Alcoa 2006 Annual Report Download - page 63

The following tables reconcile segment information to
consolidated totals:
2006 2005 2004
Sales:
Total sales $39,060 $32,271 $28,512
Elimination of intersegment sales (8,697) (6,707) (5,896)
Corporate 16 4 (7)
Consolidated sales $30,379 $25,568 $22,609
Net income:
ATOI $ 3,551 $ 2,139 $ 2,105
Unallocated amounts (net of tax):
Impact of LIFO (170) (99) (73)
Interest income 58 42 26
Interest expense (250) (220) (176)
Minority interests (436) (259) (245)
Corporate expense (317) (312) (283)
Restructuring and other
charges (379) (197) 23
Discontinued operations 87 (22) (59)
Accounting change —(2) —
Other 104 163 (8)
Consolidated net income $ 2,248 $ 1,233 $ 1,310
Assets:
Total segment assets $30,879 $26,201 $24,656
Elimination of intersegment
receivables (727) (193) (438)
Unallocated amounts:
Cash, cash equivalents, and
short-term investments 512 769 463
Deferred tax assets 2,241 1,783 1,871
Corporate goodwill 1,583 1,597 1,613
Corporate fixed assets 791 753 595
LIFO reserve (1,077) (836) (670)
Assets held for sale 979 1,377 1,953
Other 2,002 2,245 2,566
Consolidated assets $37,183 $33,696 $32,609
Geographic information for revenues and long-lived
assets is as follows:
2006 2005 2004
Revenues:
U.S. $17,141 $14,923 $13,660
Australia 3,160 2,464 1,971
Spain 1,813 1,451 1,307
Hungary 1,148 855 604
Brazil 1,093 787 603
United Kingdom 956 887 830
Germany 768 779 770
Other 4,284 3,418 2,871
$30,363 $25,564 $22,616
Long-lived assets:*
U.S. $10,892 $10,907 $11,271
Australia 3,029 2,703 2,262
Canada 2,437 2,508 2,537
Brazil 1,525 1,116 797
Iceland 1,274 505 108
United Kingdom 754 686 796
Other 3,374 2,462 2,305
$23,285 $20,887 $20,076
* Long-lived assets include intangible assets.
R. Preferred and Common Stock
Preferred Stock. Alcoa has two classes of preferred stock.
Serial preferred stock has 660,000 shares authorized with a
par value of $100 per share and an annual $3.75 cumulative
dividend preference per share. There were 546,024 of such
shares outstanding at the end of each year presented. Class
B serial preferred stock has 10 million shares authorized
(none issued) and a par value of $1 per share.
Common Stock. There are 1.8 billion shares
authorized at a par value of $1 per share, and 924,574,538
shares were issued at the end of each year presented. As of
December 31, 2006, 126 million shares of common stock
were reserved for issuance under Alcoa’s stock-based
compensation plans. Alcoa issues treasury shares for the
exercise of employee stock options. Alcoa has a policy of
repurchasing shares to cover the dilution associated with
option exercises and expects to repurchase shares in an
amount that approximates options exercised each year.
In addition to this policy, Alcoa has an existing share
repurchase program that authorizes the repurchase of up to
50 million shares of common stock from time to time and
has no expiration date. As of December 31, 2006,
approximately 33 million shares have been repurchased
under this program. In January 2007, Alcoa announced a
new share repurchase program that authorizes the
repurchase of up to 10% of the company’s outstanding
common stock at December 31, 2006 over the next three
years.
Share Activity (number of shares)
Common stock
Treasury Net outstanding
Balance at end of 2003 (56,083,852) 868,490,686
Treasury shares purchased (1,777,354) (1,777,354)
Stock issued:
Compensation plans 4,266,751 4,266,751
Balance at end of 2004 (53,594,455) 870,980,083
Treasury shares purchased (4,334,000) (4,334,000)
Stock issued:
Compensation plans 3,622,430 3,622,430
Balance at end of 2005 (54,306,025) 870,268,513
Treasury shares purchased (9,100,000) (9,100,000)
Stock issued:
Compensation plans 6,571,031 6,571,031
Balance at end of 2006 (56,834,994) 867,739,544
Stock options under Alcoa’s stock-based compensation
plans have been granted at not less than market prices on
the dates of grant. Beginning in 2006, performance stock
options were granted to certain individuals. The final
number of options granted is based on the outcome of
Alcoa’s annual return on capital results against the results of
a comparator group of companies. However, an individual
can earn a minimum number of options if Alcoa’s return on
capital meets or exceeds its cost of capital. Stock option
features based on date of original grant are as follows:
Date of
original grant Vesting Term Reload feature
2002 and
prior
One year 10 years One reload
over option
term
2003 3 years
(1/3 each year)
10 years One reload in
2004 for 1/3
vesting in
2004
2004 and
forward
3 years
(1/3 each year)
6 years None
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