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