Alcoa 1999 Annual Report Download - page 51

The transactions for shares under options were:
1999 1998 1997
Outstanding, beginning of year:
Number of options 26.6 21.1 20.1
Weighted average exercise price $33.00 $31.67 $25.87
Granted:
Number of options 21.8 11.8 12.8
Weighted average exercise price $48.93 $34.37 $36.07
Exercised:
Number of options (21.6) (6.0) (11.5)
Weighted average exercise price $34.44 $30.13 $26.40
Expired or forfeited:
Number of options (.3) (.3) (.3)
Weighted average exercise price $37.17 $36.49 $31.70
Outstanding, end of year:
Number of options 26.5 26.6 21.1
Weighted average exercise price $44.29 $33.00 $31.67
Exercisable, end of year:
Number of options 13.2 13.8 10.4
Weighted average exercise price $38.41 $30.47 $26.73
Shares reserved for future options 14.3 11.4 17.8
The following tables summarize certain stock option information at
December 31, 1999:
Options Outstanding
Range of
exercise price Number
Weighted average
remaining life
Weighted average
exercise price
$ 0.25 .3 employment career $ 0.25
$13.93–$27.57 1.9 4.20 22.13
$27.58–$41.21 5.6 5.60 35.12
$41.22–$54.85 12.3 8.21 43.00
$54.86–$68.49 5.9 6.04 62.24
$68.50–$82.13 .5 6.05 73.07
Total 26.5 6.74 44.29
Options Exercisable
Range of
exercise price Number
Weighted average
exercisable price
$ 0.25 .3 $ 0.25
$13.93–$27.57 1.9 22.13
$27.58–$41.21 5.6 35.12
$41.22–$54.85 3.9 44.91
$54.86–$68.49 1.5 62.35
$68.50–$82.13 — —
Total 13.2 $38.41
O. Segment and Geographic Area Information
Alcoa is primarily a producer of aluminum products. Its segments
are organized by product on a worldwide basis. Alcoa’s management
reporting system evaluates performance based on a number of
factors; however, the primary measure of performance is the after-tax
operating profit of each segment. Nonoperating items such as interest
income, interest expense, foreign exchange gains/losses, the effects
of
LIFO accounting and minority interest are excluded from segment
profit. In addition, certain expenses such as corporate general admin-
istrative expenses, depreciation and amortization on corporate assets
and certain special items are not included in segment results. Segment
assets exclude cash, cash equivalents, short-term investments and
all deferred taxes. Segment assets also exclude items such as corpo-
rate fixed assets,
LIFO reserves, goodwill allocated to corporate and
other amounts. In 1999, Alcoa changed its internal reporting system
to include the results of aluminum hedging in the Primary Metals
segment. Previously, these results were reported as reconciling items
between segment
ATOI and net income. Segment results for 1998
and 1997 have been restated to reflect this change.
The accounting policies of the segments are the same as those
described in the Summary of Significant Accounting Policies (Note A).
Transactions between segments are established based on negotiation
between the parties. Differences between segment totals and Alcoa’s
consolidated totals for line items not reconciled are primarily due to
corporate allocations.
Alcoa’s products are used primarily by packaging, transportation
(including aerospace, automotive, rail and shipping), building and
construction, and industrial customers worldwide. Total exports from
the U.S. were $1,309 in 1999, compared with $1,283 in 1998 and $1,207
in 1997. Alcoa’s reportable segments follow.
Alumina and Chemicals. This segment’s activities include the
miningofbauxite,whichisthenrefinedintoalumina.Thealuminais
then sold to internal and external customers worldwide, or processed
into industrial chemical products. The alumina operations of Alcoa
World Alumina and Chemicals
(AWAC) comprise the majority of
this segment.
Primary Metals. T h is g ro up’s fo cu s i s A lc oa’s worl dw ide s melt er
system. Primary Metals receives alumina from the Alumina and
Chemicals segment and produces aluminum ingot to be used by
other Alcoa segments, as well as sold to outside customers. Results
from internal hedging contracts and from marking to market certain
aluminum commodity contracts are also included in this segment.