10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-3610

ARCONIC INC.

(Exact name of registrant as specified in its charter)

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)

Investor Relations 212-836-2758

Office of the Secretary 212-836-2732

(Registrant’s telephone number including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ✓    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ✓    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	✓	Accelerated filer	__
Non-accelerated filer	__	Smaller reporting company	__
		Emerging growth company	__

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ✓

As of October 24, 2018, there were 483,242,370 shares of common stock, par value $1.00 per share, of the registrant outstanding.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Arconic and subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)

	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

The accompanying notes are an integral part of the consolidated financial statements.

2

Arconic and subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(in millions)

	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

The accompanying notes are an integral part of the consolidated financial statements.

3

Arconic and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)

	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

The accompanying notes are an integral part of the consolidated financial statements.

4

Arconic and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)

	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

The accompanying notes are an integral part of the consolidated financial statements.

5

Arconic and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(in millions, except per-share amounts)

	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

The accompanying notes are an integral part of the consolidated financial statements.

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	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

The accompanying notes are an integral part of the consolidated financial statements.

7

Arconic and subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(dollars in millions, except per-share amounts)

A. Basis of Presentation

The interim Consolidated Financial Statements of Arconic Inc. and its subsidiaries (“Arconic” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2017 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with Arconic’s Annual Report on Form 10-K for the year ended December 31, 2017, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation (see below and Note D).

On January 1, 2018, Arconic adopted new guidance issued by the Financial Accounting Standards Board (FASB) related to the following: presentation of net periodic pension cost and net periodic postretirement benefit cost that required a reclassification of costs within the Statement of Consolidated Operations; presentation of certain cash receipts and cash payments within the Statement of Consolidated Cash Flows that required a reclassification of amounts between operating and either financing or investing activities; and the classification of restricted cash within the Statement of Consolidated Cash Flows. See Note B for further details.

In January 2018, management changed the organizational structure of the businesses in its Engineered Products and Solutions (EP&S) segment, from four business units to three business units, with a focus on aligning its internal structure to core markets and customers and reducing cost. As a result of this change in the EP&S segment organizational structure, management assessed and concluded that each of the three business units represent reporting units for goodwill impairment evaluation purposes.  Also, as a result of the reorganization, goodwill was reallocated to the three new reporting units and evaluated for impairment during the first quarter of 2018. The estimated fair value of each reporting unit substantially exceeded its carrying value; thus, there was no goodwill impairment. More than 92% of Arconic’s total goodwill at March 31, 2018 was allocated to the following three EP&S reporting units: Arconic Engines ($2,095), Arconic Fastening Systems ($1,623) and Arconic Engineered Structures ($517). See Note M for further details of an interim goodwill impairment evaluation that was performed for the Arconic Engines reporting unit during the second quarter of 2018.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. These changes became effective for Arconic on January 1, 2018. Arconic adopted this new guidance using the modified retrospective transition approach applied to those contracts that were not completed as of January 1, 2018. There was no cumulative effect adjustment to the opening balance of retained earnings in the Consolidated Balance Sheet in the first quarter of 2018, as the adoption did not result in a change to our timing of revenue recognition, which continues to be at a point in time. See Note C for further details.

In January 2016, the FASB issued changes to equity investments. These changes require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values using the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Also, the impairment assessment of equity investments without readily determinable fair values has been simplified by requiring a qualitative assessment to identify impairment. Also, the new guidance required changes in fair value of equity securities to be recognized immediately as a component of net income instead of being reported in accumulated other comprehensive loss until the gain (loss) is realized. These changes became effective for Arconic on January 1, 2018 and have

8

been applied on a prospective basis. Arconic elected the measurement alternative for its equity investments that do not have readily determinable fair values. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2016, the FASB issued changes to the classification of certain cash receipts and cash payments within the statement of cash flows. The guidance identifies eight specific cash flow items and the sections where they must be presented within the statement of cash flows. These changes became effective for Arconic on January 1, 2018 and have been be applied retrospectively. As a result of the adoption, Arconic reclassified cash received related to beneficial interest in previously transferred trade accounts receivable from operating activities to investing activities in the Statement of Consolidated Cash Flows. This new accounting standard does not reflect a change in our underlying business or activities. The reclassification of cash received related to beneficial interest in previously transferred trade accounts receivable was $514 for the nine months endedSeptember 30, 2017. In addition, Arconic reclassified $52 of cash paid for debt prepayments including extinguishment costs from operating activities to financing activities for the nine months endedSeptember 30, 2017.

In November 2016, the FASB issued changes to the classification of cash and cash equivalents within the statement of cash flow. Restricted cash and cash equivalents will be included within the cash and cash equivalents line on the cash flow statement and a reconciliation must be prepared to the statement of financial position. Transfers between restricted cash and cash equivalents and cash and cash equivalents will no longer be presented as cash flow activities in the Statement of Consolidated Cash Flows and for material balances of restricted cash and cash equivalents, Arconic will disclose information regarding the nature of the restrictions. These changes became effective for Arconic on January 1, 2018 and have been applied retrospectively. Management has determined that the adoption of this guidance did not have a material impact on the Statement of Consolidated Cash Flows. Restricted cash was $7, $4 and $5 at September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

In March 2017, the FASB issued changes to the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires registrants to present the service cost component of net periodic benefit cost in the same income statement line item or items as other employee compensation costs arising from services rendered during the period. Also, only the service cost component will be eligible for asset capitalization. Registrants will present the other components of net periodic benefit cost separately from the service cost component; and, the line item or items used in the income statement to present the other components of net periodic benefit cost must be disclosed. These changes became effective for Arconic on January 1, 2018 and were adopted retrospectively for the presentation of the service cost component and the other components of net periodic benefit cost in the Statement of Consolidated Operations, and prospectively for the asset capitalization of the service cost component of net periodic benefit cost. The Company recorded the service related net periodic benefit cost within Cost of goods sold, Selling, general administrative, and other expenses and Research and development expenses and recorded the non-service related net periodic benefit cost (except for the curtailment cost which was recorded in Restructuring and other charges) separately from service cost in Other expense (income), net within the Statement of Consolidated Operations. The impact of the retrospective adoption of this guidance was an increase to consolidated Operating income of $39 and $116, while there was no impact to consolidated Net income, for the third quarter or nine months endedSeptember 30, 2017, respectively.

In May 2017, the FASB issued clarification to guidance on the modification accounting criteria for share-based payment awards. The new guidance requires registrants to apply modification accounting unless three specific criteria are met. The three criteria are 1) the fair value of the award is the same before and after the modification, 2) the vesting conditions are the same before and after the modification and 3) the classification as a debt or equity award is the same before and after the modification. These changes became effective for Arconic on January 1, 2018 and were applied prospectively to new awards modified after adoption. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance which requires cloud computing arrangement implementation costs to be accounted for in accordance with the software stage model, regardless of whether or not the cloud computing arrangement contains a license. Arconic adopted this guidance in the third quarter of 2018. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In February 2016, the FASB issued changes to the accounting and presentation of leases. These changes require lessees to recognize a right of use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right of use asset and lease liability. Also, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option, or not exercise an option to terminate the lease. As originally released, the standards update required application at the beginning of the earliest comparative period presented at the time of adoption. However, in July 2018, the

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FASB provided entities the option to instead apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. The Company expects to apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. These changes become effective for Arconic on January 1, 2019. Arconic’s current operating lease portfolio is primarily comprised of land and buildings, plant equipment, vehicles, and computer equipment. A cross-functional implementation team is in the process of determining the scope of arrangements that will be subject to this standard as well as assessing the impact to the Company’s systems, processes and internal controls. Arconic has contracted with a third-party vendor to implement a software solution. Concurrently, Arconic is compiling lease data to be uploaded into the software solution to account for leases under the new standard. Management is evaluating the impact of these changes on the Consolidated Balance Sheet, which will require right of use assets and lease liabilities be recorded for operating leases; therefore, an estimate of the impact is not currently determinable. However, the adoption is not expected to have a material impact on the Statement of Consolidated Operations or Statement of Consolidated Cash Flows.

In June 2016, the FASB added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for Arconic on January 1, 2020. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

In August 2017, the FASB issued guidance that will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. These changes become effective for Arconic on January 1, 2019. For cash flow and net investment hedges existing at the date of adoption, Arconic will apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in which the amendment is adopted. The amended presentation and disclosure guidance is required only prospectively. Arconic has engaged a third-party consultant to assist with a review of the Company’s risk management and hedging strategies, with any changes to be implemented in conjunction with the adoption of the new guidance. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In February 2018, the FASB issued guidance that allows an optional reclassification from Accumulated other comprehensive loss to Accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. These changes become effective for Arconic on January 1, 2019. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance that impacts disclosures for defined benefit pension plans. These changes become effective for Arconic's annual report for the year ending December 31, 2020, with early adoption permitted. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

Also, in August 2018, the Securities and Exchange Commission (SEC) issued guidance to eliminate or modify certain disclosure requirements that have become redundant, overlapping, outdated or superseded in light of other SEC rules, GAAP or changes in the information environment. This guidance becomes effective on November 5, 2018 and will be applied to filings thereafter. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

10

C. Revenue from Contracts with Customers

The Company's contracts with customers are comprised of acknowledged purchase orders incorporating the Company’s standard terms and conditions, or for larger customers, may also generally include terms under negotiated multi-year agreements. These contracts with customers typically consist of the manufacture of products which represent single performance obligations that are satisfied upon transfer of control of the product to the customer. The Company produces fastening systems; seamless rolled rings; investment castings, including airfoils and forged jet engine components; extruded, machined and formed aircraft parts; aluminum sheet and plate; integrated aluminum structural systems; architectural extrusions; and forged aluminum commercial vehicle wheels. Transfer of control is assessed based on alternative use of the products we produce and our enforceable right to payment for performance to date under the contract terms. Transfer of control and revenue recognition generally occur upon shipment or delivery of the product, which is when title, ownership and risk of loss pass to the customer and is based on the applicable shipping terms. The shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation (truck, train, or vessel). An invoice for payment is issued at time of shipment. The Company’s objective is to have net 30-day terms. Our business units set commercial terms on which Arconic sells products to its customers. These terms are influenced by industry custom, market conditions, product line (specialty versus commodity products), and other considerations.

The following table disaggregates revenue by major end market served. Differences between segment totals and consolidated Arconic are in Corporate. In the nine months endedSeptember 30, 2018, Corporate included $38 of costs related to settlements of certain customer claims primarily related to product introductions.

	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

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D. Segment Information

Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging. Arconic’s segments are organized by product on a worldwide basis. In the first quarter of 2018, the Company changed its primary measure of segment performance from Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) to Segment operating profit, which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges and Impairment of goodwill. Segment operating profit also includes certain items that, under the previous segment performance measure, were recorded in Corporate, such as the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Prior period financial information has been recast to conform to current year presentation. Differences between segment totals and consolidated Arconic are in Corporate. 

The operating results of Arconic’s reportable segments were as follows:

	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

12

	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

The following table reconciles Total segment operating profit to Consolidated income before income taxes:

	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

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The total assets of Arconic's reportable segment were as follows:

	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

The following table reconciles Total segment assets to Consolidated assets:

	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

E. Restructuring and Other Charges

In the third quarter of 2018, Restructuring and other charges was a net benefit of $2 ($3 after-tax), which included a postretirement curtailment benefit of $28 ($22 after-tax) (see Note G); a charge of $12 ($9 after-tax) for contract termination costs and asset impairments associated with the shutdown of a facility in Acuna, Mexico; a charge of $8 ($6 after-tax) for layoff costs, including the separation of approximately 85 employees (65 in the Engineered Products and Solutions segment and 20 in Corporate); a charge of $4 ($3 after-tax) for a pension settlement; a charge of $3 ($2 after-tax) for other miscellaneous items; and a benefit of $1 ($1 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In the nine months ended September 30, 2018, Arconic recorded Restructuring and other charges of $20 ($14 after-tax), which included a postretirement curtailment benefit of $28 ($22 after-tax) (see Note G); a charge of $14 ($11 after-tax) for pension curtailments; a charge of $16 ($12 after-tax) for layoff costs, including the separation of approximately 125 employees (89 in the Engineered Products and Solutions segment and 36 in Corporate); a charge of $12 ($9 after-tax) related to the shutdown of a facility in Acuna, Mexico as noted above; a charge of $7 ($5 after-tax) for other miscellaneous items; a charge of $5 ($4 after-tax) for exit costs primarily related to the New York office; a charge of $4 ($3 after-tax) for a pension settlement; and a benefit of $10 ($8 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In the third quarter of 2017, Arconic recorded Restructuring and other charges of $19 ($13 after-tax), which included a charge of $11 ($8 after-tax) for layoff costs related to cost reduction initiatives including the separation of 124 employees (111 in the Engineered Products and Solutions segment, 12 in Corporate and 1 in the Global Rolled Products segment) and a net charge of $8 ($5 after-tax) for other miscellaneous items.

In the nine months ended September 30, 2017, Arconic recorded Restructuring and other charges of $118 ($99 after-tax), which included a charge of $59 ($40 after-tax) for layoff costs related to cost reduction initiatives including the separation of approximately 800 employees (350 in the Engineered Products and Solutions segment, 243 in the Global Rolled Products segment, 133 in the Transportation and Construction Solutions segment and 74 in Corporate); a charge of $60 ($60 after-tax) related to the sale of the Fusina, Italy rolling mill; a net benefit of $6 ($4 after-tax) for the reversal of forfeited executive stock compensation of $13, partially offset by a charge of $7 for the related severance; a net charge of $7 ($5 after-tax) for other miscellaneous items; and a benefit of $2 ($2 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of September 30, 2018, approximately 35 of the 125 employees associated with 2018 restructuring programs and approximately 570 of the 760 employees (previously 830) associated with 2017 restructuring programs (with planned departures in 2018) were separated; all of the separations associated with 2016 restructuring programs were essentially complete. The remaining separations for the 2018 restructuring programs are expected to be completed by mid-2019. All of the remaining separations for the 2017 restructuring programs are expected to be completed by the end of 2018.

14

For the third quarter and nine months ended September 30, 2018, cash payments of $3 and $6, respectively, were made against layoff reserves related to 2018 restructuring programs, cash payments of $4 and $27, respectively, were made against layoff reserves related to 2017 restructuring programs, and cash payments of $0 and $4, respectively, were made against the layoff reserves related to 2016 restructuring programs.

Activity and reserve balances for restructuring and other charges were as follows:

	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.

The remaining reserves are expected to be paid in cash during 2018, with the exception of approximately $18 to $20, which is expected to be paid over the next several years for lease termination costs and special termination benefit payments.

F. Other Expense (Income), Net

	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	)

For the third quarter and nine months ended September 30, 2018, Non-service related net periodic benefit cost included lower net actuarial losses as a result of pension actions taken during 2018 (see Note G). For the third quarter and nine months ended September 30, 2018, Other, net included a benefit from establishing a tax indemnification receivable of $29 reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve (see Notes H and Q). For the nine months ended September 30, 2017, Net loss (gain) from asset sales included a gain on the sale of a portion of Arconic’s investment in Alcoa Corporation common stock of $351 that resulted in cash proceeds of $888 which were recorded in Sale of investments within Investing Activities in the Statement of Consolidated Cash Flows and a $167 gain on the debt-for-equity exchange with two investment banks (the “Investment Banks”) of the remaining portion of Arconic’s retained interest in Alcoa Corporation common stock for a portion of the Company’s outstanding notes held by the Investment Banks (the “Debt-for-Equity Exchange”).

15

G. Pension and Other Postretirement Benefits

The components of net periodic benefit cost were as follows:

	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.

In the first quarter of 2018, the Company announced that, effective April 1, 2018, benefit accruals for future service and compensation under all of the Company's qualified and non-qualified defined benefit pension plans for U.S. salaried and non-bargaining hourly employees ceased. As a result of this change, in the first quarter of 2018, the Company recorded a decrease to the Accrued pension benefits liability of $136 related to the reduction of future benefits, $141 offset in Accumulated other comprehensive loss, and curtailment charges of $5 in Restructuring and other charges.

In conjunction with the separation of Alcoa Inc. on November 1, 2016, the Pension Benefit Guaranty Corporation approved management’s plan to separate the Alcoa Inc. pension plans between Arconic Inc. and Alcoa Corporation. The plan stipulates that Arconic will make cash contributions over a period of 30 months (from November 1, 2016) to its two largest pension plans. Payments are expected to be made in three increments of no less than $50 each ($150 total) over this 30-month period. The Company made payments of $50 in March 2018 and $50 in April 2017. In the third quarter of 2018, the 2018 U.S. pension plan valuations were completed and additional pension contributions of $16 that were made in the first quarter of 2018 were able to be used to partially satisfy the third $50 requirement. The remaining $34 payment is expected to be made in 2019. Through the third quarter of 2018, $116 of pension contributions have been made toward the $150 requirement.

On April 13, 2018, the United Auto Workers ratified a new five-year labor agreement, covering approximately 1,300 U.S. employees of Arconic, which expires on March 31, 2023. A provision within the agreement includes a retirement benefit increase for future retirees that participate in a defined benefit pension plan, which impacts approximately 300 of those employees. In addition, effective January 1, 2019, benefit accruals for future service will cease. As result of these changes, a curtailment charge of $9 was recorded in Restructuring and other charges in the second quarter of 2018.

In the third quarter of 2018, the Company announced that effective December 31, 2018, it will end all pre-Medicare medical, prescription drug and vision coverage for current and future salaried and non-bargained hourly employees and retirees of the Company and its subsidiaries. As a result of this change, in the third quarter of 2018, the Company recorded a decrease to the Accrued other postretirement benefits liability of $32 related to the reduction of future benefits, $4 offset in Accumulated other comprehensive loss, and a curtailment benefit of $28 in Restructuring and other charges.

16

In the third quarter of 2018, settlement accounting applied to a U.S. pension plan due to the payment of lump sums, resulting in a charge of $4 that was recorded in Restructuring and other charges.

In the fourth quarter of 2018, settlement accounting is expected to apply to certain U.S. pension plans due to the significant amount of lump sum payments made to participants. The settlement will result in a charge that is expected to be in the range of $70 to $85 that will be recorded in Restructuring and other charges. The actual charge will be based on the total lump sum payments for the year along with any updates to the plan assets and obligations based upon market conditions.

H. Income Taxes

Arconic’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impact of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

For the nine months ended September 30, 2018, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 26.5%. This rate was higher than the federal statutory rate of 21%, which was enacted by the Tax Cuts and Jobs Act (the “2017 Act”) on December 22, 2017, primarily due to the additional estimated U.S. tax on Global Intangible Low-Taxed Income (GILTI) pursuant to the 2017 Act, domestic taxable income in certain U.S. states no longer subject to valuation allowance, and foreign income taxed in higher rate jurisdictions, partially offset by the favorable impact related to the portion of an indemnification receivable recorded through pre-tax income (see Note Q) that is not subject to tax and a benefit for tax credits allowed.

For the nine months ended September 30, 2017, Arconic’s estimated annual effective tax rate, before discrete items, was 28.5%. This rate is lower than the federal statutory rate of 35% due to foreign income taxed in lower rate jurisdictions, a tax basis in excess of book basis in Alcoa Corporation common stock sold, and a nontaxable gain on the Debt-for-Equity Exchange. These beneficial items were partially offset by a loss on the sale of a rolling mill in Fusina, Italy for which no net tax benefit was recognized and valuation allowances recorded against U.S. foreign tax credits.

For the third quarter ended September 30, 2018 and September 30, 2017, the tax rate including discrete items was 35.3% and 30.8%, respectively. A discrete charge of $26 was recorded in the third quarter ended September 30, 2018 related to the establishment of a $59 tax reserve in Spain (see Note Q) and prior year adjustments of $13 related to various jurisdictions, partially offset by the reversal of a $38 foreign tax reserve that is effectively settled and an $8 reduction to the estimate of the provisional impact of the enactment of the 2017 Act discussed further below. A discrete charge of $2 was recorded in the third quarter ended September 30, 2017, primarily related to the tax effects of expired stock compensation, partially offset by a number of small items.

The tax provisions for the third quarter and nine months ended September 30, 2018 and 2017 were comprised of the following:

	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

On December 22, 2017, the 2017 Act was signed into law, making significant changes to the Internal Revenue Code. Also on December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118"), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, was issued by the SEC to address the application of U.S. GAAP for financial reporting. SAB 118 permits the use of provisional amounts based on reasonable estimates in the financial statements. SAB 118 also provides that the tax impact may be considered incomplete in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Act. Any adjustments to provisional or incomplete amounts should be included in income from continuing operations as an adjustment to tax expense or benefit in the reporting period that the amounts are determined within one year.

17

The Company's analysis of U.S. tax reform legislation updated through September 30, 2018, resulted in a decrease of $8 and an increase of $13 in the third quarter and nine months ended September 30, 2018, respectively, to the 2017 year-end provisional charge of $272. In the third quarter ended September 30, 2018, a benefit of $8 was recorded related to a $2 decrease in the estimate of the one-time transition tax and $6 for U.S. tax rate change impacts. In the nine months ended September 30, 2018, a net charge of $13 was recorded for an increase of $16 in the estimate of the one-time transition tax and a charge of $3 for alternative minimum tax (AMT) credits expected to be refunded upon filing the 2018 tax return that will result in no benefit under government sequestration, partly offset by beneficial U.S. tax rate change impacts of $6. The Company's estimates of the impact of the 2017 Act remain provisional through September 30, 2018.

The impact of the rate reduction will be finalized in the fourth quarter of 2018 upon the filing of the 2017 U.S. income tax return and the expected completion of the Internal Revenue Service’s 2017 audit. Arconic will continue to analyze the amount of foreign earnings and profits, the associated foreign tax credits, and additional guidance that may be issued during 2018 in order to further update the estimated deemed repatriation calculation as necessary under SAB 118. Arconic has not yet gathered, prepared and analyzed all the necessary information in sufficient detail to determine whether any excess foreign tax credits that may result from the deemed repatriation will be realizable.

Provisional estimates of the impact of the 2017 Act on the realizability of certain deferred tax assets, including, but not limited to, foreign tax credits, AMT credits, and state tax loss carryforwards have been made based on information and computations that were available, prepared, and analyzed as of February 2, 2018. Through September 30, 2018, there were no changes to the estimates related to the realizability of deferred tax assets. Further analysis, or the issuance of additional guidance, could result in changes to the realizability of this and other deferred tax assets.

As a result of the 2017 Act, the non-previously taxed post-1986 foreign earnings and profits (calculated based on U.S. tax principles) of certain U.S.-owned foreign corporations has been subject to U.S. tax under the one-time transition tax provisions. In the fourth quarter of 2017, Arconic had no plans to distribute such earnings in the foreseeable future and considered that conclusion to be incomplete under SAB 118. There is no change to this conclusion through September 30, 2018.

The 2017 Act creates a new requirement that certain income earned by foreign subsidiaries, GILTI, must be included in the gross income of the U.S. shareholder. The 2017 Act also established the Base Erosion and Anti-Abuse Tax (BEAT). Arconic anticipates that it will be subject to GILTI and has included an estimate of GILTI in the calculation of the 2018 estimated annual effective tax rate. At this time, Arconic does not anticipate being subject to BEAT for 2018. In the first quarter ended March 31, 2018, Arconic made a final accounting policy election to treat taxes due on future inclusions in U.S. taxable income related to GILTI as a current period expense when incurred.

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I. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):

	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

The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions).

	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.

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J. Accumulated Other Comprehensive Loss

The following table details the activity of the four components that comprise Accumulated other comprehensive loss for both Arconic’s shareholders and noncontrolling interests:

	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.

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	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.

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K. Receivables

Arconic has an arrangement with three financial institutions to sell certain customer receivables without recourse on a revolving basis. The sale of such receivables is completed using a bankruptcy remote special purpose entity, which is a consolidated subsidiary of Arconic. This arrangement provides for minimum funding of $200 up to a maximum of $400 for receivables sold. Arconic maintains a beneficial interest, or a right to collect cash, on the sold receivables that have not been funded (deferred purchase program). On March 30, 2012, Arconic initially sold $304 of customer receivables in exchange for $50 in cash and $254 of deferred purchase program under the arrangement. Arconic has received additional net cash funding of $300 ($2,808 in draws and $2,508 in repayments) since the program’s inception, including net cash draws totaling $0 ($450 in draws and $450 in repayments) for the nine months ended September 30, 2018.

As of September 30, 2018 and December 31, 2017, the deferred purchase program receivable was $362 and $187, respectively, which was included in Other receivables on the accompanying Consolidated Balance Sheet. The deferred purchase program receivable is reduced as collections of the underlying receivables occur; however, as this is a revolving program, the sale of new receivables will result in an increase in the deferred purchase program receivable. The gross amount of receivables sold and total cash collected under this program since its inception was $40,194 and $39,482, respectively. Arconic services the customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded.

Cash receipts from customer payments on sold receivables (which are cash receipts on the underlying trade receivables that have been previously sold in this program) as well as cash receipts and cash disbursements from draws and repayments under the program are presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows.

L. Inventories

	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

At September 30, 2018 and December 31, 2017, the portion of inventories valued on a last-in, first-out (LIFO) basis was $1,339 and $1,208, respectively. If valued on an average-cost basis, total inventories would have been $534 and $481 higher at September 30, 2018 and December 31, 2017, respectively.

In the second quarter of 2018, a charge of $23 was recorded in Cost of goods sold and Inventories to reflect a physical inventory adjustment at one plant in the EP&S segment. While a portion of this charge relates to prior years, the majority relates to 2018. The out-of-period amounts are not material to any interim or annual periods.

M. Properties, Plants, and Equipment, Net

	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

During the second quarter of 2018, the Company updated its three-year strategic plan and determined that there was a decline in the forecasted financial performance for the disks operations, an asset group within the Arconic Engines business unit. As such, the Company evaluated the recoverability of the long-lived assets by comparing their carrying value of approximately $515 to the estimated undiscounted net cash flows of the disks operations, resulting in an estimated fair value in excess of their

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carrying value of approximately 13%; thus, there was no impairment. If the disks operations do not achieve the revised forecasted financial performance or if there are changes in any significant assumptions, a material non-cash impairment of long-lived assets may occur in future periods. These significant assumptions include sales growth, cost of raw materials, ramp up of additional production capacity, and working capital. A 1% decrease in the forecasted net cash flows would reduce the undiscounted cash flows by approximately $6. There were no indicators of impairment identified for the disks operations during the third quarter of 2018 and, as such, the Company did not evaluate the recoverability of its long-lived assets. The Company also performed an interim impairment evaluation of goodwill in the second quarter of 2018 for the Arconic Engines reporting unit as a result of the decline in the forecasted performance of the disks operations as noted above. The estimated fair value of the reporting unit was substantially in excess of the carrying value; thus, there was no impairment of goodwill.

N. Debt

	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.

Public Debt – During the first quarter of 2018, the Company completed the early redemption of its remaining outstanding 5.72% Notes due in 2019, with aggregate principal amount of $500, for $518 in cash including accrued and unpaid interest. As a result, the Company recorded a charge of $19 in Interest expense in the accompanying Statement of Consolidated Operations for the first quarter of 2018 primarily for the premium paid on the early redemption of these notes in excess of their carrying value.

Credit Facilities. On July 25, 2014, Arconic entered into a Five-Year Revolving Credit Agreement with a syndicate of lenders and issuers named therein, which provides for a senior unsecured revolving credit facility (the “Credit Facility”). By an Extension Request and Amendment Letter dated as of June 5, 2015, the maturity date of the Credit Facility was extended to July 25, 2020. On September 16, 2016, Arconic entered into Amendment No. 1 to the Five-Year Revolving Credit Agreement to permit the Separation Transaction and to amend certain terms of the Credit Agreement, including the replacement of the existing financial covenant with a leverage ratio and reduction of total commitments available from $4,000 to $3,000. On June 29, 2018, Arconic entered into Amendment No. 2 (“Amendment No. 2”) to amend and restate the Five-Year Revolving Credit Agreement. The Five-Year Revolving Credit Agreement, as so amended and restated, is herein referred to as the “Credit Agreement.”

The Credit Agreement provides a $3,000 Credit Facility, the proceeds of which are to be used to provide working capital or for other general corporate purposes of Arconic. Subject to the terms and conditions of the Credit Agreement, Arconic may from time to time request increases in lender commitments under the Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $1,000 of the Credit Facility. Pursuant to the Credit Agreement, Arconic shall not permit the ratio of Consolidated Net Debt to Consolidated EBITDA (each as defined in the Credit Agreement) as of the end of each fiscal quarter for the period of the four fiscal quarters

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most recently ended, to be greater than 4.50 to 1.00, which maximum level will step down successively to 4.00 to 1.00 on December 31, 2018, and to 3.50 to 1.00 on December 31, 2019 and thereafter.

The Credit Agreement includes additional covenants, including, among others, (a) limitations on Arconic’s ability to incur liens securing indebtedness for borrowed money, (b) limitations on Arconic’s ability to consummate a merger, consolidation or sale of all or substantially all of its assets, and (c) limitations on Arconic’s ability to change the nature of its business. As of September 30, 2018, Arconic was in compliance with all such covenants.

The Credit Facility matures on June 29, 2023, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Arconic may make twoone-year extension requests during the term of the Credit Facility, subject to the lender consent requirements set forth in the Credit Agreement. Under the provisions of the Credit Agreement, Arconic will pay a fee of 0.25% per annum (based on Arconic’s current long-term debt ratings) of the total commitment to maintain the Credit Facility.

The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured, unsubordinated indebtedness of Arconic. Borrowings under the Credit Facility may be denominated in U.S. dollars or euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on the credit ratings of Arconic’s outstanding senior unsecured long-term debt. The applicable margin on base rate loans and LIBOR loans will be 0.50% and 1.50% per annum, respectively, based on Arconic’s current long-term debt ratings. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

The obligation of Arconic to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an “Event of Default” as defined in the Credit Agreement. Such Events of Default include, among others, (a) non-payment of obligations; (b) breach of any representation or warranty in any material respect; (c) non-performance of covenants and obligations; (d) with respect to other indebtedness in a principal amount in excess of $100 million, a default thereunder that causes such indebtedness to become due prior to its stated maturity or a default in the payment at maturity of any principal of such indebtedness; (e) the bankruptcy or insolvency of Arconic; and (f) a change in control of Arconic.

There were no amounts outstanding at September 30, 2018 or December 31, 2017, and no amounts were borrowed during 2018 or 2017, under the Credit Facility.

In addition to the Credit Agreement above, Arconic has a number of other credit agreements that provide a combined borrowing capacity of $715 as of September 30, 2018, of which $200 is due to expire in 2018, $365 is due to expire in 2019, and $150 due to expire in 2020. The purpose of any borrowings under these credit arrangements is to provide for working capital requirements and for other general corporate purposes. The covenants contained in all these arrangements are the same as the Credit Agreement. During the nine months ended September 30, 2018, Arconic borrowed and repaid $450 and $450, respectively, under these other credit facilities. The weighted-average interest rate and weighted-average days outstanding during the third quarter and nine months ended September 30, 2018 were 3.5% and 35 days and 3.3% and 55 days, respectively.

O. Fair Value of Financial Instruments

The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables and Short-term debt included in the Consolidated Balance Sheet approximate fair values. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities which are carried at fair value which is based on quoted market prices.

The following table summarizes Arconic’s financial liabilities that were not carried at fair value at September 30, 2018 and December 31, 2017:

	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

The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Arconic for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

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P. Acquisitions and Divestitures

In March 2017, Arconic completed the sale of its Fusina, Italy rolling mill to Slim Aluminium. While owned by Arconic, the operating results and assets and liabilities of the Fusina, Italy rolling mill were included in the Global Rolled Products segment. As part of the transaction, Arconic injected $10 of cash into the business and provided a third-party guarantee with a fair value of $5 related to Slim Aluminium’s environmental remediation. The Company recorded a loss on the sale of $60, which was recorded in Restructuring and other charges (see Note E) on the Statement of Consolidated Operations in the first quarter of 2017. The rolling mill generated third-party sales of approximately $37 in the first quarter of 2017. At the time of the divestiture, the rolling mill had approximately 312 employees.

On April 2, 2018, Arconic completed the sale of its Latin America extrusions business to a subsidiary of Hydro Extruded Solutions AS for $5 in cash, subject to post-closing adjustments that are not expected to be significant. The sales price approximates the carrying value of the net assets sold on the closing date, following the charge of $41 recognized in the fourth quarter of 2017 related to the non-cash impairment of the net book value of the business. The operating results and assets and liabilities of the business were included in the Transportation and Construction Solutions segment. This business generated sales of approximately $30 in the third quarter of 2017, and $25 and $86 in the nine months ended September 30, 2018 and 2017, respectively.

On July 31, 2018, the Company announced that it had initiated a sale process of its Building and Construction Systems (BCS) business, as part of the Company’s ongoing strategy and portfolio review that commenced in January 2018. BCS is part of the Transportation and Construction Solutions segment and generated third-party sales of approximately $1,070 for the year ended December 31, 2017. The sale process is in its early stages. The Company’s decision regarding whether to sell the business will not be finalized until final binding offers are evaluated at a later stage in the sale process. Until the Company makes that final decision, the BCS business will remain classified as held and in-use in the Consolidated Financial Statements.

On October 31, 2018, the Company sold its Texarkana, Texas rolling mill and cast house, which had a combined net book value of $63, to Ta Chen International, Inc. for $302 in cash, subject to post-closing adjustments, plus additional contingent consideration of up to $50. The contingent consideration relates to the achievement of various milestones within 36 months of the transaction closing date associated with operationalizing the rolling mill equipment. The Texarkana rolling mill facility had previously been idle since late 2009. In early 2016, the Company restarted the Texarkana cast house to meet demand for aluminum slab. As part of the agreement, the Company will continue to produce aluminum slab at the facility for a period of 18months through a lease back of the cast house building and equipment, after which time, Ta Chen will perform toll processing of metal for the Company for a period of six months. The Company will supply Ta Chen with cold-rolled aluminum coil during this 24-month period.

The sale of the rolling mill and cast house will be accounted for separately. The gain on the sale of the rolling mill is estimated to be approximately $150 to $165 including the fair value of contingent consideration of $4, which will be recorded in the fourth quarter of 2018. The Company will reevaluate its estimate of the amount of contingent consideration to which it will be entitled at the end of each reporting period and recognize any changes thereto in the Statement of Consolidated Operations. The Company will have continuing involvement related to the cast house, and, therefore will use the failed-sale-leaseback accounting model. Under such model, the Company is deemed to still own the cast house building and equipment sold to Ta Chen, and therefore the Company must continue to reflect these assets in its Consolidated Balance Sheet and depreciate them over the remaining useful life. Additionally, the Company will record the cash proceeds associated with the cast house as a noncurrent liability in its Consolidated Balance Sheet. The Company will defer a gain estimated at approximately $85 to $100 associated with the cast house assets.

Q. Contingencies and Commitments

Contingencies

Environmental Matters

Arconic participates in environmental assessments and cleanups at more than 100 locations. These include owned or operating facilities and adjoining properties, previously owned or operating facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.

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Arconic’s remediation reserve balance was $280 at September 30, 2018 and $294 at December 31, 2017 (of which $70 and $41, respectively, was classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated.

Payments related to remediation expenses applied against the reserve were $7 and $15 in the third quarter and nine months ended September 30, 2018, respectively. This amount includes expenditures currently mandated, as well as those not required by any regulatory authority or third party.

Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be approximately 1% or less of cost of goods sold.

The following discussion provides details regarding the current status of the most significant remediation reserves related to a current Arconic site.

Massena West, NY—Arconic has an ongoing remediation project related to the Grasse River, which is adjacent to Arconic’s Massena plant site. Many years ago, it was determined that sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs). The project, which was selected by the U.S. Environmental Protection Agency (EPA) in a Record of Decision issued in April 2013, is aimed at capping PCB contaminated sediments with concentration in excess of one part per million in the main channel of the river and dredging PCB contaminated sediments in the near-shore areas where total PCBs exceed one part per million. At September 30, 2018 and December 31, 2017, the reserve balance associated with this matter was $208 and $215, respectively. Arconic is in the planning and design phase of the project, which is expected to be completed in 2018. Following the submittal of the final design and EPA approval, the actual remediation fieldwork is expected to commence and take approximately four years. The majority of the project funding is expected to be incurred between 2018 and 2022.

Tax

Pursuant to the Tax Matters Agreement entered into between Arconic and Alcoa Corporation in connection with the separation transaction with Alcoa Corporation, Arconic shares responsibility with Alcoa Corporation, and Alcoa Corporation has agreed to partially indemnify Arconic for 49% of the ultimate liability, with respect to the following matter.

As previously reported, in July 2013, following a Spanish corporate income tax audit covering the 2006 through 2009 tax years, an assessment was received mainly disallowing certain interest deductions claimed by a Spanish consolidated tax group owned by the Company. In August 2013, the Company filed an appeal of this assessment in Spain’s Central Tax Administrative Court, which was denied in January 2015. Arconic filed another appeal in Spain’s National Court in March 2015 which was denied in July 2018. The National Court’s decision requires the assessment for the 2006 through 2009 tax years to be reissued to take into account the outcome of the 2003 to 2005 audit which was closed in 2017. The Company estimates the revised assessment to be $175 (€152), including interest.

The Company maintains its intent to petition the Supreme Court of Spain to review the National Court’s decision. If the petition is accepted, the Supreme Court will review the assessment on its merits and render a final decision. In the event the Company is unsuccessful in appealing the assessment to the Supreme Court of Spain, a portion of the assessment may be offset with existing net operating losses and tax credits available to the Spanish consolidated tax group, which would be shared between the Company and Alcoa Corporation as provided for in the Tax Matters Agreement. As a result of the National Court decision, an income tax reserve, including interest, of $59 (€51) was established in the third quarter of 2018. Concurrent with the establishment of the reserve, an indemnification receivable of $29 (€25), representing Alcoa Corporation’s 49% share of the liability, was also recorded in the third quarter of 2018 (see Note F).

Additionally, while the tax years 2010 through 2013 are closed to audit, it is possible that the Company may receive assessments for tax years subsequent to 2013. Any potential assessment for an individual tax year is not expected to be material to the Company’s consolidated operations.

Reynobond PE

Howard v. Arconic Inc. et al. As previously reported, a purported class action complaint related to the Grenfell Tower fire was filed on August 11, 2017 in the United States District Court for the Western District of Pennsylvania against Arconic Inc. and Klaus Kleinfeld. A related purported class action complaint was filed in the United States District Court for the Western District of Pennsylvania on August 25, 2017, under the caption Sullivan v. Arconic Inc. et al., against Arconic Inc., two former Arconic executives, several current and former Arconic directors, and banks that acted as underwriters for Arconic’s September 18, 2014 preferred stock offering (the “Preferred Offering”). The plaintiff in Sullivan had previously filed a purported class action against the same defendants on July 18, 2017 in the Southern District of New York and, on August 25, 2017, voluntarily dismissed that action without prejudice. On February 7, 2018, on motion from certain putative class members, the court consolidated Howard and Sullivan, closed Sullivan, and appointed lead plaintiffs in the consolidated case. On April 9, 2018, the

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lead plaintiffs in the consolidated purported class action filed a consolidated amended complaint. The consolidated amended complaint alleges that the registration statement for the Preferred Offering contained false and misleading statements and omitted to state material information, including by allegedly failing to disclose material uncertainties and trends resulting from sales of Reynobond PE for unsafe uses and by allegedly expressing a belief that appropriate risk management and compliance programs had been adopted while concealing the risks posed by Reynobond PE sales. The consolidated amended complaint also alleges that between November 4, 2013 and June 23, 2017 Arconic and Kleinfeld made false and misleading statements and failed to disclose material information about the Company’s commitment to safety, business and financial prospects, and the risks of the Reynobond PE product, including in Arconic’s Form 10-Ks for the fiscal years ended December 31, 2013, 2014, 2015 and 2016, its Form 10-Qs and quarterly financial press releases from the fourth quarter of 2013 through the first quarter of 2017, its 2013, 2014, 2015 and 2016 Annual Reports, and its 2016 Annual Highlights Report. The consolidated amended complaint seeks, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses. On June 8, 2018, all defendants moved to dismiss the consolidated amended complaint for failure to state a claim. Briefing on that motion is now closed and the parties await a ruling.

Raul v. Albaugh, et al. As previously reported, on June 22, 2018, a derivative complaint was filed nominally on behalf of Arconic by a purported Arconic shareholder against all current members of Arconic’s Board of Directors, Klaus Kleinfeld and Ken Giacobbe, naming Arconic as a nominal defendant, in the United States District Court for the District of Delaware. The complaint raises similar allegations as the consolidated amended complaint in Howard, as well as allegations that the defendants improperly authorized the sale of Reynobond PE for unsafe uses, and asserts claims under Section 14(a) of the Securities Exchange Act of 1934 and Delaware state law. On July 13, 2018, the parties filed a stipulation agreeing to stay this case until the final resolution of the Howard case, the Grenfell Tower public inquiry in London, and the investigation by the London Metropolitan Police Service and on June 23, 2018, the Court approved the stay.

While the Company believes that these cases are without merit and intends to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters. Given the preliminary nature of these matters and the uncertainty of litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome. The Board of Directors has also received letters, purportedly sent on behalf of shareholders, reciting allegations similar to those made in the federal court lawsuits and demanding that the Board authorize the Company to initiate litigation against members of management, the Board and others. The Board of Directors has appointed a Special Litigation Committee of the Board to review and make recommendations to the Board regarding the appropriate course of action with respect to these shareholder demand letters. The Special Litigation Committee and the Board are continuing to consider the appropriate responses to the shareholder demand letters in view of developments in proceedings concerning the Grenfell Tower fire. In addition, the Company has settled lawsuits with another shareholder that had been pending in state court in New York and federal court in Pennsylvania concerning the shareholder’s demand to inspect certain of the Company’s books and records related to the Grenfell Tower fire and Reynobond PE.

Other

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Arconic, including those pertaining to environmental, product liability, safety and health, employment, tax matters and antitrust. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.

Commitments

Guarantees

At September 30, 2018, Arconic had outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, energy contracts, and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between 2018 and 2026, was $32 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement between Arconic and Alcoa Corporation, Arconic was required to provide certain guarantees for Alcoa Corporation, which had a combined fair value of $7 and $8 at September 30, 2018 and December 31, 2017, respectively, and were included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. Arconic was required to provide payment guarantees for Alcoa Corporation issued on behalf of a third party related to project financing for Alcoa Corporation’s aluminum complex in Saudi Arabia. During the third quarter of 2018, Arconic was released from this guarantee. Furthermore, Arconic was required to provide a guarantee up to an estimated

27

present value amount of approximately $1,141 and $1,297 at September 30, 2018 and December 31, 2017, respectively, related to a long-term supply agreement for energy for an Alcoa Corporation facility in the event of an Alcoa Corporation payment default. This guarantee expires in 2047. For this guarantee, subject to its provisions, Arconic is secondarily liable in the event of a payment default by Alcoa Corporation. Arconic currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote.

Letters of Credit

Arconic has outstanding letters of credit, primarily related to workers’ compensation, environmental obligations and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2018, was $129 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement, Arconic was required to retain letters of credit of $53 that had previously been provided related to both Arconic and Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016. Alcoa Corporation workers’ compensation claims and letter of credit fees paid by Arconic are being proportionally billed to and are being fully reimbursed by Alcoa Corporation.

Surety Bonds

Arconic has outstanding surety bonds, primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these surety bonds, which expire at various dates, primarily in 2018, was $49 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement, Arconic was required to provide surety bonds related to Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016 and, as a result, Arconic has $25 in outstanding surety bonds relating to these liabilities. Alcoa Corporation workers’ compensation claims and surety bond fees paid by Arconic are being proportionately billed to and are being fully reimbursed by Alcoa Corporation.

R. Subsequent Events

Management evaluated all activity of Arconic and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:

See Note G for details of a subsequent event related to certain U.S. pension plan lump sum payments and see Note P for details of a subsequent event related to the divestiture of the Texarkana, Texas rolling mill.

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Report of Independent Registered Public Accounting Firm

To theShareholders and Board of Directors of Arconic Inc.

Results of Review of Financial Statements

We have reviewed the accompanying consolidated balance sheet of Arconic Inc. and its subsidiaries as of September 30, 2018, and the related statements of consolidated operations, consolidated comprehensive income, and changes in consolidated equity for the three-month and nine-month periods ended September 30, 2018 and 2017 and the statement of consolidated cash flows for the nine-month periods ended September 30, 2018 and 2017, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2017, and the related statements of consolidated operations, consolidated comprehensive (loss) income, changes in consolidated equity, and consolidated cash flows for the year then ended (not presented herein), and in our report dated February 23, 2018, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management.We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

November 1, 2018

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollars in millions, except per share amounts)

Overview

Our Business

Arconic (“Arconic” or the “Company”) is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging.

Results of Operations

Earnings Summary:

Sales.Sales were $3,524 in the third quarter of 2018 compared to $3,236 in the third quarter of 2017 and $10,542 in the nine months ended September 30, 2018 compared to $9,689 in the nine months ended September 30, 2017. The increase of $288, or 9%, in the third quarter of 2018 and $853, or 9%, in the nine months ended September 30, 2018, was the result of strong volume growth across all segments, primarily in the aerospace engines and defense, automotive, commercial transportation, industrial, and building and construction end markets; and higher aluminum prices; partially offset by the absence of sales from the Latin America extrusions business, which was divested in April 2018; and a decline in the industrial gas turbine end market. The nine months ended September 30, 2018 was also favorably impacted by foreign currency movements; offset by costs of $38 related to settlements of certain customer claims primarily related to product introductions; and the absence of sales from the rolling mill in Fusina, Italy, which was divested in March 2017.

Cost of goods sold (COGS). COGS as a percentage of Sales was 81.8% in the third quarter of 2018 compared to 80.1% in the third quarter of 2017 and 81.1% in the nine months ended September 30, 2018 compared to 78.4% in the nine months ended September 30, 2017. The increase in the third quarter and nine months ended September 30, 2018 was the result of higher aluminum prices, unfavorable product mix, higher transportation costs and manufacturing inefficiencies in the Engineered Structures business. The nine months ended September 30, 2018 was also negatively impacted by costs related to settlements of certain customer claims noted above, performance shortfalls in the rings and disks operations, and the impact of a $23 charge related to a physical inventory adjustment at one plant in the Engineered Products and Solutions segment that was recorded in the second quarter of 2018. While a portion of this charge for the physical inventory adjustment related to prior years, the majority related to the first half of 2018. The out-of-period amounts were not material to any interim or annual periods.

Selling, general administrative, and other expenses (SG&A). SG&A expenses were $134 in the third quarter of 2018 compared to $152 in the third quarter of 2017 and $464 in the nine months ended September 30, 2018 compared to $569 in the nine months ended September 30, 2017. The decrease of $18, or 12%, in the third quarter of 2018 was the result of lower expenses driven by lower annual incentive compensation accruals and overhead cost reductions. The decrease of $105, or 18%, in the nine months ended September 30, 2018 was the result of 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. Additionally, in the nine months ended September 30, 2018, lower expenses driven by lower annual incentive compensation accruals and overhead cost reductions were somewhat offset by an increase in legal and other advisory costs related to Grenfell Tower of $7.

Restructuring and other charges. Restructuring and other charges was a net benefit of $2 in the third quarter of 2018 compared to charges of $19 in the third quarter of 2017 and charges of $20 in the nine months ended September 30, 2018 compared to $118 in the nine months ended September 30, 2017. The decrease of $21 in the third quarter of 2018 was primarily the result of a postretirement curtailment benefit of $28. The decrease of $98 in the nine months ended September 30, 2018, was primarily the result of a loss of $60 on the sale of the Fusina, Italy rolling mill in March 2017 and lower restructuring activity in 2018. See Note E to the Consolidated Financial Statements.

Interest expense.Interest expense was $88 in the third quarter of 2018 compared to $100 in the third quarter of 2017 and $291 in the nine months ended September 30, 2018 compared to $398 in the nine months ended September 30, 2017. The decrease of $12, or 12%, in the third quarter of 2018 was the result of lower debt outstanding. The decrease of $107, or 27%, in the nine months ended September 30, 2018, was the result of higher costs incurred in the nine months ended September 30, 2017 related to the early redemption of the Company’s outstanding debt than were incurred during 2018 and lower debt outstanding.

Other expense (income), net. Other expense, net was $8 in the third quarter of 2018 compared to $38 in the third quarter of 2017 and Other expense, net was $69 in the nine months ended September 30, 2018 compared to Other income, net of $410 in the nine months ended September 30, 2017. The decrease of $30 in the third quarter of 2018 was primarily due to a $29 benefit from establishing a tax indemnification receivable reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve (see Note Q to the Consolidated Financial Statements). The decrease of $479 in the nine months ended September 30, 2018 was primarily

30

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 (see Note F to the Consolidated Financial Statements) of $167, neither of which recurred in 2018, and unfavorable foreign currency movements, somewhat offset by lower non-service related net periodic benefit cost and the benefit of $29 from establishing a tax indemnification receivable as noted previously.

Provision for income taxes. The tax rate, including discrete items, was 35.3% and 30.8% for the third quarter of 2018 and 2017, respectively. A discrete charge of $26 was recorded in the third quarter of 2018 compared to a discrete charge of $2 in the third quarter of 2017. The estimated annual effective tax rate before discrete items applied to ordinary income was 26.5% and 28.5% for the nine months ended September 30, 2018 and 2017, respectively. See Note H to the Consolidated Financial Statements.

Net income.Net income was $161 in the third quarter of 2018 or $0.32 per diluted share, compared to $119 in the third quarter of 2017, or $0.22 per diluted share, and $424 in the nine months ended September 30, 2018, or $0.86 per diluted share, compared to $653 in the nine months ended September 30, 2017, or $1.31 per diluted share. The increase of $42, or 35%, in the third quarter of 2018 was primarily attributable to strong volume growth and lower Restructuring and other charges, SG&A, and Interest expense as noted above; partly offset by higher transportation costs; unfavorable aerospace engine mix and aerospace pricing; manufacturing inefficiencies in the Engineered Structures business; and higher income taxes. The decrease of $229, or 35%, in the nine months ended September 30, 2018 was primarily attributable 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 and the Debt-for-Equity Exchange, neither of which recurred in 2018; unfavorable aerospace product mix; higher aluminum prices; performance shortfalls in the rings and disks operations and manufacturing inefficiencies in the Engineered Structures business; and costs related to settlements of certain customer claims and a physical inventory adjustment; partially offset by volume growth and lower expenses for Income taxes, Interest expense, Restructuring and other charges, and SG&A.

Segment Information

In the first quarter of 2018, the Company changed its primary measure of segment performance from Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) to Segment operating profit, which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges and Impairment of goodwill. Segment operating profit also includes certain items which under the previous segment performance measure were recorded in Corporate, such as the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Prior period financial information has been recast to conform to current year presentation.

Engineered Products and Solutions

	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-party sales for the Engineered Products and Solutions segment increased$89, or 6%, in the third quarter of 2018 and $254, or 6%, in the nine months ended September 30, 2018 compared with the corresponding periods in 2017, primarily as a result of higher volumes in the aerospace engines and defense end markets, partially offset by a decline in the industrial gas turbine market. The nine months ended September 30, 2018 was also positively impacted by favorable foreign currency movements.

Segment operating profit for the Engineered Products and Solutions segment decreased$1 in the third quarter of 2018 and $65 in the nine months ended September 30, 2018 compared to the corresponding periods in 2017, due to manufacturing inefficiencies in the Engineered Structures business, unfavorable aerospace engine mix, and lower aerospace pricing principally in the fasteners business, offset by the strength in aerospace engine and defense volumes. The nine months ended September 30, 2018 was also negatively impacted by a physical inventory adjustment of $23, and performance shortfalls in the rings and disks operations.

In late October 2018, a forging press in our Cleveland Works plant experienced a hydraulic leak resulting from a cracked cylinder that resulted in a shutdown. The length of the outage has not yet been determined, but we do not anticipate a return to

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service in the fourth quarter. Production is being moved to other presses in the facility and we are working with our customers to prioritize shipments. The financial impact of the outage has not yet been determined.

In 2018, demand in the commercial aerospace end market is expected to remain strong, driven by the ramp-up of new aerospace engine platforms. Demand in the defense end market is expected to grow due to the continuing ramp-up of certain aerospace programs, while declines in the industrial gas turbine market are likely to continue. Higher input costs, costs associated with the Cleveland forging press outage, pricing pressures, and challenges in the rings and disks operations and the Engineered Structures business are anticipated despite net cost savings.

Global Rolled Products

	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-party sales for the Global Rolled Products segment increased$192, or 16%, in the third quarter of 2018 and $490, or 13%, in the nine months ended September 30, 2018 compared with the corresponding periods in 2017, primarily as a result of higher aluminum prices; higher volumes in the automotive, commercial transportation, and industrial end markets; and favorable product mix. The nine months ended September 30, 2018 was negatively impacted by the absence of sales from the rolling mill in Fusina, Italy, which was divested in March 2017.

Segment operating profit for the Global Rolled Products segment increased$10, or 16%, in the third quarter of 2018 compared to the third quarter of 2017 principally driven by higher volumes as previously noted, partially offset by higher transportation costs and scrap spreads and volume. Segment operating profit for the Global Rolled Products segment decreased$24, or 7%, in the nine months ended September 30, 2018 compared with the corresponding period in 2017, principally driven by unfavorable aerospace wide-body production mix, higher aluminum prices, and higher costs noted above, partially offset by higher automotive, commercial transportation and industrial volumes.

In 2018, demand in the automotive end market is expected to continue to grow due to the growing demand for innovative products and aluminum-intensive vehicles. Demand in North America industrial and commercial transportation is expected to grow as a result of the common alloy duties on products originating from China. Demand from the commercial airframe end market is expected to be flat as the ramp-up of new programs is offset by lower build rates for aluminum intensive wide-body programs. Arconic's North American packaging operations is expected to fully ramp down at the end of the year. Higher transportation costs and scrap spreads are expected to continue to negatively impact this segment on a year over year basis. Net cost savings are anticipated to continue.

Russia Sanctions

On April 6, 2018, the U.S. Administration announced new sanctions against Russian “oligarchs” and extended those sanctions to companies that are majority-owned or substantively controlled by those oligarchs. These sanctions block U.S. persons - both individuals and companies - from engaging in transactions with listed oligarchs and their companies.  These new sanctions extend to UC Rusal PLC (“Rusal”), which supplies primary aluminum to Arconic in Europe, the United States, and to the Company’s Samara plant in Russia. The Company complies with and expects to continue to comply with these sanctions. We do not anticipate any interruption in Samara’s supply of metal from Rusal based on these sanctions, and we expect that our facilities in Europe and the United States will be able to obtain metal from alternate sources if necessary. We anticipate that the price of aluminum will continue to fluctuate based upon supply/demand balance and the supply uncertainty created by the sanctions.

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Transportation and Construction Solutions

	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-party sales for the Transportation and Construction Solutions segment increased$7, or 1%, in the third quarter of 2018 and $146, or 10%, in the nine months ended September 30, 2018 compared with the corresponding periods in 2017, primarily as a result of higher volumes in the commercial transportation and building and construction end markets,partially offset by the absence of sales resulting from the divestiture of the Latin America extrusions business in April 2018. The nine months ended September 30, 2018 was also positively impacted by favorable foreign currency movements and higher aluminum prices.

Segment operating profit for the Transportation and Construction Solutions segment increased$3, or 4%, in the third quarter of 2018 and $28, or 13%, in the nine months ended September 30, 2018 compared with the corresponding periods in 2017, principally as a result of higher volumes in the commercial transportation and building and construction end markets and net cost savings, which more than offset higher aluminum prices.

On April 2, 2018, Arconic completed the sale of its Latin America extrusions business to a subsidiary of Hydro Extruded Solutions AS. The sale is part of Arconic’s continued drive to streamline its business portfolio, reduce complexity and further focus on its higher-margin products and profitable growth.

In 2018, we expect continued growth in the North American and European commercial transportation and building and construction markets and continued demand for innovative products. Net cost savings are anticipated to continue.

Reconciliation of Total segment operating profit to Consolidated income before income taxes

	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

The changes in the reconciling items between Total segment operating profit and Consolidated income before income taxes in the third quarter and nine months ended September 30, 2018 compared to the corresponding periods in 2017 consisted of:

• 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

33

months ended September 30, 2017 related to the early redemption of the Company’s outstanding debt than were incurred during 2018 and lower debt outstanding; and

• 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.

Environmental Matters

See the Environmental Matters section of Note Q to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Subsequent Events

See Note R to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Liquidity and Capital Resources

Operating activities

Cash used for operations was $209 in the nine months ended September 30, 2018 compared to $373 in the nine months ended September 30, 2017. The decrease in cash used of $164, or 44%, was primarily due to higher operating results (net income plus net add-back for noncash transactions in earnings) of $152 and lower working capital of $59, partially offset by higher pension contributions of $31. The components of the change in working capital included favorable changes of $351 in accounts payable and $42 in accrued expenses, partially offset by unfavorable changes of $228 in receivables and $81 in taxes, including income taxes.

Financing Activities

Cash used for financing activities was $609 in the nine months ended September 30, 2018 compared to $970 in the nine months ended September 30, 2017. The decrease in cash used of $361 was primarily related to the early redemption during 2017 of the Company’s 6.50% Bonds due 2018, 6.75% Notes due 2018, and a portion of the 5.72% Notes due 2019, partially offset by the early redemption during 2018 of the remaining outstanding 5.72% Notes due in 2019 (see Note N to the Consolidated Financial Statements).

Arconic maintains a Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and issuers named therein. In addition to the Credit Agreement above, Arconic has a number of other credit agreements. See Note N to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for reference.

Arconic’s costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Arconic by the major credit rating agencies.

Arconic’s credit ratings from the three major credit rating agencies are as follows:

	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

Investing Activities

Cash provided from investing activities was $211 in the nine months ended September 30, 2018 compared to $1,279 in the nine months ended September 30, 2017. The decrease of $1,068 was primarily due to the sale of Alcoa Corporation common stock for proceeds of $888 and the receipt of proceeds from the sale of the Yadkin Hydroelectric Project of $243 during the nine months ended September 30, 2017, as well as higher capital expenditures of $137 in 2018 that were partly offset by an increase in cash receipts from sold receivables of $179.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

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Forward-Looking Statements

This report contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Arconic’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts and expectations relating to the growth of the aerospace, automotive, commercial transportation and other end markets; statements and guidance regarding future financial results or operating performance; statements about Arconic’s strategies, outlook, business and financial prospects; and statements regarding the completion of the Texarkana sale and the expected financial impact of the sale. These statements reflect beliefs and assumptions that are based on Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally; (b) unfavorable changes in the markets served by Arconic; (c) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; (d) competition from new product offerings, disruptive technologies or other developments; (e) political, economic, and regulatory risks relating to Arconic’s global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (f) manufacturing difficulties or other issues that impact product performance, quality or safety; (g) Arconic’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, expansions, or joint ventures; (h) failure or delays in the receipt or satisfaction of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals and the other closing conditions to the Texarkana transaction; (i) the impact of cyber attacks and potential information technology or data security breaches; (j) changes in discount rates or investment returns on pension assets; (k) the impact of changes in aluminum prices and foreign currency exchange rates on costs and results; (l) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Arconic to substantial costs and liabilities; and (m) the other risk factors summarized in Arconic’s Form 10-K for the year ended December 31, 2017 and other reports filed with the U.S. Securities and Exchange Commission (the “SEC”). Arconic disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Arconic’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the third quarter of 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

See the Reynobond PE and Tax sections of Note Q to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

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Item 6. Exhibits.

10(a).	Terms and Conditions for Restricted Share Units - Non-Executive Chairman (John C. Plant) Director Award, effective October 23, 2018.
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.
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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	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)

36

EX-10.(A)

Exhibit 10(a)

ARCONIC INC.

TERMS AND CONDITIONS FOR RESTRICTED SHARE UNITS

NON-EXECUTIVE CHAIRMAN DIRECTOR AWARD

Effective October 23, 2018

These terms and conditions, including any Appendices attached hereto for non-U.S. directors (jointly, the "Award Terms"), are authorized by the Board of Directors (the "Board"). They are deemed to be incorporated into and form a part of the Award of Restricted Share Units issued to the Non-Executive Chairman of the Board ("Chairman") on October 23, 2018. The Restricted Share Units are granted under the 2013 Arconic Stock Incentive Plan, as amended and restated and as may be further amended from time to time (the "Plan").

Terms that are defined in the Plan have the same meanings in the Award Terms.

General Terms and Conditions

1. Restricted Share Units are subject to the provisions of the Plan and the provisions of the Award Terms. If the Plan and the Award Terms are inconsistent, the provisions of the Plan will govern. Interpretations of the Plan and the Award Terms by the Board are binding on the Participant and the Company. A Restricted Share Unit is an undertaking by the Company to issue the number of Shares indicated in the Participant's account at Merrill Lynch's OnLine^® website www.benefits.ml.com, subject to the fulfillment of certain conditions, except to the extent otherwise provided in the Plan or herein. A Participant has no voting rights or rights to receive dividends on Restricted Share Units, but the Board of Directors may authorize that dividend equivalents be accrued on Restricted Share Units upon vesting in accordance with paragraphs 2 and 4 below. Any dividend equivalents on Restricted Share Units will be paid in the same manner and at the same time as the Restricted Share Units to which they relate, as set forth in paragraph 5 below.

Vesting and Payment

2. The Restricted Share Units vest on the first anniversary date of the grant date.

3. Except as provided in paragraph 4, if a Participant's service as Chairman ceases before the Restricted Share Unit vests as provided in paragraph 2, a pro-rata portion of the Award will become vested, and the remainder of the Award will be forfeited and automatically canceled. The pro-rata portion of the Award that will become vested will be that number of Restricted Share Units (rounded to the nearest whole number) calculated based on the ratio of (x) the number of days of service provided by the Participant during the period of service to which the Award relates to (y) 365 days. For avoidance of doubt, the period of service to which the Award relates commences on October 23, 2018, and ends on the first anniversary date of the grant date.

4.The following are exceptions to the vesting rules:

• 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.

1

5. Payment. The Participant will receive one Share upon payment of each vested Restricted Share Unit. Payment of vested Restricted Share Units is governed by Article V of the Arconic Inc. Amended and Restated Deferred Fee Plan for Directors (the "Deferred Fee Plan"). Except as otherwise set forth in the Deferred Fee Plan, payment of vested Restricted Share Units will occur in a single lump sum upon the earlier of the Participant's "separation from service" (as defined in Section 409A of the Code and the Treasury Regulations thereunder) and the Participant's death, within the payment period specified in the Deferred Fee Plan.

Taxes

6. The Participant acknowledges that the Participant will consult with his or her personal tax advisor regarding any income tax, social security contributions or other tax-related items ("Taxes") that arise in connection with the Restricted Share Units. The Participant is relying solely on such advisor and is not relying in any part on any statement or representation of the Company or any of its agents. The Company shall not be responsible for withholding any applicable Taxes, unless required by applicable law. The Company may take such action as it deems appropriate to ensure that all Taxes, which are the Participant’s sole and absolute responsibility, are withheld or collected from the Participant, if and to the extent required by applicable law. In this regard, the Company will have the power and the right to require the Participant to remit to the Company the amount necessary to satisfy federal, state and local taxes, U.S. or non-U.S., required by law or regulation to be withheld with respect to any taxable event arising as a result of the Restricted Share Units. Notwithstanding the foregoing, unless otherwise determined by the Board, any obligation to withhold Taxes will be met by the Company by withholding from the Shares to be issued upon payment of the Restricted Share Unit that number of Shares with a fair market value on the payment date equal to the Taxes required to be withheld at the minimum required rates or, to the extent permitted under applicable accounting principles, at up to the maximum individual tax rate for the applicable tax jurisdiction.

Beneficiaries

7. If permitted by the Company, the Participant will be entitled to designate one or more beneficiaries to receive all Restricted Share Units that have not yet vested or that have vested but have not been paid at the time of death of the Participant. All beneficiary designations will be on beneficiary designation forms approved for the Plan. Copies of the form are available from the Communications Center on Merrill Lynch's OnLine^® website www.benefits.ml.com.

8. Beneficiary designations on an approved form will be effective at the time received by the Communications Center on Merrill Lynch's OnLine^® website www.benefits.ml.com. A Participant may revoke a beneficiary designation at any time by written notice to the Communications Center on Merrill Lynch's OnLine^® website www.benefits.ml.com or by filing a new designation form. Any designation form previously filed by a Participant will be automatically revoked and superseded by a later-filed form.

9.A Participant will be entitled to designate any number of beneficiaries on the form, and the beneficiaries may be natural or corporate persons.

10. The failure of any Participant to obtain any recommended signature on the form will not prohibit the Company from treating such designation as valid and effective. No beneficiary will acquire any beneficial or other interest in any Restricted Share Unit prior to the death of the Participant who designated such beneficiary.

11.Unless the Participant indicates on the form that a named beneficiary is to receive Restricted Share Units only upon the prior death of another named beneficiary, all beneficiaries designated on the form will be entitled to share equally in the Restricted Share Units. Unless otherwise indicated, all such beneficiaries will have an equal, undivided interest in all such Restricted Share Units.

12.Should a beneficiary die after the Participant but before the Restricted Share Unit is paid, such beneficiary's rights and interest in the Award will be transferable by the beneficiary's last will and testament or by the laws of descent and distribution. A named beneficiary who predeceases the Participant will obtain no rights or interest in a Restricted Share Unit, nor will any person claiming on behalf of such individual. Unless otherwise specifically indicated by the Participant on the beneficiary designation form, beneficiaries designated by class (such as

2

"children," "grandchildren" etc.) will be deemed to refer to the members of the class living at the time of the Participant's death, and all members of the class will be deemed to take "per capita."

13. If a Participant does not designate a beneficiary or if the Company does not permit a beneficiary designation, the Restricted Share Units that have not yet vested or been paid at the time of death of the Participant will be paid to the Participant's legal heirs pursuant to the Participant's last will and testament or by the laws of descent and distribution.

Adjustments

14. In the event of an Equity Restructuring, the Board will equitably adjust the Restricted Share Unit as it deems appropriate to reflect the Equity Restructuring, which may include (i) adjusting the number and type of securities subject to the Restricted Share Unit; and (ii) adjusting the terms and conditions of the Restricted Share Unit. The adjustments provided under this paragraph 14 will be nondiscretionary and final and binding on all interested parties, including the affected Participant and the Company; provided that the Board will determine whether an adjustment is equitable.

Miscellaneous Provisions

15. Stock Exchange Requirements; Applicable Laws. Notwithstanding anything to the contrary in the Award Terms, no Shares issuable upon vesting and payment of the Restricted Share Units, and no certificate representing all or any part of such Shares, shall be issued or delivered if, in the opinion of counsel to the Company, such issuance or delivery would cause the Company to be in violation of, or to incur liability under, any securities law, or any rule, regulation or procedure of any U.S. national securities exchange upon which any securities of the Company are listed, or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or a Subsidiary.

16. Shareholder Rights. No person or entity shall be entitled to vote, receive dividends or be deemed for any purpose the holder of any Shares until the Restricted Share Unit shall have vested and been paid in the form of Shares in accordance with the provisions of the Award Terms.

17.Notices. Any notice required or permitted under the Award Terms shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or five days after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company's principal corporate offices or to the Participant at the address maintained for the Participant in the Company's records or, in either case, as subsequently modified by written notice to the other party.

18. Severability and Judicial Modification. If any provision of the Award Terms is held to be invalid or unenforceable under the applicable laws of any country, state, province, territory or other political subdivision or the Company elects not to enforce such restriction, the remaining provisions shall remain in full force and effect and the invalid or unenforceable provision shall be modified only to the extent necessary to render that provision valid and enforceable to the fullest extent permitted by law. If the invalid or unenforceable provision cannot be, or is not, modified, that provision shall be severed from the Award Terms and all other provisions shall remain valid and enforceable.

19. Successors. The Award Terms shall be binding upon and inure to the benefit of the Company and its successors and assigns, on the one hand, and the Participant and his or her heirs, beneficiaries, legatees and personal representatives, on the other hand.

20. Appendices. Notwithstanding any provisions in the Award Terms, to the extent that there are Participants residing and/or providing services outside the United States, the Restricted Share Unit shall be subject to the additional terms and conditions previously adopted by the Board and set forth in Appendix A to the Award Terms and to any special terms and conditions previously adopted by the Board for the Participant's country and set forth in Appendix B to the Award Terms. Moreover, if the Participant relocates outside the United States or relocates between the countries included in Appendix B, subject to compliance with Section 409A of the Code, the additional terms and conditions

3

set forth in Appendix A and the special terms and conditions for such country set forth in Appendix B will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendices constitute part of the Award Terms.

21. Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant's participation in the Plan, on the Restricted Share Unit and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

22. Compliance with Code Section 409A. It is intended that the Restricted Share Unit granted pursuant to the Award Terms be compliant with Section 409A of the Code and the Award Terms shall be interpreted, construed and operated to reflect this intent. Notwithstanding the foregoing, the Award Terms and the Plan may be amended at any time, without the consent of any party, to the extent necessary or desirable to satisfy any of the requirements under Section 409A of the Code, but the Company shall not be under any obligation to make any such amendment. Further, the Company and its Subsidiaries do not make any representation to the Participant that the Restricted Share Unit granted pursuant to the Award Terms satisfies the requirements of Section 409A of the Code, and the Company and its Subsidiaries will have no liability or other obligation to indemnify or hold harmless the Participant or any other party for any tax, additional tax, interest or penalties that the Participant or any other party may incur in the event that any provision of the Award Terms or any amendment or modification thereof or any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A of the Code.

23. Waiver. A waiver by the Company of breach of any provision of the Award Terms shall not operate or be construed as a waiver of any other provision of the Award Terms, or of any subsequent breach by the Participant or any other Participant.

24. No Advice Regarding Award. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant's participation in the Plan, or the Participant's acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with the Participant's own personal tax, legal and financial advisors regarding the Participant's participation in the Plan before taking any action related to the Plan.

25. Governing Law and Venue. As stated in the Plan, the Restricted Share Unit and the provisions of the Award Terms and all determinations made and actions taken thereunder, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of New York, United States of America, without reference to principles of conflict of laws, and construed accordingly. The jurisdiction and venue for any disputes arising under, or any actions brought to enforce (or otherwise relating to), the Restricted Share Unit will be exclusively in the courts in the State of New York, County of New York, including the Federal Courts located therein (should Federal jurisdiction exist).

26.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

27. Entire Agreement. The Award Terms and the Plan embody the entire understanding and agreement of the parties with respect to the subject matter hereof, and no promise, condition, representation or warranty, express or implied, not stated or incorporated by reference herein, shall bind either party hereto.

Acceptance of Award

28. In accordance with Section 15(c) of the Plan (as in effect at the grant date), the Participant may reject the Restricted Share Unit by notifying the Company within 30 days of the grant date that he or she does not accept the Restricted Share Unit. The Participant's acceptance of the Restricted Share Unit constitutes the Participant's acceptance of and agreement with the Award Terms. Notwithstanding the foregoing, if required by the Company, the

4

Participant will provide a signed copy of the Award Terms in such manner and within such timeframe as may be requested by the Company. The Company has no obligation to issue Shares to the Participant if the Participant does not accept the Restricted Share Unit.

5

APPENDIX A

TO THE ARCONIC INC.

2013 Stock Incentive Plan

Terms and Conditions for Restricted Share Units

For Non-U.S. Participants

Available upon request to Arconic’s Corporate Secretary.

6

APPENDIX B

TO THE ARCONIC INC.

2013 Stock Incentive Plan

Terms and Conditions for Restricted Share Units

For Non-U.S. Participants

Available upon request to Arconic’s Corporate Secretary.

7

EX-15.1

EXHIBIT 15

November 1, 2018

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Commissioners:

We are aware that our report dated November 1, 2018 on our review of interim financial information of Arconic Inc., which appears in this Quarterly Report on Form 10-Q, is incorporated by reference in the Registration Statement on Form S-8(Nos. 333-32516, 333-106411, 333-128445, 333-146330, 333-153369, 333-155668, 333-159123, 333-168428, 333-170801, 333-182899, 333-189882, 333-203275, 333-209772, and 333-212246) of Arconic Inc.

Very truly yours,

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

EX-31.1

Exhibit 31

Certifications

I, Charles P. Blankenship, certify that:

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.

Date: November 1, 2018

/s/ Charles P. Blankenship

Name: Charles P. Blankenship

Title: Chief Executive Officer

I, Ken Giacobbe, certify that:

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.

Date: November 1, 2018

/s/ Ken Giacobbe

Name: Ken Giacobbe

Title: Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Arconic Inc., a Delaware corporation (the “Company”), does hereby certify that:

The quarterly report on Form 10-Q for the period ended September 30, 2018 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

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

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 24, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	ARNC
Entity Registrant Name	Arconic Inc.
Entity Central Index Key	0000004281
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		483,242,370

XML

Statement of Consolidated Operations (unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
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 (in usd per share)	$ 0.33	$ 0.23	$ 0.87	$ 1.36
Earnings per share - diluted (in usd per share)	0.32	0.22	0.86	1.31
Dividends paid per share (in usd per share)	$ 0.06	$ 0.06	$ 0.18	$ 0.18
Average Shares Outstanding (I):
Average shares outstanding - basic (in shares)	483	442	483	441
Average shares outstanding - diluted (in shares)	502	462	503	501

XML

Statement of Consolidated Comprehensive Income (unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net income	$ 161	$ 119	$ 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	37	31	209	110
Foreign currency translation adjustments	(16)	85	(95)	251
Net change in unrealized gains on available-for-sale securities	1	1	(1)	(133)
Net change in unrecognized losses/gains on cash flow hedges	(10)	10	(13)	13
Total Other comprehensive income, net of tax	12	127	100	241
Comprehensive income	173	246	524	894
Arconic
Net income	161	119	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	37	31	209	110
Foreign currency translation adjustments	(16)	85	(95)	251
Net change in unrealized gains on available-for-sale securities	1	1	(1)	(133)
Net change in unrecognized losses/gains on cash flow hedges	(10)	10	(13)	13
Total Other comprehensive income, net of tax	12	127	100	241
Comprehensive income	173	246	524	894
Noncontrolling Interests
Net income	0	0	0	0
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	0	0	0	0
Foreign currency translation adjustments	0	0	0	0
Net change in unrealized gains on available-for-sale securities	0	0	0	0
Net change in unrecognized losses/gains on cash flow hedges	0	0	0	0
Total Other comprehensive income, net of tax	0	0	0	0
Comprehensive income	$ 0	$ 0	$ 0	$ 0

XML

Consolidated Balance Sheet (unaudited) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
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
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)
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

XML

Consolidated Balance Sheet (unaudited) (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable, current	$ 5	$ 8

XML

Statement of Consolidated Cash Flows (unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 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	0	(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

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Statement of Changes in Consolidated Equity (unaudited) - USD ($) $ in Millions	Total	Preferred Class A	Preferred Class B	Preferred stock	Mandatory convertible preferred stock	Common stock	Additional capital	Accumulated deficit	Accumulated deficit Preferred Class A	Accumulated deficit Preferred Class B	Accumulated other comprehensive loss	Noncontrolling Interests
Balance at beginning of period at Dec. 31, 2016	$ 5,141			$ 55	$ 3	$ 438	$ 8,214	$ (1,027)			$ (2,568)	$ 26
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	653							653				0
Other comprehensive income (J)	241										241	0
Cash dividends declared:
Preferred dividends declared, value		$ (2)	$ (51)						$ (2)	$ (51)
Common share, value	(107)							(107)
Stock-based compensation	59						59
Common stock issued: compensation plans	25					4	21
Distributions	(14)											(14)
Other	16							15				1
Balance at end of period at Sep. 30, 2017	5,961			55	3	442	8,294	(519)			(2,327)	13
Balance at beginning of period at Jun. 30, 2017	5,753			55	3	441	8,262	(567)			(2,454)	13
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	119							119				0
Other comprehensive income (J)	127										127	0
Cash dividends declared:
Preferred dividends declared, value		(1)	$ (17)						(1)	$ (17)
Common share, value	(53)							(53)
Stock-based compensation	11						11
Common stock issued: compensation plans	22					1	21
Balance at end of period at Sep. 30, 2017	5,961			55	3	442	8,294	(519)			(2,327)	13
Balance at beginning of period at Dec. 31, 2017	4,924			55	0	481	8,266	(1,248)			(2,644)	14
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	424							424				0
Other comprehensive income (J)	100										100	0
Cash dividends declared:
Preferred dividends declared, value		(2)							(2)
Common share, value	(117)							(117)
Stock-based compensation	43						43
Common stock issued: compensation plans	3					2	1
Balance at end of period at Sep. 30, 2018	5,375			55	0	483	8,310	(943)			(2,544)	14
Balance at beginning of period at Jun. 30, 2018	5,218			55	0	483	8,295	(1,073)			(2,556)	14
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	161							161				0
Other comprehensive income (J)	12										12	0
Cash dividends declared:
Preferred dividends declared, value		$ (1)							$ (1)
Common share, value	(30)							(30)
Stock-based compensation	14						14
Common stock issued: compensation plans	1						1
Balance at end of period at Sep. 30, 2018	$ 5,375			$ 55	$ 0	$ 483	$ 8,310	$ (943)			$ (2,544)	$ 14

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Statement of Changes in Consolidated Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Common stock, dividends per share (in usd per share)	$ 0.06	$ 0.12	$ 0.24	$ 0.24
Preferred Class A
Preferred, dividends per share (in usd per share)	$ 0.9375	1.875	$ 2.8125	3.75
Preferred Class B
Preferred, dividends per share (in usd per share)		$ 6.71875		$ 20.1563

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Basis of Presentation

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The interim Consolidated Financial Statements of Arconic Inc. and its subsidiaries (“Arconic” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2017 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with Arconic’s Annual Report on Form 10-K for the year ended December 31, 2017, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation (see below and Note D).

On January 1, 2018, Arconic adopted new guidance issued by the Financial Accounting Standards Board (FASB) related to the following: presentation of net periodic pension cost and net periodic postretirement benefit cost that required a reclassification of costs within the Statement of Consolidated Operations; presentation of certain cash receipts and cash payments within the Statement of Consolidated Cash Flows that required a reclassification of amounts between operating and either financing or investing activities; and the classification of restricted cash within the Statement of Consolidated Cash Flows. See Note B for further details.

In January 2018, management changed the organizational structure of the businesses in its Engineered Products and Solutions (EP&S) segment, from four business units to three business units, with a focus on aligning its internal structure to core markets and customers and reducing cost. As a result of this change in the EP&S segment organizational structure, management assessed and concluded that each of the three business units represent reporting units for goodwill impairment evaluation purposes.  Also, as a result of the reorganization, goodwill was reallocated to the three new reporting units and evaluated for impairment during the first quarter of 2018. The estimated fair value of each reporting unit substantially exceeded its carrying value; thus, there was no goodwill impairment. More than 92% of Arconic’s total goodwill at March 31, 2018 was allocated to the following three EP&S reporting units: Arconic Engines ($2,095), Arconic Fastening Systems ($1,623) and Arconic Engineered Structures ($517). See Note M for further details of an interim goodwill impairment evaluation that was performed for the Arconic Engines reporting unit during the second quarter of 2018.

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Recently Adopted and Recently Issued Accounting Guidance

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Recently Adopted and Recently Issued Accounting Guidance

Recently Adopted and Recently Issued Accounting Guidance

Adopted

In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. These changes became effective for Arconic on January 1, 2018. Arconic adopted this new guidance using the modified retrospective transition approach applied to those contracts that were not completed as of January 1, 2018. There was no cumulative effect adjustment to the opening balance of retained earnings in the Consolidated Balance Sheet in the first quarter of 2018, as the adoption did not result in a change to our timing of revenue recognition, which continues to be at a point in time. See Note C for further details.

In January 2016, the FASB issued changes to equity investments. These changes require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values using the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Also, the impairment assessment of equity investments without readily determinable fair values has been simplified by requiring a qualitative assessment to identify impairment. Also, the new guidance required changes in fair value of equity securities to be recognized immediately as a component of net income instead of being reported in accumulated other comprehensive loss until the gain (loss) is realized. These changes became effective for Arconic on January 1, 2018 and have been applied on a prospective basis. Arconic elected the measurement alternative for its equity investments that do not have readily determinable fair values. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2016, the FASB issued changes to the classification of certain cash receipts and cash payments within the statement of cash flows. The guidance identifies eight specific cash flow items and the sections where they must be presented within the statement of cash flows. These changes became effective for Arconic on January 1, 2018 and have been be applied retrospectively. As a result of the adoption, Arconic reclassified cash received related to beneficial interest in previously transferred trade accounts receivable from operating activities to investing activities in the Statement of Consolidated Cash Flows. This new accounting standard does not reflect a change in our underlying business or activities. The reclassification of cash received related to beneficial interest in previously transferred trade accounts receivable was $514 for the nine months endedSeptember 30, 2017. In addition, Arconic reclassified $52 of cash paid for debt prepayments including extinguishment costs from operating activities to financing activities for the nine months endedSeptember 30, 2017.

In November 2016, the FASB issued changes to the classification of cash and cash equivalents within the statement of cash flow. Restricted cash and cash equivalents will be included within the cash and cash equivalents line on the cash flow statement and a reconciliation must be prepared to the statement of financial position. Transfers between restricted cash and cash equivalents and cash and cash equivalents will no longer be presented as cash flow activities in the Statement of Consolidated Cash Flows and for material balances of restricted cash and cash equivalents, Arconic will disclose information regarding the nature of the restrictions. These changes became effective for Arconic on January 1, 2018 and have been applied retrospectively. Management has determined that the adoption of this guidance did not have a material impact on the Statement of Consolidated Cash Flows. Restricted cash was $7, $4 and $5 at September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

In March 2017, the FASB issued changes to the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires registrants to present the service cost component of net periodic benefit cost in the same income statement line item or items as other employee compensation costs arising from services rendered during the period. Also, only the service cost component will be eligible for asset capitalization. Registrants will present the other components of net periodic benefit cost separately from the service cost component; and, the line item or items used in the income statement to present the other components of net periodic benefit cost must be disclosed. These changes became effective for Arconic on January 1, 2018 and were adopted retrospectively for the presentation of the service cost component and the other components of net periodic benefit cost in the Statement of Consolidated Operations, and prospectively for the asset capitalization of the service cost component of net periodic benefit cost. The Company recorded the service related net periodic benefit cost within Cost of goods sold, Selling, general administrative, and other expenses and Research and development expenses and recorded the non-service related net periodic benefit cost (except for the curtailment cost which was recorded in Restructuring and other charges) separately from service cost in Other expense (income), net within the Statement of Consolidated Operations. The impact of the retrospective adoption of this guidance was an increase to consolidated Operating income of $39 and $116, while there was no impact to consolidated Net income, for the third quarter or nine months endedSeptember 30, 2017, respectively.

In May 2017, the FASB issued clarification to guidance on the modification accounting criteria for share-based payment awards. The new guidance requires registrants to apply modification accounting unless three specific criteria are met. The three criteria are 1) the fair value of the award is the same before and after the modification, 2) the vesting conditions are the same before and after the modification and 3) the classification as a debt or equity award is the same before and after the modification. These changes became effective for Arconic on January 1, 2018 and were applied prospectively to new awards modified after adoption. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance which requires cloud computing arrangement implementation costs to be accounted for in accordance with the software stage model, regardless of whether or not the cloud computing arrangement contains a license. Arconic adopted this guidance in the third quarter of 2018. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In February 2016, the FASB issued changes to the accounting and presentation of leases. These changes require lessees to recognize a right of use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right of use asset and lease liability. Also, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option, or not exercise an option to terminate the lease. As originally released, the standards update required application at the beginning of the earliest comparative period presented at the time of adoption. However, in July 2018, the FASB provided entities the option to instead apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. The Company expects to apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. These changes become effective for Arconic on January 1, 2019. Arconic’s current operating lease portfolio is primarily comprised of land and buildings, plant equipment, vehicles, and computer equipment. A cross-functional implementation team is in the process of determining the scope of arrangements that will be subject to this standard as well as assessing the impact to the Company’s systems, processes and internal controls. Arconic has contracted with a third-party vendor to implement a software solution. Concurrently, Arconic is compiling lease data to be uploaded into the software solution to account for leases under the new standard. Management is evaluating the impact of these changes on the Consolidated Balance Sheet, which will require right of use assets and lease liabilities be recorded for operating leases; therefore, an estimate of the impact is not currently determinable. However, the adoption is not expected to have a material impact on the Statement of Consolidated Operations or Statement of Consolidated Cash Flows.

In June 2016, the FASB added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for Arconic on January 1, 2020. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

In August 2017, the FASB issued guidance that will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. These changes become effective for Arconic on January 1, 2019. For cash flow and net investment hedges existing at the date of adoption, Arconic will apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in which the amendment is adopted. The amended presentation and disclosure guidance is required only prospectively. Arconic has engaged a third-party consultant to assist with a review of the Company’s risk management and hedging strategies, with any changes to be implemented in conjunction with the adoption of the new guidance. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In February 2018, the FASB issued guidance that allows an optional reclassification from Accumulated other comprehensive loss to Accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. These changes become effective for Arconic on January 1, 2019. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance that impacts disclosures for defined benefit pension plans. These changes become effective for Arconic's annual report for the year ending December 31, 2020, with early adoption permitted. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

Also, in August 2018, the Securities and Exchange Commission (SEC) issued guidance to eliminate or modify certain disclosure requirements that have become redundant, overlapping, outdated or superseded in light of other SEC rules, GAAP or changes in the information environment. This guidance becomes effective on November 5, 2018 and will be applied to filings thereafter. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

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Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company's contracts with customers are comprised of acknowledged purchase orders incorporating the Company’s standard terms and conditions, or for larger customers, may also generally include terms under negotiated multi-year agreements. These contracts with customers typically consist of the manufacture of products which represent single performance obligations that are satisfied upon transfer of control of the product to the customer. The Company produces fastening systems; seamless rolled rings; investment castings, including airfoils and forged jet engine components; extruded, machined and formed aircraft parts; aluminum sheet and plate; integrated aluminum structural systems; architectural extrusions; and forged aluminum commercial vehicle wheels. Transfer of control is assessed based on alternative use of the products we produce and our enforceable right to payment for performance to date under the contract terms. Transfer of control and revenue recognition generally occur upon shipment or delivery of the product, which is when title, ownership and risk of loss pass to the customer and is based on the applicable shipping terms. The shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation (truck, train, or vessel). An invoice for payment is issued at time of shipment. The Company’s objective is to have net 30-day terms. Our business units set commercial terms on which Arconic sells products to its customers. These terms are influenced by industry custom, market conditions, product line (specialty versus commodity products), and other considerations.

The following table disaggregates revenue by major end market served. Differences between segment totals and consolidated Arconic are in Corporate. In the nine months endedSeptember 30, 2018, Corporate included $38 of costs related to settlements of certain customer claims primarily related to product introductions.

	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

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging. Arconic’s segments are organized by product on a worldwide basis. In the first quarter of 2018, the Company changed its primary measure of segment performance from Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) to Segment operating profit, which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges and Impairment of goodwill. Segment operating profit also includes certain items that, under the previous segment performance measure, were recorded in Corporate, such as the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Prior period financial information has been recast to conform to current year presentation. Differences between segment totals and consolidated Arconic are in Corporate. 

The operating results of Arconic’s reportable segments were as follows:

	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

The following table reconciles Total segment operating profit to Consolidated income before income taxes:

	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

The total assets of Arconic's reportable segment were as follows:

	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

The following table reconciles Total segment assets to Consolidated assets:

	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

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Restructuring and Other Charges

9 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

In the third quarter of 2018, Restructuring and other charges was a net benefit of $2 ($3 after-tax), which included a postretirement curtailment benefit of $28 ($22 after-tax) (see Note G); a charge of $12 ($9 after-tax) for contract termination costs and asset impairments associated with the shutdown of a facility in Acuna, Mexico; a charge of $8 ($6 after-tax) for layoff costs, including the separation of approximately 85 employees (65 in the Engineered Products and Solutions segment and 20 in Corporate); a charge of $4 ($3 after-tax) for a pension settlement; a charge of $3 ($2 after-tax) for other miscellaneous items; and a benefit of $1 ($1 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In the nine months ended September 30, 2018, Arconic recorded Restructuring and other charges of $20 ($14 after-tax), which included a postretirement curtailment benefit of $28 ($22 after-tax) (see Note G); a charge of $14 ($11 after-tax) for pension curtailments; a charge of $16 ($12 after-tax) for layoff costs, including the separation of approximately 125 employees (89 in the Engineered Products and Solutions segment and 36 in Corporate); a charge of $12 ($9 after-tax) related to the shutdown of a facility in Acuna, Mexico as noted above; a charge of $7 ($5 after-tax) for other miscellaneous items; a charge of $5 ($4 after-tax) for exit costs primarily related to the New York office; a charge of $4 ($3 after-tax) for a pension settlement; and a benefit of $10 ($8 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In the third quarter of 2017, Arconic recorded Restructuring and other charges of $19 ($13 after-tax), which included a charge of $11 ($8 after-tax) for layoff costs related to cost reduction initiatives including the separation of 124 employees (111 in the Engineered Products and Solutions segment, 12 in Corporate and 1 in the Global Rolled Products segment) and a net charge of $8 ($5 after-tax) for other miscellaneous items.

In the nine months ended September 30, 2017, Arconic recorded Restructuring and other charges of $118 ($99 after-tax), which included a charge of $59 ($40 after-tax) for layoff costs related to cost reduction initiatives including the separation of approximately 800 employees (350 in the Engineered Products and Solutions segment, 243 in the Global Rolled Products segment, 133 in the Transportation and Construction Solutions segment and 74 in Corporate); a charge of $60 ($60 after-tax) related to the sale of the Fusina, Italy rolling mill; a net benefit of $6 ($4 after-tax) for the reversal of forfeited executive stock compensation of $13, partially offset by a charge of $7 for the related severance; a net charge of $7 ($5 after-tax) for other miscellaneous items; and a benefit of $2 ($2 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of September 30, 2018, approximately 35 of the 125 employees associated with 2018 restructuring programs and approximately 570 of the 760 employees (previously 830) associated with 2017 restructuring programs (with planned departures in 2018) were separated; all of the separations associated with 2016 restructuring programs were essentially complete. The remaining separations for the 2018 restructuring programs are expected to be completed by mid-2019. All of the remaining separations for the 2017 restructuring programs are expected to be completed by the end of 2018.

For the third quarter and nine months ended September 30, 2018, cash payments of $3 and $6, respectively, were made against layoff reserves related to 2018 restructuring programs, cash payments of $4 and $27, respectively, were made against layoff reserves related to 2017 restructuring programs, and cash payments of $0 and $4, respectively, were made against the layoff reserves related to 2016 restructuring programs.

Activity and reserve balances for restructuring and other charges were as follows:

	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.

The remaining reserves are expected to be paid in cash during 2018, with the exception of approximately $18 to $20, which is expected to be paid over the next several years for lease termination costs and special termination benefit payments.

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Other Expense (Income), Net

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Other Expense (Income), Net

Other Expense (Income), Net

	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	)

For the third quarter and nine months ended September 30, 2018, Non-service related net periodic benefit cost included lower net actuarial losses as a result of pension actions taken during 2018 (see Note G). For the third quarter and nine months ended September 30, 2018, Other, net included a benefit from establishing a tax indemnification receivable of $29 reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve (see Notes H and Q). For the nine months ended September 30, 2017, Net loss (gain) from asset sales included a gain on the sale of a portion of Arconic’s investment in Alcoa Corporation common stock of $351 that resulted in cash proceeds of $888 which were recorded in Sale of investments within Investing Activities in the Statement of Consolidated Cash Flows and a $167 gain on the debt-for-equity exchange with two investment banks (the “Investment Banks”) of the remaining portion of Arconic’s retained interest in Alcoa Corporation common stock for a portion of the Company’s outstanding notes held by the Investment Banks (the “Debt-for-Equity Exchange”).

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Pension and Other Postretirement Benefits

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The components of net periodic benefit cost were as follows:

	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.

In the first quarter of 2018, the Company announced that, effective April 1, 2018, benefit accruals for future service and compensation under all of the Company's qualified and non-qualified defined benefit pension plans for U.S. salaried and non-bargaining hourly employees ceased. As a result of this change, in the first quarter of 2018, the Company recorded a decrease to the Accrued pension benefits liability of $136 related to the reduction of future benefits, $141 offset in Accumulated other comprehensive loss, and curtailment charges of $5 in Restructuring and other charges.

In conjunction with the separation of Alcoa Inc. on November 1, 2016, the Pension Benefit Guaranty Corporation approved management’s plan to separate the Alcoa Inc. pension plans between Arconic Inc. and Alcoa Corporation. The plan stipulates that Arconic will make cash contributions over a period of 30 months (from November 1, 2016) to its two largest pension plans. Payments are expected to be made in three increments of no less than $50 each ($150 total) over this 30-month period. The Company made payments of $50 in March 2018 and $50 in April 2017. In the third quarter of 2018, the 2018 U.S. pension plan valuations were completed and additional pension contributions of $16 that were made in the first quarter of 2018 were able to be used to partially satisfy the third $50 requirement. The remaining $34 payment is expected to be made in 2019. Through the third quarter of 2018, $116 of pension contributions have been made toward the $150 requirement.

On April 13, 2018, the United Auto Workers ratified a new five-year labor agreement, covering approximately 1,300 U.S. employees of Arconic, which expires on March 31, 2023. A provision within the agreement includes a retirement benefit increase for future retirees that participate in a defined benefit pension plan, which impacts approximately 300 of those employees. In addition, effective January 1, 2019, benefit accruals for future service will cease. As result of these changes, a curtailment charge of $9 was recorded in Restructuring and other charges in the second quarter of 2018.

In the third quarter of 2018, the Company announced that effective December 31, 2018, it will end all pre-Medicare medical, prescription drug and vision coverage for current and future salaried and non-bargained hourly employees and retirees of the Company and its subsidiaries. As a result of this change, in the third quarter of 2018, the Company recorded a decrease to the Accrued other postretirement benefits liability of $32 related to the reduction of future benefits, $4 offset in Accumulated other comprehensive loss, and a curtailment benefit of $28 in Restructuring and other charges.

In the third quarter of 2018, settlement accounting applied to a U.S. pension plan due to the payment of lump sums, resulting in a charge of $4 that was recorded in Restructuring and other charges.

In the fourth quarter of 2018, settlement accounting is expected to apply to certain U.S. pension plans due to the significant amount of lump sum payments made to participants. The settlement will result in a charge that is expected to be in the range of $70 to $85 that will be recorded in Restructuring and other charges. The actual charge will be based on the total lump sum payments for the year along with any updates to the plan assets and obligations based upon market conditions.

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Arconic’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impact of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

For the nine months ended September 30, 2018, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 26.5%. This rate was higher than the federal statutory rate of 21%, which was enacted by the Tax Cuts and Jobs Act (the “2017 Act”) on December 22, 2017, primarily due to the additional estimated U.S. tax on Global Intangible Low-Taxed Income (GILTI) pursuant to the 2017 Act, domestic taxable income in certain U.S. states no longer subject to valuation allowance, and foreign income taxed in higher rate jurisdictions, partially offset by the favorable impact related to the portion of an indemnification receivable recorded through pre-tax income (see Note Q) that is not subject to tax and a benefit for tax credits allowed.

For the nine months ended September 30, 2017, Arconic’s estimated annual effective tax rate, before discrete items, was 28.5%. This rate is lower than the federal statutory rate of 35% due to foreign income taxed in lower rate jurisdictions, a tax basis in excess of book basis in Alcoa Corporation common stock sold, and a nontaxable gain on the Debt-for-Equity Exchange. These beneficial items were partially offset by a loss on the sale of a rolling mill in Fusina, Italy for which no net tax benefit was recognized and valuation allowances recorded against U.S. foreign tax credits.

For the third quarter ended September 30, 2018 and September 30, 2017, the tax rate including discrete items was 35.3% and 30.8%, respectively. A discrete charge of $26 was recorded in the third quarter ended September 30, 2018 related to the establishment of a $59 tax reserve in Spain (see Note Q) and prior year adjustments of $13 related to various jurisdictions, partially offset by the reversal of a $38 foreign tax reserve that is effectively settled and an $8 reduction to the estimate of the provisional impact of the enactment of the 2017 Act discussed further below. A discrete charge of $2 was recorded in the third quarter ended September 30, 2017, primarily related to the tax effects of expired stock compensation, partially offset by a number of small items.

The tax provisions for the third quarter and nine months ended September 30, 2018 and 2017 were comprised of the following:

	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

On December 22, 2017, the 2017 Act was signed into law, making significant changes to the Internal Revenue Code. Also on December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118"), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, was issued by the SEC to address the application of U.S. GAAP for financial reporting. SAB 118 permits the use of provisional amounts based on reasonable estimates in the financial statements. SAB 118 also provides that the tax impact may be considered incomplete in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Act. Any adjustments to provisional or incomplete amounts should be included in income from continuing operations as an adjustment to tax expense or benefit in the reporting period that the amounts are determined within one year.

The Company's analysis of U.S. tax reform legislation updated through September 30, 2018, resulted in a decrease of $8 and an increase of $13 in the third quarter and nine months ended September 30, 2018, respectively, to the 2017 year-end provisional charge of $272. In the third quarter ended September 30, 2018, a benefit of $8 was recorded related to a $2 decrease in the estimate of the one-time transition tax and $6 for U.S. tax rate change impacts. In the nine months ended September 30, 2018, a net charge of $13 was recorded for an increase of $16 in the estimate of the one-time transition tax and a charge of $3 for alternative minimum tax (AMT) credits expected to be refunded upon filing the 2018 tax return that will result in no benefit under government sequestration, partly offset by beneficial U.S. tax rate change impacts of $6. The Company's estimates of the impact of the 2017 Act remain provisional through September 30, 2018.

The impact of the rate reduction will be finalized in the fourth quarter of 2018 upon the filing of the 2017 U.S. income tax return and the expected completion of the Internal Revenue Service’s 2017 audit. Arconic will continue to analyze the amount of foreign earnings and profits, the associated foreign tax credits, and additional guidance that may be issued during 2018 in order to further update the estimated deemed repatriation calculation as necessary under SAB 118. Arconic has not yet gathered, prepared and analyzed all the necessary information in sufficient detail to determine whether any excess foreign tax credits that may result from the deemed repatriation will be realizable.

Provisional estimates of the impact of the 2017 Act on the realizability of certain deferred tax assets, including, but not limited to, foreign tax credits, AMT credits, and state tax loss carryforwards have been made based on information and computations that were available, prepared, and analyzed as of February 2, 2018. Through September 30, 2018, there were no changes to the estimates related to the realizability of deferred tax assets. Further analysis, or the issuance of additional guidance, could result in changes to the realizability of this and other deferred tax assets.

As a result of the 2017 Act, the non-previously taxed post-1986 foreign earnings and profits (calculated based on U.S. tax principles) of certain U.S.-owned foreign corporations has been subject to U.S. tax under the one-time transition tax provisions. In the fourth quarter of 2017, Arconic had no plans to distribute such earnings in the foreseeable future and considered that conclusion to be incomplete under SAB 118. There is no change to this conclusion through September 30, 2018.

The 2017 Act creates a new requirement that certain income earned by foreign subsidiaries, GILTI, must be included in the gross income of the U.S. shareholder. The 2017 Act also established the Base Erosion and Anti-Abuse Tax (BEAT). Arconic anticipates that it will be subject to GILTI and has included an estimate of GILTI in the calculation of the 2018 estimated annual effective tax rate. At this time, Arconic does not anticipate being subject to BEAT for 2018. In the first quarter ended March 31, 2018, Arconic made a final accounting policy election to treat taxes due on future inclusions in U.S. taxable income related to GILTI as a current period expense when incurred.

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Earnings Per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):

	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

The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions).

	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.

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table details the activity of the four components that comprise Accumulated other comprehensive loss for both Arconic’s shareholders and noncontrolling interests:

	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.

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Receivables

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

Receivables

Receivables

Arconic has an arrangement with three financial institutions to sell certain customer receivables without recourse on a revolving basis. The sale of such receivables is completed using a bankruptcy remote special purpose entity, which is a consolidated subsidiary of Arconic. This arrangement provides for minimum funding of $200 up to a maximum of $400 for receivables sold. Arconic maintains a beneficial interest, or a right to collect cash, on the sold receivables that have not been funded (deferred purchase program). On March 30, 2012, Arconic initially sold $304 of customer receivables in exchange for $50 in cash and $254 of deferred purchase program under the arrangement. Arconic has received additional net cash funding of $300 ($2,808 in draws and $2,508 in repayments) since the program’s inception, including net cash draws totaling $0 ($450 in draws and $450 in repayments) for the nine months ended September 30, 2018.

As of September 30, 2018 and December 31, 2017, the deferred purchase program receivable was $362 and $187, respectively, which was included in Other receivables on the accompanying Consolidated Balance Sheet. The deferred purchase program receivable is reduced as collections of the underlying receivables occur; however, as this is a revolving program, the sale of new receivables will result in an increase in the deferred purchase program receivable. The gross amount of receivables sold and total cash collected under this program since its inception was $40,194 and $39,482, respectively. Arconic services the customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded.

Cash receipts from customer payments on sold receivables (which are cash receipts on the underlying trade receivables that have been previously sold in this program) as well as cash receipts and cash disbursements from draws and repayments under the program are presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows.

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Inventories

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories

	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

At September 30, 2018 and December 31, 2017, the portion of inventories valued on a last-in, first-out (LIFO) basis was $1,339 and $1,208, respectively. If valued on an average-cost basis, total inventories would have been $534 and $481 higher at September 30, 2018 and December 31, 2017, respectively.

In the second quarter of 2018, a charge of $23 was recorded in Cost of goods sold and Inventories to reflect a physical inventory adjustment at one plant in the EP&S segment. While a portion of this charge relates to prior years, the majority relates to 2018. The out-of-period amounts are not material to any interim or annual periods.

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Property, Plants, and Equipment, Net

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Properties, Plants, and Equipment, Net

Properties, Plants, and Equipment, Net

	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

During the second quarter of 2018, the Company updated its three-year strategic plan and determined that there was a decline in the forecasted financial performance for the disks operations, an asset group within the Arconic Engines business unit. As such, the Company evaluated the recoverability of the long-lived assets by comparing their carrying value of approximately $515 to the estimated undiscounted net cash flows of the disks operations, resulting in an estimated fair value in excess of their carrying value of approximately 13%; thus, there was no impairment. If the disks operations do not achieve the revised forecasted financial performance or if there are changes in any significant assumptions, a material non-cash impairment of long-lived assets may occur in future periods. These significant assumptions include sales growth, cost of raw materials, ramp up of additional production capacity, and working capital. A 1% decrease in the forecasted net cash flows would reduce the undiscounted cash flows by approximately $6. There were no indicators of impairment identified for the disks operations during the third quarter of 2018 and, as such, the Company did not evaluate the recoverability of its long-lived assets. The Company also performed an interim impairment evaluation of goodwill in the second quarter of 2018 for the Arconic Engines reporting unit as a result of the decline in the forecasted performance of the disks operations as noted above. The estimated fair value of the reporting unit was substantially in excess of the carrying value; thus, there was no impairment of goodwill.

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Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

	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.

Public Debt – During the first quarter of 2018, the Company completed the early redemption of its remaining outstanding 5.72% Notes due in 2019, with aggregate principal amount of $500, for $518 in cash including accrued and unpaid interest. As a result, the Company recorded a charge of $19 in Interest expense in the accompanying Statement of Consolidated Operations for the first quarter of 2018 primarily for the premium paid on the early redemption of these notes in excess of their carrying value.

Credit Facilities. On July 25, 2014, Arconic entered into a Five-Year Revolving Credit Agreement with a syndicate of lenders and issuers named therein, which provides for a senior unsecured revolving credit facility (the “Credit Facility”). By an Extension Request and Amendment Letter dated as of June 5, 2015, the maturity date of the Credit Facility was extended to July 25, 2020. On September 16, 2016, Arconic entered into Amendment No. 1 to the Five-Year Revolving Credit Agreement to permit the Separation Transaction and to amend certain terms of the Credit Agreement, including the replacement of the existing financial covenant with a leverage ratio and reduction of total commitments available from $4,000 to $3,000. On June 29, 2018, Arconic entered into Amendment No. 2 (“Amendment No. 2”) to amend and restate the Five-Year Revolving Credit Agreement. The Five-Year Revolving Credit Agreement, as so amended and restated, is herein referred to as the “Credit Agreement.”

The Credit Agreement provides a $3,000 Credit Facility, the proceeds of which are to be used to provide working capital or for other general corporate purposes of Arconic. Subject to the terms and conditions of the Credit Agreement, Arconic may from time to time request increases in lender commitments under the Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $1,000 of the Credit Facility. Pursuant to the Credit Agreement, Arconic shall not permit the ratio of Consolidated Net Debt to Consolidated EBITDA (each as defined in the Credit Agreement) as of the end of each fiscal quarter for the period of the four fiscal quarters most recently ended, to be greater than 4.50 to 1.00, which maximum level will step down successively to 4.00 to 1.00 on December 31, 2018, and to 3.50 to 1.00 on December 31, 2019 and thereafter.

The Credit Agreement includes additional covenants, including, among others, (a) limitations on Arconic’s ability to incur liens securing indebtedness for borrowed money, (b) limitations on Arconic’s ability to consummate a merger, consolidation or sale of all or substantially all of its assets, and (c) limitations on Arconic’s ability to change the nature of its business. As of September 30, 2018, Arconic was in compliance with all such covenants.

The Credit Facility matures on June 29, 2023, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Arconic may make twoone-year extension requests during the term of the Credit Facility, subject to the lender consent requirements set forth in the Credit Agreement. Under the provisions of the Credit Agreement, Arconic will pay a fee of 0.25% per annum (based on Arconic’s current long-term debt ratings) of the total commitment to maintain the Credit Facility.

The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured, unsubordinated indebtedness of Arconic. Borrowings under the Credit Facility may be denominated in U.S. dollars or euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on the credit ratings of Arconic’s outstanding senior unsecured long-term debt. The applicable margin on base rate loans and LIBOR loans will be 0.50% and 1.50% per annum, respectively, based on Arconic’s current long-term debt ratings. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

The obligation of Arconic to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an “Event of Default” as defined in the Credit Agreement. Such Events of Default include, among others, (a) non-payment of obligations; (b) breach of any representation or warranty in any material respect; (c) non-performance of covenants and obligations; (d) with respect to other indebtedness in a principal amount in excess of $100 million, a default thereunder that causes such indebtedness to become due prior to its stated maturity or a default in the payment at maturity of any principal of such indebtedness; (e) the bankruptcy or insolvency of Arconic; and (f) a change in control of Arconic.

There were no amounts outstanding at September 30, 2018 or December 31, 2017, and no amounts were borrowed during 2018 or 2017, under the Credit Facility.

In addition to the Credit Agreement above, Arconic has a number of other credit agreements that provide a combined borrowing capacity of $715 as of September 30, 2018, of which $200 is due to expire in 2018, $365 is due to expire in 2019, and $150 due to expire in 2020. The purpose of any borrowings under these credit arrangements is to provide for working capital requirements and for other general corporate purposes. The covenants contained in all these arrangements are the same as the Credit Agreement. During the nine months ended September 30, 2018, Arconic borrowed and repaid $450 and $450, respectively, under these other credit facilities. The weighted-average interest rate and weighted-average days outstanding during the third quarter and nine months ended September 30, 2018 were 3.5% and 35 days and 3.3% and 55 days, respectively.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables and Short-term debt included in the Consolidated Balance Sheet approximate fair values. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities which are carried at fair value which is based on quoted market prices.

The following table summarizes Arconic’s financial liabilities that were not carried at fair value at September 30, 2018 and December 31, 2017:

	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

The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Arconic for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

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Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Acquisitions and Divestitures

Acquisitions and Divestitures

In March 2017, Arconic completed the sale of its Fusina, Italy rolling mill to Slim Aluminium. While owned by Arconic, the operating results and assets and liabilities of the Fusina, Italy rolling mill were included in the Global Rolled Products segment. As part of the transaction, Arconic injected $10 of cash into the business and provided a third-party guarantee with a fair value of $5 related to Slim Aluminium’s environmental remediation. The Company recorded a loss on the sale of $60, which was recorded in Restructuring and other charges (see Note E) on the Statement of Consolidated Operations in the first quarter of 2017. The rolling mill generated third-party sales of approximately $37 in the first quarter of 2017. At the time of the divestiture, the rolling mill had approximately 312 employees.

On April 2, 2018, Arconic completed the sale of its Latin America extrusions business to a subsidiary of Hydro Extruded Solutions AS for $5 in cash, subject to post-closing adjustments that are not expected to be significant. The sales price approximates the carrying value of the net assets sold on the closing date, following the charge of $41 recognized in the fourth quarter of 2017 related to the non-cash impairment of the net book value of the business. The operating results and assets and liabilities of the business were included in the Transportation and Construction Solutions segment. This business generated sales of approximately $30 in the third quarter of 2017, and $25 and $86 in the nine months ended September 30, 2018 and 2017, respectively.

On July 31, 2018, the Company announced that it had initiated a sale process of its Building and Construction Systems (BCS) business, as part of the Company’s ongoing strategy and portfolio review that commenced in January 2018. BCS is part of the Transportation and Construction Solutions segment and generated third-party sales of approximately $1,070 for the year ended December 31, 2017. The sale process is in its early stages. The Company’s decision regarding whether to sell the business will not be finalized until final binding offers are evaluated at a later stage in the sale process. Until the Company makes that final decision, the BCS business will remain classified as held and in-use in the Consolidated Financial Statements.

On October 31, 2018, the Company sold its Texarkana, Texas rolling mill and cast house, which had a combined net book value of $63, to Ta Chen International, Inc. for $302 in cash, subject to post-closing adjustments, plus additional contingent consideration of up to $50. The contingent consideration relates to the achievement of various milestones within 36 months of the transaction closing date associated with operationalizing the rolling mill equipment. The Texarkana rolling mill facility had previously been idle since late 2009. In early 2016, the Company restarted the Texarkana cast house to meet demand for aluminum slab. As part of the agreement, the Company will continue to produce aluminum slab at the facility for a period of 18months through a lease back of the cast house building and equipment, after which time, Ta Chen will perform toll processing of metal for the Company for a period of six months. The Company will supply Ta Chen with cold-rolled aluminum coil during this 24-month period.

The sale of the rolling mill and cast house will be accounted for separately. The gain on the sale of the rolling mill is estimated to be approximately $150 to $165 including the fair value of contingent consideration of $4, which will be recorded in the fourth quarter of 2018. The Company will reevaluate its estimate of the amount of contingent consideration to which it will be entitled at the end of each reporting period and recognize any changes thereto in the Statement of Consolidated Operations. The Company will have continuing involvement related to the cast house, and, therefore will use the failed-sale-leaseback accounting model. Under such model, the Company is deemed to still own the cast house building and equipment sold to Ta Chen, and therefore the Company must continue to reflect these assets in its Consolidated Balance Sheet and depreciate them over the remaining useful life. Additionally, the Company will record the cash proceeds associated with the cast house as a noncurrent liability in its Consolidated Balance Sheet. The Company will defer a gain estimated at approximately $85 to $100 associated with the cast house assets.

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Contingencies and Commitments

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

Contingencies

Environmental Matters

Arconic participates in environmental assessments and cleanups at more than 100 locations. These include owned or operating facilities and adjoining properties, previously owned or operating facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.

Arconic’s remediation reserve balance was $280 at September 30, 2018 and $294 at December 31, 2017 (of which $70 and $41, respectively, was classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated.

Payments related to remediation expenses applied against the reserve were $7 and $15 in the third quarter and nine months ended September 30, 2018, respectively. This amount includes expenditures currently mandated, as well as those not required by any regulatory authority or third party.

Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be approximately 1% or less of cost of goods sold.

The following discussion provides details regarding the current status of the most significant remediation reserves related to a current Arconic site.

Massena West, NY—Arconic has an ongoing remediation project related to the Grasse River, which is adjacent to Arconic’s Massena plant site. Many years ago, it was determined that sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs). The project, which was selected by the U.S. Environmental Protection Agency (EPA) in a Record of Decision issued in April 2013, is aimed at capping PCB contaminated sediments with concentration in excess of one part per million in the main channel of the river and dredging PCB contaminated sediments in the near-shore areas where total PCBs exceed one part per million. At September 30, 2018 and December 31, 2017, the reserve balance associated with this matter was $208 and $215, respectively. Arconic is in the planning and design phase of the project, which is expected to be completed in 2018. Following the submittal of the final design and EPA approval, the actual remediation fieldwork is expected to commence and take approximately four years. The majority of the project funding is expected to be incurred between 2018 and 2022.

Tax

Pursuant to the Tax Matters Agreement entered into between Arconic and Alcoa Corporation in connection with the separation transaction with Alcoa Corporation, Arconic shares responsibility with Alcoa Corporation, and Alcoa Corporation has agreed to partially indemnify Arconic for 49% of the ultimate liability, with respect to the following matter.

As previously reported, in July 2013, following a Spanish corporate income tax audit covering the 2006 through 2009 tax years, an assessment was received mainly disallowing certain interest deductions claimed by a Spanish consolidated tax group owned by the Company. In August 2013, the Company filed an appeal of this assessment in Spain’s Central Tax Administrative Court, which was denied in January 2015. Arconic filed another appeal in Spain’s National Court in March 2015 which was denied in July 2018. The National Court’s decision requires the assessment for the 2006 through 2009 tax years to be reissued to take into account the outcome of the 2003 to 2005 audit which was closed in 2017. The Company estimates the revised assessment to be $175 (€152), including interest.

The Company maintains its intent to petition the Supreme Court of Spain to review the National Court’s decision. If the petition is accepted, the Supreme Court will review the assessment on its merits and render a final decision. In the event the Company is unsuccessful in appealing the assessment to the Supreme Court of Spain, a portion of the assessment may be offset with existing net operating losses and tax credits available to the Spanish consolidated tax group, which would be shared between the Company and Alcoa Corporation as provided for in the Tax Matters Agreement. As a result of the National Court decision, an income tax reserve, including interest, of $59 (€51) was established in the third quarter of 2018. Concurrent with the establishment of the reserve, an indemnification receivable of $29 (€25), representing Alcoa Corporation’s 49% share of the liability, was also recorded in the third quarter of 2018 (see Note F).

Additionally, while the tax years 2010 through 2013 are closed to audit, it is possible that the Company may receive assessments for tax years subsequent to 2013. Any potential assessment for an individual tax year is not expected to be material to the Company’s consolidated operations.

Reynobond PE

Howard v. Arconic Inc. et al. As previously reported, a purported class action complaint related to the Grenfell Tower fire was filed on August 11, 2017 in the United States District Court for the Western District of Pennsylvania against Arconic Inc. and Klaus Kleinfeld. A related purported class action complaint was filed in the United States District Court for the Western District of Pennsylvania on August 25, 2017, under the caption Sullivan v. Arconic Inc. et al., against Arconic Inc., two former Arconic executives, several current and former Arconic directors, and banks that acted as underwriters for Arconic’s September 18, 2014 preferred stock offering (the “Preferred Offering”). The plaintiff in Sullivan had previously filed a purported class action against the same defendants on July 18, 2017 in the Southern District of New York and, on August 25, 2017, voluntarily dismissed that action without prejudice. On February 7, 2018, on motion from certain putative class members, the court consolidated Howard and Sullivan, closed Sullivan, and appointed lead plaintiffs in the consolidated case. On April 9, 2018, the lead plaintiffs in the consolidated purported class action filed a consolidated amended complaint. The consolidated amended complaint alleges that the registration statement for the Preferred Offering contained false and misleading statements and omitted to state material information, including by allegedly failing to disclose material uncertainties and trends resulting from sales of Reynobond PE for unsafe uses and by allegedly expressing a belief that appropriate risk management and compliance programs had been adopted while concealing the risks posed by Reynobond PE sales. The consolidated amended complaint also alleges that between November 4, 2013 and June 23, 2017 Arconic and Kleinfeld made false and misleading statements and failed to disclose material information about the Company’s commitment to safety, business and financial prospects, and the risks of the Reynobond PE product, including in Arconic’s Form 10-Ks for the fiscal years ended December 31, 2013, 2014, 2015 and 2016, its Form 10-Qs and quarterly financial press releases from the fourth quarter of 2013 through the first quarter of 2017, its 2013, 2014, 2015 and 2016 Annual Reports, and its 2016 Annual Highlights Report. The consolidated amended complaint seeks, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses. On June 8, 2018, all defendants moved to dismiss the consolidated amended complaint for failure to state a claim. Briefing on that motion is now closed and the parties await a ruling.

Raul v. Albaugh, et al. As previously reported, on June 22, 2018, a derivative complaint was filed nominally on behalf of Arconic by a purported Arconic shareholder against all current members of Arconic’s Board of Directors, Klaus Kleinfeld and Ken Giacobbe, naming Arconic as a nominal defendant, in the United States District Court for the District of Delaware. The complaint raises similar allegations as the consolidated amended complaint in Howard, as well as allegations that the defendants improperly authorized the sale of Reynobond PE for unsafe uses, and asserts claims under Section 14(a) of the Securities Exchange Act of 1934 and Delaware state law. On July 13, 2018, the parties filed a stipulation agreeing to stay this case until the final resolution of the Howard case, the Grenfell Tower public inquiry in London, and the investigation by the London Metropolitan Police Service and on June 23, 2018, the Court approved the stay.

While the Company believes that these cases are without merit and intends to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters. Given the preliminary nature of these matters and the uncertainty of litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome. The Board of Directors has also received letters, purportedly sent on behalf of shareholders, reciting allegations similar to those made in the federal court lawsuits and demanding that the Board authorize the Company to initiate litigation against members of management, the Board and others. The Board of Directors has appointed a Special Litigation Committee of the Board to review and make recommendations to the Board regarding the appropriate course of action with respect to these shareholder demand letters. The Special Litigation Committee and the Board are continuing to consider the appropriate responses to the shareholder demand letters in view of developments in proceedings concerning the Grenfell Tower fire. In addition, the Company has settled lawsuits with another shareholder that had been pending in state court in New York and federal court in Pennsylvania concerning the shareholder’s demand to inspect certain of the Company’s books and records related to the Grenfell Tower fire and Reynobond PE.

Other

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Arconic, including those pertaining to environmental, product liability, safety and health, employment, tax matters and antitrust. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.

Commitments

Guarantees

At September 30, 2018, Arconic had outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, energy contracts, and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between 2018 and 2026, was $32 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement between Arconic and Alcoa Corporation, Arconic was required to provide certain guarantees for Alcoa Corporation, which had a combined fair value of $7 and $8 at September 30, 2018 and December 31, 2017, respectively, and were included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. Arconic was required to provide payment guarantees for Alcoa Corporation issued on behalf of a third party related to project financing for Alcoa Corporation’s aluminum complex in Saudi Arabia. During the third quarter of 2018, Arconic was released from this guarantee. Furthermore, Arconic was required to provide a guarantee up to an estimated present value amount of approximately $1,141 and $1,297 at September 30, 2018 and December 31, 2017, respectively, related to a long-term supply agreement for energy for an Alcoa Corporation facility in the event of an Alcoa Corporation payment default. This guarantee expires in 2047. For this guarantee, subject to its provisions, Arconic is secondarily liable in the event of a payment default by Alcoa Corporation. Arconic currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote.

Letters of Credit

Arconic has outstanding letters of credit, primarily related to workers’ compensation, environmental obligations and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2018, was $129 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement, Arconic was required to retain letters of credit of $53 that had previously been provided related to both Arconic and Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016. Alcoa Corporation workers’ compensation claims and letter of credit fees paid by Arconic are being proportionally billed to and are being fully reimbursed by Alcoa Corporation.

Surety Bonds

Arconic has outstanding surety bonds, primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these surety bonds, which expire at various dates, primarily in 2018, was $49 at September 30, 2018.

Pursuant to the Separation and Distribution Agreement, Arconic was required to provide surety bonds related to Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016 and, as a result, Arconic has $25 in outstanding surety bonds relating to these liabilities. Alcoa Corporation workers’ compensation claims and surety bond fees paid by Arconic are being proportionately billed to and are being fully reimbursed by Alcoa Corporation.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Management evaluated all activity of Arconic and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:

See Note G for details of a subsequent event related to certain U.S. pension plan lump sum payments and see Note P for details of a subsequent event related to the divestiture of the Texarkana, Texas rolling mill.

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Recently Adopted and Recently Issued Accounting Guidance (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Recently Adopted and Recently Issued Accounting Guidance

Adopted

In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. These changes became effective for Arconic on January 1, 2018. Arconic adopted this new guidance using the modified retrospective transition approach applied to those contracts that were not completed as of January 1, 2018. There was no cumulative effect adjustment to the opening balance of retained earnings in the Consolidated Balance Sheet in the first quarter of 2018, as the adoption did not result in a change to our timing of revenue recognition, which continues to be at a point in time. See Note C for further details.

In January 2016, the FASB issued changes to equity investments. These changes require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values using the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Also, the impairment assessment of equity investments without readily determinable fair values has been simplified by requiring a qualitative assessment to identify impairment. Also, the new guidance required changes in fair value of equity securities to be recognized immediately as a component of net income instead of being reported in accumulated other comprehensive loss until the gain (loss) is realized. These changes became effective for Arconic on January 1, 2018 and have been applied on a prospective basis. Arconic elected the measurement alternative for its equity investments that do not have readily determinable fair values. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2016, the FASB issued changes to the classification of certain cash receipts and cash payments within the statement of cash flows. The guidance identifies eight specific cash flow items and the sections where they must be presented within the statement of cash flows. These changes became effective for Arconic on January 1, 2018 and have been be applied retrospectively. As a result of the adoption, Arconic reclassified cash received related to beneficial interest in previously transferred trade accounts receivable from operating activities to investing activities in the Statement of Consolidated Cash Flows. This new accounting standard does not reflect a change in our underlying business or activities. The reclassification of cash received related to beneficial interest in previously transferred trade accounts receivable was $514 for the nine months endedSeptember 30, 2017. In addition, Arconic reclassified $52 of cash paid for debt prepayments including extinguishment costs from operating activities to financing activities for the nine months endedSeptember 30, 2017.

In November 2016, the FASB issued changes to the classification of cash and cash equivalents within the statement of cash flow. Restricted cash and cash equivalents will be included within the cash and cash equivalents line on the cash flow statement and a reconciliation must be prepared to the statement of financial position. Transfers between restricted cash and cash equivalents and cash and cash equivalents will no longer be presented as cash flow activities in the Statement of Consolidated Cash Flows and for material balances of restricted cash and cash equivalents, Arconic will disclose information regarding the nature of the restrictions. These changes became effective for Arconic on January 1, 2018 and have been applied retrospectively. Management has determined that the adoption of this guidance did not have a material impact on the Statement of Consolidated Cash Flows. Restricted cash was $7, $4 and $5 at September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

In March 2017, the FASB issued changes to the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires registrants to present the service cost component of net periodic benefit cost in the same income statement line item or items as other employee compensation costs arising from services rendered during the period. Also, only the service cost component will be eligible for asset capitalization. Registrants will present the other components of net periodic benefit cost separately from the service cost component; and, the line item or items used in the income statement to present the other components of net periodic benefit cost must be disclosed. These changes became effective for Arconic on January 1, 2018 and were adopted retrospectively for the presentation of the service cost component and the other components of net periodic benefit cost in the Statement of Consolidated Operations, and prospectively for the asset capitalization of the service cost component of net periodic benefit cost. The Company recorded the service related net periodic benefit cost within Cost of goods sold, Selling, general administrative, and other expenses and Research and development expenses and recorded the non-service related net periodic benefit cost (except for the curtailment cost which was recorded in Restructuring and other charges) separately from service cost in Other expense (income), net within the Statement of Consolidated Operations. The impact of the retrospective adoption of this guidance was an increase to consolidated Operating income of $39 and $116, while there was no impact to consolidated Net income, for the third quarter or nine months endedSeptember 30, 2017, respectively.

In May 2017, the FASB issued clarification to guidance on the modification accounting criteria for share-based payment awards. The new guidance requires registrants to apply modification accounting unless three specific criteria are met. The three criteria are 1) the fair value of the award is the same before and after the modification, 2) the vesting conditions are the same before and after the modification and 3) the classification as a debt or equity award is the same before and after the modification. These changes became effective for Arconic on January 1, 2018 and were applied prospectively to new awards modified after adoption. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance which requires cloud computing arrangement implementation costs to be accounted for in accordance with the software stage model, regardless of whether or not the cloud computing arrangement contains a license. Arconic adopted this guidance in the third quarter of 2018. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In February 2016, the FASB issued changes to the accounting and presentation of leases. These changes require lessees to recognize a right of use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right of use asset and lease liability. Also, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option, or not exercise an option to terminate the lease. As originally released, the standards update required application at the beginning of the earliest comparative period presented at the time of adoption. However, in July 2018, the FASB provided entities the option to instead apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. The Company expects to apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. These changes become effective for Arconic on January 1, 2019. Arconic’s current operating lease portfolio is primarily comprised of land and buildings, plant equipment, vehicles, and computer equipment. A cross-functional implementation team is in the process of determining the scope of arrangements that will be subject to this standard as well as assessing the impact to the Company’s systems, processes and internal controls. Arconic has contracted with a third-party vendor to implement a software solution. Concurrently, Arconic is compiling lease data to be uploaded into the software solution to account for leases under the new standard. Management is evaluating the impact of these changes on the Consolidated Balance Sheet, which will require right of use assets and lease liabilities be recorded for operating leases; therefore, an estimate of the impact is not currently determinable. However, the adoption is not expected to have a material impact on the Statement of Consolidated Operations or Statement of Consolidated Cash Flows.

In June 2016, the FASB added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for Arconic on January 1, 2020. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

In August 2017, the FASB issued guidance that will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. These changes become effective for Arconic on January 1, 2019. For cash flow and net investment hedges existing at the date of adoption, Arconic will apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in which the amendment is adopted. The amended presentation and disclosure guidance is required only prospectively. Arconic has engaged a third-party consultant to assist with a review of the Company’s risk management and hedging strategies, with any changes to be implemented in conjunction with the adoption of the new guidance. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In February 2018, the FASB issued guidance that allows an optional reclassification from Accumulated other comprehensive loss to Accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017. These changes become effective for Arconic on January 1, 2019. Management is currently evaluating the potential impact of this guidance on the Consolidated Financial Statements.

In August 2018, the FASB issued guidance that impacts disclosures for defined benefit pension plans. These changes become effective for Arconic's annual report for the year ending December 31, 2020, with early adoption permitted. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

Also, in August 2018, the Securities and Exchange Commission (SEC) issued guidance to eliminate or modify certain disclosure requirements that have become redundant, overlapping, outdated or superseded in light of other SEC rules, GAAP or changes in the information environment. This guidance becomes effective on November 5, 2018 and will be applied to filings thereafter. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements.

Revenue from Contracts with Customers

The Company's contracts with customers are comprised of acknowledged purchase orders incorporating the Company’s standard terms and conditions, or for larger customers, may also generally include terms under negotiated multi-year agreements. These contracts with customers typically consist of the manufacture of products which represent single performance obligations that are satisfied upon transfer of control of the product to the customer. The Company produces fastening systems; seamless rolled rings; investment castings, including airfoils and forged jet engine components; extruded, machined and formed aircraft parts; aluminum sheet and plate; integrated aluminum structural systems; architectural extrusions; and forged aluminum commercial vehicle wheels. Transfer of control is assessed based on alternative use of the products we produce and our enforceable right to payment for performance to date under the contract terms. Transfer of control and revenue recognition generally occur upon shipment or delivery of the product, which is when title, ownership and risk of loss pass to the customer and is based on the applicable shipping terms. The shipping terms vary across all businesses and depend on the product, the country of origin, and the type of transportation (truck, train, or vessel). An invoice for payment is issued at time of shipment. The Company’s objective is to have net 30-day terms. Our business units set commercial terms on which Arconic sells products to its customers. These terms are influenced by industry custom, market conditions, product line (specialty versus commodity products), and other considerations.

Segment Information

Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging. Arconic’s segments are organized by product on a worldwide basis. In the first quarter of 2018, the Company changed its primary measure of segment performance from Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) to Segment operating profit, which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges and Impairment of goodwill. Segment operating profit also includes certain items that, under the previous segment performance measure, were recorded in Corporate, such as the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Prior period financial information has been recast to conform to current year presentation. Differences between segment totals and consolidated Arconic are in Corporate. 

Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

Receivables

Cash receipts from customer payments on sold receivables (which are cash receipts on the underlying trade receivables that have been previously sold in this program) as well as cash receipts and cash disbursements from draws and repayments under the program are presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows.

Fair Value

The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Arconic for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

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Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue from External Customers by Products and Services

The following table disaggregates revenue by major end market served. Differences between segment totals and consolidated Arconic are in Corporate. In the nine months endedSeptember 30, 2018, Corporate included $38 of costs related to settlements of certain customer claims primarily related to product introductions.

	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

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of Operating Results of Arconic's Reportable Segments

The operating results of Arconic’s reportable segments were as follows:

	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

Schedule Of Segment Reporting Information To Consolidate Net Income Loss Attributable To Parent

The following table reconciles Total segment operating profit to Consolidated income before income taxes:

	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

Reconciliation of Assets from Segment to Consolidated

The following table reconciles Total segment assets to Consolidated assets:

	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

The total assets of Arconic's reportable segment were as follows:

	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

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Restructuring and Other Charges (Tables)

9 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

Activity and Reserve Balances for Restructuring Charges

Activity and reserve balances for restructuring and other charges were as follows:

	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.

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Other Expense (Income), Net (Tables)

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense)

	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	)

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Pension and Other Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

The components of net periodic benefit cost were as follows:

	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.

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of Income Tax Provisions

The tax provisions for the third quarter and nine months ended September 30, 2018 and 2017 were comprised of the following:

	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

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Reconciliation of Information Used to Compute Basic and Diluted EPS

The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):

	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

Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding

The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions).

	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.

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Summary of Changes in Accumulated Other Comprehensive (Loss) by Component

The following table details the activity of the four components that comprise Accumulated other comprehensive loss for both Arconic’s shareholders and noncontrolling interests:

	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.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory Components

	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

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Property, Plants, and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plants, and Equipment, Net

	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

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Debt (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

	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.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Fair Values of Financial Instruments

The following table summarizes Arconic’s financial liabilities that were not carried at fair value at September 30, 2018 and December 31, 2017:

	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

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Basis of Presentation (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($)	Sep. 30, 2018 USD ($) reporting_unit	Dec. 31, 2017 USD ($) reporting_unit
Basis Of Presentation [Line Items]
Number of reporting units | reporting_unit		3	4
Goodwill, impairment loss		$ 0
Goodwill		$ 4,517,000,000	$ 4,535,000,000
Arconic Engines
Basis Of Presentation [Line Items]
Goodwill	$ 2,095,000,000
Arconic Fastening Systems
Basis Of Presentation [Line Items]
Goodwill	1,623,000,000
Arconic Engineered Structures
Basis Of Presentation [Line Items]
Goodwill	$ 517,000,000
Minimum
Basis Of Presentation [Line Items]
Percentage of goodwill allocated to reporting units	92.00%

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Recently Adopted and Recently Issued Accounting Guidance (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Mar. 30, 2012	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Accounting Policies [Abstract]
Restricted cash		$ 7	$ 5	$ 7	$ 5	$ 4
Summary Of Significant Accounting Policies [Line Items]
Reclassification of cash received related to beneficial interest in previously transferred trade accounts receivables	$ 50			693	514
Reclassification of cash paid for debt prepayments including extinguishment costs from operating to financing activities				17	52
Adjustment to operating income based on adoption of new accounting guidance		$ 345	310	$ 1,002	913
ASU 2016-15
Summary Of Significant Accounting Policies [Line Items]
Reclassification of cash paid for debt prepayments including extinguishment costs from operating to financing activities					(52)
Adjustments for New Accounting Pronouncement
Summary Of Significant Accounting Policies [Line Items]
Adjustment to operating income based on adoption of new accounting guidance			$ 39		$ 116

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Revenue from Contracts with Customers - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, shipping payment terms	30 days
Customer claims for new product introductions	$ 38

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Revenue from Contracts with Customers - Segment Revenue By Product (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 3,522	$ 3,234	$ 10,575	$ 9,685
Aerospace
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	1,464	1,344	4,320	4,096
Transportation
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	972	802	2,894	2,333
Building and construction
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	352	342	1,042	987
Industrial and Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	734	746	2,319	2,269
Engineered Products and Solutions
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	1,566	1,477	4,703	4,449
Engineered Products and Solutions | Aerospace
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	1,244	1,130	3,675	3,426
Engineered Products and Solutions | Transportation
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	110	98	326	288
Engineered Products and Solutions | Building and construction
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	0	0	0	0
Engineered Products and Solutions | Industrial and Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	212	249	702	735
Global Rolled Products
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	1,426	1,234	4,243	3,753
Global Rolled Products | Aerospace
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	220	214	645	670
Global Rolled Products | Transportation
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	625	490	1,835	1,458
Global Rolled Products | Building and construction
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	59	56	167	156
Global Rolled Products | Industrial and Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	522	474	1,596	1,469
Transportation and Construction Solutions
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	530	523	1,629	1,483
Transportation and Construction Solutions | Aerospace
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	0	0	0	0
Transportation and Construction Solutions | Transportation
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	237	214	733	587
Transportation and Construction Solutions | Building and construction
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	293	286	875	831
Transportation and Construction Solutions | Industrial and Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 0	$ 23	$ 21	$ 65

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Segment Information - Schedule of Operating Results of Arconic's Reportable Segments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total sales	$ 3,524	$ 3,236	$ 10,542	$ 9,689
Segment operating profit	389	377	1,221	1,282
Restructuring and other charges	17	14	27	111
Provision for depreciation and amortization	133	133	403	388
Operating Segments
Segment Reporting Information [Line Items]
Total sales	3,556	3,270	10,697	9,792
Intersegment Eliminations
Segment Reporting Information [Line Items]
Total sales	34	36	122	107
Third-Party Sales | Operating Segments
Segment Reporting Information [Line Items]
Total sales	3,522	3,234	10,575	9,685
Engineered Products and Solutions
Segment Reporting Information [Line Items]
Segment operating profit	238	239	671	736
Restructuring and other charges	15	10	25	24
Provision for depreciation and amortization	71	68	212	198
Engineered Products and Solutions | Operating Segments
Segment Reporting Information [Line Items]
Total sales	1,566	1,477	4,703	4,449
Engineered Products and Solutions | Intersegment Eliminations
Segment Reporting Information [Line Items]
Total sales	0	0	0	0
Engineered Products and Solutions | Third-Party Sales | Operating Segments
Segment Reporting Information [Line Items]
Total sales	1,566	1,477	4,703	4,449
Global Rolled Products
Segment Reporting Information [Line Items]
Segment operating profit	74	64	309	333
Restructuring and other charges	2	2	2	76
Provision for depreciation and amortization	50	52	154	153
Global Rolled Products | Operating Segments
Segment Reporting Information [Line Items]
Total sales	1,460	1,270	4,365	3,860
Global Rolled Products | Intersegment Eliminations
Segment Reporting Information [Line Items]
Total sales	34	36	122	107
Global Rolled Products | Third-Party Sales | Operating Segments
Segment Reporting Information [Line Items]
Total sales	1,426	1,234	4,243	3,753
Transportation and Construction Solutions
Segment Reporting Information [Line Items]
Segment operating profit	77	74	241	213
Restructuring and other charges	0	2	0	11
Provision for depreciation and amortization	12	13	37	37
Transportation and Construction Solutions | Operating Segments
Segment Reporting Information [Line Items]
Total sales	530	523	1,629	1,483
Transportation and Construction Solutions | Intersegment Eliminations
Segment Reporting Information [Line Items]
Total sales	0	0	0	0
Transportation and Construction Solutions | Third-Party Sales | Operating Segments
Segment Reporting Information [Line Items]
Total sales	$ 530	$ 523	$ 1,629	$ 1,483

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Segment Information - Schedule of Combined Segment Adjusted EBITDA to Net Income Attributable to Arconic (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total segment operating profit	$ 389	$ 377	$ 1,221	$ 1,282
Restructuring and other charges	2	(19)	(20)	(118)
Operating income	345	310	1,002	913
Interest expense	(88)	(100)	(291)	(398)
Other (expense) income, net	(8)	(38)	(69)	410
Income before income taxes	249	172	642	925
Segment Reconciling Items
Segment Reporting Information [Line Items]
Restructuring and other charges	2	(19)	(20)	(118)
Corporate expense	(46)	(48)	(199)	(251)
Operating income	345	310	1,002	913
Interest expense	(88)	(100)	(291)	(398)
Other (expense) income, net	(8)	(38)	(69)	410
Income before income taxes	$ 249	$ 172	$ 642	$ 925

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Segment Information - Assets By Reportable Segment (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total segment assets	$ 18,327	$ 18,718
Operating Segments
Segment Reporting Information [Line Items]
Total segment assets	15,725	15,321
Engineered Products and Solutions
Segment Reporting Information [Line Items]
Total segment assets	10,522	10,325
Global Rolled Products
Segment Reporting Information [Line Items]
Total segment assets	4,112	3,955
Transportation and Construction Solutions
Segment Reporting Information [Line Items]
Total segment assets	$ 1,091	$ 1,041

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Segment Information - Schedule of Segment Reporting Information to Consolidated Assets (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total segment assets	$ 18,327	$ 18,718
Cash and cash equivalents	1,535	2,150
Corporate fixed assets, net	5,645	5,594
Operating Segments
Segment Reporting Information [Line Items]
Total segment assets	15,725	15,321
Segment Reconciling Items
Segment Reporting Information [Line Items]
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

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Restructuring and Other Charges - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018 USD ($) employee position	Sep. 30, 2017 USD ($) position	Sep. 30, 2018 USD ($) employee position	Sep. 30, 2017 USD ($) position	Dec. 31, 2017 USD ($) employee
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ (2)	$ 19	$ 20	$ 118
Restructuring and other charges after tax and noncontrolling interest	$ 3	$ 13	$ 14	$ 99
Number of employees associated with layoff costs | position	85	124	125	800
Reversal of forfeited executive stock compensation				$ 13
Severance costs				$ 7
Cash payments made against the layoff reserves			$ 38		$ 65
Reversals of previously recorded layoff			10		$ 11
Minimum amount of cash payments expected to be paid beyond the end of the current annual period			18
Maximum amount of cash payments expected to be paid beyond the end of the current annual period			$ 20
Engineered Products and Solutions
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | position	65	111	89	350
Global Rolled Products
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | position		1		243
Transportation and Construction Solutions
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | position				133
Corporate
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | position	20	12	36	74
Acuna, Mexico
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ 12		$ 12
Restructuring and other charges after tax	9		9
New York office
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges			5
Restructuring and other charges after tax			4
Fusina, Italy
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges				$ 60
Restructuring and other charges after tax				60
Postretirement Curtailment Benefit
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	28		28
Restructuring and other charges after tax	22		22
Restructuring Programs Layoffs
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	8	$ 11	16	59
Restructuring and other charges after tax	6	8	12	40
Pension Settlement
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	4		4
Restructuring and other charges after tax	3		3
Other Miscellaneous Items
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	3	8	7	7
Restructuring and other charges after tax	2	$ 5	5	5
Other Adjustments
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	1		10	2
Restructuring and other charges after tax and noncontrolling interest	$ 1		8	2
Pension Curtailment Charge
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges			14
Restructuring and other charges after tax			$ 11
Reversal of Forfeited Executive Stock Compensation
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges				6
Restructuring and other charges after tax				$ 4
Restructuring Programs Layoffs 2018
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | employee			125
Approximate number of employees already laid off | employee	35		35
Cash payments made against the layoff reserves	$ 3		$ 6
Restructuring Programs Layoffs 2017
Restructuring Cost and Reserve [Line Items]
Number of employees associated with layoff costs | employee			760		830
Approximate number of employees already laid off | employee	570		570
Cash payments made against the layoff reserves	$ 4		$ 27
Restructuring Programs Layoffs 2016
Restructuring Cost and Reserve [Line Items]
Cash payments made against the layoff reserves	$ 0		$ 4

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Restructuring and Other Charges - Activity and Reserve Balances for Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			$ 58	$ 59	$ 59
Cash payments			(38)		(65)
Restructuring charges			21		65
Other			0		(1)
Restructuring reserve ending balance	$ 41		41		58
Restructuring and other charges	(2)	$ 19	20	118
Layoff costs
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			56	50	50
Cash payments			(37)		(59)
Restructuring charges			8		64
Other			0		1
Restructuring reserve ending balance	27		27		56
Other exit costs
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			2	$ 9	9
Cash payments			(1)		(6)
Restructuring charges			13		1
Other			0		(2)
Restructuring reserve ending balance	$ 14		14		2
Postretirement benefits
Restructuring Reserve [Roll Forward]
Restructuring and other charges			28
Pension costs
Restructuring Reserve [Roll Forward]
Restructuring and other charges			$ 18
Stock awards reversal
Restructuring Reserve [Roll Forward]
Restructuring and other charges					$ 13

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Other Expense (Income), Net - Schedule (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Income and Expenses [Abstract]
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
Total	$ 8	$ 38	$ 69	$ (410)

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Other Expense (Income), Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Provision for income taxes	$ (88)	$ (53)	$ (218)	$ (272)
Sales of investments			9	890
Gain from assets sales	(2)	(1)	(7)	514
Alcoa Corporation
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of investments				351
Sales of investments				$ 888
Gain from assets sales		$ 167
Alcoa Corporation | Spain | Other, net
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Provision for income taxes	$ 29		$ 29
Alcoa Corporation
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Tax agreement, indemnification of ultimate liability, percent	49.00%		49.00%

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Pension and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Defined Benefit Plan Disclosure [Line Items]
Curtailments		$ 9
Pension benefits
Defined Benefit Plan Disclosure [Line Items]
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)		0	(4)	0
Curtailments	0		0	14	0
Net periodic benefit cost	34		55	118	163
Other postretirement benefits
Defined Benefit Plan Disclosure [Line Items]
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)		0	(28)	0
Net periodic benefit cost	$ (20)		$ 9	$ (2)	$ 26

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Pension and Other Postretirement Benefits - Narrative (Details) $ in Millions			1 Months Ended		3 Months Ended					9 Months Ended		12 Months Ended
	Apr. 13, 2018 employee	Nov. 01, 2016 USD ($) Installments	Mar. 31, 2018 USD ($)	Apr. 30, 2017 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2019 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits						$ 37			$ 31	$ 209	$ 110
Curtailment benefit (charges)							$ (9)
Cash contribution term to pension plan		30 months
Number of installments | Installments		3
Minimum required cash contribution to pension plan		$ 50
Aggregate cash cash contribution to pension plan		$ 150
Cash payments made for pension and other post-retirement benefits			$ 50	$ 50				$ 16		116
Labor agreement, duration	5 years
Labor agreement, number of employees | employee	1,300
Defined benefit plan, labor agreement, employees subject to retirement benefit increase | employee	300
Scenario, Forecast
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash payments made for pension and other post-retirement benefits												$ 34
Pension benefits
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Curtailment benefit (charges)						0			0	(14)	0
Charge recorded						9			23	37	67
Other postretirement benefits
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Decrease in obligation, pension benefits						32
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits						4
Curtailment benefit (charges)						28			0	28	0
Charge recorded						2			$ 2	$ 6	$ 6
UNITED STATES | Pension benefits
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Decrease in obligation, pension benefits								136
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits								141
Curtailment benefit (charges)								$ (5)
Charge recorded						$ 4
UNITED STATES | Pension benefits | Scenario, Forecast | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charge recorded					$ 70
UNITED STATES | Pension benefits | Scenario, Forecast | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charge recorded					$ 85

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Income Taxes - Narrative (Details) € in Millions, $ in Millions	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2018 EUR (€)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017	Dec. 31, 2017 USD ($)
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, percent				26.50%	28.50%
Effective income tax rate reconciliation, including discrete items, percent	35.30%	35.30%	30.80%
Discrete income tax expense	$ 26		$ 2
Prior year adjustments	13
Reversal of a foreign tax reserve that is effectively settled	38
Tax Cuts And Jobs Act of 2017, incomplete accounting, provisional income tax expense (benefit)	(8)			$ 13		$ 272
Tax Cuts and Jobs Act of 2017, incomplete accounting, transition tax benefit	2
Tax Cuts and Jobs Act of 2017, incomplete accounting, change in tax rate benefit	6
Increase in estimate of one-time transition tax				16
Charges recorded for alternative minimum tax credits				(3)
U.S. tax rate change impacts				$ 6
Spain
Operating Loss Carryforwards [Line Items]
Established tax reserve	$ 59	€ 51

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Income Taxes - Summary of Tax Provisions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Pretax 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	0	0
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

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Earnings Per Share - Reconciliation of Information Used to Compute Basic and Diluted EPS (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
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	0	0	0	50
Net income available to Arconic common shareholders - diluted	$ 163	$ 103	$ 430	$ 657
Average shares outstanding - basic (in shares)	483	442	483	441
Effect of dilutive securities:
Stock options (in shares)	0	1	1	2
Stock and performance awards (in shares)	5	5	5	5
Mandatory convertible preferred stock (in shares)	0	0	0	39
Convertible notes (in shares)	14	14	14	14
Weighted average shares outstanding - diluted (in shares)	502	462	503	501

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Earnings Per Share - Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding (Details) - $ / shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Mandatory convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive securities (in shares)	0	39	0	0
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive securities (in shares)	6	3	6	3
Weighted average exercise price of options (in usd per share)	$ 29.14	$ 33.33	$ 29.14	$ 33.33

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	$ 5,218	$ 5,753	$ 4,924	$ 5,141
Total Other comprehensive income, net of tax	12	127	100	241
Balance at end of period	5,375	5,961	5,375	5,961
Arconic
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(2,556)	(2,454)	(2,644)	(2,568)
Total Other comprehensive income, net of tax	12	127	100	241
Balance at end of period	(2,544)	(2,327)	(2,544)	(2,327)
Pension and other postretirement benefits
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(2,058)	(1,931)	(2,230)	(2,010)
Other comprehensive income (loss), before reclassifications, before tax	30	(7)	152	4
Tax (expense) benefit	(7)	1	(35)	(3)
Total Other comprehensive income (loss) before reclassifications, net of tax	23	(6)	117	1
Reclassification from accumulated other comprehensive income, before tax	18	56	118	167
Tax (expense) benefit	(4)	(19)	(26)	(58)
Total amount reclassified from Accumulated other comprehensive loss, net of tax	14	37	92	109
Total Other comprehensive income, net of tax	37	31	209	110
Balance at end of period	(2,021)	(1,900)	(2,021)	(1,900)
Foreign currency translation
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(516)	(523)	(437)	(689)
Total Other comprehensive income, net of tax	(16)	85	(95)	251
Balance at end of period	(532)	(438)	(532)	(438)
Available-for-sale securities
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(4)	(2)	(2)	132
Total Other comprehensive income, net of tax	1	1	(1)	(133)
Balance at end of period	(3)	(1)	(3)	(1)
Cash flow hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	22	2	25	(1)
Other comprehensive income (loss), before reclassifications, before tax	(7)	15	(4)	20
Tax (expense) benefit	1	(5)	1	(7)
Total Other comprehensive income (loss) before reclassifications, net of tax	(6)	10	(3)	13
Reclassification from accumulated other comprehensive income, before tax	(5)	0	(12)	0
Tax (expense) benefit	1	0	2	0
Total amount reclassified from Accumulated other comprehensive loss, net of tax	(4)	0	(10)	0
Total Other comprehensive income, net of tax	(10)	10	(13)	13
Balance at end of period	12	12	12	12
Noncontrolling Interests
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at end of period	0	(2)	0	(2)
Pension and other postretirement benefits
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	0	0	0	0
Other comprehensive income (loss), before reclassifications, before tax	0	0	0	0
Tax (expense) benefit	0	0	0	0
Total Other comprehensive income (loss) before reclassifications, net of tax	0	0	0	0
Reclassification from accumulated other comprehensive income, before tax	0	0	0	0
Tax (expense) benefit	0	0	0	0
Total amount reclassified from Accumulated other comprehensive loss, net of tax	0	0	0	0
Total Other comprehensive income, net of tax	0	0	0	0
Balance at end of period	0	0	0	0
Foreign currency translation
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	0	(2)	0	(2)
Total Other comprehensive income, net of tax	0	0	0	0
Balance at end of period	0	(2)	0	(2)
Available-for-sale securities
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	0	0	0	0
Total Other comprehensive income, net of tax	0	0	0	0
Balance at end of period	0	0	0	0
Cash flow hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	0	0	0	0
Other comprehensive income (loss), before reclassifications, before tax	0	0	0	0
Tax (expense) benefit	0	0	0	0
Total Other comprehensive income (loss) before reclassifications, net of tax	0	0	0	0
Reclassification from accumulated other comprehensive income, before tax	0	0	0	0
Tax (expense) benefit	0	0	0	0
Total amount reclassified from Accumulated other comprehensive loss, net of tax	0	0	0	0
Total Other comprehensive income, net of tax	0	0	0	0
Balance at end of period	$ 0	$ 0	$ 0	$ 0

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Receivables (Details)		9 Months Ended		12 Months Ended
	Mar. 30, 2012 USD ($)	Sep. 30, 2018 USD ($) agreement	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Schedule Of Financial Receivables [Line Items]
Number of arrangement with different financial institution to sell customer receivables | agreement		3
Funding of customer receivables sold		$ 0
Sale of customer receivables	$ 304,000,000
Cash received for receivables	50,000,000	693,000,000	$ 514,000,000
Deferred purchase program receivable	$ 254,000,000	362,000,000		$ 187,000,000
Net cash funding received during the period		300,000,000
Amount of cash draws under arrangement during the period		2,808,000,000
Amount of cash repayments under arrangement during the period		(2,508,000,000)
Amount of cash draws under arrangement since inception		(450,000,000)
Amount of cash repayments under arrangement since inception		450,000,000
Cash outflow from deferred purchase receivable		40,194,000,000
Cash collections of other receivables		(39,482,000,000)
Minimum
Schedule Of Financial Receivables [Line Items]
Funding of customer receivables sold		200,000,000
Maximum
Schedule Of Financial Receivables [Line Items]
Funding of customer receivables sold		$ 400,000,000

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Inventories - Schedule of Inventory Components (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
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

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Inventories - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Inventories valued on a LIFO basis	$ 1,339		$ 1,208
Total inventories valued on an average-cost basis	$ 534		$ 481
EP&S
Segment Reporting Information [Line Items]
Inventory adjustments		$ 23

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Property, Plants, and Equipment, Net (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation and amortization	$ 6,778	$ 6,392
Properties, plants, and equipment, net	5,645	5,594
Undiscounted cash flows, effect of one percentage point decrease on net cash flows	$ 6
Disks Business
Property, Plant and Equipment [Line Items]
Estimated undiscounted cash flows in excess its carrying value, percent	13.00%
Arconic Engines
Property, Plant and Equipment [Line Items]
Long-lived assets	$ 515
Land and land rights
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	138	140
Structures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	2,374	2,395
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	9,244	8,830
Depreciable property, plant and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	11,756	11,365
Properties, plants, and equipment, net	4,978	4,973
Construction work-in-progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 667	$ 621

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Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt	$ 6,318		$ 6,807
Other	(12)		(23)
Less: amount due within one year	3		1
Long-term debt, excluding amount due within one year	6,315		6,806
5.72% Notes, due 2019
Debt Instrument [Line Items]
Long-term debt	0		$ 500
Long-term debt, interest rate		5.72%	5.72%
1.63% Convertible Notes, due 2019
Debt Instrument [Line Items]
Long-term debt	$ 403		$ 403
Long-term debt, interest rate	1.63%
6.150% Notes, due 2020
Debt Instrument [Line Items]
Long-term debt	$ 1,000		1,000
Long-term debt, interest rate	6.15%
5.40% Notes due 2021
Debt Instrument [Line Items]
Long-term debt	$ 1,250		1,250
Long-term debt, interest rate	5.40%
5.87% Notes, due 2022
Debt Instrument [Line Items]
Long-term debt	$ 627		627
Long-term debt, interest rate	5.87%
5.125% Notes, due 2024
Debt Instrument [Line Items]
Long-term debt	$ 1,250		1,250
Long-term debt, interest rate	5.125%
5.90% Notes, due 2027
Debt Instrument [Line Items]
Long-term debt	$ 625		625
Long-term debt, interest rate	5.90%
6.75% Bonds, due 2028
Debt Instrument [Line Items]
Long-term debt	$ 300		300
Long-term debt, interest rate	6.75%
5.95% Notes, due 2037
Debt Instrument [Line Items]
Long-term debt	$ 625		625
Long-term debt, interest rate	5.95%
Iowa Finance Authority Loan, due 2042
Debt Instrument [Line Items]
Long-term debt	$ 250		$ 250

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Debt - Public Debt (Details) - 5.72% Notes, due 2019 - USD ($)	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt, interest rate	5.72%	5.72%
Long-term debt	$ 500,000,000
Redemption amount	518,000,000
Loss on prepayment of debt redemption	$ 19,000,000

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Debt - Credit Facilities (Details)			3 Months Ended	9 Months Ended
	Jun. 29, 2018 USD ($) extension	Jul. 25, 2014 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 05, 2015 USD ($)
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 715,000,000	$ 715,000,000
Parent Company
Debt Instrument [Line Items]
Borrowings from credit facility				450,000,000
Repayments of borrowings				$ (450,000,000)
Weighted average interest rate outstanding borrowings			3.50%	3.30%
Debt weighted average maturity term			35 days	55 days
Maximum
Debt Instrument [Line Items]
Applicable margin on LIBOR loans	1.50%
Minimum
Debt Instrument [Line Items]
Applicable margin on LIBOR loans	0.50%
Revolving Credit Agreement
Debt Instrument [Line Items]
Line of credit facility term		5 years
Long-term line of credit			$ 0	$ 0	$ 0
Outstanding amount			0	0	$ 0
Revolving Credit Agreement | Maximum
Debt Instrument [Line Items]
Commitment fee percentage	0.25%
Revolving Credit Agreement | Prior To Amendment
Debt Instrument [Line Items]
Long-term line of credit		$ 4,000,000,000
Revolving Credit Agreement | After Amendment
Debt Instrument [Line Items]
Long-term line of credit	$ 3,000,000,000					$ 3,000,000,000
Maximum increase in borrowing capacity	$ 500,000,000
Debt covenants net leverage ratio	4.50%
Debt covenants net leverage ratio after year three	4.00%
Debt covenants net leverage ratio after year four	3.50%
Number of extensions | extension	2
Extended additional maturity period	1 year
Minimum indebtedness for other principal amounts	$ 100,000,000
Revolving Credit Agreement | After Amendment | Letter of Credit
Debt Instrument [Line Items]
Long-term line of credit	$ 1,000,000,000
Expected Maturity Date Year 2018
Debt Instrument [Line Items]
Outstanding amount			200,000,000	200,000,000
Expected Maturity Date Year 2019
Debt Instrument [Line Items]
Outstanding amount			365,000,000	365,000,000
Expected Maturity Date Year 2020
Debt Instrument [Line Items]
Outstanding amount			$ 150,000,000	$ 150,000,000

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Fair Value of Financial Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Carrying Value
Derivative [Line Items]
Long-term debt, less amount due within one year	$ 6,315	$ 6,806
Fair Value
Derivative [Line Items]
Long-term debt, less amount due within one year	$ 6,495	$ 7,443

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Acquisitions and Divestitures (Details) $ in Millions			1 Months Ended	3 Months Ended				9 Months Ended		12 Months Ended
	Oct. 31, 2018 USD ($)	Apr. 02, 2018 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($) employee	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restructuring and other charges				$ (2)		$ 19		$ 20	$ 118
Latin America Extrusions (LAE) | Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, revenue						$ 30		$ 25	$ 86
Cash received on sale of operations		$ 5
Latin America Extrusions (LAE) | Disposed of by Sale | Divested Businesses
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restructuring and other charges					$ 41
Texarkana, Texas Rolling Mill And Cast House | Subsequent Event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of operationalizing rolling mill equipment of transaction closing date	36 months
Minimum required terms of leases on cast house building and equipment	18 months
Period of supply with aluminum	24 months
Texarkana, Texas Rolling Mill And Cast House | Subsequent Event | Ta Chen International, Inc.
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of services performed, processing of metal	6 years
Texarkana, Texas Rolling Mill And Cast House | Disposed of by Sale | Subsequent Event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash received on sale of operations	$ 63
Disposal group, consideration	302
Disposal group, consideration consideration	50
Texarkana, Texas rolling mill | Disposed of by Sale | Subsequent Event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contingent consideration on sale of assets	4
Texarkana, Texas rolling mill | Disposed of by Sale | Subsequent Event | Scenario, Forecast | Minimum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on disposal	150
Deferred gain on disposal	85
Texarkana, Texas rolling mill | Disposed of by Sale | Subsequent Event | Scenario, Forecast | Maximum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on disposal	165
Deferred gain on disposal	$ 100
Slim Aluminium
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash expense related to sale of rolling mill			$ 10
Third party guarantee with a fair value related to environmental remediation			$ 5
Disposal group, including discontinued operation, revenue							$ 37
Number of employees | employee							312
Slim Aluminium | Restructuring and Other Charges
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on sale of rolling mill							$ 60
Third-Party Sales | Building and Construction Systems
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, revenue										$ 1,070

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Contingencies and Commitments (Details) € in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2018 EUR (€)	Sep. 30, 2018 USD ($) location	Sep. 30, 2018 EUR (€)	Jul. 31, 2018 USD ($)	Jul. 31, 2018 EUR (€)	Dec. 31, 2017 USD ($)	Nov. 01, 2016 USD ($)
Loss Contingencies [Line Items]
Number of cleanup locations | location			100
Remediation reserve balance	$ 280		$ 280				$ 294
Remediation reserve balance, classified as a current liability	70		70				41
Payments related to remediation expenses applied against the reserve	7		$ 15
Actual remediation fieldwork period			4 years
Income tax examination assessment outstanding					$ 175	€ 152
Guarantees of third party related to project financing	32		$ 32
Long-term debt	6,318		6,318				6,807
Total amount committed under outstanding surety bonds	49		49
Bank Loan Obligations | Letter of Credit
Loss Contingencies [Line Items]
Long-term debt	129		129
Separation Agreement
Loss Contingencies [Line Items]
Total amount committed under outstanding surety bonds	25		25
Other Noncurrent Liabilities and Deferred Credits
Loss Contingencies [Line Items]
Combined fair value of guarantees	7		7				8
Massena West, NY
Loss Contingencies [Line Items]
Remediation reserve balance	208		208				215
Spain
Loss Contingencies [Line Items]
Established tax reserve	59	€ 51
Tax indemnification receivable	$ 29		$ 29	€ 25
Alcoa Corporation
Loss Contingencies [Line Items]
Tax agreement, indemnification of ultimate liability, percent	49.00%		49.00%	49.00%
Recurring Costs of Managing Hazardous Substances and Environmental Programs | Maximum
Loss Contingencies [Line Items]
Percentage of cost of goods sold			1.00%
Supply Agreement
Loss Contingencies [Line Items]
Guarantees of third party related to project financing	$ 1,141		$ 1,141				$ 1,297
Alcoa Corporation Workers Compensation Claims
Loss Contingencies [Line Items]
Letters of credit, total amount committed								$ 53