Alcoa 2009 Annual Report Download - page 122

In 2004, Alcoa acquired a 20% interest in a consortium, which subsequently purchased the Dampier to Bunbury
Natural Gas Pipeline (DBNGP) in Western Australia, in exchange for an initial cash investment of $17 (A$24). The
investment in the DBNGP was made in order to secure a competitively priced long-term supply of natural gas to
Alcoa’s refineries in Western Australia. This investment was classified as an equity investment. Alcoa has made
additional contributions of $116 (A$151), including $31 (A$42) and $9 (A$12) in 2009 and 2008, respectively, and
committed to invest an additional $29 (A$32) to be paid as the pipeline expands through 2011. In March 2008,
additional equity contributions of $38 (A$40) were approved to support further expansion of the gas transmission
capacity. In addition to its equity ownership, Alcoa has an agreement to purchase gas transmission services from the
DBNGP. Alcoa’s maximum exposure to loss on the investment and the related contract is approximately $430 (A$470)
as of December 31, 2009.
Purchase Obligations. Alcoa is party to unconditional purchase obligations for energy that expire between 2012 and
2028. Commitments related to these contracts total $108 in 2010, $114 in 2011, $135 in 2012, $134 in 2013, $133 in
2014, and $2,258 thereafter. Expenditures under these contracts totaled $28 in 2009, $96 in 2008, and $110 in 2007.
Additionally, Alcoa has entered into other purchase commitments for energy, raw materials, and other goods and
services, which total $2,097 in 2010, $1,603 in 2011, $1,400 in 2012, $1,096 in 2013, $1,098 in 2014, and $11,274
thereafter.
Operating Leases. Certain computer equipment, plant equipment, vehicles, and buildings are under operating lease
agreements. Total expense from continuing operations for all leases was $249 in 2009, $275 in 2008, and $286 in 2007.
Under long-term operating leases, minimum annual rentals are $224 in 2010, $210 in 2011, $187 in 2012, $104 in
2013, $76 in 2014, and $226 thereafter.
Letters of Credit. Alcoa has outstanding letters of credit primarily related to workers’ compensation, derivative
contracts, and leasing obligations. The total amount committed under these letters of credit, which expire at various
dates, mostly in 2010, was $273 at December 31, 2009.
Guarantees. Alcoa has outstanding bank guarantees related to legal, customs duties, and leasing obligations, among
others. The total amount committed under these guarantees, which expire at various dates, was $490 at December 31,
2009. Alcoa has also issued guarantees of third-party obligations related to project financing for hydroelectric power
projects in Brazil, which expire in 2015 through 2027, that total $378 at December 31, 2009.
Surety Bonds. Alcoa has outstanding surety bonds primarily related to customs duties, self-insurance, and legal
obligations. The total amount committed under these bonds, which automatically renew or expire at various dates,
mostly in 2010, was $140 at December 31, 2009.
O. Other Income, Net
2009 2008 2007
Equity loss (income) $ 14 $(41) $ (71)
Interest income (18) (53) (61)
Dividend income (1) (1) (31)
Foreign currency (gains) losses, net (82) 74 26
Net gain from asset sales (106) (50) (1,806)
Other, net 32 12 23
$(161) $(59) $(1,920)
In 2009, Net gain from asset sales included a $188 gain related to the Elkem/Sapa AB exchange transaction (see Note
F), a $182 loss on the sale of the SPPL investment (see Note I), and a $92 gain related to the acquisition of a BHP
subsidiary (see Note F). In 2007, Net gain from asset sales included a $1,754 gain on the sale of Alcoa’s investment in
the Aluminum Corporation of China Limited (Chalco). The dividend income in 2007 was virtually all related to
Alcoa’s former stake in Chalco.
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