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Inventories
 9 Months Ended
Sep. 30, 2019
Inventory Disclosure [Abstract]  
Inventories

H. Inventories

 

 

 

September 30, 2019

 

 

December 31, 2018

 

Finished goods

 

$

282

 

 

$

346

 

Work-in-process

 

 

276

 

 

 

189

 

Bauxite and alumina

 

 

493

 

 

 

609

 

Purchased raw materials

 

 

447

 

 

 

529

 

Operating supplies

 

 

151

 

 

 

146

 

 

 

$

1,649

 

 

$

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 third quarter and the nine months ended September 30, 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 third quarter ended September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

2,534

 

 

$

(49

)

 

$

2,485

 

Provision for income taxes

 

251

 

 

 

9

 

 

 

260

 

Net income

 

155

 

 

 

40

 

 

 

195

 

Net income attributable to noncontrolling interest

 

196

 

 

 

5

 

 

 

201

 

Net loss attributable to Alcoa Corporation

 

(41

)

 

 

35

 

 

 

(6

)

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.22

)

 

$

0.19

 

 

$

(0.03

)

Diluted

 

(0.22

)

 

 

0.19

 

 

 

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the third quarter ended

     September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

337

 

 

$

40

 

 

$

377

 

Comprehensive income attributable to noncontrolling interest

 

151

 

 

 

5

 

 

 

156

 

Comprehensive income attributable to Alcoa Corporation

 

186

 

 

 

35

 

 

 

221

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Operations for the nine months ended September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

7,547

 

 

$

(7

)

 

$

7,540

 

Provision for income taxes

 

569

 

 

 

—

 

 

 

569

 

Net income

 

659

 

 

 

7

 

 

 

666

 

Net income attributable to noncontrolling interest

 

475

 

 

 

(8

)

 

 

467

 

Net income attributable to Alcoa Corporation

 

184

 

 

 

15

 

 

 

199

 

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.99

 

 

$

0.08

 

 

$

1.07

 

Diluted

 

0.97

 

 

 

0.09

 

 

 

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the nine months ended

     September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

864

 

 

$

7

 

 

$

871

 

Comprehensive income attributable to noncontrolling interest

 

238

 

 

 

(8

)

 

 

230

 

Comprehensive income attributable to Alcoa Corporation

 

626

 

 

 

15

 

 

 

641

 

 

 

 

 

 

 

 

 

 

 

 

 

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 nine months ended September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

659

 

 

$

7

 

 

$

666

 

Deferred income taxes

 

(16

)

 

 

—

 

 

 

(16

)

(Increase) in inventories

 

(279

)

 

 

(7

)

 

 

(286

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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 September 30, 2019 and for the third quarter and nine months then ended:  

 

 

 

 

 

As Computed under LIFO

 

 

As Reported under Average Cost

 

 

Effect of Change

 

Statement of Consolidated Operations for the third quarter ended September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

2,104

 

 

$

2,120

 

 

$

16

 

Provision for income taxes

 

92

 

 

 

95

 

 

 

3

 

Net loss

 

(128

)

 

 

(147

)

 

 

(19

)

Net income attributable to noncontrolling interest

 

70

 

 

 

74

 

 

 

4

 

Net loss attributable to Alcoa Corporation

 

(198

)

 

 

(221

)

 

 

(23

)

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(1.07

)

 

$

(1.19

)

 

$

(0.12

)

Diluted

 

(1.07

)

 

 

(1.19

)

 

 

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the third quarter ended

     September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

(356

)

 

$

(375

)

 

$

(19

)

Comprehensive loss attributable to noncontrolling interest

 

(14

)

 

 

(10

)

 

 

4

 

Comprehensive loss attributable to Alcoa Corporation

 

(342

)

 

 

(365

)

 

 

(23

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Operations for the nine months ended September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$

6,495

 

 

$

6,489

 

 

$

(6

)

Provision for income taxes

 

348

 

 

 

361

 

 

 

13

 

Net loss

 

(491

)

 

 

(498

)

 

 

(7

)

Net income attributable to noncontrolling interest

 

305

 

 

 

324

 

 

 

19

 

Net loss attributable to Alcoa Corporation

 

(796

)

 

 

(822

)

 

 

(26

)

Earnings per share attributable to Alcoa Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(4.29

)

 

$

(4.43

)

 

$

(0.14

)

Diluted

 

(4.29

)

 

 

(4.43

)

 

 

(0.14

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Comprehensive Income for the nine months ended

     September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

(849

)

 

$

(856

)

 

$

(7

)

Comprehensive income attributable to noncontrolling interest

 

231

 

 

 

250

 

 

 

19

 

Comprehensive loss attributable to Alcoa Corporation

 

(1,080

)

 

 

(1,106

)

 

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet as of September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Inventories

$

1,471

 

 

$

1,649

 

 

$

178

 

Prepaid expenses and other current assets

 

236

 

 

 

245

 

 

 

9

 

Retained deficit

 

(455

)

 

 

(252

)

 

 

203

 

Noncontrolling interest

 

1,887

 

 

 

1,871

 

 

 

(16

)

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Consolidated Cash Flows for the nine months ended September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(491

)

 

$

(498

)

 

$

(7

)

Deferred income taxes

 

46

 

 

 

59

 

 

 

13

 

Decrease in inventories

 

117

 

 

 

111

 

 

 

(6

)