Alcoa 2011 Annual Report Download - page 72

The higher pension contributions were principally driven by cash contributions made to U.S. pension plans towards
maintaining an approximately 80% funded status.
The major components of the lower net cash inflow in working capital were as follows: an additional outflow of $122
in inventories, mostly due to higher production as a result of increased demand and rising input costs; a higher inflow
of $47 in prepaid expenses and other current assets, primarily driven by the absence of collateral posted related to a
mark-to-market energy contract that ended in September 2011; an additional inflow of $66 in accounts payable, trade,
principally the result of higher purchasing needs and timing of vendor payments; a lower outflow of $201 in accrued
expenses, mostly related to fewer cash payments for restructuring programs and the absence of a reduction in collateral
held related to mark-to-market energy contracts; and a smaller inflow of $385 in taxes, including income taxes, mainly
due to the absence of a $347 federal income tax refund for the carryback of Alcoa’s 2009 net loss to prior tax years.
The additional outflow in noncurrent assets was largely attributable to higher deferred mining costs related to bauxite
operations in Australia, while the lower inflow in noncurrent liabilities was mainly caused by a smaller increase in the
environmental remediation reserve.
Cash from operations in 2010 was $2,261 compared with $1,365 in 2009. The improvement of $896, or 66%, was
primarily due to significantly better operating results, partially offset by a lower net cash inflow associated with
working capital of $904.
The major components of the lower net cash inflow in working capital were as follows: an additional outflow of $787
in receivables, primarily as a result of higher sales in three of the four reportable segments and a significant rise in
LME prices; a higher outflow of $1,485 in inventories, mostly due to a build-up of levels to meet anticipated demand
and higher input costs; an additional inflow of $962 in accounts payable, trade, principally the result of higher
purchasing needs and timing of vendor payments; and a higher inflow of $646 in taxes, including income taxes, mainly
due to a $310 receivable recorded in 2009 and the receipt of $347 in 2010, both related to a federal income tax refund
for the carryback of Alcoa’s 2009 net loss to prior tax years.
Financing Activities
Cash provided from financing activities was $62 in 2011 compared with cash used for financing activities of $952 in
2010 and cash provided from financing activities of $37 in 2009.
The source of cash in 2011 was mostly driven by $1,256 in additions to long-term debt, of which $1,248 was for the
issuance of 5.40% Notes due 2021; and a change of $224 in commercial paper; mostly offset by $1,194 in payments on
long-term debt, principally related to $881 for the early retirement of all of the 5.375% Notes due 2013 and a portion of
the 6.00% Notes due 2013, $218 for previous borrowings on the loans supporting the São Luís refinery expansion,
Juruti bauxite mine development, and Estreito hydroelectric power project in Brazil, and $45 for a loan associated with
the Samara, Russia facility; net cash distributed to noncontrolling interests of $88, all of which relates to Alumina
Limited’s share of AWAC; and $131 in dividends paid to shareholders.
The use of cash in 2010 was primarily due to $1,757 in payments on long-term debt, mostly related to $511 for the
repayment of 7.375% Notes due 2010 as scheduled, $825 for the early retirement of all of the 6.50% Notes due 2011
and a portion of the 6.00% Notes due 2012 and 5.375% Notes due 2013, and $287 related to previous borrowings on
the loans supporting the São Luís refinery expansion and Juruti bauxite mine development in Brazil; $125 in dividends
paid to shareholders; net cash paid to noncontrolling interests of $94, all of which relates to Alumina Limited’s share of
AWAC; $66 in acquisitions of noncontrolling interests, mainly the result of the $60 paid to redeem the convertible
securities of a subsidiary that were held by Alcoa’s former partner related to the joint venture in Saudi Arabia; and a
change of $44 in short-term borrowings; partially offset by $1,126 in additions to long-term debt, of which $998 was
for the issuance of 6.150% Notes due 2020 and $76 was related to borrowings under the loans that support the Estreito
hydroelectric power project in Brazil.
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