Alcoa 2001 Annual Report Download - page 55

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also has a $1,000 revolving-credit facility that expires in August 2003.
Under these agreements, a certain ratio of indebtedness to consoli-
dated net worth must be maintained. Commercial paper of $220 and
$1,510 at December 31, 2001 and 2000, respectively, was classified
as long-term debt because it is backed by the revolving-credit facili-
ties. There were no amounts outstanding under these facilities at
December 31, 2001. The interest rate on these facilities, if drawn
upon, is Libor plus 19 basis points, which is subject to adjustment if
Alcoa’s credit rating changes, to a maximum interest rate of Libor
plus 40 basis points.
Aluminio’s export notes are collateralized by receivables due under
an export contract. Certain financial ratios must be maintained,
including the maintenance of a minimum debt service ratio as well as
a certain level of tangible net worth of Aluminio and its subsidiaries.
Short-term borrowings of $142 at December 31, 2001 consisted
of bank and other borrowings. Short-term borrowings of $2,719
at December 31, 2000 consisted of commercial paper of $2,201,
extendible commercial notes of $280 and bank and other borrowings
of $238. The weighted average interest rate on short-term borrowings
was 2.5% in 2001 and 6.6% in 2000.
I. Minority Interests
The following table summarizes the minority shareholders’ interests
in the equity of consolidated subsidiaries.
December 31 2001 2000
Alcoa of Australia $ 431 $ 462
Alcoa Aluminio 222 256
Alcoa World Alumina and Chemicals 175 260
Alcoa Fujikura Ltd. 277 309
Other majority-owned companies 208 227
$1,313 $1,514
J. Commitments and Contingencies
Various lawsuits, claims and proceedings have been or may be
instituted or asserted against Alcoa, including those pertaining
to environmental, product liability, and safety and health matters.
While the amounts claimed may be substantial, the ultimate liability
cannot now be determined because of the considerable uncertainties
that exist. Therefore, it is possible that results of operations or
liquidity in a particular period could be materially affected by certain
contingencies. However, based on facts currently available, manage-
ment believes that the disposition of matters that are pending or
asserted will not have a materially adverse effect on the financial
position of the company.
Aluminio is a 27.23% participant in Machadinho, a hydroelectric
construction project in Brazil. Aluminio has guaranteed up to 39% of
the project’s total debt of approximately $315. Beginning in February
2002, Aluminio is committed to taking a share of the output of the
completed project for 30 years at cost, including cost of financing
the project. In the event that other participants in this project fail to
fulfill their financial responsibilities, Aluminio may be required to
fund a portion of the deficiency. In accordance with the agreement,
if Aluminio funds any such deficiency, its participation and share of
the output from the project will increase proportionately.
Aluminio also entered into agreements to participate in four
additional hydroelectric construction projects in Brazil that are
scheduled to be completed at various dates ranging from 2005 to
2008. Aluminio’s share of the output from the hydroelectric facilities,
when completed, ranges from 20% to 39.5%. Total costs for all
four projects are estimated at $1,400, with Aluminio’s share of total
project costs totaling approximately 30%. The plans for financing
these projects have not yet been finalized. Aluminio may be required
to provide guarantees of project financing or commit to additional
investments as these projects progress. At December 31, 2001,
Aluminio had provided $13 of guarantees on two of the hydro-
electric construction projects in the form of performance bonds.
Aluminio accounts for its investments in these hydroelectric
projects on the equity method. Aluminio’s investment in these
projectswas$108and$48atDecember31,2001and2000,
respectively.
Alcoa of Australia (AofA) is party to a number of natural gas
and electricity contracts that expire between 2002 and 2020. Under
these take-or-pay contracts, AofA is obligated to pay for a minimum
amount of natural gas or electricity even if these commodities are
not required for operations. Commitments related to these contracts
total$176in2002,$180in2003,$185in2004,$178in2005,$154
in 2006 and $2,243 thereafter. Expenditures under these contracts
totaled$179in2001,$188in2000and$179in1999.
On January 9, 2002, Alcoa raised its equity stake in Elkem ASA,
a Norwegian metals producer, above 40% which, under Norwegian
law, required Alcoa to initiate an unconditional cash tender offer
for the remaining outstanding shares of Elkem. Under the tender
offer, which expires on February 22, 2002, Alcoa will pay approxi-
mately $17.40 for each outstanding share of Elkem. Alcoa’s potential
cash commitment if all outstanding shares are tendered is approxi-
mately $515.
Alcoa has standby letters of credit related to environmental, insur-
ance and other activities. The total amount committed under these
letters of credit, which expire at various dates in 2002, was $181 at
December 31, 2001.
K. Cash Flow Information
Cash payments for interest and income taxes follow.
2001 2000 1999
Interest $418 $388 $225
Income taxes 548 419 394
The details of cash payments related to acquisitions follow.
2001 2000 1999
Fair value of assets acquired $184 $14,991 $ 282
Liabilities assumed (24) (7,075) (159)
Stock options issued —(182) —
Stock issued —(4,502) —
Cash paid 160 3,232 123
Less: cash acquired 1111 1
Net cash paid for acquisitions $159 $ 3,121 $ 122