to provide a basis for comparison to historical information):
Total 2011 2012-2013 2014-2015 Thereafter
Operating activities:
Energy-related purchase obligations $20,165 $1,442 $2,354 $2,219 $14,150
Raw material purchase obligations 3,243 1,572 902 249 520
Other purchase obligations 1,076 180 352 291 253
Operating leases 948 244 326 179 199
Interest related to total debt 4,966 473 930 758 2,805
Estimated minimum required pension funding 2,215 445 1,030 740 -
Other postretirement benefit payments 2,585 275 555 540 1,215
Layoff and other restructuring payments 116 55 30 31 -
Deferred revenue arrangements 133 8 16 16 93
Uncertain tax positions 59 - - - 59
Financing activities:
Total debt 9,139 323 1,954 819 6,043
Dividends to shareholders - - - - -
Investing activities:
Capital projects 1,301 645 563 93 -
Equity contributions 940 407 533 - -
Payments related to acquisitions - - - - -
Totals $46,886 $6,069 $9,545 $5,935 $25,337
Obligations for Operating Activities
Energy-related purchase obligations consist primarily of electricity and natural gas contracts with expiration dates
ranging from less than 1 year to 40 years. The majority of raw material and other purchase obligations have expiration
dates of 24 months or less. Certain purchase obligations contain variable pricing components, and, as a result, actual
cash payments may differ from the estimates provided in the preceding table. Operating leases represent multi-year
obligations for certain computer equipment, plant equipment, vehicles, and buildings.
Interest related to total debt is based on interest rates in effect as of December 31, 2010 and is calculated on debt with
maturities that extend to 2037. The effect of outstanding interest rate swaps, which are accounted for as fair value
hedges, are included in interest related to total debt. As of December 31, 2010, these hedges effectively convert the
interest rate from fixed to floating on $1,065 of debt through 2018. As the contractual interest rates for certain debt and
interest rate swaps are variable, actual cash payments may differ from the estimates provided in the preceding table.
Estimated minimum required pension funding and postretirement benefit payments are based on actuarial estimates
using current assumptions for discount rates, long-term rate of return on plan assets, rate of compensation increases,
and health care cost trend rates. The minimum required contributions for pension funding are estimated to be $445 for
2011 and $530 for 2012. The funding estimate is $500 for 2013, $410 for 2014 and $330 for 2015. The expected
pension contributions in 2011 and later reflect the impacts of the Pension Protection Act of 2006 and the Worker,
Retiree, and Employer Recovery Act of 2008. Pension contributions are expected to continue to decline if all actuarial
assumptions are realized and remain the same in the future. In January 2011, Alcoa contributed 36,518,563 newly
issued shares of its common stock (valued at $600) to a master trust that holds the assets of certain U.S. defined benefit
64