Alcoa 2015 Annual Report Download - page 101

In 2015, 2014, and 2013, Alcoa borrowed and repaid $1,890, $1,640, and $1,850, respectively, under the respective
credit arrangements. The weighted-average interest rate and weighted-average days outstanding of the respective
borrowings during 2015, 2014, and 2013 were 1.61%, 1.54%, and 1.57%, respectively, and 69 days, 67 days, and 213
days, respectively.
In February 2014, Alcoa’s automatic shelf registration statement filed with the Securities and Exchange Commission
expired. On July 11, 2014, Alcoa filed a new shelf registration statement, which was amended on July 25, 2014 and
became effective on July 30, 2014, for up to $5,000 of securities on an unallocated basis for future issuance. As of
December 31, 2015, $2,500 in securities were issued under the new shelf registration statement.
In September 2014, Alcoa completed two public securities offerings under its shelf registration statement for (i) $1,250
of 25 million depositary shares, each representing a 1/10th interest in a share of Alcoa’s 5.375% Class B Mandatory
Convertible Preferred Stock, Series 1, par value $1 per share, liquidation preference $500 per share, and (ii) $1,250 of
5.125% Notes due 2024. The net proceeds of the offerings were used to finance the cash portion of the acquisition of
Firth Rixson (see Engineered Products and Solutions in Segment Information above).
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 March 9, 2015, 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
September 28, 2015 S&P issued a statement that these ratings and outlook for Alcoa were not affected by Alcoa’s plan
to separate into two publicly-traded companies.
On April 16, 2015 Fitch affirmed the following ratings for Alcoa: long-term debt at BB+ and short-term debt at B.
Additionally, Fitch changed the current outlook from stable to positive. On September 30, 2015, Fitch placed these
ratings on “ratings watch positive” based on Alcoa’s plan to separate into two publicly-traded companies.
On April 30, 2015, Moody’s Investor Service (Moody’s) affirmed the following ratings for Alcoa; long-term debt at
Ba1 and short-term debt at Speculative Grade Liquidity Rating-1. Additionally, Moody’s changed the current outlook
from stable to positive. On September 28, 2015, Moody’s affirmed these ratings and changed the current outlook from
positive to developing based on Alcoa’s plan to separate into two publicly-traded companies. On January 21, 2016,
Moody’s placed Alcoa’s long-term debt rating under review and changed the current outlook from developing to rating
under review, while leaving Alcoa’s short-term debt rating unchanged.
Investing Activities
Cash used for investing activities was $1,060 in 2015 compared with $3,460 in 2014 and $1,290 in 2013.
The use of cash in 2015 was mainly due to $1,180 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $141), 38% of which related to growth projects, including the aerospace
expansion at the La Porte, IN plant, the automotive expansion at the Alcoa, TN plant, the aerospace expansion (thick
plate stretcher) at the Davenport, IA plant, the aerospace expansion (isothermal press) at the Savannah, GA plant (Firth
Rixson), and the specialty foil expansion at the Itapissuma plant in Brazil; $205 (net of cash acquired) for the
acquisition of TITAL (see Engineered Products and Solutions in Segment Information above); and $134 in additions to
investments, including the purchase of $70 in equities and fixed income securities held by Alcoa’s captive insurance
company and equity contributions of $29 related to the aluminum complex joint venture in Saudi Arabia. These items
were somewhat offset by $302 in cash acquired with RTI International Metals (see Engineered Products and Solutions
in Segment Information above); $112 in proceeds from the sale of assets and businesses, composed of three land sales
in Australia and the United States combined and post-closing adjustments related to an ownership stake in a smelter,
four rolling mills, and an ownership stake in a bauxite mine/alumina refinery divested from December 2014 through
March 2015; and $40 in sales of investments, related to the sale of $21 in equities and fixed income securities held by
Alcoa’s captive insurance company and $19 in proceeds from the sale of the remaining portion of an equity investment
in a China rolling mill.
77