Alcoa 2014 Annual Report Download - page 95

Financing Activities
Cash provided from financing activities was $2,250 in 2014 compared with cash used for financing activities of $679
and $798 in 2013 and 2012, respectively.
The source of cash in 2014 was mostly driven by $2,878 in additions to debt, virtually all of which was the result of
$1,238 in net proceeds from the issuance of new senior debt securities used for the acquisition of an aerospace business
(see below) and $1,640 in borrowings under certain revolving credit facilities (see below); net proceeds of $1,211 from
the issuance of mandatory convertible preferred stock related to the aforementioned acquisition; and $150 in proceeds
from employee exercises of 17.3 million stock options at a weighted average exercise price of $8.70 (not in millions).
These items were somewhat offset by $1,723 in payments on debt, mostly related to $1,640 for the repayment of
borrowings under certain revolving credit facilities (see below), and $161 in dividends paid to shareholders.
The use of cash in 2013 was primarily due to $2,317 in payments on debt, mainly related to $1,850 for the repayment
of borrowings under certain credit facilities (see below), a $422 early repayment of 6.00% Notes due July 2013, and
$27 for previous borrowings on the loans supporting the Estreito hydroelectric power project in Brazil; $132 in
dividends paid to shareholders; and net cash paid to noncontrolling interests of $97, most of which relates to Alumina
Limited’s share of AWAC. These items were partially offset by $1,852 in additions to debt, virtually all of which was
the result of borrowings under certain credit facilities (see below).
The use of cash in 2012 was principally the result of $1,489 in payments on debt, mainly related to $600 for the
repayment of borrowings under certain credit facilities (see below), $322 for the repayment of 6% Notes due 2012 as
scheduled, $280 for the repayment of short-term loans to support the export operations of a subsidiary in Brazil, and
$272 for previous borrowings on the loans supporting the São Luís refinery expansion, Juruti bauxite mine
development, and Estreito hydroelectric power project in Brazil; a change of $224 in commercial paper; and $131 in
dividends paid to shareholders. These items were partially offset by $972 in additions to debt, due to $600 in
borrowings under certain credit facilities (see below), $280 in short-term loans to support the export operations of a
subsidiary in Brazil, and $92 in borrowings under loans that support the Estreito hydroelectric power project in Brazil;
and net cash received from noncontrolling interests of $76, all of which relates to Alumina Limited’s share of AWAC.
On July 25, 2014, Alcoa entered into a Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a
syndicate of lenders and issuers named therein. The Credit Agreement provides a $4,000 senior unsecured revolving
credit facility (the “Credit Facility”), the proceeds of which are to be used to provide working capital or for other
general corporate purposes of Alcoa. Subject to the terms and conditions of the Credit Agreement, Alcoa may from
time to time request increases in lender commitments under the Credit Facility, not to exceed $500 in aggregate
principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $1,000
under the Credit Facility.
The Credit Facility matures on July 25, 2019, unless extended or earlier terminated in accordance with the provisions
of the Credit Agreement. Alcoa may make two one-year extension requests during the term of the Credit Facility, with
any extension being subject to the lender consent requirements set forth in the Credit Agreement. Under the provisions
of the Credit Agreement, Alcoa will pay a fee of 0.25% (based on Alcoa’s long-term debt ratings as of December 31,
2014) of the total commitment per annum to maintain the Credit Facility.
The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured,
unsubordinated indebtedness of Alcoa. Borrowings under the Credit Facility may be denominated in U.S. dollars or
euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on
the credit ratings of Alcoa’s outstanding senior unsecured long-term debt. The applicable margin on base rate loans and
LIBOR loans will be 0.50% and 1.50% per annum, respectively, based on Alcoa’s long-term debt ratings as of
December 31, 2014. Loans may be prepaid without premium or penalty, subject to customary breakage costs.
The Credit Agreement replaces Alcoa’s Five-Year Revolving Credit Agreement, dated as of July 25, 2011 (the
“Former Credit Agreement”), which was scheduled to mature on July 25, 2017. The Former Credit Agreement, which
had a total capacity of $3,750 and was undrawn, was terminated effective July 25, 2014.
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