Alcoa 2012 Annual Report Download - page 80

The six revolving credit facilities expire as follows: $150 in March 2013; $100 in September 2013 (originally
December 2012, extended in September 2012); $100 in September 2013; $140 in October 2013; $100 in December
2013 (originally December 2012, extended in December 2012); and $50 in December 2015. The covenants contained
in all eight arrangements are the same as the Credit Agreement (see above).
In February 2011, Alcoa filed an automatic shelf registration statement with the Securities and Exchange Commission
for an indeterminate amount of securities for future issuance. This shelf registration statement replaced Alcoa’s
existing shelf registration statement (filed in March 2008). As of December 31, 2012 and 2011, $1,250 in senior debt
securities were issued under the current shelf registration statement.
Alcoa’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also
by the short- and long-term debt ratings assigned to Alcoa’s debt by the major credit rating agencies.
On April 12, 2011, 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. Additionally, S&P changed the current outlook from negative to stable.
On March 2, 2011, Moody’s Investors Service (Moody’s) confirmed the following ratings for Alcoa: long-term debt at
Baa3 and short-term debt at Prime-3. Additionally, Moody’s changed the current outlook from negative to stable. On
September 7, 2011, Moody’s affirmed the ratings and outlook published in its March 2, 2011 report. On December 18,
2012, Moody’s placed Alcoa’s long-term debt and short-term debt ratings under review.
On February 22, 2011, Fitch Ratings (Fitch) affirmed the following ratings for Alcoa: long-term debt at BBB- and
short-term debt at F3. Additionally, Fitch changed the current outlook from negative to stable. On August 2, 2012,
Fitch reaffirmed its previous ratings and outlook for Alcoa.
Investing Activities
Cash used for investing activities was $759 in 2012 compared with $1,852 in 2011 and $1,272 in 2010.
The use of cash in 2012 was mainly due to $1,261 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $153), 33% of which related to growth projects, including the automotive
expansion at the Davenport, IA fabrication plant and the Estreito hydroelectric power project; and $300 in additions to
investments, principally for the equity contributions of $253 related to the aluminum complex joint venture in Saudi
Arabia. These items were somewhat offset by $615 in proceeds from the sale of assets, mostly the result of $597
received for the sale of U.S. hydroelectric power assets (see Primary Metals in Segment Information above), and a net
change in restricted cash of $87, principally related to the release of funds to be used for capital expenditures of the
automotive expansion at the Davenport, IA fabrication plant.
The use of cash in 2011 was principally due to $1,287 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $148), 28% of which related to growth projects, including the Estreito
hydroelectric power project and Juruti bauxite mine development; $374 in additions to investments, mostly for the
equity contributions of $249 related to the aluminum complex joint venture in Saudi Arabia and purchase of $41 in
available-for-sale securities held by Alcoa’s captive insurance company; and $239 (net of cash acquired) for the
acquisition of an aerospace fastener business. These items were slightly offset by $54 in sales of investments, primarily
related to available-for-sale securities held by Alcoa’s captive insurance company, and $38 in proceeds from the sale of
assets, mainly attributable to the sale of land in Australia.
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
equity contributions of $160 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. These items were 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.
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