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Inventories
 3 Months Ended
Mar. 31, 2019
Inventory Disclosure [Abstract]  
Inventories

H. Inventories

 

 

 

March 31, 2019

 

 

December 31, 2018

 

Finished goods

 

$

304

 

 

$

346

 

Work-in-process

 

 

297

 

 

 

189

 

Bauxite and alumina

 

 

525

 

 

 

609

 

Purchased raw materials

 

 

528

 

 

 

529

 

Operating supplies

 

 

145

 

 

 

146

 

 

 

$

1,799

 

 

$

1,819

 

 

As of January 1, 2019, the Company changed its method for valuing certain of its inventories held in the United States and Canada to the average cost method of accounting from the LIFO method. Inventories held by other subsidiaries of the parent company were previously, and continue to be, valued principally using the average cost method. Management believes that the change in accounting is preferable as it results in a consistent method to value inventory across all regions of the business, it improves comparability with industry peers, and it more closely resembles the physical flow of inventory.

The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to all periods presented. This change resulted in a favorable adjustment to Retained earnings of $205 and an unfavorable adjustment to Noncontrolling interest of $35 as of January 1, 2018.  In addition, certain financial statement line items in the Company’s Statement of Consolidated Operations, Statement of Consolidated Comprehensive Income, and Statement of Consolidated Cash Flows for the three months ended March 31, 2018 and Consolidated Balance Sheet as of December 31, 2018 were adjusted as follows:

 

 

As Originally Reported

 

 

Effect of Change

 

 

As Adjusted

 

Statement of Consolidated Operations for the first quarter ended March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

2,381

 

 

$

(79

)

 

$

2,302

 

Provision for income taxes

 

138

 

 

 

13

 

 

 

151

 

Net income

 

274

 

 

 

66

 

 

 

340

 

Net income attributable to noncontrolling interest

 

124

 

 

 

21

 

 

 

145

 

Net income attributable to Alcoa Corporation

 

150

 

 

 

45

 

 

 

195

 

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.81

 

 

$

0.24

 

 

$

1.05

 

Diluted

 

0.80

 

 

 

0.24

 

 

 

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the first quarter ended

     March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

893

 

 

$

66

 

 

$

959

 

Comprehensive income attributable to Alcoa Corporation

 

802

 

 

 

45

 

 

 

847

 

Comprehensive income attributable to noncontrolling interest

 

91

 

 

 

21

 

 

 

112

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet as of December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

Inventories

$

1,644

 

 

$

175

 

 

$

1,819

 

Prepaid expenses and other current assets

 

301

 

 

 

19

 

 

 

320

 

Retained earnings

 

341

 

 

 

229

 

 

 

570

 

Noncontrolling interest

 

2,005

 

 

 

(35

)

 

 

1,970

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Cash Flows for the three months ended March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

274

 

 

$

66

 

 

$

340

 

Deferred income taxes

 

(11

)

 

 

13

 

 

 

2

 

(Increase) in inventories

 

(169

)

 

 

(79

)

 

 

(248

)

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table compares the amounts that would have been reported under LIFO with the amounts recorded under the average cost method in the Consolidated Financial Statements as of March 31, 2019 and for the three months then ended:  

 

 

 

 

 

As Computed under LIFO

 

 

As Reported under Average Cost

 

 

Effect of Change

 

Statement of Consolidated Operations for the first quarter ended March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

2,228

 

 

$

2,180

 

 

$

(48

)

Provision for income taxes

 

137

 

 

 

150

 

 

 

13

 

Net loss

 

(93

)

 

 

(58

)

 

 

35

 

Net income attributable to noncontrolling interest

 

127

 

 

 

141

 

 

 

14

 

Net loss attributable to Alcoa Corporation

 

(220

)

 

 

(199

)

 

 

21

 

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(1.19

)

 

$

(1.07

)

 

$

0.12

 

Diluted

 

(1.19

)

 

 

(1.07

)

 

 

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the first quarter ended

     March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

(353

)

 

$

(318

)

 

$

35

 

Comprehensive income attributed to noncontrolling interest

 

136

 

 

 

150

 

 

 

14

 

Comprehensive loss attributable to Alcoa Corporation

$

(489

)

 

$

(468

)

 

$

21

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet as of March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

Inventories

$

1,579

 

 

$

1,799

 

 

$

220

 

Prepaid expenses and other current assets

 

276

 

 

 

285

 

 

 

9

 

Retained earnings

 

121

 

 

 

371

 

 

 

250

 

Noncontrolling interest

 

1,947

 

 

 

1,926

 

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Cash Flows for the three months ended March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(93

)

 

$

(58

)

 

$

35

 

Deferred income taxes

 

20

 

 

 

33

 

 

 

13

 

Decrease (Increase) in inventories

 

65

 

 

 

17

 

 

 

(48

)