|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
25-0317820
|
(State of
incorporation)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
390 Park Avenue, New York, New York
|
|
10022-4608
|
(Address of principal executive offices)
|
|
(Zip code)
|
|
Large accelerated filer
|
✓
|
Accelerated filer
|
__
|
Non-accelerated filer
|
__
|
Smaller reporting company
|
__
|
|
|
Emerging growth company
|
__
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales (C & D)
|
$
|
3,524
|
|
|
$
|
3,236
|
|
|
$
|
10,542
|
|
|
$
|
9,689
|
|
Cost of goods sold (exclusive of expenses below)
|
2,881
|
|
|
2,591
|
|
|
8,552
|
|
|
7,598
|
|
||||
Selling, general administrative, and other expenses
|
134
|
|
|
152
|
|
|
464
|
|
|
569
|
|
||||
Research and development expenses
|
25
|
|
|
24
|
|
|
77
|
|
|
81
|
|
||||
Provision for depreciation and amortization
|
141
|
|
|
140
|
|
|
427
|
|
|
410
|
|
||||
Restructuring and other charges (E)
|
(2
|
)
|
|
19
|
|
|
20
|
|
|
118
|
|
||||
Operating income
|
345
|
|
|
310
|
|
|
1,002
|
|
|
913
|
|
||||
Interest expense (N)
|
88
|
|
|
100
|
|
|
291
|
|
|
398
|
|
||||
Other expense (income), net (F)
|
8
|
|
|
38
|
|
|
69
|
|
|
(410
|
)
|
||||
Income before income taxes
|
249
|
|
|
172
|
|
|
642
|
|
|
925
|
|
||||
Provision for income taxes (H)
|
88
|
|
|
53
|
|
|
218
|
|
|
272
|
|
||||
Net income
|
$
|
161
|
|
|
$
|
119
|
|
|
$
|
424
|
|
|
$
|
653
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts Attributable to Arconic Common Shareholders (I):
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
160
|
|
|
$
|
101
|
|
|
$
|
422
|
|
|
$
|
600
|
|
Earnings per share - basic
|
$
|
0.33
|
|
|
$
|
0.23
|
|
|
$
|
0.87
|
|
|
$
|
1.36
|
|
Earnings per share - diluted
|
$
|
0.32
|
|
|
$
|
0.22
|
|
|
$
|
0.86
|
|
|
$
|
1.31
|
|
Dividends paid per share
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
Average Shares Outstanding (I):
|
|
|
|
|
|
|
|
||||||||
Average shares outstanding - basic
|
483
|
|
|
442
|
|
|
483
|
|
|
441
|
|
||||
Average shares outstanding - diluted
|
502
|
|
|
462
|
|
|
503
|
|
|
501
|
|
|
Arconic
|
|
Noncontrolling
Interests
|
|
Total
|
||||||||||||||||||
Third quarter ended September 30,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Net income
|
$
|
161
|
|
|
$
|
119
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161
|
|
|
$
|
119
|
|
Other comprehensive income, net of tax (J):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits
|
37
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
31
|
|
||||||
Foreign currency translation adjustments
|
(16
|
)
|
|
85
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
85
|
|
||||||
Net change in unrealized gains on available-for-sale securities
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Net change in unrecognized losses/gains on cash flow hedges
|
(10
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
10
|
|
||||||
Total Other comprehensive income, net of tax
|
12
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
127
|
|
||||||
Comprehensive income
|
$
|
173
|
|
|
$
|
246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
173
|
|
|
$
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Arconic
|
|
Noncontrolling
Interests
|
|
Total
|
||||||||||||||||||
Nine months ended September 30,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Net income
|
$
|
424
|
|
|
$
|
653
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
424
|
|
|
$
|
653
|
|
Other comprehensive income, net of tax (J):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits
|
209
|
|
|
110
|
|
|
—
|
|
|
—
|
|
|
209
|
|
|
110
|
|
||||||
Foreign currency translation adjustments
|
(95
|
)
|
|
251
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
251
|
|
||||||
Net change in unrealized gains on available-for-sale securities
|
(1
|
)
|
|
(133
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(133
|
)
|
||||||
Net change in unrecognized gains/losses on cash flow hedges
|
(13
|
)
|
|
13
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
13
|
|
||||||
Total Other comprehensive income, net of tax
|
100
|
|
|
241
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|
241
|
|
||||||
Comprehensive income
|
$
|
524
|
|
|
$
|
894
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
524
|
|
|
$
|
894
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,535
|
|
|
$
|
2,150
|
|
Receivables from customers, less allowances of $5 in 2018 and $8 in 2017 (K)
|
1,147
|
|
|
1,035
|
|
||
Other receivables (K)
|
511
|
|
|
339
|
|
||
Inventories (L)
|
2,622
|
|
|
2,480
|
|
||
Prepaid expenses and other current assets
|
317
|
|
|
374
|
|
||
Total current assets
|
6,132
|
|
|
6,378
|
|
||
Properties, plants, and equipment, net (M)
|
5,645
|
|
|
5,594
|
|
||
Goodwill (A & M)
|
4,517
|
|
|
4,535
|
|
||
Deferred income taxes
|
605
|
|
|
743
|
|
||
Intangibles, net
|
954
|
|
|
987
|
|
||
Other noncurrent assets
|
474
|
|
|
481
|
|
||
Total assets
|
$
|
18,327
|
|
|
$
|
18,718
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
$
|
2,061
|
|
|
$
|
1,839
|
|
Accrued compensation and retirement costs
|
359
|
|
|
399
|
|
||
Taxes, including income taxes
|
84
|
|
|
75
|
|
||
Accrued interest payable
|
97
|
|
|
124
|
|
||
Other current liabilities
|
371
|
|
|
349
|
|
||
Short-term debt
|
42
|
|
|
38
|
|
||
Total current liabilities
|
3,014
|
|
|
2,824
|
|
||
Long-term debt, less amount due within one year (N & O)
|
6,315
|
|
|
6,806
|
|
||
Accrued pension benefits (G)
|
2,120
|
|
|
2,564
|
|
||
Accrued other postretirement benefits (G)
|
773
|
|
|
841
|
|
||
Other noncurrent liabilities and deferred credits
|
730
|
|
|
759
|
|
||
Total liabilities
|
12,952
|
|
|
13,794
|
|
||
Contingencies and commitments (Q)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Arconic shareholders’ equity:
|
|
|
|
||||
Preferred stock
|
55
|
|
|
55
|
|
||
Common stock
|
483
|
|
|
481
|
|
||
Additional capital
|
8,310
|
|
|
8,266
|
|
||
Accumulated deficit
|
(943
|
)
|
|
(1,248
|
)
|
||
Accumulated other comprehensive loss (J)
|
(2,544
|
)
|
|
(2,644
|
)
|
||
Total Arconic shareholders’ equity
|
5,361
|
|
|
4,910
|
|
||
Noncontrolling interests
|
14
|
|
|
14
|
|
||
Total equity
|
5,375
|
|
|
4,924
|
|
||
Total liabilities and equity
|
$
|
18,327
|
|
|
$
|
18,718
|
|
|
Nine months ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
424
|
|
|
$
|
653
|
|
Adjustments to reconcile net income to cash used for operations:
|
|
|
|
||||
Depreciation and amortization
|
427
|
|
|
410
|
|
||
Deferred income taxes
|
95
|
|
|
24
|
|
||
Restructuring and other charges
|
20
|
|
|
118
|
|
||
Net loss (gain) from investing activities - asset sales (F)
|
7
|
|
|
(514
|
)
|
||
Net periodic pension benefit cost (G)
|
100
|
|
|
163
|
|
||
Stock-based compensation
|
43
|
|
|
59
|
|
||
Other
|
61
|
|
|
112
|
|
||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
|
|
|
|
||||
(Increase) in receivables (B)
|
(1,020
|
)
|
|
(792
|
)
|
||
(Increase) in inventories
|
(184
|
)
|
|
(168
|
)
|
||
(Increase) decrease in prepaid expenses and other current assets
|
(3
|
)
|
|
6
|
|
||
Increase (decrease) in accounts payable, trade
|
257
|
|
|
(94
|
)
|
||
(Decrease) in accrued expenses
|
(96
|
)
|
|
(138
|
)
|
||
Increase in taxes, including income taxes
|
63
|
|
|
144
|
|
||
Pension contributions
|
(288
|
)
|
|
(257
|
)
|
||
(Increase) in noncurrent assets
|
(33
|
)
|
|
(37
|
)
|
||
(Decrease) in noncurrent liabilities
|
(82
|
)
|
|
(62
|
)
|
||
Cash used for operations
|
(209
|
)
|
|
(373
|
)
|
||
Financing Activities
|
|
|
|
||||
Net change in short-term borrowings (original maturities of three months or less)
|
3
|
|
|
15
|
|
||
Additions to debt (original maturities greater than three months) (N)
|
450
|
|
|
664
|
|
||
Premiums paid on early redemption of debt (B & N)
|
(17
|
)
|
|
(52
|
)
|
||
Payments on debt (original maturities greater than three months) (N)
|
(952
|
)
|
|
(1,484
|
)
|
||
Proceeds from exercise of employee stock options
|
15
|
|
|
48
|
|
||
Dividends paid to shareholders
|
(89
|
)
|
|
(132
|
)
|
||
Distributions to noncontrolling interests
|
—
|
|
|
(14
|
)
|
||
Other
|
(19
|
)
|
|
(15
|
)
|
||
Cash used for financing activities
|
(609
|
)
|
|
(970
|
)
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(497
|
)
|
|
(360
|
)
|
||
Proceeds from the sale of assets and businesses (P)
|
7
|
|
|
(9
|
)
|
||
Sales of investments (F)
|
9
|
|
|
890
|
|
||
Cash receipts from sold receivables (B & K)
|
693
|
|
|
514
|
|
||
Other
|
(1
|
)
|
|
244
|
|
||
Cash provided from investing activities
|
211
|
|
|
1,279
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(4
|
)
|
|
6
|
|
||
Net change in cash, cash equivalents and restricted cash (B)
|
(611
|
)
|
|
(58
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year (B)
|
2,153
|
|
|
1,878
|
|
||
Cash, cash equivalents and restricted cash at end of period (B)
|
$
|
1,542
|
|
|
$
|
1,820
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||||||
|
Preferred
stock |
|
Mandatory
convertible preferred stock |
|
Common
stock |
|
Additional
capital |
|
Accumulated
deficit |
|
Accumulated
other comprehensive loss |
|
Noncontrolling
interests |
|
Total
Equity |
||||||||||||||||
Balance at June 30, 2017
|
$
|
55
|
|
|
$
|
3
|
|
|
$
|
441
|
|
|
$
|
8,262
|
|
|
$
|
(567
|
)
|
|
$
|
(2,454
|
)
|
|
$
|
13
|
|
|
$
|
5,753
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
—
|
|
|
119
|
|
||||||||
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
—
|
|
|
127
|
|
||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred-Class A @ $1.875 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||||
Preferred-Class B @ $6.71875 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
||||||||
Common @ $0.12 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||||
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
1
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||||||
Balance at September 30, 2017
|
$
|
55
|
|
|
$
|
3
|
|
|
$
|
442
|
|
|
$
|
8,294
|
|
|
$
|
(519
|
)
|
|
$
|
(2,327
|
)
|
|
$
|
13
|
|
|
$
|
5,961
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||||||
|
Preferred
stock |
|
Mandatory
convertible preferred stock |
|
Common
stock |
|
Additional
capital |
|
Accumulated
deficit |
|
Accumulated
other comprehensive loss |
|
Noncontrolling
interests |
|
Total
Equity |
||||||||||||||||
Balance at June 30, 2018
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
483
|
|
|
$
|
8,295
|
|
|
$
|
(1,073
|
)
|
|
$
|
(2,556
|
)
|
|
$
|
14
|
|
|
$
|
5,218
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
161
|
|
||||||||
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Preferred-Class A @ $0.9375 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||||
Common @ $0.06 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||||
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Balance at September 30, 2018
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
483
|
|
|
$
|
8,310
|
|
|
$
|
(943
|
)
|
|
$
|
(2,544
|
)
|
|
$
|
14
|
|
|
$
|
5,375
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||||||
|
Preferred
stock
|
|
Mandatory
convertible
preferred
stock
|
|
Common
stock
|
|
Additional
capital
|
|
Accumulated
deficit |
|
Accumulated
other
comprehensive
loss
|
|
Noncontrolling
interests
|
|
Total
Equity
|
||||||||||||||||
Balance at December 31, 2016
|
$
|
55
|
|
|
$
|
3
|
|
|
$
|
438
|
|
|
$
|
8,214
|
|
|
$
|
(1,027
|
)
|
|
$
|
(2,568
|
)
|
|
$
|
26
|
|
|
$
|
5,141
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
653
|
|
|
—
|
|
|
—
|
|
|
653
|
|
||||||||
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
241
|
|
||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred-Class A @ $3.75 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||||
Preferred-Class B @ $20.1563 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
||||||||
Common @ $0.24 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
||||||||
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
4
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
1
|
|
|
16
|
|
||||||||
Balance at September 30, 2017
|
$
|
55
|
|
|
$
|
3
|
|
|
$
|
442
|
|
|
$
|
8,294
|
|
|
$
|
(519
|
)
|
|
$
|
(2,327
|
)
|
|
$
|
13
|
|
|
$
|
5,961
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||||||
|
Preferred
stock
|
|
Mandatory
convertible
preferred
stock
|
|
Common
stock
|
|
Additional
capital
|
|
Accumulated
deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Noncontrolling
interests
|
|
Total
Equity
|
||||||||||||||||
Balance at December 31, 2017
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
481
|
|
|
$
|
8,266
|
|
|
$
|
(1,248
|
)
|
|
$
|
(2,644
|
)
|
|
$
|
14
|
|
|
$
|
4,924
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
424
|
|
|
—
|
|
|
—
|
|
|
424
|
|
||||||||
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
100
|
|
||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Preferred-Class A @ $2.8125 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||||
Common @ $0.24 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
||||||||
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||||
Balance at September 30, 2018
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
483
|
|
|
$
|
8,310
|
|
|
$
|
(943
|
)
|
|
$
|
(2,544
|
)
|
|
$
|
14
|
|
|
$
|
5,375
|
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
Third quarter ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Aerospace
|
$
|
1,244
|
|
|
$
|
220
|
|
|
$
|
—
|
|
|
$
|
1,464
|
|
Transportation
|
110
|
|
|
625
|
|
|
237
|
|
|
972
|
|
||||
Building and construction
|
—
|
|
|
59
|
|
|
293
|
|
|
352
|
|
||||
Industrial and Other
|
212
|
|
|
522
|
|
|
—
|
|
|
734
|
|
||||
Total end-market revenue
|
$
|
1,566
|
|
|
$
|
1,426
|
|
|
$
|
530
|
|
|
$
|
3,522
|
|
|
|
|
|
|
|
|
|
||||||||
Third quarter ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Aerospace
|
$
|
1,130
|
|
|
$
|
214
|
|
|
$
|
—
|
|
|
$
|
1,344
|
|
Transportation
|
98
|
|
|
490
|
|
|
214
|
|
|
802
|
|
||||
Building and construction
|
—
|
|
|
56
|
|
|
286
|
|
|
342
|
|
||||
Industrial and Other
|
249
|
|
|
474
|
|
|
23
|
|
|
746
|
|
||||
Total end-market revenue
|
$
|
1,477
|
|
|
$
|
1,234
|
|
|
$
|
523
|
|
|
$
|
3,234
|
|
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Aerospace
|
$
|
3,675
|
|
|
$
|
645
|
|
|
$
|
—
|
|
|
$
|
4,320
|
|
Transportation
|
326
|
|
|
1,835
|
|
|
733
|
|
|
2,894
|
|
||||
Building and construction
|
—
|
|
|
167
|
|
|
875
|
|
|
1,042
|
|
||||
Industrial and Other
|
702
|
|
|
1,596
|
|
|
21
|
|
|
2,319
|
|
||||
Total end-market revenue
|
$
|
4,703
|
|
|
$
|
4,243
|
|
|
$
|
1,629
|
|
|
$
|
10,575
|
|
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Aerospace
|
$
|
3,426
|
|
|
$
|
670
|
|
|
$
|
—
|
|
|
$
|
4,096
|
|
Transportation
|
288
|
|
|
1,458
|
|
|
587
|
|
|
2,333
|
|
||||
Building and construction
|
—
|
|
|
156
|
|
|
831
|
|
|
987
|
|
||||
Industrial and Other
|
735
|
|
|
1,469
|
|
|
65
|
|
|
2,269
|
|
||||
Total end-market revenue
|
$
|
4,449
|
|
|
$
|
3,753
|
|
|
$
|
1,483
|
|
|
$
|
9,685
|
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
Third quarter ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Third-party sales
|
$
|
1,566
|
|
|
$
|
1,426
|
|
|
$
|
530
|
|
|
$
|
3,522
|
|
Intersegment sales
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||
Total sales
|
$
|
1,566
|
|
|
$
|
1,460
|
|
|
$
|
530
|
|
|
$
|
3,556
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
Segment operating profit
|
$
|
238
|
|
|
$
|
74
|
|
|
$
|
77
|
|
|
$
|
389
|
|
Restructuring and other charges
|
15
|
|
|
2
|
|
|
—
|
|
|
17
|
|
||||
Provision for depreciation and amortization
|
71
|
|
|
50
|
|
|
12
|
|
|
133
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Third quarter ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Third-party sales
|
$
|
1,477
|
|
|
$
|
1,234
|
|
|
$
|
523
|
|
|
$
|
3,234
|
|
Intersegment sales
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||
Total sales
|
$
|
1,477
|
|
|
$
|
1,270
|
|
|
$
|
523
|
|
|
$
|
3,270
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
Segment operating profit
|
$
|
239
|
|
|
$
|
64
|
|
|
$
|
74
|
|
|
$
|
377
|
|
Restructuring and other charges
|
10
|
|
|
2
|
|
|
2
|
|
|
14
|
|
||||
Provision for depreciation and amortization
|
68
|
|
|
52
|
|
|
13
|
|
|
133
|
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Third-party sales
|
$
|
4,703
|
|
|
$
|
4,243
|
|
|
$
|
1,629
|
|
|
$
|
10,575
|
|
Intersegment sales
|
—
|
|
|
122
|
|
|
—
|
|
|
122
|
|
||||
Total sales
|
$
|
4,703
|
|
|
$
|
4,365
|
|
|
$
|
1,629
|
|
|
$
|
10,697
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
Segment operating profit
|
$
|
671
|
|
|
$
|
309
|
|
|
$
|
241
|
|
|
$
|
1,221
|
|
Restructuring and other charges
|
25
|
|
|
2
|
|
|
—
|
|
|
27
|
|
||||
Provision for depreciation and amortization
|
212
|
|
|
154
|
|
|
37
|
|
|
403
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Third-party sales
|
$
|
4,449
|
|
|
$
|
3,753
|
|
|
$
|
1,483
|
|
|
$
|
9,685
|
|
Intersegment sales
|
—
|
|
|
107
|
|
|
—
|
|
|
107
|
|
||||
Total sales
|
$
|
4,449
|
|
|
$
|
3,860
|
|
|
$
|
1,483
|
|
|
$
|
9,792
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
Segment operating profit
|
$
|
736
|
|
|
$
|
333
|
|
|
$
|
213
|
|
|
$
|
1,282
|
|
Restructuring and other charges
|
24
|
|
|
76
|
|
|
11
|
|
|
111
|
|
||||
Provision for depreciation and amortization
|
198
|
|
|
153
|
|
|
37
|
|
|
388
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total segment operating profit
|
$
|
389
|
|
|
$
|
377
|
|
|
$
|
1,221
|
|
|
$
|
1,282
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
||||||||
Restructuring and other charges
|
2
|
|
|
(19
|
)
|
|
(20
|
)
|
|
(118
|
)
|
||||
Corporate expense
|
(46
|
)
|
|
(48
|
)
|
|
(199
|
)
|
|
(251
|
)
|
||||
Consolidated operating income
|
$
|
345
|
|
|
$
|
310
|
|
|
$
|
1,002
|
|
|
$
|
913
|
|
Interest expense
|
(88
|
)
|
|
(100
|
)
|
|
(291
|
)
|
|
(398
|
)
|
||||
Other (expense) income, net
|
(8
|
)
|
|
(38
|
)
|
|
(69
|
)
|
|
410
|
|
||||
Consolidated income before income taxes
|
$
|
249
|
|
|
$
|
172
|
|
|
$
|
642
|
|
|
$
|
925
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Engineered Products and Solutions
|
$
|
10,522
|
|
|
$
|
10,325
|
|
Global Rolled Products
|
4,112
|
|
|
3,955
|
|
||
Transportation and Construction Solutions
|
1,091
|
|
|
1,041
|
|
||
Total segment assets
|
$
|
15,725
|
|
|
$
|
15,321
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Total segment assets
|
$
|
15,725
|
|
|
$
|
15,321
|
|
Unallocated amounts:
|
|
|
|
||||
Cash and cash equivalents
|
1,535
|
|
|
2,150
|
|
||
Deferred income taxes
|
605
|
|
|
743
|
|
||
Corporate fixed assets, net
|
307
|
|
|
310
|
|
||
Fair value of derivative contracts
|
28
|
|
|
91
|
|
||
Other
|
127
|
|
|
103
|
|
||
Consolidated assets
|
$
|
18,327
|
|
|
$
|
18,718
|
|
|
Layoff
costs
|
|
Other exit
costs
|
|
Total
|
||||||
Reserve balances at December 31, 2016
|
$
|
50
|
|
|
$
|
9
|
|
|
$
|
59
|
|
Cash payments
|
(59
|
)
|
|
(6
|
)
|
|
(65
|
)
|
|||
Restructuring charges
|
64
|
|
|
1
|
|
|
65
|
|
|||
Other
(1)
|
1
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Reserve balances at December 31, 2017
|
56
|
|
|
2
|
|
|
58
|
|
|||
Cash payments
|
(37
|
)
|
|
(1
|
)
|
|
(38
|
)
|
|||
Restructuring charges
|
8
|
|
|
13
|
|
|
21
|
|
|||
Other
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reserve balances at September 30, 2018
|
$
|
27
|
|
|
$
|
14
|
|
|
$
|
41
|
|
(1)
|
Other includes reversals of previously recorded restructuring charges and credits, and the effects of foreign currency translation. In 2018, Other for layoff costs included the following: a reclassification of a
$28
credit in postretirement benefits, as the impact to the liability was reflected in Arconic’s separate liability for postretirement benefits; a reclassification of
$18
in pension costs, as this liability was reflected in Arconic’s separate liability for pension benefits; and reversals of
$10
for previously recorded layoff charges. In 2017, Other for layoff costs included a reclassification of a stock awards reversal of
$13
and reversals of
$11
for previously recorded layoff reserves.
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Non-service related net periodic benefit cost
|
$
|
27
|
|
|
$
|
39
|
|
|
$
|
83
|
|
|
$
|
116
|
|
Interest income
|
(6
|
)
|
|
(5
|
)
|
|
(16
|
)
|
|
(13
|
)
|
||||
Foreign currency losses (gains), net
|
6
|
|
|
(1
|
)
|
|
20
|
|
|
(4
|
)
|
||||
Net loss (gain) from asset sales
|
2
|
|
|
1
|
|
|
7
|
|
|
(514
|
)
|
||||
Other, net
|
(21
|
)
|
|
4
|
|
|
(25
|
)
|
|
5
|
|
||||
|
$
|
8
|
|
|
$
|
38
|
|
|
$
|
69
|
|
|
$
|
(410
|
)
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Pension benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
9
|
|
|
$
|
23
|
|
|
$
|
37
|
|
|
$
|
67
|
|
Interest cost
|
54
|
|
|
59
|
|
|
164
|
|
|
175
|
|
||||
Expected return on plan assets
|
(76
|
)
|
|
(83
|
)
|
|
(230
|
)
|
|
(248
|
)
|
||||
Recognized net actuarial loss
|
42
|
|
|
55
|
|
|
126
|
|
|
165
|
|
||||
Amortization of prior service cost (benefit)
|
1
|
|
|
1
|
|
|
3
|
|
|
4
|
|
||||
Settlements
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Curtailments
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Net periodic benefit cost
(1)
|
$
|
34
|
|
|
$
|
55
|
|
|
$
|
118
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
||||||||
Other postretirement benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
6
|
|
Interest cost
|
7
|
|
|
7
|
|
|
21
|
|
|
22
|
|
||||
Recognized net actuarial loss
|
1
|
|
|
2
|
|
|
5
|
|
|
4
|
|
||||
Amortization of prior service cost (benefit)
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
Curtailments
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
||||
Net periodic benefit cost
(1)
|
$
|
(20
|
)
|
|
$
|
9
|
|
|
$
|
(2
|
)
|
|
$
|
26
|
|
(1)
|
Service cost was included within Cost of goods sold,
Selling, general administrative, and other expenses
, and
Research and development expenses
; curtailments and settlements were included in Restructuring and other charges; and all other cost components were recorded in
Other expense (income), net
in the Statement of Consolidated Operations.
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Pre-tax income at estimated annual effective income tax rate before discrete items
|
$
|
66
|
|
|
$
|
49
|
|
|
$
|
170
|
|
|
$
|
264
|
|
Catch-up adjustment to revalue previous quarter pre-tax income at current estimated annual effective tax rate
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
|
5
|
|
||||
Other discrete items
|
26
|
|
|
2
|
|
|
49
|
|
|
3
|
|
||||
Provision for income taxes
|
$
|
88
|
|
|
$
|
53
|
|
|
$
|
218
|
|
|
$
|
272
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
161
|
|
|
$
|
119
|
|
|
$
|
424
|
|
|
$
|
653
|
|
Less: Preferred stock dividends declared
|
(1
|
)
|
|
(18
|
)
|
|
(2
|
)
|
|
(53
|
)
|
||||
Net income available to Arconic common shareholders - basic
|
160
|
|
|
101
|
|
|
422
|
|
|
600
|
|
||||
Add: Interest expense related to convertible notes
|
3
|
|
|
2
|
|
|
8
|
|
|
7
|
|
||||
Add: Dividends related to mandatory convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||
Net income available to Arconic common shareholders - diluted
|
$
|
163
|
|
|
$
|
103
|
|
|
$
|
430
|
|
|
$
|
657
|
|
|
|
|
|
|
|
|
|
||||||||
Average shares outstanding - basic
|
483
|
|
|
442
|
|
|
483
|
|
|
441
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Stock and performance awards
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||
Mandatory convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
Convertible notes
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
||||
Average shares outstanding - diluted
|
502
|
|
|
462
|
|
|
503
|
|
|
501
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Mandatory convertible preferred stock
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
Stock options
(1)
|
6
|
|
|
3
|
|
|
6
|
|
|
3
|
|
(1)
|
The average exercise price of options per share was
$29.14
for the third quarter and nine months ended September 30, 2018 and
$33.33
for the third quarter and nine months ended September 30, 2017.
|
|
Arconic
|
|
Noncontrolling Interests
|
||||||||||||
Third quarter ended September 30,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Pension and other postretirement benefits (G)
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(2,058
|
)
|
|
$
|
(1,931
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrecognized net actuarial loss and prior service cost/benefit
|
30
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Tax (expense) benefit
|
(7
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive income (loss) before reclassifications, net of tax
|
23
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss and prior service cost
(1)
|
18
|
|
|
56
|
|
|
—
|
|
|
—
|
|
||||
Tax expense
(2)
|
(4
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
||||
Total amount reclassified from Accumulated other comprehensive loss, net of tax
(5)
|
14
|
|
|
37
|
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive income
|
37
|
|
|
31
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(2,021
|
)
|
|
$
|
(1,900
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(516
|
)
|
|
$
|
(523
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Other comprehensive (loss) income
(3)
|
(16
|
)
|
|
85
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(532
|
)
|
|
$
|
(438
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive income
(4)
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
22
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Net change from periodic revaluations
|
(7
|
)
|
|
15
|
|
|
—
|
|
|
—
|
|
||||
Tax benefit (expense)
|
1
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive (loss) income before reclassifications, net of tax
|
(6
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
||||
Net amount reclassified to earnings
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Tax benefit
(2)
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total amount reclassified from Accumulated other comprehensive income, net of tax
(5)
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive (loss) income
|
(10
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Total balance at end of period
|
$
|
(2,544
|
)
|
|
$
|
(2,327
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
(1)
|
These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note G).
|
(2)
|
These amounts were included in Provision for income taxes on the accompanying Statement of Consolidated Operations.
|
(3)
|
In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.
|
(4)
|
Realized gains and losses were included in Other expense (income), net on the accompanying Statement of Consolidated Operations.
|
(5)
|
A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.
|
|
Arconic
|
|
Noncontrolling Interests
|
||||||||||||
Nine months ended September 30,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Pension and other postretirement benefits (G)
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(2,230
|
)
|
|
$
|
(2,010
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrecognized net actuarial loss and prior service cost/benefit
|
152
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
Tax expense
|
(35
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive income before reclassifications, net of tax
|
117
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss and prior service cost
(1)
|
118
|
|
|
167
|
|
|
—
|
|
|
—
|
|
||||
Tax expense
(2)
|
(26
|
)
|
|
(58
|
)
|
|
—
|
|
|
—
|
|
||||
Total amount reclassified from Accumulated other comprehensive loss, net of tax
(5)
|
92
|
|
|
109
|
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive income
|
209
|
|
|
110
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(2,021
|
)
|
|
$
|
(1,900
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(437
|
)
|
|
$
|
(689
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Other comprehensive (loss) income
(3)
|
(95
|
)
|
|
251
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(532
|
)
|
|
$
|
(438
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(2
|
)
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive loss
(4)
|
(1
|
)
|
|
(133
|
)
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
25
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Net change from periodic revaluations
|
(4
|
)
|
|
20
|
|
|
—
|
|
|
—
|
|
||||
Tax benefit (expense)
|
1
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive (loss) income before reclassifications, net of tax
|
(3
|
)
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Net amount reclassified to earnings
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Tax benefit
(2)
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total amount reclassified from Accumulated other comprehensive income, net of tax
(5)
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Other comprehensive (loss) income
|
(13
|
)
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Total balance at end of period
|
$
|
(2,544
|
)
|
|
$
|
(2,327
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
(1)
|
These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note G).
|
(2)
|
These amounts were included in Provision for income taxes on the accompanying Statement of Consolidated Operations.
|
(3)
|
In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.
|
(4)
|
Realized gains and losses were included in Other expense (income), net on the accompanying Statement of Consolidated Operations.
|
(5)
|
A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Finished goods
|
$
|
667
|
|
|
$
|
669
|
|
Work-in-process
|
1,467
|
|
|
1,349
|
|
||
Purchased raw materials
|
398
|
|
|
381
|
|
||
Operating supplies
|
90
|
|
|
81
|
|
||
Total inventories
|
$
|
2,622
|
|
|
$
|
2,480
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land and land rights
|
$
|
138
|
|
|
$
|
140
|
|
Structures
|
2,374
|
|
|
2,395
|
|
||
Machinery and equipment
|
9,244
|
|
|
8,830
|
|
||
|
11,756
|
|
|
11,365
|
|
||
Less: accumulated depreciation and amortization
|
6,778
|
|
|
6,392
|
|
||
|
4,978
|
|
|
4,973
|
|
||
Construction work-in-progress
|
667
|
|
|
621
|
|
||
|
$
|
5,645
|
|
|
$
|
5,594
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
5.72% Notes, due 2019
|
$
|
—
|
|
|
$
|
500
|
|
1.63% Convertible Notes, due 2019
|
403
|
|
|
403
|
|
||
6.150% Notes, due 2020
|
1,000
|
|
|
1,000
|
|
||
5.40% Notes due 2021
|
1,250
|
|
|
1,250
|
|
||
5.87% Notes, due 2022
|
627
|
|
|
627
|
|
||
5.125% Notes, due 2024
|
1,250
|
|
|
1,250
|
|
||
5.90% Notes, due 2027
|
625
|
|
|
625
|
|
||
6.75% Bonds, due 2028
|
300
|
|
|
300
|
|
||
5.95% Notes, due 2037
|
625
|
|
|
625
|
|
||
Iowa Finance Authority Loan, due 2042
|
250
|
|
|
250
|
|
||
Other
(1)
|
(12
|
)
|
|
(23
|
)
|
||
Total debt
|
6,318
|
|
|
6,807
|
|
||
Less: amount due within one year
|
3
|
|
|
1
|
|
||
Total long-term debt
|
$
|
6,315
|
|
|
$
|
6,806
|
|
(1)
|
Includes various financing arrangements related to subsidiaries, unamortized debt discounts related to outstanding notes and bonds listed in the table above, an equity option related to the convertible notes due in 2019, and unamortized debt issuance costs.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
value
|
|
Fair
value
|
|
Carrying
value
|
|
Fair
value
|
||||||||
Long-term debt, less amount due within one year
|
$
|
6,315
|
|
|
$
|
6,495
|
|
|
$
|
6,806
|
|
|
$
|
7,443
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Third-party sales
|
$
|
1,566
|
|
|
$
|
1,477
|
|
|
$
|
4,703
|
|
|
$
|
4,449
|
|
Segment operating profit
|
238
|
|
|
239
|
|
|
671
|
|
|
736
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Third-party sales
|
$
|
1,426
|
|
|
$
|
1,234
|
|
|
$
|
4,243
|
|
|
$
|
3,753
|
|
Intersegment sales
|
34
|
|
|
36
|
|
|
122
|
|
|
107
|
|
||||
Total sales
|
$
|
1,460
|
|
|
$
|
1,270
|
|
|
$
|
4,365
|
|
|
$
|
3,860
|
|
Segment operating profit
|
74
|
|
|
64
|
|
|
309
|
|
|
333
|
|
||||
Third-party aluminum shipments (kmt)
|
318
|
|
|
297
|
|
|
941
|
|
|
914
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Third-party sales
|
$
|
530
|
|
|
$
|
523
|
|
|
$
|
1,629
|
|
|
$
|
1,483
|
|
Segment operating profit
|
77
|
|
|
74
|
|
|
241
|
|
|
213
|
|
|
Third quarter ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total segment operating profit
|
$
|
389
|
|
|
$
|
377
|
|
|
$
|
1,221
|
|
|
$
|
1,282
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
||||||||
Restructuring and other charges
|
2
|
|
|
(19
|
)
|
|
(20
|
)
|
|
(118
|
)
|
||||
Corporate expense
|
(46
|
)
|
|
(48
|
)
|
|
(199
|
)
|
|
(251
|
)
|
||||
Consolidated operating income
|
$
|
345
|
|
|
$
|
310
|
|
|
$
|
1,002
|
|
|
$
|
913
|
|
Interest expense
|
(88
|
)
|
|
(100
|
)
|
|
(291
|
)
|
|
(398
|
)
|
||||
Other (expense) income, net
|
(8
|
)
|
|
(38
|
)
|
|
(69
|
)
|
|
410
|
|
||||
Consolidated income before income taxes
|
$
|
249
|
|
|
$
|
172
|
|
|
$
|
642
|
|
|
$
|
925
|
|
•
|
a decrease in
Restructuring and other charges
in the third quarter of 2018, primarily due to a postretirement curtailment benefit of $28. The decrease in
Restructuring and other charges
in the nine months ended September 30, 2018 was primarily due to a loss of $60 on the sale of the Fusina, Italy rolling mill in March 2017. See Note E to the Consolidated Financial Statements;
|
•
|
a decrease in
Corporate expense
in the nine months ended September 30, 2018 primarily due to proxy, advisory and governance-related costs of $58 and costs related to the separation of Alcoa Inc. of $18 in the nine months ended September 30, 2017, neither of which recurred in 2018. Also, lower expenses driven by lower annual incentive compensation accruals and overhead cost reductions were partially offset by costs incurred in the second quarter of 2018 related to the settlements of certain customer claims primarily related to product introductions of $38 and an increase in legal and other advisory costs related to Grenfell Tower of $7;
|
•
|
a decrease in
Interest expense
in the third quarter of 2018, primarily due to lower debt outstanding. The decrease in
Interest expense
in the nine months ended September 30, 2018 was primarily due to higher costs incurred in the nine
|
•
|
a decrease in
Other (expense) income, net
in the third quarter of 2018, primarily due to a $29 benefit from establishing a tax indemnification receivable reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve. The decrease in
Other (expense) income, net
in the nine months ended September 30, 2018 was primarily due to gains recorded during the nine months ended September 30, 2017 related to the sale of a portion of Arconic’s investment in Alcoa Corporation common stock of $351 and the Debt-for-Equity Exchange of $167, neither of which recurred in 2018, partially offset by the $29 benefit from establishing a tax indemnification receivable as noted previously.
|
|
Long-Term Debt
|
Short-Term Debt
|
Outlook
|
Date of Last Update
|
Standard and Poor’s
|
BBB-
|
A-3
|
Stable
|
May 1, 2017
|
Moody’s
|
Ba2
|
Speculative Grade Liquidity-2
|
Stable
|
October 8, 2018
|
Fitch
|
BB+
|
B
|
Positive
|
September 27, 2018
|
Terms and Conditions for Restricted Share Units - Non-Executive Chairman (John C. Plant) Director Award, effective October 23, 2018.
|
|
Letter regarding unaudited interim financial information.
|
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Arconic Inc.
|
|
|
November 1, 2018
|
/s/ Ken Giacobbe
|
Date
|
Ken Giacobbe
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
|
November 1, 2018
|
/s/ Paul Myron
|
Date
|
Paul Myron
|
|
Vice President and Controller
|
|
(Principal Accounting Officer)
|
|
•
|
|
Death
: if the Participant dies while serving as Chairman, the Award of Restricted Share Units is not forfeited but becomes fully vested as of the date of the Participant's death.
|
|
•
|
|
Change in Control
: to the extent that (i) a Replacement Award is not provided to the Participant following a Change in Control; or (ii) the Participant’s service is not continued by the successor or survivor corporation in connection with or following such Change in Control, the Restricted Share Units will become fully vested immediately prior to the consummation of the Change in Control subject to the Participant’s continued service as Chairman through the date of such Change in Control.
|
/s/ PricewaterhouseCoopers LLP
|
PricewaterhouseCoopers LLP
|
Pittsburgh, Pennsylvania
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Arconic Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Charles P. Blankenship
|
Name: Charles P. Blankenship
|
Title: Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Arconic Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Ken Giacobbe
|
Name: Ken Giacobbe
|
Title: Executive Vice President and Chief Financial Officer
|
Dated:
|
November 1, 2018
|
/s/ Charles P. Blankenship
|
|
|
|
Name:
|
Charles P. Blankenship
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
Dated:
|
November 1, 2018
|
/s/ Ken Giacobbe
|
|
|
|
Name:
|
Ken Giacobbe
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|