Alcoa 2012 Annual Report Download - page 82

Interest related to total debt is based on interest rates in effect as of December 31, 2012 and is calculated on debt with
maturities that extend to 2042. 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, 2012, these hedges effectively convert the
interest rate from fixed to floating on $200 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, among others. The minimum required contributions for pension funding are estimated to be $460 for
2013, $575 for 2014, $535 for 2015, $465 for 2016, and $445 for 2017. These expected pension contributions reflect the
impacts of the Pension Protection Act of 2006, the Worker, Retiree, and Employer Recovery Act of 2008, and the Moving
Ahead for Progress in the 21st Century Act. Pension contributions are expected to continue to decline if all actuarial
assumptions are realized and remain the same in the future. Other postretirement benefit payments are expected to
approximate $270 to $285 annually for years 2013 through 2017 and $240 annually for years 2018 through 2022. Such
payments will be slightly offset by subsidy receipts related to Medicare Part D, which are estimated to be approximately
$30 to $35 annually for years 2013 through 2022. Alcoa has determined that it is not practicable to present pension
funding and other postretirement benefit payments beyond 2017 and 2022, respectively.
Layoff and other restructuring payments expected to be paid within one year primarily relate to severance costs.
Amounts scheduled to be paid beyond one year are related to lease termination costs, special termination benefit
payments, and ongoing site remediation work.
Deferred revenue arrangements require Alcoa to deliver alumina and sheet and plate to certain customers over the
specified contract period (through 2027 for an alumina contract and through 2020 for a sheet and plate contract). While
these obligations are not expected to result in cash payments, they represent contractual obligations for which the
Company would be obligated if the specified product deliveries could not be made.
Uncertain tax positions taken or expected to be taken on an income tax return may result in additional payments to tax
authorities. The amount in the preceding table includes interest and penalties accrued related to such positions as of
December 31, 2012. The total amount of uncertain tax positions is included in the “Thereafter” column as the Company is
not able to reasonably estimate the timing of potential future payments. If a tax authority agrees with the tax position taken or
expected to be taken or the applicable statute of limitations expires, then additional payments will not be necessary.
Obligations for Financing Activities
Total debt amounts in the preceding table represent the principal amounts of all outstanding debt, including short-term
borrowings and long-term debt. Maturities for long-term debt extend to 2042.
Alcoa has historically paid quarterly dividends on its preferred and common stock. Including dividends on preferred
stock, Alcoa paid $131 in dividends to shareholders during 2012. Because all dividends are subject to approval by
Alcoa’s Board of Directors, amounts are not included in the preceding table unless such authorization has occurred. As
of December 31, 2012, there were 1,067,211,953 and 546,024 shares of outstanding common stock and preferred stock,
respectively. The annual preferred stock dividend is at the rate of $3.75 per share and the annual common stock
dividend is $0.12 per share.
Obligations for Investing Activities
Capital projects in the preceding table only include amounts approved by management as of December 31, 2012.
Funding levels may vary in future years based on anticipated construction schedules of the projects. It is expected that
significant expansion projects will be funded through various sources, including cash provided from operations. Total
capital expenditures are anticipated to be approximately $1,550 in 2013.
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