that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on facts currently available, management believes that the disposition of matters that are pending or asserted will not have a materially adverse effect on the financial position or liquidity of the company. Aluminio is a participant in several hydroelectric power construction projects in Brazil for purposes of increasing its energy self-sufficiency and providing a long-term, low-cost source of power for its facilities. The completed and committed hydroelectric construction projects that Aluminio participates in are outlined in the following tables. Completed projects Date completed Investment participation Share of output Debt guarantee Debt guarantee through 2013 Machadinho 2002 27.23% 22.62% 35.53% $105 Committed projects Scheduled completion date Share of output Investment participation Total estimated project costs Aluminio’s share of project costs Performance bond guarantee Barra Grande 2006 42.20% 42.20% $449 $189 $ 6 Pai-Quereˆ 2008 35.00% 35.00% $261 $ 91 $ 2 Estreito 2009 19.08% 19.08% $741 $141 $11 SerradoFaca ˜o 39.50% 39.50% $218 $ 86 $ 4 Aluminio committed to taking a share of the output of the completed Machadinho project for 30 years at cost (including cost of financing the project). In the event that other partici- pants in this project fail to fulfill their financial responsibilities, Aluminio may be required to fund a portion of the deficiency. In accordance with the agreement, if Aluminio funds any such deficiency, its participation and share of the output from the project will increase proportionately. These projects were committed to during 2001 and 2002, and the Barra Grande project commenced construction in 2002. At December 31, 2004, approximately 60% of the long-term financing for the Barra Grande project was obtained, of which Aluminio guaranteed 42.20% based on its investment partici- pation. The plans for financing the other projects have not yet been finalized. It is anticipated that a portion of the project costs will be financed with third parties. Aluminio may be required to provide guarantees of project financing or commit to additional investments as these projects progress. In 2004, the Installation Permit of Serra do Faca ˜o was temporarily suspended by legal injunction from the Brazilian Judicial Department (Public Ministry). As a result, the Serra do Faca ˜o project has been suspended. During the second quarter of 2003, the participants in the Santa Isabel project formally requested the return of the perfor- mance bond related to the license to construct the hydroelectric project. This project has been terminated. Aluminio accounts for the Machadinho and Barra Grande hydroelectric projects on the equity method. Its total investment was $124 and $136 at December 31, 2004 and 2003, respec- tively. There have been no significant investments made in any of the other projects. total$483in2005,$383in2006,$289in2007,$277in2008, $277 in 2009, and $2,754 thereafter. AofA is obligated to make minimum payments related to these contracts totaling $135 in2005,$103in2006,$115in2007,$124in2008,$125in2009, and $802 thereafter. Expenditures under these take-or-pay contracts totaled $356 in 2004, $266 in 2003, and $178 in 2002. Alcoa has standby letters of credit related to environmental, insurance, and other activities. The total amount committed under these letters of credit, which expire at various dates in 2005 through 2013, was $293 at December 31, 2004. In October of 2004, Alcoa agreed to acquire a 20% interest in a consortium formed to acquire the Dampier to Bunbury Natural Gas Pipeline (DBNGP) in exchange for an initial cash investment of $17, which is classified as an equity investment. Alcoa has committed to an additional $72 in investment to be paid as the pipeline expands through 2008. The investment in the DBNGP was made in order to secure a competitively priced long-term supply of power to Alcoa’s refineries in Western Australia. In addition to its equity ownership, Alcoa has an agreement to purchase natural gas from the DBNGP until after 2016. Alcoa’s maximum exposure to loss on the investment and the related contract is approximately $412. Alcoa of Australia (AofA) is party to a number of natural gas, steam, caustic soda, and electricity contracts that expire between 2005 and 2025. Commitments related to these contracts The changes in equity income for all years presented were primarily due to Alcoa’s investment in Elkem. The gain on the sale of assets in 2004 was primarily the result of the sale of 40% of Alcoa’s interest in the Juruti bauxite project in Brazil, which resulted in a $37 gain in 2004. The gains on sales of assets in 2003 and 2002 were primarily associated with dispositions of office space and other smaller noncore business assets. In 2004, Alcoa recognized a gain of $58 on the early retirement of long- term debt and the associated settlement of interest rate swaps. Also in 2004, other income included a $35 gain on the termina- tion of an alumina tolling arrangement, primarily offset by environmental litigation settlements of $20. The increase in other income from 2002 to 2003 is primarily due to a $105 gain from insurance settlements of a series of historical environmen- tal matters in the U.S. and an increase in the cash surrender value of employee life insurance. 53 O. Other Income, Net 2004 2003 2002 Equity income $145 $138 $ 72 Interest income 41 38 46 Foreign currency losses (27) (81) (30) Gains on sales of assets 44 37 52 Net gain on early retirement of debt and interest rate swap settlements (K) 58 — — Other income 7 142 38 $268 $274 $178