Hydro Annual Report 2011b

F52
FINANCIAL STATEMENTS
Note 35 - Capital management
Adjusted net interest­bearing debt to equity
Amounts in NOK million, except ratio 2011 2010
Cash and cash equivalents 8 365 10 929
Short­term investments 1 780 1 321
Bank loans and other interest­bearing short­term debt (4 248) (940)
Long­term debt (4 190) (328)
Net interest­bearing debt 1 708 10 983
Cash and cash equivalents and short­term investments in captive insurance company 1)
(1 329) (1 377)
Net pension obligation at fair value, net of expected income tax benefit 2)
(6 916) (5 607)
Operating lease commitments, net of expected income tax benefit 3)
(3 102) (1 746)
Net interest­bearing debt equity accounted investments 4)
(7 388) (7 807)
Short and long­term provisions net of expected income tax benefit, and other liabilites 5)
(2 867) (872)
Adjusted net interest­bearing debt (19 895) (6 427)
Total equity 85 168 57 443
Net pension liability (asset) not recognized (871) 1 180
Expected income tax liability (benefit) 261 (354)
Adjusted equity 84 558 58 269
Adjusted net interest­bearing debt / Adjusted equity ratio 0.24 0.11
1) Cash and cash equivalents and short-term investments in Hydro's captive insurance company Industriforsikring AS are assumed to not be available to
service or repay future Hydro debt, and are therefore excluded from the measure Adjusted net interest-bearing debt.
2) Net pension liability at fair value is the total of both the recognized and unrecognized pension liability. The expected income tax benefit related to the net
pension liability is defined as the total of the net deferred tax asset related to pensions as of December 31 and 30 percent of the unrecognized net pension
liability as of December 31 and is NOK 1 508 million and NOK 878 million, respectively, for 2011 and 2010. The figure also includes the long-term provision
for postretirement medical benefits of NOK 73 million, net of an estimated 30 percent expected tax benefit.
3) Operating lease commitments are discounted using a rate of 3.4 percent and 3.8 percent for 2011 and 2010, respectively. The expected tax benefit on
operating lease commitments is estimated at 30 percent.
4) Net interest-bearing debt equity accounted investments is defined as the total of Hydro's relative ownership percentage of each equity accounted
investment's short and long-term interest-bearing debt less their cash positions, reduced by total outstanding loans from Hydro to the equity accounted
investment. Net interest-bearing debt per individual equity accounted investment is limited to a floor of zero. Currently, the major part of the adjustment is
related to Qatalum.
5) Consists of Hydro's short and long-term provisions related to exit and disposal activities, environmental clean-up, asset retirement obligations, net of an
expected tax benefit estimated at 30 percent, and other non-current financial liabilities.
Note 36 - Dividends
Hydro's Board of Directors normally proposes a dividend per share in connection with the fourth quarter results that are
published in February each year. The Annual General Meeting considers this proposal, normally in May, and the approved
dividend is then paid to the shareholders. Dividends are paid once each calendar year; generally occurring in May. For non-
Norwegian shareholders, Norwegian withholding tax will be deducted at source in accordance with the applicable Norwegian
tax regulations. For additional information related to Hydro's dividend and shareholder policy see note 35 Capital
management.
For fiscal year 2011 the Board of Directors has proposed a dividend of NOK 0.75 per share to be paid in May 2012. The
Annual General Meeting, scheduled to be held May 8, 2012, will consider this dividend proposal. If approved, this would be a
total dividend of approximately NOK 1,527 million. In accordance with IFRS, the fiscal year 2011 proposed dividend is not
recognized as a liability in the 2011 financial statements.