|
|
||||
|
☒
|
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.)
|
||||
|
|
|
|
|
|
|
|
|
201 Isabella Street,
|
Suite 200,
|
Pittsburgh,
|
Pennsylvania
|
|
15212-5872
|
|
|
(Address of principal executive offices)
|
|
(Zip code)
|
||||
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, par value $1.00 per share
|
ARNC
|
New York Stock Exchange
|
|
$3.75 Cumulative Preferred Stock, par value $100 per share
|
ARNC PR
|
NYSE American
|
|
Large accelerated filer
|
x
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
|
||||
|
|
Second quarter ended
|
Six months ended
|
||||||||||||
|
|
June 30,
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
|
$
|
3,691
|
|
|
$
|
3,573
|
|
$
|
7,232
|
|
|
$
|
7,018
|
|
|
|
Cost of goods sold (exclusive of expenses below)
|
2,939
|
|
|
2,903
|
|
5,757
|
|
|
5,671
|
|
||||
|
Selling, general administrative, and other expenses
|
178
|
|
|
158
|
|
356
|
|
|
330
|
|
||||
|
Research and development expenses
|
17
|
|
|
29
|
|
39
|
|
|
52
|
|
||||
|
Provision for depreciation and amortization
|
139
|
|
|
144
|
|
276
|
|
|
286
|
|
||||
|
499
|
|
|
15
|
|
511
|
|
|
22
|
|
|||||
|
Operating (loss) income
|
(81
|
)
|
|
324
|
|
293
|
|
|
657
|
|
||||
|
Interest expense
|
85
|
|
|
89
|
|
170
|
|
|
203
|
|
||||
|
29
|
|
|
41
|
|
61
|
|
|
61
|
|
|||||
|
(Loss) income before income taxes
|
(195
|
)
|
|
194
|
|
62
|
|
|
393
|
|
||||
|
(74
|
)
|
|
74
|
|
(4
|
)
|
|
130
|
|
|||||
|
Net (loss) income
|
$
|
(121
|
)
|
|
$
|
120
|
|
$
|
66
|
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|||||||||
|
Net (loss) income
|
$
|
(121
|
)
|
|
$
|
120
|
|
$
|
65
|
|
|
$
|
262
|
|
|
(Loss) earnings per share - basic
|
$
|
(0.27
|
)
|
|
$
|
0.25
|
|
$
|
0.14
|
|
|
$
|
0.54
|
|
|
(Loss) earnings per share - diluted
|
$
|
(0.27
|
)
|
|
$
|
0.24
|
|
$
|
0.14
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|||||||||
|
Average shares outstanding - basic
|
445
|
|
|
483
|
|
458
|
|
|
483
|
|
||||
|
Average shares outstanding - diluted
|
445
|
|
|
502
|
|
462
|
|
|
502
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net (loss) income
|
$
|
(121
|
)
|
|
$
|
120
|
|
|
$
|
66
|
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits
|
23
|
|
|
29
|
|
|
63
|
|
|
172
|
|
||||
|
Foreign currency translation adjustments
|
(30
|
)
|
|
(201
|
)
|
|
(4
|
)
|
|
(79
|
)
|
||||
|
Net change in unrealized gains on available-for-sale securities
|
—
|
|
|
(2
|
)
|
|
3
|
|
|
(2
|
)
|
||||
|
Net change in unrecognized gains/losses on cash flow hedges
|
(10
|
)
|
|
4
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
|
Total Other comprehensive (loss) income, net of tax
|
(17
|
)
|
|
(170
|
)
|
|
59
|
|
|
88
|
|
||||
|
Comprehensive (loss) income
|
$
|
(138
|
)
|
|
$
|
(50
|
)
|
|
$
|
125
|
|
|
$
|
351
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Assets
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
1,357
|
|
|
$
|
2,277
|
|
|
Receivables from customers, less allowances of $4 in 2019 and 2018 (K)
|
1,155
|
|
|
1,047
|
|
||
|
640
|
|
|
451
|
|
|||
|
2,606
|
|
|
2,492
|
|
|||
|
Prepaid expenses and other current assets
|
260
|
|
|
314
|
|
||
|
Total current assets
|
6,018
|
|
|
6,581
|
|
||
|
5,517
|
|
|
5,704
|
|
|||
|
4,500
|
|
|
4,500
|
|
|||
|
Deferred income taxes
|
568
|
|
|
573
|
|
||
|
686
|
|
|
919
|
|
|||
|
624
|
|
|
416
|
|
|||
|
Total assets
|
$
|
17,913
|
|
|
$
|
18,693
|
|
|
Liabilities
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Accounts payable, trade
|
$
|
2,095
|
|
|
$
|
2,129
|
|
|
Accrued compensation and retirement costs
|
384
|
|
|
370
|
|
||
|
Taxes, including income taxes
|
116
|
|
|
118
|
|
||
|
Accrued interest payable
|
113
|
|
|
113
|
|
||
|
479
|
|
|
356
|
|
|||
|
434
|
|
|
434
|
|
|||
|
Total current liabilities
|
3,621
|
|
|
3,520
|
|
||
|
5,901
|
|
|
5,896
|
|
|||
|
2,079
|
|
|
2,230
|
|
|||
|
641
|
|
|
723
|
|
|||
|
805
|
|
|
739
|
|
|||
|
Total liabilities
|
13,047
|
|
|
13,108
|
|
||
|
|
|
|
|
|
|||
|
Equity
|
|
|
|
||||
|
Arconic shareholders’ equity:
|
|
|
|
||||
|
Preferred stock
|
55
|
|
|
55
|
|
||
|
440
|
|
|
483
|
|
|||
|
7,484
|
|
|
8,319
|
|
|||
|
Accumulated deficit
|
(256
|
)
|
|
(358
|
)
|
||
|
(2,869
|
)
|
|
(2,926
|
)
|
|||
|
Total Arconic shareholders’ equity
|
4,854
|
|
|
5,573
|
|
||
|
Noncontrolling interests
|
12
|
|
|
12
|
|
||
|
Total equity
|
4,866
|
|
|
5,585
|
|
||
|
Total liabilities and equity
|
$
|
17,913
|
|
|
$
|
18,693
|
|
|
|
Six months ended
|
||||||
|
|
June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
Operating activities
|
|
|
|
||||
|
Net income
|
$
|
66
|
|
|
$
|
263
|
|
|
Adjustments to reconcile net income to cash used for operations:
|
|
|
|
||||
|
Depreciation and amortization
|
276
|
|
|
286
|
|
||
|
Deferred income taxes
|
(78
|
)
|
|
47
|
|
||
|
Restructuring and other charges
|
511
|
|
|
22
|
|
||
|
Net loss from investing activities—asset sales
|
4
|
|
|
5
|
|
||
|
58
|
|
|
71
|
|
|||
|
Stock-based compensation
|
27
|
|
|
29
|
|
||
|
Other
|
14
|
|
|
50
|
|
||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
|
|
|
|
||||
|
(Increase) in receivables
|
(743
|
)
|
|
(709
|
)
|
||
|
(Increase) in inventories
|
(117
|
)
|
|
(220
|
)
|
||
|
Decrease in prepaid expenses and other current assets
|
18
|
|
|
8
|
|
||
|
(Decrease) increase in accounts payable, trade
|
(29
|
)
|
|
218
|
|
||
|
(Decrease) in accrued expenses
|
(46
|
)
|
|
(84
|
)
|
||
|
Increase in taxes, including income taxes
|
41
|
|
|
37
|
|
||
|
Pension contributions
|
(140
|
)
|
|
(237
|
)
|
||
|
(Increase) in noncurrent assets
|
(5
|
)
|
|
(4
|
)
|
||
|
(Decrease) in noncurrent liabilities
|
(9
|
)
|
|
(42
|
)
|
||
|
Cash used for operations
|
(152
|
)
|
|
(260
|
)
|
||
|
Financing Activities
|
|
|
|
||||
|
Net change in short-term borrowings (original maturities of three months or less)
|
—
|
|
|
5
|
|
||
|
Additions to debt (original maturities greater than three months)
|
226
|
|
|
300
|
|
||
|
Payments on debt (original maturities greater than three months)
|
(226
|
)
|
|
(801
|
)
|
||
|
Premiums paid on early redemption of debt
|
—
|
|
|
(17
|
)
|
||
|
Proceeds from exercise of employee stock options
|
11
|
|
|
13
|
|
||
|
Dividends paid to shareholders
|
(39
|
)
|
|
(60
|
)
|
||
|
(900
|
)
|
|
—
|
|
|||
|
Other
|
(14
|
)
|
|
(17
|
)
|
||
|
Cash used for financing activities
|
(942
|
)
|
|
(577
|
)
|
||
|
Investing Activities
|
|
|
|
||||
|
Capital expenditures
|
(304
|
)
|
|
(288
|
)
|
||
|
Proceeds from the sale of assets and businesses
|
12
|
|
|
5
|
|
||
|
Sales of investments
|
47
|
|
|
9
|
|
||
|
417
|
|
|
420
|
|
|||
|
Other
|
(1
|
)
|
|
—
|
|
||
|
Cash provided from investing activities
|
171
|
|
|
146
|
|
||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
|
(2
|
)
|
||
|
Net change in cash, cash equivalents and restricted cash
|
(922
|
)
|
|
(693
|
)
|
||
|
Cash, cash equivalents and restricted cash at beginning of period
|
2,282
|
|
|
2,153
|
|
||
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,360
|
|
|
$
|
1,460
|
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||
|
|
Preferred
stock |
|
Common
stock |
|
Additional
capital |
|
Accumulated deficit
|
|
Accumulated
other comprehensive loss |
|
Noncontrolling
interests |
|
Total
Equity |
||||||||||||||
|
Balance at March 31, 2018
|
$
|
55
|
|
|
$
|
483
|
|
|
$
|
8,280
|
|
|
$
|
(1,164
|
)
|
|
$
|
(2,386
|
)
|
|
$
|
14
|
|
|
$
|
5,282
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(170
|
)
|
|
—
|
|
|
(170
|
)
|
||||||||
|
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Common @ $0.06 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
|
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
|
Balance at June 30, 2018
|
$
|
55
|
|
|
$
|
483
|
|
|
$
|
8,295
|
|
|
$
|
(1,073
|
)
|
|
$
|
(2,556
|
)
|
|
$
|
14
|
|
|
$
|
5,218
|
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||
|
|
Preferred
stock |
|
Common
stock |
|
Additional
capital |
|
Accumulated deficit
|
|
Accumulated
other comprehensive loss |
|
Noncontrolling
interests |
|
Total
Equity |
||||||||||||||
|
Balance at March 31, 2019
|
$
|
55
|
|
|
$
|
453
|
|
|
$
|
7,644
|
|
|
$
|
(134
|
)
|
|
$
|
(2,852
|
)
|
|
$
|
12
|
|
|
$
|
5,178
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(121
|
)
|
|
—
|
|
|
—
|
|
|
(121
|
)
|
|||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||||||
|
—
|
|
|
(13
|
)
|
|
(187
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
||||||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||||
|
Common stock issued: compensation plans
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||||
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||
|
Balance at June 30, 2019
|
$
|
55
|
|
|
$
|
440
|
|
|
$
|
7,484
|
|
|
$
|
(256
|
)
|
|
$
|
(2,869
|
)
|
|
$
|
12
|
|
|
$
|
4,866
|
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||||
|
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
263
|
|
|
—
|
|
|
—
|
|
|
263
|
|
|||||||||
|
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
|||||||||
|
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Preferred-Class A @ $1.875 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||||
|
Common @ $0.18 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
|||||||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|||||||||
|
Common stock issued: compensation plans
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||||
|
Balance at June 30, 2018
|
$
|
55
|
|
$
|
—
|
|
$
|
483
|
|
|
$
|
8,295
|
|
|
$
|
(1,073
|
)
|
|
$
|
(2,556
|
)
|
|
$
|
14
|
|
|
$
|
5,218
|
|
|
|
Arconic Shareholders
|
|
|
|
|
||||||||||||||||||||||
|
|
Preferred
stock
|
|
Common
stock
|
|
Additional
capital
|
|
Accumulated deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Noncontrolling
interests
|
|
Total
Equity
|
||||||||||||||
|
Balance at December 31, 2018
|
$
|
55
|
|
|
$
|
483
|
|
|
$
|
8,319
|
|
|
$
|
(358
|
)
|
|
$
|
(2,926
|
)
|
|
$
|
12
|
|
|
$
|
5,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
(2
|
)
|
|
—
|
|
|
73
|
|
||||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|||||||
|
Other comprehensive income (J)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|||||||
|
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Preferred-Class A @ $1.875 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||
|
Common @ $0.08 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|||||||
|
—
|
|
|
(45
|
)
|
|
(855
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(900
|
)
|
||||||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||||
|
Common stock issued: compensation plans
|
—
|
|
|
2
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||||
|
Balance at June 30, 2019
|
$
|
55
|
|
|
$
|
440
|
|
|
$
|
7,484
|
|
|
$
|
(256
|
)
|
|
$
|
(2,869
|
)
|
|
$
|
12
|
|
|
$
|
4,866
|
|
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
|
Second quarter ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
Sales:
|
|
|
|
|
|
|
|
||||||||
|
Third-party sales
|
$
|
1,565
|
|
|
$
|
1,577
|
|
|
$
|
548
|
|
|
$
|
3,690
|
|
|
Intersegment sales
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||
|
Total sales
|
$
|
1,565
|
|
|
$
|
1,632
|
|
|
$
|
548
|
|
|
$
|
3,745
|
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
|
Segment operating profit
|
$
|
286
|
|
|
$
|
145
|
|
|
$
|
107
|
|
|
$
|
538
|
|
|
Restructuring and other charges
|
442
|
|
|
2
|
|
|
25
|
|
|
469
|
|
||||
|
Provision for depreciation and amortization
|
62
|
|
|
54
|
|
|
13
|
|
|
129
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Second quarter ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Sales:
|
|
|
|
|
|
|
|
||||||||
|
Third-party sales
|
$
|
1,474
|
|
|
$
|
1,573
|
|
|
$
|
562
|
|
|
$
|
3,609
|
|
|
Intersegment sales
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||
|
Total sales
|
$
|
1,474
|
|
|
$
|
1,634
|
|
|
$
|
562
|
|
|
$
|
3,670
|
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
|
Segment operating profit
|
$
|
224
|
|
|
$
|
111
|
|
|
$
|
97
|
|
|
$
|
432
|
|
|
Restructuring and other charges
|
8
|
|
|
2
|
|
|
—
|
|
|
10
|
|
||||
|
Provision for depreciation and amortization
|
65
|
|
|
59
|
|
|
12
|
|
|
136
|
|
||||
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
|
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
Sales:
|
|
|
|
|
|
|
|
||||||||
|
Third-party sales
|
$
|
3,067
|
|
|
$
|
3,080
|
|
|
$
|
1,083
|
|
|
$
|
7,230
|
|
|
Intersegment sales
|
—
|
|
|
110
|
|
|
—
|
|
|
110
|
|
||||
|
Total sales
|
$
|
3,067
|
|
|
$
|
3,190
|
|
|
$
|
1,083
|
|
|
$
|
7,340
|
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
|
Segment operating profit
|
$
|
539
|
|
|
$
|
252
|
|
|
$
|
194
|
|
|
$
|
985
|
|
|
Restructuring and other charges
|
456
|
|
|
8
|
|
|
34
|
|
|
498
|
|
||||
|
Provision for depreciation and amortization
|
126
|
|
|
108
|
|
|
26
|
|
|
260
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Sales:
|
|
|
|
|
|
|
|
||||||||
|
Third-party sales
|
$
|
2,900
|
|
|
$
|
3,054
|
|
|
$
|
1,099
|
|
|
$
|
7,053
|
|
|
Intersegment sales
|
—
|
|
|
118
|
|
|
—
|
|
|
118
|
|
||||
|
Total sales
|
$
|
2,900
|
|
|
$
|
3,172
|
|
|
$
|
1,099
|
|
|
$
|
7,171
|
|
|
Profit and loss:
|
|
|
|
|
|
|
|
||||||||
|
Segment operating profit
|
$
|
433
|
|
|
$
|
235
|
|
|
$
|
164
|
|
|
$
|
832
|
|
|
Restructuring and other charges
|
9
|
|
|
1
|
|
|
—
|
|
|
10
|
|
||||
|
Provision for depreciation and amortization
|
130
|
|
|
115
|
|
|
25
|
|
|
270
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Total segment operating profit
|
$
|
538
|
|
|
$
|
432
|
|
|
$
|
985
|
|
|
$
|
832
|
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
||||||||
|
Restructuring and other charges
|
(499
|
)
|
|
(15
|
)
|
|
(511
|
)
|
|
(22
|
)
|
||||
|
Corporate expense
|
(120
|
)
|
|
(93
|
)
|
|
(181
|
)
|
|
(153
|
)
|
||||
|
Consolidated operating (loss) income
|
$
|
(81
|
)
|
|
$
|
324
|
|
|
$
|
293
|
|
|
$
|
657
|
|
|
Interest expense
|
(85
|
)
|
|
(89
|
)
|
|
(170
|
)
|
|
(203
|
)
|
||||
|
Other expense, net
|
(29
|
)
|
|
(41
|
)
|
|
(61
|
)
|
|
(61
|
)
|
||||
|
Consolidated (loss) income before income taxes
|
$
|
(195
|
)
|
|
$
|
194
|
|
|
$
|
62
|
|
|
$
|
393
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Engineered Products and Solutions
|
$
|
9,681
|
|
|
$
|
9,797
|
|
|
Global Rolled Products
|
4,714
|
|
|
4,486
|
|
||
|
Transportation and Construction Solutions
|
1,216
|
|
|
1,089
|
|
||
|
Total segment assets
|
$
|
15,611
|
|
|
$
|
15,372
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Total segment assets
|
$
|
15,611
|
|
|
$
|
15,372
|
|
|
Unallocated amounts:
|
|
|
|
||||
|
Cash and cash equivalents
|
1,357
|
|
|
2,277
|
|
||
|
Deferred income taxes
|
568
|
|
|
573
|
|
||
|
Corporate fixed assets, net
|
302
|
|
|
305
|
|
||
|
Fair value of derivative contracts
|
5
|
|
|
37
|
|
||
|
Other
|
70
|
|
|
129
|
|
||
|
Consolidated assets
|
$
|
17,913
|
|
|
$
|
18,693
|
|
|
|
Engineered
Products and
Solutions
|
|
Global Rolled
Products
|
|
Transportation
and Construction
Solutions
|
|
Total
Segment
|
||||||||
|
Second quarter ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
Aerospace
|
$
|
1,283
|
|
|
$
|
328
|
|
|
$
|
—
|
|
|
$
|
1,611
|
|
|
Transportation
|
85
|
|
|
632
|
|
|
258
|
|
|
975
|
|
||||
|
Building and construction
|
—
|
|
|
54
|
|
|
291
|
|
|
345
|
|
||||
|
Industrial and Other
|
197
|
|
|
563
|
|
|
(1
|
)
|
|
759
|
|
||||
|
Total end-market revenue
|
$
|
1,565
|
|
|
$
|
1,577
|
|
|
$
|
548
|
|
|
$
|
3,690
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Second quarter ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Aerospace
|
$
|
1,187
|
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
|
Transportation
|
93
|
|
|
638
|
|
|
253
|
|
|
984
|
|
||||
|
Building and construction
|
—
|
|
|
60
|
|
|
297
|
|
|
357
|
|
||||
|
Industrial and Other
|
194
|
|
|
595
|
|
|
12
|
|
|
801
|
|
||||
|
Total end-market revenue
|
$
|
1,474
|
|
|
$
|
1,573
|
|
|
$
|
562
|
|
|
$
|
3,609
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
|
Aerospace
|
$
|
2,533
|
|
|
$
|
630
|
|
|
$
|
—
|
|
|
$
|
3,163
|
|
|
Transportation
|
172
|
|
|
1,281
|
|
|
513
|
|
|
1,966
|
|
||||
|
Building and construction
|
—
|
|
|
103
|
|
|
572
|
|
|
675
|
|
||||
|
Industrial and Other
|
362
|
|
|
1,066
|
|
|
(2
|
)
|
|
1,426
|
|
||||
|
Total end-market revenue
|
$
|
3,067
|
|
|
$
|
3,080
|
|
|
$
|
1,083
|
|
|
$
|
7,230
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Aerospace
|
$
|
2,328
|
|
|
$
|
528
|
|
|
$
|
—
|
|
|
$
|
2,856
|
|
|
Transportation
|
166
|
|
|
1,260
|
|
|
496
|
|
|
1,922
|
|
||||
|
Building and construction
|
—
|
|
|
108
|
|
|
582
|
|
|
690
|
|
||||
|
Industrial and Other
|
406
|
|
|
1,158
|
|
|
21
|
|
|
1,585
|
|
||||
|
Total end-market revenue
|
$
|
2,900
|
|
|
$
|
3,054
|
|
|
$
|
1,099
|
|
|
$
|
7,053
|
|
|
|
Layoff
costs
|
|
Other exit
costs
|
|
Total
|
||||||
|
Reserve balances at December 31, 2017
|
$
|
56
|
|
|
$
|
2
|
|
|
$
|
58
|
|
|
Cash payments
|
(47
|
)
|
|
(2
|
)
|
|
(49
|
)
|
|||
|
Restructuring charges
|
111
|
|
|
13
|
|
|
124
|
|
|||
|
Other(1)
|
(110
|
)
|
|
2
|
|
|
(108
|
)
|
|||
|
Reserve balances at December 31, 2018
|
10
|
|
|
15
|
|
|
25
|
|
|||
|
Cash payments
|
(40
|
)
|
|
(3
|
)
|
|
(43
|
)
|
|||
|
Restructuring charges
|
39
|
|
|
472
|
|
|
511
|
|
|||
|
Other(2)
|
56
|
|
|
(479
|
)
|
|
(423
|
)
|
|||
|
Reserve balances at June 30, 2019
|
$
|
65
|
|
|
$
|
5
|
|
|
$
|
70
|
|
|
(1)
|
In 2018, Other for layoff costs included reclassifications of $119 in pension costs and a $28 credit in postretirement benefits, as the impacts were reflected in Arconic's separate liabilities for Accrued pension benefits and Accrued postretirement benefits, and the reversal of previously recorded restructuring charges of $19.
|
|
(2)
|
In 2019, Other for layoff costs included reclassifications of a $58 credit for elimination of life insurance benefits for U.S. salaried and non-bargaining hourly retirees and a $4 pension settlement charge, as the impacts were reflected in Arconic's separate liabilities for Accrued pension benefits and Accrued postretirement benefits, and other credits of $2.
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Non-service related net periodic benefit cost
|
$
|
29
|
|
|
$
|
28
|
|
|
$
|
58
|
|
|
$
|
56
|
|
|
Interest income
|
(6
|
)
|
|
(4
|
)
|
|
(16
|
)
|
|
(10
|
)
|
||||
|
Foreign currency (gains) losses, net
|
(4
|
)
|
|
17
|
|
|
(4
|
)
|
|
14
|
|
||||
|
Net loss from asset sales
|
2
|
|
|
2
|
|
|
4
|
|
|
5
|
|
||||
|
Other, net
|
8
|
|
|
(2
|
)
|
|
19
|
|
|
(4
|
)
|
||||
|
|
$
|
29
|
|
|
$
|
41
|
|
|
$
|
61
|
|
|
$
|
61
|
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Pension benefits
|
|
|
|
|
|
|
|
||||||||
|
Service cost
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
13
|
|
|
$
|
28
|
|
|
Interest cost
|
59
|
|
|
55
|
|
|
118
|
|
|
110
|
|
||||
|
Expected return on plan assets
|
(71
|
)
|
|
(77
|
)
|
|
(143
|
)
|
|
(154
|
)
|
||||
|
Recognized net actuarial loss
|
34
|
|
|
42
|
|
|
69
|
|
|
84
|
|
||||
|
Amortization of prior service cost (benefit)
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
|
Settlements
|
2
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
|
Curtailments
|
—
|
|
|
9
|
|
|
—
|
|
|
14
|
|
||||
|
Net periodic benefit cost(1)
|
$
|
31
|
|
|
$
|
38
|
|
|
$
|
62
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other postretirement benefits
|
|
|
|
|
|
|
|
||||||||
|
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
Interest cost
|
7
|
|
|
7
|
|
|
14
|
|
|
14
|
|
||||
|
Recognized net actuarial loss
|
1
|
|
|
2
|
|
|
2
|
|
|
4
|
|
||||
|
Amortization of prior service cost (benefit)
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
|
Curtailments
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
||||
|
Net periodic benefit cost(1)
|
$
|
8
|
|
|
$
|
9
|
|
|
$
|
(41
|
)
|
|
$
|
18
|
|
|
(1)
|
Service cost was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations.
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Pre-tax income at estimated annual effective income tax rate before discrete items
|
$
|
(69
|
)
|
|
$
|
52
|
|
|
$
|
22
|
|
|
$
|
106
|
|
|
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income
|
24
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
|
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized
|
7
|
|
|
—
|
|
|
9
|
|
|
1
|
|
||||
|
Other discrete items
|
(36
|
)
|
|
21
|
|
|
(35
|
)
|
|
23
|
|
||||
|
Provision for income taxes
|
$
|
(74
|
)
|
|
$
|
74
|
|
|
$
|
(4
|
)
|
|
$
|
130
|
|
|
Share delivery date
|
Number of shares
|
|
Average price
|
|
Total
|
|
February 21, 2019
|
31,908,831
|
|
|
|
|
|
April 29, 2019
|
4,525,592
|
|
|
|
|
|
February 2019 ASR total
|
36,434,423
|
|
$19.21
|
|
$700
|
|
|
|
|
|
|
|
|
May 6, 2019
|
7,455,732
|
|
|
|
|
|
June 12, 2019
|
1,561,249
|
|
|
|
|
|
May 2019 ASR total
|
9,016,981
|
|
$22.18
|
|
$200
|
|
|
|
|
|
|
|
|
2019 ASR total
|
45,451,404
|
|
$19.80
|
|
$900
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net (loss) income
|
$
|
(121
|
)
|
|
$
|
120
|
|
|
$
|
66
|
|
|
$
|
263
|
|
|
Less: preferred stock dividends declared
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
|
Net (loss) income available to Arconic common shareholders - basic
|
(121
|
)
|
|
120
|
|
|
65
|
|
|
262
|
|
||||
|
Add: Interest expense related to convertible notes
|
—
|
|
|
3
|
|
|
—
|
|
|
6
|
|
||||
|
Net (loss) income available to Arconic common shareholders - diluted
|
$
|
(121
|
)
|
|
$
|
123
|
|
|
$
|
65
|
|
|
$
|
268
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Average shares outstanding - basic
|
445
|
|
|
483
|
|
|
458
|
|
|
483
|
|
||||
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
|
Stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Stock and performance awards
|
—
|
|
|
5
|
|
|
4
|
|
|
5
|
|
||||
|
Convertible notes
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||
|
Average shares outstanding - diluted
|
445
|
|
|
502
|
|
|
462
|
|
|
502
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||
|
|
June 30,
|
|
June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
Convertible notes
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
Stock options(1)
|
9
|
|
|
9
|
|
|
3
|
|
|
9
|
|
|
Stock and performance awards
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
The average exercise price per share of options was $25.03 and $32.66 for the second quarter and six months ended June 30, 2019 and $26.80 for the second quarter and six months ended June 30, 2018.
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Balance at beginning of period
|
$
|
(2,304
|
)
|
|
$
|
(2,087
|
)
|
|
$
|
(2,344
|
)
|
|
$
|
(2,230
|
)
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
|
Unrecognized net actuarial loss and prior service cost/benefit
|
(6
|
)
|
|
(15
|
)
|
|
66
|
|
|
122
|
|
||||
|
Tax benefit (expense)
|
1
|
|
|
3
|
|
|
(15
|
)
|
|
(28
|
)
|
||||
|
Total Other comprehensive loss before reclassifications, net of tax
|
(5
|
)
|
|
(12
|
)
|
|
51
|
|
|
94
|
|
||||
|
Amortization of net actuarial loss and prior service cost(1)
|
36
|
|
|
52
|
|
|
15
|
|
|
100
|
|
||||
|
Tax expense(2)
|
(8
|
)
|
|
(11
|
)
|
|
(3
|
)
|
|
(22
|
)
|
||||
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)
|
28
|
|
|
41
|
|
|
12
|
|
|
78
|
|
||||
|
Total Other comprehensive income
|
23
|
|
|
29
|
|
|
63
|
|
|
172
|
|
||||
|
Balance at end of period
|
$
|
(2,281
|
)
|
|
$
|
(2,058
|
)
|
|
$
|
(2,281
|
)
|
|
$
|
(2,058
|
)
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
(557
|
)
|
|
$
|
(315
|
)
|
|
$
|
(583
|
)
|
|
$
|
(437
|
)
|
|
Other comprehensive loss(3)
|
(30
|
)
|
|
(201
|
)
|
|
(4
|
)
|
|
(79
|
)
|
||||
|
Balance at end of period
|
$
|
(587
|
)
|
|
$
|
(516
|
)
|
|
$
|
(587
|
)
|
|
$
|
(516
|
)
|
|
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
Other comprehensive (loss) income(4)
|
—
|
|
|
(2
|
)
|
|
3
|
|
|
(2
|
)
|
||||
|
Balance at end of period
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
9
|
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
25
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||||
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
|
Net change from periodic revaluations
|
(13
|
)
|
|
9
|
|
|
(5
|
)
|
|
3
|
|
||||
|
Tax benefit (expense)
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
||||
|
Total Other comprehensive (loss) income before reclassifications, net of tax
|
(10
|
)
|
|
8
|
|
|
(3
|
)
|
|
3
|
|
||||
|
Net amount reclassified to earnings
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(7
|
)
|
||||
|
Tax benefit(2)
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
|
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(6
|
)
|
||||
|
Total Other comprehensive (loss) income
|
(10
|
)
|
|
4
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
|
Balance at end of period
|
$
|
(1
|
)
|
|
$
|
22
|
|
|
$
|
(1
|
)
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total balance at end of period
|
$
|
(2,869
|
)
|
|
$
|
(2,556
|
)
|
|
$
|
(2,869
|
)
|
|
$
|
(2,556
|
)
|
|
(1)
|
|
(2)
|
These amounts were included in Provision for income taxes on the accompanying Statement of Consolidated Operations.
|
|
(3)
|
In all periods presented, no amounts were reclassified to earnings.
|
|
(4)
|
Realized gains and losses were included in Other expense, 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.
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Finished goods
|
$
|
701
|
|
|
$
|
668
|
|
|
Work-in-process
|
1,447
|
|
|
1,371
|
|
||
|
Purchased raw materials
|
361
|
|
|
366
|
|
||
|
Operating supplies
|
97
|
|
|
87
|
|
||
|
Total inventories
|
$
|
2,606
|
|
|
$
|
2,492
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
Land and land rights
|
$
|
136
|
|
|
$
|
136
|
|
|
Structures
|
2,378
|
|
|
2,364
|
|
||
|
Machinery and equipment
|
9,249
|
|
|
9,234
|
|
||
|
|
11,763
|
|
|
11,734
|
|
||
|
Less: accumulated depreciation and amortization
|
7,013
|
|
|
6,769
|
|
||
|
|
4,750
|
|
|
4,965
|
|
||
|
Construction work-in-progress
|
767
|
|
|
739
|
|
||
|
|
$
|
5,517
|
|
|
$
|
5,704
|
|
|
|
June 30, 2019
|
||
|
Right-of-use assets classified in Other noncurrent assets
|
$
|
277
|
|
|
|
|
||
|
Current portion of lease liabilities classified in Other current liabilities
|
77
|
|
|
|
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits
|
211
|
|
|
|
Total lease liabilities
|
$
|
288
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
2019
|
$
|
48
|
|
|
$
|
94
|
|
|
2020
|
78
|
|
|
74
|
|
||
|
2021
|
57
|
|
|
54
|
|
||
|
2022
|
43
|
|
|
40
|
|
||
|
2023
|
32
|
|
|
30
|
|
||
|
Thereafter
|
90
|
|
|
87
|
|
||
|
Total lease payments
|
$
|
348
|
|
|
$
|
379
|
|
|
Less: Imputed interest
|
(60
|
)
|
|
|
|||
|
Present value of lease liabilities
|
$
|
288
|
|
|
|
||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
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)
|
(24
|
)
|
|
(29
|
)
|
||
|
|
6,306
|
|
|
6,301
|
|
||
|
Less: amount due within one year
|
405
|
|
|
405
|
|
||
|
Total long-term debt
|
$
|
5,901
|
|
|
$
|
5,896
|
|
|
(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.
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying
value
|
|
Fair
value
|
|
Carrying
value
|
|
Fair
value
|
||||||||
|
Long-term debt, less amount due within one year
|
$
|
5,901
|
|
|
$
|
6,240
|
|
|
$
|
5,896
|
|
|
$
|
5,873
|
|
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Third-party sales
|
$
|
1,565
|
|
|
$
|
1,474
|
|
|
$
|
3,067
|
|
|
$
|
2,900
|
|
|
Segment operating profit
|
286
|
|
|
224
|
|
|
539
|
|
|
433
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Third-party sales
|
$
|
1,577
|
|
|
$
|
1,573
|
|
|
$
|
3,080
|
|
|
$
|
3,054
|
|
|
Intersegment sales
|
55
|
|
|
61
|
|
|
110
|
|
|
118
|
|
||||
|
Total sales
|
$
|
1,632
|
|
|
$
|
1,634
|
|
|
$
|
3,190
|
|
|
$
|
3,172
|
|
|
Segment operating profit
|
145
|
|
|
111
|
|
|
252
|
|
|
235
|
|
||||
|
Third-party aluminum shipments (kmt)
|
367
|
|
|
330
|
|
|
698
|
|
|
652
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Third-party sales
|
$
|
548
|
|
|
$
|
562
|
|
|
$
|
1,083
|
|
|
$
|
1,099
|
|
|
Segment operating profit
|
107
|
|
|
97
|
|
|
194
|
|
|
164
|
|
||||
|
|
Second quarter ended
|
|
Six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Total segment operating profit
|
$
|
538
|
|
|
$
|
432
|
|
|
$
|
985
|
|
|
$
|
832
|
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
||||||||
|
Restructuring and other charges
|
(499
|
)
|
|
(15
|
)
|
|
(511
|
)
|
|
(22
|
)
|
||||
|
Corporate expense
|
(120
|
)
|
|
(93
|
)
|
|
(181
|
)
|
|
(153
|
)
|
||||
|
Consolidated operating (loss) income
|
$
|
(81
|
)
|
|
$
|
324
|
|
|
$
|
293
|
|
|
$
|
657
|
|
|
Interest expense
|
(85
|
)
|
|
(89
|
)
|
|
(170
|
)
|
|
(203
|
)
|
||||
|
Other expense, net
|
(29
|
)
|
|
(41
|
)
|
|
(61
|
)
|
|
(61
|
)
|
||||
|
Consolidated (loss) income before income taxes
|
$
|
(195
|
)
|
|
$
|
194
|
|
|
$
|
62
|
|
|
$
|
393
|
|
|
|
Long-Term Debt
|
Short-Term Debt
|
Outlook
|
Date of Last Update
|
|
Standard and Poor’s
|
BBB-
|
A-3
|
Negative
|
April 26, 2019
|
|
Moody’s
|
Ba2
|
Speculative Grade Liquidity-2
|
Stable
|
June 7, 2019
|
|
Fitch
|
BB+
|
B
|
Positive
|
February 12, 2019
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
|
April 1 - April 30, 2019(2)
|
|
4,525,592
|
|
|
$
|
19.21
|
|
|
4,525,592
|
|
|
$
|
300,000,000
|
|
|
May 1 - May 31, 2019(3)
|
|
7,455,732
|
|
|
$
|
22.18
|
|
|
7,455,732
|
|
|
$
|
600,000,000
|
|
|
June 1 - June 30, 2019(3)
|
|
1,561,249
|
|
|
$
|
22.18
|
|
|
1,561,249
|
|
|
$
|
600,000,000
|
|
|
Total for quarter ended June 30, 2019
|
|
13,542,573
|
|
|
|
|
13,542,573
|
|
|
|
||||
|
(1)
|
On February 5, 2018, the Company announced that its Board of Directors (the Board) had authorized the repurchase of up to $500 million of the Company's outstanding common stock (the "February 2018 Share Repurchase Program"). There was no stated expiration for the February 2018 Share Repurchase Program, and no shares were repurchased during 2018. On February 8, 2019, the Company announced that the Board had authorized the repurchase of an additional $500 million of the Company's outstanding common stock, effective through the end of 2020. On May 20, 2019, the Company announced that the Board had authorized the repurchase of a further $500 million of the Company's outstanding common stock (the "May 2019 Share Repurchase Program"). There was no stated expiration for the May 2019 Share Repurchase Program.
|
|
(2)
|
On February 19, 2019, the Company entered into an accelerated share repurchase (ASR) agreement with JPMorgan Chase Bank (“JPM”) to repurchase $700 million of its common stock, and received an initial delivery of 31,908,831 shares. The term of the ASR concluded on April 25, 2019, with JPM delivering 4,525,592 additional shares to Arconic on April 29, 2019. A total of 36,434,423 shares, at an average price of $19.21 per share, were repurchased under the agreement.
|
|
(3)
|
On May 2, 2019, the Company entered into an ASR agreement with JPM to repurchase $200 million of its common stock, and received an initial delivery of 7,455,732 shares. The term of the ASR concluded on June 10, 2019, with JPM delivering 1,561,249 additional shares to Arconic on June 12, 2019. A total of 9,016,981 shares, at an average price of $22.18 per share, were repurchased under the agreement.
|
|
2013 Arconic Stock Incentive Plan, as Amended and Restated, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 17, 2019.
|
|
|
Change in Control Severance Plan, as amended and restated, effective May 14, 2019, incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated May 17, 2019.
|
|
|
Executive Severance Plan, as amended and restated, effective May 14, 2019, incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated May 17, 2019.
|
|
|
10(d).
|
Special Retention Award Agreement - Neil E. Marchuk, effective May 14, 2019.
|
|
Letter Agreement, by and between Arconic Inc. and John C. Plant, dated as of August 1, 2019, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 2, 2019.
|
|
|
15.
|
Letter regarding unaudited interim financial information.
|
|
31.
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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.
|
|
104.
|
Cover Page Interactive Data File - the cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL (included within the Exhibit 101 attachments).
|
|
|
Arconic Inc.
|
|
|
|
|
August 2, 2019
|
/s/ Ken Giacobbe
|
|
Date
|
Ken Giacobbe
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
|
August 2, 2019
|
/s/ Paul Myron
|
|
Date
|
Paul Myron
|
|
|
Vice President and Controller
|
|
|
(Principal Accounting Officer)
|
|
|
• Involuntary Termination without Cause: An unvested Special Retention Award held by a Participant who is involuntarily terminated without Cause (as defined below) from employment with the Company or a Subsidiary during the vesting period is not forfeited in whole but only in part upon termination of employment. The portion of the Special Retention Award that is not forfeited vests on the original stated vesting date set forth in paragraph 2 and is calculated based on a proportionate
|
|
|
• Death or Disability: An unvested Special Retention Award held by a Participant, who dies while an employee or who is permanently and totally disabled while an employee, is not forfeited but vests on the original stated vesting date set forth in paragraph 2.
|
|
|
• Change in Control: A Special Retention Award vests if a Replacement Award is not provided following certain Change in Control events, as described in the Plan. If the Change in Control qualifies as a “change in control event” within the meaning of Treas. Reg. § 1.409-3(i)(5), the vested Special Retention Award will be paid to the Participant within 30 days following the Change in Control. If the Change in Control does not so qualify, the vested Special Retention Award will be paid to the Participant on the original stated vesting date set forth in paragraph 2.
|
|
|
• Termination Following Change in Control: As further described in the Plan, if a Replacement Award is provided following a Change in Control, but within 24 months of such Change in Control the Participant’s employment is terminated without Cause (as defined in the Arconic Inc. Change in Control Severance Plan) or by the Participant for Good Reason (as defined in the Arconic Inc. Change in Control Severance Plan), the Replacement Award will vest and will be paid to the Participant on the original stated vested date set forth in paragraph 2.
|
|
/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/ John C. Plant
|
|
Name: John C. Plant
|
|
Title: Chairman and 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:
|
August 2, 2019
|
/s/ John C. Plant
|
|
|
|
|
Name:
|
John C. Plant
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
August 2, 2019
|
/s/ Ken Giacobbe
|
|
|
|
|
Name:
|
Ken Giacobbe
|
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|