Alcoa 2007 Annual Report Download - page 45

The company has historically paid quarterly dividends on its
preferred and common stock. Including dividends on preferred
stock, Alcoa paid $590 in dividends to shareholders during 2007.
Amounts are not included in the preceding table because all
dividends are subject to approval by the company’s Board of
Directors. In January 2007, Alcoa announced an increase in its
annual common stock dividend from $0.60 per share to $0.68 per
share. As of December 31, 2007, there were 827,401,800 shares of
common stock outstanding. It is expected that the increase in the
annual common stock dividend will be offset over time due to the
repurchase of common stock. In October 2007, Alcoa’s Board of
Directors approved a new share repurchase program. The new
program authorizes the purchase of up to 25% (or approximately
217 million shares) of the outstanding common stock of Alcoa at
December 31, 2006, in the open market or though privately nego-
tiated transactions, directly or through brokers or agents, and
expires on December 31, 2010. This new program superseded the
share repurchase program that was approved by Alcoa’s Board of
Directors in January 2007, which authorized the repurchase of up
to 87 million shares of Alcoa common stock. The shares
repurchased under the January 2007 program count against the
shares authorized for repurchase under the new program. During
2007, Alcoa repurchased 68 million shares, including 43 million
shares under the January 2007 program.
Obligations for Investing Activities
Alcoa has made announcements indicating its participation in
several significant expansion projects. These projects include the
expansion of an alumina refinery in São Luis; the development of a
bauxite mine in Juruti; global rolled products expansion projects
in Russia, Hungary and China; and the continued investment in
several hydroelectric power projects in Brazil. These projects are
in various stages of development and, depending on business and
(or) regulatory circumstances, may not be completed. The amounts
included in the preceding table for capital projects represent the
amounts that have been approved by management for these and
other projects as of December 31, 2007. Funding levels may vary
in future years based on anticipated construction schedules of the
projects. It is anticipated that significant expansion projects will
be funded through various sources, including cash provided from
operations. Alcoa anticipates that financing required to execute all
of these investments will be readily available over the time frame
required.
Payments related to acquisitions are based on provisions in
certain acquisition agreements that state additional funds are due
to the seller from Alcoa if the businesses acquired achieve stated
financial and operational thresholds. Amounts are only presented
in the preceding table if it is has been determined that payment is
more likely than not to occur. Certain additional contingent
payments related to prior acquisitions are not included in the
preceding table as they have not met such standard.
Off-Balance Sheet Arrangements.As of December 31,
2007, Alcoa has maximum potential future payments for guaran-
tees issued on behalf of certain third parties of $513. These
guarantees expire at various dates in 2008 through 2018 and relate
primarily to project financing for hydroelectric power projects in
Brazil. Alcoa also has standby letters of credit in the amount of
$485 issued as of December 31, 2007. These letters of credit
relate to environmental, insurance and other activities, and expire
at various dates in 2008 through 2014.
In November 2007, Alcoa entered into a program to sell a
senior undivided interest in certain customer receivables, without
recourse, on a continuous basis to a third-party for cash. As of
December 31, 2007, Alcoa received $100 in cash proceeds, which
reduced Receivables from customers on the Consolidated Balance
Sheet. Alcoa services the customer receivables for the third-party
at market rates; therefore, no servicing asset or liability was
recorded.
Alcoa also has an existing program with a different third-party
to sell certain customer receivables. The sale of receivables under
this program was conducted through a qualifying special purpose
entity (QSPE) that is bankruptcy remote, and, therefore, is not
consolidated by Alcoa. As of December 31, 2007 and 2006, Alcoa
sold trade receivables of $139 and $84 to the QSPE.
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