Case Document 1176 Filed in TXSB on 02/14/17 Page 1 of 14

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1 Case Document 1176 Filed in TXSB on 02/14/17 Page 1 of 14

2 Case Document 1176 Filed in TXSB on 02/14/17 Page 2 of 14 ASSETS FILING DATE* COMPARATIVE BALANCE SHEETS January 11, 2016 March 31, 2016 June 30, 2016 September 30, 2016 October 31, 2016 November 30, 2016 December 31, 2016 January 31, 2017 CURRENT ASSETS Cash 17,155,337 8,393,654 8,464,898 5,725,388 2,620,212 4,845,599 3,177,071 2,428,315 Accounts Receivable, Net 7,197,912 16,300,753 7,098,072 4,721,706 4,830,319 5,290,226 5,836,172 6,501,471 Notes Receivable, Net 5,625,000 5,625,000 5,625,000 5,625,000 5,625,000 5,625,000 5,625,000 5,625,000 Inventory: Lower of Cost or Market 38,726,457 37,941,967 37,631,117 26,727,372 26,784,199 26,634,833 26,840,187 26,878,737 Prepaid Expenses 6,699,108 7,354,688 3,510,308 1,593,296 1,593,296 1,606,296 1,538,308 1,542,848 Investments Other TOTAL CURRENT ASSETS 75,403,813 75,616,061 62,329,395 44,392,762 41,453,026 44,001,954 43,016,738 42,976,371 PROPERTY, PLANT & COST 238,583, ,787, ,542, ,838, ,838, ,838, ,838, ,838,562 Less Accumulated Depreciation (79,184,211) (83,274,823) (87,389,906) (91,182,610) (91,182,610) (91,182,610) (91,182,610) (91,182,610) NET BOOK VALUE OF PP & E 159,399, ,512, ,152, ,655, ,655, ,655, ,655, ,655,952 OTHER ASSETS 1. Tax Deposits Investments in Subsidiaries Electric Deposit Notes Receivable 14,080,483 12,673,234 11,266,983 9,851,742 6,536,143 6,091,446 5,647,548 5,204, Other 5,733,362 15,716,460 15,710,142 22,968,883 22,968,883 22,968,882 18,054,277 18,054,276 TOTAL ASSETS $ 254,617,187 $ 257,518,643 $ 238,458,676 $ 192,869,339 $ 186,614,004 $ 188,718,234 $ 182,374,515 $ 181,891,505 * Filing Date (January 11, 2016) balances reflect the amounts of assets and liabilities reported on the Debtors Schedules of Assets and Liabilities filed on February 2, 2016 (Docket Nos and 0211) adjusted to eliminate any duplicate balances between the Debtors. These balances may vary from those reported in the Debtors books and records as a result of differences between the requirements of IFRS and other accounting conventions and the purposes for which balances are reported on the Schedules of Assets and Liabilities. See the accompanying Notes to Monthly Operating Report for additional discussion. (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. (2) The amounts expressed throughout this report do not reflect market value. (3) The category Notes Receivable consists primarily of the net amount of receivables on account of promissory notes issued by Nashtec, LLC. MOR-2 Revised 07/01/98

3 Case Document 1176 Filed in TXSB on 02/14/17 Page 3 of 14 LIABILITIES & OWNER'S FILING DATE* COMPARATIVE BALANCE SHEETS EQUITY January 11, 2016 March 31, 2016 June 30, 2016 September 30, 2016 October 31, 2016 November 30, 2016 December 31, 2016 January 31, 2017 LIABILITIES POST-PETITION LIABILITIES (MOR-4) 17,078,348 19,237,607 26,503,605 18,527,829 22,721,739 25,197,209 26,559,247 PRE-PETITION LIABILITIES Notes Payable - Secured 95,000,000 95,000,000 95,000,000 95,000,000 95,000,000 95,000,000 95,000,000 95,000,000 Priority Debt Federal Income Tax FICA/Withholding Unsecured Liabilities 1 120,205, ,881, ,020,784 83,750, ,225, ,979,767 97,618,167 96,875,531 Other 2,972, TOTAL PRE-PETITION LIABILITIES 218,177, ,881, ,020, ,750, ,225, ,979, ,618, ,875,531 TOTAL LIABILITIES 218,177, ,960, ,258, ,254, ,753, ,701, ,815, ,434,778 OWNER'S EQUITY (DEFICIT) PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS: Filing Date 38,729,717 38,729,717 38,729,717 38,729,717 38,729,717 38,729,717 38,729,717 RETAINED EARNINGS: Post Filing Date (17,171,313) (37,529,433) (51,114,670) (68,869,304) (70,712,990) (74,170,578) (75,272,990) TOTAL OWNER'S EQUITY (NET WORTH) 21,558,405 1,200,284 (12,384,953) (30,139,587) (31,983,272) (35,440,860) (36,543,273) TOTAL LIABILITIES & OWNERS EQUITY $ 257,518,643 $ 238,458,676 $ 192,869,339 $ 186,614,004 $ 188,718,234 $ 182,374,515 $ 181,891,505 * Filing Date (January 11, 2016) balances reflect the amounts of assets and liabilities reported on the Debtors Schedules of Assets and Liabilities filed on February 2, 2016 (Docket Nos and 0211) adjusted to eliminate any duplicate balances between the Debtors. These balances may vary from those reported in the Debtors books and records as a result of differences between the requirements of IFRS and other accounting conventions and the purposes for which balances are reported on the Schedules of Assets and Liabilities. See the accompanying Notes to Monthly Operating Report for additional discussion. (1) Unsecured Liabilities include: (1) Sherwin Alumina Company Welfare Plans for $0 as they were eliminated in December 2016 and have no future liability; (2) Sherwin Alumina Company Pension Plan For Hourly Employees for $30,668,634.00; and (3) Sherwin Alumina Company Retirement Plan For Salaried Employees for $14,336,113. Pursuant to IAS 19, certain adjustments were made to reflect the year-end pension reserve liability obligation. (2) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. MOR-3 Revised 07/01/98

4 Case Document 1176 Filed in TXSB on 02/14/17 Page 4 of 14 SCHEDULE OF POST-PETITION LIABILITIES March 31, 2016 June 30, 2016 September 30, 2016 October 31, 2016 November 30, 2016 December 31, 2016 January 31, 2017 TRADE ACCOUNTS PAYABLE 7,090,860 9,601,462 17,452,834 2,009,818 2,072, , ,908 TAX PAYABLE Federal Taxes State Taxes 1 296, , ,668 47, Property Taxes 2 293, , ,812 1,100,087 1,319,362 1,538, ,754 Other Taxes TOTAL TAXES PAYABLE 590, , ,480 1,147,653 1,319,453 1,538, ,754 SECURED DEBT POST-PETITION ,000,000 18,000,000 20,500,000 23,000,000 ACCRUED INTEREST PAYABLE ACCRUED PROFESSIONAL FEES * 3 2,213,876 2,580,593-1,689, ,000 1,915,600 1,953,000 OTHER ACCRUED LIABILITIES 1. Purchase Clearing Report and Received Not Invoiced 368, ,709 69,796 53,877 52, Contract Labor and Other Accruals 4,297,371 4,578,168 7,989, , , , , Accrued Vacation / Sick Pay 2,517,429 1,301, TOTAL POST-PETITION LIABILITIES (MOR-3) $ 17,078,348 $ 19,237,607 $ 26,503,605 $ 18,527,829 $ 22,721,739 $ 25,197,209 $ 26,559,247 *Payment requires Court Approval (1) State Use Taxes are due and payable one month in arrears. (2) Property Taxes were paid in January 2017 for the prior year per State regulations. (3) Accrued Professional Fee payments are subject to the Interim Compensation Order. (4) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. MOR-4 Revised 07/01/98

5 Case Document 1176 Filed in TXSB on 02/14/17 Page 5 of 14 AGING OF POST-PETITION LIABILITIES January 31, 2017 DAYS TOTAL TRADE POST-PETITION STATE PROPERTY ACCRUED ACCOUNTS DEBT TAXES 1 TAXES 2 LIABILITIES ,471, ,258 2,500, ,754 2,579, ,840, ,590 2,500, ,012,743 12,743 5,000, ,234, ,316 13,000, TOTAL $ 26,559,247 $ 836,908 $ 23,000,000 $ - $ 142,754 $ 2,579,586 AGING OF ACCOUNTS RECEIVABLE MONTH TOTAL Customer 1 Customer 2 Customer 3 Customer 4 Other DAYS 752,868-53, , , DAYS 468, ,211 - (89,461) DAYS 468, ,789 - (89,839) 91+ DAYS 4,810,903-35,616 5,796,164 1,864,962 (2,885,839) TOTAL $ 6,501,471 $ - $ 89,541 $ 7,467,791 $ 1,864,962 $ (2,920,823) (1) State Use Taxes are due and payable one month in arrears. (2) Property Taxes were paid in January 2017 for the prior year per State regulations. (3) Other Accounts Receivable includes allowance for bad debt and Other Accounts Receivable. (4) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. MOR-5 Revised 07/01/98

6 Case Document 1176 Filed in TXSB on 02/14/17 Page 6 of 14 STATEMENT OF INCOME (LOSS) QUARTER QUARTER QUARTER MONTH MONTH MONTH MONTH FILING TO Q (1/11-3/31) Q Q October November December January DATE REVENUES (MOR-1) 52,142,832 57,274,616 40,765,219 19, ,201,777 TOTAL COST OF REVENUES (61,179,419) (64,400,919) (87,266,138) (3,453,718) (1,191,792) (1,402,047) (1,130,481) (220,024,515) GROSS PROFIT (9,036,587) (7,126,302) (46,500,919) (3,434,608) (1,191,792) (1,402,047) (1,130,481) (69,822,738) OPERATING EXPENSES: - - Selling & Marketing General & Administrative (61,468) (68,988) (66,990) (21,037) (20,833) (25,674) (11,669) (276,659) Insiders Compensation 3 (180,938) (197,151) (469,156) (38,217) (38,217) (38,217) (38,217) (1,000,113) Professional Fees (2,789,551) (5,254,621) (315,208) (956,625) (333,729) (2,052,708) (797,777) (12,500,219) Other Income/(Expense) (42,818) (3,490,942) 54, ,900 (135,189) 194, ,677 (2,240,927) TOTAL OPERATING EXPENSES (3,074,775) (9,011,702) (797,204) (777,979) (527,968) (1,922,304) 94,014 (16,017,918) INCOME BEFORE INT, DEPR/TAX (MOR-1) (12,111,362) (16,138,004) (47,298,123) (4,212,587) (1,719,760) (3,324,351) (1,036,467) (85,840,655) INTEREST EXPENSE (112,045) (14,935) (22,809) (49,791) (123,925) (133,237) (65,945) (522,686) DEPRECIATION (3,779,140) (4,205,181) (3,799,024) (11,783,345) OTHER (INCOME) EXPENSE* OTHER ITEMS** TOTAL INT, DEPR & OTHER ITEMS (3,891,185) (4,220,116) (3,821,833) (49,791) (123,925) (133,237) (65,945) (12,306,031) NET INCOME BEFORE TAXES (16,002,546) (20,358,120) (51,119,956) (4,262,378) (1,843,685) (3,457,588) (1,102,412) (98,146,687) FEDERAL INCOME TAXES (1,168,766) (1,168,766) NET INCOME (LOSS) (MOR-1) $ (17,171,313) $ (20,358,120) $ (51,119,956) $ (4,262,378) $ (1,843,685) $ (3,457,588) $ (1,102,412) $ (99,315,453) Accrual Accounting Required, Otherwise Footnote with Explanation. * Footnote Mandatory. * * Unusual and/or infrequent item(s) outside the ordinary course of business requires footnote. (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. (2) Accrued Professional Fee payments are subject to the Interim Compensation Order. (3) Amount excludes payments to Glencore for bauxite purchases and administrative charges, which are part of Total Cost of Revenues. MOR-6 Revised 07/01/98

7 Case Document 1176 Filed in TXSB on 02/14/17 Page 7 of 14 Actual Actual Actual Actual Actual Actual Actual CASH RECEIPTS AND QUARTER QUARTER QUARTER MONTH MONTH MONTH MONTH FILING TO DISBURSEMENTS Q (1/11-3/31) Q2 Q3 October November December January DATE 1. CASH-BEGINNING OF MONTH $ 17,155,337 $ 8,393,654 $ 8,464,898 $ 5,725,388 $ 2,620,212 $ 4,845,599 $ 3,177,071 $ 17,155,337 RECEIPTS: 2. MISCELLANEOUS RECEIPTS 2,717,897 4,120,988 3,872, , , , ,191 12,033, NORANDA PRINCIPAL AND INTEREST ALUMINA RECEIPTS 44,928,518 65,991,119 43,065, ,985, SALE OF ASSETS PASS-THROUGH RECEIPT 716,301 12,436 25, , DRAWDOWN ON DIP CREDIT FACILITY ,000,000 5,000,000 2,500,000 2,500,000 23,000,000 TOTAL RECEIPTS** $ 48,362,716 $ 70,124,543 $ 46,963,526 $ 13,520,587 $ 5,184,078 $ 3,011,193 $ 2,606,191 $ 189,772,834 - DISBURSEMENTS: - 8. PAYROLL $ 4,397,157 3,995,163 $ $ 5,437,072 $ 506,062 $ 150,457 $ 165,952 $ 122,431 $ 14,774, INSURANCE & TAXES 3,155,340 2,080,632 3,303, , , ,199 1,852,075 11,768, ACCOUNTS PAYABLE 15,069,235 21,518,939 19,016,022 3,245, ,128 1,815, ,630 61,626, UTILITIES 10,311,294 9,757,755 11,292, ,691 52, , ,454 32,235, CAUSTIC 7,207,103 10,573,451 3,434, ,214, BAUXITE 12,729,756 14,546,392 3,071,590 10,668, ,016, FREIGHT MID-SHIP 2,120,071 1,839,744 1,091, ,051, ND PT FREIGHT & DEMURRAGE 104, , , , DEMURRAGE 8, , OTHER 777,411 1,493,361 1,480, , , , ,823 4,982, PASS-THROUGH DISBURSEMENT 716,301 12,436 25, , DIRECTOR'S FEE 64,986 60,000 62,111 20,000 20,000 20,000 20, ,096 TOTAL DISBURSEMENTS FROM OPERATIONS $ 56,661,175 $ 66,162,214 $ 48,484,749 $ 15,701,897 $ 1,821,463 $ 2,952,381 $ 2,575,413 $ 194,359, PROFESSIONAL FEES 463,224 3,860,759 1,187, ,207 1,020,562 1,600, ,652 9,597, U.S. TRUSTEE FEES - 30,325 30,325 30, , , DIP INTEREST PAYMENTS , , , , ,333 TOTAL DISBURSEMENTS** $ 57,124,399 $ 70,053,299 $ 49,703,037 $ 16,625,762 $ 2,958,691 $ 4,679,721 $ 3,354,947 $ 204,499, NET CASH FLOW $ (8,761,683) $ 71,244 $ (2,739,510) $ (3,105,175) $ 2,225,386 $ (1,668,528) $ (748,756) $ (14,727,022) 24. CASH - END OF MONTH (MOR-2) $ 8,393,654 $ 8,464,898 $ 5,725,388 $ 2,620,212 $ 4,845,599 $ 3,177,071 $ 2,428,315 $ 2,428,315 **Numbers for the current month should balance (match) RECEIPTS and CHECKS/OTHER DISBURSEMENTS lines on MOR-8 (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. MOR-7 Revised 07/01/98

8 Case Document 1176 Filed in TXSB on 02/14/17 Page 8 of 14 BANK NAME Bank of America Bank of America Bank of America Bank of America Bank of America Bank of America Bank of America N/A ACCOUNT NUMBER *****2593 *****5453 *****5466 *****6339 *****1M43 *****1333 *****0712 N/A ACCOUNT TYPE Master Concentration Account Operating Account Payroll Account Farm Operating Account Investment Account Utility Deposit Account Deposit Account Petty Cash TOTAL BANK BALANCE 1,123, ,414 1,500,000-2,635,103 DEPOSITS IN TRANSIT OUTSTANDING CHECKS - (194,338) (12,450) (206,788) ADJUSTED BANK BALANCE $ 1,123,690 $ (194,338) $ (12,450) $ - $ - $ 11,414 $ 1,500,000 $ - $ 2,428,315 BEGINNING CASH - PER BOOKS 1,928,561 (279,910) (33,050) (944) - 62,414 1,500,000-3,177,071 RECEIPTS* - 2,606, ,606,191 TRANSFERS BETWEEN ACCOUNTS (804,871) 763,778 20,600 71,495 - (51,000) (WITHDRAWAL) OR INDIVIDUAL CONTRIBUTION BY DEBTOR MFR CHECKS/OTHER DISBURSEMENTS* - (3,284,396) - (70,550) (3,354,947) ENDING CASH - PER BOOKS $ 1,123,690 $ (194,338) $ (12,450) $ - $ - $ 11,414 $ 1,500,000 $ - $ 2,428,315 *Numbers should balance (match) TOTAL RECEIPTS and TOTAL DISBURSEMENTS lines on MOR-7. (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. (2) Deposit Account *****0712 Reserve account holding proposed Debtors portion contribution to unsecured creditor settlement. CASH ACCOUNT RECONCILIATION January-17 MOR-8 Revised 07/01/98

9 Case Document 1176 Filed in TXSB on 02/14/17 Page 9 of 14 PAYMENTS TO INSIDERS AND PROFESSIONALS Of the total disbursements shown for the month, list the amount paid to insiders (as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the professionals. Also, for insiders, identify the type of compensation paid (e.g., salary, commission, bonus, etc.) (Attach additional pages as necessary). QUARTER QUARTER QUARTER MONTH MONTH MONTH MONTH INSIDERS: NAME/COMP TYPE Q (1/11-3/31) Q2 Q3 October November December January 1. Independent Director - Director's Fee and Expenses 64,986 60,000 62,111 20,000 20,000 20,000 20, Chief Executive Officer - Salary and Stock Options 82,500 82,500 98, Chief Financial Officer - Salary and Stock Options 54,651 54,651 63,605 18,217 18,217 18,217 18, Glencore - Purchases and Other 6,236,504 6,625, ,650 10,785, ,509 57, , TOTAL INSIDERS (MOR-1) $ 6,438,641 $ 6,822,515 $ 521,610 $ 10,823,254 $ 237,726 $ 95,261 $ 252,857 QUARTER QUARTER QUARTER MONTH MONTH MONTH MONTH PROFESSIONALS Q (1/11-3/31) Q2 Q3 October November December January 1. Kirkland & Ellis LLP 463,224 1,921, , , ,123 1,416, , Huron Consulting Group, Inc. - 1,095, , ,613 43, ,691 46, Kurtzman Carson Consultants Inc ,071 25,348 16,302 12,836 16,080 32, Zack A. Clement - 44,183-6,960-27, Andrews Kurth LLP - 445, , Gavin / Solmonese LLC - 175, , TOTAL PROFESSIONALS (MOR-1) $ 463,224 $ 3,860,759 $ 1,187,963 $ 850,207 $ 1,020,562 $ 1,600,561 $ 614,652 (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. MOR-9

10 Case Document 1176 Filed in TXSB on 02/14/17 Page 10 of 14 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION Exhibit A - CONSOLIDATING DISBURSEMENTS OF JOINTLY ADMINISTERED CASES IN CHAPTER 11 CASE NAME: SHERWIN ALUMINA COMPANY, LLC, ET AL JOINT ADMINISTRATION Entity Case No. Q (1/11-3/31) Q2 Q3 October November December January Filing to Date SHERWIN ALUMINA COMPANY, LLC ,124,399 70,053,299 49,703,037 16,625,762 2,958,691 4,679,721 3,354, ,499,856 SHERWIN PIPELINE, INC Total Disbursements (same as MOR-1 disbursements) $ 57,124,399 $ 70,053,299 $ 49,703,037 $ 16,625,762 $ 2,958,691 $ 4,679,721 $ 3,354,947 $ 204,499,856 (1) The accompanying Notes to the Monthly Operating Report are an integral part of this schedule. Exhibit A

11 Case Document 1176 Filed in TXSB on 02/14/17 Page 11 of 14 SHERWIN ALUMINA COMPANY, LLC AND SHERWIN PIPELINE, INC., Debtors and Debtors-in-possession NOTES TO THE MONTHLY OPERATING REPORT Period ended January 31, 2017 NOTE 1 RESERVATION OF RIGHTS Nothing contained in this Monthly Operating Report (as defined below) shall constitute a waiver of any of the Debtors rights or an admission with respect to their Chapter 11 proceedings, including, but not limited to, matters involving objections to claims, substantive consolidation, equitable subordination, defenses, ultimate allocation of proceeds from sales of assets, characterization or re-characterization of contracts, assumption or rejection of contracts under the provisions of chapter 3 of title 11 of the United States Code ( Bankruptcy Code ) and/or causes of action under the provisions of chapter 5 of the Bankruptcy Code or any other relevant applicable laws to recover assets or avoid transfers. NOTE 2 ORGANIZATION AND BASIS OF PRESENTATION Sherwin Alumina Company, LLC ( Sherwin ), is a Delaware Limited Liability Company. Sherwin Pipeline, Inc. ( Pipeline, and together with Sherwin, the Debtors ) is a wholly owned subsidiary of Sherwin. Unless otherwise indicated, Pipeline is a dormant entity without any current operations or cash flows. Sherwin operates an alumina production facility located in Gregory, Texas, and is ISO 9002 certified. The facility has a capacity of 1.6 million metric tons of alumina per year. Sherwin produces two main classes of products: smelter-grade alumina, which accounts for the vast majority of the facility s production volume, and hydrate or chemical-grade alumina. The plant has been in operation for over 60 years, producing alumina since Pipeline holds certain property easements and is a guarantor on Sherwin s debt. On January 11, 2016 (the Petition Date ), Sherwin and Pipeline filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. A detailed description surrounding the facts and circumstances of these chapter 11 cases is set forth in the Declaration of Kent Britton, Chief Financial Officer of Sherwin Alumina Company, LLC, in Support of Chapter 11 Petitions and First Day Motions [Docket No. 010]. The Debtors continue to operate and manage their businesses as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 1

12 Case Document 1176 Filed in TXSB on 02/14/17 Page 12 of 14 The accompanying schedules MOR-1 through MOR-9 and Exhibit A (the MOR Schedules and together with any notes and supporting detail, the MOR Report ) contained herein are unaudited and are not intended to reconcile to any financial statements otherwise prepared or distributed by Sherwin or Pipeline. The MOR Schedules do not include the effects of all current or future claims relating to the Chapter 11 Proceedings. Certain claims filed may have priority over those of the Debtors unsecured creditors. The Debtors will be reviewing all claims filed and will commence a claims reconciliation process as necessary. Differences between claim amounts determined by the Debtors and claim amounts filed by creditors will be investigated and resolved pursuant to a claims resolution process approved by the Court or, if necessary, the Court will make a final determination as to the amount, nature, and validity of claims. Certain claims that have been filed may be duplicative, based on contingencies that have not occurred, or may be otherwise overstated, and would therefore be subject to revision or disallowance. The settlement of claims cannot be finalized until the relevant creditors and the Court approve a plan. In light of the number of creditors of the Debtors, the claims resolution process may take considerable time to complete. The accompanying MOR Schedules represent unaudited condensed financial information for the Debtors derived from the Debtors books and records. The Debtors internal accounting follows International Financial Reporting Standards ( IFRS ) as promulgated by the International Accounting Standards Board ( IASB.) The Monthly Operating Report is limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the monthly reporting requirements of the Bankruptcy Court and the United States Trustee. The information presented herein has not been subject to all procedures that would typically be applied to financial information presented in accordance with IFRS. Upon the application of such procedures (such as tests of asset impairment), the Debtors believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this Monthly Operating Report includes normal recurring adjustments, but does not include all of the adjustments that would typically be made for interim financial statements in accordance with IFRS. As of January 31, 2017, certain pre-petition trade accounts payable and debt balances are subject to further review and possible reclassification. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with IFRS have been condensed or omitted. The results of operations herein are not necessarily indicative of results which may be expected from any other period or for the full year and may not necessarily reflect the results of operations, financial position, and cash flows of the Debtors in the future. Therefore, the Debtors caution readers not to place undue reliance upon the information contained in this Monthly Operating Report. 2

13 Case Document 1176 Filed in TXSB on 02/14/17 Page 13 of 14 NOTE 3 SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Accordingly, the condensed financial information contained herein is subject to change. The Debtors may, at a future date, amend this Monthly Operating Report for updated financial information. Cash and Cash Equivalents For purposes of reporting cash flows, the Sherwin considers all currency on hand, demand deposits, money market accounts, and liquid investments with original maturities of three months or less to be cash equivalents. At times, the balances in these accounts may exceed federally insured limits. Accounts Receivable Net Accounts receivable are recorded at net realizable value. Accounts are written off or reserved for when they are determined to be uncollectable based upon management s assessment of individual accounts. All receivables are shown net of an allowance for doubtful accounts. This allowance was $3,090, as of January 31, Inventories Inventories are stated at the lower of average cost or market value on a first-in, first-out (FIFO) basis. Costs include materials and an allocation of labor and overhead. Write-downs of inventories are considered to be permanent reductions in the cost basis of the inventories. Sherwin regularly evaluates its inventories for obsolescence and records reserves as necessary. Property, Plant and Equipment 3

14 Case Document 1176 Filed in TXSB on 02/14/17 Page 14 of 14 Property, plant and equipment are carried at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are charged to operations as incurred. Gains or losses on the disposition of property, plant, and equipment are recorded in the period incurred. Construction in progress is stated at cost, and represents equipment that is still undergoing development and has not been placed in service. The estimated useful lives of the asset classes are as follows: Buildings Years Plant and equipment 2-15 Years Computer equipment and software 4-5 Years Vehicles and other 2-5 Years Property, plant and equipment amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. The Debtors have discontinued recording depreciation as assets are out of service and held-for-sale. Revenue Recognition Revenue is recognized when the following criteria are met: persuasive evidence of an agreement exists, delivery has occurred, price to the buyer is fixed and determinable, and collectability is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership, which is generally on the date of shipment for chemicalgrade alumina or the date of placement into Parent storage bins for smelter-grade alumina. Income Taxes The Company is a single member LLC and is treated as a disregarded entity for income tax purposes. The Company s taxable income or loss is included in the federal income tax return of its Parent. 4