EX-99.2 3 a51970456ex99_2.htm EXHIBIT 99.2
Exhibit 99.2


As of January 1, 2019, the Company changed its accounting method for valuing certain inventories in the United States and Canada from last-in, first-out (LIFO) to average cost. 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 principle is preferable as it results in a consistent method to value inventory across all regions in our business, it improves comparability with our peers, and it more closely resembles the physical flow of our inventory. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented, and certain financial statement line items in the Company’s consolidated financial statements for the 2018 interim and full year periods were adjusted, as follows:

Reconciliation of Change in Inventory Accounting Method (unaudited)
(dollars in millions, except per share)
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Year
Ended
 
   
31-Mar-18
   
30-Jun-18
   
30-Sep-18
   
31-Dec-18
   
31-Dec-18
 
Statement of consolidated operations as originally reported:
                             
Cost of goods sold
 
$
2,381
   
$
2,632
   
$
2,534
   
$
2,534
   
$
10,081
 
Provision for income taxes
   
138
     
180
     
251
     
157
     
726
 
Net income
   
274
     
230
     
155
     
212
     
871
 
Net income attributable to noncontrolling interest
   
124
     
155
     
196
     
169
     
644
 
Net income (loss) attributable to Alcoa Corporation
   
150
     
75
     
(41
)
   
43
     
227
 
Earnings per share attributable to Alcoa Corporation common shareholders:
                                       
Basic
 
$
0.81
   
$
0.40
   
$
(0.22
)
 
$
0.23
   
$
1.22
 
Diluted
 
$
0.80
   
$
0.39
   
$
(0.22
)
 
$
0.23
   
$
1.20
 
                                         
Segment Information - Footnote E as originally reported:
                                       
Segment adjusted EBITDA - Aluminum
 
$
153
   
$
231
   
$
73
   
$
(53
)
 
$
404
 
Segment adjusted EBITDA - Total
   
655
     
969
     
839
     
740
     
3,203
 
Corporate inventory accounting(1)
   
31
     
(32
)
   
(17
)
   
29
     
11
 
                                         
Effect of change:
                                       
Statement of consolidated operations
                                       
Cost of goods sold
 
$
(79
)
 
$
121
   
$
(49
)
 
$
(21
)
 
$
(28
)
Provision for income taxes
   
13
     
(22
)
   
9
     
6
     
6
 
Net income
   
66
     
(99
)
   
40
     
15
     
22
 
Net income attributable to noncontrolling interest
   
21
     
(34
)
   
5
     
7
     
(1
)
Net income (loss) attributable to Alcoa Corporation
   
45
     
(65
)
   
35
     
8
     
23
 
Earnings per share attributable to Alcoa Corporation common shareholders:
                                       
Basic
 
$
0.24
   
$
(0.35
)
 
$
0.19
   
$
0.04
   
$
0.12
 
Diluted
 
$
0.24
   
$
(0.34
)
 
$
0.19
   
$
0.04
   
$
0.13
 
                                         
Segment Information - Footnote E
                                       
Segment adjusted EBITDA - Aluminum
 
$
34
   
$
(1
)
 
$
11
   
$
3
   
$
47
 
Segment adjusted EBITDA - Total
   
34
     
(1
)
   
11
     
3
     
47
 
Corporate inventory accounting(1)
   
45
     
(120
)
   
38
     
18
     
(19
)
                                         
Statement of consolidated operations as adjusted:
                                       
Cost of goods sold
 
$
2,302
   
$
2,753
   
$
2,485
   
$
2,513
   
$
10,053
 
Provision for income taxes
   
151
     
158
     
260
     
163
     
732
 
Net income
   
340
     
131
     
195
     
227
     
893
 
Net income attributable to noncontrolling interest
   
145
     
121
     
201
     
176
     
643
 
Net income (loss) attributable to Alcoa Corporation
   
195
     
10
     
(6
)
   
51
     
250
 
Earnings per share attributable to Alcoa Corporation common shareholders:
                                       
Basic
 
$
1.05
   
$
0.05
   
$
(0.03
)
 
$
0.27
   
$
1.34
 
Diluted
 
$
1.04
   
$
0.05
   
$
(0.03
)
 
$
0.27
   
$
1.33
 
Segment Information - Footnote E as adjusted:
                                       
Segment adjusted EBITDA - Aluminum
 
$
187
   
$
230
   
$
84
   
$
(50
)
 
$
451
 
Segment adjusted EBITDA - Total
   
689
     
968
     
850
     
743
     
3,250
 
Corporate inventory accounting(1)
   
76
     
(152
)
   
21
     
47
     
(8
)

(1)
Concurrent with the change in inventory accounting method as of January 1, 2019, management elected to change the label of this line item, which is subsequently labeled as Intersegment eliminations.

Consolidated Balance Sheet as originally reported at December 31, 2018:
     
Inventories
 
$
1,644
 
Prepaid expenses and other current assets
   
301
 
Retained earnings
   
341
 
Noncontrolling interest
   
2,005
 
         
Effect of change:
       
Inventories
 
$
175
 
Prepaid expenses and other current assets
   
19
 
Retained earnings
   
229
 
Noncontrolling interest
   
(35
)
         
Consolidated Balance Sheet as adjusted at December 31, 2018:
       
Inventories
 
$
1,819
 
Prepaid expenses and other current assets
   
320
 
Retained earnings
   
570
 
Noncontrolling interest
   
1,970