Alcoa 2015 Annual Report Download - page 103

Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations. Alcoa is required to make future payments under various contracts, including long-term
purchase obligations, financing arrangements, and lease agreements. Alcoa also has commitments to fund its pension
plans, provide payments for other postretirement benefit plans, and fund capital projects. As of December 31, 2015, 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 2016 2017-2018 2019-2020 Thereafter
Operating activities:
Energy-related purchase obligations $16,555 $1,311 $2,128 $2,009 $11,107
Raw material purchase obligations 6,970 1,612 1,183 815 3,360
Other purchase obligations 1,317 166 328 328 495
Operating leases 853 243 298 174 138
Interest related to total debt 3,817 500 933 723 1,661
Estimated minimum required pension funding 2,150 300 850 1,000 -
Other postretirement benefit payments 2,095 230 450 440 975
Layoff and other restructuring payments 250 235 15 - -
Deferred revenue arrangements 147 20 41 34 52
Uncertain tax positions 52 - - - 52
Financing activities:
Total debt 9,102 59 1,810 2,158 5,075
Dividends to shareholders - - - - -
Investing activities:
Capital projects 861 586 223 52 -
Equity contributions 10 10 - - -
Payments related to acquisitions 150 - - 150 -
Totals $44,329 $5,272 $8,259 $7,883 $22,915
Obligations for Operating Activities
Energy-related purchase obligations consist primarily of electricity and natural gas contracts with expiration dates
ranging from 1 year to 32 years. Raw material obligations consist mostly of bauxite (relates to Alcoa’s bauxite mine
interests in Guinea and Brazil), caustic soda, alumina, aluminum fluoride, calcined petroleum coke, cathode blocks,
and various metals with expiration dates ranging from less than 1 year to 18 years. Other purchase obligations consist
principally of freight for bauxite and alumina with expiration dates ranging from 1 to 16 years. Many of these 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 land and buildings,
alumina refinery process control technology, plant equipment, vehicles, and computer equipment.
Interest related to total debt is based on interest rates in effect as of December 31, 2015 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, was included in interest related to total debt. As of December 31, 2015, 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 $300 for 2016, $375 for 2017, $475 for 2018, $425 for 2019, and $575 for 2020. These expected pension
contributions reflect the impacts of the Pension Protection Act of 2006; the Worker, Retiree, and Employer Recovery
Act of 2008; the Moving Ahead for Progress in the 21st Century Act of 2012; the Highway and Transportation Funding
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