Alcoa 2015 Annual Report Download - page 169

In 2015, basic average shares outstanding and diluted average shares outstanding were the same because the effect of
potential shares of common stock was anti-dilutive since Alcoa generated a net loss. As a result, 77 million share
equivalents related to mandatory convertible preferred were not included in the computation of diluted EPS.
Additionally, 20 million stock awards, 33 million stock options, and 15 million (weighted-average) share equivalents
related to convertible debt (acquired from RTI—see Note F) were not included in the computation of diluted EPS. Had
Alcoa generated net income in 2015, 77 million, 15 million, 12 million, and 3 million potential shares of common
stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options,
respectively, would have been included in diluted average shares outstanding.
In 2014, 16 million and 22 million share equivalents related to convertible notes and mandatory convertible preferred
stock, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.
In 2013, basic average shares outstanding and diluted average shares outstanding were the same because the effect of
potential shares of common stock was anti-dilutive since Alcoa generated a net loss. As a result, 89 million share
equivalents related to convertible notes, 16 million stock awards, and 12 million stock options were not included in the
computation of diluted EPS. Had Alcoa generated sufficient income from continuing operations in 2013, 89 million,
9 million, and 2 million potential shares of common stock related to the convertible notes, stock awards, and stock
options, respectively, would have been included in diluted average shares outstanding.
Options to purchase 26 million, 3 million, and 12 million shares of common stock at a weighted average exercise price
of $12.75, $16.24, and $15.81 per share were outstanding as of December 31, 2015, 2014, and 2013, respectively, but
were not included in the computation of diluted EPS because they were anti-dilutive, as the exercise prices of the
options were greater than the average market price of Alcoa’s common stock.
T. Income Taxes
The components of income (loss) before income taxes were as follows:
2015 2014 2013
United States $(607) $(125) $(1,269)
Foreign 855 622 (547)
$ 248 $ 497 $(1,816)
The provision for income taxes consisted of the following:
2015 2014 2013
Current:
Federal* $ 3 $ (3) $ 14
Foreign 409 357 235
State and local (1) 1 1
411 355 250
Deferred:
Federal* (108) 7 84
Foreign 142 (41) 95
State and local - (1) (1)
34 (35) 178
Total $ 445 $320 $428
* Includes U.S. taxes related to foreign income
The exercise of employee stock options generated a tax benefit of $3 and $9 in 2015 and 2014, respectively, and a tax
charge of $1 in 2013, representing only the difference between compensation expense recognized for financial
reporting and tax purposes. These amounts decreased equity and increased either current taxes payable or deferred tax
assets (not operating losses) in the respective periods.
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