Alcoa 2015 Annual Report Download - page 102

The use of cash in 2014 was principally due to $2,385 (net of cash acquired) for the acquisition of Firth Rixson (see
Engineered Products and Solutions in Segment Information above); $1,219 in capital expenditures (includes costs
related to environmental control in new and expanded facilities of $129), 40% of which related to growth projects,
including the automotive expansions at the Alcoa, TN and Davenport, IA fabrication plants, the aerospace expansion at
the La Porte, IN plant, the aluminum-lithium capacity expansion at the Lafayette, IN plant, and the specialty foil
expansion at the Itapissuma plant in Brazil; and $195 in additions to investments, including equity contributions of
$120 related to the aluminum complex joint venture in Saudi Arabia and the purchase of $49 in equities and fixed
income securities held by Alcoa’s captive insurance company. These items were slightly offset by $253 in proceeds
from the sale of assets and businesses, largely attributable to the sale of an ownership stake in a bauxite mine and
refinery in Jamaica (see Alumina in Segment Information above), an ownership stake in a smelter in the United States
(see Primary Metals in Segment Information above), three rolling mills in Spain and France combined (see Global
Rolled Products in Segment Information above), and a rod plant in Canada (see Primary Metals in Segment
Information above); and $57 in sales of investments, mostly related to $42 in combined proceeds from the sale of a
mining interest in Suriname and a portion of an equity investment in a China rolling mill.
The use of cash in 2013 was primarily due to $1,193 in capital expenditures (includes costs related to environmental
control in new and expanded facilities of $143), 34% of which related to growth projects, including the automotive
expansion at the Davenport, IA fabrication plant, the aluminum-lithium capacity expansion at the Lafayette, IN plant,
and the automotive sheet expansion at the Alcoa, TN plant; and $293 in additions to investments, including equity
contributions of $171 related to the aluminum complex joint venture in Saudi Arabia and the purchase of $54 in
equities and fixed income securities held by Alcoa’s captive insurance company. These items were slightly offset by a
net change in restricted cash of $170, mostly related to the release of funds to be used for capital expenditures of the
automotive expansion at the Davenport, IA fabrication plant (see Noncash Financing and Investing Activities below).
Noncash Financing and Investing Activities
In July 2015, Alcoa purchased all outstanding shares of RTI common stock in a stock-for-stock transaction valued at
$870. As a result, Alcoa issued 87 million shares of its common stock to consummate this transaction, which was not
reflected in Alcoa’s Statement of Consolidated Cash Flows as it represents a noncash financing activity.
In early 2014, holders of $575 principal amount of Alcoa’s 5.25% Convertible Notes due March 15, 2014 (the “2014
Notes”) exercised their option to convert the 2014 Notes into 89 million shares of Alcoa common stock. The
conversion rate for the 2014 Notes was 155.4908 shares of Alcoa’s common stock per $1,000 (in full dollars) principal
amount of notes, equivalent to a conversion price of $6.43 per share. The difference between the $575 principal amount
of the 2014 Notes and the $89 par value of the issued shares increased Additional capital on Alcoa’s Consolidated
Balance Sheet. This transaction was not reflected in Alcoa’s Statement of Consolidated Cash Flows as it represents a
noncash financing activity.
In late 2014, Alcoa paid $2,995 (net of cash acquired) to acquire Firth Rixson (see Engineered Products and Solutions
in Segment Information above). A portion of this consideration was paid through the issuance of 37 million shares in
Alcoa common stock valued at $610. The issuance of common stock was not reflected in Alcoa’s Statement of
Consolidated Cash Flows as it represents a noncash investing activity.
In August 2012, Alcoa received a loan of $250 for the purpose of financing all or part of the cost of acquiring,
constructing, reconstructing, and renovating certain facilities at Alcoa’s rolling mill plant in Davenport, IA. Because
this loan can only be used for this purpose, the net proceeds of $248 were classified as restricted cash. Since restricted
cash is not part of cash and cash equivalents, this transaction was not reflected in Alcoa’s Statement of Consolidated
Cash Flows as it represents a noncash activity. As funds were expended for the project, the release of the cash was
reflected as both an inflow on the Net change in restricted cash line and an outflow on the Capital expenditures line in
the Investing Activities section of the Statement of Consolidated Cash Flows. At December 31, 2013 and 2012, Alcoa
had $13 and $171, respectively, of restricted cash remaining related to this transaction. In 2014, the remaining funds
were expended on the project.
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