Alcoa 2000 Annual Report Download - page 44

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Name /alcoa/4500 06/01/2001 01:50PM Plate # 0 com g 42 # 1
0099989796
0.79
1.13
0.63
0.80
0.57
Free Cash Flow to
Debt Coverage
times covered
0099989796
1,279
1,888
2,197
2,381
2,851
Cash from Operations
millions of dollars
42
Liquidity and Capital Resources
(dollars in millions, except share amounts)
Cash from Operations
Cash from operations increased 20% to $2,851 in 2000, after rising
8% in 1999 to $2,381, versus $2,197 in 1998. The 2000 increase
was primarily due to increases in net income, depreciation and
amortization, partially offset by changes in noncurrent assets and
liabilities. The increase in cash from operations in 1999 relative to
1998 was primarily the result of higher earnings and lower working
capital. In 1999, the lower working capital was a result of lower
inventories and higher taxes, partly offset by higher receivables.
Financing Activities
Cash provided from financing activities was $1,552 in 2000 compared
with cash used in financing activities of $1,311 in 1999. The primary
reason for the shift in 2000 was the increase in short-term borrow-
ings, commercial paper and long-term debt. This was partially offset
by a decrease in common stock issued for stock compensation
plans. In 1999, financing activities used $1,311 of cash versus $280
in the 1998 period. The primary reason for the increase in 1999
was a decrease in borrowings. This decrease was partly offset by an
increase in common stock issued in connection with stock compen-
sation plans.
In 2000, the additions to long-term debt exceeded the payments
by $571. In 2000, Alcoa issued $1,500 of notes. Of these notes,
$1,000 mature in 2010 and carry a coupon rate of 7.375%, and $500
mature in 2005 and carry a coupon rate of 7.25%. Additionally, Alcoa
issued $3,711 of commercial paper. Net payments on long-term debt
in 1999 totaled $428, versus $561 of net additions in 1998. In 1998,
Alcoa issued $1,100 of commercial paper, $200 of term debt due in
2005,$250oftermdebtduein2018,and$300ofthirty-yearbonds
due in 2028. Partially offsetting these borrowings were net payments
of $350 on commercial paper and the repayment of $950 of Alumax
debt. In 2000, Alcoa entered into a new $2,490 revolving-credit
facility that expires in April 2001 and a $510 revolving-credit facility
that expires in August 2005. The revolving-credit facilities are used
to support Alcoa’s commercial paper program.
In 2000, Alcoa used $763 to repurchase 21,742,600 shares of the
company’s common stock at an average price of $35.08 per share.
In 1999, Alcoa used $838 to repurchase 31,211,044 shares of the
company’s common stock at an average price of $26.85 per share.
Stock purchases in 2000 and 1999 were partially offset by $251
and $464, respectively, of stock issued for stock compensation plans.
Debt as a percentage of invested capital was 38.6% at the end of
2000, compared with 28.3% for 1999 and 31.7% for 1998.