Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	The	Fiscal	Year	Ended	December	31,	2018

OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	File	Number	1-3610

# ARCONIC	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	of	incorporation)

(I.R.S.	Employer	Identification	No.)

(Address	of	principal	executive	offices)					(Zip	code)

# Registrant's	telephone	numbers:

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.		Yes	✓		No					.

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Exchange	Act.		Yes								No	✓	.

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,	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	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	[]

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	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	✓.

The	aggregate	market	value	of	the	outstanding	common	stock,	other	than	shares	held	by	persons	who	may	be	deemed	affiliates	of	the	registrant,	as	of	the	last	business day	of	the	registrant's	most	recently	completed	second	fiscal	quarter	was	approximately	$8	billion.	As	of	February	15,	2019,	there	were	484,940,842	shares	of	common stock,	par	value	$1.00	per	share,	of	the	registrant	outstanding.

# Documents	incorporated	by	reference.

Part	III	of	this	Form	10-K	incorporates	by	reference	certain	information	from	the	registrant's	definitive	Proxy	Statement	for	its	2019	Annual	Meeting	of	Shareholders	to be	filed	pursuant	to	Regulation	14A	(Proxy	Statement).

# Page(s)

| Item	1. | Business | 1 |
| :--- | :--- | :--- |
| Item\t1A. | Risk\tFactors | 14 |
| Item\t1B. | Unresolved\tStaff\tComments | 28 |
| Item\t2. | Properties | 29 |
| Item\t3. | Legal\tProceedings | 30 |
| Item\t4. | Mine\tSafety\tDisclosures | 32 |
| Part\tII |  |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 32 |
| Item\t6. | Selected\tFinancial\tData | 34 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 35 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 51 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 52 |
| Item\t9. | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 103 |
| Item\t9A. | Controls\tand\tProcedures | 103 |
| Item\t9B. | Other\tInformation | 104 |
| Part\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 104 |
| Item\t11. | Executive\tCompensation | 104 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 104 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 104 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 104 |
| Part\tIV |  |  |
| Item\t15. | Exhibits,\tFinancial\tStatement\tSchedules | 105 |
| Item\t16. | Form\t10-K\tSummary | 114 |
|  | Signatures | 115 |

# Note	on	Incorporation	by	Reference

In	this	Form	10-K,	selected	items	of	information	and	data	are	incorporated	by	reference	to	portions	of	the	Proxy	Statement.	Unless	otherwise	provided	herein,	any reference	in	this	report	to	disclosures	in	the	Proxy	Statement	shall	constitute	incorporation	by	reference	of	only	that	specific	disclosure	into	this	Form	10-K.

# PART	I

# Item	1.	Business.

# General

Arconic	Inc.	is	a	Delaware	corporation	with	its	principal	office	in	New	York,	New	York	and	the	successor	to	Arconic	Pennsylvania	(as	defined	below)	which	was formed	in	1888	and	formerly	known	as	Alcoa	Inc.	In	this	report,	unless	the	context	otherwise	requires,	"Arconic"	or	the	"Company"	means	Arconic	Inc.,	a	Delaware corporation,	and	all	subsidiaries	consolidated	for	the	purposes	of	its	financial	statements.

The	Company's	Internet	address	is	http://www.arconic.com.	Arconic	makes	available	free	of	charge	on	or	through	its	website	its	annual	report	on	Form	10-K,	quarterly reports	on	Form	10-Q,	current	reports	on	Form	8-K,	and	amendments	to	those	reports	filed	or	furnished	pursuant	to	Section	13(a)	or	15(d)	of	the	Securities	Exchange	Act of	1934	as	soon	as	reasonably	practicable	after	the	Company	electronically	files	such	material	with,	or	furnishes	it	to,	the	Securities	and	Exchange	Commission	(SEC). The	information	on	the	Company's	Internet	site	is	not	a	part	of,	or	incorporated	by	reference	in,	this	annual	report	on	Form	10-K.	The	SEC	maintains	an	Internet	site	that contains	these	reports	at	http://www.sec.gov.

# Forward-Looking	Statements

This	report	contains	(and	oral	communications	made	by	Arconic	may	contain)	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	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	potential	share	gains.	Forward-looking	statements	are	not	guarantees	of	future	performance	and	are subject	to	risks,	uncertainties,	and	changes	in	circumstances	that	are	difficult	to	predict.	Although	Arconic	believes	that	the	expectations	reflected	in	any	forward-looking statements	are	based	on	reasonable	assumptions,	it	can	give	no	assurance	that	these	expectations	will	be	attained	and	it	is	possible	that	actual	results	may	differ materially	from	those	indicated	by	these	forward-looking	statements	due	to	a	variety	of	risks	and	uncertainties.

For	a	discussion	of	some	of	the	specific	factors	that	may	cause	Arconic's	actual	results	to	differ	materially	from	those	projected	in	any	forward-looking	statements,	see the	following	sections	of	this	report:	Part	I,	Item	1A.	(Risk	Factors),	Part	II,	Item	7.	(Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations),	including	the	disclosures	under	Segment	Information	and	Critical	Accounting	Policies	and	Estimates,	and	Note	U	to	the	Consolidated	Financial	Statements in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).	Market	projections	are	subject	to	the	risks	discussed	in	this	report	and	other	risks	in	the	market. 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.

# Overview

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.

Arconic	is	a	global	company	operating	in	18	countries.	Based	upon	the	country	where	the	point	of	sale	occurred,	the	United	States	and	Europe	generated	65%	and	24%, respectively,	of	Arconic's	sales	in	2018.	In	addition,	Arconic	has	operating	activities	in	Brazil,	Canada,	China,	Japan,	and	Russia,	among	others.	Governmental	policies, laws	and	regulations,	and	other	economic	factors,	including	inflation	and	fluctuations	in	foreign	currency	exchange	rates	and	interest	rates,	affect	the	results	of operations	in	these	countries.

Arconic's	operations	consist	of	three	worldwide	reportable	segments:	Engineered	Products	and	Solutions,	Global	Rolled	Products	and	Transportation	and	Construction Solutions.

# Background

# Arconic	Inc.	Reincorporation

On	December	31,	2017	(the	"Effective	Date"),	Arconic	Inc.,	a	Pennsylvania	corporation	("Arconic	Pennsylvania"	or,	prior	to	the	Reincorporation	(as	defined	below),	the "Company"),	effected	the	change	of	the	Company's	jurisdiction	of	incorporation	from	Pennsylvania	to	Delaware	(the	"Reincorporation")	by	merging	(the "Reincorporation	Merger")	with	a	direct	wholly	owned	Delaware	subsidiary,	Arconic	(in	this	section,	"Arconic	Delaware"	or,	following	the	Reincorporation,	the "Company"),	pursuant	to	an	Agreement	and	Plan	of	Merger	(the	"Reincorporation	Merger	Agreement"),	dated	as	of	October	12,	2017,	by	and

between	Arconic	Pennsylvania	and	Arconic	Delaware.		Arconic	Pennsylvania	shareholders	approved	the	Reincorporation	Merger	to	effect	the	Reincorporation	at	a Special	Meeting	of	Shareholders	held	on	November	30,	2017.	As	a	result	of	the	Reincorporation,	(i)	Arconic	Pennsylvania	has	ceased	to	exist,	(ii)	Arconic	Delaware automatically	inherited	the	reporting	obligations	of	Arconic	Pennsylvania	under	the	Securities	Exchange	Act	of	1934,	as	amended	(the	"Exchange	Act"),	and	(iii) Arconic	Delaware	is	deemed	to	be	the	successor	issuer	to	Arconic	Pennsylvania.

The	common	stock,	par	value	$1.00	per	share,	of	Arconic	Pennsylvania	(the	"Arconic	Pennsylvania	Common	Stock")	was	listed	for	trading	on	the	New	York	Stock Exchange	and	traded	under	the	symbol	"ARNC."	As	of	the	Effective	Date,	this	symbol,	without	interruption,	represents	shares	of	common	stock,	par	value	$1.00	per share,	of	Arconic	Delaware	(the	"Arconic	Delaware	Common	Stock").	There	was	no	change	in	the	Exchange	Act	File	Number	assigned	by	the	SEC	as	a	result	of	the Reincorporation.

As	of	the	Effective	Date,	the	rights	of	the	Company's	stockholders	began	to	be	governed	by	the	General	Corporation	Law	of	the	State	of	Delaware,	the	Certificate	of Incorporation	of	Arconic	Delaware	(the	"Delaware	Certificate")	and	the	Bylaws	of	Arconic	Delaware	(the	"Delaware	Bylaws").

Other	than	the	change	in	corporate	domicile,	the	Reincorporation	did	not	result	in	any	change	in	the	business,	physical	location,	management,	financial	condition	or number	of	authorized	shares	of	the	Company,	nor	did	it	result	in	any	change	in	location	of	its	current	employees,	including	management.		On	the	Effective	Date,	(i)	the directors	and	officers	of	Arconic	Pennsylvania	prior	to	the	Reincorporation	continued	as	the	directors	and	officers	of	Arconic	Delaware	after	the	Reincorporation,	(ii) each	outstanding	share	of	Arconic	Pennsylvania	Common	Stock	was	automatically	converted	into	one	share	of	Arconic	Delaware	Common	Stock,	(iii)	each	outstanding share	of	Serial	Preferred	Stock,	par	value	$100	per	share,	of	Arconic	Pennsylvania	(the	"Arconic	Pennsylvania	Preferred	Stock")	was	automatically	converted	into	one share	of	Serial	Preferred	Stock,	par	value	$100	per	share,	of	Arconic	Delaware	(the	"Arconic	Delaware	Preferred	Stock")	and	(iv)	all	of	Arconic	Pennsylvania's employee	benefit	and	compensation	plans	immediately	prior	to	the	Reincorporation	were	continued	by	Arconic	Delaware,	and	each	outstanding	equity	award	and notional	share	unit	relating	to	shares	of	Arconic	Pennsylvania	Common	Stock	was	converted	into	an	equity	award	or	notional	share	unit,	as	applicable,	relating	to	an equivalent	number	of	shares	of	Arconic	Delaware	Common	Stock	on	the	same	terms	and	subject	to	the	same	conditions.	Beginning	at	the	effective	time	of	the Reincorporation,	each	certificate	representing	Arconic	Pennsylvania	Common	Stock	or	Arconic	Pennsylvania	Preferred	Stock	was	deemed	for	all	corporate	purposes	to evidence	ownership	of	Arconic	Delaware	Common	Stock	or	Arconic	Delaware	Preferred	Stock,	as	applicable.	The	Company's	stockholders	may,	but	are	not	required to,	exchange	their	stock	certificates	as	a	result	of	the	Reincorporation.

The	foregoing	descriptions	of	the	Arconic	Delaware	Common	Stock,	the	Arconic	Delaware	Preferred	Stock,	the	Delaware	Certificate	and	the	Delaware	Bylaws	are qualified	in	their	entirety	by	the	full	text	of	the	Delaware	Certificate	and	the	Delaware	Bylaws,	which	are	filed	as	Exhibits	3(a)	and	3(b),	respectively,	to	this	report.

# Alcoa	Corporation	Separation	Transaction

On	November	1,	2016,	Alcoa	Inc.	completed	the	separation	of	its	business	into	two	independent,	publicly	traded	companies	(the	"Separation")	–	Alcoa	Corporation	and Arconic	Inc.	(the	new	name	for	Alcoa	Inc.).	Following	the	Separation,	Alcoa	Corporation	holds	the	Alumina	and	Primary	Metals	segments,	the	rolling	mill	at	the Warrick,	Indiana	operations	and	the	25.1%	stake	in	the	Ma'aden	Rolling	Company	in	Saudi	Arabia	previously	held	by	the	Company.	The	Company	retained	the	Global Rolled	Products	(other	than	the	rolling	mill	at	the	Warrick,	Indiana	operations	and	the	25.1%	ownership	stake	in	the	Ma'aden	Rolling	Company),	Engineered	Products and	Solutions	and	Transportation	and	Construction	Solutions	segments.

The	Separation	was	effected	by	a	pro	rata	distribution	of	80.1%	of	the	outstanding	shares	of	Alcoa	Corporation	common	stock	to	the	Company's	shareholders	(the "Distribution").	The	Company's	shareholders	of	record	as	of	the	close	of	business	on	October	20,	2016	(the	"Record	Date")	received	one	share	of	Alcoa	Corporation common	stock	for	every	three	shares	of	the	Company's	common	stock	held	as	of	the	Record	Date.	The	Company	did	not	issue	fractional	shares	of	Alcoa	Corporation common	stock	in	the	Distribution.	Instead,	each	shareholder	otherwise	entitled	to	receive	a	fractional	share	of	Alcoa	Corporation	common	stock	received	cash	in	lieu	of fractional	shares.

The	Company	distributed	146,159,428	shares	of	common	stock	of	Alcoa	Corporation	in	the	Distribution	and	retained	36,311,767	shares,	or	approximately	19.9%,	of	the common	stock	of	Alcoa	Corporation	immediately	following	the	Distribution.	As	a	result	of	the	Distribution,	Alcoa	Corporation	became	an	independent	public	company trading	under	the	symbol	"AA"	on	the	New	York	Stock	Exchange,	and	the	Company	trades	under	the	symbol	"ARNC"	on	the	New	York	Stock	Exchange.

During	2017,	the	Company	disposed	of	its	retained	interest	in	Alcoa	Corporation.	In	February	2017,	the	Company	sold	23,353,000	shares	of	Alcoa	Corporation	stock	at $38.03	per	share,	which	resulted	in	cash	proceeds	of	$888	million	and	a	gain	of	$351	million.	In	April	and	May	2017,	the	Company	acquired	a	portion	of	its	outstanding notes	held	by	two	investment	banks	(the	"Investment	Banks")	in	exchange	for	cash	and	the	Company's	remaining	12,958,767	shares	(valued	at	$35.91	per	share)	in

Alcoa	Corporation	stock	(the	"Debt-for-Equity	Exchange")	and	recorded	a	gain	of	$167	million.	The	gains	of	$351	million	and	$167	million	associated	with	the disposition	of	the	Alcoa	Corporation	shares	were	recorded	in	Other	Income,	Net	in	the	accompanying	Statement	of	Consolidated	Operations	in	Part	II,	Item	8	(Financial Statements	and	Supplementary	Data).

On	October	31,	2016,	in	connection	with	the	Separation	and	the	Distribution,	Arconic	entered	into	several	agreements	with	Alcoa	Corporation	or	its	subsidiaries	that govern	the	relationship	of	the	parties	following	the	Distribution,	including	the	following:	Separation	and	Distribution	Agreement,	Transition	Services	Agreement,	Tax Matters	Agreement,	Employee	Matters	Agreement,	certain	Patent,	Know-How,	Trade	Secret	License	and	Trademark	License	Agreements,	Toll	Processing	and	Services Agreement,	Master	Agreement	for	the	Supply	of	Primary	Aluminum,	Massena	Lease	and	Operations	Agreement,	Fusina	Lease	and	Operations	Agreement,	and Stockholder	and	Registration	Rights	Agreement.	The	Toll	Processing	and	Services	Agreement	expired	by	its	terms	at	the	end	of	2018.

# Recent	Developments

On	January	22,	2019,	the	Company	announced	that	its	Board	of	Directors	(the	Board)	had	determined	to	no	longer	pursue	a	potential	sale	of	Arconic	as	part	of	its strategy	and	portfolio	review.	Management	and	the	Board	have	been	conducting	a	rigorous	and	comprehensive	strategy	and	portfolio	review	over	the	past	year	and	as part	of	that	process	had	considered	a	sale	of	the	Company,	among	other	matters.	However,	the	Company	did	not	receive	a	proposal	for	a	full-Company	transaction	that management	and	the	Board	believed	would	be	in	the	best	interest	of	Arconic's	shareholders	and	other	stakeholders.	Management	and	the	Board	remain	confident	in Arconic's	significant	potential	and	are	strongly	focused	on	enhancing	value	for	shareholders,	through	continued	operational	improvements	and	through	other	potential initiatives	which	have	been	previously	identified	in	the	strategy	and	portfolio	review.	The	Company	has	announced	the	following	key	initiatives	as	part	of	its	ongoing strategy	and	portfolio	review:

•Commenced	plans	to	reduce	operating	costs	by	approximately	$200	million	on	an	annual	run-rate	basis,	designed	to	maximize	the	impact	in 2019;

•Announced	the	planned	separation	of	its	portfolio	into	Engineered	Products	and	Forgings	and	Global	Rolled	Products,	with	a	spin-off	of	one	of	the businesses;

•Considering	the	potential	sale	of	businesses	that	do	not	best	fit	into	one	of	the	two	segments above;

•Intends	to	execute	its	previously	authorized	$500	million	share	repurchase	program	in	the	first	half	of 2019;

•The	Board	also	authorized	an	additional	$500	million	of	share	repurchases,	effective	through	the	end	of	2020;

•Expects	to	reduce	its	quarterly	common	stock	dividend	from	$0.06	to	$0.02	per

share.

On	February	6,	2019,	the	Company	announced	that	the	Board	appointed	John	C.	Plant,	current	Chairman	of	the	Board,	as	Chairman	and	Chief	Executive	Officer	of	the Company,	effective	February	6,	2019,	to	succeed	Chip	Blankenship,	who	ceased	to	serve	as	Chief	Executive	Officer	of	the	Company	and	resigned	as	a	member	of	the Board,	in	each	case	as	of	that	date.	In	addition,	the	Company	announced	that	the	Board	appointed	Elmer	L.	Doty,	current	member	of	the	Board,	as	President	and	Chief Operating	Officer,	a	newly	created	position,	effective	February	6,	2019.	Mr.	Doty	will	remain	a	member	of	the	Board.	The	Company	also	announced	that	Arthur	D. Collins,	Jr.,	current	member	of	the	Board,	has	been	appointed	interim	Lead	Independent	Director	of	the	Company,	effective	February	6,	2019.

On	February	19,	2019,	the	Company	entered	into	an	accelerated	share	repurchase	("ASR")	agreement	with	JPMorgan	Chase	Bank	to	repurchase	$700	million	of	its common	stock,	pursuant	to	the	share	repurchase	program	previously	authorized	by	the	Board.	Under	the	ASR	agreement,	Arconic	will	receive	initial	delivery	of approximately	32	million	shares	on	February	21,	2019.	The	final	number	of	shares	to	be	repurchased	will	be	based	on	the	volume-weighted	average	price	of	Arconic's common	stock	during	the	term	of	the	transaction,	less	a	discount.	The	ASR	agreement	is	expected	to	be	completed	during	the	first	half	of	2019.

The	Company	will	evaluate	its	organizational	structure	in	conjunction	with	the	planned	separation	of	its	portfolio	and	changes	to	its	reportable	segments	are	expected	in the	first	half	of	2019.

# Description	of	the	Business

Information	describing	Arconic's	businesses	can	be	found	on	the	indicated	pages	of	this	report:

| Item | Page(s) |
| :--- | :--- |
| Discussion\tof\tRecent\tBusiness\tDevelopments: |  |
| Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations: |  |
| Overview\tand\tResults\tof\tOperations | 35 |
| Notes\tto\tConsolidated\tFinancial\tStatements: |  |
| Note\tD.\tRestructuring\tand\tOther\tCharges | 70 |
| Note\tG.\tPension\tand\tOther\tPostretirement\tBenefits | 73 |
| Note\tH.\tIncome\tTaxes | 80 |
| Note\tT.\tAcquisitions\tand\tDivestitures | 96 |
| Note\tU.\tContingencies\tand\tCommitments | 97 |
| Segment\tInformation: |  |
| Business\tDescriptions,\tPrincipal\tProducts,\tPrincipal\tMarkets,\tMethods\tof\tDistribution,\tSeasonality\tand\tDependence\tUpon\tCustomers: |  |
| Engineered\tProducts\tand\tSolutions | 40 |
| Global\tRolled\tProducts | 41 |
| Transportation\tand\tConstruction\tSolutions | 42 |
| Financial\tInformation\tabout\tSegments\tand\tGeographic\tAreas: |  |
| Note\tC.\tSegment\tand\tGeographic\tArea\tInformation | 66 |

Products	that	contributed	10%	or	more	to	consolidated	revenues	for	the	years	ended	December	31,	2018,	2017	and	2016,	were:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Innovative\tflat-rolled\tproducts | 40% | 39% | 39% |
| Engines | 21% | 21% | 21% |
| Engineered\tstructures | 13% | 13% | 14% |
| Fastening\tsystems | 11% | 11% | 12% |

Arconic	has	no	customer	that	accounts	for	10%	or	more	of	its	consolidated	revenues.	However,	certain	of	the	Company's	businesses	are	dependent	upon	a	few significant	customers.	The	loss	of	any	such	significant	customer	could	have	a	material	adverse	effect	on	such	businesses.

# Engineered	Products	and	Solutions

Arconic's	Engineered	Products	and	Solutions	segment	("EP&S")	develops	and	manufactures	high	performance	products	mainly	for	the	aerospace	(commercial	and defense),	commercial	transportation,	and	power	generation	end	markets.	Such	products	include	fastening	systems	(titanium,	steel,	and	nickel	superalloys);	seamless rolled	rings	(nickel	superalloys,	steel	and	titanium);	investment	castings	(nickel	superalloys,	titanium,	and	aluminum),	including	airfoils	and	structural	components; forged	airframe	and	jet	engine	components	(nickel	superalloys,	titanium,	aluminum),	including	bulkheads,	disks	and	shafts;	extruded	airframe	components	(aluminum); and	various	other	forged	and	extruded	metallic	components	for	the	oil	and	gas,	industrial	products,	automotive,	and	land	and	sea	defense	end	markets.

In	January	2018,	EP&S	announced	a	change	in	the	organizational	structure	of	the	segment,	from	four	business	units	to	three	business	units,	with	a	focus	on	aligning	its internal	structure	to	core	markets	and	customers	and	reducing	costs.	The	three	business	units	are	Arconic	Engines;	Arconic	Fastening	Systems;	and	Arconic	Engineered Structures.

Arconic	Engines	(AEN).	AEN	produces	investment	cast	airfoils,	seamless	rolled	rings	and	closed-die	(including	isothermal)	forged	turbine	disks	for	aero	engine	and industrial	gas	turbines,	as	well	as	other	structural	aero	engine	components.	AEN	also	provides	additive	manufacturing	technologies,	superalloy	ingots,	open-die	forging, machining,	performance	coatings,	and	hot	isostatic	pressing	for	high	performance	parts.

Arconic	Fastening	Systems	(AFS).	AFS	produces	aerospace	fastening	systems,	as	well	as	commercial	transportation	fasteners.	The	business's	high-tech,	multi-material fastening	systems	are	found	nose	to	tail	on	aircraft	and	aero	engines.	The

business's	products	are	also	critical	components	of	industrial	gas	turbines,	automobiles,	commercial	transportation	vehicles,	and	construction	and	industrial	equipment.

Arconic	Engineered	Structures	(AES).	AES	produces	titanium	and	aluminum	ingots	and	mill	products	for	aerospace	and	defense	applications	and	is	vertically integrated	to	produce	structural	investment	castings,	forgings	and	extrusions,	for	airframe,	wing,	aero-engine,	and	landing	gear	components,	as	well	as	lightweight	drive shafts	for	the	commercial	transportation	industries.	AES	also	provides	multi-material	airframe	subassemblies	and	solutions	related	to	advanced	technologies	and materials,	such	as	3D	printing	and	titanium	aluminides.

For	additional	discussion	of	the	EP&S	segment's	business,	see	"Results	of	Operations—Segment	Information"	in	Part	II,	Item	7.	(Management's	Discussion	and Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	C	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and Supplementary	Data).

In	July	2018,	Arconic	announced	a	two-year	Joint	Development	Agreement	with	Lockheed	Martin	to	develop	customized	lightweight	material	systems	and	advanced manufacturing	processes,	such	as	metal	3D	printing,	to	advance	current	and	next-generation	aerospace	and	defense	solutions	-	including	new	structures	and	systems.

In	December	2018,	as	part	of	the	Company's	ongoing	strategy	and	portfolio	review,	Arconic	completed	the	sale	of	its	Eger,	Hungary	forgings	business	that manufactured	high	volume	steel	forgings	for	drivetrain	components	in	the	European	heavy-duty	truck	and	automotive	market	to	Angstrom	Automotive	Group	LLC.

# Engineered	Products	and	Solutions	Principal	Facilities1

1 Principal	facilities	are	listed,	and	do	not	include	14	locations	that	serve	as	sales	and	administrative	offices,	distribution	centers	or warehouses.

2 Leased	property	or	partially	leased

property.

# Global	Rolled	Products

Arconic's	Global	Rolled	Products	segment	("GRP")	has	a	single	group	organization	structure	and	produces	a	range	of	aluminum	sheet	and	plate	products	for	the following	markets:

Aerospace	and	Automotive	-	GRP	provides	a	wide	range	of	products,	including	many	highly-differentiated	sheet	and	plate	products,	for	the	worldwide	aerospace	and regional	automotive	markets.

Brazing,	Commercial	Transportation	and	Industrial	-	GRP	provides	specialty	aluminum	sheet	and	plate	products	for	automotive,	commercial	transportation	and industrial	applications	including	proprietary	heat	exchanger	products	like	multilayer	brazing	sheet.

# Packaging	-	GRP	serves	the	packaging	market	in	Russia,	Asia	and	Latin	America	through	regional	facilities.

For	additional	discussion	of	the	Global	Rolled	Products	segment's	business,	see	"Results	of	Operations—Segment	Information"	in	Part	II,	Item	7.	(Management's Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	C	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements and	Supplementary	Data).

In	July	2018,	the	Company	announced	it	had	signed	a	new	long-term	contract	with	Boeing	to	supply	aluminum	sheet	and	plate	for	all	models	produced	by	Boeing Commercial	Airplanes.	The	multiyear	contract,	which	extends	and	adds	to	the	Companies'	2014	contract,	is	the	largest	to	date	and	captures	growth	in	the	build	rate increases	of	the	Boeing	737	program.

On	October	31,	2018,	the	Company	sold	its	Texarkana,	Texas	rolling	mill	and	cast	house	to	Ta	Chen	International,	Inc.	for	$302	million	in	cash,	subject	to	post-closing adjustments,	plus	additional	contingent	consideration	of	up	to	$50	million.	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	18	months	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.

In	February	2019,	the	Company	announced	an	investment	of	approximately	$100	million	to	expand	its	hot	mill	capability	and	add	downstream	equipment	capabilities	to manufacture	industrial	and	automotive	aluminum	products	in	its	Tennessee	Operations	facility	near	Knoxville,	Tennessee.	The	project,	which	is	expected	to	create	70 new	jobs,	is	already	underway	and	is	expected	to	be	complete	by	the	fourth	quarter	of	2020.

# Global	Rolled	Products	Principal	Facilities

3 The	aluminum	slab	that	is	cast	at	Texarkana	is	turned	into	aluminum	sheets	at	Arconic's	expanded	automotive	facility	in	Davenport,	Iowa	and	its	rolling	mill	in Lancaster,	Pennsylvania.	See	discussion	above	concerning	the	sale	of	this	facility.

4 Micromill™	production	facility	produces	sheet	for	automotive	and	industrial	applications	using	Arconic	innovative	production process.

# Transportation	and	Construction	Solutions

Arconic's	Transportation	and	Construction	Solutions	segment	("TCS")	produces	products	that	are	used	mostly	in	the	commercial	transportation	and	nonresidential building	and	construction	end	markets.	Such	products	include	integrated	aluminum	structural	systems,	architectural	extrusions	and	forged	aluminum	commercial	vehicle wheels.

The	Transportation	and	Construction	Solutions	segment	is	comprised	of	two	business	units:	Arconic	Wheel	and	Transportation	Products;	and	Building	and	Construction Systems.

Arconic	Wheel	and	Transportation	Products	(AWTP).	AWTP	provides	forged	aluminum	wheels	and	related	products	for	heavy-duty	trucks	and	the	commercial transportation	markets.

Building	and	Construction	Systems	(BCS).	BCS	provides	building	and	construction	architectural	framing	products	and	aluminum	curtain	wall	and	front	entry	systems.

For	additional	discussion	of	the	Transportation	and	Construction	Solutions	segment's	business,	see	"Results	of	Operations—Segment	Information"	in	Part	II,	Item	7. (Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	C	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8. (Financial	Statements	and	Supplementary	Data).

In	April	2018,	the	Company	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.

On	July	31,	2018,	the	Company	announced	that	it	had	initiated	a	sale	process	of	its	BCS	business,	as	part	of	the	Company's	ongoing	strategy	and	portfolio	review	that commenced	in	January	2018.

# Transportation	and	Construction	Solutions	Principal	Facilities1

1 Principal	facilities	are	listed,	and	do	not	include	8	locations	that	serve	as	sales	and	administrative	offices,	distribution	centers	or	warehouses.	In	addition	to	the facilities	listed	above,	TCS	has	20	service	centers.	These	centers	perform	light	manufacturing,	such	as	assembly	and	fabrication	of	certain	products.

# Sources	and	Availability	of	Raw	Materials

Important	raw	materials	purchased	in	2018	for	each	of	the	Company's	reportable	segments	are	listed	below.

Aluminum	coil Aluminum	scrap Electricity Natural	gas Paint/Coating

Primary	aluminum	(billet)

Resin

Generally,	other	materials	are	purchased	from	third-party	suppliers	under	competitively	priced	supply	contracts	or	bidding	arrangements.	The	Company	believes	that	the raw	materials	necessary	to	its	business	are	and	will	continue	to	be	available.

# Patents,	Trade	Secrets	and	Trademarks

The	Company	believes	that	its	domestic	and	international	patent,	trade	secret	and	trademark	assets	provide	it	with	a	significant	competitive	advantage.	The	Company's rights	under	its	patents,	as	well	as	the	products	made	and	sold	under	them,	are	important	to	the	Company	as	a	whole	and,	to	varying	degrees,	important	to	each	business segment.	The	patents	owned	by	Arconic	generally	concern	metal	alloys,	particular	products,	manufacturing	equipment	or	techniques.	Arconic's	business	as	a	whole	is not,	however,	materially	dependent	on	any	single	patent,	trade	secret	or	trademark.	As	a	result	of	product	development	and	technological	advancement,	the	Company continues	to	pursue	patent	protection	in	jurisdictions	throughout	the	world.	As	of	the	end	of	2018,	the	Company's	worldwide	patent	portfolio	consists	of	approximately 1,863	granted	patents	and	824	pending	patent	applications.

The	Company	also	has	a	significant	number	of	trade	secrets,	mostly	regarding	manufacturing	processes	and	material	compositions	that	give	many	of	its	businesses important	advantages	in	their	markets.	The	Company	continues	to	strive	to	improve	those	processes	and	generate	new	material	compositions	that	provide	additional benefits.

With	respect	to	domestic	and	international	registered	trademarks,	the	Company	has	many	that	have	significant	recognition	within	the	markets	that	are	served.	Examples include	the	name	"Arconic"	and	the	Arconic	symbol	for	aluminum,	nickel,	and	titanium	products,	Howmet®	metal	castings,	Huck®	fasteners,	Kawneer®	building	panels and	Dura-Bright®	wheels	with	easy-clean	surface	treatments.	A	significant	trademark	filing	campaign	for	the	name	"Arconic"	was	completed	in	2016,	in	support	of	the corporate	launch	of	Arconic	Inc.	As	of	the	end	of	2018,	the	Company's	worldwide	trademark	portfolio	consists	of	approximately	1,967	registered	trademarks	and	465 pending	trademark	applications.	The	Company's	rights	under	its	trademarks	are	important	to	the	Company	as	a	whole	and,	to	varying	degrees,	important	to	each business	segment.

# Competitive	Conditions

# Engineered	Products	and	Solutions	(EP&S)

EP&S's	business	units	-	AFS,	AEN	and	AES	-are	subject	to	substantial	and	intense	competition	in	the	markets	they	serve.	Although	Arconic	believes	its	advanced technology,	manufacturing	processes	and	experience	provide	advantages	to	Arconic's	customers,	such	as	high	quality	and	superior	mechanical	properties	that	meet	the Company's	customers'	most	stringent	requirements,	many	of	the	products	Arconic	makes	can	be	produced	by	competitors	using	similar	types	of	manufacturing

processes	as	well	as	alternative	forms	of	manufacturing.	Despite	intense	competition,	Arconic	continues	as	a	market	leader	in	most	of	its	principal	markets.	Several factors,	including	Arconic's	legacy	of	technical	innovation,	state-of-the-art	capabilities,	engaged	employees	and	long-standing	customer	relationships,	enable	the Company	to	maintain	its	competitive	position.

Principal	competitors	in	the	EP&S	segment	include	Berkshire	Hathaway	Inc.,	through	its	acquisition	of	Precision	Castparts	Corporation	and	subsidiaries,	for	titanium and	titanium-based	alloys,	precision	forgings,	seamless	rolled	rings,	investment	castings	and	aerospace	fasteners;	VSMPO	(Russia)	for	titanium	and	titanium-based alloys	and	precision	forgings;	the	High-Performance	Materials	&	Components	segment	of	Allegheny	Technologies,	Inc.	(ATI)	for	titanium	and	titanium-based	alloys, precision	forgings,	and	investment	castings;	Lisi	Aerospace	(France)	for	aerospace	fasteners;	and	Aubert	&	Duval	(part	of	Eramet	Group	in	France)	for	precision forgings.

# Other	competitors	include:

•Kaiser	Aluminum	-	for	extruded

products

•Universal	Alloy	Corp.,	part	of	Montana	Tech	Components	-	for	extruded products

•Doncasters	Group	Ltd.	(UK)	-	for	investment

castings

•Consolidated	Precision	Products	Corp.,	part	of	Warburg	Pincus	-	for	investment castings

•Weber	Metals,	part	of	Otto	Fuchs	-	for	precision

forgings

•Forgital	-	for	seamless

rings

•Frisa	(Mexico)	-	for	seamless

Several	of	Arconic's	largest	customers	have	captive	superalloy	furnaces	for	producing	airfoil	investment	castings	for	their	own	use.	Many	other	companies	around	the world	also	produce	superalloy	investment	castings,	and	some	of	these	companies	currently	compete	with	Arconic	in	the	aerospace	and	other	markets,	while	others	are capable	of	competing	with	the	Company	should	they	choose	to	do	so.

International	competition	in	the	investment	castings,	fasteners,	rings	and	forgings	markets	may	also	increase	in	the	future	as	a	result	of	strategic	alliances	among	engine original	equipment	manufacturers	(OEMs),	aero-structure	prime	contractors,	and	overseas	companies,	especially	in	developing	markets,	particularly	where	"offset"	or "local	content"	requirements	create	purchase	obligations	with	respect	to	products	manufactured	in	or	directed	to	a	particular	country.

# Global	Rolled	Products	(GRP)

GRP	is	one	of	the	leaders	in	many	of	the	aluminum	flat	rolled	products	markets	in	which	it	participates,	including	aerospace,	automotive,	commercial	transportation, industrial	markets	(including	brazing	sheet)	and	packaging.	However,	much	like	other	Arconic	businesses,	GRP	is	subject	to	substantial	and	intense	competition	in	all	of its	markets.

While	GRP	participates	in	markets	where	Arconic	believes	the	Company	has	a	significant	competitive	advantage	due	to	customer	intimacy,	advanced	manufacturing capability,	unique	technology	and/or	differentiated	products,	in	certain	cases,	the	Company's	competitors	are	capable	of	making	products	similar	to	Arconic's.	The Company	continuously	works	to	maintain	and	enhance	its	competitive	advantage	through	innovation:	new	alloys	such	as	aerospace	alloys,	differentiated	products	such as	the	Company's	5-layer	brazing	products	and	break-through	processes	such	as	Arconic	Micromill®	technology.

Some	of	GRP's	markets	are	worldwide	and	some	are	more	regionally	focused.	Participation	in	these	segments	by	GRP's	competitors	varies.	For	example,	Novelis	is	the largest	flat	rolled	products	producer	competing	in	automotive,	but	it	does	not	participate	in	the	aerospace	market.	On	the	other	hand,	Constellium	participates	in	all	major market	segments	including	aerospace,	brazing,	industrial,	commercial	transportation	and	packaging.	Granges	participates	only	in	the	brazing	sheet	market.	Other	GRP competitors	include	Aleris,	AMAG,	Hydro,	Kaiser,	Kobe,	Nanshan,	and	UACJ.	The	competitive	landscape	is	changing	-	in	this	past	year,	Novelis	announced	the acquisition	of	aluminum	rolled	products	producer	Aleris	and	Braidy	Industries	announced	its	intention	to	build	a	new	aluminum	mill	near	Ashland,	Kentucky	for automotive	production.

Additionally,	there	are	a	number	of	new	competitors	emerging,	particularly	in	China	and	other	developing	economies.	Arconic	expects	that	this	competitive	pressure will	continue	and	increase	in	the	future	as	customers	seek	to	globalize	their	supply	bases	in	order	to	reduce	costs.	The	Company	continually	monitors	and	plans	for	these new	emerging	players.

Summary	of	Major	Competitors	for	GRP:

•Aleris

•Hydro	(Norway)

•Nanshan	(China)

•Granges	(Sweden)

•Kobe	(Japan)

# Transportation	and	Construction	Solutions	(TCS)

In	the	forged	aluminum	wheels	business,	AWTP	competes	in	commercial	transportation,	under	the	product	brand	name	Alcoa®	Wheels,	for	the	major	regions	that	it serves	(Americas,	Europe,	Japan,	China,	and	Australia).	AWTP	competes	against	steel	wheels,	as	well	as	aluminum.	Its	larger	competitors	are	Accuride	Corporation, Nippon	Steel	&	Sumitomo	Metal	Corporation,	Zhejiang	Dicastal	Hongxin	Technology	Co.	Ltd,	Wheels	India	Limited	and	Speedline	(member	of	the	Ronal	Group). AWTP	has	continued	to	see	aluminum	wheel	suppliers	(both	forged	and	cast	aluminum	wheels)	from	China,	Taiwan,	India	and	South	Korea	attempting	to	penetrate	the commercial	transportation	market.

BCS	is	a	manufacturer	of	aluminum	architectural	systems	and	products	in	North	America	and	Europe.	In	North	America,	BCS	primarily	competes	in	the	nonresidential building	segment.	In	Europe,	it	competes	in	both	the	residential	and	the	nonresidential	building	segments.	BCS	competes	with	regional	and	local	players	in	the architectural	systems	and	more	global	companies	in	the	products	markets.	BCS's	competitive	advantage	is	the	cornerstone	to	its	strong	brand,	innovative	products, customer	intimacy	and	technical	services.	Over	the	past	decade,	the	regional	competitors,	primarily	in	North	America,	have	narrowed	the	product	portfolio	and	technical services	advantages.	However,	BCS	has	maintained	its	competitive	advantage	through	innovative	products	like	highly	energy-efficient	high-thermal	products	and differentiated	services.	BCS	sales	are	derived	mainly	from	the	retail,	office,	education	and	healthcare	building	segments.

BCS	is	organized	into	two	business	segments:	architectural	systems	and	architectural	products.	The	primary	product	categories	in	architectural	systems	are	storefront, framing	and	entrances	(SEF),	curtain	walls,	and	windows.	In	the	SEF	and	curtain	wall	businesses,	BCS	competes	with	competitors	like	Apogee,	YKK,	Oldcastle, Schüco,	Hydro/SAPA	and	Reynaers	in	their	aluminum	framing	systems	business.	The	architectural	products	business	is	more	global	and	is	primarily	served	by subsidiaries	of	larger	companies	like	Alpolic	(Mitsubishi	Corporation),	Alucobond	(Schweiter	Technologies)	and	Novelis	(Aditya	Birla	Group).	The	primary	product categories	are	aluminum	composite	material	and	coil	coated	sheet.	The	competitive	landscape	in	the	architectural	systems	market	has	been	relatively	stable	since	the mid-2000s,	with	the	major	competitors	in	North	America	and	Europe	still	operating	in	their	markets,	despite	some	industry	consolidation	in	North	America	during	the late	2000s.

# Summary	of	Major	Competitors:

# AWTP:

•Accuride	Corporation

•Speedline	(member	of	the	Ronal	Group	in Switzerland)

•Apogee,	Oldcastle	and	YKK

•Alpolic,	Alucobond	and	Alucoil

•Schüco	(Germany),	Hydro/SAPA	(Norway),	Reynaers	(Belgium)	and	Corialis (Belgium)

•Alucobond,	Alucoil,	Euramax	and

Novelis

# Research	and	Development

Arconic,	at	its	light	metals	research	center,	engages	in	research	and	development	(R&D)	programs	that	include	process	and	product	development,	and	basic	and	applied research.

Throughout	2018,	the	Company	continued	working	on	new	developments	in	all	business	segments	and	leveraging	new	technologies.	The	Company	has	continued investing	in	additive	manufacturing,	with	a	focus	on	producing	metal	powder	materials	tailored	for	a	range	of	additive	process	technologies,	and	furthering	its development	of	advanced	3D	printing	design	and	manufacturing	techniques-such	as	Arconic's	Ampliforge™	process-to	improve	production	speeds,	reduce	costs,	and achieve	material	properties	not	possible	through	other	additive	flowpaths.	The	Company's	powder	production	facility	was	completed	at	the	Arconic	Technology	Center (ATC)	in	2016.	This	facility	will	continue	its	focus	on	material	development	in	aluminum,	nickel	and	titanium	alloys.

The	Company	is	also	producing	and	qualifying	additively	manufactured	aerospace,	automotive	and	defense	components	via	laser	powder	bed	printing	technology.	It	also is	developing	more	formable	titanium	plate	based	wrought	products	for	customers.

Arconic's	Micromill®	technology,	which	enables	aluminum	sheet	to	be	produced	in	a	matter	of	minutes	rather	than	weeks	and	with	enhanced	structural	properties, continues	to	grow.	Specifically,	the	Arconic	Micromill®	technology	located	in	San	Antonio	continues	to	transition	to	commercial	production.	In	addition,	the	Company has	invested	in	further	developing	Micromill™	technology,	including	installation	of	a	pilot	line	at	the	ATC.

The	Company	continues	to	develop	differentiated	pretreatment	technology,	for	example,	by	continuing	to	improve	on	its	A951	technology,	which	enables	aluminum	to be	joined	with	steel	(e.g.,	in	automotive	applications).	In	addition,	the	Company	continues	to	advance	its	joining	methods/fasteners	(like	RSR™)	and	highly	formable and	high	strength	automotive	sheet	products	for	automotive	original	equipment	manufacturer	applications	in	both	cosmetic	hang	on	parts	and	structural	body-in-white applications.	A	pilot	coating	line	was	installed	at	ATC	in	2018.

The	Company	continued	its	differentiation	in	the	commercial	transportation	market	with	Dura-Bright®	EVO,	UltraOne™	and	European	UltraOne™	wheel	products.

The	Company	also	continues	to	develop	and	deploy	proprietary	processing	technologies	in	the	manufacture	of	aerospace	components,	as	well	as	a	continued commitment	and	commercialization	of	a	portfolio	of	proprietary	aerospace	fasteners.	One	such	example	is	Ergo-Tech®	blind	fasteners	which	enable	automated	assembly operations.

# Environmental	Matters

Information	relating	to	environmental	matters	is	included	in	Note	U	to	the	Consolidated	Financial	Statements	under	the	caption	"Environmental	Matters".	Approved capital	expenditures	for	new	or	expanded	facilities	for	environmental	control	are	$28	million	for	2019	and	estimated	expenditures	for	such	purposes	are	$8	million	for 2020.

# Employees

Total	worldwide	employment	at	the	end	of	2018	was	approximately	43,000	employees	in	29	countries.	About	18,600	of	these	employees	are	represented	by	labor	unions. The	Company	believes	that	relations	with	its	employees	and	any	applicable	union	representatives	generally	are	good.

In	the	United	States,	approximately	7,900	employees	are	represented	by	various	labor	unions.	The	largest	collective	bargaining	agreement	is	the	master	collective bargaining	agreement	between	Arconic	and	the	United	Steelworkers	(USW).	The	USW	master	agreement	covers	approximately	3,400	employees	at	four	U.S.	locations; the	current	labor	agreement	expires	on	May	15,	2019.	There	are	17	other	collective	bargaining	agreements	in	the	United	States	with	varying	expiration	dates.

On	a	regional	basis,	collective	bargaining	agreements	with	varying	expiration	dates	cover	approximately	8,900	employees	in	Europe	and	Russia,	8,100	employees	in North	America,	600	employees	in	South	America,	and	1,000	employees	in	Asia.

# Executive	Officers	of	the	Registrant

The	names,	ages,	positions	and	areas	of	responsibility	of	the	executive	officers	of	the	Company	as	of	February	21,	2019	are	listed	below.

Elmer	L.	Doty,	64,	Director,	President	and	Chief	Operating	Officer.	Mr.	Doty	was	appointed	President	and	Chief	Operating	Officer	of	Arconic	effective	February	6, 2019,	and	has	served	on	the	Arconic	Board	of	Directors	since	May	2017.	From	March	2016	until	February	2019,	Mr.	Doty	was	an	Operating	Executive	at	The	Carlyle Group	LP,	multinational	private	equity,	alternative	asset	management	and	financial	services	corporation,	where	he	held	a	similar	position	from	March	2012	to	December 2012.	From	December	2012	to	February	2016,	Mr.	Doty	was	President	and	Chief	Executive	Officer	of	Accudyne	Industries	LLC,	a	provider	of	precision-engineered flow	control	systems	and	industrial	compressors.	Mr.	Doty	also	was	the	President	and	Chief	Executive	Officer	of	Vought	Aircraft	Industries,	Inc.	from	2006	until	its acquisition	in	2010	by	Triumph	Group,	a	leader	in	manufacturing	and	overhauling	aerospace	structures,	systems	and	components.	Prior	to	Vought,	Mr.	Doty	was Executive	Vice	President	and	General	Manager	of	the	Land	Systems	Division	of	United	Defense	Industries,	Inc.	(now	BAE	Systems).	Earlier	in	his	career,	Mr.	Doty held	executive	positions	at	General	Electric	Company	and	FMC	Corporation.

Ken	Giacobbe,	53,	Executive	Vice	President	and	Chief	Financial	Officer.	Mr.	Giacobbe	was	elected	Executive	Vice	President	and	Chief	Financial	Officer	of	Arconic effective	November	1,	2016.	Mr.	Giacobbe	joined	Arconic	in	2004	as	Vice	President	of	Finance	for	Global	Extruded	Products,	part	of	Alcoa	Forgings	and	Extrusions. He	then	served	as	Vice	President	of	Finance	for	the	Company's	Building	and	Construction	Systems	business	from	2008	until	2011.	In	2011,	he	assumed	the	role	of Group	Controller	for	the	Engineered	Products	and	Solutions	segment.	From	January	2013	until	October	2016,	Mr.	Giacobbe	served	as	Chief	Financial	Officer	of	the Engineered	Products	and	Solutions	segment.	Before	joining	Arconic,	Mr.	Giacobbe	held	senior	finance	roles	at	Avaya	and	Lucent	Technologies.

Timothy	D.	Myers,	53,	Executive	Vice	President	and	Group	President,	Global	Rolled	Products	and	Transportation	and	Construction	Solutions.	Mr.	Myers	was appointed	Executive	Vice	President	and	Group	President,	Global	Rolled	Products	and	Transportation	and	Construction	Solutions	in	October	2017.	Prior	to	being appointed	to	his	current	role,	he	was	Executive	Vice	President	and	Group	President,	Transportation	and	Construction	Solutions	from	May	2016	to	October	2017.	Prior	to that	assignment,	he	was	President	of	Alcoa	Wheel	and	Transportation	Products,	from	June	2009	to	May	2016.	Mr.	Myers	was	Vice	President	and	General	Manager, Commercial	Vehicle	Wheels	for	the	Alcoa	Wheel	Products	business	from	January	2006	to	June	2009.	Mr.	Myers	joined	Arconic	in	1991	as	an	automotive	applications engineer	in	the	Commercial	Rolled	Products	Division,	and	held	a	series	of	engineering,	marketing,	sales	and	management	positions	with	the	Company	since	that	time.

Paul	Myron,	52,	Vice	President	and	Controller.	Mr.	Myron	was	elected	Vice	President	and	Controller	of	Arconic	effective	November	1,	2016.	Mr.	Myron	joined Arconic	as	a	systems	analyst	in	Pittsburgh	and	in	1992	relocated	to	the	Company's	Davenport,	Iowa	facility	as	a	product	accountant.	He	served	in	numerous	financial management	positions	from	1995	until	2000	when	he	was	named	Commercial	Manager	and	Controller	for	the	Atlantic	division	of	the	Alcoa	World	Alumina	and Chemicals	business.	In	2002,	Mr.	Myron	was	appointed	Vice	President	of	Finance,	Alcoa	Primary	Metals	and	later	became	Vice	President	of	Finance,	Alcoa	World Alumina	and	Chemicals.	In	2005	Mr.	Myron	was	named	Director	of	Financial	Planning	and	Analysis,	accountable	for	Arconic's	financial	planning,	analysis,	and reporting	worldwide.	In	February	2012,	he	became	Director	of	Finance	Initiatives	for	the	Engineered	Products	and	Solutions	segment,	overseeing	specific	financial initiatives	and	projects	within	the	group.	From	July	2012	until	his	most	recent	appointment,	Mr.	Myron	served	as	Vice	President,	Finance	and	Business	Excellence	for the	Arconic	Power	and	Propulsion	business.

John	C.	Plant,	65,	Chairman	and	Chief	Executive	Officer.	Mr.	Plant	was	appointed	Chief	Executive	Officer	of	Arconic	effective	February	6,	2019.	He	has	served	as Arconic's	Chairman	since	October	2017	and	as	a	member	of	the	Board	since	February	2016.	Mr.	Plant	previously	served	as	Chairman	of	the	Board,	President	and	Chief Executive	Officer	of	TRW	Automotive	from	2011	to	2015,	and	as	its	President	and	Chief	Executive	Officer	from	2003	to	2011.	TRW	Automotive	was	acquired	by	ZF Friedrichshafen	AG	in	May	2015.	Mr.	Plant	was	a	co-member	of	the	Chief	Executive	Office	of	TRW	Inc.	from	2001	to	2003	and	an	Executive	Vice	President	of	TRW from	the	company's	1999	acquisition	of	Lucas	Varity	to	2003.	Prior	to	TRW,	Mr.	Plant	was	President	of	Lucas	Varity	Automotive	and	managing	director	of	the Electrical	and	Electronics	division	from	1991	through	1997.

Katherine	H.	Ramundo,	51,	Executive	Vice	President,	Chief	Legal	Officer	and	Secretary.	Ms.	Ramundo	was	elected	to	her	current	position	effective	November	1, 2016.	Prior	to	joining	Arconic,	from	January	2013	through	August	2015,	she	was	Executive	Vice	President,	General	Counsel	and	Secretary	of	ANN	INC.,	the	parent company	of	ANN	TAYLOR	and	LOFT	brands,	based	in	New	York.	Prior	to	ANN	INC.,	she	served	as	Vice	President,	Deputy	General	Counsel	and	Assistant	Secretary at	Colgate-Palmolive,	where	she	held	various	legal	roles	from	November	1997	to	January	2013.	She	began	her	career	as	a	litigator	in	New	York,	practicing	at	major	law firms,	including	Cravath,	Swaine	&	Moore	and	Sidley	&	Austin.

The	Company's	executive	officers	are	elected	or	appointed	to	serve	until	the	next	annual	meeting	of	the	Board	of	Directors	(held	in	conjunction	with	the	annual	meeting of	shareholders)	except	in	the	case	of	earlier	death,	retirement,	resignation	or	removal.

# Item	1A.	Risk	Factors.

Arconic's	business,	financial	condition	and	results	of	operations	may	be	impacted	by	a	number	of	factors.	In	addition	to	the	factors	discussed	elsewhere	in	this	report, the	following	risks	and	uncertainties	could	materially	harm	its	business,	financial	condition	or	results	of	operations,	including	causing	Arconic's	actual	results	to	differ materially	from	those	projected	in	any	forward-looking	statements.	The	following	list	of	significant	risk	factors	is	not	all-inclusive	or	necessarily	in	order	of	importance. Additional	risks	and	uncertainties	not	presently	known	to	Arconic	or	that	Arconic	currently	deems	immaterial	also	may	materially	adversely	affect	the	Company	in future	periods.

# The	markets	for	Arconic's	products	are	highly	cyclical	and	are	influenced	by	a	number	of	factors,	including	global	economic	conditions.

Arconic	is	subject	to	cyclical	fluctuations	in	global	economic	conditions	and	lightweight	metals	end-use	markets.	Arconic	sells	many	products	to	industries	that	are cyclical,	such	as	the	aerospace,	automotive,	and	commercial	transportation	and	construction	industries,	and	the	demand	for	its	products	is	sensitive	to,	and	quickly impacted	by,	demand	for	the	finished	goods	manufactured	by	its	customers	in	these	industries,	which	may	change	as	a	result	of	changes	in	regional	or	worldwide economies,	currency	exchange	rates,	energy	prices	or	other	factors	beyond	its	control.

In	particular,	Arconic	derives	a	significant	portion	of	its	revenue	from	products	sold	to	the	aerospace	industry,	which	can	be	highly	cyclical	and	reflective	of	changes	in the	general	economy.	The	commercial	aerospace	industry	is	historically	driven	by	the	demand	from	commercial	airlines	for	new	aircraft.	The	U.S.	and	international commercial	aviation	industries	may	face	challenges	arising	from	competitive	pressures	and	fuel	costs.	Demand	for	commercial	aircraft	is	influenced	by	airline	industry profitability,	trends	in	airline	passenger	traffic,	the	state	of	U.S.,	regional	and	world	economies,	the	ability	of

aircraft	purchasers	to	obtain	required	financing	and	numerous	other	factors	including	the	effects	of	terrorism,	health	and	safety	concerns,	environmental	constraints imposed	upon	aircraft	operators,	the	retirement	of	older	aircraft,	and	technological	improvements	to	new	engines.	The	military	aerospace	cycle	is	highly	dependent	on U.S.	and	foreign	government	funding;	however,	it	is	also	driven	by	the	effects	of	terrorism,	a	changing	global	political	environment,	U.S.	foreign	policy,	the	retirement of	older	aircraft,	and	technological	improvements	to	new	engines.

Further,	the	demand	for	Arconic's	automotive	and	ground	transportation	products	is	driven	by	the	number	of	vehicles	produced	by	automotive	manufacturers	and Arconic	content	per	vehicle.	The	automotive	industry	is	sensitive	to	general	economic	conditions,	including	credit	markets	and	interest	rates,	and	consumer	spending	and preferences	regarding	vehicle	ownership	and	usage,	vehicle	size,	configuration	and	features.	Automotive	sales	and	production	can	also	be	affected	by	other	factors including	the	age	of	the	vehicle	fleet	and	related	scrappage	rates,	labor	relations	issues,	fuel	prices,	regulatory	requirements,	government	initiatives,	trade	agreements	and levels	of	competition.

While	Arconic	believes	that	the	long-term	prospects	for	its	products	are	positive,	the	Company	is	unable	to	predict	the	future	course	of	industry	variables,	the	strength	of the	U.S.,	regional	or	global	economies,	or	the	effects	of	government	intervention.	Negative	economic	conditions,	such	as	a	major	economic	downturn,	a	prolonged recovery	period,	or	disruptions	in	the	financial	markets,	could	have	a	material	adverse	effect	on	Arconic's	business,	financial	condition	or	results	of	operations.

# Arconic	faces	significant	competition,	which	may	have	an	adverse	effect	on	profitability.

As	discussed	in	Part	I,	Item	1.	(Business-Competitive	Conditions)	of	this	report,	the	markets	for	Arconic's	products	are	highly	competitive.	Arconic's	competitors include	a	variety	of	both	U.S.	and	non-U.S.	companies	in	all	major	markets.	New	product	offerings,	new	technologies	in	the	marketplace	or	new	facilities	may	compete with	or	replace	Arconic	products.	The	willingness	of	customers	to	accept	substitutes	for	the	products	sold	by	Arconic,	the	ability	of	large	customers	to	exert	leverage	in the	marketplace	to	affect	the	pricing	for	Arconic's	products,	and	technological	advancements	or	other	developments	by	or	affecting	Arconic's	competitors	or	customers could	adversely	affect	Arconic's	business,	financial	condition	or	results	of	operations.

In	addition,	Arconic	may	face	increased	competition	due	to	industry	consolidation.	As	companies	attempt	to	strengthen	or	hold	their	market	positions	in	an	evolving industry,	companies	could	be	acquired	or	may	be	unable	to	continue	operations.	Companies	that	are	strategic	alliance	partners	in	some	areas	of	Arconic's	business	may acquire	or	form	alliances	with	Arconic's	competitors,	thereby	reducing	their	business	with	Arconic.	Industry	consolidation	may	result	in	stronger	competitors	who	are better	able	to	compete	as	sole-source	vendors	for	customers.	If	there	is	consolidation	among	Arconic's	customer	base,	those	customers	may	be	able	to	command increased	leverage	in	negotiating	prices	and	other	terms	of	sale,	which	could	adversely	affect	Arconic's	profitability.	Moreover,	if,	as	a	result	of	increased	leverage, customer	pressures	require	Arconic	to	reduce	its	pricing	such	that	its	gross	margins	are	diminished,	the	Company	could	decide	not	to	sell	certain	products	under	such less	favorable	terms,	which	would	decrease	Arconic's	revenue.	Consolidation	among	the	Company's	customer	base	may	also	lead	to	reduced	demand	for	Arconic's solutions,	replacement	of	Arconic	products	by	the	combined	entity	with	those	of	Arconic's	competitors	and	cancellations	of	orders,	each	of	which	could	have	a	material adverse	effect	on	Arconic's	business,	operating	results	and	financial	condition.

# Arconic	may	be	unable	to	develop	innovative	new	products	or	implement	technology	initiatives	successfully.

Arconic's	competitive	position	and	future	performance	depends,	in	part,	on	the	Company's	ability	to:

•identify	and	evolve	with	emerging	technological	and	broader	industry	trends	in	Arconic's	target	end-markets;

•identify	and	successfully	execute	on	a	strategy	to	remain	an	essential	and	sustainable	element	of	its	customer's	supply

chain;

•fund,	develop,	manufacture	and	bring	innovative	new	products	and	services	to	market	quickly	and	cost-

effectively;

•monitor	disruptive	technologies	and	understand	customers'	and	competitors'	abilities	to	deploy	those	disruptive	technologies;

•achieve	sufficient	return	on	investment	for	new	products	based	on	capital	expenditures	and	research	and	development

spending.

Arconic	is	working	on	new	developments	for	a	number	of	strategic	projects	in	all	business	segments,	including	additive	manufacturing,	alloy	development,	engineered finishes	and	product	design,	high	speed	continuous	casting	and	rolling	technology,	and	other	advanced	manufacturing	technologies.	For	more	information	on	Arconic's research	and	development	programs,	see	"Research	and	Development"	in	Part	I,	Item	1.	(Business-Research	and	Development)	of	this	report.

While	Arconic	intends	to	continue	committing	substantial	financial	resources	and	effort	to	the	development	of	innovative	new	products	and	services,	it	may	not	be	able to	successfully	differentiate	its	products	or	services	from	those	of	its	competitors	or	match	the	level	of	research	and	development	spending	of	its	competitors,	including those	developing	technology	to	displace	Arconic's	current	products.	In	addition,	Arconic	may	not	be	able	to	adapt	to	evolving	markets	and	technologies	or	achieve	and maintain	technological	advantages.	There	can	be	no	assurance	that	any	of	Arconic's	new	products	or	services,	development	programs	or	technologies	will	be commercially	adopted	or	beneficial	to	Arconic.

# Arconic	could	be	adversely	affected	by	changes	in	the	business	or	financial	condition	or	the	loss	of	a	significant	customer	or	customers.

A	significant	downturn	or	deterioration	in	the	business	or	financial	condition	or	loss	of	a	key	customer	or	customers	supplied	by	Arconic	could	affect	Arconic's	financial results	in	a	particular	period.	Arconic's	customers	may	experience	delays	in	the	launch	of	new	products,	labor	strikes,	diminished	liquidity	or	credit	unavailability,	weak demand	for	their	products,	or	other	difficulties	in	their	businesses.	Arconic's	customers	may	also	change	their	business	strategies	or	modify	their	business	relationships with	Arconic,	including	to	reduce	the	amount	of	Arconic's	products	they	purchase	or	to	switch	to	alternative	suppliers.	If	Arconic	is	unsuccessful	in	replacing	business lost	from	such	customers,	profitability	may	be	adversely	affected.

# Arconic	could	encounter	manufacturing	difficulties	or	other	issues	that	impact	product	performance,	quality	or	safety,	which	could	affect	Arconic's reputation,	business	and	financial	statements.

The	manufacture	of	many	of	Arconic's	products	is	a	highly	exacting	and	complex	process.	Problems	may	arise	during	manufacturing	for	a	variety	of	reasons,	including equipment	malfunction,	failure	to	follow	specific	protocols,	specifications	and	procedures,	including	those	related	to	quality	or	safety,	problems	with	raw	materials, supply	chain	interruptions,	natural	disasters,	labor	unrest	and	environmental	factors.	Such	problems	could	have	an	adverse	impact	on	the	Company's	ability	to	fulfill orders	or	on	product	quality	or	performance.	Product	manufacturing	or	performance	issues	could	result	in	recalls,	customer	penalties,	contract	cancellation	and	product liability	exposure,	including	if	any	of	our	products	are	non-compliant	or	are	used	in	an	unintended	and/or	unapproved	manner	that	results	in	injuries	or	other	damages. Because	of	approval	and	license	requirements	applicable	to	manufacturers	and/or	their	suppliers,	alternatives	to	mitigate	manufacturing	disruptions	may	not	be	readily available	to	the	Company	or	its	customers.	Accordingly,	manufacturing	problems,	product	defects	or	other	risks	associated	with	our	products,	including	their	use	or application,	could	result	in	significant	costs	to	and	liability	for	Arconic	that	could	have	a	material	adverse	effect	on	its	business,	financial	condition	or	results	of operations,	including	the	payment	of	potentially	substantial	monetary	damages,	fines	or	penalties,	as	well	as	negative	publicity	and	damage	to	the	Company's	reputation, which	could	adversely	impact	product	demand	and	customer	relationships.

# Arconic's	business	depends,	in	part,	on	its	ability	to	meet	increased	program	demand	successfully	and	to	mitigate	the	impact	of	program	cancellations, reductions	and	delays.

Arconic	is	currently	under	contract	to	supply	components	for	a	number	of	new	and	existing	commercial,	general	aviation,	military	aircraft	and	aircraft	engine	programs and	is	the	sole	supplier	of	aluminum	sheet	for	a	number	of	aluminum-intensive	automotive	vehicle	programs.	Many	of	these	programs	are	scheduled	for	production increases	over	the	next	several	years.	If	Arconic	fails	to	meet	production	levels	or	encounters	difficulty	or	unexpected	costs	in	meeting	such	levels,	it	could	have	a material	adverse	effect	on	the	Company's	business,	financial	condition	or	results	of	operations.	Similarly,	program	cancellations,	reductions	or	delays	could	also	have	a material	adverse	effect	on	Arconic's	business.

# Arconic	could	be	adversely	affected	by	reductions	in	defense	spending.

Arconic's	products	are	used	in	a	variety	of	military	applications,	including	military	aircraft	and	armored	vehicles.	Although	many	of	the	programs	in	which	Arconic participates	extend	several	years,	they	are	subject	to	annual	funding	through	congressional	appropriations.	Changes	in	military	strategy	and	priorities,	or	reductions	in defense	spending,	may	affect	current	and	future	funding	of	these	programs	and	could	reduce	the	demand	for	Arconic's	products,	which	could	adversely	affect	Arconic's business,	financial	condition	or	results	of	operations.

# Arconic's	global	operations	and	status	as	a	public	company	expose	the	Company	to	risks	that	could	adversely	affect	Arconic's	business,	financial	condition, results	of	operations,	cash	flows	or	the	market	price	of	its	securities.

Arconic	has	operations	or	activities	in	numerous	countries	and	regions	outside	the	United	States,	including	Europe,	Brazil,	Canada,	China,	Japan,	and	Russia.	As	a result,	the	Company's	global	operations	are	affected	by	economic,	political	and	other	conditions	in	the	foreign	countries	in	which	Arconic	does	business	as	well	as	U.S. laws	regulating	international	trade,	including:

•economic	and	commercial	instability	risks,	including	those	caused	by	sovereign	and	private	debt	default,	corruption,	and	changes	in	local	government	laws, regulations	and	policies,	such	as	those	related	to	tariffs,	sanctions	and	trade	barriers,	taxation,	exchange	controls,	employment	regulations	and	repatriation	of earnings;

•geopolitical	risks	such	as	political	instability,	civil	unrest,	expropriation,	nationalization	of	properties	by	a	government,	imposition	of	sanctions,	and renegotiation	or	nullification	of	existing	agreements;

•war	or	terrorist	activities;

•kidnapping	of	personnel;

•major	public	health	issues	such	as	an	outbreak	of	a	pandemic	or	epidemic	(such	as	Sudden	Acute	Respiratory	Syndrome,	Avian	Influenza,	H7N9	virus,	or	the Ebola	virus),	which	could	cause	disruptions	in	Arconic's	operations	or	workforce;

•difficulties	enforcing	intellectual	property	and	contractual	rights	in	certain

jurisdictions;

•changes	in	trade	and	tax	laws	that	may	result	in	our	customers	being	subjected	to	increased	taxes,	duties	and	tariffs	and	reduce	their	willingness	to	use	our services	in	countries	in	which	we	are	currently	manufacturing	their	products;

•rising	labor	costs;

•labor	unrest,	including	strikes;

•compliance	with	antitrust	and	competition

regulations;

•compliance	with	foreign	labor	laws,	which	generally	provide	for	increased	notice,	severance	and	consultation	requirements	compared	to	U.S.

laws;

•aggressive,	selective	or	lax	enforcement	of	laws	and	regulations	by	national	governmental

authorities;

•compliance	with	the	Foreign	Corrupt	Practices	Act	("FCPA")	and	other	anti-bribery	and	corruption

•compliance	with	U.S.	laws	concerning	trade,	including	the	International	Traffic	in	Arms	Regulations	("ITAR"),	the	Export	Administration	Regulations

("EAR"),	and	the	sanctions,	regulations	and	embargoes	administered	by	the	U.S.	Department	of	Treasury's	Office	of	Foreign	Asset	Controls	("OFAC");

•imposition	of	currency

controls;

•adverse	tax	audit	rulings;	and

•unexpected	events,	including	fires	or	explosions	at	facilities,	and	natural

disasters.

Although	the	effect	of	any	of	the	foregoing	factors	is	difficult	to	predict,	any	one	or	more	of	them	could	adversely	affect	Arconic's	business,	financial	condition,	or results	of	operations.	While	Arconic	believes	it	has	adopted	appropriate	risk	management,	compliance	programs	and	insurance	arrangements	to	address	and	reduce	the risks	associated	with	these	factors,	such	measures	may	provide	inadequate	protection	against	costs	or	liabilities	that	may	arise	from	such	events.

As	a	public	company,	Arconic	is	subject	to,	among	other	things,	the	reporting	requirements	of	the	Securities	Exchange	Act	of	1934,	as	amended,	the	Sarbanes-Oxley Act,	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	and	the	regulations	of	the	New	York	Stock	Exchange.	Arconic's	failure	to	comply	with applicable	law	could	subject	it	to	penalties	under	federal	securities	laws,	expose	it	to	lawsuits	and	restrict	its	ability	to	access	financing.	Under	the	Sarbanes-Oxley	Act, Arconic	must	maintain	effective	disclosure	controls	and	procedures	and	internal	control	over	financial	reporting.	There	can	be	no	assurance	that	Arconic's	internal control	over	financial	reporting	will	be	effective	in	the	future	or	that	a	material	weakness	will	not	be	discovered	with	respect	to	a	prior	period	for	which	the	Company had	previously	believed	that	internal	controls	were	effective.	Any	failure	to	maintain	effective	disclosure	controls	and	procedures	or	internal	control	over	financial reporting	could	result	in	adverse	regulatory	consequences	and/or	a	loss	of	investor	confidence,	which	could	limit	the	Company's	ability	to	access	the	global	capital markets	and	could	have	a	material	adverse	effect	on	the	Company's	business,	financial	condition	or	the	market	price	of	Arconic	securities.

# A	material	disruption	of	Arconic's	operations,	particularly	at	one	or	more	of	the	Company's	manufacturing	facilities,	could	adversely	affect	Arconic's business.

If	Arconic's	operations,	particularly	one	of	the	Company's	manufacturing	facilities,	were	to	be	disrupted	as	a	result	of	significant	equipment	failures,	natural	disasters, power	outages,	fires,	explosions,	terrorism,	theft,	sabotage,	adverse	weather	conditions,	public	health	crises,	labor	disputes	or	other	reasons,	the	Company	may	be	unable to	effectively	meet	its	obligations	to	or	demand	from	its	customers,	which	could	adversely	affect	Arconic's	financial	performance.

Interruptions	in	production	could	increase	the	Company's	costs	and	reduce	its	sales.	Any	interruption	in	production	capability	could	require	the	Company	to	make substantial	capital	expenditures	or	purchase	alternative	material	at	higher	costs	to	fill	customer	orders,	which	could	negatively	affect	Arconic's	profitability	and	financial condition.	Arconic	maintains	property	damage	insurance	that	the	Company	believes	to	be	adequate	to	provide	for	reconstruction	of	facilities	and	equipment,	as	well	as business	interruption	insurance	to	mitigate	losses	resulting	from	significant	production	interruption	or	shutdown	caused	by	an	insured	loss.	However,	any	recovery under	Arconic's	insurance	policies	may	not	offset	the	lost	profits	or	increased	costs	that	may	be	experienced	during	the	disruption	of	operations,	which	could	adversely affect	Arconic's	business,	results	of	operations,	financial	condition	and	cash	flow.

# Arconic	may	face	challenges	to	its	intellectual	property	rights	which	could	adversely	affect	the	Company's	reputation,	business	and	competitive	position.

Arconic	owns	important	intellectual	property,	including	patents,	trademarks,	copyrights	and	trade	secrets.	The	Company's	intellectual	property	plays	an	important	role	in maintaining	Arconic's	competitive	position	in	a	number	of	the	markets	that	the	Company	serves.	Arconic's	competitors	may	develop	technologies	that	are	similar	or superior	to	Arconic's	proprietary	technologies	or	design	around	the	patents	Arconic	owns	or	licenses.	The	pursuit	of	remedies	for	any	misappropriation	of	Arconic intellectual	property	is	expensive	and	the	ultimate	remedies	may	be	deemed	insufficient.	Further,	as	the	Company	expands	its	operations	in	jurisdictions	where	the enforcement	of	intellectual	property	rights	is	less	robust,	the	risk	of	misappropriation	of	Arconic	intellectual	property	increases,	despite	efforts	the	Company	undertakes to	protect	it.	Developments	or	assertions	by	or	against	Arconic	relating	to	intellectual	property	rights,	and	any	inability	to	protect	or	enforce	Arconic's	rights	sufficiently, could	adversely	affect	Arconic's	business	and	competitive	position.

# Arconic	may	be	unable	to	realize	the	expected	benefits	from	acquisitions,	divestitures,	joint	ventures	and	strategic	alliances.

Arconic	has	made,	and	may	continue	to	plan	and	execute,	acquisitions	and	divestitures	and	take	other	actions	to	grow	its	business	or	streamline	its	portfolio.	Although management	believes	that	its	strategic	actions	are	beneficial	to	Arconic,	there	is	no	assurance	that	anticipated	benefits	will	be	realized.	Acquisitions	present	significant challenges	and	risks,	including	the	effective	integration	of	the	business	into	the	Company,	unanticipated	costs	and	liabilities,	and	the	ability	to	realize	anticipated benefits,	such	as	growth	in	market	share,	revenue	or	margins,	at	the	levels	or	in	the	timeframe	expected.	The	Company	may	be	unable	to	manage	acquisitions successfully.	Additionally,	adverse	factors	may	prevent	Arconic	from	realizing	the	benefits	of	its	growth	projects,	including	unfavorable	global	economic	conditions, currency	fluctuations,	or	unexpected	delays	in	target	timelines.

With	respect	to	portfolio	optimization	actions	such	as	divestitures,	curtailments	and	closures,	Arconic	may	face	barriers	to	exit	from	unprofitable	businesses	or operations,	including	high	exit	costs	or	objections	from	customers,	suppliers,	unions,	local	or	national	governments,	or	other	stakeholders.	In	addition,	Arconic	may retain	unforeseen	liabilities	for	divested	entities	if	a	buyer	fails	to	honor	all	commitments.	Arconic's	business	operations	are	capital	intensive,	and	curtailment	or	closure of	operations	or	facilities	may	include	significant	charges,	including	employee	separation	costs,	asset	impairment	charges	and	other	measures.

In	addition,	Arconic	has	participated	in,	and	may	continue	to	participate	in,	joint	ventures,	strategic	alliances	and	other	similar	arrangements	from	time	to	time.	Although the	Company	has,	in	connection	with	past	and	existing	joint	ventures,	sought	to	protect	its	interests,	joint	ventures	and	strategic	alliances	inherently	involve	special	risks. Whether	or	not	Arconic	holds	majority	interests	or	maintains	operational	control	in	such	arrangements,	its	partners	may:

•have	economic	or	business	interests	or	goals	that	are	inconsistent	with	or	opposed	to	those	of	the

Company;

•exercise	veto	rights	to	block	actions	that	Arconic	believes	to	be	in	its	or	the	joint	venture's	or	strategic	alliance's	best

interests;

•take	action	contrary	to	Arconic's	policies	or	objectives	with	respect	to	investments;

•as	a	result	of	financial	or	other	difficulties,	be	unable	or	unwilling	to	fulfill	their	obligations	under	the	joint	venture,	strategic	alliance	or	other	agreements,	such as	contributing	capital	to	expansion	or	maintenance	projects.

There	can	be	no	assurance	that	acquisitions,	growth	investments,	divestitures,	closures,	joint	ventures,	strategic	alliances	or	similar	arrangements	will	be	undertaken	or completed	in	their	entirety	as	planned	or	that	they	will	be	beneficial	to	Arconic,	whether	due	to	the	above-described	risks,	unfavorable	global	economic	conditions, increases	in	construction	costs,	currency	fluctuations,	political	risks,	or	other	factors.

# Arconic	may	be	unable	to	realize	future	targets	or	goals	established	for	its	business	segments,	or	complete	projects,	at	the	levels,	projected	costs	or	by	the	dates targeted.

From	time	to	time,	Arconic	may	announce	future	targets	or	goals	for	its	business,	which	are	based	on	the	Company's	then	current	expectations,	estimates,	forecasts	and projections	about	the	operating	environment,	economies	and	markets	in	which	Arconic	operates.	Future	targets	and	goals	reflect	the	Company's	beliefs	and	assumptions and	its	perception	of	historical	trends,	then	current	conditions	and	expected	future	developments,	as	well	as	other	factors	management	believes	are	appropriate	in	the circumstances.	As	such,	targets	and	goals	are	inherently	subject	to	significant	business,	economic,	competitive	and	other	uncertainties	and	contingencies	regarding future	events,	including	the	risks	discussed	in	this	report.	The	actual	outcome	may	be	materially	different.	There	can	be	no	assurance	that	any	targets	or	goals	established by	the	Company	will	be	accomplished	at	the	levels	or	by	the	dates	targeted,	if	at	all.	Failure	to	achieve	the	targets	or	goals	by	the	Company	may	have	a	material	adverse effect	on	its	business,	financial	condition,	results	of	operations	or	the	market	price	of	its	securities.

In	addition,	the	implementation	of	Arconic's	business	strategy	periodically	involves	the	entry	into	and	the	execution	of	complex	projects,	which	place	significant demands	on	the	Company's	management	and	personnel,	and	may	depend	on	numerous	factors	beyond	the	Company's	control.	There	can	be	no	assurance	that	such projects	will	be	completed	within	budgeted	costs,	on	a	timely	basis,	or	at	all,	whether	due	to	the	risks	described	in	this	report,	or	other	factors.	The	failure	to	complete	a material	project	as	planned,	or	a	significant	delay	in	a	material	project,	whatever	the	cause,	could	have	an	adverse	effect	on	Arconic's	business,	financial	condition,	or results	of	operations.

Arconic's	plans	to	restructure	the	Company,	including	separating	into	two	companies	and	the	possible	sales	of	businesses,	will	involve	significant	time	and expense,	which	could	disrupt	or	adversely	affect	Arconic's	business,	may	not	achieve	some	or	all	of	the	anticipated	benefits,	are	subject	to	various	risks	and uncertainties	and	may	not	be	completed	in	accordance	with	the	expected	plans	or	anticipated	timelines,	or	at	all.

On	February	8,	2019,	Arconic	announced	plans	to	separate	into	Engineered	Products	&	Forgings	and	Global	Rolled	Products,	with	a	spin-off	of	one	of	the	businesses, and	to	consider	the	possible	sales	of	certain	businesses.

Arconic	expects	that	the	process	of	completing	the	proposed	separation	and	possible	sales	of	businesses	will	be	time-consuming	and	involve	significant	costs	and expenses,	which	may	be	significantly	higher	than	what	it	currently	anticipates	and	may	not	yield	a	benefit	if	the	separation	and/or	sales	are	not	completed.	Executing these	transactions	will	also	require	significant	time	and	attention	from	Arconic's	senior	management	and	employees,	which	could	disrupt	the	Company's	ongoing business	and	adversely	affect	financial	results	and	results	of	operations.	Arconic	may	also	experience	increased	difficulties	in	attracting,	retaining	and	motivating employees	or	maintaining	or	initiating	relationships	with	lead	suppliers,	customers	and	other	parties	with	which	Arconic	currently	does	business,	or	may	do	business	in the	future,	during	the	pendency	of	the	separation	and/or	possible	sales	of	businesses	and	following	their	completion,	which	could	have	a	material	and	adverse	effect	on Arconic's	businesses,	financial	condition,	results	of	operations	and	prospects,	or	the	businesses,	financial	condition,	results	of	operations	and	prospects	of	the independent	companies	resulting	from	the	separation.

Arconic	may	not	realize	some	or	all	of	the	anticipated	strategic,	financial,	operational	or	other	benefits	from	the	separation	and/or	possible	sales	of	businesses.	For example,	as	independent	companies,	the	Engineered	Products	&	Forgings	and	Global	Rolled	Products	businesses	will	be	smaller,	less	diversified	companies	with	a narrower	business	focus	and	may	be	more	vulnerable	to	changing	market	conditions,	such	as	changes	in	industry	conditions,	which	could	result	in	increased	volatility	in their	cash	flows,	working	capital	and	financing	requirements	and	could	materially	and	adversely	affect	the	respective	business,	financial	condition	and	results	of operations.	Moreover,	following	the	separation,	there	can	be	no	assurance	that	either	company	will	be	able	to	obtain	an	investment	grade	rating	from	nationally recognized	credit	rating	agencies,	which	could,	among	other	things,	increase	the	non-investment	grade	rated	company's	cost	of	capital.	Further,	there	can	be	no assurance	that	the	combined	value	of	the	common	stock	of	the	two	companies	will	be	equal	to	or	greater	than	what	the	value	of	Arconic's	common	stock	would	have been	had	the	proposed	separation	not	occurred.	In	addition,	if	Arconic	pursues	the	possible	sales	of	businesses,	it	may	face	barriers	to	exit	or	objections	from	various stakeholders,	and/or	may	retain	liabilities	for	divested	entities.	There	can	be	no	assurance	that	any	such	sales	will	be	undertaken	or	completed	or	that	they	will	be beneficial	to	Arconic,	whether	due	to	the	above-described	risks,	unfavorable	global	economic	conditions,	currency	fluctuations,	political	risks,	or	other	factors.

Additionally,	the	separation	is	subject	to	approval	by	Arconic's	Board	of	Directors	and	market,	regulatory	and	certain	other	conditions.	Unanticipated	developments, including,	among	others,	failure	of	the	separation	to	qualify	for	the	expected	tax	treatment,	the	possibility	that	any	third-party	consents	required	in	connection	with	the separation	will	not	be	received,	material	adverse	changes	in	business	or	industry	conditions,	changes	in	global	economic	and	financial	market	conditions	generally,	and the	ability	to	complete	the	possible	sales	of	businesses,	could	delay	or	prevent	the	completion	of	the	proposed	separation,	or	cause	the	proposed	separation	to	occur	on terms	or	conditions	that	are	different	or	less	favorable	than	expected.

Information	technology	system	failures,	cyber	attacks	and	security	breaches	may	threaten	the	integrity	of	Arconic's	intellectual	property	and	other	sensitive information,	disrupt	its	business	operations,	and	result	in	reputational	harm	and	other	negative	consequences	that	could	have	a	material	adverse	effect	on	its financial	condition	and	results	of	operations.

Arconic	relies	on	its	information	technology	systems	to	manage	and	operate	its	business,	process	transactions,	and	summarize	its	operating	results.	Arconic's information	technology	systems	are	subject	to	damage	or	interruption	from	power	outages,	computer	and	telecommunications	failures,	computer	viruses,	and catastrophic	events,	such	as	fires,	floods,	earthquakes,	tornadoes,	hurricanes,	acts	of	war	or	terrorism,	and	usage	errors	by	employees.	If	Arconic's	information technology	systems	are	damaged	or	cease	to	function	properly,	the	Company	may	have	to	make	a	significant	investment	to	fix	or	replace	them,	and	Arconic	may	suffer loss	of	critical	data	and	interruptions	or	delays	in	its	operations.	Any	material	disruption	in	the	Company's	information	technology	systems,	or	delays	or	difficulties	in implementing	or	integrating	new

systems	or	enhancing	current	systems,	could	have	an	adverse	effect	on	Arconic's	business,	financial	condition	or	results	of	operations.

Arconic	also	faces	global	cybersecurity	threats,	which	may	range	from	uncoordinated	individual	attempts	to	sophisticated	and	targeted	measures,	known	as	advanced persistent	threats,	directed	at	the	Company.	Cyber	attacks	and	security	breaches	may	include,	but	are	not	limited	to,	attempts	to	access	information,	computer	viruses, denial	of	service	and	other	electronic	security	breaches.

The	Company	believes	that	it	faces	a	heightened	threat	of	cyber	attacks	due	to	the	industries	it	serves,	the	locations	of	its	operations	and	its	technological	innovations. The	Company	has	experienced	cybersecurity	attacks	in	the	past,	including	breaches	of	its	information	technology	systems	in	which	information	was	taken,	and	may experience	them	in	the	future,	potentially	with	more	frequency	or	sophistication.	Based	on	information	known	to	date,	past	attacks	have	not	had	a	material	impact	on Arconic's	financial	condition	or	results	of	operations.	However,	due	to	the	evolving	nature	of	cybersecurity	threats,	the	scope	and	impact	of	any	future	incident	cannot be	predicted.

Arconic	employs	a	number	of	measures	to	protect	and	defend	against	cyber	attacks,	including	technical	security	controls,	data	encryption,	firewalls,	intrusion	prevention systems,	anti-virus	software	and	frequent	backups.	Additionally,	the	Company	conducts	regular	periodic	training	of	its	employees	regarding	the	protection	of	sensitive information	which	includes	training	intended	to	prevent	the	success	of	"phishing"	attacks.	While	the	Company	continually	works	to	safeguard	its	systems	and	mitigate potential	risks,	there	is	no	assurance	that	such	actions	will	be	sufficient	to	prevent	cyber	attacks	or	security	breaches	that	manipulate	or	improperly	use	its	systems	or networks,	compromise	confidential	or	otherwise	protected	information,	destroy	or	corrupt	data,	or	otherwise	disrupt	its	operations.	The	occurrence	of	such	events	could negatively	impact	Arconic's	reputation	and	its	competitive	position	and	could	result	in	litigation	with	third	parties,	regulatory	action,	loss	of	business,	potential	liability and	increased	remediation	costs,	any	of	which	could	have	a	material	adverse	effect	on	its	financial	condition	and	results	of	operations.	In	addition,	such	attacks	or breaches	could	require	significant	management	attention	and	resources,	and	result	in	the	diminution	of	the	value	of	the	Company's	investment	in	research	and development.

Arconic's	enterprise	risk	management	program	and	disclosure	controls	and	procedures	address	cybersecurity	and	include	elements	intended	to	ensure	that	there	is	an analysis	of	potential	disclosure	obligations	arising	from	cyber	attacks	and	security	breaches.	Arconic	also	maintains	compliance	programs	to	address	the	potential applicability	of	restrictions	against	trading	while	in	possession	of	material,	nonpublic	information	generally	and	in	connection	with	a	cyber	attack	or	security	breach. However,	a	breakdown	in	existing	controls	and	procedures	around	the	Company's	cybersecurity	environment	may	prevent	Arconic	from	detecting,	reporting	or responding	to	cyber	incidents	in	a	timely	manner	and	could	have	a	material	adverse	effect	on	the	Company's	financial	condition	or	the	market	price	of	its	securities.

# A	decline	in	Arconic's	financial	performance	or	outlook	could	negatively	impact	the	Company's	access	to	the	global	capital	markets,	reduce	the	Company's liquidity	and	increase	its	borrowing	costs.

Arconic	has	significant	capital	requirements	and	depends,	in	part,	upon	the	issuance	of	debt	to	fund	its	operations	and	contractual	commitments	and	pursue	strategic acquisitions.	A	decline	in	the	Company's	financial	performance	or	outlook	due	to	internal	or	external	factors	could	affect	the	Company's	access	to,	and	the	availability or	cost	of,	financing	on	acceptable	terms	and	conditions.	There	can	be	no	assurance	that	Arconic	will	have	access	to	the	global	capital	market	on	terms	the	Company finds	acceptable.	Limitations	on	Arconic's	ability	to	access	the	global	capital	markets,	a	reduction	in	the	Company's	liquidity	or	an	increase	in	borrowing	costs	could materially	and	adversely	affect	Arconic's	ability	to	maintain	or	grow	its	business,	which	in	turn	may	adversely	affect	its	financial	condition	and	results	of	operations.

A	downgrade	of	Arconic's	credit	ratings	could	limit	Arconic's	ability	to	obtain	future	financing,	increase	its	borrowing	costs,	increase	the	pricing	of	its	credit facilities,	adversely	affect	the	market	price	of	its	securities,	trigger	letter	of	credit	or	other	collateral	postings,	or	otherwise	impair	its	business,	financial condition,	and	results	of	operations.

Arconic's	credit	ratings	are	important	to	the	Company's	cost	of	capital.	The	major	rating	agencies	routinely	evaluate	Arconic's	credit	profile	and	assign	debt	ratings	to the	Company.	This	evaluation	is	based	on	a	number	of	factors,	which	include	financial	strength,	business	and	financial	risk,	as	well	as	transparency	with	rating	agencies and	timeliness	of	financial	reporting.	On	May	1,	2017,	Standard	and	Poor's	Ratings	Services	(S&P)	affirmed	Arconic's	long-term	debt	at	BBB-,	an	investment	grade rating,	with	a	stable	outlook,	and	its	short-term	debt	at	A-3.	On	February	7,	2019,	S&P	changed	the	outlook	from	stable	to	negative	credit	watch.	On	October	8,	2018, Moody's	Investor	Service	(Moody's)	affirmed	Arconic's	long-term	debt	rating	at	Ba2,	a	non-investment	grade,	with	a	stable	outlook,	and	its	short-term	debt	rating	at Speculative	Grade	Liquidity-2.	On	September	27,	2018,	Fitch	affirmed	Arconic's	long-term	debt	rating	at	BB+,	a	non-investment	grade,	and	short-term	debt	at	B. Additionally,	Fitch	changed	the	outlook	from	stable	to	positive.

There	can	be	no	assurance	that	one	or	more	of	these	or	other	rating	agencies	will	not	take	negative	actions	with	respect	to	Arconic's	ratings.	Increased	debt	levels, macroeconomic	conditions,	a	deterioration	in	the	Company's	debt	protection	metrics,

a	contraction	in	the	Company's	liquidity,	or	other	factors	could	potentially	trigger	such	actions.	A	rating	agency	may	lower,	suspend	or	withdraw	entirely	a	rating	or place	it	on	negative	outlook	or	watch	if,	in	that	rating	agency's	judgment,	circumstances	so	warrant.

A	downgrade	of	Arconic's	credit	ratings	by	one	or	more	rating	agencies	could	adversely	impact	the	market	price	of	Arconic's	securities;	adversely	affect	existing financing	(for	example,	a	downgrade	by	S&P	or	Moody's	would	subject	Arconic	to	higher	costs	under	Arconic's	Five-Year	Revolving	Credit	Agreement	and	certain	of its	other	revolving	credit	facilities);	limit	access	to	the	capital	(including	commercial	paper)	or	credit	markets	or	otherwise	adversely	affect	the	availability	of	other	new financing	on	favorable	terms,	if	at	all;	result	in	more	restrictive	covenants	in	agreements	governing	the	terms	of	any	future	indebtedness	that	the	Company	incurs; increase	the	cost	of	borrowing	or	fees	on	undrawn	credit	facilities;	result	in	vendors	or	counterparties	seeking	collateral	or	letters	of	credit	from	Arconic;	or	otherwise impair	Arconic's	business,	financial	condition,	liquidity	and	results	of	operations.

# Arconic's	business	and	growth	prospects	may	be	negatively	impacted	by	limits	in	its	capital	expenditures.

Arconic	requires	substantial	capital	to	invest	in	growth	opportunities	and	to	maintain	and	prolong	the	life	and	capacity	of	its	existing	facilities.	Insufficient	cash generation	or	capital	project	overruns	may	negatively	impact	Arconic's	ability	to	fund	as	planned	its	sustaining	and	return-seeking	capital	projects.	Over	the	long	term, Arconic's	ability	to	take	advantage	of	improved	market	conditions	or	growth	opportunities	in	its	businesses	may	be	constrained	by	earlier	capital	expenditure restrictions,	which	could	adversely	affect	the	long-term	value	of	its	business	and	the	Company's	position	in	relation	to	its	competitors.

# An	adverse	decline	in	the	liability	discount	rate,	lower-than-expected	investment	return	on	pension	assets	and	other	factors	could	affect	Arconic's	results	of operations	or	amount	of	pension	funding	contributions	in	future	periods.

Arconic's	results	of	operations	may	be	negatively	affected	by	the	amount	of	expense	Arconic	records	for	its	pension	and	other	postretirement	benefit	plans,	reductions	in the	fair	value	of	plan	assets	and	other	factors.	Arconic	calculates	income	or	expense	for	its	plans	using	actuarial	valuations	in	accordance	with	accounting	principles generally	accepted	in	the	United	States	of	America	(GAAP).

These	valuations	reflect	assumptions	about	financial	market	and	other	economic	conditions,	which	may	change	based	on	changes	in	key	economic	indicators.	The	most significant	year-end	assumptions	used	by	Arconic	to	estimate	pension	or	other	postretirement	benefit	income	or	expense	for	the	following	year	are	the	discount	rate applied	to	plan	liabilities	and	the	expected	long-term	rate	of	return	on	plan	assets.	In	addition,	Arconic	is	required	to	make	an	annual	measurement	of	plan	assets	and liabilities,	which	may	result	in	a	significant	charge	to	shareholders'	equity.	For	a	discussion	regarding	how	Arconic's	financial	statements	can	be	affected	by	pension	and other	postretirement	benefits	accounting	policies,	see	"Critical	Accounting	Policies	and	Estimates-Pension	and	Other	Postretirement	Benefits"	in	Part	II,	Item	7. (Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	Note	G	to	the	Consolidated	Financial	Statements-Pension	and	Other Postretirement	Benefits	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data).	Although	GAAP	expense	and	pension	funding	contributions	are	impacted	by different	regulations	and	requirements,	the	key	economic	factors	that	affect	GAAP	expense	would	also	likely	affect	the	amount	of	cash	or	securities	Arconic	would contribute	to	the	pension	plans.

Potential	pension	contributions	include	both	mandatory	amounts	required	under	federal	law	and	discretionary	contributions	to	improve	the	plans'	funded	status.	The Moving	Ahead	for	Progress	in	the	21st	Century	Act	("MAP-21"),	enacted	in	2012,	provided	temporary	relief	for	employers	like	Arconic	who	sponsor	defined	benefit pension	plans	related	to	funding	contributions	under	the	Employee	Retirement	Income	Security	Act	of	1974	by	allowing	the	use	of	a	25-year	average	discount	rate within	an	upper	and	lower	range	for	purposes	of	determining	minimum	funding	obligations.	In	2014,	the	Highway	and	Transportation	Funding	Act	(HATFA)	was signed	into	law.	HATFA	extended	the	relief	provided	by	MAP-21	and	modified	the	interest	rates	that	had	been	set	by	MAP-21.	In	2015,	the	Bipartisan	Budget	Act	of 2015	(BBA	2015)	was	signed	into	law.	BBA	2015	extends	the	relief	period	provided	by	HAFTA.	Arconic	believes	that	the	relief	provided	by	BBA	2015	will	moderately reduce	the	cash	flow	sensitivity	of	the	Company's	U.S.	pension	plans'	funded	status	to	potential	declines	in	discount	rates	over	the	next	several	years.	However,	higher than	expected	pension	contributions	due	to	a	decline	in	the	plans'	funded	status	as	a	result	of	declines	in	the	discount	rate	or	lower-than-expected	investment	returns	on plan	assets	could	have	a	material	negative	effect	on	the	Company's	cash	flows.	Adverse	capital	market	conditions	could	result	in	reductions	in	the	fair	value	of	plan assets	and	increase	the	Company's	liabilities	related	to	such	plans,	which	could	adversely	affect	Arconic's	liquidity	and	results	of	operations.

# Unanticipated	changes	in	Arconic's	tax	provisions	or	exposure	to	additional	tax	liabilities	could	affect	Arconic's	future	profitability.

Arconic	is	subject	to	income	taxes	in	both	the	United	States	and	various	non-U.S.	jurisdictions.	Its	domestic	and	international	tax	liabilities	are	dependent	upon	the distribution	of	income	among	these	different	jurisdictions.	Changes	in	applicable	domestic	or	foreign	tax	laws	and	regulations,	or	their	interpretation	and	application, including	the	possibility	of	retroactive

effect,	could	affect	the	Company's	tax	expense	and	profitability.	Arconic's	tax	expense	includes	estimates	of	additional	tax	that	may	be	incurred	for	tax	exposures	and reflects	various	estimates	and	assumptions.	The	assumptions	include	assessments	of	future	earnings	of	the	Company	that	could	impact	the	valuation	of	its	deferred	tax assets.	The	Company's	future	results	of	operations	could	be	adversely	affected	by	changes	in	the	effective	tax	rate	as	a	result	of	a	change	in	the	mix	of	earnings	in countries	with	differing	statutory	tax	rates,	changes	in	the	overall	profitability	of	the	Company,	changes	in	tax	legislation	and	rates,	changes	in	generally	accepted accounting	principles,	changes	in	the	valuation	of	deferred	tax	assets	and	liabilities,	the	results	of	tax	audits	and	examinations	of	previously	filed	tax	returns	or	related litigation	and	continuing	assessments	of	its	tax	exposures.

Corporate	tax	law	changes	continue	to	be	analyzed	in	the	United	States	and	in	many	other	jurisdictions.	In	particular,	on	December	22,	2017,	the	Tax	Cuts	and	Jobs	Act (the	"2017	Act")	was	signed	into	law,	significantly	reforming	the	United	States	Internal	Revenue	Code	of	1986,	as	amended.	During	2018,	the	Internal	Revenue	Service began	a	number	of	guidance	projects	which	serve	to	both	interpret	and	implement	the	2017	Act.	Those	guidance	projects,	which	include	both	Proposed	and	Final Treasury	Regulations,	will	continue	into	2019.	The	Company	continues	to	review	the	components	of	the	2017	Act,	as	well	as	the	ongoing	interpretive	guidance,	and evaluate	its	consequences.	As	such,	the	ultimate	impact	of	the	2017	Act	may	differ	from	reported	amounts	due	to,	among	other	things,	changes	in	interpretations	and assumptions	the	Company	has	made	to	date;	and	actions	the	Company	may	take	as	a	result	of	the	2017	Act	and	related	guidance.	These	changes	to	the	U.S.	corporate	tax system	could	have	a	substantial	impact,	positive	or	negative,	on	Arconic's	future	effective	tax	rate,	cash	tax	expenditures,	and	deferred	tax	assets	and	liabilities.

# Arconic's	business	could	be	adversely	affected	by	increases	in	the	cost	of	aluminum.

Arconic	derives	a	significant	portion	of	its	revenue	from	aluminum-based	products.	The	price	of	primary	aluminum	has	historically	been	subject	to	significant	cyclical price	fluctuations	and	the	timing	of	changes	in	the	market	price	of	aluminum	is	largely	unpredictable.	Although	the	Company's	pricing	of	products	is	generally	intended to	pass	the	risk	of	metal	price	fluctuations	on	to	the	Company's	customers	or	is	otherwise	hedged,	there	are	situations	where	Arconic	is	unable	to	pass	on	the	entire	cost of	increases	to	its	customers	and	there	is	a	potential	time	lag	on	certain	products	between	increases	in	costs	for	aluminum	and	the	point	when	the	Company	can implement	a	corresponding	increase	in	price	to	its	customers	and/or	there	are	other	timing	factors	that	may	result	in	Arconic's	exposure	to	certain	price	fluctuations which	could	have	a	material	adverse	effect	on	Arconic's	business,	financial	condition	or	results	of	operations.

# Arconic	is	exposed	to	fluctuations	in	foreign	currency	exchange	rates	and	interest	rates,	as	well	as	inflation,	economic	factors,	and	currency	controls	in	the countries	in	which	it	operates.

Economic	factors,	including	inflation	and	fluctuations	in	foreign	currency	exchange	rates	and	interest	rates,	competitive	factors	in	the	countries	in	which	Arconic operates,	and	continued	volatility	or	deterioration	in	the	global	economic	and	financial	environment	could	affect	Arconic's	revenues,	expenses	and	results	of	operations. Changes	in	the	valuation	of	the	U.S.	dollar	against	other	currencies,	including	the	Euro,	British	pound,	Chinese	yuan	(renminbi)	and	Russian	ruble,	may	affect	Arconic's profitability	as	some	important	inputs	are	purchased	in	other	currencies,	while	the	Company's	products	are	generally	sold	in	U.S.	dollars.

In	addition,	a	portion	of	Arconic's	indebtedness,	including	certain	borrowings	under	the	Company's	Five-Year	Credit	Facility,	bears	interest	at	rates	equal	to	the	London Interbank	Offering	Rate	(LIBOR)	plus	an	applicable	margin	based	on	the	credit	ratings	of	Arconic's	outstanding	senior	unsecured	long-term	debt.	Accordingly,	the Company	is	subject	to	risk	from	changes	in	interest	rates	on	the	variable	component	of	the	rate.	Further,	LIBOR	is	the	subject	of	recent	national,	international	and	other regulatory	guidance	and	proposals	for	reform.	These	reforms	and	other	pressures	may	cause	LIBOR	to	disappear	entirely	or	to	perform	differently	than	in	the	past.	The consequences	of	these	developments	cannot	be	entirely	predicted,	but	could	include	changes	in	the	cost	of	Arconic's	variable	rate	indebtedness.

Arconic	also	faces	risks	arising	from	the	imposition	of	cash	repatriation	restrictions	and	exchange	controls.	Cash	repatriation	restrictions	and	exchange	controls	may limit	the	Company's	ability	to	convert	foreign	currencies	into	U.S.	dollars	or	to	remit	dividends	and	other	payments	by	Arconic's	foreign	subsidiaries	or	businesses located	in	or	conducted	within	a	country	imposing	restrictions	or	controls.	While	Arconic	currently	has	no	need,	and	does	not	intend,	to	repatriate	or	convert	cash	held	in countries	that	have	significant	restrictions	or	controls	in	place,	should	the	Company	need	to	do	so	to	fund	its	operations,	it	may	be	unable	to	repatriate	or	convert	such cash,	or	be	unable	to	do	so	without	incurring	substantial	costs.	Arconic	currently	has	substantial	operations	in	countries	that	have	cash	repatriation	restrictions	or exchange	controls	in	place,	including	China,	and,	if	the	Company	were	to	need	to	repatriate	or	convert	such	cash,	these	controls	and	restrictions	may	have	an	adverse effect	on	Arconic's	operating	results	and	financial	condition.

# Arconic	may	not	realize	expected	benefits	from	its	productivity	and	cost-reduction	initiatives.

Arconic	has	undertaken,	and	may	continue	to	undertake,	productivity	and	cost-reduction	initiatives	to	improve	performance	and	conserve	cash,	including	deployment	of company-wide	business	process	models,	such	as	Arconic's	degrees	of

implementation	process	in	which	ideas	are	executed	in	a	disciplined	manner	to	generate	savings,	and	operating	cost	reductions,	including,	among	others,	those announced	on	February	8,	2019,	in	connection	with	the	Company's	ongoing	strategic	and	portfolio	review.	There	is	no	assurance	that	these	initiatives	will	be	successful or	beneficial	to	Arconic	or	that	estimated	cost	savings	from	such	activities	will	be	realized.	If	Arconic	fails	to	achieve	net	cost	savings	at	anticipated	levels,	its	business, financial	condition	or	results	of	operations	could	be	adversely	affected.

# Arconic's	customers	may	reduce	their	demand	for	aluminum	products	in	favor	of	alternative	materials.

Certain	applications	of	Arconic's	aluminum-based	products	compete	with	products	made	from	other	materials,	such	as	steel,	titanium	and	composites.	The	willingness	of customers	to	pursue	materials	other	than	aluminum	depends	upon	the	desire	to	achieve	specific	attributes.	For	example,	the	commercial	aerospace	industry	has	used	and continues	to	evaluate	the	further	use	of	alternative	materials	to	aluminum,	such	as	titanium	and	composites,	in	order	to	reduce	the	weight	and	increase	the	fuel	efficiency of	aircraft.	Additionally,	the	automotive	industry,	while	motivated	to	reduce	vehicle	weight	through	the	use	of	aluminum,	may	revert	to	steel	or	other	materials	for certain	applications.	Further,	the	decision	to	use	aluminum	may	be	impacted	by	aluminum	prices.	The	willingness	of	customers	to	accept	other	materials	in	lieu	of aluminum	could	adversely	affect	the	demand	for	certain	of	Arconic's	products,	and	thus	adversely	affect	Arconic's	business,	financial	condition	or	results	of	operations.

# Arconic's	profitability	could	be	adversely	affected	by	volatility	in	the	availability	or	cost	of	raw	materials.

Arconic's	results	of	operations	may	be	affected	by	changes	in	the	availability	or	cost	of	raw	materials	(including,	but	not	limited	to,	aluminum,	cobalt,	nickel,	titanium sponge	and	vanadium),	as	well	as	freight	costs	associated	with	transportation	of	raw	materials.	The	availability	and	costs	of	certain	raw	materials	necessary	for	the production	of	Arconic's	products	may	be	influenced	by	private	or	government	entities	including	mergers	and	acquisitions,	changes	in	world	politics	or	regulatory requirements,	labor	relations	between	the	producers	and	their	work	forces,	unstable	governments	in	exporting	nations,	export	quotas,	sanctions,	new	or	increased	import duties,	countervailing	or	anti-dumping	duties,	market	forces	of	supply	and	demand,	and	inflation.	In	addition,	from	time	to	time,	commodity	prices	may	fall	rapidly. When	this	happens,	suppliers	may	withdraw	capacity	from	the	market	until	prices	improve,	which	may	cause	periodic	supply	interruptions.	Arconic	may	be	unable	to offset	fully	the	effects	of	raw	material	shortages	or	higher	costs	through	customer	price	increases,	productivity	improvements	or	cost	reduction	programs.	Shortages	or price	fluctuations	in	raw	materials	could	have	a	material	adverse	effect	on	Arconic's	operating	results.

# Union	disputes	and	other	employee	relations	issues	could	adversely	affect	Arconic's	business,	financial	condition	or	results	of	operations.

A	significant	portion	of	Arconic's	employees	are	represented	by	labor	unions	in	a	number	of	countries	under	various	collective	bargaining	agreements	with	varying durations	and	expiration	dates.	For	more	information,	see	"Employees"	in	Part	I,	Item	1.	(Business)	of	this	report.	While	Arconic	previously	has	been	successful	in renegotiating	its	collective	bargaining	agreements	with	various	unions,	Arconic	may	not	be	able	to	satisfactorily	renegotiate	all	collective	bargaining	agreements	in	the United	States	and	other	countries	when	they	expire.	In	addition,	existing	collective	bargaining	agreements	may	not	prevent	a	strike	or	work	stoppage	at	Arconic's facilities	in	the	future.	Arconic	may	also	be	subject	to	general	country	strikes	or	work	stoppages	unrelated	to	its	business	or	collective	bargaining	agreements.	Any	such work	stoppages	(or	potential	work	stoppages)	could	have	a	material	adverse	effect	on	Arconic's	business,	financial	condition	or	results	of	operations.

# A	failure	to	attract,	retain	or	provide	adequate	succession	plans	for	key	personnel	could	adversely	affect	Arconic's	operations	and	competitiveness.

Arconic's	existing	operations	and	development	projects	require	highly	skilled	executives	and	staff	with	relevant	industry	and	technical	experience.	The	inability	of	the Company	to	attract	and	retain	such	people	may	adversely	impact	Arconic's	ability	to	meet	project	demands	adequately	and	fill	roles	in	existing	operations.	Skills shortages	in	engineering,	manufacturing,	technology,	construction	and	maintenance	contractors	and	other	labor	market	inadequacies	may	also	impact	activities.	These shortages	may	adversely	impact	the	cost	and	schedule	of	development	projects	and	the	cost	and	efficiency	of	existing	operations.

In	addition,	the	continuity	of	key	personnel	and	the	preservation	of	institutional	knowledge	are	vital	to	the	success	of	the	Company's	growth	and	business	strategy.	The loss	of	key	members	of	management	and	other	personnel	could	significantly	harm	Arconic's	business,	and	any	unplanned	turnover,	or	failure	to	develop	adequate succession	plans	for	key	positions,	could	deplete	the	Company's	institutional	knowledge	base,	delay	or	impede	the	execution	of	the	Company's	business	plans	and	erode Arconic's	competitiveness.

# Arconic	may	be	exposed	to	significant	legal	proceedings,	investigations	or	changes	in	U.S.	federal,	state	or	foreign	law,	regulation	or	policy.

Arconic's	results	of	operations	or	liquidity	in	a	particular	period	could	be	affected	by	new	or	increasingly	stringent	laws,

regulatory	requirements	or	interpretations,	or	outcomes	of	significant	legal	proceedings	or	investigations	adverse	to	Arconic.	The	Company	may	experience	a	change	in effective	tax	rates	or	become	subject	to	unexpected	or	rising	costs	associated	with	business	operations	or	provision	of	health	or	welfare	benefits	to	employees	due	to changes	in	laws,	regulations	or	policies.	The	Company	may	be	a	party	to	litigation	in	a	foreign	jurisdiction	where	geopolitical	risks	might	influence	the	ultimate	outcome of	such	litigation.	The	Company	is	also	subject	to	a	variety	of	legal	and	regulatory	compliance	risks	associated	with	its	business	and	products.	These	risks	include, among	other	things,	potential	claims	relating	to	product	liability,	product	testing,	health	and	safety,	environmental	matters,	required	record	keeping	and	record	retention, intellectual	property	rights,	government	contracts	and	taxes,	as	well	as	compliance	with	U.S.	and	foreign	laws	and	regulations	governing	import	and	export,	anti-bribery, antitrust	and	competition,	sales	and	trading	practices,	human	rights	and	modern	slavery,	sourcing	of	raw	materials,	third-party	relationships,	supply	chain	operations	and the	manufacture	and	sale	of	products.	Arconic	could	be	subject	to	fines,	penalties,	damages	(in	certain	cases,	treble	damages),	or	suspension	or	debarment	from government	contracts.

For	example,	in	the	event	that	an	Arconic	product	fails	to	perform	as	expected,	regardless	of	fault,	or	is	used	in	an	unexpected	manner,	and	such	failure	or	use	results	in, or	is	alleged	to	result	in,	bodily	injury	and/or	property	damage	or	other	losses,	Arconic	may	be	subject	to	product	liability	lawsuits	and	other	claims	or	may	be	required or	requested	by	its	customers	to	participate	in	a	recall	or	other	corrective	action	involving	such	product.	In	addition,	if	an	Arconic	product	is	perceived	to	be	defective	or unsafe,	sales	of	the	Company's	products	could	be	diminished,	and	the	Company	could	be	subject	to	further	liability	claims.	Even	if	Arconic	successfully	defends	against these	types	of	claims,	the	Company	could	still	be	required	to	spend	a	substantial	amount	of	money	in	connection	with	legal	proceedings	or	investigations	with	respect	to such	claims;	the	Company's	management	could	be	required	to	devote	significant	time,	attention	and	operational	resources	responding	to	and	defending	against	these claims;	and	Arconic's	reputation	could	suffer,	any	of	which	could	have	a	material	adverse	effect	on	its	financial	condition	and	results	of	operations.

While	Arconic	believes	it	has	adopted	appropriate	risk	management	and	compliance	programs	to	address	and	reduce	these	risks,	including	insurance	arrangements	with respect	to	these	risks,	such	measures	may	provide	inadequate	protection	against	liabilities	that	may	arise.	The	global	and	diverse	nature	of	Arconic's	operations	means that	these	risks	will	continue	to	exist,	and	additional	legal	proceedings	and	contingencies	may	arise	from	time	to	time.	In	addition,	various	factors	or	developments	can lead	the	Company	to	change	current	estimates	of	liabilities	or	make	such	estimates	for	matters	previously	unsusceptible	to	reasonable	estimates,	such	as	a	significant judicial	ruling	or	judgment,	a	significant	settlement,	significant	regulatory	developments	or	changes	in	applicable	law.	A	future	adverse	ruling	or	settlement	or unfavorable	changes	in	laws,	regulations	or	policies,	or	other	contingencies	that	the	Company	cannot	predict	with	certainty	could	have	a	material	adverse	effect	on	the Company's	financial	condition,	results	of	operations	or	cash	flows	in	a	particular	period.	For	additional	information	regarding	the	legal	proceedings	involving	the Company,	see	the	discussion	in	Part	I,	Item	3.	(Legal	Proceedings)	of	this	report	and	in	Note	U	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial Statements	and	Supplementary	Data).

# Arconic	is	subject	to	a	broad	range	of	health,	safety	and	environmental	laws	and	regulations	in	the	jurisdictions	in	which	it	operates	and	may	be	exposed	to substantial	costs	and	liabilities	associated	with	such	laws	and	regulations.

Arconic's	operations	worldwide	are	subject	to	numerous	complex	and	increasingly	stringent	health,	safety	and	environmental	laws	and	regulations.	The	costs	of complying	with	such	laws	and	regulations,	including	participation	in	assessments	and	cleanups	of	sites,	as	well	as	internal	voluntary	programs,	are	significant	and	will continue	to	be	so	for	the	foreseeable	future.	Environmental	laws	may	impose	cleanup	liability	on	owners	and	occupiers	of	contaminated	property,	including	past	or divested	properties,	regardless	of	whether	the	owners	and	occupiers	caused	the	contamination	or	whether	the	activity	that	caused	the	contamination	was	lawful	at	the time	it	was	conducted.	Environmental	matters	for	which	Arconic	may	be	liable	may	arise	in	the	future	at	its	present	sites,	where	no	problem	is	currently	known,	at previously	owned	sites,	sites	previously	operated	by	the	Company,	sites	owned	by	its	predecessors	or	sites	that	it	may	acquire	in	the	future.	Compliance	with	health, safety	and	environmental	laws	and	regulations,	including	remediation	obligations,	may	prove	to	be	more	challenging	and	costly	than	the	Company	anticipates.	For example,	new	data	and	information,	including	information	about	the	ways	in	which	the	Company's	products	are	used,	may	lead	the	Company,	regulatory	authorities, government	agencies	or	other	entities	or	organizations	to	publish	guidelines	or	recommendations,	or	impose	restrictions,	related	to	the	manufacturing	or	use	of	the Company's	products.	This	could	lead	to	reduced	sales	or	market	acceptance	of	the	Company's	products.	Arconic's	results	of	operations	or	liquidity	in	a	particular	period could	be	affected	by	certain	health,	safety	or	environmental	matters,	including	remediation	costs	and	damages	related	to	certain	sites	as	well	as	other	health	and	safety risks	relating	to	its	operations	and	products.	Additionally,	evolving	regulatory	standards	and	expectations	can	result	in	increased	litigation	and/or	increased	costs,	all	of which	can	have	a	material	and	adverse	effect	on	the	Company's	financial	condition,	results	of	operations	and	cash	flows.

# Arconic	is	subject	to	privacy	and	data	security/protection	laws	in	the	jurisdictions	in	which	it	operates	and	may	be	exposed	to	substantial	costs	and	liabilities associated	with	such	laws	and	regulations.

The	regulatory	environment	surrounding	information	security	and	privacy	is	increasingly	demanding,	with	frequent	imposition	of	new	and	changing	requirements.	For example,	the	European	Union's	General	Data	Protection	Regulation	("GDPR"),	which	became	effective	in	May	2018,	imposed	significant	new	requirements	on	how companies	process	and	transfer	personal	data,	as	well	as	significant	fines	for	non-compliance.	Compliance	with	changes	in	privacy	and	information	security	laws	and standards	may	result	in	significant	expense	due	to	increased	investment	in	technology	and	the	development	of	new	operational	processes,	which	could	have	a	material adverse	effect	on	Arconic's	financial	condition	and	results	of	operations.	In	addition,	the	payment	of	potentially	significant	fines	or	penalties	in	the	event	of	a	breach	of the	GDRP	or	other	privacy	and	information	security	laws,	as	well	as	the	negative	publicity	associated	with	such	a	breach,	could	damage	the	Company's	reputation	and adversely	impact	product	demand	and	customer	relationships.

# Arconic	may	be	subject	to	securities	litigation,	which	could	cause	the	Company	to	incur	substantial	costs	and	divert	management's	attention	and	resources.

Arconic	currently	is,	and	may	in	the	future	become,	subject	to	claims	and	litigation	alleging	violations	of	the	securities	laws.	Arconic	is	generally	obliged,	to	the	extent permitted	by	law,	to	indemnify	its	current	and	former	directors	and	officers	who	are	named	as	defendants	in	these	types	of	lawsuits.	Regardless	of	the	outcome,

securities	litigation	may	require	substantial	attention	from	management	and	could	result	in	significant	legal	expenses,	settlement	costs	or	damage	awards	that	could	have a	material	impact	on	the	Company's	financial	position,	results	of	operations	and	cash	flows.

# Failure	to	comply	with	domestic	or	international	employment	and	related	laws	could	result	in	penalties	or	costs	that	could	have	a	material	adverse	effect	on Arconic's	business	results.

Arconic	is	subject	to	a	variety	of	domestic	and	foreign	employment	laws,	such	as	the	Fair	Labor	Standards	Act	(which	governs	such	matters	as	minimum	wages, overtime	and	other	working	conditions),	state	and	local	wage	laws,	the	Employee	Retirement	Income	Security	Act	("ERISA"),	and	regulations	related	to	safety,

discrimination,	organizing,	whistle-blowing,	classification	of	employees,	privacy	and	severance	payments,	citizenship	requirements,	and	healthcare	insurance	mandates. Allegations	that	Arconic	has	violated	such	laws	or	regulations	could	damage	the	Company's	reputation	and	lead	to	fines	from	or	settlements	with	federal,	state	or foreign	regulatory	authorities	or	damages	payable	to	employees,	which	could	have	a	material	adverse	impact	on	Arconic's	operations	and	financial	condition.

# Arconic	may	be	affected	by	global	climate	change	or	by	legal,	regulatory,	or	market	responses	to	such	change.

Increased	concern	over	climate	change	has	led	to	new	and	proposed	legislative	and	regulatory	initiatives,	such	as	cap-and-trade	systems,	additional	limits	on	emissions of	greenhouse	gases	or	Corporate	Average	Fuel	Economy	(CAFE)	standards	in	the	United	States.	New	or	revised	laws	and	regulations	in	this	area	could	directly	and indirectly	affect	Arconic's	customers	and	suppliers	(through	an	increase	in	the	cost	of	production	or	their	ability	to	produce	satisfactory	products)	or	business	(through	an impact	on	Arconic's	inventory	availability,	cost	of	sales,	operations	or	demand	for	Arconic	products),	which	could	result	in	an	adverse	effect	on	our	financial	condition, results	of	operations	and	cash	flows.	Compliance	with	any	new	or	more	stringent	laws	or	regulations,	or	stricter	interpretations	of	existing	laws,	could	require	additional expenditures	by	the	Company	or	its	customers	or	suppliers.	Also,	Arconic	relies	on	natural	gas,	electricity,	fuel	oil	and	transport	fuel	to	operate	its	facilities.	Any increased	costs	of	these	energy	sources	because	of	new	laws	could	be	passed	along	to	the	Company	and	its	customers	and	suppliers,	which	could	also	have	a	negative impact	on	Arconic's	profitability.

# Anti-takeover	provisions	could	prevent	or	delay	a	change	in	control	of	Arconic,	including	a	takeover	attempt	by	a	third	party	and	limit	the	power	of	Arconic's shareholders.

Arconic's	Certificate	of	Incorporation	and	Bylaws	contain,	and	Delaware	law	contains,	provisions	that	are	intended	to	deter	coercive	takeover	practices	and	inadequate takeover	bids	by	making	such	practices	or	bids	unacceptably	expensive	to	the	bidder	and	to	encourage	prospective	acquirers	to	negotiate	with	Arconic's	Board	of Directors	rather	than	to	attempt	a	hostile	takeover.	For	example,	Arconic	is	subject	to	Section	203	of	the	Delaware	General	Corporation	Law,	which	imposes	certain restrictions	on	mergers	and	other	business	combinations	between	the	Company	and	any	holder	of	15%	or	more	of	the	Company's	outstanding	common	stock,	which could	make	it	more	difficult	for	another	party	to	acquire	Arconic.	Additionally,	the	Company's	Certificate	of	Incorporation	authorizes	Arconic's	Board	of	Directors	to issue	preferred	stock	or	adopt	other	anti-takeover	measures	without	shareholder	approval.	These	provisions	may	apply	even	if	an	offer	may	be	considered	beneficial	by some	shareholders	and	could	delay	or	prevent	an	acquisition	that	Arconic's	Board	of	Directors	determines	is	not	in	the	best	interests	of	Arconic's	shareholders.	These provisions	may	also	limit	the	price	that	investors	might	be	willing	to	pay	in	the	future	for	shares	of	Arconic	common	stock	or	prevent	or	discourage	attempts	to	remove and	replace	incumbent	directors.

# Dividends	on	Arconic	common	stock	could	be	reduced	or	eliminated	in	the	event	of	material	future	deterioration	in	business	conditions	or	in	other circumstances.

Arconic	has	historically	paid	dividends	on	its	common	stock;	however,	it	has	no	obligation	to	do	so.	The	existence,	timing,	declaration,	amount	and	payment	of	future dividends	to	Arconic's	shareholders	falls	within	the	discretion	of	Arconic's	Board	of	Directors,	and	the	Company's	dividend	policy	may	change	at	any	time	without advance	notice	to	Arconic's	shareholders.	For	example,	on	February	8,	2019,	in	connection	with	the	Company's	ongoing	strategic	and	portfolio	review,	Arconic announced	that	it	expected	to	reduce	its	quarterly	common	stock	dividend	from	$0.06	to	$0.02	per	share.	The	Arconic	Board	of	Directors'	decisions	regarding	the payment	of	dividends	will	depend	on	many	factors,	such	as	Arconic's	financial	condition,	earnings,	capital	requirements,	debt	service	obligations,	covenants	associated with	certain	of	the	Company's	debt	service	obligations,	industry	practice,	legal	requirements,	regulatory	constraints	and	other	factors	that	Arconic's	Board	of	Directors deems	relevant.	Arconic's	Board	of	Directors	may	determine	to	further	reduce	or	eliminate	Arconic's	common	stock	dividend	in	the	event	of	material	future deteriorations	in	business	conditions	or	in	other	circumstances.

# Changes	in	the	United	Kingdom's	economic	and	other	relationships	with	the	European	Union	could	adversely	affect	Arconic.

In	March	2017,	the	United	Kingdom	formally	triggered	the	process	to	withdraw	from	the	European	Union	(also	referred	to	as	"Brexit")	following	the	results	of	a national	referendum	that	took	place	in	June	2016.	The	ultimate	effects	of	Brexit	on	Arconic	are	difficult	to	predict,	but	because	the	Company	currently	operates	and conducts	business	in	the	United	Kingdom	and	in	Europe,	Brexit	could	cause	disruptions	and	create	uncertainty	to	Arconic's	businesses,	including	affecting	the	business of	and/or	our	relationships	with	Arconic's	customers	and	suppliers,	as	well	as	altering	the	relationship	among	tariffs	and	currencies,	including	the	value	of	the	British pound	and	the	Euro	relative	to	the	U.S.	dollar.	Such	disruptions	and	uncertainties	could	adversely	affect	Arconic's	financial	condition,	operating	results	and	cash	flows. In	addition,	Brexit	could	result	in	legal	uncertainty	and	potentially	divergent	national	laws	and	regulations	as	new	legal	relationships	between	the	United	Kingdom	and the	European	Union	are	established.	The	ultimate	effects	of	Brexit	on	Arconic	will	also	depend	on	the	terms	of	any	agreements	the	United	Kingdom	and	the	European Union	make	to	retain	access	to	each	other's	respective	markets	either	during	a	transitional	period	or	more	permanently.

# Arconic	may	not	achieve	some	or	all	of	the	expected	benefits	of	the	Separation	from	Alcoa	Corporation,	and	failure	to	realize	such	benefits	in	a	timely	manner may	materially	adversely	affect	Arconic's	business.

Arconic	may	be	unable	to	achieve	the	full	strategic	and	financial	benefits	expected	to	result	from	the	Separation,	or	such	benefits	may	be	delayed	or	not	occur	at	all.	The Separation	is	expected	to	provide	the	following	benefits,	among	others:	(i)	enabling	the	management	of	each	company	to	pursue	more	effectively	its	own	distinct operating	priorities	and	strategies,	to	focus	on	strengthening	its	core	business	and	its	unique	needs,	and	to	pursue	distinct	and	targeted	opportunities	for	long-term	growth and	profitability;	(ii)	permitting	each	company	to	allocate	its	financial	resources	to	meet	the	unique	needs	of	its	own	business,	allowing	each	company	to	intensify	its focus	on	its	distinct	strategic	priorities	and	to	pursue	more	effectively	its	own	distinct	capital	structures	and	capital	allocation	strategies;	(iii)	allowing	each	company	to articulate	more	effectively	a	clear	investment	thesis	to	attract	a	long-term	investor	base	suited	to	its	business	and	providing	investors	with	two	distinct	and	targeted investment	opportunities;	(iv)	creating	an	independent	equity	currency	tracking	each	company's	underlying	business,	affording	Arconic	and	Alcoa	Corporation	direct access	to	the	capital	markets	and	facilitating	each	company's	ability	to	consummate	future	acquisitions	or	other	restructuring	transactions	utilizing	its	common	stock;	(v) allowing	each	company	more	consistent	application	of	incentive	structures	and	targets,	due	to	the	common	nature	of	the	underlying	businesses;	and	(vi)	separating	and simplifying	the	structures	required	to	manage	two	distinct	and	differing	underlying	businesses.

Arconic	may	not	achieve	these	and	other	anticipated	benefits	for	a	variety	of	reasons,	including,	among	others:	(i)	Arconic	may	be	more	susceptible	to	market fluctuations	and	other	adverse	events	than	if	Alcoa	Corporation	were	still	a	part	of	the	Company	because	Arconic's	business	is	less	diversified	than	it	was	prior	to	the completion	of	the	Separation;	and	(ii)	as	a	smaller,	independent	company,	Arconic	may	be	unable	to	obtain	certain	goods,	services	and	technologies	at	prices	or	on	terms as	favorable	as	those	it	obtained	prior	to	completion	of	the	Separation.	If	Arconic	fails	to	achieve	some	or	all	of	the	benefits	expected	to	result	from	the	Separation,	or	if such	benefits	are	delayed,	it	could	have	a	material	adverse	effect	on	Arconic's	competitive	position,	business,	financial	condition,	results	of	operations	and	cash	flows.

# Alcoa	Corporation	may	fail	to	perform	under	various	transaction	agreements	that	were	executed	as	part	of	the	Separation.

In	connection	with	the	Separation,	Arconic	and	Alcoa	Corporation	entered	into	a	Separation	and	Distribution	Agreement	and	also	entered	into	various	other	agreements, of	which	the	following	were	still	in	effect	during	2018:	a	Tax	Matters	Agreement,	an	Employee	Matters	Agreement,	intellectual	property	license	agreements,	a	metal supply	agreement,	real	estate	and	office	leases	and	a	spare	parts	loan	agreement.	The	Separation	and	Distribution	Agreement,	the	Tax	Matters	Agreement	and	the Employee	Matters	Agreement,	together	with	the	documents	and	agreements	by	which	the	internal	reorganization	of	the

Company	prior	to	the	Separation	was	effected,	determined	the	allocation	of	assets	and	liabilities	between	the	companies	following	the	Separation	for	those	respective areas	and	included	any	necessary	indemnifications	related	to	liabilities	and	obligations.	Arconic	will	rely	on	Alcoa	Corporation	to	satisfy	its	performance	and	payment obligations	under	these	agreements.	If	Alcoa	Corporation	is	unable	or	unwilling	to	satisfy	its	obligations	under	these	agreements,	including	its	indemnification obligations,	we	could	incur	operational	difficulties	and/or	losses.

In	connection	with	the	Separation	from	Alcoa	Corporation,	Alcoa	Corporation	has	agreed	to	indemnify	Arconic	for	certain	liabilities	and	Arconic	has	agreed to	indemnify	Alcoa	Corporation	for	certain	liabilities.	If	Arconic	is	required	to	pay	under	these	indemnities	to	Alcoa	Corporation,	Arconic's	financial	results could	be	negatively	impacted.	The	Alcoa	Corporation	indemnity	may	be	insufficient	to	hold	Arconic	harmless	from	the	full	amount	of	liabilities	for	which Alcoa	Corporation	will	be	allocated	responsibility,	and	Alcoa	Corporation	may	be	unable	to	satisfy	its	indemnification	obligations	in	the	future.

Pursuant	to	the	Separation	and	Distribution	Agreement	and	certain	other	agreements	with	Alcoa	Corporation,	Alcoa	Corporation	has	agreed	to	indemnify	Arconic	for certain	liabilities,	and	Arconic	has	agreed	to	indemnify	Alcoa	Corporation	for	certain	liabilities,	in	each	case	for	uncapped	amounts.	Indemnities	that	Arconic	may	be required	to	provide	Alcoa	Corporation	are	not	subject	to	any	cap,	may	be	significant	and	could	negatively	impact	Arconic's	business.	Third	parties	could	also	seek	to hold	Arconic	responsible	for	any	of	the	liabilities	that	Alcoa	Corporation	has	agreed	to	retain.	Any	amounts	Arconic	is	required	to	pay	pursuant	to	these	indemnification obligations	and	other	liabilities	could	require	Arconic	to	divert	cash	that	would	otherwise	have	been	used	in	furtherance	of	the	Company's	operating	business.	Further, the	indemnity	from	Alcoa	Corporation	may	be	insufficient	to	protect	Arconic	against	the	full	amount	of	such	liabilities,	and	Alcoa	Corporation	may	be	unable	to	satisfy its	indemnification	obligations	fully.	Moreover,	even	if	Arconic	ultimately	succeeds	in	recovering	from	Alcoa	Corporation	any	amounts	for	which	Arconic	is	held	liable, Arconic	may	be	temporarily	required	to	bear	such	losses.	Each	of	these	risks	could	negatively	affect	Arconic's	business,	results	of	operations	and	financial	condition.

# The	Separation	could	result	in	substantial	tax	liability.

It	was	a	condition	to	the	Distribution	that	(i)	the	private	letter	ruling	from	the	Internal	Revenue	Service	(the	"IRS")	regarding	certain	U.S.	federal	income	tax	matters relating	to	the	Separation	and	the	Distribution	received	by	Arconic	remain	valid	and	be	satisfactory	to	Arconic's	Board	of	Directors	and	(ii)	Arconic	receive	an	opinion of	its	outside	counsel,	satisfactory	to	the	Board	of	Directors,	regarding	the	qualification	of	the	Distribution,	together	with	certain	related	transactions,	as	a	transaction that	is	generally	tax-free,	for	U.S.	federal	income	tax	purposes,	under	Sections	355	and	368(a)(1)(D)	of	the	Internal	Revenue	Code	of	1986,	as	amended	(the	"Code"). Both	of	these	conditions	were	satisfied	prior	to	the	Distribution.	However,	the	IRS	private	letter	ruling	and	the	opinion	of	counsel	were	based	upon	and	relied	on,	among other	things,	various	facts	and	assumptions,	as	well	as	certain	representations,	statements	and	undertakings	of	Arconic	and	Alcoa	Corporation,	including	those	relating	to the	past	and	future	conduct	of	Arconic	and	Alcoa	Corporation.	If	any	of	these	representations,	statements	or	undertakings	is,	or	becomes,	inaccurate	or	incomplete,	or	if Arconic	or	Alcoa	Corporation	breaches	any	of	its	representations	or	covenants	contained	in	any	of	the	Separation-	related	agreements	and	documents	or	in	any documents	relating	to	the	IRS	private	letter	ruling	and/or	the	opinion	of	counsel,	the	IRS	private	letter	ruling	and/or	the	opinion	of	counsel	may	be	invalid	and	the conclusions	reached	therein	could	be	jeopardized.

Notwithstanding	Arconic's	receipt	of	the	IRS	private	letter	ruling	and	the	opinion	of	counsel,	the	IRS	could	determine	that	the	Distribution	and/or	certain	related transactions	should	be	treated	as	taxable	transactions	for	U.S.	federal	income	tax	purposes	if	it	determines	that	any	of	the	representations,	assumptions	or	undertakings upon	which	the	IRS	private	letter	ruling	or	the	opinion	of	counsel	was	based	are	false	or	have	been	violated.	In	addition,	the	IRS	private	letter	ruling	does	not	address	all of	the	issues	that	are	relevant	to	determining	whether	the	Distribution,	together	with	certain	related	transactions,	qualifies	as	a	transaction	that	is	generally	tax-free	for U.S.	federal	income	tax	purposes,	and	the	opinion	of	counsel	represents	the	judgment	of	such	counsel	and	is	not	binding	on	the	IRS	or	any	court	and	the	IRS	or	a	court may	disagree	with	the	conclusions	in	the	opinion	of	counsel.	Accordingly,	notwithstanding	receipt	by	Arconic	of	the	IRS	private	letter	ruling	and	the	opinion	of	counsel, there	can	be	no	assurance	that	the	IRS	will	not	assert	that	the	Distribution	and/or	certain	related	transactions	do	not	qualify	for	tax-free	treatment	for	U.S.	federal	income tax	purposes	or	that	a	court	would	not	sustain	such	a	challenge.	In	the	event	the	IRS	were	to	prevail	with	such	challenge,	Arconic,	Alcoa	Corporation	and	Arconic shareholders	could	be	subject	to	significant	U.S.	federal	income	tax	liability.

If	the	Distribution,	together	with	certain	related	transactions,	fails	to	qualify	as	a	transaction	that	is	generally	tax-free,	for	U.S.	federal	income	tax	purposes,	under Sections	355	and	368(a)(1)(D)	of	the	Code,	in	general,	for	U.S.	federal	income	tax	purposes,	Arconic	would	recognize	taxable	gain	as	if	it	had	sold	the	Alcoa Corporation	common	stock	in	a	taxable	sale	for	its	fair	market	value	and	Arconic	shareholders	who	received	Alcoa	Corporation	shares	in	the	distribution	would	be subject	to	tax	as	if	they	had	received	a	taxable	distribution	equal	to	the	fair	market	value	of	such	shares.

Under	current	U.S.	federal	income	tax	law,	even	if	the	Distribution,	together	with	certain	related	transactions,	otherwise	qualifies	for	tax-free	treatment	under	Sections 355	and	368(a)(1)(D)	of	the	Code,	the	Distribution	may	nevertheless	be

rendered	taxable	to	Arconic	and	its	shareholders	as	a	result	of	certain	post-Distribution	transactions,	including	certain	acquisitions	of	shares	or	assets	of	Arconic	or Alcoa	Corporation.	The	possibility	of	rendering	the	Distribution	taxable	as	a	result	of	such	transactions	may	limit	Arconic's	ability	to	pursue	certain	equity	issuances, strategic	transactions	or	other	transactions	that	would	otherwise	maximize	the	value	of	Arconic's	business.	Under	the	Tax	Matters	Agreement	that	Arconic	entered	into with	Alcoa	Corporation,	Alcoa	Corporation	may	be	required	to	indemnify	Arconic	against	any	additional	taxes	and	related	amounts	resulting	from	(i)	an	acquisition	of all	or	a	portion	of	the	equity	securities	or	assets	of	Alcoa	Corporation,	whether	by	merger	or	otherwise	(and	regardless	of	whether	Alcoa	Corporation	participated	in	or otherwise	facilitated	the	acquisition),	(ii)	issuing	equity	securities	beyond	certain	thresholds,	(iii)	repurchasing	shares	of	Alcoa	Corporation	stock	other	than	in	certain open-market	transactions,	(iv)	ceasing	actively	to	conduct	certain	of	its	businesses,	(v)	other	actions	or	failures	to	act	by	Alcoa	Corporation	or	(vi)	any	of	Alcoa Corporation's	representations,	covenants	or	undertakings	contained	in	any	of	the	Separation-related	agreements	and	documents	or	in	any	documents	relating	to	the	IRS private	letter	ruling	and/or	the	opinion	of	counsel	being	incorrect	or	violated.	However,	the	indemnity	from	Alcoa	Corporation	may	be	insufficient	to	protect	Arconic against	the	full	amount	of	such	additional	taxes	or	related	liabilities,	and	Alcoa	Corporation	may	be	unable	to	satisfy	its	indemnification	obligations	fully.	Moreover, even	if	Arconic	ultimately	succeeds	in	recovering	from	Alcoa	Corporation	any	amounts	for	which	Arconic	is	held	liable,	Arconic	may	be	temporarily	required	to	bear such	losses.	In	addition,	Arconic	and	Arconic's	subsidiaries	may	incur	certain	tax	costs	in	connection	with	the	Separation,	including	tax	costs	resulting	from	separations in	non-U.S.	jurisdictions,	which	may	be	material.	Each	of	these	risks	could	negatively	affect	Arconic's	business,	results	of	operations	and	financial	condition.

# Item	1B.	Unresolved	Staff	Comments.

None.

# Item	2.	Properties.

Arconic's	principal	office	is	located	at	390	Park	Avenue,	New	York,	New	York	10022-4608.	Arconic's	corporate	center	is	located	at	201	Isabella	Street,	Pittsburgh,

Pennsylvania	15212-5858.	The	Arconic	Technology	Center	for	research	and	development	is	located	at	100	Technical	Drive,	New	Kensington,	Pennsylvania	15069- 0001.

Arconic	leases	some	of	its	facilities;	however,	it	is	the	opinion	of	management	that	the	leases	do	not	materially	affect	the	continued	use	of	the	properties	or	the properties'	values.

Arconic	believes	that	its	facilities	are	suitable	and	adequate	for	its	operations.	Although	no	title	examination	of	properties	owned	by	Arconic	has	been	made	for	the purpose	of	this	report,	the	Company	knows	of	no	material	defects	in	title	to	any	such	properties.	See	Notes	A	and	N	to	the	Consolidated	Financial	Statements	in	Part	II,

Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

Arconic	has	active	plants	and	holdings	under	the	following	segments	and	in	the	following	geographic	areas:

See	the	table	and	related	text	in	the	Engineered	Products	and	Solutions	Facilities	section	on	page	6	of	this	report.

See	the	table	and	related	text	in	the	Global	Rolled	Products	Facilities	section	on	page	8	of	this	report.

See	the	table	and	related	text	in	the	Transportation	and	Construction	Solutions	section	on	page	9	of	this	report.

# Item	3.	Legal	Proceedings.

In	the	ordinary	course	of	its	business,	Arconic	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential.

Arconic	is	involved	in	proceedings	under	the	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act,	also	known	as	Superfund	(CERCLA)	or analogous	state	provisions	regarding	the	usage,	disposal,	storage	or	treatment	of	hazardous	substances	at	a	number	of	sites	in	the	U.S.	The	Company	has	committed	to participate,	or	is	engaged	in	negotiations	with	federal	or	state	authorities	relative	to	its	alleged	liability	for	participation,	in	clean-up	efforts	at	several	such	sites.	The most	significant	of	these	matters,	the	remediation	of	the	Grasse	River	in	Massena,	NY,	is	discussed	in	the	Environmental	Matters	section	of	Note	U	to	the	Consolidated Financial	Statements	under	the	caption	"Environmental	Matters".

# Reynobond	PE

As	previously	reported,	on	June	13,	2017,	the	Grenfell	Tower	in	London,	UK	caught	fire	resulting	in	fatalities,	injuries	and	damage.	A	French	subsidiary	of	Arconic, Arconic	Architectural	Products	SAS	(AAP	SAS),	supplied	a	product,	Reynobond	PE,	to	its	customer,	a	cladding	system	fabricator,	which	used	the	product	as	one component	of	the	overall	cladding	system	on	Grenfell	Tower.	The	fabricator	supplied	its	portion	of	the	cladding	system	to	the	façade	installer,	who	then	completed	and installed	the	system	under	the	direction	of	the	general	contractor.	Neither	Arconic	nor	AAP	SAS	was	involved	in	the	design	or	installation	of	the	system	used	at	the Grenfell	Tower,	nor	did	it	have	a	role	in	any	other	aspect	of	the	building's	refurbishment	or	original	design.	Regulatory	investigations	into	the	overall	Grenfell	Tower matter	are	being	conducted,	including	a	criminal	investigation	by	the	London	Metro	Police,	a	Public	Inquiry	by	the	British	government	and	a	consumer	protection inquiry	by	a	French	public	authority.	AAP	SAS	has	sought	and	received	core	participant	status	in	the	Public	Inquiry.	The	Company	will	no	longer	sell	the	PE	product	for architectural	use	on	buildings.

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.

# Other	Matters

As	previously	reported,	Arconic	Inc.	and	its	subsidiaries	and	former	subsidiaries	are	defendants	in	lawsuits	filed	on	behalf	of	persons	alleging	injury	as	a	result	of occupational	or	other	exposure	to	asbestos.	Arconic,	its	subsidiaries	and	former	subsidiaries	have	numerous	insurance	policies	over	many	years	that	provide	coverage for	asbestos	related	claims.	Arconic	has	significant	insurance	coverage	and	believes	that	Arconic's	reserves	are	adequate	for	its	known	asbestos	exposure	related liabilities.	The	costs	of	defense	and	settlement	have	not	been	and	are	not	expected	to	be	material	to	the	results	of	operations,	cash	flows,	and	financial	position	of	the Company.

Pursuant	to	the	Tax	Matters	Agreement,	dated	as	of	October	31,	2016,	entered	into	between	the	Company	and	Alcoa	Corporation	in	connection	with	the	Separation,	the Company	shares	responsibility	with	Alcoa	Corporation	for,	and	Alcoa	Corporation	has	agreed	to	partially	indemnify	the	Company	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	$174	million	(€152	million),	including	interest.

The	Company	has	petitioned	to	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 $60	million	(€52	million)	was	established	in	2018.	Concurrent	with	the	establishment	of	the	reserve,	an	indemnification	receivable	of	$29	million	(€25	million), representing	Alcoa	Corporation's	49%	share	of	the	liability,	was	also	recorded	in	2018.

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.	At	this	time,	the	Company	is	unable	to reasonably	predict	an	ultimate	outcome	for	this	matter.

# Matters	Previously	Reported	–	Alcoa	Corporation

We	have	included	the	matters	discussed	below	in	which	the	Company	remains	party	to	proceedings	relating	to	Alcoa	Corporation	in	accordance	with	SEC	regulations. The	Separation	and	Distribution	Agreement,	dated	October	31,	2016,	entered	into	between	the	Company	and	Alcoa	Corporation	in	connection	with	the	Separation, provides	for	cross-indemnities	between	the	Company	and	Alcoa	Corporation	for	claims	subject	to	indemnification.	The	Company	does	not	expect	any	of	such	matters	to result	in	a	net	claim	against	it.

# St.	Croix	Proceedings

Red	Dust	Docket	Cases,	(St.	Croix)	f/k/a	Abednego,	Laurie	L.A.,	et	al.	v.	St.	Croix	Alumina,	L.L.C.,	et	al.	As	previously	reported,	on	January	14,	2010,	Arconic	was served	with	a	multi-plaintiff	action	complaint	involving	several	thousand	individual	persons	claiming	to	be	residents	of	St.	Croix	who	are	alleged	to	have	suffered personal	injury	or	property	damage	from	Hurricane	Georges	or	winds	blowing	material	from	the	St.	Croix	Alumina,	L.L.C.	("SCA")	facility	on	the	island	of	St.	Croix (U.S.	Virgin	Islands)	since	the	time	of	the	hurricane.	This	complaint,	Abednego,	et	al.	v.	Alcoa,	et	al.	was	filed	in	the	Superior	Court	of	the	Virgin	Islands,	St.	Croix Division.	Following	an	unsuccessful	attempt	by	Arconic	and	SCA	to	remove	the	case	to	federal	court,	the	case	has	been	lodged	in	the	Superior	Court.	The	complaint names	as	defendants	the	same	entities	that	were	sued	in	a	February	1999	action	arising	out	of	the	impact	of	Hurricane	Georges	on	the	island	and	added	as	a	defendant	the current	owner	of	the	alumina	facility	property.

Also	as	previously	reported,	on	March	1,	2012,	Arconic	was	served	with	a	separate	multi-plaintiff	action	complaint	involving

approximately	200	individual	persons	alleging	claims	essentially	identical	to	those	set	forth	in	the	Abednego	v.	Alcoa	complaint.	This	complaint,	Abraham,	et	al.	v. Alcoa,	et	al.,	was	filed	on	behalf	of	plaintiffs	previously	dismissed	in	the	federal	court	proceeding	involving	the	original	litigation	over	Hurricane	Georges	impacts.	The matter	was	originally	filed	in	the	Superior	Court	of	the	Virgin	Islands,	St.	Croix	Division,	on	March	30,	2011.

Arconic	and	other	defendants	in	the	Abraham	and	Abednego	cases	filed	or	renewed	motions	to	dismiss	each	case	in	March	2012	and	August	2012	following	service	of the	Abraham	complaint	on	Arconic	and	remand	of	the	Abednego	complaint	to	Superior	Court,	respectively.	By	order	dated	August	10,	2015,	the	Superior	Court dismissed	plaintiffs'	complaints	without	prejudice	to	re-file	the	complaints	individually,	rather	than	as	a	multi-plaintiff	filing.	The	order	also	preserves	the	defendants' grounds	for	dismissal	if	new,	individual	complaints	are	filed.	On	July	7,	2017,	the	Court	issued	an	order	and	associated	memoranda	on	plaintiff's	multiple	motions	for extension	of	time	to	file	the	individual	Complaints.	Following	the	court's	July	7,	2017	order,	a	total	of	429	complaints	were	filed	and	accepted	by	the	court	by	the deadline	of	July	30,	2017	(and	consolidated	into	the	Red	Dust	Claims	docket	(Master	Case	No.:	SX-15-CV-620)).	These	complaints	include	claims	of	about	1,260 individual	plaintiffs.	On	December	11,	2017,	the	court	issued	a	new	scheduling	order	and	further	set	a	scheduling	conference	for	January	18,	2018.	At	that	conference, the	court	set	the	next	status	conference	for	late	July	2018.

The	July	2018	status	conference	was	canceled.	On	November	5,	2018,	notice	of	an	order	of	reassignment	was	entered,	transferring	the	claims	to	the	newly	created Complex	Litigation	Division	of	the	Superior	Court	of	the	Virgin	Islands,	Division	of	St.	Croix.	Following	the	transfer,	the	Court	scheduled	a	status	conference	to	discuss the	most	efficient	manner	in	which	to	proceed	with	discovery.	The	conference	took	place	on	January	24,	2019.	The	Court	has	not	issued	a	discovery	schedule.	On January	28,	2019,	the	plaintiffs	filed	a	motion	asking	for	a	determination	that	expert	testimony	will	not	be	required	on	the	issue	of	causation,	which	defendants	opposed. The	Court	has	not	ruled	on	that	motion.

# Other	Contingencies

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	and	antitrust	matters.	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.

# Item	4.	Mine	Safety	Disclosures.

Not	applicable.

# PART	II

# Item	5.	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

The	Company's	common	stock	is	listed	on	the	New	York	Stock	Exchange.	Prior	to	the	Separation	of	Alcoa	Corporation	from	the	Company,	the	Company's	common stock	traded	under	the	symbol	"AA."	In	connection	with	the	separation,	on	November	1,	2016,	the	Company	changed	its	stock	symbol	and	its	common	stock	began trading	under	the	symbol	"ARNC."

On	October	5,	2016,	the	Company's	common	shareholders	approved	a	1-for-3	reverse	stock	split	of	the	Company's	outstanding	and	authorized	shares	of	common	stock (the	"Reverse	Stock	Split").	As	a	result	of	the	Reverse	Stock	Split,	every	three	shares	of	issued	and	outstanding	common	stock	were	combined	into	one	issued	and outstanding	share	of	common	stock,	without	any	change	in	the	par	value	per	share.	The	Reverse	Stock	Split	reduced	the	number	of	shares	of	common	stock	outstanding from	approximately	1.3	billion	shares	to	approximately	0.4	billion	shares,	and	proportionately	decreased	the	number	of	authorized	shares	of	common	stock	from 1.8	billion	to	0.6	billion	shares.	The	Company's	common	stock	began	trading	on	a	Reverse	Stock	Split-adjusted	basis	on	October	6,	2016.

On	November	1,	2016,	the	Company	completed	the	Separation	of	its	business	into	two	independent,	publicly	traded	companies:	the	Company	and	Alcoa	Corporation. The	Separation	was	effected	by	means	of	a	pro	rata	distribution	by	the	Company	of	80.1%	of	the	outstanding	shares	of	Alcoa	Corporation	common	stock	to	the Company's	shareholders.	The	Company's	shareholders	of	record	as	of	the	close	of	business	on	October	20,	2016	(the	"Record	Date")	received	one	share	of	Alcoa Corporation	common	stock	for	every	three	shares	of	the	Company's	common	stock	held	as	of	the	Record	Date.	The	Company	retained	19.9%	of	the	outstanding common	stock	of	Alcoa	Corporation	immediately	following	the	Separation.	See	disposition	of	retained	shares	in	Note	V	to	the	Consolidated	Financial	Statements	in	Part II	Item	8	of	this	Form	10-K.

The	number	of	holders	of	record	of	common	stock	was	approximately	11,668	as	of	February	15,	2019.

# Stock	Performance	Graph

The	following	graph	compares	the	most	recent	five-year	performance	of	the	Company's	common	stock	with	(1)	the	Standard	&	Poor's	(S&P)	500®	Index,	(2)	the	S&P 500®	Materials	Index,	a	group	of	25	companies	categorized	by	Standard	&	Poor's	as	active	in	the	"materials"	market	sector,	(3)	the	S&P	Aerospace	&	Defense	Select Industry	Index,	a	group	of	33	companies	categorized	by	Standard	&	Poor's	as	active	in	the	"aerospace	&	defense"	industry	and	(4)	the	S&P	500®	Industrials	Index,	a group	of	69	companies	categorized	by	Standard	&	Poor's	as	active	in	the	"industrials"	market	sector.	The	graph	assumes,	in	each	case,	an	initial	investment	of	$100	on December	31,	2013,	and	the	reinvestment	of	dividends.	Historical	prices	prior	to	the	separation	of	Alcoa	Corporation	from	the	Company	on	November	1,	2016,	have been	adjusted	to	reflect	the	value	of	the	Separation	transaction.	The	graph,	table	and	related	information	shall	not	be	deemed	to	be	"filed"	with	the	SEC,	nor	shall	such information	be	incorporated	by	reference	into	future	filings	under	the	Securities	Act	of	1933	or	Securities	Exchange	Act	of	1934,	each	as	amended,	except	to	the	extent that	the	Company	specifically	incorporates	it	by	reference	into	such	filing.

Please	note	that	the	Company	intends	to	replace	the	S&P	500®	Materials	Index	with	the	S&P	Aerospace	&	Defense	Select	Industry	Index	and	the	S&P	500®	Industrials Index	in	subsequent	stock	performance	graphs.	We	believe	that	the	companies	and	industries	represented	in	the	S&P	Aerospace	&	Defense	Select	Industry	Index	and	the S&P	500®	Industrials	Index	better	reflect	the	markets	in	which	the	Company	currently	participates.	All	three	indices	are	represented	in	the	graph	below.

# Copyright©	2019	Standard	&	Poor's,	a	division	of	S&P	Global.	All	rights	reserved.

| As	of	December	31, | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Arconic\tInc. | $100 | $149.83 | $94.62 | $80.22 | $119.02 | $74.47 |
| S&P\t500®\tIndex | 100 | 113.69 | 115.26 | 129.05 | 157.22 | 150.33 |
| S&P\t500®\tMaterials\tIndex | 100 | 106.91 | 97.95 | 114.30 | 141.55 | 120.74 |
| S&P\tAerospace\t&\tDefense\tSelect\tIndustry\tIndex | 100 | 111.43 | 117.49 | 139.70 | 197.50 | 181.56 |
| S&P\t500®\tIndustrials\tIndex | 100 | 109.83 | 107.04 | 127.23 | 153.99 | 133.53 |

# Item	6.	Selected	Financial	Data.

The	separation	of	Alcoa	Inc.	into	two	standalone,	publicly-traded	companies,	Arconic	Inc.	(the	new	name	for	Alcoa	Inc.)	and	Alcoa	Corporation,	became	effective	on November	1,	2016	(the	"Separation	Transaction").	The	financial	results	of	Alcoa	Corporation	for	all	periods	prior	to	the	Separation	Transaction	have	been retrospectively	reflected	in	the	Statement	of	Consolidated	Operations	as	discontinued	operations	and,	as	such,	have	been	excluded	from	continuing	operations	and segment	results	for	2016	and	all	prior	periods	presented	prior	to	the	Separation	Transaction.	The	cash	flows	related	to	Alcoa	Corporation	have	not	been	segregated	and are	included	in	the	Statement	of	Consolidated	Cash	Flows	for	2016	and	all	prior	periods	presented.

# (dollars	in	millions,	except	per-share	amounts)

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Sales | $14,014 | $12,960 | $12,394 | $12,413 | $12,542 |
| Amounts\tattributable\tto\tArconic: |  |  |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations(1) | $642 | $(74) | $(1,062) | $(157) | $(61) |
| Income\t(loss)\tfrom\tdiscontinued\toperations(2) | — | — | 121 | (165) | 329 |
| Net\tincome\t(loss) | $642 | $(74) | $(941) | $(322) | $268 |
| Earnings\t(loss)\tper\tshare\tattributable\tto\tArconic\tcommon\nshareholders:(3) |  |  |  |  |  |
| Basic: |  |  |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | $1.33 | $(0.28) | $(2.58) | $(0.54) | $(0.21) |
| Income\t(loss)\tfrom\tdiscontinued\toperations | — | — | 0.27 | (0.39) | 0.85 |
| Net\tincome\t(loss) | $1.33 | $(0.28) | $(2.31) | $(0.93) | $0.64 |
| Diluted: |  |  |  |  |  |
| Income\t(loss)\tfrom\tcontinuing\toperations | $1.30 | $(0.28) | $(2.58) | $(0.54) | $(0.21) |
| Income\t(loss)\tfrom\tdiscontinued\toperations | — | — | 0.27 | (0.39) | 0.84 |
| Net\tincome\t(loss) | $1.30 | $(0.28) | $(2.31) | $(0.93) | $0.63 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare(1) | $0.24 | $0.24 | $0.36 | $0.36 | $0.36 |
| Total\tassets | 18,693 | 18,718 | 20,038 | 36,477 | 37,298 |
| Total\tdebt | 6,330 | 6,844 | 8,084 | 8,827 | 8,445 |
| Cash\tprovided\tfrom\t(used\tfor)\toperations(4) | 217 | (39) | 95 | 764 | 1,674 |
| Capital\texpenditures: |  |  |  |  |  |
| Capital\texpenditures—continuing\toperations | 768 | 596 | 827 | 789 | 775 |
| Capital\texpenditures—discontinued\toperations | — | — | 298 | 391 | 444 |
| Total\tcapital\texpenditures | $768 | $596 | $1,125 | $1,180 | $1,219 |

(1) Calculated	from	the	accompanying	Statement	of	Consolidated	Operations	as	Income	(loss)	from	continuing	operations	after	income	taxes	less	Net	income	from continuing	operations	attributable	to	noncontrolling	interests.

(2) Calculated	from	the	accompanying	Statement	of	Consolidated	Operations	as	Income	from	discontinued	operations	after	income	taxes	less	Net	income	from discontinued	operations	attributable	to	noncontrolling	interests.

(3) Per	share	data	has	been	retroactively	restated	to	reflect	the	1-for-3	reverse	stock	split	which	became	effective	on	October	6,	2016	(see	Note	I	to	the Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K).

(4) Cash	provided	from	(used	for)	operations	has	not	been	restated	for	discontinued	operations	presentation	for	2016	and	all	prior	periods	presented	(see	Basis	of Presentation	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K). Cash	provided	from	(used	for)	operations	in	2014	has	not	been	recast	for	the	impact	of	the	new	accounting	pronouncements	that	were	adopted	in	the	first quarter	of	2018	(see	Recently	Adopted	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial Statements	and	Supplementary	Data)	of	this	Form	10-K).

The	data	presented	in	the	Selected	Financial	Data	table	should	be	read	in	conjunction	with	the	information	provided	in	Management's	Discussion	and	Analysis	of Financial	Condition	and	Results	of	Operations	in	Part	II,	Item	7.	and	the	Consolidated	Financial	Statements	and	Notes	in	Part	II,	Item	8.	(Financial	Statements	and Supplementary	Data)	of	this	Form	10-K.

# Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

(dollars	in	millions,	except	per-share	amounts;	shipments	in	thousands	of	metric	tons	[kmt])

# Our	Business

# Management	Review	of	2018	and	Outlook	for	the	Future

In	2018,	Arconic's	revenues	increased	8%	over	2017	as	a	result	of	higher	volumes	across	all	segments	including	strong	volume	growth	in	aerospace	engines	and	defense, automotive,	commercial	transportation,	industrial,	and	building	and	construction	end	markets;	higher	aluminum	pricing	and	favorable	product	mix	primarily	impacting the	Global	Rolled	Products	segment;	and	favorable	foreign	currency	movements;	partially	offset	by	a	decline	in	volumes	in	the	industrial	gas	turbine	end	market;	lower sales	of	$90	from	the	divestiture	of	the	Latin	America	extrusions	business	(divested	in	April	2018),	$54	from	the	divestiture	of	the	rolling	mill	in	Fusina,	Italy	(divested in	March	2017),	and	$46	from	the	ramp	down	of	Arconic's	North	American	packaging	operations	(completed	in	December	2018);	and	costs	of	$38	in	2018	related	to settlements	of	certain	customer	claims	primarily	related	to	product	introductions.	In	the	segments,	Segment	operating	profit	decreased	6%	from	2017	as	volume	growth was	more	than	offset	by	performance	shortfalls	in	the	disks	operations,	manufacturing	inefficiencies	in	the	Engineered	Structures	business,	unfavorable	product	mix,	and higher	aluminum	prices.

Net	income	was	$642	in	2018	compared	to	a	Net	loss	of	$74	in	2017.	There	were	several	significant	items	that	impacted	the	fourth	quarter	of	2018.	The	Company recognized	proceeds	of	approximately	$300	in	cash	and	recorded	a	gain	of	$119	($154	pre-tax)	on	the	sale	of	the	Texarkana	rolling	mill.	The	Company	recorded	a	loss	of $39	($43	pre-tax)	on	the	sale	of	the	Eger,	Hungary	forgings	business.	The	Company	also	recorded	a	charge	of	$72	($92	pre-tax)	for	pension	plan	settlement	charges associated	with	significant	lump	sum	payments	made	to	participants.	Additionally,	the	Company	recorded	several	discrete	tax	items,	including	benefits	related	to	the reversal	of	a	foreign	deferred	tax	liability	of	$74	as	well	as	the	release	of	valuation	allowances	and	revaluation	of	deferred	taxes.

Management	continued	its	focus	on	liquidity	and	cash	flows	as	well	as	improving	its	operating	performance	through	cost	reductions,	streamlined	organizational structures,	margin	enhancement,	and	profitable	revenue	generation.	Management	has	continued	its	intensified	focus	on	capital	efficiency.	This	focus	and	the	related results	enabled	Arconic	to	end	2018	with	a	solid	financial	position.

The	following	financial	information	reflects	certain	key	measures	of	Arconic's	2018	results:

•Cash	provided	from	operations	of	$217,	cash	used	for	financing	activities	of	$649,	and	cash	provided	from	investing	activities	of	$565,	reflecting	improvements in	working	capital;

(1)	For	the	reconciliation	of	Total	segment	operating	profit	to	Consolidated	income	before	income	taxes	and	related	information,	see	page	43.

On	January	22,	2019,	the	Company	announced	that	its	Board	of	Directors	(the	Board)	had	determined	to	no	longer	pursue	a	potential	sale	of	Arconic	as	part	of	its strategy	and	portfolio	review.	Management	and	the	Board	have	been	conducting	a	rigorous	and	comprehensive	strategy	and	portfolio	review	over	the	past	year	and	as part	of	that	process	had	considered	a	sale	of	the	Company,	among	other	matters.	However,	the	Company	did	not	receive	a	proposal	for	a	full-Company	transaction	that management	and	the	Board	believed	would	be	in	the	best	interest	of	Arconic's	shareholders	and	other	stakeholders.	Management	and	the	Board	remain	confident	in Arconic's	significant	potential	and	are	strongly	focused	on	enhancing	value	for	shareholders,	through	continued	operational	improvements	and	through	other	potential initiatives	which	have	been	previously	identified	in	the	strategy	and	portfolio	review.	The	Company	has	announced	the	following	key	initiatives	as	part	of	its	ongoing

# strategy	and	portfolio	review:

•Commenced	plans	to	reduce	operating	costs	by	approximately	$200	on	an	annual	run-rate	basis,	designed	to	maximize	the	impact	in 2019;

•Intends	to	execute	its	previously	authorized	$500	share	repurchase	program	in	the	first	half	of 2019;

•The	Board	also	authorized	an	additional	$500	of	share	repurchases,	effective	through	the	end	of	2020;

On	February	19,	2019,	the	Company	entered	into	an	accelerated	share	repurchase	("ASR")	agreement	with	JPMorgan	Chase	Bank	to	repurchase	$700	of	its	common stock,	pursuant	to	the	share	repurchase	program	previously	authorized	by	the	Board.	Under	the	ASR	agreement,	Arconic	will	receive	initial	delivery	of	approximately	32 million	shares	on	February	21,	2019.	The	final	number	of	shares	to	be	repurchased	will	be	based	on	the	volume-weighted	average	price	of	Arconic's	common	stock during	the	term	of	the	transaction,	less	a	discount.	The	ASR	agreement	is	expected	to	be	completed	during	the	first	half	of	2019.

In	2019,	management	projects	that	sales	will	be	up	approximately	2%	to	4%	supported	by	increases	in	most	of	the	Company's	key	end	markets,	as	robust	growth	and	the Company's	unique	position	in	those	markets	is	expected	to	continue.	These	increases	will	be	partly	offset	by	the	expected	decline	in	aluminum	prices	in	2019	compared with	2018.	Earnings	per	share	is	expected	to	grow	as	management	continues	to	focus	on	operational	performance	and	driving	further	cost	reductions.	The	Company expects	favorable	impacts	from	volume,	net	cost	savings,	aerospace	pricing,	and	lower	aluminum	pricing,	which	will	be	pressured	by	the	continuation	of	new	product introductions	in	aerospace	as	well	as	higher	transportation	costs	and	aluminum	scrap	spreads.	Cash	flows	are	expected	to	keep	pace	for	the	full	year	in	2019	compared with	2018,	resulting	from	improved	operating	performance	and	the	focus	on	capital	efficiency	that	is	expected	to	drive	lower	capital	expenditures.	Cash	flows	in	the	first quarter	of	2019	are	expected	to	reflect	the	typical	use	of	cash	based	on	anticipated	timing	of	working	capital	increases	and	interest	payments.

2016	Separation	Transaction.	On	November	1,	2016,	the	Company	completed	the	separation	of	its	business	into	two	standalone,	publicly-traded	companies,	Arconic Inc.	and	Alcoa	Corporation.	Following	the	Separation	Transaction,	Arconic	comprises	the	Global	Rolled	Products	(other	than	the	rolling	mill	in	Warrick,	Indiana,	and the	25.1%	equity	ownership	stake	in	the	Ma'aden	Rolling	Company),	the	Engineered	Products	and	Solutions,	and	the	Transportation	and	Construction	Solutions segments.	Alcoa	Corporation	comprises	the	Alumina	and	Primary	Metals	segments,	the	rolling	mill	in	Warrick,	Indiana,	and	the	25.1%	equity	ownership	stake	in	the Ma'aden	Rolling	Company	in	Saudi	Arabia.

The	Separation	Transaction	was	effected	by	the	distribution	of	80.1%	of	the	outstanding	shares	of	Alcoa	Corporation	common	stock	to	the	Company's	shareholders	(the "Distribution").	The	Company's	shareholders	of	record	as	of	the	close	of	business	on	October	20,	2016	(the	"Record	Date")	received	one	share	of	Alcoa	Corporation common	stock	for	every	three	shares	of	the	Company's	common	stock	held	as	of	the	Record	Date.	The	Company	distributed	146,159,428	shares	of	common	stock	of Alcoa	Corporation	in	the	Distribution	and	retained	36,311,767	shares,	or	approximately	19.9%	(see	disposition	of	retained	shares	under	Results	of	Operations	below),	of the	common	stock	of	Alcoa	Corporation	immediately	following	the	Distribution.	As	a	result	of	the	Distribution,	Alcoa	Corporation	is	now	an	independent	public company	trading	under	the	symbol	"AA"	on	the	New	York	Stock	Exchange,	and	the	Company	trades	under	the	symbol	"ARNC"	on	the	New	York	Stock	Exchange.

On	October	31,	2016,	Arconic	entered	into	several	agreements	with	Alcoa	Corporation	that	govern	the	relationship	of	the	parties	following	the	completion	of	the Separation	Transaction.	These	agreements	include	the	following:	Separation	and	Distribution	Agreement,	Transition	Services	Agreement,	Tax	Matters	Agreement, Employee	Matters	Agreement,	Alcoa	Corporation	to	Arconic	Inc.	Patent,	Know-How,	and	Trade	Secret	License	Agreement,	Arconic	Inc.	to	Alcoa	Corporation	Patent, Know-How,	and	Trade	Secret	License	Agreement,	Alcoa	Corporation	to	Arconic	Inc.	Trademark	License	Agreement,	Toll	Processing	and	Services	Agreement,	Master Agreement	for	the	Supply	of	Primary	Aluminum,	Massena	Lease	and

Operations	Agreement,	Fusina	Lease	and	Operations	Agreement,	and	Stockholder	and	Registration	Rights	Agreement.	The	Toll	Processing	and	Services	Agreement expired	by	its	terms	at	the	end	of	2018.

# Results	of	Operations

# Earnings	Summary

Sales.	Sales	for	2018	were	$14,014	compared	with	$12,960	in	2017,	an	increase	of	$1,054,	or	8%.	The	increase	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;	higher aluminum	prices	and	favorable	product	mix	primarily	in	the	Global	Rolled	Products	segment;	and	favorable	foreign	currency	movements;	partially	offset	by	a	decline	in volumes	in	the	industrial	gas	turbine	end	market;	lower	sales	of	$190	from	the	divestitures	of	the	Latin	America	extrusions	business	(divested	in	April	2018),	the	rolling mill	in	Fusina,	Italy	(divested	in	March	2017),	and	the	ramp	down	of	Arconic's	North	American	packaging	operations	(completed	in	December	2018);	and	costs	of	$38 in	2018	related	to	settlements	of	certain	customer	claims	primarily	related	to	product	introductions.

Sales	for	2017	were	$12,960	compared	with	$12,394	in	2016,	an	increase	of	$566,	or	5%.	The	increase	was	the	result	of	strong	volume	growth	in	all	segments	and	higher aluminum	pricing,	partially	offset	by	the	planned	ramp	down	and	Toll	Processing	Agreement	relating	to	the	Company's	North	America	packaging	business	in	Tennessee in	the	Global	Rolled	Products	segment,	as	well	as	unfavorable	product	pricing	in	both	the	Engineered	Products	and	Solutions	and	Global	Rolled	Products	segments. Pursuant	to	the	Toll	Processing	Agreement	that	Arconic	entered	into	with	Alcoa	Corporation	on	October	31,	2016	in	connection	with	the	Separation	Transaction,

Arconic	provides	can	body	stock	to	Alcoa	Corporation	using	aluminum	supplied	by	Alcoa	Corporation,	resulting	in	the	absence	of	metal	sales	in	2017	compared	to	2016.

Cost	of	Goods	Sold	(COGS).	COGS	as	a	percentage	of	Sales	was	81.3%	in	2018	compared	with	78.9%	in	2017.	The	increase	was	the	result	of	higher	aluminum	prices; unfavorable	aerospace	product	mix;	higher	transportation	costs;	manufacturing	inefficiencies	in	the	Engineered	Structures	business;	performance	shortfalls	in	the	disks operations;	costs	related	to	settlements	of	certain	customer	claims	noted	above;	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.

COGS	as	a	percentage	of	Sales	was	78.9%	in	2017	compared	with	78.2%	in	2016.	The	increase	was	primarily	attributable	to	cost	increases,	including	net	higher aluminum	prices	of	$84	and	ramp-up	costs	related	to	new	commercial	aerospace	engines,	and	a	lower	margin	product	mix,	partially	offset	by	net	cost	savings.

Selling,	General	Administrative,	and	Other	Expenses	(SG&A).	SG&A	expenses	were	$604,	or	4.3%	of	Sales,	in	2018	compared	with	$715,	or	5.5%	of	Sales,	in	2017. The	decrease	in	SG&A	was	the	result	of	proxy,	advisory	and	governance-related	costs	of	$58,	costs	related	to	the	separation	of	Alcoa	Inc.	of	$18,	and	costs	associated with	the	Company's	Delaware	reincorporation	of	$3	in	2017,	none	of	which	recurred	in	2018.	Additionally,	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	$4	as	well	as strategy	and	portfolio	review	costs	of	$7	in	2018.

SG&A	expenses	were	$715,	or	5.5%	of	Sales,	in	2017	compared	with	$924,	or	7.5%	of	Sales,	in	2016.	The	decrease	in	SG&A	was	the	result	of	expenses	related	to	the Separation	Transaction	of	$193	in	2016	compared	to	$18	in	2017,	as	well	as	ongoing	overhead	cost	reduction	efforts,	partially	offset	by	proxy,	advisory	and	governance- related	costs	of	$58,	external	legal	and	other	advisory	costs	related	to	Grenfell	Tower	of	$14,	and	costs	associated	with	the	Company's	Delaware	reincorporation	of	$3	in 2017.

Research	and	Development	Expenses	(R&D).	R&D	expenses	were	$103	in	2018	compared	with	$109	in	2017	and	$130	in	2016.	The	decrease	in	both	periods	was	the result	of	lower	spending.

Provision	for	Depreciation	and	Amortization	(D&A).	The	provision	for	D&A	was	$576	in	2018	compared	with	$551	in	2017	and	$535	in	2016.	The	increase	in	both periods	was	primarily	due	to	capital	projects	placed	into	service.

Impairment	of	Goodwill.	In	2017,	the	Company	recognized	an	impairment	of	goodwill	of	$719	related	to	the	annual	impairment	review	of	the	Arconic	Forgings	and Extrusions	business	(see	Goodwill	under	Critical	Accounting	Policies	and	Estimates	below).

Restructuring	and	Other	Charges.	Restructuring	and	other	charges	were	$9	in	2018	compared	with	$165	in	2017.	The	decrease	of	$156	was	primarily	due	to	the	gain on	the	sale	of	the	Texarkana	rolling	mill	of	$154,	lower	layoff	costs,	and	a	postretirement	curtailment	benefit	of	$28,	partially	offset	by	pension	plan	settlement	charges of	$96	associated	with	significant	lump	sum	payments	made	to	participants,	a	loss	on	the	sale	of	the	Eger,	Hungary	forgings	business	of	$43,	and	pension	curtailment charges	of	$23.	In	2017,	the	Company	recorded	a	loss	on	the	sale	of	the	Fusina,	Italy	rolling	mill	of	$60	and	a	charge	for	the	impairment	of	assets	associated	with	the sale	of	the	Latin	America	extrusions	business	of	$41.	See	Note	T	to	the

to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

Restructuring	and	other	charges	were	$165	in	2017	compared	with	$155	in	2016.	The	increase	of	$10	was	primarily	due	to	a	loss	of	$60	on	the	sale	of	the	Fusina,	Italy rolling	mill	and	a	charge	of	$41	for	the	impairment	of	assets	associated	with	the	sale	of	the	Latin	America	extrusions	business	(divested	in	2018)	in	2017,	partially	offset by	$57	for	costs	related	to	the	exit	of	certain	legacy	Firth	Rixson	operations	in	the	U.K.	and	$37	for	exit	costs	related	to	the	decision	in	2016	to	permanently	shut	down	a can	sheet	facility.	See	Note	T	to	the	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

Interest	Expense.	Interest	expense	was	$378	in	2018	compared	with	$496	in	2017.	The	decrease	of	$118,	or	24%,	was	the	result	of	higher	costs	incurred	in	2017	related to	the	early	redemption	of	the	Company's	outstanding	debt	than	were	incurred	during	2018,	as	well	as	lower	debt	outstanding.

Interest	expense	was	$496	in	2017	compared	with	$499	in	2016.	The	decrease	of	$3,	or	1%,	was	primarily	due	to	lower	interest	expense	resulting	from	lower outstanding	debt,	mostly	offset	by	$73	primarily	in	higher	premiums	paid	in	2017	related	to	the	early	redemption	of	$1,250	in	debt.	In	the	second	quarter	of	2017, Arconic	redeemed	all	of	the	Company's	6.50%	Bonds	due	2018	and	6.75%	Notes	due	2018,	and	a	portion	of	the	Company's	5.72%	Notes	due	2019	in	advance	of	the respective	maturity	dates.

Other	Expense	(Income),	Net.	Other	expense,	net	was	$79	in	2018	compared	with	Other	income,	net	of	$486	in	2017.	The	decrease	in	other	income,	net	of	$565	was	the result	of	gains	recorded	during	2017	related	to	the	sale	of	a	portion	of	Arconic's	investment	in	Alcoa	Corporation	common	stock	of	$351,	the	Debt-for-Equity	Exchange (in	April	and	May	2017,	the	Company	acquired	a	portion	of	its	outstanding	notes	held	by	two	investment	banks	(the	"Investment	Banks")	in	exchange	for	cash	and	the Company's	remaining	12,958,767	shares	(valued	at	$35.91	per	share)	in	Alcoa	Corporation	stock	and	recorded	a	gain	of	$167),	income	of	$81	associated	with	an adjustment	to	the	contingent	earn-out	liability	related	to	the	Firth	Rixson	acquisition	(see	Note	T	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial Statements	and	Supplementary	Data)	of	this	Form	10-K),	and	income	of	$25	due	to	the	reversal	of	a	liability	associated	with	a	separation-related	guarantee,	none	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	reflecting	Alcoa	Corporation's	49%	share	of	a	Spanish	tax	reserve	(see	Note	U	to	the	Consolidated	Financial Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K).

Other	income,	net	was	$486	in	2017	compared	with	Other	expense,	net	of	$41	in	2016.	The	increase	in	other	income,	net	of	$527	was	primarily	due	to	the	gain	on	the sale	of	a	portion	of	Arconic's	investment	in	Alcoa	Corporation	common	stock	of	$351	(in	February	2017,	the	Company	sold	23,353,000	shares	of	Alcoa	Corporation stock	at	$38.03	per	share,	which	resulted	in	cash	proceeds	of	$888	and	a	gain	of	$351)	and	the	gain	of	$167	on	the	Debt-for-Equity	Exchange,	income	of	$25	associated with	a	higher	reversal	of	a	contingent	earn-out	liability	related	to	the	Firth	Rixson	acquisition	(see	Note	T	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8. (Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K),	and	income	of	$25	due	to	the	reversal	of	a	liability	associated	with	a	separation-related	guarantee. The	Company	was	required	to	provide	a	guarantee	for	an	Alcoa	Corporation	electricity	contract	in	the	event	of	an	Alcoa	Corporation	payment	default.	In	the	fourth quarter	of	2017,	Alcoa	Corporation	announced	that	it	had	terminated	the	electricity	contract	at	its	Rockdale	Operations	and,	as	a	result,	Arconic	reversed	its	associated guarantee	liability.

Income	Taxes.	Arconic's	effective	tax	rate	was	26.0%	in	2018	compared	with	the	U.S.	federal	statutory	rate	of	21%.	The	effective	tax	rate	differs	from	the	U.S.	federal statutory	rate	primarily	as	a	result	of	a	$60	charge	to	establish	a	tax	reserve	in	Spain,	a	$59	net	charge	resulting	from	the	Company's	finalized	analysis	of	the	U.S.	Tax Cuts	and	Jobs	Acts	of	2017	("the	2017	Act"),	a	$13	charge	for	U.S.	state	taxes,	foreign	income	taxed	in	higher	rate	jurisdictions,	and	foreign	losses	with	no	tax	benefit, partially	offset	by	a	$74	benefit	related	to	the	reversal	of	a	foreign	recapture	obligation,	a	$38	benefit	to	reverse	a	foreign	tax	reserve	that	is	effectively	settled,	and	a	$10 benefit	for	the	release	of	U.S.	valuation	allowances.

Arconic's	effective	tax	rate	was	115.7%	in	2017	compared	with	the	U.S.	federal	statutory	rate	of	35%.	The	effective	tax	rate	differs	from	the	U.S.	federal	statutory	rate primarily	as	a	result	of	a	$719	impairment	of	goodwill,	a	$41	impairment	of	assets	in	the	Latin	America	extrusions	business,	and	a	$60	charge	related	to	the	sale	of	a rolling	mill	in	Italy	that	are	nondeductible	for	income	tax	purposes,	a	$272	tax	charge	as	a	provisional	impact	of	the	2017	Act,	and	a	$23	tax	charge	for	an	increase	in	an uncertain	tax	position	in	Germany,	partially	offset	by	a	$73	tax	benefit	related	to	the	sale	and	Debt-for-Equity	Exchange	of	the	Alcoa	Corporation	stock,	a	$69	tax	benefit for	the	release	of	U.S.	state	valuation	allowances	net	of	the	federal	tax	benefit,	a	$27	favorable	tax	impact	associated	with	a	non-taxable	earn-out	liability	adjustment	in connection	with	the	Firth	Rixson	acquisition,	and	by	foreign	income	taxed	in	lower	rate	jurisdictions.

Arconic's	effective	tax	rate	was	356.5%	in	2016	compared	with	the	U.S.	federal	statutory	rate	of	35%.	The	effective	tax	rate	differs	from	the	U.S.	federal	statutory	rate primarily	due	to	a	$1,267	discrete	income	tax	charge	for	valuation	allowances	related	to	the	Separation	Transaction	(see	Note	H	to	the	Consolidated	Financial Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K),	a	$95	tax	charge	associated	with	the	redemption	of	company-owned life	insurance

policies	whose	tax	basis	was	less	than	the	redemption	amount	resulting	in	a	taxable	gain,	a	$51	net	charge	for	the	remeasurement	of	certain	deferred	tax	assets	and liabilities	due	to	tax	rate	and	tax	law	changes,	and	a	$34	unfavorable	tax	impact	related	to	certain	separation	costs	which	are	nondeductible	for	income	tax	purposes, somewhat	offset	by	a	$39	discrete	income	tax	benefit	for	the	release	of	valuation	allowances	in	Canada	and	Russia,	a	$38	tax	benefit	related	to	currency	impacts	of	a distribution	of	previously	taxed	income,	and	a	$26	favorable	tax	impact	associated	with	non-taxable	settlement	proceeds	and	earn-out	liability	adjustments	in	connection with	the	Firth	Rixson	acquisition.

Management	anticipates	that	the	effective	tax	rate	in	2019	will	be	between	26.5%	and	28.5%.	However,	business	portfolio	actions,	changes	in	the	current	economic environment,	tax	legislation	or	rate	changes,	currency	fluctuations,	ability	to	realize	deferred	tax	assets,	movements	in	stock	price	impacting	tax	benefits	or	deficiencies on	stock-based	payment	awards,	and	the	results	of	operations	in	certain	taxing	jurisdictions	may	cause	this	estimated	rate	to	fluctuate.

Income	(Loss)	From	Continuing	Operations	After	Income	Taxes.	Income	from	continuing	operations	after	income	taxes	was	$642	for	2018,	or	$1.30	per	diluted share,	compared	to	a	loss	from	continuing	operations	after	income	taxes	of	$74	for	2017,	or	$0.28	per	share.	The	increase	in	results	of	$716	was	due	in	part	to	the following	items	that	occurred	in	2017	but	did	not	recur	in	2018:	a	charge	for	goodwill	impairment	of	$719	($719	pre-tax);	gains	related	to	the	sale	of	a	portion	of Arconic's	investment	in	Alcoa	Corporation	common	stock	and	the	Debt-for-Equity	Exchange	of	$405	($518	pre-tax);	and	favorable	adjustments	of	$97	($106	pre-tax)	to contingent	earn-out	and	guarantee	liabilities	as	noted	below.	Additional	favorable	impacts	in	2018	included:	volume	growth	across	all	segments;	lower	SG&A	expenses due	to	proxy	and	separation	costs	incurred	in	2017	and	not	recurring	in	2018,	as	well	as	lower	incentive	compensation	accruals;	lower	Restructuring	and	other	charges driven	primarily	by	the	gain	on	sale	of	the	Texarkana	rolling	mill,	offset	by	pension	settlement	charges	and	the	loss	on	sale	of	the	Eger,	Hungary	forgings	business; lower	Interest	expense	due	to	lower	debt	levels;	lower	pension	expenses;	and	lower	Income	taxes.	These	favorable	impacts	were	partially	offset	by	unfavorable aerospace	product	mix,	higher	aluminum	prices,	manufacturing	inefficiencies	in	the	Engineered	Structures	business,	performance	shortfalls	in	the	disks	operations, settlements	of	certain	customer	claims,	and	an	unfavorable	physical	inventory	adjustment	at	one	plant.

Loss	from	continuing	operations	after	income	taxes	was	$74	for	2017,	or	$0.28	per	diluted	share,	compared	with	$1,062	for	2016,	or	$2.58	per	share.	The	increase	in results	of	$988	was	primarily	attributable	to	charges	for	tax	valuation	allowances	and	costs	related	to	the	Separation	Transaction	in	2016;	a	gain	of	$238	($351	pre-tax) on	the	sale	of	a	portion	of	Arconic's	investment	in	Alcoa	Corporation	common	stock	and	a	gain	of	$167	($167	pre-tax)	on	the	Debt-for-Equity	Exchange	in	2017; income	of	$25	($25	pre-tax)	associated	with	a	higher	reversal	of	a	contingent	earn-out	liability	related	to	the	Firth	Rixson	acquisition	and	income	of	$16	($25	pre-tax) due	to	the	reversal	of	a	liability	associated	with	a	separation-related	guarantee;	net	cost	savings;	and	higher	sales	volumes	across	all	segments;	partially	offset	by	a	charge for	goodwill	impairment	of	$719	($719	pre-tax);	a	charge	related	to	the	2017	Act	of	$272;	$47	($73	pre-tax)	of	higher	premiums	paid	for	the	early	redemption	of	debt	in 2017;	higher	LIFO	inventory	expense	associated	with	higher	aluminum	prices;	charges	for	asset	impairments	of	the	Fusina,	Italy	rolling	mill	of	$60	($60	pre-tax)	and Latin	America	extrusions	business	of	$41	($41	pre-tax)	based	on	the	sale	of	these	businesses;	unfavorable	product	pricing,	primarily	in	aerospace;	and	lower-margin product	mix.

# Segment	Information

Arconic's	operations	consist	of	three	worldwide	reportable	segments:	Engineered	Products	and	Solutions,	Global	Rolled	Products	and	Transportation	and	Construction Solutions	(see	below).	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.	Differences	between	segment	totals	and	consolidated Arconic	are	in	Corporate.	Prior	period	financial	information	has	been	recast	to	conform	to	current	year	presentation.

Segment	operating	profit	for	all	reportable	segments	totaled	$1,581	in	2018,	$1,678	in	2017,	and	$1,622	in	2016.	The	following	information	provides	Sales	and	Segment operating	profit	for	each	reportable	segment,	as	well	as	certain	shipment	data	for	Global	Rolled	Products,	for	each	of	the	three	years	in	the	period	ended	December	31, 2018.	See	Note	C	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Third-party\tsales | $6,316 | $5,943 | $5,728 |
| Segment\toperating\tprofit | $891 | $964 | $955 |

The	Engineered	Products	and	Solutions	segment	produces	products	that	are	used	primarily	in	the	aerospace	(commercial	and	defense),	industrial,	commercial transportation,	and	power	generation	end	markets.	Such	products	include	fastening	systems	(titanium,	steel,	and	nickel	superalloys);	seamless	rolled	rings	(mostly	nickel superalloys);	investment	castings	(nickel	superalloys,	titanium,	and	aluminum),	including	airfoils	and	forged	jet	engine	components	(e.g.,	jet	engine	disks),	and	extruded, machined	and	formed	aircraft	parts	(titanium	and	aluminum),	all	of	which	are	sold	directly	to	customers	and	through	distributors.	More	than	75%	of	the	third-party	sales in	this	segment	are	from	the	aerospace	end	market.	A	small	part	of	this	segment	also	produces	various	forged,	extruded,	and	machined	metal	products	(titanium, aluminum	and	steel)	for	the	oil	and	gas,	automotive,	and	land	and	sea	defense	end	markets.	Seasonal	decreases	in	sales	are	generally	experienced	in	the	third	quarter	of the	year	due	to	the	European	summer	slowdown	across	all	end	markets.	Generally,	the	sales	and	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency of	the	respective	operations,	which	are	mostly	the	U.S.	dollar,	British	pound	and	the	euro.

On	December	31,	2018,	as	part	of	the	Company's	ongoing	strategy	and	portfolio	review,	Arconic	completed	the	sale	of	its	Eger,	Hungary	forgings	business	that manufactured	high	volume	steel	forgings	for	drivetrain	components	in	the	European	heavy-duty	truck	and	automotive	market.	This	business	generated	third-party	sales of	$32,	$38,	and	$29	in	2018,	2017,	and	2016,	respectively,	and	had	180	employees	at	the	time	of	the	divestiture.	See	Restructuring	and	other	charges	under	Results	of Operations	above.

In	April	2016,	Arconic	completed	the	sale	of	the	Remmele	Medical	business	(that	was	part	of	the	RTI	International	Metals	Inc.	(RTI)	acquisition)	that	manufactured precision-machined	metal	products	for	customers	in	the	minimally	invasive	surgical	device	and	implantable	device	markets.	Remmele	Medical	generated	third-party sales	of	$23	from	January	1,	2016	through	the	divestiture	date,	and,	at	the	time	of	the	divestiture,	had	approximately	330	employees.

Third-party	sales	for	the	Engineered	Products	and	Solutions	segment	increased	$373,	or	6%,	in	2018	compared	with	2017,	primarily	attributable	to	higher	volumes	in	the aerospace	engines	and	defense	end	markets	and	favorable	foreign	currency	movements,	partially	offset	by	a	decline	in	volumes	in	the	industrial	gas	turbine	market	and lower	aerospace	pricing	principally	in	the	fasteners	business.

Third-party	sales	for	this	segment	increased	$215,	or	4%,	in	2017	compared	with	2016,	primarily	attributable	to	volume	growth	in	both	aerospace	engines	and	airframes, partially	offset	by	lower	product	pricing,	primarily	in	the	aerospace	end	market,	and	the	absence	of	sales	of	$23	related	to	the	Remmele	Medical	business,	which	was sold	in	April	2016.

Segment	operating	profit	for	the	Engineered	Products	and	Solutions	segment	decreased	$73,	or	8%,	in	2018	compared	with	2017,	primarily	attributable	to	performance shortfalls	in	the	disks	operations;	manufacturing	inefficiencies	in	the	Engineered	Structures	business,	including	the	now	resolved	forging	press	outage	at	the	Cleveland facility	that	impacted	the	fourth	quarter	of	2018	with	higher	costs	of	$10;	unfavorable	aerospace	engine	mix	and	new	product	introductions;	a	physical	inventory adjustment	of	$23;	and	lower	aerospace	pricing	principally	in	the	fasteners	business;	partly	offset	by	the	strength	in	aerospace	engine	and	defense	volumes.

Segment	operating	profit	for	this	segment	increased	$9,	or	1%,	in	2017	compared	with	2016,	primarily	on	higher	volumes	and	net	cost	savings,	partially	offset	by	product pricing	pressures,	ramp	up	costs	associated	with	increasing	production	volumes	of	new	aerospace	engine	parts,	and	a	lower	margin	product	mix.

In	2019,	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	expected	to	continue, albeit	at	lower	levels	than	in	2018.	Net	cost	savings	and	favorable	pricing	are	expected.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Third-party\tsales | $5,604 | $5,000 | $4,865 |
| Intersegment\tsales | 160 | 148 | 118 |
| Total\tsales | $5,764 | $5,148 | $4,983 |
| Segment\toperating\tprofit | $386 | $424 | $421 |
| Third-party\taluminum\tshipments\t(kmt) | 1,249 | 1,197 | 1,339 |

(1) Excludes	the	Warrick,	IN	rolling	operations	and	the	equity	interest	in	the	rolling	mill	at	the	joint	venture	in	Saudi	Arabia,	both	of	which	were	previously	part	of the	Global	Rolled	Products	segment	but	became	part	of	Alcoa	Corporation	effective	November	1,	2016.

The	Global	Rolled	Products	segment	produces	aluminum	sheet	and	plate	for	a	variety	of	end	markets.	Sheet	and	plate	is	sold	directly	to	customers	and	through distributors	related	to	the	aerospace,	automotive,	commercial	transportation,	packaging,	building	and	construction,	and	industrial	products	(mainly	used	in	the production	of	machinery	and	equipment	and	consumer	durables)	end	markets.	A	small	portion	of	this	segment	also	produces	aseptic	foil	for	the	packaging	end	market. While	the	customer	base	for	flat-rolled	products	is	large,	a	significant	amount	of	sales	of	sheet	and	plate	is	to	a	relatively	small	number	of	customers.	Generally,	the	sales and	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	mostly	the	U.S.	dollar,	Chinese	yuan,	the	euro,	the Russian	ruble,	the	Brazilian	real,	and	the	British	pound.

On	April	6,	2018,	the	U.S.	Treasury	Department's	Office	of	Foreign	Asset	Control	("OFAC")	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	sanctions	originally	extended	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	operated	under	a	series	of	temporary	licenses	issued	by OFAC	until	January	27,	2019	when	OFAC	removed	Rusal	from	the	list	of	sanctioned	parties.	The	Company	complies	with	and	expects	to	continue	to	comply	with	all other	aspects	of	these	sanctions	and	we	do	not	anticipate	any	interruption	in	Samara's	ability	to	operate	normally.

In	March	2017,	Arconic	completed	the	sale	of	its	Fusina,	Italy	rolling	mill.	The	rolling	mill	generated	third-party	sales	of	$54	and	$165	for	2017	and	2016,	respectively. At	the	time	of	the	divestiture,	the	rolling	mill	had	approximately	312	employees.	See	Restructuring	and	other	charges	under	Results	of	Operations	above.

On	November	1,	2016,	Arconic	entered	into	a	Toll	Processing	Agreement	with	Alcoa	Corporation	for	the	tolling	of	metal	for	the	Warrick,	IN	rolling	mill	which	became a	part	of	Alcoa	Corporation	upon	the	completion	of	the	Separation	Transaction.	As	part	of	this	arrangement,	Arconic	provided	a	toll	processing	service	to	Alcoa Corporation	to	produce	can	sheet	products	at	its	facility	in	Tennessee	through	the	end	date	of	the	contract,	December	31,	2018.	Alcoa	Corporation	supplied	all	required raw	materials	to	Arconic	and	Arconic	processed	the	raw	materials	into	finished	can	sheet	coils	ready	for	shipment	to	the	end	customer.	Tolling	revenue	for	2018,	2017, and	the	two	months	ended	December	31,	2016	was	$144,	$190	and	$37,	respectively.

Third-party	sales	for	the	Global	Rolled	Products	segment	increased	$604,	or	12%,	in	2018	compared	with	2017,	primarily	attributable	to	higher	aluminum	prices;	higher volumes	in	the	automotive,	commercial	transportation,	and	industrial	end	markets;	and	favorable	product	mix;	partially	offset	by	the	absence	of	sales	of	$54	from	the rolling	mill	in	Fusina,	Italy	(divested	in	March	2017)	and	the	planned	ramp	down	of	Arconic's	North	American	packaging	operations	(completed	in	December	2018).

Third-party	sales	for	this	segment	increased	$135,	or	3%,	in	2017	compared	with	2016,	primarily	attributable	to	volume	growth	in	the	automotive	end	market	and	higher aluminum	pricing,	partially	offset	by	the	impact	of	$362	associated	with	the	ramp-down	and	Toll	Processing	Agreement	with	Alcoa	Corporation	at	the	Company's North	America	packaging	business	in	Tennessee,	the	absence	of	sales	of	$111	from	the	rolling	mill	in	Fusina,	Italy,	aerospace	customer	inventory	destocking	and reduced	build	rates,	and	pricing	pressures	in	the	global	packaging	market.

Segment	operating	profit	for	the	Global	Rolled	Products	segment	decreased	$38,	or	9%,	in	2018	compared	with	2017,	primarily	driven	by	unfavorable	aerospace	wide- body	production	mix,	higher	aluminum	prices,	and	higher	transportation	costs	and	scrap	spreads,	partially	offset	by	higher	automotive,	commercial	transportation	and industrial	volumes.	The	higher	aluminum	prices	negatively	impacted	segment	operating	profit	margin	by	$30,	or	100	basis	points,	in	2018	compared	with	2017.

Segment	operating	profit	for	this	segment	increased	$3,	or	1%,	in	2017	compared	with	2016,	primarily	driven	by	net	cost	savings	and	increased	automotive	volumes, partially	offset	by	lower	aerospace	volume	from	customer	destocking	and	reduced	build	rates,	continued	pricing	pressure	on	global	packaging	products	and	higher aluminum	prices.	The	higher	aluminum	prices

negatively	impacted	segment	operating	profit	margin	by	$37,	or	150	basis	points,	in	2017	compared	with	2016.

In	2019,	demand	in	the	North	America	commercial	transportation,	brazing,	and	industrial	end	markets	is	expected	to	grow	as	a	result	of	the	International	Trade Commission	initiated	common	alloy	trade	case.	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	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.	Net	productivity	improvements	are	anticipated	to	continue.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Third-party\tsales | $2,126 | $2,011 | $1,802 |
| Segment\toperating\tprofit | $304 | $290 | $246 |

The	Transportation	and	Construction	Solutions	segment	produces	products	that	are	used	mostly	in	the	commercial	transportation	and	nonresidential	building	and construction	end	markets.	Such	products	include	integrated	aluminum	structural	systems,	architectural	extrusions,	and	forged	aluminum	commercial	vehicle	wheels, which	are	sold	both	directly	to	customers	and	through	distributors.	A	small	part	of	this	segment	also	produces	aluminum	products	for	the	industrial	products	end	market. Generally,	the	sales	and	costs	and	expenses	of	this	segment	are	transacted	in	the	local	currency	of	the	respective	operations,	which	are	primarily	the	U.S.	dollar,	the	euro, and	the	Brazilian	real.

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	generated	third-party	sales	of	approximately	$1,140,	$1,070,	and	$1,010	for	2018,	2017, and	2016,	respectively.	The	sale	process	continues	to	progress.	The	Company's	decision	regarding	whether	to	sell	the	business	will	not	be	finalized	until	final	binding offers	are	evaluated.	Until	the	Company	makes	that	final	decision,	the	BCS	business	will	remain	classified	as	held	and	in-use	in	the	Consolidated	Financial	Statements.

On	April	2,	2018,	Arconic	completed	the	sale	of	its	Latin	America	extrusions	business	as	part	of	its	continued	drive	to	streamline	its	business	portfolio,	reduce complexity	and	further	focus	on	its	higher-margin	products	and	profitable	growth.	This	business	generated	sales	of	$25,	$115,	and	$103	in	2018,	2017,	and	2016 respectively,	and	had	612	employees	at	the	time	of	the	divestiture.	See	Restructuring	and	Other	Charges	under	Results	of	Operations	above.

Third-party	sales	for	the	Transportation	and	Construction	Solutions	segment	increased	$115,	or	6%,	in	2018	compared	with	2017,	primarily	driven	by	higher	volumes	in the	commercial	transportation	and	building	and	construction	end	markets,	favorable	foreign	currency	movements	and	higher	aluminum	prices,	partially	offset	by	the absence	of	sales	of	$90	resulting	from	the	divestiture	of	the	Latin	America	extrusions	business	in	April	2018.

Third-party	sales	for	this	segment	increased	$209,	or	12%,	in	2017	compared	with	2016,	primarily	driven	by	increased	volumes	in	the	commercial	transportation	and building	and	construction	end	markets,	higher	aluminum	pricing,	and	favorable	foreign	currency	movements,	partially	offset	by	lower	product	pricing.

Segment	operating	profit	for	the	Transportation	and	Construction	Solutions	segment	increased	$14,	or	5%,	in	2018	compared	with	2017,	principally	driven	by	higher volumes	in	the	commercial	transportation	and	building	and	construction	end	markets	and	net	cost	savings,	which	more	than	offset	higher	aluminum	prices.	The	higher aluminum	prices	negatively	impacted	segment	operating	margin	by	$57,	or	270	basis	points,	in	2018	compared	with	2017.

Segment	operating	profit	for	this	segment	increased	$44,	or	18%,	in	2017	compared	with	2016,	principally	driven	by	net	cost	savings	and	higher	volumes,	partially	offset by	lower	product	pricing	in	the	heavy-duty	truck	market,	unfavorable	product	mix,	and	higher	aluminum	prices.	The	higher	aluminum	prices	negatively	impacted segment	operating	margin	by	$8,	or	90	basis	points,	in	2017	compared	with	2016.

In	2019,	we	expect	continued	growth	in	the	North	American	and	European	commercial	transportation	and	building	and	construction	markets	and	continued	demand	for innovative	products.	Net	productivity	improvements	are	anticipated	to	continue.

# Reconciliation	of	Total	segment	operating	profit	to	Consolidated	income	from	continuing	operations	before	income	taxes

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Total\tsegment\toperating\tprofit | $1,581 | $1,678 | $1,622 |
| Unallocated\tamounts: |  |  |  |
| Impairment\tof\tgoodwill | — | (719) | — |
| Restructuring\tand\tother\tcharges | (9) | (165) | (155) |
| Corporate\texpense | (247) | (314) | (513) |
| Consolidated\toperating\tincome | $1,325 | $480 | $954 |
| Interest\texpense | (378) | (496) | (499) |
| Other\t(expense)\tincome,\tnet | (79) | 486 | (41) |
| Consolidated\tincome\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | $868 | $470 | $414 |

See	Restructuring	and	Other	Charges,	Impairment	of	Goodwill,	Interest	Expense,	and	Other	Expense	(Income),	Net	discussions	above	under	Results	of	Operations	for reference.

Corporate	expense	decreased	in	2018	compared	with	2017	primarily	due	to	proxy,	advisory	and	governance-related	costs	of	$58	and	costs	related	to	the	separation	of Alcoa	Inc.	of	$18	in	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,	an	increase	in	legal	and	other	advisory	costs	related	to	Grenfell	Tower	of	$4,	and	strategy	and	portfolio	review	costs	of	$7	in	2018.

Corporate	expense	decreased	in	2017	compared	with	2016	primarily	attributable	to	costs	incurred	in	2016	related	to	the	Separation	Transaction,	partially	offset	by proxy,	advisory	and	governance-related	costs	and	legal	and	other	advisory	costs	related	to	Grenfell	Tower	incurred	in	2017.

See	the	Environmental	Matters	section	of	Note	U	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8	of	this	Form	10-K.

# Liquidity	and	Capital	Resources

Arconic	maintains	a	disciplined	approach	to	cash	management	and	strengthening	of	its	balance	sheet.	Management	continued	to	focus	on	actions	to	improve	Arconic's cost	structure	and	liquidity,	providing	the	Company	with	the	ability	to	operate	effectively.	Such	actions	included	procurement	efficiencies	and	overhead	rationalization	to reduce	costs,	working	capital	initiatives,	and	maintaining	a	sustainable	level	of	capital	expenditures.

Cash	provided	from	operations	and	financing	activities	is	expected	to	be	adequate	to	cover	Arconic's	operational	and	business	needs	over	the	next	12	months.	For	an analysis	of	long-term	liquidity,	see	Contractual	Obligations	and	Off-Balance	Sheet	Arrangements	below.

At	December	31,	2018,	cash	and	cash	equivalents	of	Arconic	were	$2,277,	of	which	$541	was	held	by	Arconic's	non-U.S.	subsidiaries.	If	the	cash	held	by	non-U.S. subsidiaries	were	to	be	repatriated	to	the	U.S.,	the	company	does	not	expect	there	to	be	additional	material	income	tax	consequences.

The	Statement	of	Consolidated	Cash	Flows	has	not	been	restated	for	discontinued	operations,	therefore	the	discussion	below	concerning	Operating	Activities,	Financing Activities,	and	Investing	Activities	for	the	year	ended	December	31,	2016	includes	the	results	of	both	Arconic	and	Alcoa	Corporation	up	through	the	completion	of	the Separation	Transaction	on	November	1,	2016.

# Operating	Activities

Cash	provided	from	operations	in	2018	was	$217	compared	with	cash	used	for	operations	of	$39	in	2017.	The	increase	of	$256	was	primarily	due	to	lower	working capital	of	$209	and	a	favorable	change	in	noncurrent	liabilities	of	$169	due	primarily	to	reversals	in	2017	related	to	the	Firth	Rixson	earn-out	liability	of	$81	and separation-related	guarantee	liability	of	$25,	partially	offset	by	lower	operating	results.	The	components	of	the	change	in	working	capital	included	favorable	changes	of $277	in	accounts	payable,	$127	in	taxes,	including	income	taxes,	and	$118	in	inventories,	partially	offset	by	unfavorable	changes	of	$227	in	receivables,	$74	in	accrued expenses,	and	$12	in	prepaid	expenses	and	other	current	assets.

Cash	used	for	operations	in	2017	was	$39	compared	with	Cash	provided	from	operations	$95	in	2016.	The	decrease	of	$134	was	primarily	due	to	lower	operating	results and	higher	pension	contributions	of	$20,	partially	offset	by	a	favorable	change	in

noncurrent	assets	of	$111	due	to	the	prepayment	of	$200	made	in	April	2016	related	to	a	gas	supply	agreement	for	the	Australia	alumina	refineries	(Alcoa	Corporation), a	favorable	change	in	noncurrent	liabilities	of	$55,	and	lower	cash	used	for	working	capital	of	$17.	The	components	of	the	change	in	working	capital	included	favorable changes	of	$101	in	receivables;	$87	in	prepaid	expenses	and	other	current	assets;	and	$278	in	accrued	expenses;	mostly	offset	by	unfavorable	changes	in	working capital,	including	$163	in	inventories;	$170	in	accounts	payable,	trade;	and	$116	in	taxes,	including	income	taxes.

# Financing	Activities

The	use	of	cash	in	2018	was	principally	the	result	of	$1,103	in	repayments	on	borrowings	under	certain	revolving	credit	facilities	(see	below)	and	repayments	on	debt, primarily	related	to	the	early	redemption	of	the	remaining	outstanding	5.72%	Notes	due	in	2019	(see	Note	P	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8. (Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K)	and	$119	in	dividends	to	shareholders.	These	items	were	partially	offset	by	$600	in	additions	to	debt, primarily	from	borrowings	under	certain	revolving	credit	facilities.

The	use	of	cash	in	2017	was	principally	the	result	of	$1,634	in	repayments	on	borrowings	under	certain	revolving	credit	facilities	(see	below)	and	repayments	on	debt, primarily	related	to	the	early	redemption	of	the	Company's	6.50%	Bonds	due	2018,	6.75%	Notes	due	2018,	and	a	portion	of	the	5.72%	Notes	due	2019	(see	Note	P	to the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K);	$162	in	dividends	to	shareholders;	and	$52 in	premiums	paid	on	early	redemption	of	debt.	These	items	were	partially	offset	by	$816	in	additions	to	debt,	primarily	from	borrowings	under	certain	revolving	credit facilities,	and	$50	of	proceeds	from	the	exercise	of	stock	options.

The	use	of	cash	in	2016	was	principally	the	result	of	$2,734	in	payments	on	debt,	mostly	related	to	the	repayment	of	borrowings	under	certain	revolving	credit	facilitates (see	below)	and	the	repayment	in	December	2016	of	$750	of	outstanding	principal	of	5.55%	Notes	due	February	2017;	$228	in	dividends	to	shareholders;	and	$175	in net	cash	paid	to	noncontrolling	interests	(Alcoa	Corporation).	These	items	were	mostly	offset	by	$1,962	in	additions	to	debt,	virtually	all	of	which	was	the	result	of borrowing	under	certain	revolving	credit	facilities,	and	$421	in	net	cash	transferred	from	Alcoa	Corporation	at	the	completion	of	the	Separation	Transaction.

In	July	2015,	through	the	acquisition	of	RTI,	Arconic	assumed	the	obligation	to	repay	two	tranches	of	convertible	debt;	one	tranche	was	due	and	settled	in	cash	on December	1,	2015	(principal	amount	of	$115)	and	the	other	tranche	is	due	on	October	15,	2019	(principal	amount	of	$403),	unless	earlier	converted	or	purchased	by Arconic	at	the	holder's	option	under	specific	conditions.	Upon	conversion	of	the	2019	convertible	notes,	holders	will	receive,	at	Arconic's	election,	cash,	shares	of common	stock	(approximately	14,453,000	shares	using	the	December	31,	2018	conversion	rate	of	35.9125	shares	per	$1,000	(not	in	millions)	bond	or	per-share conversion	price	of	$27.8455),	or	a	combination	of	cash	and	shares.	On	the	maturity	date,	each	holder	of	outstanding	notes	will	be	entitled	to	receive	$1,000	(not	in millions)	in	cash	for	each	$1,000	(not	in	millions)	bond,	together	with	accrued	and	unpaid	interest.

In	September	2014,	Arconic	completed	two	public	securities	offerings	under	its	shelf	registration	statement	for	(i)	$1,250	of	25	million	depositary	shares,	each representing	a	1/10th	interest	in	a	share	of	Arconic's	5.375%	Class	B	Mandatory	Convertible	Preferred	Stock,	Series	1,	par	value	$1	per	share,	liquidation	preference $500	per	share,	and	(ii)	$1,250	of	5.125%	Notes	due	2024.	The	net	proceeds	of	the	offerings	were	used	to	finance	the	cash	portion	of	the	acquisition	of	Firth	Rixson.	On October	2,	2017,	all	outstanding	24,975,978	depositary	shares	were	converted	at	a	rate	of	1.56996	into	39,211,286	common	shares;	24,022	depositary	shares	were previously	tendered	for	early	conversion	into	31,420	shares	of	Arconic	common	stock.	No	gain	or	loss	was	recognized	associated	with	this	noncash	equity	transaction.

Arconic	maintains	a	Five-Year	Revolving	Credit	Agreement	(the	"Credit	Agreement")	with	a	syndicate	of	lenders	and	issuers	named	therein	that	expires	on	June	29, 2023	and	provides	for	a	senior	unsecured	revolving	credit	facility	of	$3,000.	In	addition	to	the	Credit	Agreement,	Arconic	has	a	number	of	other	credit	agreements	that provide	a	combined	borrowing	capacity	of	$715	as	of	December	31,	2018.	See	Note	P	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements and	Supplementary	Data)	of	this	Form	10-K.

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.

On	May	1,	2017,	Standard	and	Poor's	Ratings	Services	(S&P)	affirmed	Arconic's	long-term	debt	at	BBB-,	an	investment	grade	rating,	with	a	stable	outlook,	and	its short-term	debt	at	A-3.	On	February	7,	2019,	S&P	changed	the	outlook	from	stable	to	negative	credit	watch.	On	November	1,	2016,	Moody's	Investor	Service (Moody's)	downgraded	Arconic's	long-term	debt	rating	from	Ba1,	a	non-investment	grade,	to	Ba2	and	its	short-term	debt	rating	from	Speculative	Grade	Liquidity-1	to Speculative	Grade	Liquidity-2.	Additionally,	Moody's	changed	the	outlook	from	negative	to	stable	(ratings	and	outlook	were	affirmed	on	November	2,	2017	and October	8,	2018).	On	April	21,	2016,	Fitch	affirmed	Arconic's	long-term	debt	rating	at	BB+,	a	non-investment	grade,	and	short-term	debt	at	B.	Additionally,	Fitch changed	the	outlook	from	positive	to	evolving.	On	July	7,	2016,	Fitch	changed	the	outlook	from	evolving	to	stable	(ratings	and	outlook	were	affirmed	on	July	3,	2017). On	September

27,	2018,	Fitch	changed	the	outlook	from	stable	to	positive	(ratings	and	outlook	were	affirmed	on	September	27,	2018).

# Investing	Activities

The	source	of	cash	in	2018	included	cash	receipts	from	sold	receivables	of	$1,016	and	proceeds	from	the	sale	of	the	Texarkana,	Texas	rolling	mill	and	cast	house	of $302,	partially	offset	by	capital	expenditures	of	$768,	including	the	horizontal	heat	treat	furnace	at	the	Davenport,	Iowa	plant	and	an	expansion	of	a	wheels	plant	in Szekesfehervar,	Hungary.

The	source	of	cash	in	2017	included	proceeds	of	$888	from	the	sale	of	a	portion	of	Arconic's	investment	in	Alcoa	Corporation	common	stock,	cash	receipts	from	sold receivables	of	$792,	and	the	receipt	of	proceeds	from	the	sale	of	the	Yadkin	Hydroelectric	Project	of	$243,	somewhat	offset	by	cash	used	for	capital	expenditures	of $596,	including	the	aerospace	expansion	(very	thick	plate	stretcher	and	horizontal	heat	treat	furnace)	at	the	Davenport,	Iowa	plant	and	a	titanium	aluminide	furnace	at the	Niles,	Ohio	facility,	and	the	injection	of	$10	into	the	Fusina	rolling	business	prior	to	its	sale.

The	source	of	cash	in	2016	was	mainly	due	to	$778	of	cash	receipts	from	sold	receivables,	$692	in	proceeds	from	the	sale	of	assets	and	businesses,	including	$457	from the	redemption	of	company-owned	life	insurance	policies,	$120	in	proceeds	related	to	the	sale	of	the	Intalco	smelter	wharf	property	(Alcoa	Corporation),	and	$102	in proceeds	($99	net	of	transaction	costs)	from	the	sale	of	the	Remmele	Medical	business,	which	was	part	of	Arconic's	acquisition	of	RTI	in	July	2015;	and	$280	in	sales	of investments,	composed	primarily	of	$145	for	an	equity	interest	in	a	natural	gas	pipeline	in	Australia	(Alcoa	Corporation)	and	$130	for	securities	held	by	Arconic's captive	insurance	company.	These	sources	of	cash	were	partially	offset	by	$1,125	in	capital	expenditures	($298	Alcoa	Corporation),	29%	of	which	related	to	growth projects,	including	the	aerospace	expansion	(very	thick	plate	stretcher)	at	the	Davenport,	Iowa	plant	and	a	titanium	aluminide	furnace	at	the	Niles,	Ohio	facility.

# Noncash	Financing	and	Investing	Activities

On	October	2,	2017,	all	outstanding	24,975,978	depositary	shares	(each	depositary	share	representing	a	1/10th	interest	in	a	share	of	the	mandatory	convertible	preferred stock)	were	converted	at	a	rate	of	1.56996	into	39,211,286	common	shares;	24,022	depositary	shares	were	previously	tendered	for	early	conversion	into	31,420	shares	of Arconic	common	stock.	No	gain	or	loss	was	recognized	associated	with	this	equity	transaction.	See	Note	I	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8. (Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

In	the	second	quarter	of	2017,	the	Company	completed	a	Debt-for-Equity	Exchange	with	the	Investment	Banks	for	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	for	$465	including	accrued	and	unpaid	interest.	See Note	P	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

On	October	5,	2016,	Arconic	completed	a	1-for-3	reverse	stock	split	of	its	outstanding	and	authorized	shares	of	common	stock,	pursuant	to	the	authorization	provided	at a	special	meeting	of	Arconic	common	shareholders	(the	"Reverse	Stock	Split").	The	Reverse	Stock	Split	reduced	the	number	of	shares	of	common	stock	outstanding from	approximately	1.3	billion	shares	to	approximately	0.4	billion	shares.	The	par	value	of	the	common	stock	remained	at	$1.00	per	share.	Accordingly,	Common	stock and	Additional	capital	in	the	Company's	Statement	of	Changes	in	Consolidated	Equity	at	December	31,	2016	reflect	a	decrease	and	increase	of	$877,	respectively.

In	August	2016,	Arconic	retired	its	outstanding	treasury	stock	consisting	of	approximately	76	million	shares.	As	a	result,	Common	stock	and	Additional	capital	were decreased	by	$76	and	$2,563,	respectively,	in	the	Company's	Statement	of	Changes	in	Consolidated	Equity	at	December	31,	2016,	to	reflect	the	retirement	of	the treasury	shares.

# Contractual	Obligations	and	Off-Balance	Sheet	Arrangements

Contractual	Obligations.	Arconic	is	required	to	make	future	payments	under	various	contracts,	including	long-term	purchase	obligations,	financing	arrangements,	and lease	agreements.	Arconic	also	has	commitments	to	fund	its	pension	plans,	provide	payments	for	other	postretirement	benefit	plans,	and	fund	capital	projects.	As	of December	31,	2018,	a	summary	of	Arconic's	outstanding	contractual	obligations	is	as	follows	(these	contractual	obligations	are	grouped	in	the	same	manner	as	they	are classified	in	the	Statement	of	Consolidated	Cash	Flows	in	order	to	provide	a	better	understanding	of	the	nature	of	the	obligations	and	to	provide	a	basis	for	comparison	to historical	information):

|  | Total | 2019 | 2020-2021 | 2022-2023 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tactivities: |  |  |  |  |  |
| Energy-related\tpurchase\tobligations | $72 | $37 | $28 | $7 | $— |
| Raw\tmaterial\tpurchase\tobligations | 829 | 652 | 155 | 19 | 3 |
| Other\tpurchase\tobligations | 102 | 81 | 13 | 6 | 2 |
| Operating\tleases | 379 | 94 | 128 | 70 | 87 |
| Interest\trelated\tto\ttotal\tdebt | 2,326 | 351 | 592 | 370 | 1,013 |
| Estimated\tminimum\trequired\tpension\tfunding | 1,860 | 255 | 840 | 765 | — |
| Other\tpostretirement\tbenefit\tpayments | 730 | 90 | 170 | 170 | 300 |
| Layoff\tand\tother\trestructuring\tpayments | 25 | 19 | 4 | 1 | 1 |
| Deferred\trevenue\tarrangements | 18 | 12 | 6 | — | — |
| Uncertain\ttax\tpositions | 187 | — | — | — | 187 |
| Financing\tactivities: |  |  |  |  |  |
| Total\tdebt | 6,330 | 421 | 2,243 | 623 | 3,043 |
| Dividends\tto\tshareholders | — | — | — | — | — |
| Investing\tactivities: |  |  |  |  |  |
| Capital\tprojects | 665 | 532 | 133 | — | — |
| Totals | $13,523 | $2,544 | $4,312 | $2,031 | $4,636 |

# Obligations	for	Operating	Activities

Energy-related	purchase	obligations	consist	primarily	of	electricity	and	natural	gas	contracts	with	expiration	dates	ranging	from	one	year	to	five	years.	Raw	material purchase	obligations	consist	mostly	of	aluminum,	titanium	sponge,	and	various	other	metals	with	expiration	dates	ranging	from	less	than	one	year	to	six	years.	Many	of these	purchase	obligations	contain	variable	pricing	components,	and,	as	a	result,	actual	cash	payments	may	differ	from	the	estimates	provided	in	the	preceding	table. Operating	leases	represent	multi-year	obligations	for	certain	land	and	buildings,	plant	equipment,	vehicles,	and	computer	equipment.

Interest	related	to	total	debt	is	based	on	interest	rates	in	effect	as	of	December	31,	2018	and	is	calculated	on	debt	with	maturities	that	extend	to	2042.

Estimated	minimum	required	pension	funding	and	postretirement	benefit	payments	are	based	on	actuarial	estimates	using	current	assumptions	for	discount	rates,	long- term	rate	of	return	on	plan	assets,	rate	of	compensation	increases,	and	health	care	cost	trend	rates,	among	others.	It	is	Arconic's	policy	to	fund	amounts	for	pension	plans sufficient	to	meet	the	minimum	requirements	set	forth	in	applicable	country	benefits	laws	and	tax	laws.	Periodically,	Arconic	contributes	additional	amounts	as	deemed appropriate.	In	2018,	the	Company	funded	$298,	of	which	$72	was	contributed	to	its	U.S.	plans	in	excess	of	the	minimum	required	under	the	Employee	Retirement Income	Security	Act	(ERISA).	The	estimates	reported	in	the	preceding	table	include	amounts	sufficient	to	meet	the	minimum	required,	along	with	a	$34	contribution	in 2019	related	to	an	agreement	with	the	Pension	Benefit	Guaranty	Corporation	(PBGC)	(see	Note	G	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8.	(Financial Statements	and	Supplementary	Data)	of	this	Form	10-K).	Arconic	has	determined	that	it	is	not	practicable	to	present	pension	funding	and	other	postretirement	benefit payments	beyond	2023	and	2028,	respectively.

Layoff	and	other	restructuring	payments	to	be	paid	within	one	year	primarily	relate	to	severance	costs,	special	layoff	benefit	payments,	and	lease	termination	costs,	while payments	expected	to	be	paid	over	the	next	several	years	relate	to	lease	termination	costs.

Deferred	revenue	arrangements	require	Arconic	to	deliver	product	to	a	customer	over	the	specified	contract	period	through	2020	for	a	sheet	and	plate	contract.	While these	obligations	are	not	expected	to	result	in	cash	payments,	they	represent	contractual	obligations	for	which	the	Company	would	be	obligated	if	the	specified	product deliveries	could	not	be	made.

Uncertain	tax	positions	taken	or	expected	to	be	taken	on	an	income	tax	return	may	result	in	additional	payments	to	tax	authorities.	The	amount	in	the	preceding	table includes	interest	and	penalties	accrued	related	to	such	positions	as	of	December	31,	2018.	The	total	amount	of	uncertain	tax	positions	is	included	in	the	"Thereafter" column	as	the	Company	is	not	able	to	reasonably	estimate	the	timing	of	potential	future	payments.	If	a	tax	authority	agrees	with	the	tax	position	taken	or	expected	to	be taken	or	the	applicable	statute	of	limitations	expires,	then	additional	payments	will	not	be	necessary.

# Obligations	for	Financing	Activities

Arconic	has	historically	paid	quarterly	dividends	on	its	preferred	and	common	stock.	Including	dividends	on	preferred	stock,	Arconic	paid	$119	in	dividends	to shareholders	during	2018.	Because	all	dividends	are	subject	to	approval	by	Arconic's	Board	of	Directors,	amounts	are	not	included	in	the	preceding	table	unless	such authorization	has	occurred.	As	of	December	31,	2018,	there	were	483,270,717	shares	of	outstanding	common	stock	and	546,024	shares	of	outstanding	Class	A	preferred stock.	In	2018,	the	annual	preferred	stock	dividend	was	$3.75	per	share	and	the	annual	common	stock	dividend	was	$0.24	per	share.

# Obligations	for	Investing	Activities

Capital	projects	in	the	preceding	table	only	include	amounts	approved	by	management	as	of	December	31,	2018.	Funding	levels	may	vary	in	future	years	based	on anticipated	construction	schedules	of	the	projects.	It	is	expected	that	significant	expansion	projects	will	be	funded	through	various	sources,	including	cash	provided	from operations.	Total	capital	expenditures	are	anticipated	to	be	approximately	$700	in	2019.

# Off-Balance	Sheet	Arrangements

At	December	31,	2018,	Arconic	has	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	2019	and	2026	was	$37	at December	31,	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	$6	and	$8	at	December	31,	2018	and	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	guarantees	related	to	two	long-term	supply	agreements	for	energy	for	Alcoa	Corporation	facilities	in	the	event	of	an	Alcoa Corporation	payment	default.	In	October	2017,	Alcoa	Corporation	announced	that	it	had	terminated	one	of	the	two	agreements,	the	electricity	contract	with	Luminant Generation	Company	LLC	that	was	tied	to	its	Rockdale	Operations,	effective	as	of	October	1,	2017.	As	a	result	of	the	termination	of	the	Rockdale	electricity	contract, Arconic	recorded	income	of	$25	in	the	fourth	quarter	of	2017	associated	with	reversing	the	fair	value	of	the	electricity	contract	guarantee.	For	the	remaining	long-term supply	agreement,	Arconic	is	required	to	provide	a	guarantee	up	to	an	estimated	present	value	amount	of	approximately	$1,087	and	$1,297	at	December	31,	2018	and December	31,	2017,	respectively,	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.

In	December	2016,	Arconic	entered	into	a	one-year	claims	purchase	agreement	with	a	bank	covering	claims	up	to	$245	related	to	the	Saudi	Arabian	joint	venture	and	two long-term	energy	supply	agreements.	The	majority	of	the	premium	was	paid	by	Alcoa	Corporation.	The	agreement	matured	in	December	2017	and	was	not	renewed	in 2018	due	to	the	decline	in	exposure	to	guarantee	claims	including	a	substantial	reduction	in	the	guarantees	related	to	the	Saudi	Arabian	joint	venture	and	also	the elimination	of	the	guarantee	related	to	the	Rockdale	energy	contract.	In	December	2018,	Arconic	entered	into	a	one-year	insurance	policy	with	a	limit	of	$80	relating	to the	remaining	long-term	energy	supply	agreement.	The	premium	is	expected	to	be	paid	by	Alcoa	Corporation.	The	decision	to	enter	into	a	claims	purchase	agreement	or insurance	policy	will	be	made	on	an	annual	basis	going	forward.

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	2019,	was	$136	at	December	31,	2018.

Pursuant	to	the	Separation	and	Distribution	Agreement,	Arconic	was	required	to	retain	letters	of	credit	of	$54	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.

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	2019,	was	$50	at	December	31,	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	proportionally	billed	to	and	are	being	fully	reimbursed	by	Alcoa	Corporation.

# Critical	Accounting	Policies	and	Estimates

The	preparation	of	the	Consolidated	Financial	Statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America	requires management	to	make	certain	judgments,	estimates,	and	assumptions	regarding	uncertainties	that	affect	the	amounts	reported	in	the	Consolidated	Financial	Statements and	disclosed	in	the	accompanying	Notes.	Areas	that	require	significant	judgments,	estimates,	and	assumptions	include	accounting	for	environmental	and	litigation matters;	the	testing	of	goodwill,	other	intangible	assets,	and	properties,	plants,	and	equipment	for	impairment;	estimating	fair	value	of	businesses	acquired	or	divested; pension	plans	and	other	postretirement	benefits	obligations;	stock-based	compensation;	and	income	taxes.

Management	uses	historical	experience	and	all	available	information	to	make	these	judgments,	estimates,	and	assumptions,	and	actual	results	may	differ	from	those	used to	prepare	the	Company's	Consolidated	Financial	Statements	at	any	given	time.	Despite	these	inherent	limitations,	management	believes	that	Management's	Discussion and	Analysis	of	Financial	Condition	and	Results	of	Operations	and	the	Consolidated	Financial	Statements	and	accompanying	Notes	provide	a	meaningful	and	fair perspective	of	the	Company.

A	summary	of	the	Company's	significant	accounting	policies	is	included	in	Note	A	to	the	Consolidated	Financial	Statements.	Management	believes	that	the	application of	these	policies	on	a	consistent	basis	enables	the	Company	to	provide	the	users	of	the	Consolidated	Financial	Statements	with	useful	and	reliable	information	about	the Company's	operating	results	and	financial	condition.

Environmental	Matters.	Expenditures	for	current	operations	are	expensed	or	capitalized,	as	appropriate.	Expenditures	relating	to	existing	conditions	caused	by	past operations,	which	will	not	contribute	to	future	revenues,	are	expensed.	Liabilities	are	recorded	when	remediation	costs	are	probable	and	can	be	reasonably	estimated.	The liability	may	include	costs	such	as	site	investigations,	consultant	fees,	feasibility	studies,	outside	contractors,	and	monitoring	expenses.	Estimates	are	generally	not discounted	or	reduced	by	potential	claims	for	recovery.	Claims	for	recovery	are	recognized	when	probable	and	as	agreements	are	reached	with	third	parties.	The estimates	also	include	costs	related	to	other	potentially	responsible	parties	to	the	extent	that	Arconic	has	reason	to	believe	such	parties	will	not	fully	pay	their proportionate	share.	The	liability	is	continuously	reviewed	and	adjusted	to	reflect	current	remediation	progress,	prospective	estimates	of	required	activity,	and	other factors	that	may	be	relevant,	including	changes	in	technology	or	regulations.

Litigation	Matters.	For	asserted	claims	and	assessments,	liabilities	are	recorded	when	an	unfavorable	outcome	of	a	matter	is	deemed	to	be	probable	and	the	loss	is reasonably	estimable.	Management	determines	the	likelihood	of	an	unfavorable	outcome	based	on	many	factors	such	as	the	nature	of	the	matter,	available	defenses	and case	strategy,	progress	of	the	matter,	views	and	opinions	of	legal	counsel	and	other	advisors,	applicability	and	success	of	appeals	processes,	and	the	outcome	of	similar historical	matters,	among	others.	Once	an	unfavorable	outcome	is	deemed	probable,	management	weighs	the	probability	of	estimated	losses,	and	the	most	reasonable loss	estimate	is	recorded.	If	an	unfavorable	outcome	of	a	matter	is	deemed	to	be	reasonably	possible,	then	the	matter	is	disclosed	and	no	liability	is	recorded.	With respect	to	unasserted	claims	or	assessments,	management	must	first	determine	that	the	probability	that	an	assertion	will	be	made	is	likely,	then,	a	determination	as	to	the likelihood	of	an	unfavorable	outcome	and	the	ability	to	reasonably	estimate	the	potential	loss	is	made.	Legal	matters	are	reviewed	on	a	continuous	basis	to	determine	if there	has	been	a	change	in	management's	judgment	regarding	the	likelihood	of	an	unfavorable	outcome	or	the	estimate	of	a	potential	loss.

Goodwill.	Goodwill	is	not	amortized;	instead,	it	is	reviewed	for	impairment	annually	(in	the	fourth	quarter)	or	more	frequently	if	indicators	of	impairment	exist	or	if	a decision	is	made	to	sell	or	realign	a	business.	A	significant	amount	of	judgment	is	involved	in	determining	if	an	indicator	of	impairment	has	occurred.	Such	indicators may	include	deterioration	in	general	economic	conditions,	negative	developments	in	equity	and	credit	markets,	adverse	changes	in	the	markets	in	which	an	entity operates,	increases	in	input	costs	that	have	a	negative	effect	on	earnings	and	cash	flows,	or	a	trend	of	negative	or	declining	cash	flows	over	multiple	periods,	among others.	The	fair	value	that	could	be	realized	in	an	actual	transaction	may	differ	from	that	used	to	evaluate	the	impairment	of	goodwill.

Goodwill	is	allocated	among	and	evaluated	for	impairment	at	the	reporting	unit	level,	which	is	defined	as	an	operating	segment	or	one	level	below	an	operating	segment. Arconic	had	six	reporting	units	for	2018,	of	which	three	were	included	in	the	Engineered	Products	and	Solutions	segment	(Arconic	Fastening	Systems,	Arconic	Engines, Arconic	Engineered	Structures),	two	were	included	in	the	Transportation	and	Construction	Solutions	segment	(Arconic	Wheel	and	Transportation	Products	and	Building and	Construction	Systems),	and	the	remaining	reporting	unit	was	the	Global	Rolled	Products	segment.

In	reviewing	goodwill	for	impairment,	an	entity	has	the	option	to	first	assess	qualitative	factors	to	determine	whether	the

existence	of	events	or	circumstances	leads	to	a	determination	that	it	is	more	likely	than	not	(greater	than	50%)	that	the	estimated	fair	value	of	a	reporting	unit	is	less	than its	carrying	amount.	If	an	entity	elects	to	perform	a	qualitative	assessment	and	determines	that	an	impairment	is	more	likely	than	not,	the	entity	is	then	required	to perform	the	quantitative	impairment	test	(described	below),	otherwise	no	further	analysis	is	required.	An	entity	also	may	elect	not	to	perform	the	qualitative	assessment and,	instead,	proceed	directly	to	the	quantitative	impairment	test.	The	ultimate	outcome	of	the	goodwill	impairment	review	for	a	reporting	unit	should	be	the	same whether	an	entity	chooses	to	perform	the	qualitative	assessment	or	proceeds	directly	to	the	quantitative	impairment	test.

Arconic	determines	annually,	based	on	facts	and	circumstances,	which	of	its	reporting	units	will	be	subject	to	the	qualitative	assessment.	For	those	reporting	units	where a	qualitative	assessment	is	either	not	performed	or	for	which	the	conclusion	is	that	an	impairment	is	more	likely	than	not,	a	quantitative	impairment	test	will	be performed.	Arconic's	policy	is	that	a	quantitative	impairment	test	be	performed	for	each	reporting	unit	at	least	once	during	every	three-year	period.

During	the	2018	annual	review	of	goodwill,	management	proceeded	directly	to	the	quantitative	impairment	test	for	all	six	of	its	reporting	units.	The	estimated	fair	values for	each	of	the	six	reporting	units	exceeded	their	respective	carrying	values	by	more	than	25%,	thus,	there	was	no	goodwill	impairment.	Under	the	quantitative impairment	test,	the	evaluation	of	impairment	involves	comparing	the	current	fair	value	of	each	reporting	unit	to	its	carrying	value,	including	goodwill.	Arconic	uses	a discounted	cash	flow	model	(DCF)	to	estimate	the	current	fair	value	of	its	reporting	units	when	testing	for	impairment,	as	management	believes	forecasted	cash	flows	are the	best	indicator	of	such	fair	value.	A	number	of	significant	assumptions	and	estimates	are	involved	in	the	application	of	the	DCF	model	to	forecast	operating	cash flows,	including	sales	growth	(volumes	and	pricing),	production	costs,	capital	spending,	and	discount	rate.	Most	of	these	assumptions	vary	significantly	among	the reporting	units.	Cash	flow	forecasts	are	generally	based	on	approved	business	unit	operating	plans	for	the	early	years	and	historical	relationships	in	later	years.	The WACC	rate	for	the	individual	reporting	units	is	estimated	with	the	assistance	of	valuation	experts.	Arconic	would	recognize	an	impairment	charge	for	the	amount	by which	the	carrying	amount	exceeds	the	reporting	unit's	fair	value	without	exceeding	the	total	amount	of	goodwill	allocated	to	that	reporting	unit.

Goodwill	impairment	tests	in	2017	and	2016	indicated	that	goodwill	was	not	impaired	for	any	of	the	Company's	reporting	units,	except	for	the	Arconic	Forgings	and Extrusions	(AFE)	business	whose	estimated	fair	value	was	lower	than	its	carrying	value.	As	such,	Arconic	recorded	an	impairment	for	the	full	amount	of	goodwill	in	the AFE	reporting	unit	of	$719.	The	decrease	in	the	AFE	fair	value	was	primarily	due	to	unfavorable	performance	that	was	impacting	operating	margins	and	a	higher discount	rate	due	to	an	increase	in	the	risk-free	rate	of	return,	while	the	carrying	value	increased	compared	to	prior	year.

Properties,	Plants,	and	Equipment	and	Other	Intangible	Assets.	Properties,	plants,	and	equipment	and	Other	intangible	assets	are	reviewed	for	impairment	whenever events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	such	assets	(asset	group)	may	not	be	recoverable.	Recoverability	of	assets	is	determined	by comparing	the	estimated	undiscounted	net	cash	flows	of	the	operations	related	to	the	assets	(asset	group)	to	their	carrying	amount.	An	impairment	loss	would	be recognized	when	the	carrying	amount	of	the	assets	(asset	group)	exceeds	the	estimated	undiscounted	net	cash	flows.	The	amount	of	the	impairment	loss	to	be	recorded	is calculated	as	the	excess	of	the	carrying	value	of	the	assets	(asset	group)	over	their	fair	value,	with	fair	value	determined	using	the	best	information	available,	which generally	is	a	DCF	model.	The	determination	of	what	constitutes	an	asset	group,	the	associated	estimated	undiscounted	net	cash	flows,	and	the	estimated	useful	lives	of assets	also	require	significant	judgments.

In	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	AEN	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	or	fourth	quarters	of	2018	and,	as	such,	the	Company	did not	evaluate	the	recoverability	of	its	long-lived	assets.

Discontinued	Operations	and	Assets	Held	for	Sale.	The	fair	values	of	all	businesses	to	be	divested	are	estimated	using	accepted	valuation	techniques	such	as	a	DCF model,	valuations	performed	by	third	parties,	earnings	multiples,	or	indicative	bids,	when	available.	A	number	of	significant	estimates	and	assumptions	are	involved	in the	application	of	these	techniques,	including	the	forecasting	of	markets	and	market	share,	sales	volumes	and	prices,	costs	and	expenses,	and	multiple	other	factors. Management	considers	historical	experience	and	all	available	information	at	the	time	the	estimates	are	made;	however,	the	fair	value	that	is	ultimately	realized	upon	the divestiture	of	a	business	may	differ	from	the	estimated	fair	value	reflected	in	the	Consolidated	Financial	Statements.

Pension	and	Other	Postretirement	Benefits.	Liabilities	and	expenses	for	pension	and	other	postretirement	benefits	are	determined	using	actuarial	methodologies	and incorporate	significant	assumptions,	including	the	interest	rate	used	to	discount	the	future	estimated	liability,	the	expected	long-term	rate	of	return	on	plan	assets,	and several	assumptions	relating	to	the	employee	workforce	(salary	increases,	health	care	cost	trend	rates,	retirement	age,	and	mortality).

The	interest	rate	used	to	discount	future	estimated	liabilities	is	determined	using	a	Company-specific	yield	curve	model	(above-median)	developed	with	the	assistance	of an	external	actuary.	The	cash	flows	of	the	plans'	projected	benefit	obligations	are	discounted	using	a	single	equivalent	rate	derived	from	yields	on	high	quality	corporate bonds,	which	represent	a	broad	diversification	of	issuers	in	various	sectors,	including	finance	and	banking,	industrials,	transportation,	and	utilities,	among	others.	The yield	curve	model	parallels	the	plans'	projected	cash	flows,	which	have	an	average	duration	of	10	years.	The	underlying	cash	flows	of	the	bonds	included	in	the	model exceed	the	cash	flows	needed	to	satisfy	the	Company's	plans'	obligations	multiple	times.	In	2018,	2017,	and	2016,	the	discount	rate	used	to	determine	benefit	obligations for	U.S.	pension	and	other	postretirement	benefit	plans	was	4.35%,	3.75%,	and	4.20%,	respectively.	The	impact	on	the	liabilities	of	a	change	in	the	discount	rate	of	1/4 of	1%	would	be	approximately	$170	and	either	a	charge	or	credit	of	approximately	$2	to	after-tax	earnings	in	the	following	year.

In	conjunction	with	the	annual	measurement	of	the	funded	status	of	Arconic's	pension	and	other	postretirement	benefit	plans	at	December	31,	2015,	management elected	to	change	the	manner	in	which	the	interest	cost	component	of	net	periodic	benefit	cost	will	be	determined	in	2016	and	beyond.	Previously,	the	interest	cost component	was	determined	by	multiplying	the	single	equivalent	rate	described	above	and	the	aggregate	discounted	cash	flows	of	the	plans'	projected	benefit	obligations. Under	the	new	methodology,	the	interest	cost	component	will	be	determined	by	aggregating	the	product	of	the	discounted	cash	flows	of	the	plans'	projected	benefit obligations	for	each	year	and	an	individual	spot	rate	(referred	to	as	the	"spot	rate"	approach).	This	change	resulted	in	a	lower	interest	cost	component	of	net	periodic benefit	cost	under	the	new	methodology	compared	to	the	previous	methodology	in	2018,	2017,	and	2016	of	$24,	$34,	and	$84,	respectively,	for	pension	plans	and	$4, $6,	and	$14,	respectively,	for	other	postretirement	benefit	plans.	Management	believes	this	new	methodology,	which	represents	a	change	in	an	accounting	estimate,	is	a better	measure	of	the	interest	cost	as	each	year's	cash	flows	are	specifically	linked	to	the	interest	rates	of	bond	payments	in	the	same	respective	year.

The	expected	long-term	rate	of	return	on	plan	assets	is	generally	applied	to	a	five-year	market-related	value	of	plan	assets	(a	fair	value	at	the	plan	measurement	date	is used	for	certain	non-U.S.	plans).	The	process	used	by	management	to	develop	this	assumption	is	one	that	relies	on	a	combination	of	historical	asset	return	information and	forward-looking	returns	by	asset	class.	As	it	relates	to	historical	asset	return	information,	management	focuses	on	various	historical	moving	averages	when developing	this	assumption.	While	consideration	is	given	to	recent	performance	and	historical	returns,	the	assumption	represents	a	long-term,	prospective return.	Management	also	incorporates	expected	future	returns	on	current	and	planned	asset	allocations	using	information	from	various	external	investment	managers	and consultants,	as	well	as	management's	own	judgment.

For	2018,	2017,	and	2016,	management	used	7.00%,	7.75%,	and	7.75%,	respectively,	as	its	expected	long-term	rate	of	return,	which	was	based	on	the	prevailing	and planned	strategic	asset	allocations,	as	well	as	estimates	of	future	returns	by	asset	class.	These	rates	fell	within	the	respective	range	of	the	20-year	moving	average	of actual	performance	and	the	expected	future	return	developed	by	asset	class.	For	2019,	management	anticipates	that	7.00%	will	be	the	expected	long-term	rate	of	return. The	decrease	of	75	basis	points	in	the	2018	expected	long-term	rate	of	return	was	due	to	a	decrease	in	the	expected	return	by	asset	class	and	the	20-year	moving	average. A	change	in	the	assumption	for	the	expected	long-term	rate	of	return	on	plan	assets	of	1/4	of	1%	would	impact	after-tax	earnings	by	approximately	$10	for	2019.

In	2018,	a	net	loss	of	$114	(after-tax)	was	recorded	in	other	comprehensive	loss,	primarily	due	to	the	impact	of	the	adoption	of	new	accounting	guidance	that	permits	a reclassification	to	Accumulated	deficit	for	stranded	tax	effects	resulting	from	the	Tax	Cuts	and	Jobs	Act	of	2017,	as	well	as	the	plan	asset	performance	that	was	less	than expected,	which	were	partially	offset	by	the	increase	in	the	discount	rate	of	60	basis	points	and	the	amortization	of	actuarial	losses.	In	2017,	a	net	loss	of	$220	(after-tax) was	recorded	in	other	comprehensive	loss,	primarily	due	to	the	decrease	in	the	discount	rate	of	45	basis	points	and	plan	asset	performance	less	than	expected,	which were	partially	offset	by	the	amortization	of	actuarial	losses.	In	2016,	a	net	benefit	of	$1,601	(after-tax	and	noncontrolling	interest)	was	recorded	in	other	comprehensive loss,	primarily	due	to	the	transfer	of	$2,080	to	Alcoa	Corporation	which	was	partially	offset	by	a	net	charge	of	$479.	The	charge	was	due	to	the	unfavorable	performance of	the	plan	assets	and	a	9	basis	point	decrease	in	the	discount	rate,	which	were	partially	offset	by	the	amortization	of	actuarial	losses.

Stock-Based	Compensation.	Arconic	recognizes	compensation	expense	for	employee	equity	grants	using	the	non-substantive	vesting	period	approach,	in	which	the expense	is	recognized	ratably	over	the	requisite	service	period	based	on	the	grant	date	fair	value.	Forfeitures	are	accounted	for	as	they	occur.	The	fair	value	of	new	stock options	is	estimated	on	the	date	of	grant	using	a	lattice-pricing	model.	The	fair	value	of	performance	awards	containing	a	market	condition	is	valued	using	a	Monte	Carlo valuation	model.	Determining	the	fair	value	at	the	grant	date	requires	judgment,	including	estimates	for	the	average	risk-free	interest	rate,	dividend	yield,	volatility,	and exercise	behavior.	These	assumptions	may	differ	significantly	between	grant	dates	because	of	changes	in	the	actual	results	of	these	inputs	that	occur	over	time.

Income	Taxes.	The	provision	for	income	taxes	is	determined	using	the	asset	and	liability	approach	of	accounting	for	income	taxes.	Under	this	approach,	the	provision for	income	taxes	represents	income	taxes	paid	or	payable	(or	received	or	receivable)	for	the	current	year	plus	the	change	in	deferred	taxes	during	the	year.	Deferred	taxes represent	the	future	tax	consequences	expected	to	occur	when	the	reported	amounts	of	assets	and	liabilities	are	recovered	or	paid,	and	result	from	differences	between the	financial	and	tax	bases	of	Arconic's	assets	and	liabilities	and	are	adjusted	for	changes	in	tax	rates	and	tax	laws	when	enacted.

The	2017	Act	created	a	new	requirement	that	certain	income	earned	by	foreign	subsidiaries,	Global	Intangible	Low	Taxed	Income	(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).	Until	regulations	are	finalized,	judgement	will	be required	to	apply	preliminary	guidance,	including	proposed	regulations,	to	Arconic's	facts	and	circumstances.

Valuation	allowances	are	recorded	to	reduce	deferred	tax	assets	when	it	is	more	likely	than	not	that	a	tax	benefit	will	not	be	realized.	In	evaluating	the	need	for	a valuation	allowance,	management	considers	all	potential	sources	of	taxable	income,	including	income	available	in	carryback	periods,	future	reversals	of	taxable temporary	differences,	projections	of	taxable	income,	and	income	from	tax	planning	strategies,	as	well	as	all	available	positive	and	negative	evidence.	Positive	evidence includes	factors	such	as	a	history	of	profitable	operations,	projections	of	future	profitability	within	the	carryforward	period,	including	from	tax	planning	strategies,	and Arconic's	experience	with	similar	operations.	Existing	favorable	contracts	and	the	ability	to	sell	products	into	established	markets	are	additional	positive	evidence. Negative	evidence	includes	items	such	as	cumulative	losses,	projections	of	future	losses,	or	carryforward	periods	that	are	not	long	enough	to	allow	for	the	utilization	of	a deferred	tax	asset	based	on	existing	projections	of	income.	Deferred	tax	assets	for	which	no	valuation	allowance	is	recorded	may	not	be	realized	upon	changes	in	facts and	circumstances,	resulting	in	a	future	charge	to	establish	a	valuation	allowance.	Existing	valuation	allowances	are	re-examined	under	the	same	standards	of	positive and	negative	evidence.	If	it	is	determined	that	it	is	more	likely	than	not	that	a	deferred	tax	asset	will	be	realized,	the	appropriate	amount	of	the	valuation	allowance,	if any,	is	released.	Deferred	tax	assets	and	liabilities	are	also	re-measured	to	reflect	changes	in	underlying	tax	rates	due	to	law	changes	and	the	granting	and	lapse	of	tax holidays.

In	2018,	Arconic	made	a	final	accounting	policy	election	to	apply	a	tax	law	ordering	approach	when	considering	the	need	for	a	valuation	allowance	on	net	operating losses	expected	to	offset	GILTI	income	inclusions.	Under	this	approach,	reductions	in	cash	tax	savings	are	not	considered	as	part	of	the	valuation	allowance	assessment. Instead,	future	GILTI	inclusions	are	considered	a	source	of	taxable	income	that	supports	the	realizability	of	deferred	tax	assets.

Tax	benefits	related	to	uncertain	tax	positions	taken	or	expected	to	be	taken	on	a	tax	return	are	recorded	when	such	benefits	meet	a	more	likely	than	not	threshold. Otherwise,	these	tax	benefits	are	recorded	when	a	tax	position	has	been	effectively	settled,	which	means	that	the	statute	of	limitations	has	expired	or	the	appropriate taxing	authority	has	completed	their	examination	even	though	the	statute	of	limitations	remains	open.	Interest	and	penalties	related	to	uncertain	tax	positions	are recognized	as	part	of	the	provision	for	income	taxes	and	are	accrued	beginning	in	the	period	that	such	interest	and	penalties	would	be	applicable	under	relevant	tax	law until	such	time	that	the	related	tax	benefits	are	recognized.

Recently	Adopted	Accounting	Guidance.	See	the	Recently	Adopted	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II,	Item 8.	(Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

Recently	Issued	Accounting	Guidance.	See	the	Recently	Issued	Accounting	Guidance	section	of	Note	A	to	the	Consolidated	Financial	Statements	in	Part	II,	Item	8. (Financial	Statements	and	Supplementary	Data)	of	this	Form	10-K.

# Item	7A.		Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

Not	material.

# Item	8.	Financial	Statements	and	Supplementary	Data.

# Management's	Reports	to	Arconic	Shareholders

# Management's	Report	on	Financial	Statements	and	Practices

The	accompanying	Consolidated	Financial	Statements	of	Arconic	Inc.	and	its	subsidiaries	(the	"Company")	were	prepared	by	management,	which	is	responsible	for their	integrity	and	objectivity.	The	statements	were	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America	and	include amounts	that	are	based	on	management's	best	judgments	and	estimates.	The	other	financial	information	included	in	the	annual	report	is	consistent	with	that	in	the financial	statements.

Management	also	recognizes	its	responsibility	for	conducting	the	Company's	affairs	according	to	the	highest	standards	of	personal	and	corporate	conduct.	This responsibility	is	characterized	and	reflected	in	key	policy	statements	issued	from	time	to	time	regarding,	among	other	things,	conduct	of	its	business	activities	within	the laws	of	the	host	countries	in	which	the	Company	operates	and	potentially	conflicting	outside	business	interests	of	its	employees.	The	Company	maintains	a	systematic program	to	assess	compliance	with	these	policies.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

Management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	for	the	Company.	In	order	to	evaluate	the	effectiveness	of internal	control	over	financial	reporting,	as	required	by	Section	404	of	the	Sarbanes-Oxley	Act,	management	has	conducted	an	assessment,	including	testing,	using	the criteria	in	Internal	Control—Integrated	Framework	(2013),	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	The Company's	system	of	internal	control	over	financial	reporting	is	designed	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.	The	Company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	Company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America,	and	that	receipts	and	expenditures	of	the	Company	are	being	made	only	in accordance	with	authorizations	of	management	and	directors	of	the	Company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of unauthorized	acquisition,	use,	or	disposition	of	the	Company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

Based	on	the	assessment,	management	has	concluded	that	the	Company	maintained	effective	internal	control	over	financial	reporting	as	of	December	31,	2018,	based	on criteria	in	Internal	Control—Integrated	Framework	(2013)	issued	by	the	COSO.

The	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2018	has	been	audited	by	PricewaterhouseCoopers	LLP,	an independent	registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	herein.

John	C.	Plant Chairman	and	Chief	Executive	Officer

/s/	Ken	Giacobbe Ken	Giacobbe Executive	Vice	President	and Chief	Financial	Officer

# Report	of	Independent	Registered	Public	Accounting	Firm

# To	the	Shareholders	and	Board	of	Directors	of	Arconic	Inc.

# Opinions	on	the	Financial	Statements	and	Internal	Control	over	Financial	Reporting

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Arconic	Inc.	and	its	subsidiaries	(the	"Company")	as	of	December	31,	2018	and	2017,	and	the	related consolidated	statements	of	operations,	comprehensive	(loss)	income,	changes	in	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31, 2018,	including	the	related	notes	(collectively	referred	to	as	the	"consolidated	financial	statements").	We	also	have	audited	the	Company's	internal	control	over	financial reporting	as	of	December	31,	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	(COSO).

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of	December	31, 2018	and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2018	in	conformity	with	accounting principles	generally	accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over financial	reporting	as	of	December	31,	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	COSO.

# Basis	for	Opinions

The	Company's	management	is	responsible	for	these	consolidated	financial	statements,	for	maintaining	effective	internal	control	over	financial	reporting,	and	for	its assessment	of	the	effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial Reporting.	Our	responsibility	is	to	express	opinions	on	the	Company's	consolidated	financial	statements	and	on	the	Company's	internal	control	over	financial	reporting based	on	our	audits.	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	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable	assurance about	whether	the	consolidated	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or	fraud,	and	whether	effective	internal	control	over	financial reporting	was	maintained	in	all	material	respects.

Our	audits	of	the	consolidated	financial	statements	included	performing	procedures	to	assess	the	risks	of	material	misstatement	of	the	consolidated	financial	statements, whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures	included	examining,	on	a	test	basis,	evidence	regarding	the amounts	and	disclosures	in	the	consolidated	financial	statements.	Our	audits	also	included	evaluating	the	accounting	principles	used	and	significant	estimates	made	by management,	as	well	as	evaluating	the	overall	presentation	of	the	consolidated	financial	statements.	Our	audit	of	internal	control	over	financial	reporting	included obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we	considered	necessary	in	the circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

# Definition	and	Limitations	of	Internal	Control	over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	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.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

/s/	PricewaterhouseCoopers	LLP Pittsburgh,	Pennsylvania February	21,	2019

We	have	served	as	the	Company's	auditor	since	1950.

# Arconic	and	subsidiaries

# Statement	of	Consolidated	Operations

# (in	millions,	except	per-share	amounts)

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales\t(B\tand\tC) | $14,014 | $12,960 | $12,394 |
| Cost\tof\tgoods\tsold\t(exclusive\tof\texpenses\tbelow) | 11,397 | 10,221 | 9,696 |
| Selling,\tgeneral\tadministrative,\tand\tother\texpenses | 604 | 715 | 924 |
| Research\tand\tdevelopment\texpenses | 103 | 109 | 130 |
| Provision\tfor\tdepreciation\tand\tamortization | 576 | 551 | 535 |
| Impairment\tof\tgoodwill\t(A\tand\tO) | — | 719 | — |
| Restructuring\tand\tother\tcharges\t(D) | 9 | 165 | 155 |
| Operating\tincome | 1,325 | 480 | 954 |
| Interest\texpense\t(E) | 378 | 496 | 499 |
| Other\texpense\t(income),\tnet\t(F) | 79 | (486) | 41 |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | 868 | 470 | 414 |
| Provision\tfor\tincome\ttaxes\t(H) | 226 | 544 | 1,476 |
| Income\t(loss)\tfrom\tcontinuing\toperations\tafter\tincome\ttaxes | 642 | (74) | (1,062) |
| Income\tfrom\tdiscontinued\toperations\tafter\tincome\ttaxes\t(V) | — | — | 184 |
| Net\tincome\t(loss) | 642 | (74) | (878) |
| Less:\tNet\tincome\tfrom\tdiscontinued\toperations\tattributable\tto\tnoncontrolling\tinterests\t(V) | — | — | 63 |
| Net\tincome\t(loss)\tAttributable\tto\tArconic | $642 | $(74) | $(941) |
| Amounts\tAttributable\tto\tArconic\tCommon\tShareholders\t(J): |  |  |  |
| Net\tincome\t(loss) | $651 | $(127) | $(1,010) |
| Earnings\t(loss)\tper\tshare—basic: |  |  |  |
| Continuing\toperations | $1.33 | $(0.28) | $(2.58) |
| Discontinued\toperations | — | — | 0.27 |
| Net\tearnings\t(loss)\tper\tshare-basic | $1.33 | $(0.28) | $(2.31) |
| Earnings\t(loss)\tper\tshare—diluted |  |  |  |
| Continuing\toperations | $1.30 | $(0.28) | $(2.58) |
| Discontinued\toperations | — | — | 0.27 |
| Net\tearnings\t(loss)\tper\tshare-diluted | $1.30 | $(0.28) | $(2.31) |

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

# Statement	of	Consolidated	Comprehensive	Income	(Loss)

# (in	millions)

|  |  | Arconic |  |  | Noncontrolling<br>Interests |  |  | Total |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| For\tthe\tyear\tended\tDecember\t31, | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Net\tincome\t(loss) | $642 | $(74) | $(941) | $— | $— | $63 | $642 | $(74) | $(878) |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ntax\t(K): |  |  |  |  |  |  |  |  |  |
| Change\tin\tunrecognized\tnet\tactuarial\tloss |  |  |  |  |  |  |  |  |  |
| and\tprior\tservice\tcost/benefit\trelated\tto | 255 | (220) | (479) | — | — | (3) | 255 | (220) | (482) |
| pension\tand\tother\tpostretirement\tbenefits |  |  |  |  |  |  |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustments | (146) | 252 | 268 | — | 2 | 182 | (146) | 254 | 450 |
| Net\tchange\tin\tunrealized\tgains\ton\navailable-for-sale\tsecurities | (1) | (134) | 137 | — | — | — | (1) | (134) | 137 |
| Net\tchange\tin\tunrecognized\tgains/losses\non\tcash\tflow\thedges | (23) | 26 | (617) | — | — | 5 | (23) | 26 | (612) |
| Total\tOther\tcomprehensive\tincome\t(loss),\nnet\tof\ttax | 85 | (76) | (691) | — | 2 | 184 | 85 | (74) | (507) |
| Comprehensive\tincome\t(loss) | $727 | $(150) | $(1,632) | $— | $2 | $247 | $727 | $(148) | $(1,385) |

# Consolidated	Balance	Sheet

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | 2,277 | $2,150 |
| Receivables\tfrom\tcustomers,\tless\tallowances\tof\t$4\tin\t2018\tand\t$8\tin\t2017\t(L) | 1,047 | 1,035 |
| Other\treceivables\t(L) | 451 | 339 |
| Inventories\t(M) | 2,492 | 2,480 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 314 | 374 |
| Total\tcurrent\tassets | 6,581 | 6,378 |
| Properties,\tplants,\tand\tequipment,\tnet\t(N) | 5,704 | 5,594 |
| Goodwill\t(A\tand\tO) | 4,500 | 4,535 |
| Deferred\tincome\ttaxes\t(H) | 573 | 743 |
| Intangibles,\tnet\t(O) | 919 | 987 |
| Other\tnoncurrent\tassets | 416 | 481 |
| Total\tassets | $18,693 | $18,718 |
| Liabilities |  |  |
| Current\tliabilities: |  |  |
| Accounts\tpayable,\ttrade | 2,129 | $1,839 |
| Accrued\tcompensation\tand\tretirement\tcosts | 370 | 399 |
| Taxes,\tincluding\tincome\ttaxes | 118 | 75 |
| Accrued\tinterest\tpayable | 113 | 124 |
| Other\tcurrent\tliabilities | 356 | 349 |
| Short-term\tdebt\t(P\tand\tR) | 434 | 38 |
| Total\tcurrent\tliabilities | 3,520 | 2,824 |
| Long-term\tdebt,\tless\tamount\tdue\twithin\tone\tyear\t(P\tand\tR) | 5,896 | 6,806 |
| Accrued\tpension\tbenefits\t(G) | 2,230 | 2,564 |
| Accrued\tother\tpostretirement\tbenefits\t(G) | 723 | 841 |
| Other\tnoncurrent\tliabilities\tand\tdeferred\tcredits\t(Q) | 739 | 759 |
| Total\tliabilities | 13,108 | 13,794 |
| Contingencies\tand\tcommitments\t(U) |  |  |
| Equity |  |  |
| Arconic\tshareholders'\tequity: |  |  |
| Preferred\tstock\t(I) | 55 | 55 |
| Common\tstock\t(I) | 483 | 481 |
| Additional\tcapital | 8,319 | 8,266 |
| Accumulated\tdeficit\t(A) | (358) | (1,248) |
| Accumulated\tother\tcomprehensive\tloss\t(A\tand\tK) | (2,926) | (2,644) |
| Total\tArconic\tshareholders'\tequity | 5,573 | 4,910 |
| Noncontrolling\tinterests | 12 | 14 |
| Total\tequity | 5,585 | 4,924 |
| Total\tliabilities\tand\tequity | $18,693 | $18,718 |

# Statement	of	Consolidated	Cash	Flows

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities |  |  |  |
| Net\tincome\t(loss) | $642 | $(74) | $(878) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tcash\tprovided\tfrom\t(used\tfor)\toperations: |  |  |  |
| Depreciation\tand\tamortization | 576 | 551 | 1,132 |
| Deferred\tincome\ttaxes | 31 | 434 | 1,125 |
| Equity\tincome,\tnet\tof\tdividends | — | — | 42 |
| Impairment\tof\tgoodwill\t(A\tand\tO) | — | 719 | — |
| Restructuring\tand\tother\tcharges | 9 | 165 | 257 |
| Net\tloss\t(gain)\tfrom\tinvesting\tactivities\t-\tasset\tsales | 10 | (513) | (156) |
| Net\tperiodic\tpension\tbenefit\tcost\t(G) | 130 | 217 | 304 |
| Stock-based\tcompensation | 50 | 67 | 86 |
| Other | 75 | 112 | 63 |
| Changes\tin\tassets\tand\tliabilities,\texcluding\teffects\tof\tacquisitions,\tdivestitures,\tand\tforeign\ncurrency\ttranslation\tadjustments: |  |  |  |
| (Increase)\tin\treceivables\t(A) | (1,142) | (915) | (1,016) |
| (Increase)\tin\tinventories | (74) | (192) | (29) |
| (Increase)\tdecrease\tin\tprepaid\texpenses\tand\tother\tcurrent\tassets | (1) | 11 | (76) |
| Increase\tin\taccounts\tpayable,\ttrade | 339 | 62 | 232 |
| (Decrease)\tin\taccrued\texpenses | (190) | (116) | (394) |
| Increase\t(decrease)\tin\ttaxes,\tincluding\tincome\ttaxes | 104 | (23) | 93 |
| Pension\tcontributions | (298) | (310) | (290) |
| (Increase)\tin\tnoncurrent\tassets | (20) | (41) | (152) |
| (Decrease)\tin\tnoncurrent\tliabilities | (24) | (193) | (248) |
| Cash\tprovided\tfrom\t(used\tfor)\toperations | 217 | (39) | 95 |
| Financing\tActivities |  |  |  |
| Net\tchange\tin\tshort-term\tborrowings\t(original\tmaturities\tof\tthree\tmonths\tor\tless) | (7) | (2) | (3) |
| Additions\tto\tdebt\t(original\tmaturities\tgreater\tthan\tthree\tmonths)\t(P) | 600 | 816 | 1,962 |
| Payments\ton\tdebt\t(original\tmaturities\tgreater\tthan\tthree\tmonths)\t(P) | (1,103) | (1,634) | (2,734) |
| Premiums\tpaid\ton\tearly\tredemption\tof\tdebt\t(A\tand\tP) | (17) | (52) | (3) |
| Proceeds\tfrom\texercise\tof\temployee\tstock\toptions | 16 | 50 | 4 |
| Dividends\tpaid\tto\tshareholders | (119) | (162) | (228) |
| Distributions\tto\tnoncontrolling\tinterests | — | (14) | (226) |
| Contributions\tfrom\tnoncontrolling\tinterests | — | — | 51 |
| Net\tcash\ttransferred\tfrom\tAlcoa\tCorporation\tat\tseparation | — | — | 421 |
| Other | (19) | (17) | (1) |
| Cash\tused\tfor\tfinancing\tactivities | (649) | (1,015) | (757) |
| Investing\tActivities |  |  |  |
| Capital\texpenditures | (768) | (596) | (1,125) |
| Acquisitions,\tnet\tof\tcash\tacquired\t(S) | — | — | 10 |
| Proceeds\tfrom\tthe\tsale\tof\tassets\tand\tbusinesses\t(S) | 309 | (9) | 692 |
| Sales\tof\tinvestments\t(S\tand\tV) | 9 | 890 | 280 |
| Cash\treceipts\tfrom\tsold\treceivables\t(A\tand\tL) | 1,016 | 792 | 778 |
| Other\t(V) | (1) | 243 | (44) |
| Cash\tprovided\tfrom\tinvesting\tactivities | 565 | 1,320 | 591 |
| Effect\tof\texchange\trate\tchanges\ton\tcash,\tcash\tequivalents\tand\trestricted\tcash | (4) | 9 | (8) |
| Net\tchange\tin\tcash,\tcash\tequivalents\tand\trestricted\tcash\t(A) | 129 | 275 | (79) |
| Cash,\tcash\tequivalents\tand\trestricted\tcash\tat\tbeginning\tof\tyear\t(A) | 2,153 | 1,878 | 1,957 |
| Cash,\tcash\tequivalents\tand\trestricted\tcash\tat\tend\tof\tyear\t(A) | $2,282 | $2,153 | $1,878 |

# Statement	of	Changes	in	Consolidated	Equity

|  | Preferred<br>stock | Mandatory<br>convertible<br>preferred<br>stock | Common<br>stock | Additional<br>capital | Retained<br>earnings<br>(deficit) | Treasury<br>stock | Accumulated<br>Other<br>Comprehensive<br>Loss | Noncontrolling<br>interests | Total<br>equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2015 | $55 | $3 | $1,391 | $10,019 | $8,834 | $(2,825) | $(5,431) | $2,085 | $14,131 |
| Net\t(loss)\tincome | — | — | — | — | (941) | — | — | 63 | (878) |
| Other\tcomprehensive\t(loss)\tincome\t(K) | — | — | — | — | — | — | (691) | 184 | (507) |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred–Class\tA\t@\t$3.75\tper\tshare | — | — | — | — | (2) | — | — | — | (2) |
| Preferred–Class\tB\t@\t$26.8750\tper\tshare | — | — | — | — | (67) | — | — | — | (67) |
| Common\t@\t$0.36\tper\tshare | — | — | — | — | (159) | — | — | — | (159) |
| Stock-based\tcompensation\t(I) | — | — | — | 86 | — | — | — | — | 86 |
| Common\tstock\tissued:\tcompensation\tplans\t(I) | — | — | — | (205) | — | 186 | — | — | (19) |
| Retirement\tof\tTreasury\tstock\t(I) |  |  | (76) | (2,563) |  | 2,639 |  |  | — |
| Reverse\tstock\tsplit\t(I) |  |  | (877) | 877 |  |  |  |  | — |
| Distribution\tof\tAlcoa\tCorporation |  |  |  |  | (8,692) |  | 3,554 | (2,133) | (7,271) |
| Distributions | — | — | — | — | — | — | — | (226) | (226) |
| Contributions | — | — | — | — | — | — | — | 51 | 51 |
| Other | — | — | — | — | — | — | — | 2 | 2 |
| Balance\tat\tDecember\t31,\t2016 | $55 | $3 | $438 | $8,214 | $(1,027) | $— | $(2,568) | $26 | $5,141 |
| Net\tloss | — | — | — | — | (74) | — | — | — | (74) |
| Other\tcomprehensive\tloss\t(K) | — | — | — | — | — | — | (76) | 2 | (74) |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred–Class\tA\t@\t$3.75\tper\tshare | — | — | — | — | (2) | — | — | — | (2) |
| Preferred–Class\tB\t@\t$20.1563\tper\tshare | — | — | — | — | (51) | — | — | — | (51) |
| Common\t@\t$0.24\tper\tshare | — | — | — | — | (109) | — | — | — | (109) |
| Stock-based\tcompensation\t(I) | — | — | — | 67 | — | — | — | — | 67 |
| Common\tstock\tissued:\tcompensation\tplans\t(I) | — | — | — | 21 | — | — | — | — | 21 |
| Conversion\tof\tmandatory\tconvertible\tpreferred\tstock\t(I) | — | (3) | 39 | (36) | — | — | — | — | — |
| Issuance\tof\tcommon\tstock\t(I) | — | — | 4 | — | — | — | — | — | 4 |
| Distributions | — | — | — | — | — | — | — | (14) | (14) |
| Other | — | — | — | — | 15 | — | — | — | 15 |
| Balance\tat\tDecember\t31,\t2017 | $55 | $— | $481 | $8,266 | $(1,248) | $— | $(2,644) | $14 | $4,924 |
| Adoption\tof\taccounting\tstandard\t(A) | — | — | — | — | 367 | — | (367) | — | — |
| Net\tincome | — | — | — | — | 642 | — | — | — | 642 |
| Other\tcomprehensive\tincome\t(K) | — | — | — | — | — | — | 85 | — | 85 |
| Cash\tdividends\tdeclared: |  |  |  |  |  |  |  |  |  |
| Preferred–Class\tA\t@\t$3.75\tper\tshare | — | — | — | — | (2) | — | — | — | (2) |
| Common\t@\t$0.24\tper\tshare | — | — | — | — | (117) | — | — | — | (117) |
| Stock-based\tcompensation\t(I) | — | — | — | 50 | — | — | — | — | 50 |
| Common\tstock\tissued:\tcompensation\tplans\t(I) | — | — | 2 | 3 | — | — | — | — | 5 |
| Other | — | — | — | — | — | — | — | (2) | (2) |
| Balance\tat\tDecember\t31,\t2018 | $55 | $— | $483 | $8,319 | $(358) | $— | $(2,926) | $12 | $5,585 |

# Notes	to	the	Consolidated	Financial	Statements

# A.	Summary	of	Significant	Accounting	Policies

Basis	of	Presentation.	The	Consolidated	Financial	Statements	of	Arconic	Inc.	and	subsidiaries	("Arconic"	or	the	"Company")	are	prepared	in	conformity	with accounting	principles	generally	accepted	in	the	United	States	of	America	(GAAP)	and	require	management	to	make	certain	judgments,	estimates,	and	assumptions. These	may	affect	the	reported	amounts	of	assets	and	liabilities	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements.	They	also may	affect	the	reported	amounts	of	revenues	and	expenses	during	the	reporting	period.	Actual	results	could	differ	from	those	estimates	upon	subsequent	resolution	of identified	matters.	Certain	amounts	in	previously	issued	financial	statements	were	reclassified	to	conform	to	the	current	period	presentation	(see	below	and	Note	C)

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;	the	classification	of	restricted	cash	within	the	Statement	of	Consolidated	Cash	Flows;	and	the	reclassification	from	Accumulated	other comprehensive	loss	to	Accumulated	deficit	in	the	Consolidated	Balance	Sheet	of	stranded	tax	effects	resulting	from	the	Tax	Cuts	and	Jobs	Act	enacted	on	December	22, 2017.	See	Recently	Adopted	Accounting	Guidance	below	for	further	details.

Also	on	January	1,	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.	See	Note	C	for	further	details.

The	separation	of	Alcoa	Inc.	into	two	standalone,	publicly-traded	companies,	Arconic	Inc.	(the	new	name	for	Alcoa	Inc.)	and	Alcoa	Corporation,	became	effective	on November	1,	2016	(the	"Separation	Transaction").	The	financial	results	of	Alcoa	Corporation	for	2016	have	been	retrospectively	reflected	in	the	Statement	of Consolidated	Operations	as	discontinued	operations	and,	as	such,	have	been	excluded	from	continuing	operations	and	segment	results	for	2016.	The	cash	flows	and comprehensive	income	related	to	Alcoa	Corporation	have	not	been	segregated	and	are	included	in	the	Statement	of	Consolidated	Cash	Flows	and	Statement	of Consolidated	Comprehensive	Income	(Loss),	respectively,	for	2016.	See	Note	V	for	additional	information	related	to	the	Separation	Transaction	and	discontinued operations.

Principles	of	Consolidation.	The	Consolidated	Financial	Statements	include	the	accounts	of	Arconic	and	companies	in	which	Arconic	has	a	controlling	interest. Intercompany	transactions	have	been	eliminated.	Investments	in	affiliates	in	which	Arconic	cannot	exercise	significant	influence	are	accounted	for	on	the	cost	method.

Management	also	evaluates	whether	an	Arconic	entity	or	interest	is	a	variable	interest	entity	and	whether	Arconic	is	the	primary	beneficiary.	Consolidation	is	required	if both	of	these	criteria	are	met.	Arconic	does	not	have	any	variable	interest	entities	requiring	consolidation.

Cash	Equivalents.	Cash	equivalents	are	highly	liquid	investments	purchased	with	an	original	maturity	of	three	months	or	less.

Inventory	Valuation.	Inventories	are	carried	at	the	lower	of	cost	and	net	realizable	value,	with	cost	for	approximately	half	of	U.S.	inventories	determined	under	the	last- in,	first-out	(LIFO)	method.	The	cost	of	other	inventories	is	determined	under	a	combination	of	the	first-in,	first-out	(FIFO)	and	average-cost	methods.

Properties,	Plants,	and	Equipment.	Properties,	plants,	and	equipment	are	recorded	at	cost.	Depreciation	is	recorded	principally	on	the	straight-line	method	at	rates based	on	the	estimated	useful	lives	of	the	assets.	The	following	table	details	the	weighted-average	useful	lives	of	structures	and	machinery	and	equipment	by	reporting segment	(numbers	in	years):

|  | Structures | Machinery	and	equipment |
| :--- | :--- | :--- |
| Engineered\tProducts\tand\tSolutions | 29 | 17 |
| Global\tRolled\tProducts | 31 | 21 |
| Transportation\tand\tConstruction\tSolutions | 27 | 18 |

Gains	or	losses	from	the	sale	of	asset	groups	are	generally	recorded	in	Restructuring	and	other	charges	while	the	sale	of	individual	assets	are	recorded	in	Other	expense (income),	net	(see	policy	below	for	assets	classified	as	held	for	sale	and	discontinued	operations).	Repairs	and	maintenance	are	charged	to	expense	as	incurred.	Interest related	to	the	construction	of	qualifying	assets	is	capitalized	as	part	of	the	construction	costs.

Properties,	plants,	and	equipment	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	such	assets	(asset group)	may	not	be	recoverable.	Recoverability	of	assets	is	determined	by	comparing	the	estimated	undiscounted	net	cash	flows	of	the	operations	related	to	the	assets (asset	group)	to	their	carrying	amount.	An	impairment	loss	would	be	recognized	when	the	carrying	amount	of	the	assets	(asset	group)	exceeds	the	estimated undiscounted	net	cash	flows.	The	amount	of	the	impairment	loss	to	be	recorded	is	calculated	as	the	excess	of	the	carrying	value	of	the	assets	(asset	group)	over	their	fair value,	with	fair	value	determined	using	the	best	information	available,	which	generally	is	a	discounted	cash	flow	(DCF)	model.	The	determination	of	what	constitutes	an asset	group,	the	associated	estimated	undiscounted	net	cash	flows,	and	the	estimated	useful	lives	of	the	assets	also	require	significant	judgments.	See	Note	N	for	further information.

Goodwill	is	allocated	among	and	evaluated	for	impairment	at	the	reporting	unit	level,	which	is	defined	as	an	operating	segment	or	one	level	below	an	operating	segment. Arconic	had	eight	reporting	units	for	2017	and	2016,	of	which	four	were	included	in	the	Engineered	Products	and	Solutions	segment	(Arconic	Fastening	Systems	and Rings,	Arconic	Power	and	Propulsion,	Arconic	Forgings	and	Extrusions,	and	Arconic	Titanium	and	Engineered	Products),	three	were	included	in	the	Transportation	and Construction	Solutions	segment	(Arconic	Wheel	and	Transportation	Products,	Building	and	Construction	Systems,	and	Latin	America	Extrusions),	and	the	remaining reporting	unit	was	the	Global	Rolled	Products	segment.

In	January	2018,	management	changed	the	organizational	structure	of	the	businesses	in	the	Engineered	Products	and	Solutions	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,	management	assessed	and	concluded	that	each of	the	three	new	business	units	(Arconic	Fastening	Systems	(AFS),	Arconic	Engines	(AEN),	and	Arconic	Engineered	Structures	(AES))	represent	reporting	units	for goodwill	impairment	evaluation	purposes.	Goodwill	was	reallocated	to	the	three	new	reporting	units	and	both	the	historical	and	new	Engineered	Products	and	Solutions reporting	units	were	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.	In	April	2018,	Arconic	completed	the	sale	of	its	Latin	America	extrusions	business	and,	therefore,	it	is	no	longer	a	reporting	unit for	the	Company.	More	than	90%	of	Arconic's	total	goodwill	at	December	31,	2018	was	allocated	to	the	three	Engineered	Products	and	Solutions	reporting	units:	AEN ($2,065),	AFS	($1,607),	and	AES	($507).

In	reviewing	goodwill	for	impairment,	an	entity	has	the	option	to	first	assess	qualitative	factors	to	determine	whether	the	existence	of	events	or	circumstances	leads	to	a determination	that	it	is	more	likely	than	not	(greater	than	50%)	that	the	estimated	fair	value	of	a	reporting	unit	is	less	than	its	carrying	amount.	If	an	entity	elects	to perform	a	qualitative	assessment	and	determines	that	an	impairment	is	more	likely	than	not,	the	entity	is	then	required	to	perform	the	quantitative	impairment	test (described	below),	otherwise	no	further	analysis	is	required.	An	entity	also	may	elect	not	to	perform	the	qualitative	assessment	and,	instead,	proceed	directly	to	the quantitative	impairment	test.	The	ultimate	outcome	of	the	goodwill	impairment	review	for	a	reporting	unit	should	be	the	same	whether	an	entity	chooses	to	perform	the qualitative	assessment	or	proceeds	directly	to	the	quantitative	impairment	test.

Under	the	qualitative	assessment,	various	events	and	circumstances	(or	factors)	that	would	affect	the	estimated	fair	value	of	a	reporting	unit	are	identified	(similar	to impairment	indicators	above).	These	factors	are	then	classified	by	the	type	of	impact	they	would	have	on	the	estimated	fair	value	using	positive,	neutral,	and	adverse categories	based	on	current	business	conditions.	Additionally,	an	assessment	of	the	level	of	impact	that	a	particular	factor	would	have	on	the	estimated	fair	value	is determined	using	high,	medium,	and	low	weighting.	Furthermore,	management	considers	the	results	of	the	most	recent	quantitative	impairment	test	completed	for	a reporting	unit	and	compares	the	weighted	average	cost	of	capital	(WACC)	between	the	current	and	prior	years	for	each	reporting	unit.

During	the	2018	annual	review	of	goodwill,	management	proceeded	directly	to	the	quantitative	impairment	test	for	all	six	of	its	reporting	units.	The	estimated	fair	values for	each	of	the	six	reporting	units	exceeded	their	respective	carrying	values	by	more	than	25%,	thus,	there	was	no	goodwill	impairment.	Under	the	quantitative impairment	test,	the	evaluation	of	impairment	involves	comparing	the	current	fair	value	of	each	reporting	unit	to	its	carrying	value,	including	goodwill.	Arconic	uses	a

discounted	cash	flow	model	(DCF)	to	estimate	the	current	fair	value	of	its	reporting	units	when	testing	for	impairment,	as	management	believes	forecasted	cash	flows	are the	best	indicator	of	such	fair	value.	A	number	of	significant	assumptions	and	estimates	are	involved	in	the	application	of	the	DCF	model	to	forecast	operating	cash flows,	including	sales	growth	(volumes	and	pricing),	production	costs,	capital	spending,	and	discount	rate.	Most	of	these	assumptions	vary	significantly	among	the reporting	units.	Cash	flow	forecasts	are	generally	based	on	approved	business	unit	operating	plans	for	the	early	years	and	historical	relationships	in	later	years.	The WACC	rate	for	the	individual	reporting	units	is	estimated	with	the	assistance	of	valuation	experts.	Arconic	would	recognize	an	impairment	charge	for	the	amount	by which	the	carrying	amount	exceeds	the	reporting	unit's	fair	value	without	exceeding	the	total	amount	of	goodwill	allocated	to	that	reporting	unit.

In	connection	with	the	interim	impairment	evaluation	of	long-lived	assets	for	the	disks	operations	(an	asset	group	within	the	AEN	business	unit)	in	the	second	quarter	of 2018,	which	resulted	from	a	decline	in	forecasted	financial	performance	for	the	business	in	connection	with	its	updated	three-year	strategic	plan,	the	Company	also performed	an	interim	impairment	evaluation	of	goodwill	for	the	AEN	reporting	unit.	The	estimated	fair	value	of	the	reporting	unit	was	substantially	in	excess	of	the carrying	value;	thus,	there	was	no	impairment	of	goodwill.

Other	Intangible	Assets.	Intangible	assets	with	indefinite	useful	lives	are	not	amortized	while	intangible	assets	with	finite	useful	lives	are	amortized	generally	on	a straight-line	basis	over	the	periods	benefited.	The	following	table	details	the	weighted-average	useful	lives	of	software	and	other	intangible	assets	by	reporting	segment (numbers	in	years):

|  | Software | Other	intangible	assets |
| :--- | :--- | :--- |
| Engineered\tProducts\tand\tSolutions | 5 | 33 |
| Global\tRolled\tProducts | 5 | 9 |
| Transportation\tand\tConstruction\tSolutions | 5 | 16 |

Revenue	Recognition.	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.

In	certain	circumstances,	Arconic	receives	advanced	payments	from	its	customers	for	product	to	be	delivered	in	future	periods.	These	advanced	payments	are	recorded as	deferred	revenue	until	the	product	is	delivered	and	title	and	risk	of	loss	have	passed	to	the	customer	in	accordance	with	the	terms	of	the	contract.	Deferred	revenue	is included	in	Other	current	liabilities	and	Other	noncurrent	liabilities	and	deferred	credits	on	the	accompanying	Consolidated	Balance	Sheet.

Litigation	Matters.	For	asserted	claims	and	assessments,	liabilities	are	recorded	when	an	unfavorable	outcome	of	a	matter	is

deemed	to	be	probable	and	the	loss	is	reasonably	estimable.	Management	determines	the	likelihood	of	an	unfavorable	outcome	based	on	many	factors	such	as	the	nature of	the	matter,	available	defenses	and	case	strategy,	progress	of	the	matter,	views	and	opinions	of	legal	counsel	and	other	advisors,	applicability	and	success	of	appeals processes,	and	the	outcome	of	similar	historical	matters,	among	others.	Once	an	unfavorable	outcome	is	deemed	probable,	management	weighs	the	probability	of estimated	losses,	and	the	most	reasonable	loss	estimate	is	recorded.	If	an	unfavorable	outcome	of	a	matter	is	deemed	to	be	reasonably	possible,	then	the	matter	is disclosed	and	no	liability	is	recorded.	With	respect	to	unasserted	claims	or	assessments,	management	must	first	determine	that	the	probability	that	an	assertion	will	be made	is	likely,	then,	a	determination	as	to	the	likelihood	of	an	unfavorable	outcome	and	the	ability	to	reasonably	estimate	the	potential	loss	is	made.	Legal	matters	are reviewed	on	a	continuous	basis	to	determine	if	there	has	been	a	change	in	management's	judgment	regarding	the	likelihood	of	an	unfavorable	outcome	or	the	estimate	of a	potential	loss.

In	2018,	Arconic	made	a	final	accounting	policy	election	to	apply	a	tax	law	ordering	approach	when	considering	the	need	for	a	valuation	allowance	on	net	operating losses	expected	to	offset	Global	Intangible	Low	Taxed	Income	(GILTI)	income	inclusions.		Under	this	approach,	reductions	in	cash	tax	savings	are	not	considered	as part	of	the	valuation	allowance	assessment.		Instead,	future	GILTI	inclusions	are	considered	a	source	of	taxable	income	that	support	the	realizability	of	deferred	tax assets.

Foreign	Currency.	The	local	currency	is	the	functional	currency	for	Arconic's	significant	operations	outside	the	United	States,	except	for	certain	operations	in	Canada and	Russia,	where	the	U.S.	dollar	is	used	as	the	functional	currency.	The	determination	of	the	functional	currency	for	Arconic's	operations	is	made	based	on	the appropriate	economic	and	management	indicators.

Acquisitions.	Arconic's	business	acquisitions	are	accounted	for	using	the	acquisition	method.	The	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities assumed	based	on	their	estimated	fair	values.	Any	excess	purchase	price	over	the	fair	value	of	the	net	assets	acquired	is	recorded	as	goodwill.	For	all	acquisitions, operating	results	are	included	in	the	Statement	of	Consolidated	Operations	from	the	date	of	the	acquisition.

Discontinued	Operations	and	Assets	Held	for	Sale.	For	those	businesses	where	management	has	committed	to	a	plan	to	divest,	each	business	is	valued	at	the	lower	of its	carrying	amount	or	estimated	fair	value	less	cost	to	sell.	If	the	carrying	amount	of	the	business	exceeds	its	estimated	fair	value,	an	impairment	loss	is	recognized.	Fair value	is	estimated	using	accepted	valuation	techniques	such	as	a	DCF	model,	valuations	performed	by	third	parties,	earnings	multiples,	or	indicative	bids,	when available.	A	number	of	significant	estimates	and	assumptions	are	involved	in	the	application	of	these	techniques,	including	the	forecasting	of	markets	and	market	share, sales	volumes	and	prices,	costs	and	expenses,	and	multiple	other	factors.	Management	considers	historical	experience	and	all	available	information	at	the	time	the estimates	are	made;	however,	the	fair	value	that	is	ultimately	realized	upon	the	divestiture	of	a	business	may	differ	from	the	estimated	fair	value	reflected	in	the Consolidated	Financial	Statements.	Depreciation	and	amortization	expense	is	not	recorded	on	assets	of	a	business	to	be	divested	once	they	are	classified	as	held	for	sale. Businesses	to	be	divested	are	generally	classified	in	the	Consolidated	Financial	Statements	as	either	discontinued	operations	or	held	for	sale.

For	businesses	classified	as	discontinued	operations,	the	balance	sheet	amounts	and	results	of	operations	are	reclassified	from	their	historical	presentation	to	assets	and liabilities	of	discontinued	operations	on	the	Consolidated	Balance	Sheet	and	to	discontinued	operations	on	the	Statement	of	Consolidated	Operations,	respectively,	for	all periods	presented.	The	gains	or	losses	associated	with	these	divested	businesses	are	recorded	in	discontinued	operations	on	the	Statement	of	Consolidated	Operations. The	Statement	of	Consolidated	Cash	Flows	is	not	required	to	be	reclassified	for	discontinued	operations	for	any	period.	Segment	information	does	not	include	the	assets or	operating	results	of	businesses	classified	as	discontinued	operations	for	all	periods	presented.	These	businesses	are	expected	to	be	disposed	of	within	one	year.

For	businesses	classified	as	held	for	sale	that	do	not	qualify	for	discontinued	operations	treatment,	the	balance	sheet	and	cash	flow	amounts	are	reclassified	from	their historical	presentation	to	assets	and	liabilities	of	operations	held	for	sale	for	all	periods	presented.	The	results	of	operations	continue	to	be	reported	in	continuing operations.	The	gains	or	losses	associated	with	these	divested	businesses	are	recorded	in	Restructuring	and	other	charges	on	the	Statement	of	Consolidated	Operations. The	segment	information	includes	the	assets	and	operating	results	of	businesses	classified	as	held	for	sale	for	all	periods	presented.

Recently	Adopted	Accounting	Guidance.	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	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	the	Revenue	Recognition	policy	above.

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	$792	and	$778	for	2017	and

2016,	respectively.	In	addition,	Arconic	reclassified	$52	and	$3	of	cash	paid	for	debt	prepayments	including	extinguishment	costs	from	operating	activities	to	financing activities	for	2017	and	2016,	respectively.

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	$6,	$4,	and	$15	in	2018,	2017,	and	2016,	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	$154	and	$135,	while	there	was no	impact	to	consolidated	Net	income,	for	2017	and	2016,	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	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.	Stranded	tax	effects	were	created	when	deferred	taxes,	originally	established	in Other	comprehensive	income	at	35%,	were	revalued	to	21%	as	a	component	of	income	tax	expense	from	continuing	operations.	The	Company	elected	to	early	adopt	this provision	in	the	fourth	quarter	of	2018	and	reclassified	$367	of	beneficial	stranded	tax	effects	in	Accumulated	other	comprehensive	loss	to	Accumulated	deficit	in	its Consolidated	Balance	Sheet	and	Statement	of	Changes	in	Consolidated	Equity.

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.

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	became	effective	on November	5,	2018	and	will	be	applied	to	filings	thereafter.	The	adoption	of	this	guidance	did	not	have	a	material	impact	on	the	Consolidated	Financial	Statements.

Recently	Issued	Accounting	Guidance.	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	became	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	has	determined	the	scope	of	arrangements	that	will	be	subject	to	this	standard	and	continues	to	assess	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	has	been	compiling	and uploading	lease	data	into	the	software	solution	to	account	for	leases	under	the	new	standard.	Management	continues	to	evaluate	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.	Arconic	anticipates	the	impact	of	adoption	on January	1,	2019	will	result	in	a	right	of	use	asset	and	total	lease	liability	related	to	operating	leases	in	the	range	of	$300	to	$340,	while	the	accounting	for	capital	leases will	remain	unchanged.	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	became 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	loss	with	a	corresponding	adjustment	to	the	opening	balance	of Accumulated	deficit	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.	Under	the	new	guidance,	Management	expects	to	utilize	cash	flow	hedge	accounting	of	its	variable priced	purchases	and	sales.	Management	determined	that	the	adoption	of	this	guidance	will	not	have	a	material	impact	on	the	Consolidated	Financial	Statements.

In	August	2018,	the	FASB	issued	guidance	that	impacts	disclosures	for	defined	benefit	pension	plans	and	other	postretirement	benefit	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.	20.

# B.	Revenue	from	Contracts	with	Customers

The	following	table	disaggregates	revenue	by	major	end	market	served.	Differences	between	segment	totals	and	consolidated	Arconic	are	in	Corporate.	In	2018,

Corporate	included	$38	of	costs	related	to	settlements	of	certain	customer	claims	primarily	related	to	product	introductions.

| For	the	year	ended	December	31, | Engineered<br>Products	and<br>Solutions | Global	Rolled<br>Products | Transportation<br>and	Construction<br>Solutions | Total<br>Segment |
| :--- | :--- | :--- | :--- | :--- |
| 2018 |  |  |  |  |
| Aerospace | $4,947 | $891 | $— | $5,838 |
| Transportation | 440 | 2,443 | 969 | 3,852 |
| Building\tand\tconstruction | — | 217 | 1,150 | 1,367 |
| Industrial\tand\tOther | 929 | 2,053 | 7 | 2,989 |
| Total\tend-market\trevenue | $6,316 | $5,604 | $2,126 | $14,046 |
| 2017 |  |  |  |  |
| Aerospace | $4,572 | $883 | $— | $5,455 |
| Transportation | 383 | 1,981 | 805 | 3,169 |
| Building\tand\tconstruction | — | 204 | 1,113 | 1,317 |
| Industrial\tand\tOther | 988 | 1,932 | 93 | 3,013 |
| Total\tend-market\trevenue | $5,943 | $5,000 | $2,011 | $12,954 |
| 2016 |  |  |  |  |
| Aerospace | $4,358 | $942 | $— | $5,300 |
| Transportation | 347 | 1,577 | 708 | 2,632 |
| Building\tand\tconstruction | — | 200 | 1,060 | 1,260 |
| Industrial\tand\tOther | 1,023 | 2,146 | 34 | 3,203 |
| Total\tend-market\trevenue | $5,728 | $4,865 | $1,802 | $12,395 |

# C.	Segment	and	Geographic	Area	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.	Differences	between	segment totals	and	consolidated	Arconic	are	in	Corporate.	Prior	period	financial	information	has	been	recast	to	conform	to	current	year	presentation.

The	accounting	policies	of	the	segments	are	the	same	as	those	described	in	the	Summary	of	Significant	Accounting	Policies	(see	Note	A).	Transactions	among	segments are	established	based	on	negotiation	among	the	parties.	Differences	between	segment	totals	and	Arconic's	consolidated	totals	for	line	items	not	reconciled	are	in Corporate.

Arconic's	operations	consist	of	three	worldwide	reportable	segments	as	follows:

Engineered	Products	and	Solutions.	This	segment	produces	products	that	are	used	primarily	in	the	aerospace	(commercial	and	defense),	industrial,	commercial transportation,	and	power	generation	end	markets.	Such	products	include	fastening	systems	(titanium,	steel,	and	nickel	superalloys);	seamless	rolled	rings	(mostly	nickel superalloys);	investment	castings	(nickel	superalloys,	titanium,	and	aluminum),	including	airfoils	and	forged	jet	engine	components	(e.g.,	jet	engine	disks);	and	extruded,

machined	and	formed	aircraft	parts	(titanium	and	aluminum),	all	of	which	are	sold	directly	to	customers	and	through	distributors.	More	than	75%	of	the	third-party	sales in	this	segment	are	from	the	aerospace	end	market.	A	small	part	of	this	segment	also	produces	various	forged,	extruded,	and	machined	metal	products	(titanium, aluminum	and	steel)	for	the	oil	and	gas,	automotive,	and	land	and	sea	defense	end	markets.	Seasonal	decreases	in	sales	are	generally	experienced	in	the	third	quarter	of the	year	due	to	the	European	summer	slowdown	across	all	end	markets.

Global	Rolled	Products.	This	segment	produces	aluminum	sheet	and	plate	for	a	variety	of	end	markets.	Sheet	and	plate	is	sold	directly	to	customers	and	through distributors	related	to	the	aerospace,	automotive,	commercial	transportation,	packaging,	building	and	construction,	and	industrial	products	(mainly	used	in	the production	of	machinery	and	equipment	and	consumer	durables)	end	markets.	A	small	portion	of	this	segment	also	produces	aseptic	foil	for	the	packaging	end	market. While	the	customer	base	for	flat-rolled	products	is	large,	a	significant	amount	of	sales	of	sheet	and	plate	is	to	a	relatively	small	number	of	customers.

Transportation	and	Construction	Solutions.	This	segment	produces	products	that	are	used	mostly	in	the	commercial	transportation	and	nonresidential	building	and construction	end	markets.	Such	products	include	integrated	aluminum	structural	systems,	architectural	extrusions,	and	forged	aluminum	commercial	vehicle	wheels, which	are	sold	both	directly	to	customers	and	through	distributors.	A	small	part	of	this	segment	also	produces	aluminum	products	for	the	industrial	products	end	market.

# The	operating	results	and	assets	of	Arconic's	reportable	segments	were	as	follows:

|  | Engineered<br>Products	and<br>Solutions | Global	Rolled<br>Products | Transportation<br>and	Construction	Solutions | Total |
| :--- | :--- | :--- | :--- | :--- |
| 2018 |  |  |  |  |
| Sales: |  |  |  |  |
| Third-party\tsales | $6,316 | $5,604 | $2,126 | $14,046 |
| Intersegment\tsales | — | 160 | — | 160 |
| Total\tsales | $6,316 | $5,764 | $2,126 | $14,206 |
| Profit\tand\tloss: |  |  |  |  |
| Segment\toperating\tprofit | $891 | $386 | $304 | $1,581 |
| Restructuring\tand\tother\tcharges | 71 | (156) | 1 | (84) |
| Provision\tfor\tdepreciation\tand\tamortization | 282 | 212 | 50 | 544 |
| 2017 |  |  |  |  |
| Sales: |  |  |  |  |
| Third-party\tsales | $5,943 | $5,000 | $2,011 | $12,954 |
| Intersegment\tsales | — | 148 | — | 148 |
| Total\tsales | $5,943 | $5,148 | $2,011 | $13,102 |
| Profit\tand\tloss: |  |  |  |  |
| Segment\toperating\tprofit | $964 | $424 | $290 | $1,678 |
| Restructuring\tand\tother\tcharges | 30 | 72 | 52 | 154 |
| Provision\tfor\tdepreciation\tand\tamortization | 268 | 205 | 50 | 523 |
| 2016 |  |  |  |  |
| Sales: |  |  |  |  |
| Third-party\tsales | $5,728 | $4,865 | $1,802 | $12,395 |
| Intersegment\tsales | — | 118 | — | 118 |
| Total\tsales | $5,728 | $4,983 | $1,802 | $12,513 |
| Profit\tand\tloss: |  |  |  |  |
| Segment\toperating\tprofit | $955 | $421 | $246 | $1,622 |
| Restructuring\tand\tother\tcharges | 78 | 40 | 14 | 132 |
| Provision\tfor\tdepreciation\tand\tamortization | 255 | 201 | 48 | 504 |
| 2018 |  |  |  |  |
| Assets: |  |  |  |  |
| Capital\texpenditures | $349 | $255 | $111 | $715 |
| Goodwill | 4,179 | 245 | 76 | 4,500 |
| Total\tassets | 10,346 | 3,934 | 1,089 | 15,369 |
| 2017 |  |  |  |  |
| Assets: |  |  |  |  |
| Capital\texpenditures | $308 | $178 | $57 | $543 |
| Goodwill | 4,205 | 252 | 78 | 4,535 |
| Total\tassets | 10,325 | 3,955 | 1,041 | 15,321 |

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales: |  |  |  |
| Total\tsegment\tsales | $14,206 | $13,102 | $12,513 |
| Elimination\tof\tintersegment\tsales | (160) | (148) | (118) |
| Corporate | (32) | 6 | (1) |
| Consolidated\tsales | $14,014 | $12,960 | $12,394 |

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Total\tsegment\toperating\tprofit | $1,581 | $1,678 | $1,622 |
| Unallocated\tamounts: |  |  |  |
| Impairment\tof\tgoodwill | — | (719) | — |
| Restructuring\tand\tother\tcharges | (9) | (165) | (155) |
| Corporate\texpense | (247) | (314) | (513) |
| Consolidated\toperating\tincome | $1,325 | $480 | $954 |
| Interest\texpense | (378) | (496) | (499) |
| Other\t(expense)\tincome,\tnet | (79) | 486 | (41) |
| Consolidated\tincome\tbefore\tincome\ttaxes | $868 | $470 | $414 |

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Assets: |  |  |
| Total\tsegment\tassets | $15,369 | $15,321 |
| Unallocated\tamounts: |  |  |
| Cash\tand\tcash\tequivalents | 2,277 | 2,150 |
| Deferred\tincome\ttaxes | 573 | 743 |
| Corporate\tfixed\tassets,\tnet | 305 | 310 |
| Fair\tvalue\tof\tderivative\tcontracts | 37 | 91 |
| Other | 132 | 103 |
| Consolidated\tassets | $18,693 | $18,718 |

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales: |  |  |  |
| Innovative\tflat-rolled\tproducts | $5,588 | $4,992 | $4,864 |
| Engines | 2,940 | 2,708 | 2,560 |
| Engineered\tstructures | 1,839 | 1,743 | 1,683 |
| Fastening\tsystems | 1,531 | 1,484 | 1,463 |
| Architectural\taluminum\tsystems | 1,140 | 1,065 | 1,010 |
| Aluminum\twheels | 969 | 805 | 689 |
| Other | 7 | 163 | 125 |
|  | $14,014 | $12,960 | $12,394 |

Geographic	information	for	sales	was	as	follows	(based	upon	the	country	where	the	point	of	sale	occurred):

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales: |  |  |  |
| United\tStates | $9,137 | $8,167 | $7,823 |
| France | 936 | 965 | 930 |
| Hungary | 823 | 739 | 619 |
| United\tKingdom | 737 | 721 | 711 |
| China | 632 | 615 | 582 |
| Russia | 553 | 500 | 433 |
| Germany | 302 | 309 | 284 |
| Canada | 285 | 261 | 262 |
| Brazil | 214 | 285 | 250 |
| Japan | 170 | 141 | 145 |
| Other | 225 | 257 | 355 |
|  | $14,014 | $12,960 | $12,394 |

Geographic	information	for	long-lived	assets	was	as	follows	(based	upon	the	physical	location	of	the	assets):

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Long-lived\tassets: |  |  |
| United\tStates | $4,148 | $4,005 |
| China | 326 | 347 |
| Hungary | 257 | 227 |
| Russia | 253 | 276 |
| United\tKingdom | 253 | 259 |
| France | 163 | 159 |
| Germany | 84 | 88 |
| Canada | 61 | 63 |
| Brazil | 54 | 62 |
| Other | 105 | 108 |
|  | $5,704 | $5,594 |

# D.	Restructuring	and	Other	Charges

Restructuring	and	other	charges	for	each	year	in	the	three-year	period	ended	December	31,	2018	were	comprised	of	the	following:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Asset\timpairments | $13 | $58 | $80 |
| Layoff\tcosts | 20 | 64 | 68 |
| Pension\tand\tOther\tpostretirement\tbenefits\t-\tnet\tsettlement\tand\tcurtailment\tcharges | 91 | — | 2 |
| Net\t(gain)\tloss\ton\tdivestitures\tof\tassets\tand\tbusinesses\t(T) | (109) | 57 | 3 |
| Other | 13 | (3) | 27 |
| Reversals\tof\tpreviously\trecorded\tlayoff\tcosts | (19) | (11) | (25) |
| Restructuring\tand\tother\tcharges | $9 | $165 | $155 |

Layoff	costs	were	recorded	based	on	approved	detailed	action	plans	submitted	by	the	operating	locations	that	specified	positions	to	be	eliminated,	benefits	to	be	paid under	existing	severance	plans,	union	contracts	or	statutory	requirements,	and	the	expected	timetable	for	completion	of	the	plans.

2018	Actions.	In	2018,	Arconic	recorded	Restructuring	and	other	charges	of	$9	($9	after-tax),	which	included	a	net	gain	on	the	sale	of	several	assets	and	businesses	of $109	($81	after-tax),	primarily	made	up	of	a	gain	on	the	asset	sale	of	Texarkana	of	$154	($119	after-tax)	and	loss	on	the	sale	of	the	Eger,	Hungary	forgings	business	of $43	($39	after-tax)	(see	note	T);	charges	of	$96	($75	after-tax)	for	pension	settlement	and	$23	($18	after-tax)	for	pension	curtailment;	a	postretirement	curtailment benefit	of	$28	($22	after-tax)	(see	note	G);	and	a	charge	of	$20	($17	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)	for	contract	termination	costs	and	asset	impairments	associated	with	the shutdown	of	a	facility	in	Acuna,	Mexico;	a	charge	of	$6	($4	after-tax)	for	contract	termination	costs	related	to	the	New	York	office;	a	charge	of	$8	($4	after-tax)	for	other miscellaneous	items	including	accelerated	depreciation	and	asset	impairments;	and	a	benefit	of	$19	($15	after-tax)	for	the	reversal	of	a	number	of	layoff	reserves	related to	prior	periods.

As	of	December	31,	2018,	approximately	110	of	the	125	employees	were	separated.	The	remaining	separations	for	2018	restructuring	programs	are	expected	to	be completed	by	the	end	of	2019.	In	2018,	cash	payments	of	$9	were	made	against	layoff	reserves	related	to	the	2018	restructuring	programs.

2017	Actions.	In	2017,	Arconic	recorded	Restructuring	and	other	charges	of	$165	($143	after-tax),	which	were	comprised	of	the	following	components:	$69	($47	after- tax)	for	layoff	costs	related	to	cost	reduction	initiatives	including	the	separation	of	approximately	880	employees	(400	in	the	Engineered	Products	and	Solutions	segment, 245	in	the	Global	Rolled	Products	segment,	135	in	the	Transportation	and	Construction	Solutions	segment,	and	100	in	Corporate),	a	charge	of	$60	($60	after-tax)	related to	the	sale	of	the	Fusina,	Italy	rolling	mill;	a	charge	of	$41	($41	after-tax)	for	the	impairment	of	assets	associated	with	the	sale	of	the	Latin	America	extrusions	business (see	Note	T);	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	$12	($7	after-

tax)	for	other	miscellaneous	items;	and	a	favorable	benefit	of	$11	($8	after-tax)	for	the	reversal	of	a	number	of	small	layoff	reserves	related	to	prior	periods.

As	of	December	31,	2018,	approximately	570	of	the	660	employees	(previously	760)	were	separated.	The	total	number	of	employees	associated	with	2017	restructuring programs	was	updated	to	reflect	employees,	who	were	initially	identified	for	separation,	accepting	other	positions	within	Arconic	and	natural	attrition.	The	remaining separations	for	2017	restructuring	programs	are	expected	to	be	completed	by	the	end	of	2019.	In	2018	and	2017,	cash	payments	of	$34	and	$28,	respectively,	were	made against	layoff	reserves	related	to	2017	restructuring	programs.

2016	Actions.	In	2016,	Arconic	recorded	Restructuring	and	other	charges	of	$155	($114	after-tax),	which	were	comprised	of	the	following	components:	$57	($46	after- tax)	for	costs	related	to	the	exit	of	certain	legacy	Firth	Rixson	operations	in	the	U.K.;	$37	($24	after-tax)	for	exit	costs	related	to	the	decision	to	permanently	shut	down	a can	sheet	facility;	$20	($14	after-tax)	for	costs	related	to	the	closures	of	five	facilities,	primarily	in	the	Transportation	and	Construction	Solutions	segment	and Engineered	Products	and	Solutions	segment,	including	the	separation	of	approximately	280	employees;	$53	($33	after-tax)	for	other	layoff	costs,	including	the	separation of	approximately	1,315	employees	(1,045	in	the	Engineered	Products	and	Solutions	segment,	210	in	Corporate,	30	in	the	Global	Rolled	Products	segment,	and	30	in	the Transportation	and	Construction	Solutions	segment);	$11	($8	after-tax)	for	other	miscellaneous	items,	including	$3	($2	after-tax)	for	the	sale	of	Remmele	Medical,	an RTI	subsidiary;	$2	($1	after-tax)	for	a	pension	settlement;	and	$25	($12	after-tax)	for	the	reversal	of	a	number	of	small	layoff	reserves	related	to	prior	periods.

In	2016,	management	made	the	decision	to	exit	certain	legacy	Firth	Rixson	facilities	in	the	U.K.	Costs	related	to	these	actions	included	asset	impairments	and accelerated	depreciation	of	$51;	other	exit	costs	of	$4;	and	$2	for	the	separation	of	60	employees.

Also	in	2016,	management	approved	the	shutdown	and	demolition	of	the	can	sheet	facility	in	Tennessee	upon	completion	of	the	Toll	Processing	and	Services Agreement	with	Alcoa	Corporation.	Costs	related	to	this	action	included	$21	in	asset	impairments;	$9	in	other	exit	costs;	and	$7	for	the	separation	of	145	employees. The	other	exit	costs	of	$9	represent	$4	in	asset	retirement	obligations	and	$3	in	environmental	remediation,	both	of	which	were	triggered	by	the	decision	to	permanently shut	down	and	demolish	the	can	sheet	facility	in	Tennessee,	and	$2	in	other	exit	costs.

As	of	December	31,	2018,	the	separations	associated	with	the	2016	restructuring	programs	were	essentially	complete.	In	2018,	2017,	and	2016,	cash	payments	of	$4,	$26, and	$16,	respectively,	were	made	against	layoff	reserves	related	to	2016	restructuring	programs.

Activity	and	reserve	balances	for	restructuring	charges	were	as	follows:

|  | Layoff<br>costs | Other<br>exit	costs | Total |
| :--- | :--- | :--- | :--- |
| Reserve\tbalances\tat\tDecember\t31,\t2015 | $84 | $9 | $93 |
| 2016 |  |  |  |
| Cash\tpayments | (73) | (13) | (86) |
| Restructuring\tcharges | 70 | 27 | 97 |
| Other(1) | (31) | (14) | (45) |
| Reserve\tbalances\tat\tDecember\t31,\t2016 | $50 | $9 | $59 |
| 2017 |  |  |  |
| Cash\tpayments | $(59) | $(6) | $(65) |
| Restructuring\tcharges | 64 | 1 | 65 |
| Other(2) | 1 | (2) | (1) |
| Reserve\tbalances\tat\tDecember\t31,\t2017 | $56 | $2 | $58 |
| 2018 |  |  |  |
| Cash\tpayments | $(47) | $(2) | $(49) |
| Restructuring\tcharges | 111 | 13 | 124 |
| Other(3) | (110) | 2 | (108) |
| Reserve\tbalances\tat\tDecember\t31,\t2018 | $10 | $15 | $25 |

(1) In	2016,	Other	for	layoff	costs	included	reversals	of	previously	recorded	restructuring	charges	of	$25,	effects	of	foreign	currency	translation	and	other	of	$4, and	a	reclassification	of	$2	in	pension	costs,	as	the	impact	was	reflected	in	Arconic's	separate	liability	for	Accrued	pension	benefits.	Other	for	other	exit	costs included	reclassifications	of	$8	in	asset	retirement	and	$2	in	environmental	obligations,	as	the	impacts	were	reflected	in	Arconic's	separate	liabilities

for	asset	retirement	obligations	and	environmental	remediation,	and	a	reclassification	of	$4	in	legal	obligations,	as	the	impact	was	included	in	Arconic's separate	liability	for	legal	costs.

(2) In	2017,	Other	for	layoff	costs	included	a	reclassification	of	a	stock	awards	reversal	of	$13,	offset	by	reversals	of	previously	recorded	restructuring	charges	of $11	and	foreign	currency	translation	of	$1.

(3) In	2018,	Other	for	layoff	costs	included	reclassifications	of	$119	in	pension	costs	and	a	$28	credit	in	postretirement	benefits,	as	the	impacts	were	reflected	in Arconic's	separate	liabilities	for	Accrued	pension	benefits	and	Accrued	postretirement	benefits,	and	reversals	of	previously	recorded	restructuring	charges	of $19.

The	remaining	reserves	are	expected	to	be	paid	in	cash	during	2019,	with	the	exception	of	approximately	$5	to	$7,	which	is	expected	to	be	paid	over	the	next	several years	for	lease	termination	costs.

# E.	Interest	Cost	Components

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Amount\tcharged\tto\texpense | $378 | $496 | $499 |
| Amount\tcapitalized | 23 | 22 | 32 |
|  | $401 | $518 | $531 |

# F.	Other	Expense	(Income),	Net

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Non-service\trelated\tnet\tperiodic\tbenefit\tcost | $112 | $154 | $135 |
| Interest\tincome | (23) | (19) | (16) |
| Foreign\tcurrency\tlosses\t(gains),\tnet | 26 | (5) | (4) |
| Net\tloss\t(gain)\tfrom\tasset\tsales | 10 | (513) | 11 |
| Other,\tnet | (46) | (103) | (85) |
|  | $79 | $(486) | $41 |

In	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)	and	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	Note	U).	In	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	(see	Note	V)	and	a	gain	of $167	on	the	Debt-for-Equity	Exchange	(see	Note	V).	In	2017,	Other,	net	included	an	adjustment	of	$81	to	the	contingent	earn-out	liability	related	to	the	2014	acquisition of	Firth	Rixson	(see	Note	T)	and	an	adjustment	of	$25	associated	with	a	separation-related	guarantee	liability	(see	Note	U).	In	2016,	Non-service	related	net	periodic benefit	cost	included	a	reduction	of	the	recognition	of	actuarial	losses	and	a	methodology	change	in	the	calculation	of	interest	cost,	which	were	partially	offset	by	the reduction	in	the	expected	return	on	plan	assets.	In	2016,	Other,	net	included	an	adjustment	of	$56	to	the	contingent	earn-out	liability	and	a	post-closing	adjustment	of $20,	both	related	to	the	acquisition	of	Firth	Rixson.

# G.	Pension	and	Other	Postretirement	Benefits

Arconic	maintains	pension	plans	covering	most	U.S.	employees	and	certain	employees	in	foreign	locations.	Pension	benefits	generally	depend	on	length	of	service,	job grade,	and	remuneration.	Substantially	all	benefits	are	paid	through	pension	trusts	that	are	sufficiently	funded	to	ensure	that	all	plans	can	pay	benefits	to	retirees	as	they become	due.	Most	salaried	and	non-bargaining	hourly	U.S.	employees	hired	after	March	1,	2006	participate	in	a	defined	contribution	plan	instead	of	a	defined	benefit plan.

Arconic	also	maintains	health	care	and	life	insurance	postretirement	benefit	plans	covering	eligible	U.S.	retired	employees	and	certain	retirees	from	foreign	locations. Generally,	the	medical	plans	are	unfunded	and	pay	a	percentage	of	medical	expenses,	reduced	by	deductibles	and	other	coverage.	Life	benefits	are	generally	provided	by insurance	contracts.	Arconic	retains	the	right,	subject	to	existing	agreements,	to	change	or	eliminate	these	benefits.	All	salaried	and	certain	non-bargaining	hourly	U.S. employees	hired	after	January	1,	2002	and	certain	bargaining	hourly	U.S.	employees	hired	after	July	1,	2010	are	not	eligible	for	postretirement	health	care	benefits.	All salaried	and	certain	hourly	U.S.	employees	that	retire	on	or	after	April	1,	2008	are	not	eligible	for	postretirement	life	insurance	benefits.

Effective	January	1,	2015,	Arconic	no	longer	offers	postretirement	health	care	benefits	to	Medicare-eligible,	primarily	non-bargaining,	U.S.	retirees	through	Company- sponsored	plans.	Qualifying	retirees	(hired	prior	to	January	1,	2002),	both	current	and	future,	may	access	these	benefits	in	the	marketplace	by	purchasing	coverage directly	from	insurance	carriers.

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.

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	fourth	quarter,	the	company	communicated	to	plan	participants	that	effective	in	the	first	quarter	of	2019,	benefit	accruals	for	future	service	and	compensation	for employees	in	the	United	Kingdom	defined	benefit	pension	plans	will	cease.	The	plan	curtailment	resulted	in	a	$13	decrease	in	the	Accrued	pension	benefits	liability which	was	offset	in	Accumulated	other	comprehensive	loss.	Additionally,	on	October	29,	2018,	the	United	Kingdom	High	Court	ruled	that	defined	benefit	pension	plans offering	Guaranteed	Minimum	Pensions	must	review	benefits	accrued	between	May	1990	to	April	1997	to	ensure	gender	pay	equality.	The	review	resulted	in	an increase	to	the	Accrued	pension	benefits	liability	of	$9	and	a	corresponding	curtailment	charge	that	was	recorded	in	Restructuring	and	other	charges.

In	the	third	and	fourth	quarters	of	2018,	settlement	accounting	applied	to	certain	U.S.	pension	plans	due	to	lump	sum	payments	to	participants,	resulting	in	settlement charges	of	$96	that	were	recorded	in	Restructuring	and	other	charges.

The	funded	status	of	all	of	Arconic's	pension	and	other	postretirement	benefit	plans	are	measured	as	of	December	31	each	calendar	year.

# Obligations	and	Funded	Status

|  | Pension	benefits |  | Other<br>postretirement	benefits |  |
| :--- | :--- | :--- | :--- | :--- |
| December\t31, | 2018 | 2017 | 2018 | 2017 |
| Change\tin\tbenefit\tobligation |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $7,359 | $7,026 | $927 | $980 |
| Service\tcost | 46 | 90 | 7 | 7 |
| Interest\tcost | 219 | 234 | 28 | 30 |
| Amendments | 18 | 1 | (25) | — |
| Actuarial\t(gains)\tlosses | (372) | 311 | (51) | 1 |
| Settlements | (146) | — | — | — |
| Curtailments | (154) | — | — | — |
| Benefits\tpaid | (422) | (425) | (86) | (98) |
| Medicare\tPart\tD\tsubsidy\treceipts | — | — | 6 | 7 |
| Foreign\tcurrency\ttranslation\timpact | (72) | 122 | — | — |
| Benefit\tobligation\tat\tend\tof\tyear(1) | $6,476 | $7,359 | $806 | $927 |
| Change\tin\tplan\tassets(1) |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $4,862 | $4,666 | $— | $— |
| Actual\treturn\ton\tplan\tassets | (144) | 212 | — | — |
| Employer\tcontributions | 298 | 310 | — | — |
| Benefits\tpaid | (397) | (404) | — | — |
| Administrative\texpenses | (33) | (33) | — | — |
| Settlements | (178) | — | — | — |
| Foreign\tcurrency\ttranslation\timpact | (74) | 111 | — | — |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear(1) | $4,334 | $4,862 | $— | $— |
| Net\tfunded\tstatus | $(2,142) | $(2,497) | $(806) | $(927) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheet\tconsist\tof: |  |  |  |  |
| Noncurrent\tassets | $111 | $89 | $— | $— |
| Current\tliabilities | (23) | (22) | (83) | (86) |
| Noncurrent\tliabilities | (2,230) | (2,564) | (723) | (841) |
| Net\tamount\trecognized | $(2,142) | $(2,497) | $(806) | $(927) |
| Amounts\trecognized\tin\tAccumulated\tOther\tComprehensive\tLoss\nconsist\tof: |  |  |  |  |
| Net\tactuarial\tloss | $2,957 | $3,240 | $87 | $146 |
| Prior\tservice\tcost\t(benefit) | 3 | 10 | (27) | (37) |
| Net\tamount\trecognized,\tbefore\ttax\teffect | $2,960 | $3,250 | $60 | $109 |
| Other\tchanges\tin\tplan\tassets\tand\tbenefit\tobligations\trecognized\tin\nOther\tComprehensive\tLoss\tconsist\tof: |  |  |  |  |
| Net\tactuarial\t(gain)\tloss | $(19) | $481 | $(52) | $1 |
| Amortization\tof\taccumulated\tnet\tactuarial\tloss | (264) | (220) | (7) | (5) |
| Prior\tservice\tcost\t(benefit) | 19 | — | (25) | — |
| Amortization\tof\tprior\tservice\t(cost)\tbenefit | (26) | (5) | 35 | 8 |
| Net\tamount\trecognized,\tbefore\ttax\teffect | $(290) | $256 | $(49) | $4 |

respectively.	At	December	31,	2017,	the	benefit	obligation,	fair	value	of	plan	assets,	and	funded	status	for	U.S.	pension	plans	were	$6,018,	$3,544,	and	$(2,474) respectively.

# Pension	Plan	Benefit	Obligations

|  | Pension	benefits<br>2018 | 2017 |
| :--- | :--- | :--- |
| The\tprojected\tbenefit\tobligation\tand\taccumulated\tbenefit\tobligation\tfor\tall\tdefined\tbenefit\tpension\tplans\twas\tas\tfollows: |  |  |
| Projected\tbenefit\tobligation | $6,476 | $7,359 |
| Accumulated\tbenefit\tobligation | 6,444 | 7,169 |
| The\taggregate\tprojected\tbenefit\tobligation\tand\tfair\tvalue\tof\tplan\tassets\tfor\tpension\tplans\twith\tprojected\tbenefit\nobligations\tin\texcess\tof\tplan\tassets\twas\tas\tfollows: |  |  |
| Projected\tbenefit\tobligation | 5,435 | 6,600 |
| Fair\tvalue\tof\tplan\tassets | 3,182 | 4,016 |
| The\taggregate\taccumulated\tbenefit\tobligation\tand\tfair\tvalue\tof\tplan\tassets\tfor\tpension\tplans\twith\taccumulated\tbenefit\nobligations\tin\texcess\tof\tplan\tassets\twas\tas\tfollows: |  |  |
| Accumulated\tbenefit\tobligation | 5,415 | 6,422 |
| Fair\tvalue\tof\tplan\tassets | 3,179 | 3,998 |

# Components	of	Net	Periodic	Benefit	Cost

|  |  | Pension	benefits(1) |  | Other	postretirement	benefits(2) | Other	postretirement	benefits(2) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| For\tthe\tyear\tended\tDecember\t31, | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Service\tcost | $46 | $90 | $155 | $7 | $7 | $13 |
| Interest\tcost | 219 | 234 | 431 | 28 | 30 | 63 |
| Expected\treturn\ton\tplan\tassets | (306) | (332) | (677) | — | — | — |
| Recognized\tnet\tactuarial\tloss | 168 | 220 | 380 | 7 | 5 | 24 |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | 3 | 5 | 13 | (7) | (8) | (24) |
| Settlements(3) | 96 | — | 19 | — | — | — |
| Curtailments(4) | 23 | — | — | (28) | — | — |
| Special\ttermination\tbenefits(5) | — | — | 2 | — | — | — |
| Net\tperiodic\tbenefit\tcost(6) | $249 | $217 | $323 | $7 | $34 | $76 |
| Discontinued\toperations | — | — | 122 | — | — | 41 |
| Net\tamount\trecognized\tin\tStatement\tof\tConsolidated\nOperations | $249 | $217 | $201 | $7 | $34 | $35 |

Note: the	footnotes	below	include	components	of	Net	Periodic	Benefit	Cost	related	to	Alcoa	Corporation	through	the	completion	of	the	Separation	Transaction	in 2016.

(2) In	2018,	2017	and	2016,	net	periodic	benefit	cost	for	other	postretirement	benefits	reflects	a	reduction	of	$10,	$11,	and	$22,	respectively,	related	to	the recognition	of	the	federal	subsidy	awarded	under	Medicare	Part	D.

(3) In	2018	and	2016,	settlements	were	due	to	workforce	reductions	(see	Note	D)	and	the	payment	of	lump	sum	benefits	and/or	purchases	of	annuity contracts.

(4) In	2018,	curtailments	were	due	to	a	reduction	of	future	benefits,	resulting	in	the	recognition	of	favorable	and	unfavorable	plan amendments.

(5) In	2016,	special	termination	benefits	were	due	to	workforce	reductions	(see	Note

(6) Amounts	attributed	to	joint	venture	partners	are	not	included.	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.

# Amounts	Expected	to	be	Recognized	in	Net	Periodic	Benefit	Cost

|  | Pension	benefits | Other	postretirement	benefits |
| :--- | :--- | :--- |
| December\t31, | 2019 | 2019 |
| Net\tactuarial\tloss\trecognition | $139 | $3 |
| Prior\tservice\tcost\t(benefit)\trecognition | 2 | (4) |

# Assumptions

Weighted	average	assumptions	used	to	determine	benefit	obligations	for	U.S.	pension	and	other	postretirement	benefit	plans	were	as	follows	(assumptions	for	non-U.S. plans	did	not	differ	materially):

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Discount\trate | 4.35% | 3.75% |
| Rate\tof\tcompensation\tincrease | 3.50 | 3.50 |
| Cash\tbalance\tplan\tinterest\tcrediting\trate | 3.00 | 3.00 |

The	discount	rate	is	determined	using	a	Company-specific	yield	curve	model	(above-median)	developed	with	the	assistance	of	an	external	actuary.	The	cash	flows	of	the plans'	projected	benefit	obligations	are	discounted	using	a	single	equivalent	rate	derived	from	yields	on	high	quality	corporate	bonds,	which	represent	a	broad diversification	of	issuers	in	various	sectors,	including	finance	and	banking,	industrials,	transportation,	and	utilities,	among	others.	The	yield	curve	model	parallels	the plans'	projected	cash	flows,	which	have	an	average	duration	of	10	years.	The	underlying	cash	flows	of	the	bonds	included	in	the	model	exceed	the	cash	flows	needed	to satisfy	the	Company's	plans'	obligations	multiple	times.

The	rate	of	compensation	increase	is	based	upon	actual	experience.	For	2019,	the	rate	of	compensation	increase	will	be	3.5%,	which	approximates	the	five-year	average.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Discount\trate\tto\tcalculate\tservice\tcost(1) | 3.75% | 4.20% | 4.29% |
| Discount\trate\tto\tcalculate\tinterest\tcost(1) | 3.30 | 3.60 | 3.15 |
| Expected\tlong-term\trate\tof\treturn\ton\tplan\tassets | 7.00 | 7.75 | 7.75 |
| Rate\tof\tcompensation\tincrease | 3.50 | 3.50 | 3.50 |
| Cash\tbalance\tplan\tinterest\tcrediting\trate | 3.00 | 3.00 | 3.00 |

(1) In	all	periods	presented,	the	respective	discount	rates	were	used	to	determine	net	periodic	benefit	cost	for	most	U.S.	pension	plans	for	the	full	annual	period. However,	the	discount	rates	for	a	limited	number	of	plans	were	updated	during	2018,	2017,	and	2016	to	reflect	the	remeasurement	of	these	plans	due	to	new union	labor	agreements,	settlements,	and/or	curtailments.	The	updated	discount	rates	used	were	not	significantly	different	from	the	discount	rates	presented.

In	conjunction	with	the	annual	measurement	of	the	funded	status	of	Arconic's	pension	and	other	postretirement	benefit	plans	at	December	31,	2015,	management elected	to	change	the	manner	in	which	the	interest	cost	component	of	net	periodic	benefit	costs	is	determined	in	2016	and	beyond.	Previously,	the	interest	component	was determined	by	multiplying	the	single	equivalent	rate	and	the	aggregate	discounted	cash	flows	of	the	plans'	projected	benefit	obligations.	Under	the	new	methodology, the	interest	cost	component	is	determined	by	aggregating	the	product	of	the	discounted	cash	flows	of	the	plans'	projected	benefit	obligations	for	each	year	and	an individual	spot	rate	(referred	to	as	the	"spot	rate"	approach).	This	change	resulted	in	a	lower	interest	cost	component	of	net	periodic	benefit	cost	under	the	new methodology	compared	to	the	previous	methodology	in	2018,	2017,	and	2016	of	$24,	$34,	and	$84,	respectively,	for	pension	plans	and	$4,	$6,	and	$14,	respectively,	for other	postretirement	benefit	plans.	Management	believes	this	new	methodology,	which	represents	a	change	in	an	accounting	estimate,	is	a	better	measure	of	the	interest cost	as	each	year's	cash	flows	are	specifically	linked	to	the	interest	rates	of	bond	payments	in	the	same	respective	year.

The	expected	long-term	rate	of	return	on	plan	assets	is	generally	applied	to	a	five-year	market-related	value	of	plan	assets	(a	fair	value	at	the	plan	measurement	date	is used	for	certain	non-U.S.	plans).	The	process	used	by	management	to	develop	this	assumption	is	one	that	relies	on	a	combination	of	historical	asset	return	information and	forward-looking	returns	by	asset	class.	As	it	relates	to	historical	asset	return	information,	management	focuses	on	various	historical	moving	averages	when developing

this	assumption.	While	consideration	is	given	to	recent	performance	and	historical	returns,	the	assumption	represents	a	long-term,	prospective	return.	Management	also incorporates	expected	future	returns	on	current	and	planned	asset	allocations	using	information	from	various	external	investment	managers	and	consultants,	as	well	as management's	own	judgment.

For	2018,	2017,	and	2016,	the	expected	long-term	rate	of	return	used	by	management	was	based	on	the	prevailing	and	planned	strategic	asset	allocations,	as	well	as estimates	of	future	returns	by	asset	class.	These	rates	fell	within	the	respective	range	of	the	20-year	moving	average	of	actual	performance	and	the	expected	future	return developed	by	asset	class.	In	2018,	management	reduced	the	expected	long-term	rate	of	return	by	75	basis	points	due	to	a	decrease	in	the	expected	return	by	asset	class and	the	20-year	moving	average.	For	2019,	management	anticipates	that	7.00%	will	be	the	expected	long-term	rate	of	return.

Assumed	health	care	cost	trend	rates	for	U.S.	other	postretirement	benefit	plans	were	as	follows	(assumptions	for	non-U.S.	plans	did	not	differ	materially):

The	assumed	health	care	cost	trend	rate	is	used	to	measure	the	expected	cost	of	gross	eligible	charges	covered	by	Arconic's	other	postretirement	benefit	plans.	For	2019, a	5.5%	trend	rate	will	be	used,	reflecting	management's	best	estimate	of	the	change	in	future	health	care	costs	covered	by	the	plans.	The	plans'	actual	annual	health	care cost	trend	experience	over	the	past	three	years	has	ranged	from	(3.3)%	to	(0.5)%.	Management	does	not	believe	this	three-year	range	is	indicative	of	expected	increases for	future	health	care	costs	over	the	long-term.

Assumed	health	care	cost	trend	rates	have	an	effect	on	the	amounts	reported	for	the	health	care	plan.	A	one-percentage	point	change	in	these	assumed	rates	would	have the	following	effects:

The	principal	objectives	underlying	the	investment	of	the	pension	plans'	assets	are	to	ensure	that	Arconic	can	properly	fund	benefit	obligations	as	they	become	due under	a	broad	range	of	potential	economic	and	financial	scenarios,	maximize	the	long-term	investment	return	with	an	acceptable	level	of	risk	based	on	such	obligations, and	broadly	diversify	investments	across	and	within	various	asset	classes	to	protect	asset	values	against	adverse	movements.	Specific	objectives	for	long-term	investment strategy	include	reducing	the	volatility	of	pension	assets	relative	to	pension	liabilities	and	achieving	diversification	across	the	balance	of	the	asset	portfolio.	The	use	of derivative	instruments	is	permitted	where	appropriate	and	necessary	for	achieving	overall	investment	policy	objectives.	The	investment	strategy	has	used	long	duration cash	bonds	and	derivative	instruments	to	offset	a	portion	of	the	interest	rate	sensitivity	of	U.S.	pension	liabilities.	Exposure	to	broad	equity	risk	has	been	decreased	and diversified	through	investments	in	discretionary	and	systematic	macro	hedge	funds,	long/short	equity	hedge	funds,	high	yield	bonds,	emerging	market	debt	and	global and	emerging	market	equities.	Investments	are	further	diversified	by	strategy,	asset	class,	geography,	and	sector	to	enhance	returns	and	mitigate	downside	risk.	A	large number	of	external	investment	managers	are	used	to	gain	broad	exposure	to	the	financial	markets	and	to	mitigate	manager-concentration	risk.

Investment	practices	comply	with	the	requirements	of	the	Employee	Retirement	Income	Security	Act	of	1974	(ERISA)	and	other	applicable	laws	and	regulations.

The	following	section	describes	the	valuation	methodologies	used	by	the	trustees	to	measure	the	fair	value	of	pension	plan	assets,	including	an	indication	of	the	level	in the	fair	value	hierarchy	in	which	each	type	of	asset	is	generally	classified	(see	Note	R	for	the	definition	of	fair	value	and	a	description	of	the	fair	value	hierarchy).

Equities.	These	securities	consist	of:	(i)	direct	investments	in	the	stock	of	publicly	traded	U.S.	and	non-U.S.	companies,	and	equity	derivatives,	that	are	valued	based	on the	closing	price	reported	in	an	active	market	on	which	the	individual	securities	are	traded	(generally	classified	in	Level	1);	(ii)	the	plans'	share	of	commingled	funds that	are	invested	in	the	stock	of	publicly	traded	companies	and	are	valued	at	the	net	asset	value	of	shares	held	at	December	31	(included	in	Level	1);	and	(iii)	direct investments	in	long/short	equity	hedge	funds	and	private	equity	(limited	partnerships	and	venture	capital	partnerships)	that	are	valued	at	net	asset	value.

Fixed	income.	These	securities	consist	of:	(i)	U.S.	government	debt	that	are	generally	valued	using	quoted	prices	(included	in	Level	1);	(ii)	cash	and	cash	equivalents invested	in	publicly-traded	funds	and	are	valued	based	on	the	closing	price	reported	in	an	active	market	on	which	the	individual	securities	are	traded	(generally	classified in	Level	1);	(iii)	publicly	traded	U.S.	and	non-U.S.	fixed	interest	obligations	(principally	corporate	bonds	and	debentures)	and	are	valued	through	consultation	and evaluation	with	brokers	in	the	institutional	market	using	quoted	prices	and	other	observable	market	data	(included	in	Level	2);	(iv)	fixed	income	derivatives	that	are generally	valued	using	industry	standard	models	with	market-based	observable	inputs	(included	in	Level	2);	and	(v)	cash	and	cash	equivalents	invested	in	institutional funds	and	are	valued	at	net	asset	value.

Other	investments.	These	investments	include,	among	others:	(i)	exchange	traded	funds,	such	as	gold,	and	real	estate	investment	trusts	and	are	valued	based	on	the closing	price	reported	in	an	active	market	on	which	the	investments	are	traded	(included	in	Level	1)	and	(ii)	direct	investments	of	discretionary	and	systematic	macro hedge	funds	and	private	real	estate	(includes	limited	partnerships)	and	are	valued	at	net	asset	value.

The	fair	value	methods	described	above	may	not	be	indicative	of	net	realizable	value	or	reflective	of	future	fair	values.	Additionally,	while	Arconic	believes	the valuation	methods	used	by	the	plans'	trustees	are	appropriate	and	consistent	with	other	market	participants,	the	use	of	different	methodologies	or	assumptions	to determine	the	fair	value	of	certain	financial	instruments	could	result	in	a	different	fair	value	measurement	at	the	reporting	date.

The	following	table	presents	the	fair	value	of	pension	plan	assets	classified	under	the	appropriate	level	of	the	fair	value	hierarchy	or	net	asset	cost:

| December	31,	2018 | Level	1 | Level	2 | Net	asset	value | Total |
| :--- | :--- | :--- | :--- | :--- |
| Equities: |  |  |  |  |
| Equity\tsecurities | $318 | $— | $578 | $896 |
| Long/short\tequity\thedge\tfunds | — | — | 232 | 232 |
| Private\tequity | — | — | 147 | 147 |
|  | $318 | $— | $957 | $1,275 |
| Fixed\tincome: |  |  |  |  |
| Intermediate\tand\tlong\tduration\tgovernment/credit | $200 | $934 | $770 | $1,904 |
| Other | 9 | 9 | 152 | 170 |
|  | $209 | $943 | $922 | $2,074 |
| Other\tinvestments: |  |  |  |  |
| Real\testate | $81 | $— | $164 | $245 |
| Discretionary\tand\tsystematic\tmacro\thedge\tfunds | — | — | 471 | 471 |
| Other | 56 | — | 212 | 268 |
|  | $137 | $— | $847 | $984 |
| Net\tplan\tassets(1) | $664 | $943 | $2,726 | $4,333 |

| December	31,	2017 | Level	1 | Level	2 | Net	Asset	Value | Total |
| :--- | :--- | :--- | :--- | :--- |
| Equities |  |  |  |  |
| Equity\tsecurities | $379 | $— | $593 | $972 |
| Long/short\tequity\thedge\tfunds | — | — | 230 | 230 |
| Private\tequity | — | — | 155 | 155 |
|  | $379 | $— | $978 | $1,357 |
| Fixed\tincome: |  |  |  |  |
| Intermediate\tand\tlong\tduration\tgovernment/credit | $201 | $981 | $779 | $1,961 |
| Other | 164 | 8 | 145 | 317 |
|  | $365 | $989 | $924 | $2,278 |
| Other\tinvestments: |  |  |  |  |
| Real\testate | $85 | $— | $172 | $257 |
| Discretionary\tand\tsystematic\tmacro\thedge\tfunds | — | — | 583 | 583 |
| Other | 77 | 7 | 275 | 359 |
|  | $162 | $7 | $1,030 | $1,199 |
| Net\tplan\tassets(2) | $906 | $996 | $2,932 | $4,834 |

(1) As	of	December	31,	2018,	the	total	fair	value	of	pension	plans'	assets	excludes	a	net	receivable	of	$1,	which	represents	securities	purchased	and	sold	but	not	yet settled	plus	interest	and	dividends	earned	on	various	investments.

(2) As	of	December	31,	2017,	the	total	fair	value	of	pension	plans'	assets	excludes	a	net	receivable	of	$28,	which	represents	assets	due	from	Alcoa	Corporation	as a	result	of	plan	separations	and	securities	sold	not	yet	settled	plus	interest	and	dividends	earned	on	various	investments.

# Funding	and	Cash	Flows

It	is	Arconic's	policy	to	fund	amounts	for	pension	plans	sufficient	to	meet	the	minimum	requirements	set	forth	in	applicable	country	benefits	laws	and	tax	laws.

Periodically,	Arconic	contributes	additional	amounts	as	deemed	appropriate.	In	2018	and	2017,	cash	contributions	to	Arconic's	pension	plans	were	$298	and	$310,

respectively.	The	$298	includes	$72	contributed	to	the	Company's	U.S.	plans	that	was	in	excess	of	the	minimum	required	under	ERISA.

The	minimum	required	contribution	to	pension	plans	in	2019	is	estimated	to	be	$255	(of	which	$230	is	for	U.S.	plans)	and	includes	$34	related	to	an	agreement	reached with	the	Pension	Benefit	Guaranty	Corporation	(PBGC),	as	discussed	in	the	following	paragraph.

During	the	third	quarter	of	2016,	the	PBGC	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	end	of	2018,	$116	of pension	contributions	have	been	made	toward	the	$150	requirement.

Benefit	payments	expected	to	be	paid	to	pension	and	other	postretirement	benefit	plans'	participants	and	expected	Medicare	Part	D	subsidy	receipts	are	as	follows utilizing	the	current	assumptions	outlined	above:

| For	the	year	ended	December	31, | Pension<br>benefits	paid | Gross	Other	post-<br>retirement<br>benefits | Medicare	Part	D<br>subsidy	receipts | Net	Other	post-<br>retirement<br>benefits |
| :--- | :--- | :--- | :--- | :--- |
| 2019 | $460 | $90 | $5 | $85 |
| 2020 | 460 | 85 | 5 | 80 |
| 2021 | 455 | 85 | 5 | 80 |
| 2022 | 455 | 85 | 5 | 80 |
| 2023 | 450 | 85 | 5 | 80 |
| Thereafter | 2,170 | 300 | 25 | 275 |
|  | $4,450 | $730 | $50 | $680 |

# Defined	Contribution	Plans

Arconic	sponsors	savings	and	investment	plans	in	various	countries,	primarily	in	the	United	States.	Arconic's	contributions	and	expenses	related	to	these	plans	were $123	in	2018,	$89	in	2017,	and	$71	in	2016.	In	the	United	States,	employees	may	contribute	a	portion	of	their	compensation	to	the	plans,	and	Arconic	matches	a	portion of	these	contributions	in	equivalent	form	of	the	investments	elected	by	the	employee.

# H.	Income	Taxes

The	components	of	income	from	continuing	operations	before	income	taxes	were	as	follows:

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| United\tStates | $518 | $500 | $84 |
| Foreign | 350 | (30) | 330 |
|  | $868 | $470 | $414 |

The	provision	for	income	taxes	consisted	of	the	following:

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal(1) | $45 | $— | $— |
| Foreign | 138 | 98 | 133 |
| State\tand\tlocal | 4 | (2) | 1 |
|  | 187 | 96 | 134 |
| Deferred: |  |  |  |
| Federal | 146 | 489 | 1,208 |
| Foreign | (94) | 37 | 136 |
| State\tand\tlocal | (13) | (78) | (2) |
|  | 39 | 448 | 1,342 |
| Total | $226 | $544 | $1,476 |

# income

Arconic	has	unamortized	tax-deductible	goodwill	of	$26	resulting	from	intercompany	stock	sales	and	reorganizations.	Arconic	recognizes	the	tax	benefits	(at	a	25%

rate)	associated	with	this	tax-deductible	goodwill	when	it	is	amortized	for	local	income	tax	purposes	rather	than	in	the	period	in	which	the	transaction	is	consummated.

A	reconciliation	of	the	U.S.	federal	statutory	rate	to	Arconic's	effective	tax	rate	was	as	follows	(the	effective	tax	rate	for	all	periods	was	a	provision	on	income):

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| U.S.\tfederal\tstatutory\trate | 21.0\t% | 35.0\t% | 35.0\t% |
| Taxes\ton\tforeign\toperations | 4.0 | (8.8) | (11.5) |
| U.S.\tState\tand\tlocal\ttaxes | 1.5 | 0.7 | (0.4) |
| Federal\tbenefit\tof\tstate\ttax | (0.3) | 3.7 | 0.4 |
| Permanent\tdifferences\ton\trestructuring\tand\tother\tcharges\tand\tasset\tdisposals(1) | (16.9) | (167.4) | (107.8) |
| Non-deductible\tacquisition\tcosts | — | 0.3 | 8.4 |
| Statutory\ttax\trate\tand\tlaw\tchanges(2) | 6.5 | 52.5 | (15.7) |
| Tax\tholidays | (1.6) | (3.0) | (0.8) |
| Changes\tin\tvaluation\tallowances | 0.9 | 137.9 | 426.8 |
| Impairment\tof\tgoodwill | — | 53.5 | — |
| Company-owned\tlife\tinsurance/split-dollar\tnet\tpremiums | — | — | 23.0 |
| Changes\tin\tuncertain\ttax\tpositions | 12.8 | 10.1 | 2.1 |
| Prior\tyear\ttax\tadjustments | (2.6) | (0.9) | (1.7) |
| Other | 0.7 | 2.1 | (1.3) |
| Effective\ttax\trate | 26.0\t% | 115.7\t% | 356.5\t% |

(1) Additional	losses	were	reported	in	Spain's	2017	tax	return	related	to	the	Separation	Transaction	which	are	offset	by	an	increased	valuation allowance.

(2) In	2018,	the	Company	finalized	its	accounting	for	the	Tax	Cuts	and	Jobs	Act	of	2017	("the	2017	Act")	and	recorded	an	additional	$59	charge.	In	December 2017,	an	estimated	$272	tax	charge	was	recorded	with	respect	to	the	enactment	of	the	2017	Act.	In	December	2016,	Spain	and	the	United	States	enacted	tax law	changes	which	resulted	in	the	remeasurement	of	certain	deferred	tax	liabilities	recorded	by	Arconic.

On	December	22,	2017,	the	2017	Act	was	signed	into	law,	making	significant	changes	to	the	Internal	Revenue	Code.	Changes	include,	but	are	not	limited	to,	a	corporate tax	rate	decrease	from	35%	to	21%	effective	for	tax	years	beginning	after	December	31,	2017,	the	transition	of	U.S.	international	taxation	from	a	worldwide	tax	system to	a	territorial	system,	and	a	one-time	transition	tax	on	the	non-previously	taxed	post-1986	foreign	earnings	and	profits	of	certain	U.S.-owned	foreign	corporations	as	of December	31,	2017.	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	permitted	the	use	of	provisional	amounts	based	on	reasonable estimates	in	the	financial	statements.	SAB

118	also	provided	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.

The	Company	calculated	a	reasonable	estimate	of	the	impact	of	the	2017	Act's	tax	rate	reduction	and	one-time	transition	tax	in	its	2017	year	end	income	tax	provision	in accordance	with	its	understanding	of	the	2017	Act	and	guidance	available	and,	as	a	result,	recorded	a	$272	tax	charge	in	the	fourth	quarter	of	2017,	the	period	in	which the	legislation	was	enacted.

In	2018,	the	Company	included	a	$59	tax	charge	in	income	from	continuing	operations	as	a	result	of	finalizing	its	accounting	for	the	2017	Tax	Act	in	accordance	with SAB	118.	This	charge	primarily	related	to	a	$16	charge	for	the	one-time	transition	tax	and	a	$43	charge	to	update	deferred	tax	balances.

The	components	of	net	deferred	tax	assets	and	liabilities	were	as	follows:

| December	31, | Deferred<br>tax<br>assets | Deferred<br>tax<br>liabilities | Deferred<br>tax<br>assets | Deferred<br>tax<br>liabilities |
| :--- | :--- | :--- | :--- | :--- |
| Depreciation | $38 | $694 | $31 | $693 |
| Employee\tbenefits | 836 | 27 | 936 | 23 |
| Loss\tprovisions | 94 | — | 134 | 14 |
| Deferred\tincome/expense | 22 | 1,102 | 19 | 1,144 |
| Tax\tloss\tcarryforwards | 3,159 | — | 3,305 | — |
| Tax\tcredit\tcarryforwards | 579 | — | 638 | — |
| Other | 94 | 20 | 24 | 33 |
|  | $4,822 | $1,843 | $5,087 | $1,907 |
| Valuation\tallowance | (2,486) | — | (2,584) | — |
|  | $2,336 | $1,843 | $2,503 | $1,907 |

The	following	table	details	the	expiration	periods	of	the	deferred	tax	assets	presented	above:

|  | Expires | Expires |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | within | within | No |  |  |
| December\t31,\t2018 | 10\tyears | 11-20\tyears | expiration(1) | Other(2) | Total |
| Tax\tloss\tcarryforwards | $300 | $461 | $2,398 | $— | $3,159 |
| Tax\tcredit\tcarryforwards | 497 | 70 | 12 | — | 579 |
| Other | — | — | 64 | 1,020 | 1,084 |
| Valuation\tallowance | (752) | (287) | (1,390) | (57) | (2,486) |
|  | $45 | $244 | $1,084 | $963 | $2,336 |

(1) Deferred	tax	assets	with	no	expiration	may	still	have	annual	limitations	on utilization.

(2) Other	represents	deferred	tax	assets	whose	expiration	is	dependent	upon	the	reversal	of	the	underlying	temporary	difference.	A	substantial	amount	of	Other relates	to	employee	benefits	that	will	become	deductible	for	tax	purposes	over	an	extended	period	of	time	as	contributions	are	made	to	employee	benefit	plans and	payments	are	made	to	retirees.

The	total	deferred	tax	asset	(net	of	valuation	allowance)	is	supported	by	projections	of	future	taxable	income	exclusive	of	reversing	temporary	differences	(24%)	and taxable	temporary	differences	that	reverse	within	the	carryforward	period	(76%).

Valuation	allowances	are	recorded	to	reduce	deferred	tax	assets	when	it	is	more	likely	than	not	(greater	than	50%)	that	a	tax	benefit	will	not	be	realized.	In	evaluating the	need	for	a	valuation	allowance,	management	considers	all	potential	sources	of	taxable	income,	including	income	available	in	carryback	periods,	future	reversals	of taxable	temporary	differences,	projections	of	taxable	income,	and	income	from	tax	planning	strategies,	as	well	as	all	available	positive	and	negative	evidence.	Positive evidence	includes	factors	such	as	a	history	of	profitable	operations,	projections	of	future	profitability	within	the	carryforward	period,	including	from	tax	planning strategies,	and	Arconic's	experience	with	similar	operations.	Existing	favorable	contracts	and	the	ability	to	sell	products	into	established	markets	are	additional	positive evidence.	Negative	evidence	includes	items	such	as	cumulative	losses,	projections	of	future	losses,	or	carryforward	periods	that	are	not	long	enough	to	allow	for	the utilization	of	a	deferred	tax	asset	based	on	existing	projections	of	income.	Deferred	tax	assets	for	which	no	valuation	allowance	is	recorded	may	not	be	realized	upon changes	in	facts	and	circumstances,	resulting	in	a	future	charge	to	establish	a	valuation

allowance.	Existing	valuation	allowances	are	re-examined	under	the	same	standards	of	positive	and	negative	evidence.	If	it	is	determined	that	it	is	more	likely	than	not that	a	deferred	tax	asset	will	be	realized,	the	appropriate	amount	of	the	valuation	allowance,	if	any,	is	released.	Deferred	tax	assets	and	liabilities	are	also	re-measured	to reflect	changes	in	underlying	tax	rates	due	to	law	changes	and	the	granting	and	lapse	of	tax	holidays.

In	2018,	Arconic	made	a	final	accounting	policy	election	to	apply	a	tax	law	ordering	approach	when	considering	the	need	for	a	valuation	allowance	on	net	operating losses	expected	to	offset	GILTI	income	inclusions.	Under	this	approach,	reductions	in	cash	tax	savings	are	not	considered	as	part	of	the	valuation	allowance	assessment. Instead,	future	GILTI	inclusions	are	considered	a	source	of	taxable	income	that	support	the	realizability	of	deferred	tax	assets.

Arconic's	foreign	tax	credits	in	the	United	States	have	a	10-year	carryforward	period	with	expirations	ranging	from	2019	to	2027	(as	of	December	31,	2018).	Valuation allowances	were	initially	established	in	prior	years	on	a	portion	of	the	foreign	tax	credit	carryforwards,	primarily	due	to	insufficient	foreign	source	income	to	allow	for full	utilization	of	the	credits	within	the	expiration	period.	After	consideration	of	all	available	evidence	including	potential	tax	planning	strategies,	incremental	valuation allowances	of	$46,	$9	and	$302	were	recognized	in	2018,	2017	and	2016,	respectively.	Foreign	tax	credits	of	$8,	$57,	and	$128	expired	at	the	end	of	2018,	2017,	and 2016,	respectively,	resulting	in	a	corresponding	decrease	to	the	valuation	allowance.	At	December	31,	2018,	the	cumulative	amount	of	the	valuation	allowance	was $417.	The	need	for	this	valuation	allowance	will	be	reassessed	on	a	continuous	basis	in	future	periods	and,	as	a	result,	the	allowance	may	increase	or	decrease	based	on changes	in	facts	and	circumstances.

Arconic	released	$10	and	$98	of	certain	U.S.	state	valuation	allowances	in	2018	and	2017,	respectively.	After	weighing	all	available	positive	and	negative	evidence, management	determined	that	the	underlying	net	deferred	tax	assets	were	more	likely	than	not	realizable	based	on	projected	taxable	income	estimates	taking	into	account expected	post-separation	apportionment	data.	Valuation	allowances	of	$675	remain	against	other	net	state	deferred	tax	assets	expected	to	expire	before	utilization.	The need	for	valuation	allowances	against	net	state	deferred	tax	assets	will	be	reassessed	on	a	continuous	basis	in	future	periods	and,	as	a	result,	the	allowance	may	increase or	decrease	based	on	changes	in	facts	and	circumstances.

In	2018,	Arconic	reduced	a	valuation	allowance	by	$92	as	a	result	of	increasing	a	tax	reserve	for	unrecognized	tax	benefits	in	Spain.	The	valuation	allowance	reduction was	partially	offset	by	a	$20	charge	with	respect	to	losses	no	longer	supported	by	reversing	temporary	differences.	Arconic	also	recorded	an	additional	valuation allowance	of	$61	and	$675	in	2018	and	2017,	respectively,	which	offsets	a	deferred	tax	asset	recorded	for	additional	losses	reported	on	the	Spanish	tax	return	related	to the	Separation	Transaction	that	are	not	more	likely	than	not	to	be	realized.

In	2016,	Arconic	recognized	a	$1,267	discrete	income	tax	charge	for	valuation	allowances	related	to	the	Separation	Transaction,	including	$925	with	respect	to	Alcoa Corporation's	net	deferred	tax	assets	in	the	United	States,	$302	with	respect	to	Arconic's	foreign	tax	credits	in	the	United	States,	and	$42	with	respect	to	certain	deferred tax	assets	in	Luxembourg,	partially	offset	by	$2	related	to	the	net	impact	of	other	smaller	items.	After	weighing	all	positive	and	negative	evidence,	as	described	above, management	determined	that	the	net	deferred	tax	assets	of	Alcoa	Corporation	were	not	more	likely	than	not	to	be	realized	due	to	lack	of	historical	and	projected domestic	source	taxable	income.	As	such,	a	valuation	allowance	was	recorded	immediately	prior	to	separation.

In	2016,	Arconic	also	recorded	additional	valuation	allowances	in	Australia	of	$93	related	to	the	Separation	Transaction,	in	Spain	of	$163	related	to	a	tax	law	change and	in	Luxembourg	of	$280	related	to	the	Separation	Transaction	as	well	as	a	tax	law	change.	These	valuation	allowances	fully	offset	current	year	changes	in	deferred tax	asset	balances	of	each	respective	jurisdiction,	resulting	in	no	net	impact	to	tax	expense.	The	need	for	a	valuation	allowance	will	be	reassessed	on	a	continuous	basis	in future	periods	by	each	jurisdiction	and,	as	a	result,	the	allowances	may	increase	or	decrease	based	on	changes	in	facts	and	circumstances.

Arconic	also	recognized	discrete	income	tax	benefits	in	2016	related	to	the	release	of	valuation	allowances	on	certain	net	deferred	tax	assets	in	Russia	and	Canada	of	$19 and	$20,	respectively.	After	weighing	all	available	evidence,	management	determined	that	it	was	more	likely	than	not	that	the	net	income	tax	benefits	associated	with the	underlying	deferred	tax	assets	would	be	realizable	based	on	historic	cumulative	income	and	projected	taxable	income.

The	following	table	details	the	changes	in	the	valuation	allowance:

| December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $2,584 | $1,940 | $1,291 |
| Increase\tto\tallowance | 136 | 831 | 772 |
| Release\tof\tallowance | (154) | (246) | (209) |
| Acquisitions\tand\tdivestitures | — | (1) | (1) |
| Tax\tapportionment,\ttax\trate\tand\ttax\tlaw\tchanges | (14) | (24) | 106 |
| Foreign\tcurrency\ttranslation | (66) | 84 | (19) |
| Balance\tat\tend\tof\tyear | $2,486 | $2,584 | $1,940 |

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.	The	2017	Act	also	created	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). In	the	first	quarter	of	2018,	Arconic	made	a	final	accounting	policy	election	to	treat	taxes	due	from	future	inclusions	in	U.S.	taxable	income	related	to	GILTI	as	a	current period	expense	when	incurred.	Arconic	has	estimated	a	GILTI	inclusion	for	2018	and	recorded	tax	expense	accordingly.	Arconic	does	not	anticipate	being	subject	to BEAT	for	2018.

Foreign	U.S.	GAAP	earnings	that	have	not	otherwise	been	subject	to	U.S.	tax,	will	generally	be	exempt	from	future	U.S.	tax	under	the	2017	Act	when	distributed.		Such distributions,	as	well	as	distributions	of	previously	taxed	foreign	earnings,	could	potentially	be	subject	to	U.S.	state	tax	in	certain	states,	and	foreign	withholding	taxes. Foreign	currency	gains/losses	related	to	the	translation	of	previously	taxed	earnings	from	functional	currency	to	U.S.	dollars	could	also	be	subject	to	U.S.	tax	when distributed.		At	this	time,	Arconic	has	no	plans	to	distribute	such	earnings	in	the	foreseeable	future.	If	such	earnings	were	to	be	distributed,	Arconic	would	expect	the potential	U.S.	state	tax	and	withholding	tax	impacts	to	be	immaterial	and	the	potential	deferred	tax	liability	associated	with	future	foreign	currency	gains	to	be impracticable	to	determine.

Arconic	and	its	subsidiaries	file	income	tax	returns	in	the	U.S.	federal	jurisdiction	and	various	states	and	foreign	jurisdictions.	With	a	few	minor	exceptions,	Arconic	is no	longer	subject	to	income	tax	examinations	by	tax	authorities	for	years	prior	to	2006.	All	U.S.	tax	years	prior	to	2018	have	been	audited	by	the	Internal	Revenue Service.	Various	state	and	foreign	jurisdiction	tax	authorities	are	in	the	process	of	examining	Arconic's	income	tax	returns	for	various	tax	years	through	2017.

A	reconciliation	of	the	beginning	and	ending	amount	of	unrecognized	tax	benefits	(excluding	interest	and	penalties)	was	as	follows:

| December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $73 | $28 | $18 |
| Additions\tfor\ttax\tpositions\tof\tthe\tcurrent\tyear | — | 23 | 12 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 143 | 27 | — |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (42) | — | — |
| Settlements\twith\ttax\tauthorities | — | — | (1) |
| Expiration\tof\tthe\tstatute\tof\tlimitations | (6) | (5) | (1) |
| Foreign\tcurrency\ttranslation | (2) | — | — |
| Balance\tat\tend\tof\tyear | $166 | $73 | $28 |

For	all	periods	presented,	a	portion	of	the	balance	pertains	to	state	tax	liabilities,	which	are	presented	before	any	offset	for	federal	tax	benefits.	The	effect	of unrecognized	tax	benefits,	if	recorded,	that	would	impact	the	annual	effective	tax	rate	for	2018,	2017,	and	2016	would	be	approximately	5%,	15%,	and	6%,	respectively, of	pre-tax	book	income.	Arconic	does	not	anticipate	that	changes	in	its	unrecognized	tax	benefits	will	have	a	material	impact	on	the	Statement	of	Consolidated Operations	during	2019.

It	is	Arconic's	policy	to	recognize	interest	and	penalties	related	to	income	taxes	as	a	component	of	the	Provision	for	income	taxes	on	the	accompanying	Statement	of Consolidated	Operations.	Arconic	recognized	interest	of	$22	and	$1	for	2018	and	2017,	respectively,	but	did	not	recognize	any	interest	or	penalties	in	2016.	Due	to	the expiration	of	the	statute	of	limitations,	settlements	with	tax	authorities,	and	refunded	overpayments,	Arconic	recognized	interest	income	of	$1	and	$2	in	2018	and	2017, respectively,	but	did	not	recognize	any	interest	income	in	2016.	As	of	December	31,	2018,	and	2017,	the	amount	accrued	for	the	payment	of	interest	and	penalties	was $21	and	$2,	respectively.

# I.	Preferred	and	Common	Stock

Preferred	Stock.	Arconic	has	two	classes	of	preferred	stock:	Class	A	Preferred	Stock	and	Class	B	Serial	Preferred	Stock.	Class	A	Preferred	Stock	has	660,000	shares authorized	at	a	par	value	of	$100	per	share	with	an	annual	$3.75	cumulative	dividend	preference	per	share.	There	were	546,024	shares	of	Class	A	Preferred	Stock outstanding	at	December	31,	2018	and	2017.	Class	B	Serial	Preferred	Stock	has	10,000,000	shares	authorized	at	a	par	value	of	$1	per	share.	There	were	no	shares	of Class	B	Serial	Preferred	Stock	outstanding	at	December	31,	2018	and	2017	(see	below).

In	September	2014,	Arconic	completed	a	public	offering	under	its	shelf	registration	statement	for	$1,250	of	25	million	depositary	shares,	each	of	which	represents	a 1/10th	interest	in	a	share	of	Arconic's	5.375%	Class	B	Mandatory	Convertible	Preferred	Stock,	Series	1,	par	value	$1	per	share,	liquidation	preference	$500	per	share (the	"Mandatory	Convertible	Preferred	Stock").	The	25	million	depositary	shares	are	equivalent	to	2.5	million	shares	of	Mandatory	Convertible	Preferred	Stock.	Each depositary	share	entitled	the	holder,	through	the	depositary,	to	a	proportional	fractional	interest	in	the	rights	and	preferences	of	a	share	of	Mandatory	Convertible Preferred	Stock,	including	conversion,	dividend,	liquidation,	and	voting	rights,	subject	to	terms	of	the	deposit	agreement.	Arconic	received	$1,213	in	net	proceeds	from the	public	offering	reflecting	an	underwriting	discount.	The	net	proceeds	were	used,	together	with	the	net	proceeds	of	issued	debt,	to	finance	the	cash	portion	of	the acquisition	of	Firth	Rixson.	The	underwriting	discount	was	recorded	as	a	decrease	to	Additional	capital.	The	Mandatory	Convertible	Preferred	Stock	constituted	a	series of	Arconic's	Class	B	Serial	Preferred	Stock,	which	ranks	senior	to	Arconic's	common	stock	and	junior	to	Arconic's	Class	A	Preferred	Stock	and	existing	and	future indebtedness.	Holders	of	the	Mandatory	Convertible	Preferred	Stock	generally	had	no	voting	rights.

Dividends	on	the	Mandatory	Convertible	Preferred	Stock	were	cumulative	in	nature	and	paid	at	the	rate	of	$26.8750	per	annum	per	share	in	2016	and	2015,	which commenced	January	1,	2015	(paid	on	December	30,	2014).

On	October	2,	2017,	all	outstanding	24,975,978	depositary	shares	(each	depositary	share	representing	a	1/10th	interest	in	a	share	of	the	mandatory	convertible	preferred stock)	were	converted	at	a	rate	of	1.56996	into	39,211,286	common	shares;	24,022	depositary	shares	were	previously	tendered	for	early	conversion	into	31,420	shares	of Arconic	common	stock.	No	gain	or	loss	was	recognized	associated	with	this	equity	transaction.	Dividends	on	the	Mandatory	Convertible	Preferred	Stock	were	paid	at the	rate	of	$20.1563	per	share	in	2017.

Common	Stock.	Pursuant	to	the	authorization	provided	at	a	special	meeting	of	Arconic	common	shareholders	held	on	October	5,	2016,	shareholders	approved	a	1-for-3 reverse	stock	split	of	Arconic's	outstanding	and	authorized	shares	of	common	stock	(the	"Reverse	Stock	Split").	As	a	result	of	the	Reverse	Stock	Split,	every	three shares	of	issued	and	outstanding	common	stock	were	combined	into	one	issued	and	outstanding	share	of	common	stock.	The	Reverse	Stock	Split	reduced	the	number	of shares	of	common	stock	outstanding	from	approximately	1.3	billion	shares	to	approximately	0.4	billion	shares.	The	par	value	of	the	common	stock	remained	at	$1	per share.	Accordingly,	Common	stock	and	Additional	capital	in	the	accompanying	Consolidated	Balance	Sheet	at	December	31,	2016	reflected	a	decrease	and	increase	of $877,	respectively.	The	number	of	authorized	shares	of	common	stock	was	also	decreased	from	1.8	billion	shares	to	0.6	billion	shares.	The	Company's	common	stock began	trading	on	a	reverse	stock	split-adjusted	basis	on	the	NYSE	on	October	6,	2016.

In	August	2016,	Arconic	retired	its	outstanding	treasury	stock	consisting	of	approximately	25	million	shares	(76	million	shares	pre-Reverse	Stock	Split).	As	a	result, Common	stock	and	Additional	capital	in	the	accompanying	2016	Consolidated	Balance	Sheet	were	decreased	by	$76	and	$2,563,	respectively,	to	reflect	the	retirement	of the	treasury	shares.	As	of	December	31,	2018,	and	2017,	there	was	no	outstanding	treasury	stock.

In	July	2015,	through	the	acquisition	of	RTI	International	Metals	Inc.	(RTI),	Arconic	assumed	the	obligation	to	repay	two	tranches	of	convertible	debt;	one	tranche	was due	and	settled	in	cash	on	December	1,	2015	(principal	amount	of	$115)	and	the	other	tranche	is	due	on	October	15,	2019	(principal	amount	of	$403),	unless	earlier converted	or	purchased	by	Arconic	at	the	holder's	option	under	specific	conditions.	Upon	conversion	of	the	2019	convertible	notes,	holders	will	receive,	at	Arconic's election,	cash,	shares	of	common	stock	(approximately	14,453,000	shares	using	the	December	31,	2018	conversion	rate	of	35.9125	shares	per	$1,000	(not	in	millions) bond	or	per-share	conversion	price	of	$27.8455),	or	a	combination	of	cash	and	shares.	On	the	maturity	date,	each	holder	of	outstanding	notes	will	be	entitled	to	receive $1,000	(not	in	millions)	in	cash	for	each	$1,000	(not	in	millions)	bond,	together	with	accrued	and	unpaid	interest.

As	of	December	31,	2018,	47	million	shares	of	common	stock	were	reserved	for	issuance	under	Arconic's	stock-based	compensation	plans.	As	of	December	31,	2018,	41 million	shares	remain	available	for	issuance.	Arconic	issues	new	shares	to	satisfy	the	exercise	of	stock	options	and	the	conversion	of	stock	awards.

See	Note	W	for	further	information	on	common	stock	repurchases.

Share	Activity	(number	of	shares)

|  | Common	stock |  |
| :--- | :--- | :--- |
|  | Treasury | Outstanding |
| Balance\tat\tend\tof\t2015 | 81,051,103 | 1,310,160,141 |
| Issued\tfor\tstock-based\tcompensation\tplans | (5,219,660) | 5,302,128 |
| Treasury\tstock\tretirement | (75,831,443) | — |
| Reverse\tStock\tSplit | — | (876,942,489) |
| Balance\tat\tend\tof\t2016 | — | 438,519,780 |
| Conversion\tof\tconvertible\tnotes | — | 39,242,706 |
| Issued\tfor\tstock-based\tcompensation\tplans | — | 3,654,051 |
| Balance\tat\tend\tof\t2017 | — | 481,416,537 |
| Issued\tfor\tstock-based\tcompensation\tplans | — | 1,854,180 |
| Balance\tat\tend\tof\t2018 | — | 483,270,717 |

# Stock-Based	Compensation

Arconic	has	a	stock-based	compensation	plan	under	which	stock	options	and	restricted	stock	unit	awards	are	granted	in	January	each	year	to	eligible	employees.	Stock options	are	granted	at	the	closing	market	price	of	Arconic's	common	stock	on	the	date	of	grant	and	typically	vest	over	a	three-year	service	period	(1/3	each	year)	with	a ten-year	contractual	term.	In	2018,	there	were	stock	options	granted	that	vest	over	a	four-year	cliff	service	period.	Restricted	stock	unit	awards	typically	vest	over	a three-year	service	period	from	the	date	of	grant.	As	part	of	Arconic's	stock-based	compensation	plan	design,	individuals	who	are	retirement-eligible	have	a	six-month requisite	service	period	in	the	year	of	grant.	Certain	of	these	awards	also	include	performance	and	market	conditions.	For	the	majority	of	performance	stock	awards issued	in	2018,	2017,	and	2016,	the	final	number	of	shares	earned	will	be	based	on	Arconic's	achievement	of	sales	and	profitability	targets	over	the	respective	three-year performance	periods.	For	awards	issued	in	2018	and	2017,	the	award	will	be	earned	at	the	end	of	the	three-year	performance	period.	For	awards	issued	in	2016,	one- third	of	the	award	will	be	earned	each	year	based	on	the	performance	against	the	pre-established	targets	for	that	year.	The	performance	stock	awards	earned	over	the three-year	period	vest	at	the	end	of	the	third	year.	Additionally,	the	2018	and	2017	awards	will	be	scaled	by	a	total	shareholder	return	("TSR")	multiplier,	which	depends upon	relative	three-year	performance	against	the	TSRs	of	a	group	of	peer	companies.

In	2018,	2017	and	2016,	Arconic	recognized	stock-based	compensation	expense	of	$50	($39	after-tax),	$54	($36	after-tax),	and	$76	($51	after-tax),	respectively.	The expense	related	to	restricted	stock	unit	awards	in	2018,	2017	and	2016	was	approximately	85%,	85%	and	80%,	respectively.	No	stock-based	compensation	expense	was capitalized	in	any	of	those	years.	2017	stock-based	compensation	expense	was	reduced	by	$13	for	certain	executive	pre-vest	cancellations	which	were	recorded	in Restructuring	and	other	charges	within	the	Statement	of	Consolidated	Operations.	At	December	31,	2018,	there	was	$52	(pre-tax)	of	unrecognized	compensation expense	related	to	non-vested	stock	option	grants	and	non-vested	restricted	stock	unit	award	grants.	This	expense	is	expected	to	be	recognized	over	a	weighted	average period	of	1.8	years.

Stock-based	compensation	expense	is	based	on	the	grant	date	fair	value	of	the	applicable	equity	grant.	For	restricted	stock	unit	awards,	the	fair	value	was	equivalent	to the	closing	market	price	of	Arconic's	common	stock	on	the	date	of	grant.	The	grant	date	fair	value	of	the	2018	and	2017	performance	awards	containing	a	market condition	was	$20.25	and	$21.99,	respectively,	and	was	valued	using	a	Monte	Carlo	model.	A	Monte	Carlo	simulation	uses	assumptions	of	stock	price	behavior	to estimate	the	probability	of	satisfying	market	conditions	and	the	resulting	fair	value	of	the	award.	The	risk-free	interest	rate	(2.7%	in	2018	and	1.5%	in	2017)	was	based on	a	yield	curve	of	interest	rates	at	the	time	of	the	grant	based	on	the	remaining	performance	period.	Because	of	limited	historical	information	due	to	the	Separation Transaction,	volatility	(32.0%	in	2018	and	38.0%	in	2017)	was	estimated	using	implied	volatility	and	the	representative	price	return	approach,	which	uses	price	returns of	comparable	companies,	was	used	to	develop	a	correlation	assumption.	For	stock	options,	the	fair	value	was	estimated	on	the	date	of	grant	using	a	lattice-pricing model,	which	generated	a	result	of	$9.79	($10.99	for	four-year	cliff	options),	$6.26,	and	$4.78	per	option	in	2018,	2017,	and	2016,	respectively.	The	lattice-pricing	model uses	a	number	of	assumptions	to	estimate	the	fair	value	of	a	stock	option,	including	a	risk-free	interest	rate,	dividend	yield,	volatility,	exercise	behavior,	and	contractual life.	The	following	paragraph	describes	in	detail	the	assumptions	used	to	estimate	the	fair	value	of	stock	options	granted	in	2018	(the	assumptions	used	to	estimate	the fair	value	of	stock	options	granted	in	2017	and	2016	were	not	materially	different,	except	as	noted	below).

The	risk-free	interest	rate	(2.5%)	was	based	on	a	yield	curve	of	interest	rates	at	the	time	of	the	grant	based	on	the	contractual	life	of	the	option.	The	dividend	yield (0.9%)	was	based	on	a	one-year	average.	Volatility	(34.0%	for	2018,	38.1%	for	2017,	and	44.5%	in	2016)	was	based	on	comparable	companies	in	2018	and	2017	(except 2016	historical	volatilities	were	used)	and	implied	volatilities	over	the	term	of	the	option.	Arconic	utilized	historical	option	forfeiture	data	to	estimate	annual	pre-	and

post-vesting	forfeitures	(6%).	Exercise	behavior	(61%)	was	based	on	a	weighted	average	exercise	ratio	(exercise	patterns	for	grants	issued	over	the	number	of	years	in the	contractual	option	term)	of	an	option's	intrinsic	value	resulting	from	historical	employee	exercise	behavior.	Based	upon	the	other	assumptions	used	in	the determination	of	the	fair	value,	the	life	of	an	option	(6.0	years	(7.3	years	for	four-year	cliff	options))	was	an	output	of	the	lattice-pricing	model.	The	activity	for	stock options	and	stock	awards	during	2018	was	as	follows	(options	and	awards	in	millions):

|  | Number	of<br>options | Weighted<br>average<br>exercise	price | Number	of<br>awards | Weighted<br>average	FMV<br>per	award |
| :--- | :--- | :--- | :--- | :--- |
| Outstanding,\tJanuary\t1,\t2018 | 11 | $23.94 | 7 | $21.49 |
| Granted | 1 | 29.97 | 2 | 26.48 |
| Exercised | (1) | 18.95 | — | — |
| Converted | — | — | (1) | 32.75 |
| Expired\tor\tforfeited | (1) | 26.96 | (1) | 21.10 |
| Performance\tshare\tadjustment | — | — | — | 18.47 |
| Outstanding,\tDecember\t31,\t2018 | 10 | $24.95 | 7 | $21.13 |

As	of	December	31,	2018,	the	number	of	stock	options	outstanding	had	a	weighted	average	remaining	contractual	life	of	4.8	years	and	a	total	intrinsic	value	of	$3. Additionally,	7.8	million	of	the	stock	options	outstanding	were	fully	vested	and	exercisable	and	had	a	weighted	average	remaining	contractual	life	of	3.7	years,	a weighted	average	exercise	price	of	$25.49,	and	a	total	intrinsic	value	of	$2	as	of	December	31,	2018.	In	2018,	2017,	and	2016,	the	cash	received	from	stock	option exercises	was	$16,	$50,	and	$4	and	the	total	tax	benefit	realized	from	these	exercises	was	$2,	$4,	and	$0,	respectively.	The	total	intrinsic	value	of	stock	options	exercised during	2018,	2017	and	2016	was	$7,	$13,	and	$1,	respectively.

# J.	Earnings	Per	Share

Basic	earnings	per	share	(EPS)	amounts	are	computed	by	dividing	earnings	(loss),	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):

| For	the	year	ended	December	31, | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tincome\t(loss)\tfrom\tcontinuing\toperations\tattributable\tto\tArconic | $642 | $(74) | $(1,062) |
| Less:\tpreferred\tstock\tdividends\tdeclared | (2) | (53) | (69) |
| Income\t(loss)\tfrom\tcontinuing\toperations\tavailable\tto\tArconic\tcommon\tshareholders | 640 | (127) | (1,131) |
| Income\tfrom\tdiscontinued\toperations\tafter\tincome\ttaxes\tand\tnoncontrolling\tinterests(1) | — | — | 121 |
| Net\tincome\t(loss)\tavailable\tto\tArconic\tcommon\tshareholders—basic | 640 | (127) | (1,010) |
| Add:\tinterest\texpense\trelated\tto\tconvertible\tnotes | 11 | — | — |
| Net\tincome\t(loss)\tavailable\tto\tArconic\tcommon\tshareholders\t-\tdiluted | $651 | $(127) | $(1,010) |
| Average\tshares\toutstanding\t-\tbasic | 483 | 451 | 438 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Stock\toptions | 1 | — | — |
| Stock\tand\tperformance\tawards | 5 | — | — |
| Convertible\tnotes | 14 | — | — |
| Average\tshares\toutstanding\t-\tdiluted | 503 | 451 | 438 |

(1) Calculated	from	the	Statement	of	Consolidated	Operations	as	Income	from	discontinued	operations	after	income	taxes	less	Net	income	from	discontinued operations	attributable	to	noncontrolling	interests.

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

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Mandatory\tconvertible\tpreferred\tstock | n/a | 39 | 39 |
| Convertible\tnotes | — | 14 | 14 |
| Stock\toptions(1) | 9 | 11 | 13 |
| Stock\tawards | — | 7 | 8 |

respectively.

In	2017,	had	Arconic	generated	sufficient	net	income,	30	million,	14	million,	5	million,	and	1	million	potential	shares	of	common	stock	related	to	the	mandatory convertible	preferred	stock,	convertible	notes,	stock	awards,	and	stock	options,	respectively,	would	have	been	included	in	diluted	average	shares	outstanding.	The mandatory	convertible	preferred	stock	converted	on	October	2,	2017	(see	Note	I).

In	2016,	had	Arconic	generated	sufficient	net	income,	28	million,	10	million,	4	million,	and	1	million	potential	shares	of	common	stock	related	to	the	mandatory convertible	preferred	stock,	convertible	notes,	stock	awards,	and	stock	options,	respectively,	would	have	been	included	in	diluted	average	shares	outstanding.

# K.	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 | Noncontrolling	Interests |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Pension\tand\tother\tpostretirement\tbenefits\t(G) |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(2,230) | $(2,010) | $(3,611) | $— | $— | $(56) |
| Adoption\tof\taccounting\tstandard\t(A) | (369) | — | — | — | — | — |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |  |  |
| Unrecognized\tnet\tactuarial\tloss\tand\tprior\tservice\tcost/benefit | 70 | (466) | (1,112) | — | — | (9) |
| Tax\t(expense)\tbenefit | (19) | 102 | 380 | — | — | 3 |
| Total\tOther\tcomprehensive\tincome\t(loss)\tbefore\nreclassifications,\tnet\tof\ttax | 51 | (364) | (732) | — | — | (6) |
| Amortization\tof\tnet\tactuarial\tloss\tand\tprior\tservice\tcost(1) | 262 | 222 | 389 | — | — | 4 |
| Tax\texpense(2) | (58) | (78) | (136) | — | — | (1) |
| Total\tamount\treclassified\tfrom\tAccumulated\tother\ncomprehensive\tloss,\tnet\tof\ttax(8) | 204 | 144 | 253 | — | — | 3 |
| Total\tOther\tcomprehensive\tincome\t(loss) | 255 | (220) | (479) | — | — | (3) |
| Transfer\tto\tAlcoa\tCorporation | — | — | 2,080 | — | — | 59 |
| Balance\tat\tend\tof\tperiod | $(2,344) | $(2,230) | $(2,010) | $— | $— | $— |
| Foreign\tcurrency\ttranslation |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(437) | $(689) | $(2,412) | $— | $(2) | $(780) |
| Other\tcomprehensive\t(loss)\tincome(3) | (146) | 252 | 268 | — | 2 | 182 |
| Transfer\tto\tAlcoa\tCorporation | — | — | 1,455 | — | — | 596 |
| Balance\tat\tend\tof\tperiod | $(583) | $(437) | $(689) | $— | $— | $(2) |
| Available-for-sale\tsecurities |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $(2) | $132 | $(5) | $— | $— | $— |
| Other\tcomprehensive\t(loss)\tincome(4) | (1) | (134) | 137 | — | — | — |
| Balance\tat\tend\tof\tperiod | $(3) | $(2) | $132 | $— | $— | $— |
| Cash\tflow\thedges |  |  |  |  |  |  |
| Balance\tat\tbeginning\tof\tperiod | $25 | $(1) | $597 | — | $— | $(3) |
| Adoption\tof\taccounting\tstandard\t(A) | 2 | — | — | — | — | — |
| Other\tcomprehensive\t(loss)\tincome: |  |  |  |  |  |  |
| Net\tchange\tfrom\tperiodic\trevaluations | (15) | 37 | (843) | — | — | 36 |
| Tax\tbenefit\t(expense) | 3 | (9) | 252 | — | — | (10) |
| Total\tOther\tcomprehensive\t(loss)\tincome\tbefore\nreclassifications,\tnet\tof\ttax | (12) | 28 | (591) | — | — | 26 |
| Net\tamount\treclassified\tto\tearnings |  |  |  |  |  |  |
| Aluminum\tcontracts(5) | (8) | (2) | 1 | — | — | — |
| Energy\tcontracts(6) | — | — | (49) | — | — | (34) |
| Interest\trate\tcontracts(7) | (2) | — | 9 | — | — | 5 |
| Nickel\tcontracts(6) | (4) | (1) | 1 | — | — | — |
| Sub-total | (14) | (3) | (38) | — | — | (29) |
| Tax\tbenefit(2) | 3 | 1 | 12 | — | — | 8 |
| Total\tamount\treclassified\tfrom\tAccumulated\tother\ncomprehensive\tloss,\tnet\tof\ttax(8) | (11) | (2) | (26) | — | — | (21) |
| Total\tOther\tcomprehensive\t(loss)\tincome | (23) | 26 | (617) | — | — | 5 |
| Transfer\tto\tAlcoa\tCorporation | — | — | 19 | — | — | (2) |
| Balance\tat\tend\tof\tperiod | $4 | $25 | $(1) | $— | $— | $— |
| Total\tbalance\tat\tend\tof\tperiod | $(2,926) | $(2,644) | $(2,568) | $— | $— | $(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,	net	on	the	accompanying	Statement	of	Consolidated Operations.

(5) These	amounts	were	included	in	Sales	on	the	accompanying	Statement	of	Consolidated Operations.

(6) These	amounts	were	included	in	Cost	of	goods	sold	on	the	accompanying	Statement	of	Consolidated Operations.

(7) These	amounts	were	included	in	Interest	expense	on	the	accompanying	Statement	of	Consolidated Operations.

(8) A	positive	amount	indicates	a	corresponding	charge	to	earnings	and	a	negative	amount	indicates	a	corresponding	benefit	to	earnings.	These	amounts	were reflected	on	the	accompanying	Statement	of	Consolidated	Operations	in	the	line	items	indicated	in	footnotes	1	through	7.

# L.	Receivables

# Sale	of	Receivables	Program

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	up	to	a	maximum	funding	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	($2,958	in	draws	and	$2,658	in	repayments)	since	the	program's	inception,	including	net	cash draws	totaling	$0	($600	in	draws	and	$600	in	repayments)	in	2018	and	net	cash	draws	totaling	$0	($600	in	draws	and	$600	in	repayments)	in	2017.

As	of	December	31,	2018,	and	2017,	the	deferred	purchase	program	receivable	was	$234	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	$41,784	and	$41,200	respectively.	Arconic	services	the	customer	receivables	for	the	financial	institutions	at	market rates;	therefore,	no	servicing	asset	or	liability	was	recorded.

In	2018	and	2017,	the	gross	cash	outflows	and	inflows	associated	with	the	deferred	purchase	program	receivable	were	$6,375	and	$6,328	respectively,	and	$5,471	and $5,367,	respectively.

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.	See	Note	A	for	additional	information	on	new	accounting	guidance	that	impacts	the	Company.

# Allowance	for	Doubtful	Accounts

The	following	table	details	the	changes	in	the	allowance	for	doubtful	accounts	related	to	customer	receivables	and	other	receivables:

|  |  | Customer	receivables |  |  | Other	receivables |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Balance\tat\tbeginning\tof\tyear | $8 | $13 | $8 | $34 | $32 | $34 |
| Provision\tfor\tdoubtful\taccounts | 2 | 1 | 7 | 7 | 9 | 6 |
| Write\toff\tof\tuncollectible\taccounts | (2) | (5) | (3) | (2) | (1) | (1) |
| Recoveries\tof\tprior\twrite-offs | — | — | (1) | (3) | (3) | 1 |
| Other | (4) | (1) | 2 | (5) | (3) | (8) |
| Balance\tat\tend\tof\tyear | $4 | $8 | $13 | $31 | $34 | $32 |

# M.	Inventories

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Finished\tgoods | $668 | $669 |
| Work-in-process | 1,371 | 1,349 |
| Purchased\traw\tmaterials | 366 | 381 |
| Operating\tsupplies | 87 | 81 |
| Total\tinventories | $2,492 | $2,480 |

At	December	31,	2018	and	2017,	the	portion	of	inventories	valued	on	a	LIFO	basis	was	$1,292	and	$1,208,	respectively.	If	valued	on	an	average-cost	basis,	total inventories	would	have	been	$530	and	$481	higher	at	December	31,	2018	and	2017,	respectively.	During	2018	and	2017,	reductions	in	LIFO	inventory	quantities	caused partial	liquidations	of	the	lower	cost	LIFO	inventory	base.	These	liquidations	resulted	in	the	recognition	of	immaterial	income	amounts	in	2018,	2017,	and	2016.

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 Engineered	Products	and	Solutions	segment.	While	a	portion	of	this	charge	relates	to	prior	years,	the	majority	relates	to	2018.	The	out-of-period	amounts	were	not material	to	any	interim	or	annual	periods.

# N.	Properties,	Plants,	and	Equipment,	Net

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Land\tand\tland\trights | $136 | $140 |
| Structures: |  |  |
| Engineered\tProducts\tand\tSolutions | 796 | 784 |
| Global\tRolled\tProducts | 1,068 | 1,090 |
| Transportation\tand\tConstruction\tSolutions | 248 | 268 |
| Other | 252 | 253 |
|  | 2,364 | 2,395 |
| Machinery\tand\tequipment: |  |  |
| Engineered\tProducts\tand\tSolutions | 3,437 | 3,054 |
| Global\tRolled\tProducts | 4,629 | 4,641 |
| Transportation\tand\tConstruction\tSolutions | 748 | 777 |
| Other | 420 | 358 |
|  | 9,234 | 8,830 |
|  | 11,734 | 11,365 |
| Less:\taccumulated\tdepreciation\tand\tamortization | 6,769 | 6,392 |
|  | 4,965 | 4,973 |
| Construction\twork-in-progress | 739 | 621 |
|  | $5,704 | $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	or	fourth	quarters	of	2018	and, as	such,	the	Company	did	not	evaluate	the	recoverability	of	its	long-lived	assets.

# O.	Goodwill	and	Other	Intangible	Assets

The	following	table	details	the	changes	in	the	carrying	amount	of	goodwill:

|  | Engineered<br>Products<br>and<br>Solutions | Global<br>Rolled<br>Products | Transportation<br>and<br>Construction<br>Solutions | Total |
| :--- | :--- | :--- | :--- | :--- |
| Balances\tat\tDecember\t31,\t2016 |  |  |  |  |
| Goodwill | $4,832 | $241 | $128 | $5,201 |
| Accumulated\timpairment\tlosses | — | — | (53) | (53) |
| Goodwill,\tnet | 4,832 | 241 | 75 | 5,148 |
| Impairment\t(A) | (719) | — | — | (719) |
| Translation\tand\tother | 92 | 11 | 3 | 106 |
| Balances\tat\tDecember\t31,\t2017 |  |  |  |  |
| Goodwill | 4,924 | 252 | 131 | 5,307 |
| Accumulated\timpairment\tlosses | (719) | — | (53) | (772) |
| Goodwill,\tnet | 4,205 | 252 | 78 | 4,535 |
| Divestitures\t(T) | (1) | — | — | (1) |
| Translation\tand\tother | (25) | (7) | (2) | (34) |
| Balances\tat\tDecember\t31,\t2018 |  |  |  |  |
| Goodwill | 4,898 | 245 | 129 | 5,272 |
| Accumulated\timpairment\tlosses | (719) | — | (53) | (772) |
| Goodwill,\tnet | $4,179 | $245 | $76 | $4,500 |

In	2017,	Arconic	recognized	an	impairment	of	goodwill	in	the	amount	of	$719	related	to	the	annual	impairment	review	of	the	Arconic	Forgings	and	Extrusions	business. See	Goodwill	policy	in	Note	A.

Other	intangible	assets	were	as	follows:

| December	31,	2018 | carrying<br>amount | Accumulated<br>amortization | Intangibles,	net |
| :--- | :--- | :--- | :--- |
| Computer\tsoftware | $768 | $(657) | $111 |
| Patents\tand\tlicenses | 110 | (107) | 3 |
| Other\tintangibles | 922 | (149) | 773 |
| Total\tamortizable\tintangible\tassets | 1,800 | (913) | 887 |
| Indefinite-lived\ttrade\tnames\tand\ttrademarks | 32 | — | 32 |
| Total\tother\tintangible\tassets | $1,832 | $(913) | $919 |

| December	31,	2017 | carrying<br>amount | Accumulated<br>amortization | Intangibles,	net |
| :--- | :--- | :--- | :--- |
| Computer\tsoftware | $789 | $(674) | $115 |
| Patents\tand\tlicenses | 110 | (107) | 3 |
| Other\tintangibles | 953 | (116) | 837 |
| Total\tamortizable\tintangible\tassets | 1,852 | (897) | 955 |
| Indefinite-lived\ttrade\tnames\tand\ttrademarks | 32 | — | 32 |
| Total\tother\tintangible\tassets | $1,884 | $(897) | $987 |

Computer	software	consists	primarily	of	software	costs	associated	with	an	enterprise	business	solution	within	Arconic	to	drive	common	systems	among	all	businesses.

Amortization	expense	related	to	the	intangible	assets	in	the	tables	above	for	the	years	ended	December	31,	2018,	2017,	and	2016	was	$81,	$71,	and	$65,	respectively, and	is	expected	to	be	in	the	range	of	approximately	$63	to	$70	annually	from	2019	to	2023.

# P.	Debt

# Long-Term	Debt.

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| 5.72%\tNotes,\tdue\t2019 | $— | $500 |
| 1.63%\tConvertible\tNotes,\tdue\t2019 | 403 | 403 |
| 6.150%\tNotes,\tdue\t2020 | 1,000 | 1,000 |
| 5.40%\tNotes,\tdue\t2021 | 1,250 | 1,250 |
| 5.87%\tNotes,\tdue\t2022 | 627 | 627 |
| 5.125%\tNotes,\tdue\t2024 | 1,250 | 1,250 |
| 5.90%\tNotes,\tdue\t2027 | 625 | 625 |
| 6.75%\tBonds,\tdue\t2028 | 300 | 300 |
| 5.95%\tNotes\tdue\t2037 | 625 | 625 |
| Iowa\tFinance\tAuthority\tLoan,\tdue\t2042\t(4.75%) | 250 | 250 |
| Other(1) | (29) | (23) |
|  | 6,301 | 6,807 |
| Less:\tamount\tdue\twithin\tone\tyear | 405 | 1 |
|  | $5,896 | $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	2018	primarily	for	the	premium	paid	on	the	early	redemption	of	these	notes	in	excess	of	their	carrying	value.

During	the	second	quarter	of	2017,	the	Company	announced	three	separate	cash	tender	offers	by	the	Investment	Banks	for	the	purchase	of	the	Company's	6.50%	Bonds due	2018	(the	"6.50%	Bonds"),	6.75%	Notes	due	2018	(the	"6.75%	Notes"),	and	5.72%	Notes	due	2019	(the	"5.72%	Notes"),	up	to	a	maximum	purchase	amount	of $1,000	aggregate	principal	amount	of	notes,	subject	to	certain	conditions.	The	Investment	Banks	purchased	notes	totaling	$805	aggregate	principal	amount,	including $150	aggregate	principal	amount	of	6.50%	Bonds,	$405	aggregate	principal	amount	of	6.75%	Notes,	and	$250	aggregate	principal	amount	of	5.72%	Notes.

Also,	during	the	second	quarter	of	2017,	the	Company	agreed	to	acquire	the	notes	from	the	Investment	Banks	for	$409	in	cash	plus	its	remaining	investment	in	Alcoa Corporation	common	stock	(12,958,767	shares	valued	at	$35.91	per	share)	for	total	consideration	of	$874	including	accrued	and	unpaid	interest.	The	Company	recorded a	charge	of	$58	($27	in	cash)	primarily	for	the	premium	for	the	early	redemption	of	the	notes,	a	benefit	of	$8	for	the	proceeds	of	a	related	interest	rate	swap	agreement, and	a	charge	of	$2	for	legal	fees	associated	with	the	transaction	in	Interest	expense,	and	recorded	a	gain	of	$167	in	Other	income,	net	in	the	accompanying	Statement	of Consolidated	Operations	for	the	Debt-for-Equity	Exchange.

Finally,	during	the	second	quarter	of	2017,	the	Company	completed	the	early	redemption	of	its	remaining	outstanding	6.50%	Bonds,	with	aggregate	principal	amount	of $100,	and	its	remaining	outstanding	6.75%	Notes,	with	aggregate	principal	amount	of	$345,	for	$479	in	cash	including	accrued	and	unpaid	interest.	As	a	result	of	the early	redemption	of	the	6.50%	Bonds	and	6.75%	Notes,	the	Company	recorded	a	charge	of	$24	in	Interest	expense	in	the	accompanying	Statement	of	Consolidated Operations	for	the	premium	paid	for	the	early	redemption	of	these	notes	in	excess	of	their	carrying	value.

The	Company	has	the	option	to	redeem	certain	of	its	Notes	and	Bonds	in	whole	or	part,	at	any	time	at	a	redemption	price	equal	to	the	greater	of	principal	amount	or	the sum	of	the	present	values	of	the	remaining	scheduled	payments,	discounted	using	a	defined	treasury	rate	plus	a	spread,	plus	in	either	case	accrued	and	unpaid	interest	to the	redemption	date.

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	December	31,	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	two one-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	December	31,	2018	and	2017	and	no	amounts	were	borrowed	during	2018,	2017,	or	2016	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	December	31, 2018,	of	which	$465	is	due	to	expire	in	2019	and	$250	is	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.	In	2018,	2017, and	2016,	Arconic	borrowed	and	repaid	$600,	$810,	and	$1,950,	respectively,	under	the	respective	credit	arrangements.	The	weighted-average	interest	rate	and	weighted- average	days	outstanding	of	the	respective	borrowings	during	2018,	2017,	and	2016	were	3.3%,	2.6%,	and	1.9%,	respectively,	and	46	days,	46	days,	and	49	days, respectively.

Short-Term	Debt.	At	December	31,	2018	and	2017,	short-term	debt	was	$29	and	$38,	respectively.	These	amounts	included	$29	and	$33	at	December	31,	2018	and 2017,	respectively,	related	to	accounts	payable	settlement	arrangements	with	certain	vendors	and	third-party	intermediaries.	These	arrangements	provide	that,	at	the vendor's	request,	the	third-party	intermediary	advances	the	amount	of	the	scheduled	payment	to	the	vendor,	less	an	appropriate	discount,	before	the	scheduled	payment date	and	Arconic	makes	payment	to	the	third-party	intermediary	on	the	date	stipulated	in	accordance	with	the	commercial	terms	negotiated	with	its	vendors.	Arconic records	imputed	interest	related	to	these	arrangements	in	Interest	expense	on	the	accompanying	Statement	of	Consolidated	Operations.

Commercial	Paper.	Arconic	had	no	outstanding	commercial	paper	at	December	31,	2018	and	2017.	In	2018	and	2017,	the	average	outstanding	commercial	paper	was $49	and	$67,	respectively.	Commercial	paper	matures	at	various	times	within	one	year	and	had	an	annual	weighted	average	interest	rate	of	2.5%,	1.6%,	and	1.1%	during 2018,	2017,	and	2016,	respectively.

# Q.	Other	Noncurrent	Liabilities	and	Deferred	Credits

| December	31, | 2018 | 2017 |
| :--- | :--- | :--- |
| Environmental\tremediation\t(U) | $185 | $253 |
| Income\ttaxes\t(H) | 146 | 162 |
| Accrued\tcompensation\tand\tretirement\tcosts | 195 | 218 |
| Sale-leaseback\tfinancing\tobligation | 119 | — |
| Other | 94 | 126 |
|  | $739 | $759 |

The	sale-leaseback	financing	obligation	represents	the	cash	received	from	the	sale	of	the	Texarkana,	Texas	cast	house.	The	transaction	has	been	accounted	for	as	a deferred	gain	due	to	continuing	involvement.	See	Note	T.

# R.	Other	Financial	Instruments

Fair	Value.	Fair	value	is	defined	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	market	participants	at the	measurement	date.	The	fair	value	hierarchy	distinguishes	between	(i)	market	participant	assumptions	developed	based	on	market	data	obtained	from	independent sources	(observable	inputs)	and	(ii)	an	entity's	own	assumptions	about	market	participant	assumptions	developed	based	on	the	best	information	available	in	the circumstances	(unobservable	inputs).	The	fair	value	hierarchy	consists	of	three	broad	levels,	which	gives	the	highest	priority	to	unadjusted	quoted	prices	in	active markets	for	identical	assets	or	liabilities	(Level	1)	and	the	lowest	priority	to	unobservable	inputs	(Level	3).	The	three	levels	of	the	fair	value	hierarchy	are	described below:

•Level	1	-	Unadjusted	quoted	prices	in	active	markets	that	are	accessible	at	the	measurement	date	for	identical,	unrestricted	assets	or liabilities.

•Level	2	-	Inputs	other	than	quoted	prices	included	within	Level	1	that	are	observable	for	the	asset	or	liability,	either	directly	or	indirectly,	including	quoted prices	for	similar	assets	or	liabilities	in	active	markets;	quoted	prices	for	identical	or	similar	assets	or	liabilities	in	markets	that	are	not	active;	inputs	other	than quoted	prices	that	are	observable	for	the	asset	or	liability	(e.g.,	interest	rates);	and	inputs	that	are	derived	principally	from	or	corroborated	by	observable	market data	by	correlation	or	other	means.

•Level	3	-	Inputs	that	are	both	significant	to	the	fair	value	measurement	and

unobservable.

The	carrying	values	of	Cash	and	cash	equivalents,	Restricted	cash,	Derivatives,	Noncurrent	receivables	and	Short-term	debt	included	in	the	Consolidated	Balance	Sheet approximate	their	fair	values.	The	Company	holds	exchange-traded	fixed	income	securities	which	are	considered	available-for-sale	securities	that	are	carried	at	fair	value which	is	based	on	quoted	market	prices	which	are	classified	in	Level	1	of	the	fair	value	hierarchy.	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.

As	it	relates	to	cash	paid	for	acquisitions,	during	2016,	Arconic	made	a	$10	cash	payment	for	a	working	capital	adjustment	from	a	prior	period	acquisition.

During	2016,	Arconic	sold	various	securities	held	by	its	captive	insurance	company	for	$130,	and	an	equity	interest	in	a	natural	gas	pipeline	of	$145	(Alcoa Corporation),	both	of	which	were	included	in	Sales	of	investments	on	the	accompanying	Statement	of	Consolidated	Cash	Flows.

In	2016,	Arconic	received	$457	in	proceeds	from	the	redemption	of	certain	company-owned	life	insurance	policies,	sold	its	Intalco	smelter	wharf	property	(Alcoa Corporation)	for	$120,	and	sold	the	Remmele	Medical	business	(see	Note	T)	for	$102.	These	amounts	were	included	in	Proceeds	from	the	sale	of	assets	and	businesses on	the	accompanying	Statement	of	Consolidated	Cash	Flows.

Noncash	Financing	and	Investing	Activities.	On	October	2,	2017,	all	outstanding	24,975,978	depositary	shares	(each	depositary	share	representing	a	1/10th	interest	in a	share	of	the	mandatory	convertible	preferred	stock)	were	converted	at	a	rate	of	1.56996	into	39,211,286	common	shares;	24,022	depositary	shares	were	previously tendered	for	early	conversion	into	31,420	shares	of	Arconic	common	stock.	No	gain	or	loss	was	recognized	associated	with	this	equity	transaction	(see	Note	I).

In	the	second	quarter	of	2017,	the	Company	completed	a	Debt-for-Equity	Exchange	with	the	Investment	Banks	for	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	for	$465	including	accrued	and	unpaid	interest	(see Note	P).

On	October	5,	2016,	Arconic	completed	a	1-for-3	Reverse	Stock	Split	(see	Note	I).	The	Reverse	Stock	Split	reduced	the	number	of	shares	of	common	stock	outstanding from	approximately	1.3	billion	shares	to	approximately	0.4	billion	shares.	The	par	value	of	the	common	stock	remained	at	$1.00	per	share.	Accordingly,	Common	stock and	Additional	capital	in	the	Company's	Statement	of	Changes	in	Consolidated	Equity	at	December	31,	2016	reflect	a	decrease	and	increase	of	$877,	respectively.

In	August	2016,	Arconic	retired	its	outstanding	treasury	stock	consisting	of	approximately	76	million	shares	(see	Note	I).	As	a	result,	Common	stock	and	Additional capital	were	decreased	by	$76	and	$2,563,	respectively,	in	the	Company's	Statement	of	Changes	in	Consolidated	Equity	at	December	31,	2016,	to	reflect	the	retirement of	the	treasury	shares.

# T.	Acquisitions	and	Divestitures

2018	Divestitures.	On	April	2,	2018,	Arconic	completed	the	sale	of	its	Latin	America	extrusions	business	to	a	subsidiary	of	Hydro	Extruded	Solutions	AS	for	$2, following	the	settlement	of	post-closing	and	other	adjustments	in	December	2018.	As	a	result	of	entering	into	the	agreement	to	sell	the	Latin	America	extrusions business	in	December	2017,	a	charge	of	$41	was	recognized	in	the	fourth	quarter	of	2017	in	Restructuring	and	other	charges	in	the	Statement	of	Consolidated	Operations related	to	the	non-cash	impairment	of	the	net	book	value	of	the	business	and	an	additional	charge	of	$2	related	to	a	post-closing	adjustment	was	recognized	in	the	fourth quarter	of	2018.	The	operating	results	and	assets	and	liabilities	of	the	business	were	included	in	the	Transportation	and	Construction	Solutions	segment.	This	business generated	sales	of	$25,	$115,	and	$103	in	2018,	2017,	and	2016	respectively,	and	had	612	employees	at	the	time	of	the	divestiture.

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	$1,140,	$1,070,	and	$1,010	for	2018,	2017,	and	2016,	respectively.	The	sale	process	continues	to	progress.	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	operating	results	and	assets	and liabilities	of	the	business	were	included	in	the	Global	Rolled	Products	segment.	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	18	months	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	has	been	accounted	for	separately.	The	gain	on	the	sale	of	the	rolling	mill	of	$154,	including	the	fair	value	of	contingent consideration	of	$5,	was	recorded	in	Restructuring	and	other	charges	in	the	Statement	of	Consolidated	Operations	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	has	continuing	involvement	related	to	the	lease	back	of	the	cast	house,	and,	therefore	has	deferred	the	gain associated	with	the	cast	house	in	2018.	As	a	result,	the	Company	continues	to	treat	the	cast	house	building	and	equipment	that	it	sold	to	Ta	Chen	as	owned	and	therefore reflected	these	assets	in	its	Consolidated	Balance	Sheet	and	has	been	depreciating	them	over	their	remaining	useful	life.	Additionally,	the	Company	recorded	the	cash proceeds	associated	with	the	sale	of	the	cast	house	assets	as	a	noncurrent	liability	in	its	Consolidated	Balance	Sheet	which	included	a	deferred	gain	of	$95.	The Company	will	adopt	the	new	lease	accounting	standard	in	the	first	quarter	of	2019,	under	which	the

Company's	continuing	involvement	no	longer	requires	deferral	of	the	cast	house	gain.	As	such,	the	deferred	gain	on	the	sale	of	the	cast	house	will	be	treated	as	a cumulative	effect	of	an	accounting	change	within	retained	earnings	on	January	1,	2019.

On	December	31,	2018,	as	part	of	the	Company's	ongoing	strategy	and	portfolio	review,	Arconic	completed	the	sale	of	its	Eger,	Hungary	forgings	business	to	Angstrom Automotive	Group	LLC	for	$2,	which	resulted	in	a	loss	of	$43	recorded	in	Restructuring	and	other	charges	in	the	Statement	of	Consolidated	Operations.	The	operating results	and	assets	and	liabilities	of	the	business	were	included	in	the	Engineered	Products	and	Solutions	segment.	This	business	generated	sales	of	$32,	$38,	and	$29	in 2018,	2017,	and	2016	respectively,	and	had	180	employees	at	the	time	of	the	divestiture.

2017	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	on	the	Statement	of	Consolidated	Operations	for	2017.	The	rolling	mill	generated	sales	of approximately	$54	and	$165	for	2017	and	2016,	respectively.	At	the	time	of	the	divestiture,	the	rolling	mill	had	approximately	312	employees.

2016	Divestitures.	In	April	2016,	Arconic	completed	the	sale	of	the	Remmele	Medical	business	to	LISI	MEDICAL	for	$102	in	cash	($99	net	of	transaction	costs), which	was	included	in	Proceeds	from	the	sale	of	assets	and	businesses	on	the	accompanying	Statement	of	Consolidated	Cash	Flows.	This	business,	which	was	part	of	the RTI	acquisition	in	2015,	manufactured	precision-machined	metal	products	for	customers	in	the	minimally	invasive	surgical	device	and	implantable	device	markets. Since	this	transaction	occurred	within	a	year	of	the	completion	of	the	RTI	acquisition,	no	gain	was	recorded	on	this	transaction	as	the	excess	of	the	proceeds	over	the carrying	value	of	the	net	assets	of	this	business	was	reflected	as	a	purchase	price	adjustment	(decrease	to	goodwill	of	$44)	to	the	final	allocation	of	the	purchase	price related	to	Arconic's	acquisition	of	RTI.	While	owned	by	Arconic,	the	operating	results	and	assets	and	liabilities	of	this	business	were	included	in	the	Engineered	Products and	Solutions	segment.	This	business	generated	sales	of	approximately	$20	from	January	1,	2016	through	the	divestiture	date,	April	29,	2016,	and,	at	the	time	of	the divestiture,	had	approximately	330	employees.

2014	Acquisitions.	In	November	2014,	Arconic	acquired	Firth	Rixson.	The	purchase	price	included	an	earn-out	agreement	that	required	Arconic	to	make	earn-out payments	up	to	an	aggregate	maximum	amount	of	$150	through	December	31,	2020	upon	certain	conditions.	This	earn-out	was	contingent	on	the	Firth	Rixson	forging business	in	Savannah,	Georgia	achieving	certain	identified	financial	targets	through	December	31,	2020.	During	the	fourth	quarter	of	2016,	management	determined that	payment	of	the	maximum	amount	was	not	probable	based	on	the	forecasted	financial	performance	of	this	location.	Therefore,	the	fair	value	of	this	liability	was reduced	by	$56	with	a	corresponding	credit	to	Other	income,	net	on	the	accompanying	Statement	of	Consolidated	Operations.	During	the	fourth	quarter	of	2017, management	determined	that	payment	of	the	remaining	amount	of	the	contingent	liability	was	not	probable	based	on	the	forecasted	financial	performance	of	this location.	Therefore,	the	fair	value	of	this	liability	was	reduced	by	$81	to	zero	at	December	31,	2017	with	a	corresponding	credit	to	Other	income,	net	on	the accompanying	Statement	of	Consolidated	Operations.	The	fair	value	of	this	liability	remains	at	zero	at	December	31,	2018	based	on	the	forecasted	financial	performance of	this	location.

# U.	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	$266	at	December	31,	2018	and	$294	at	December	31,	2017	(of	which	$81	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.	In	2018,	the	Company	has seen	higher	expenditures	with	the	start	of	construction	related	to	the	Grasse	River	project.	Arconic	expects	that	trend	to	continue	for	2019	as	reflected	by	the	increase	in the	portion	of	the	reserve	that	is	considered	a	current	liability.	Payments	related	to	remediation	expenses	applied	against	the	reserve	were	$32	in	2018	and	$26	in	2017 and	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 December	31,	2018	and	December	31,	2017,	the	reserve	balance	associated	with	this	matter	was	$198	and	$215,	respectively.	Arconic	is	in	the	planning	and	design phase	of	the	project,	which	is	expected	to	be	completed	early	in	2019.	Following	EPA's	approval	of	the	final	design,	the	actual	remediation	fieldwork	is	expected	to commence	and	take	approximately	four	years.	The	majority	of	the	expenditures	related	to	the	project	are	expected	to	be	incurred	between	2019	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	$174	(€152),	including	interest.

The	Company	has	petitioned	to	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 $60	(€52)	was	established	in	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	2018.

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.	As	previously	reported,	on	June	13,	2017,	the	Grenfell	Tower	in	London,	UK	caught	fire	resulting	in	fatalities,	injuries	and	damage.	A	French subsidiary	of	Arconic,	Arconic	Architectural	Products	SAS	(AAP	SAS),	supplied	a	product,	Reynobond	PE,	to	its	customer,	a	cladding	system	fabricator,	which	used the	product	as	one	component	of	the	overall	cladding	system	on	Grenfell	Tower.	The	fabricator	supplied	its	portion	of	the	cladding	system	to	the	façade	installer,	who then	completed	and	installed	the	system	under	the	direction	of	the	general	contractor.	Neither	Arconic	nor	AAP	SAS	was	involved	in	the	design	or	installation	of	the system	used	at	the	Grenfell	Tower,	nor	did	it	have	a	role	in	any	other	aspect	of	the	building's	refurbishment	or	original	design.	Regulatory	investigations	into	the	overall Grenfell	Tower	matter	are	being	conducted,	including	a	criminal	investigation	by	the	London	Metro	Police,	a	Public	Inquiry	by	the	British	government	and	a	consumer protection	inquiry	by	a	French	public	authority.	AAP	SAS	has	sought	and	received	core	participant	status	in	the	Public	Inquiry.	The	Company	will	no	longer	sell	the	PE product	for	architectural	use	on	buildings.

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.

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.

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	and	antitrust	matters.	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	December	31,	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	2019	and 2026	was	$37	at	December	31,	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	$6	and	$8	at	December	31,	2018	and	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	guarantees	related	to	two	long-term	supply	agreements	for	energy	for	Alcoa	Corporation	facilities	in	the	event	of	an	Alcoa Corporation	payment	default.	In	October	2017,	Alcoa	Corporation	announced	that	it	had	terminated	one	of	the	two	agreements,	the	electricity	contract	with	Luminant

Generation	Company	LLC	that	was	tied	to	its	Rockdale	Operations,	effective	as	of	October	1,	2017.	As	a	result	of	the	termination	of	the	Rockdale	electricity	contract, Arconic	recorded	income	of	$25	in	the	fourth	quarter	of	2017	associated	with	reversing	the	fair	value	of	the	electricity	contract	guarantee.	For	the	remaining	long-term supply	agreement,	Arconic	is	required	to	provide	a	guarantee	up	to	an	estimated	present	value	amount	of	approximately	$1,087	and	$1,297	at	December	31,	2018	and December	31,	2017,	respectively,	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	2019,	was	$136	at	December	31,	2018.

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	2019,	was	$50	at	December	31,	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.

# V.	Separation	Transaction	and	Discontinued	Operations

On	November	1,	2016,	Arconic	completed	the	Separation	Transaction.	Alcoa	Inc.,	which	was	re-named	Arconic	Inc.,	continues	to	own	the	Global	Rolled	Products (except	for	the	Warrick,	IN	rolling	operations	and	the	equity	interest	in	the	rolling	mill	at	the	joint	venture	in	Saudi	Arabia),	Engineered	Products	and	Solutions,	and Transportation	and	Construction	Solutions	segments.	Alcoa	Corporation	includes	the	Alumina	and	Primary	Metals	segments	and	the	aforementioned	Warrick,	IN	rolling operations	and	equity	interest	in	the	rolling	mill	at	the	joint	venture	in	Saudi	Arabia,	both	of	which	were	formally	part	of	the	Global	Rolled	Products	segment.

Arconic	completed	the	Separation	Transaction	by	distribution	on	November	1,	2016	of	80.1%	of	the	outstanding	common	stock	of	Alcoa	Corporation	to	the	Company's shareholders	of	record	(the	"Distribution")	as	of	the	close	of	business	on	October	20,	2016	(the	"Record	Date").	Arconic	retained	19.9%	of	the	Alcoa	Corporation common	stock	(36,311,767	shares).	In	the	Distribution,	each	Company	shareholder	received	one	share	of	Alcoa	Corporation	common	stock	for	every	three	shares	of Arconic	common	stock	held	as	of	the	close	of	business	on	the	Record	Date.	Shareholders	received	cash	in	lieu	of	fractional	shares	of	Alcoa	Corporation	common	stock. The	Company	had	recorded	the	retained	interest	as	a	cost	method	investment	in	Investment	in	common	stock	of	Alcoa	Corporation	in	the	December	2016	Consolidated Balance	Sheet.	The	fair	value	of	Arconic's	retained	interest	in	Alcoa	Corporation	was	$1,020	at	December	31,	2016	and	was	based	on	the	closing	stock	price	of	Alcoa Corporation	as	of	December	31,	2016	multiplied	by	the	number	of	shares	of	Alcoa	Corporation	common	stock	owned	by	the	Company	at	that	date.

In	February	2017,	Arconic	sold	23,353,000	of	its	shares	of	Alcoa	Corporation	common	stock	at	$38.03	per	share,	which	resulted	in	cash	proceeds	of	$888	which	were recorded	in	Sales	of	investments	within	Investing	Activities	in	the	accompanying	Statement	of	Consolidated	Cash	Flows,	and	a	gain	of	$351	which	was	recorded	in Other	expense	(income),	net	in	the	accompanying	Statement	of	Consolidated	Operations.	In	April	and	May	2017,	the	Company	acquired	a	portion	of	its	outstanding notes	held	by	two	investment	banks	(the	"Investment	Banks")	in	exchange	for	cash	and	the	Company's	remaining	12,958,767	Alcoa	Corporation	shares	(valued	at $35.91	per	share)	(the	"Debt-for-Equity	Exchange")	(See	Note	P).	A	gain	of	$167	on	the	Debt-for-Equity	Exchange	was	recorded	in	Other	expense	(income),	net	in	the accompanying	Statement	of	Consolidated	Operations.	As	of	May	4,	2017,	the	Company	no	longer	maintained	a	retained	interest	in	Alcoa	Corporation

# common	stock.

On	October	31,	2016,	Arconic	entered	into	several	agreements	with	Alcoa	Corporation	that	govern	the	relationship	of	the	parties	following	the	completion	of	the Separation	Transaction.	These	agreements	include	the	following:	Separation	and	Distribution	Agreement,	Transition	Services	Agreement,	Tax	Matters	Agreement, Employee	Matters	Agreement,	Alcoa	Corporation	to	Arconic	Inc.	Patent,	Know-How,	and	Trade	Secret	License	Agreement,	Arconic	Inc.	to	Alcoa	Corporation	Patent, Know-How,	and	Trade	Secret	License	Agreement,	Alcoa	Corporation	to	Arconic	Inc.	Trademark	License	Agreement,	Toll	Processing	and	Services	Agreement	(the "Toll	Processing	Agreement"),	Master	Agreement	for	the	Supply	of	Primary	Aluminum,	Massena	Lease	and	Operations	Agreement,	Fusina	Lease	and	Operations Agreement,	and	Stockholder	and	Registration	Rights	Agreement.

Effective	November	1,	2016,	Arconic	entered	into	a	Toll	Processing	Agreement	with	Alcoa	Corporation	for	the	tolling	of	metal	for	the	Warrick,	IN	rolling	mill	which became	a	part	of	Alcoa	Corporation	upon	completion	of	the	Separation	Transaction.	As	part	of	this	arrangement,	Arconic	provided	a	toll	processing	service	to	Alcoa Corporation	to	produce	can	sheet	products	at	its	facility	in	Tennessee	through	the	end	date	of	the	contract,	December	31,	2018.	Alcoa	Corporation	supplied	all	required raw	materials	to	Arconic	and	Arconic	processed	the	raw	materials	into	finished	can	sheet	coils	ready	for	shipment	to	the	end	customer.	Tolling	revenues	for	2018,	2017, and	the	two-month	period	ended	December	31,	2016	and	accounts	receivable	at	December	31,	2018,	December	31,	2017,	and	December	31,	2016	were	not	material	to the	consolidated	results	of	operations	and	financial	position	for	the	years	ended	December	31,	2018,	December	31,	2017,	and	December	31,	2016.

As	part	of	the	Separation	Transaction,	Arconic	was	required	to	provide	maximum	potential	future	payment	guarantees	for	Alcoa	Corporation	issued	on	behalf	of	a	third party,	guarantees	related	to	two	long-term	Alcoa	Corporation	energy	supply	agreements,	guarantees	related	to	certain	Alcoa	Corporation	environmental	liabilities	and energy	supply	contracts,	letters	of	credit	and	surety	bonds	related	to	Alcoa	Corporation	workers'	compensation	claims	which	occurred	prior	to	November	1,	2016,	and letters	of	credit	for	certain	Alcoa	Corporation	equipment	leases	and	energy	contracts	(see	Note	U).

As	part	of	the	Separation	Transaction,	Arconic	had	recorded	a	receivable	in	the	December	2016	Consolidated	Balance	Sheet	for	the	net	after-tax	proceeds	from	Alcoa Corporation's	sale	of	the	Yadkin	Hydroelectric	Project.	The	transaction	closed	and	the	Company	received	proceeds	of	$238	in	the	first	quarter	of	2017	and	the	remaining $5	in	the	second	quarter	of	2017.	The	$243	proceeds	were	included	in	Other	within	Investing	Activities	in	the	Statement	of	Consolidated	Cash	Flows.

The	results	of	operations	of	Alcoa	Corporation	were	presented	as	discontinued	operations	in	the	Statement	of	Consolidated	Operations	as	summarized	below	(the amounts	presented	in	the	table	below	have	not	been	recast	to	reflect	the	adoption	of	new	guidance	issued	by	the	FASB	related	to	the	presentation	of	net	periodic	pension cost	and	net	periodic	postretirement	benefit	cost	as	detailed	in	Note	A):

|  | Ten	months<br>ended	October	31, |
| :--- | :--- |
|  | 2016 |
| Sales | $6,752 |
| Cost\tof\tgoods\tsold\t(exclusive\tof\texpenses\tbelow) | 5,655 |
| Selling,\tgeneral\tadministrative,\tand\tother\texpenses | 164 |
| Research\tand\tdevelopment | 28 |
| Provision\tfor\tdepreciation,\tdepletion\tand\tamortization | 593 |
| Restructuring\tand\tother\tcharges | 102 |
| Interest\texpense | 28 |
| Other\t(income)\texpenses,\tnet | (75) |
| Income\tfrom\tdiscontinued\toperations\tbefore\tincome\ttaxes | 257 |
| Provision\tfor\tincome\ttaxes | 73 |
| Income\tfrom\tdiscontinued\toperations\tafter\tincome\ttaxes | 184 |
| Less:\tNet\tincome\tfrom\tdiscontinued\toperations\tattributable\tto\tnoncontrolling\tinterests | 63 |
| Net\tincome\tfrom\tdiscontinued\toperations | $121 |

During	2017	and	2016,	Arconic	recognized	$18	($12	after-tax)	and	$193	($158	after-tax),	respectively,	in	Selling,	general	administrative,	and	other	expenses	on	the accompanying	Statement	of	Consolidated	Operations	for	costs	related	to	the	Separation	Transaction.	In	addition,	Arconic	also	incurred	capital	expenditures	and	debt issuance	costs	of	$110	during	2016	related	to	the	Separation	Transaction.	None	of	the	aforementioned	costs	and	expenses	related	to	the	Separation	Transaction	were reclassified	into	discontinued	operations.

On	November	1,	2016,	management	evaluated	the	net	assets	of	Alcoa	Corporation	for	potential	impairment	and	determined	that	no	impairment	charge	was	required.

The	cash	flows	related	to	Alcoa	Corporation	have	not	been	segregated	and	are	included	in	the	Statement	of	Consolidated	Cash	Flows	for	2016.	The	following	table presents	depreciation,	depletion	and	amortization,	restructuring	and	other	charges,	and	purchases	of	property,	plant	and	equipment	of	the	discontinued	operations	related to	Alcoa	Corporation:

# W.	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:

On	January	22,	2019,	the	Company	announced	that	its	Board	of	Directors	(the	Board)	had	determined	to	no	longer	pursue	a	potential	sale	of	Arconic	as	part	of	its strategy	and	portfolio	review.

On	February	8,	2019,	the	Company	announced	the	following	key	initiatives	as	part	of	its	ongoing	strategy	and	portfolio	review:	plans	to	reduce	operating	costs,	designed to	maximize	the	impact	in	2019;	the	planned	separation	of	its	portfolio	into	Engineered	Products	and	Forgings	(EP&F)	and	Global	Rolled	Products	(GRP),	with	a	spin- off	of	one	of	the	businesses;	the	potential	sale	of	businesses	that	do	not	best	fit	into	EP&F	or	GRP;	execute	its	previously	authorized	$500	share	repurchase	program	in the	first	half	of	2019;	the	Board	authorized	an	additional	$500	of	share	repurchases,	effective	through	the	end	of	2020;	and	plans	to	reduce	its	quarterly	common	stock dividend	from	$0.06	to	$0.02	per	share.

# Supplemental	Financial	Information	(unaudited)

# Quarterly	Data

|  | First | Second | Third | Fourth(2) | Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2018 |  |  |  |  |  |
| Sales | $3,445 | $3,573 | $3,524 | $3,472 | $14,014 |
| Net\tincome | $143 | $120 | $161 | $218 | $642 |
| Earnings\tper\tshare\tattributable\tto\tArconic\tcommon\tshareholders(1): |  |  |  |  |  |
| Basic |  |  |  |  |  |
| Net\tincome\tper\tshare—basic | $0.30 | $0.25 | $0.33 | $0.45 | $1.33 |
| Diluted |  |  |  |  |  |
| Net\tincome\tper\tshare—diluted | $0.29 | $0.24 | $0.32 | $0.44 | $1.30 |
| 2017 |  |  |  |  |  |
| Sales | $3,192 | $3,261 | $3,236 | $3,271 | $12,960 |
| Net\tincome\t(loss) | $322 | $212 | $119 | $(727) | $(74) |
| Earnings\t(loss)\tper\tshare\tattributable\tto\tArconic\tcommon\nshareholders(1): |  |  |  |  |  |
| Basic |  |  |  |  |  |
| Net\tincome\t(loss)\tper\tshare—basic | $0.69 | $0.44 | $0.23 | $(1.51) | $(0.28) |
| Diluted |  |  |  |  |  |
| Net\tincome\t(loss)\tper\tshare—basic | $0.65 | $0.43 | $0.22 | $(1.51) | $(0.28) |

(1) Per	share	amounts	are	calculated	independently	for	each	period	presented;	therefore,	the	sum	of	the	quarterly	per	share	amounts	may	not	equal	the	per	share amounts	for	the	year.

(2) In	the	fourth	quarter	of	2018,	Arconic	recorded	a	gain	of	$119	($154	pre-tax)	on	the	sale	of	the	Texarkana	rolling	mill,	offset	by	pension	plan	settlement charges	of	$72	($92	pre-tax)	associated	with	significant	lump	sum	payments	made	to	participants	and	a	loss	of	$39	($43	pre-tax)	on	the	sale	of	the	Eger, Hungary	forgings	business.	Additionally,	Arconic	recorded	discrete	tax	items	primarily	comprised	of	a	benefit	related	to	certain	prior	year	foreign	investment losses	no	longer	recapturable.	In	the	fourth	quarter	of	2017,	Arconic	recorded	an	impairment	of	goodwill	related	to	the	forgings	and	extrusions	business	of	$719 ($719	pre-tax);	a	provisional	charge	of	$272	associated	with	the	revaluation	of	U.S.	net	deferred	tax	assets	due	to	a	decrease	in	the	U.S.	corporate	tax	rate	from 35%	to	21%,	as	well	as	a	one-time	transition	tax	on	the	non-previously	taxed	earnings	and	profits	of	certain	U.S.-owned	foreign	corporations	as	of	December 31,	2017;	a	favorable	adjustment	to	the	Firth	Rixson	earn-out	liability	of	$81	($81	pre-tax);	and	a	favorable	adjustment	to	a	separation-related	guarantee liability	of	$16	($25	pre-tax).

# Item	9.	Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A.	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)	Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting

Management's	Report	on	Internal	Control	over	Financial	Reporting	is	included	in	Part	II,	Item	8	of	this	Form	10-K	beginning	on	page	51.

(c)	Attestation	Report	of	the	Registered	Public	Accounting	Firm

The	effectiveness	of	Arconic's	internal	control	over	financial	reporting	as	of	December	31,	2018	has	been	audited	by	PricewaterhouseCoopers	LLP,	an	independent registered	public	accounting	firm,	as	stated	in	their	report,	which	is	included	in	Part	II,	Item	8	of	this	Form	10-K	on	page	52.

# (d)	Changes	in	Internal	Control	over	Financial	Reporting

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

# Item	9B.	Other	Information.

# PART	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance.

The	information	required	by	Item	401	of	Regulation	S-K	regarding	directors	is	contained	under	the	caption	"Item	1	Election	of	Directors"	of	the	Proxy	Statement	and	is incorporated	by	reference.	The	information	required	by	Item	401	of	Regulation	S-K	regarding	executive	officers	is	set	forth	in	Part	I,	Item	1	of	this	report	under "Executive	Officers	of	the	Registrant."

The	information	required	by	Item	405	of	Regulation	S-K	is	contained	under	the	caption	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	of	the	Proxy Statement	and	is	incorporated	by	reference.

The	Company's	Code	of	Ethics	for	the	CEO,	CFO	and	Other	Financial	Professionals	is	publicly	available	on	the	Company's	Internet	website	at	http://www.arconic.com under	the	section	"Investors—Corporate	Governance."	The	remaining	information	required	by	Item	406	of	Regulation	S-K	is	contained	under	the	captions	"Corporate Governance"	and	"Corporate	Governance—Business	Conduct	Policies	and	Code	of	Ethics"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Items	407(c)(3),	(d)(4)	and	(d)(5)	of	Regulation	S-K	is	included	under	the	captions	"Item	1	Election	of	Directors—Nominating	Board Candidates—Procedures	and	Director	Qualifications"	and	"Corporate	Governance—Committees	of	the	Board—Audit	Committee"	of	the	Proxy	Statement	and	is incorporated	by	reference.

# Item	11.	Executive	Compensation.

The	information	required	by	Item	402	of	Regulation	S-K	is	contained	under	the	captions	"Director	Compensation",	"Executive	Compensation"	and	"Corporate Governance—Recovery	of	Incentive	Compensation"	of	the	Proxy	Statement.	Such	information	is	incorporated	by	reference.

The	information	required	by	Items	407(e)(4)	and	(e)(5)	of	Regulation	S-K	is	contained	under	the	captions	"Corporate	Governance—Compensation	Committee Interlocks	and	Insider	Participation"	and	"Item	3	Advisory	Approval	of	Executive	Compensation—Compensation	Committee	Report"	of	the	Proxy	Statement.	Such information	(other	than	the	Compensation	Committee	Report,	which	shall	not	be	deemed	to	be	"filed")	is	incorporated	by	reference.

# Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

The	information	required	by	Item	201(d)	of	Regulation	S-K	relating	to	securities	authorized	for	issuance	under	equity	compensation	plans	is	contained	under	the	caption "Equity	Compensation	Plan	Information"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Item	403	of	Regulation	S-K	is	contained	under	the	captions	"Arconic	Stock	Ownership—	Stock	Ownership	of	Certain	Beneficial	Owners" and	"—	Stock	Ownership	of	Directors	and	Executive	Officers"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

# Item	13.	Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

The	information	required	by	Item	404	of	Regulation	S-K	is	contained	under	the	captions	"Executive	Compensation"	(excluding	the	information	under	the	caption "Compensation	Committee	Report")	and	"Corporate	Governance—	Related	Person	Transactions"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

The	information	required	by	Item	407(a)	of	Regulation	S-K	regarding	director	independence	is	contained	under	the	captions	"Item	1	Election	of	Directors"	and "Corporate	Governance"	of	the	Proxy	Statement	and	is	incorporated	by	reference.

# Item	14.	Principal	Accounting	Fees	and	Services.

The	information	required	by	Item	9(e)	of	Schedule	14A	is	contained	under	the	captions	"Item	2	Ratification	of	Appointment	of	Independent	Registered	Public Accounting	Firm—Report	of	the	Audit	Committee"	and	"—	Audit	and	Non-Audit	Fees"	of	the	Proxy	Statement	and	in	Attachment	A	(Pre-Approval	Policies	and Procedures	for	Audit	and	Non-Audit	Services)	thereto	and	is	incorporated	by	reference.

# PART	IV

# Item	15.		Exhibits,	Financial	Statement	Schedules.

(a)	The	consolidated	financial	statements	and	exhibits	listed	below	are	filed	as	part	of	this	report.

(1)	The	Company's	consolidated	financial	statements,	the	notes	thereto	and	the	report	of	the	Independent	Registered	Public	Accounting	Firm	are	on	pages	53 through	102	of	this	report.

(2)	Financial	statement	schedules	have	been	omitted	because	they	are	not	applicable,	not	required,	or	the	required	information	is	included	in	the	consolidated financial	statements	or	notes	thereto.

# Exhibit Number Description*

2(a) Share	Purchase	Agreement,	dated	as	of	June	25,	2014,	by	and	among	Alcoa	Inc.,	Alcoa	IH	Limited,	FR	Acquisition	Corporation	(US),	Inc.,	FR Acquisitions	Corporation	(Europe)	Limited,	FR	Acquisition	Finance	Subco	(Luxembourg),	S.à.r.l.	and	Oak	Hill	Capital	Partners	III,	L.P.	and Oak	Hill	Capital	Management	Partners	III,	L.P.,	collectively	in	their	capacity	as	the	Seller	Representative,	incorporated	by	reference	to	exhibit 2.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	June	27,	2014.

2(b) Separation	and	Distribution	Agreement,	dated	as	of	October	31,	2016,	by	and	between	Arconic	Inc.	and	Alcoa	Corporation,	incorporated	by reference	to	exhibit	2.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	4,	2016.

2(c) Tax	Matters	Agreement,	dated	as	of	October	31,	2016,	by	and	between	Arconic	Inc.	and	Alcoa	Corporation,	incorporated	by	reference	to	exhibit 2.3	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	4,	2016.

2(d) Employee	Matters	Agreement,	dated	as	of	October	31,	2016,	by	and	between	Arconic	Inc.	and	Alcoa	Corporation,	incorporated	by	reference	to exhibit	2.4	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	4,	2016.

2(d)(1) Amendment	No.	1,	dated	December	13,	2016,	to	Employee	Matters	Agreement,	dated	as	of	October	31,	2016,	by	and	between	Arconic	Inc.	and Alcoa	Corporation,	incorporated	by	reference	to	exhibit	2(e)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2016.

2(e) Alcoa	Corporation	to	Arconic	Inc.	Patent,	Know-How,	and	Trade	Secret	License	Agreement,	dated	as	of	October	31,	2016,	by	and	between Alcoa	USA	Corp.	and	Arconic	Inc.,	incorporated	by	reference	to	exhibit	2.5	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file number	1-3610)	dated	November	4,	2016.

2(f) Arconic	Inc.	to	Alcoa	Corporation	Patent,	Know-How,	and	Trade	Secret	License	Agreement,	dated	as	of	October	31,	2016,	by	and	between Arconic	Inc.	and	Alcoa	USA	Corp.,	incorporated	by	reference	to	exhibit	2.6	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file number	1-3610)	dated	November	4,	2016.

2(g) Amended	and	Restated	Alcoa	Corporation	to	Arconic	Inc.	Trademark	License	Agreement,	dated	as	of	June	25,	2017,	by	and	between	Alcoa USA	Corp.	and	Arconic	Inc.,	incorporated	by	reference	to	exhibit	2	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number 1-3610)	for	the	quarter	ended	June	30,	2017.

2(h) Master	Agreement	for	the	Supply	of	Primary	Aluminum,	dated	as	of	October	31,	2016,	by	and	between	Alcoa	Corporation	and	its	affiliates	and Arconic	Inc.,	incorporated	by	reference	to	exhibit	2.9	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated November	4,	2016.

2(i) Massena	Lease	and	Operations	Agreement,	dated	as	of	October	31,	2016,	by	and	between	Arconic	Inc.	and	Alcoa	Corporation,	incorporated	by reference	to	exhibit	2.10	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	4,	2016.

2(j) Agreement	and	Plan	of	Merger,	dated	October	12,	2017,	by	and	between	Arconic	Inc.,	a	Pennsylvania	corporation,	and	Arconic	Inc.,	a Delaware	corporation,	incorporated	by	reference	to	exhibit	2.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1- 3610)	dated	January	4,	2018.

3(a) Certificate	of	Incorporation	of	Arconic	Inc.,	a	Delaware	corporation,	incorporated	by	reference	to	exhibit	3.1	to	the	Company's	Current	Report on	Form	8-K	(Commission	file	number	1-3610)	dated	January	4,	2018.

4(c) Form	of	Indenture,	dated	as	of	September	30,	1993,	between	Alcoa	Inc.	and	The	Bank	of	New	York	Trust	Company,	N.A.,	as	successor	to	J.	P. Morgan	Trust	Company,	National	Association	(formerly	Chase	Manhattan	Trust	Company,	National	Association),	as	successor	Trustee	to	PNC Bank,	National	Association,	as	Trustee	(undated	form	of	Indenture	incorporated	by	reference	to	exhibit	4(a)	to	Registration	Statement	No.	33- 49997	on	Form	S-3).

4(c)(1) First	Supplemental	Indenture,	dated	as	of	January	25,	2007,	between	Alcoa	Inc.	and	The	Bank	of	New	York	Trust	Company,	N.A.,	as	successor to	J.P.	Morgan	Trust	Company,	National	Association	(formerly	Chase	Manhattan	Trust	Company,	National	Association),	as	successor	Trustee to	PNC	Bank,	National	Association,	as	Trustee,	incorporated	by	reference	to	exhibit	99.4	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	January	25,	2007.

4(c)(2) Second	Supplemental	Indenture,	dated	as	of	July	15,	2008,	between	Alcoa	Inc.	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as successor	in	interest	to	J.	P.	Morgan	Trust	Company,	National	Association	(formerly	Chase	Manhattan	Trust	Company,	National	Association, as	successor	to	PNC	Bank,	National	Association),	as	Trustee,	incorporated	by	reference	to	exhibit	4(c)	to	the	Company's	Current	Report	on Form	8-K	(Commission	file	number	1-3610)	dated	July	15,	2008.

4(c)(3) Fourth	Supplemental	Indenture,	dated	as	of	December	31,	2017,	between	Arconic	Inc.,	a	Pennsylvania	corporation,	Arconic	Inc.,	a	Delaware corporation,	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as	trustee,	incorporated	by	reference	to	exhibit	4.3	to	the	Company's Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	January	4,	2018.

4(k) Indenture,	dated	as	of	December	14,	2010,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company,	N.A.,	as Trustee,	incorporated	by	reference	to	exhibit	4(m)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the year	ended	December	31,	2015.

4(k)(1) Third	Supplemental	Indenture,	dated	as	of	April	17,	2013,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company, N.A.,	as	Trustee,	incorporated	by	reference	to	exhibit	4(n)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610) for	the	year	ended	December	31,	2015.

4(k)(2) Fourth	Supplemental	Indenture,	dated	as	of	July	23,	2015,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust	Company, N.A.,	as	Trustee,	incorporated	by	reference	to	exhibit	4.1	on	Form	8-K	(Commission	file	number	1-3610)	dated	July	23,	2015.

4(k)(3) Fifth	Supplemental	Indenture,	dated	as	of	November	30,	2017,	between	RTI	International	Metals,	Inc.	and	The	Bank	of	New	York	Trust Company,	N.A.,	as	Trustee,	incorporated	by	reference	to	exhibit	4.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1- 3610)	dated	December	4,	2017.

4(k)(4) Sixth	Supplemental	Indenture,	dated	as	of	December	31,	2017,	between	Arconic	Inc.,	a	Pennsylvania	corporation,	Arconic	Inc.,	a	Delaware corporation,	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as	Trustee,	incorporated	by	reference	to	exhibit	4.2	to	the	Company's Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	January	4,	2018.

4(l) Arconic	Bargaining	Retirement	Savings	Plan	(formerly	known	as	the	Alcoa	Retirement	Savings	Plan	for	Bargaining	Employees),	as	Amended and	Restated	effective	January	1,	2015,	incorporated	by	reference	to	exhibit	4(p)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission file	number	1-3610)	for	the	year	ended	December	31,	2015.

4(m) Arconic	Hourly	Non-Bargaining	Retirement	Savings	Plan	(formerly	known	as	the	Alcoa	Retirement	Savings	Plan	for	Hourly	Non-Bargaining Employees),	as	Amended	and	Restated	effective	January	1,	2015,	incorporated	by	reference	to	exhibit	4(q)	to	the	Company's	Annual	Report	on Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2015.

4(n) Arconic	Fastener	Systems	and	Rings	Retirement	Savings	Plan	(formerly	known	as	the	Alcoa	Retirement	Savings	Plan	for	Fastener	Systems Employees),	as	Amended	and	Restated	effective	January	1,	2015,	incorporated	by	reference	to	exhibit	4(r)	to	the	Company's	Annual	Report	on Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2015.

4(o) Arconic	Salaried	Retirement	Savings	Plan	(formerly	known	as	the	Alcoa	Retirement	Savings	Plan	for	Salaried	Employees),	as	Amended	and Restated	effective	January	1,	2015,	incorporated	by	reference	to	exhibit	4(s)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file number	1-3610)	for	the	year	ended	December	31,	2015.

4(p) Arconic	Retirement	Savings	Plan	for	ATEP	Bargaining	Employees,	effective	January	1,	2017,	incorporated	by	reference	to	exhibit	4	to	Post- Effective	Amendment,	dated	December	30,	2016,	to	Registration	Statement	No.	333-32516	on	Form	S-8.

10(a) Earnout	Agreement,	dated	as	of	June	25,	2014,	by	and	among	Alcoa	Inc.,	FR	Acquisition	Finance	Subco	(Luxembourg),	S.à.r.l.	and	Oak	Hill Capital	Partners	III,	L.P.	and	Oak	Hill	Capital	Management	Partners	III,	L.P.,	collectively	in	their	capacity	as	the	Seller	Representative, incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	June	27,	2014.

10(b) Five-Year	Revolving	Credit	Agreement,	dated	as	of	July	25,	2014,	among	Alcoa	Inc.,	the	Lenders	and	Issuers	named	therein,	Citibank,	N.A.,	as Administrative	Agent	for	the	Lenders	and	Issuers,	and	JPMorgan	Chase	Bank,	N.A.,	as	Syndication	Agent,	incorporated	by	reference	to	exhibit 10.2	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	July	31,	2014.

10(b)(1) Extension	Request	and	Amendment	Letter,	dated	as	of	June	5,	2015,	among	Alcoa	Inc.,	each	lender	and	issuer	party	thereto,	and	Citibank,	N.A., as	Administrative	Agent,	effective	July	7,	2015,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	July	13,	2015.

10(b)(2) Amendment	No.	1,	dated	September	16,	2016,	to	the	Five-Year	Revolving	Credit	Agreement	dated	as	of	July	25,	2014,	among	Arconic	Inc.,	the lenders	and	issuers	named	therein,	Citibank,	N.A.,	as	administrative	agent,	and	JPMorgan	Chase	Bank,	N.A.	as	syndication	agent,	incorporated by	reference	to	Exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	September	19,	2016.

10(b)(3) Assumption	Agreement,	dated	as	of	December	31,	2017,	by	Arconic	Inc.,	a	Delaware	corporation,	in	favor	of	and	for	the	benefit	of	the	Lenders and	Citibank,	N.A.,	as	administrative	agent,	incorporated	by	reference	to	exhibit	4.4	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	January	4,	2018.

10(b)(4) Amendment	No.	2,	dated	as	of	June	29,	2018,	to	the	Company's	Five-Year	Revolving	Credit	Agreement	dated	as	of	July	25,	2014,	by	and among	the	Company,	a	syndicate	of	lenders	and	issuers	named	therein,	Citibank,	N.A.,	as	administrative	agent	for	the	lenders	and	issuers,	and JPMorgan	Chase	Bank,	N.A.,	as	syndication	agent,	incorporated	by	reference	to	Exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K dated	July	2,	2018.

10(c) Plea	Agreement	dated	January	8,	2014,	between	the	United	States	of	America	and	Alcoa	World	Alumina	LLC,	incorporated	by	reference	to exhibit	10(l)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2013.

10(d) Agreement,	dated	February	1,	2016,	by	and	between	Elliott	Associates,	L.P.,	Elliott	International,	L.P.,	Elliott	International	Capital	Advisors Inc.	and	Alcoa	Inc.,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610) dated	February	1,	2016.

10(e) Settlement	Agreement,	dated	as	of	May	22,	2017,	by	and	among	Elliott	Associates,	L.P.,	Elliott	International,	L.P.,	Elliott	International	Capital Advisors	Inc.	and	Arconic	Inc.,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file number	1-3610)	dated	May	22,	2017	(reporting	an	event	on	May	21,	2017).

10(f) Letter	Agreement,	by	and	among	Arconic	Inc.	and	Elliott	Associates,	L.P.,	Elliott	International,	L.P.	and	Elliott	International	Capital	Advisors Inc.,	dated	as	of	December	19,	2017,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file number	1-3610)	dated	December	19,	2017.

10(g) Registration	Rights	Agreement,	by	and	among	Arconic	Inc.	and	Elliott	Associates,	L.P.,	Elliott	International,	L.P.	and	Elliott	International Capital	Advisors	Inc.,	dated	as	of	December	19,	2017,	incorporated	by	reference	to	exhibit	10.2	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	December	19,	2017.

10(g)(1) Amendment	to	Registration	Rights	Agreement,	by	and	among	Arconic	Inc.	and	Elliott	Associates,	L.P.,	Elliott	International,	L.P.	and	Elliott International	Capital	Advisors	Inc.,	dated	as	of	February	2,	2018,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on Form	8-K	(Commission	file	number	1-3610)	dated	February	6,	2018.

10(h) Alcoa	Internal	Revenue	Code	Section	162(m)	Compliant	Annual	Cash	Incentive	Compensation	Plan,	as	Amended	and	Restated,	incorporated by	reference	to	Exhibit	10(b)	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	11,	2016.

10(i) 2004	Summary	Description	of	the	Alcoa	Incentive	Compensation	Plan,	incorporated	by	reference	to	exhibit	10(g)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(i)(1) Incentive	Compensation	Plan	of	Alcoa	Inc.,	as	revised	and	restated	effective	November	8,	2007,	incorporated	by	reference	to	exhibit	10(k)(1)	to the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2007.

10(i)(2) Amendment	to	Incentive	Compensation	Plan	of	Alcoa	Inc.,	effective	December	18,	2009,	incorporated	by	reference	to	exhibit	10(n)(2)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(j) Arconic	Employees'	Excess	Benefits	Plan	C	(formerly	referred	to	as	the	Alcoa	Inc.	Employees'	Excess	Benefits	Plan,	Plan	C),	as	amended	and restated	effective	August	1,	2016,	incorporated	by	reference	to	exhibit	10(j)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file number	1-3610)	for	the	year	ended	December	31,	2016.

10(j)(2) Second	Amendment	to	Arconic	Employees'	Excess	Benefits	Plan	C	(as	amended	and	restated	effective	August	1,	2016),	effective	January	1, 2018,	incorporated	by	reference	to	exhibit	10(l)(2)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the year	ended	December	31,	2017.

10(j)(3) Third	Amendment	to	Arconic	Employees'	Excess	Benefits	Plan	C	(as	amended	and	restated	effective	August	1,	2016),	incorporated	by reference	to	exhibit	10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	January	8,	2018.

10(k) Deferred	Fee	Plan	for	Directors,	as	amended	effective	July	9,	1999,	incorporated	by	reference	to	exhibit	10(g)(1)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	1999.

10(l) Amended	and	Restated	Deferred	Fee	Plan	for	Directors,	effective	November	1,	2016,	incorporated	by	reference	to	exhibit	10(c)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2016.

10(m) 	 Non-Employee	Director	Compensation	Policy,	effective	February	6,	2019.

10(n) Fee	Continuation	Plan	for	Non-Employee	Directors,	incorporated	by	reference	to	exhibit	10(k)	to	the	Company's	Annual	Report	on	Form	10-K (Commission	file	number	1-3610)	for	the	year	ended	December	31,	1989.

10(n)(1) Amendment	to	Fee	Continuation	Plan	for	Non-Employee	Directors,	effective	November	10,	1995,	incorporated	by	reference	to	exhibit	10(i)(1) to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1995.

10(n)(2) Second	Amendment	to	the	Fee	Continuation	Plan	for	Non-Employee	Directors,	effective	September	15,	2006,	incorporated	by	reference	to exhibit	10.2	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	September	20,	2006.

10(o) Arconic	Deferred	Compensation	Plan,	as	amended	and	restated	effective	August	1,	2016,	incorporated	by	reference	to	exhibit	10(p)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2016.

10(o)(1) First	Amendment	to	the	Arconic	Deferred	Compensation	Plan	(as	amended	and	restated	effective	August	1,	2016),	effective	January	1,	2018, incorporated	by	reference	to	exhibit	10(r)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year ended	December	31,	2017.

10(p) Summary	of	the	Executive	Split	Dollar	Life	Insurance	Plan,	dated	November	1990,	incorporated	by	reference	to	exhibit	10(m)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1990.

10(q) Amended	and	Restated	Dividend	Equivalent	Compensation	Plan,	effective	January	1,	1997,	incorporated	by	reference	to	exhibit	10(h)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2004.

10(r) Form	of	Indemnity	Agreement	between	the	Company	and	individual	directors	or	officers,	incorporated	by	reference	to	exhibit	10(j)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	1987.)

10(s) Form	of	Indemnification	Agreement	between	the	Company	and	individual	directors	or	officers,	incorporated	by	reference	to	exhibit	10.1	to	the Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	January	25,	2018.

10(t) Amended	and	Restated	2009	Alcoa	Stock	Incentive	Plan,	dated	February	15,	2011,	incorporated	by	reference	to	exhibit	10(z)(1)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2010.

10(u) Arconic	Supplemental	Pension	Plan	for	Senior	Executives	(formerly	referred	to	as	the	Alcoa	Supplemental	Pension	Plan	for	Senior	Executives), as	amended	and	restated	effective	August	1,	2016,	incorporated	by	reference	to	exhibit	10(v)	to	the	Company's	Annual	Report	on	Form	10-K (Commission	file	number	1-3610)	for	the	year	ended	December	31,	2016.

10(u)(1) First	Amendment	to	Arconic	Supplemental	Pension	Plan	for	Senior	Executives	(as	amended	and	restated	effective	August	1,	2016),	effective January	1,	2018,	incorporated	by	reference	to	exhibit	10(x)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2017.

10(u)(2) Second	Amendment	to	Arconic	Supplemental	Pension	Plan	for	Senior	Executives	(as	amended	and	restated	effective	August	1,	2016),	effective January	1,	2018,	incorporated	by	reference	to	exhibit	10(x)(2)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2017.

10(v) Deferred	Fee	Estate	Enhancement	Plan	for	Directors,	effective	July	10,	1998,	incorporated	by	reference	to	exhibit	10(r)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-	3610)	for	the	year	ended	December	31,	1998.

10(w) Arconic	Inc.	Change	in	Control	Severance	Plan,	as	amended	and	restated	effective	February	1,	2018,	incorporated	by	reference	to	Exhibit	10.3 to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	February	6,	2018.

10(x) Letter	Agreement,	dated	August	14,	2007,	between	Alcoa	Inc.	and	Klaus	Kleinfeld,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2007.

10(y) Executive	Severance	Agreement,	as	amended	and	restated	effective	December	8,	2008,	between	Alcoa	Inc.	and	Klaus	Kleinfeld,	incorporated by	reference	to	exhibit	10(gg)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended December	31,	2008.

10(y)(1) Letter	Agreement	between	Arconic	Inc.	and	Klaus	Kleinfeld,	dated	February	27,	2017,	incorporated	by	reference	to	exhibit	10(y)(1)	to	the Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2016.

10(z) Separation	Agreement	between	Arconic	Inc.	and	Klaus	Kleinfeld,	dated	July	31,	2017,	incorporated	by	reference	to	exhibit	10(c)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2017.

10(aa) Form	of	Executive	Severance	Agreement	between	the	Company	and	new	officers	entered	into	after	July	22,	2010,	incorporated	by	reference	to exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	September	30,	2010.

10(bb) Arconic	Inc.	Executive	Severance	Plan,	as	effective	February	27,	2017,	incorporated	by	reference	to	exhibit	10(aa)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2016.

10(cc) Letter	Agreement,	by	and	between	Alcoa	Inc.	and	Katherine	H.	Ramundo,	dated	as	of	July	28,	2016,	incorporated	by	reference	to	exhibit	10(ff) to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(dd) Letter	Agreement,	from	Arconic	Inc.	to	Katherine	H.	Ramundo,	dated	as	of	May	31,	2018,	incorporated	by	reference	to	exhibit	10(c)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2018.

10(ee) Letter	Agreement	between	Arconic	Inc.	and	David	P.	Hess,	dated	May	17,	2017,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	22,	2017	(reporting	an	event	on	May	17,	2017).

10(ff) Letter	Agreement,	by	and	between	Arconic	Inc.	and	Charles	P.	Blankenship,	dated	as	of	October	19,	2017,	incorporated	by	reference	to	exhibit 10.1	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	October	23,	2017

10(gg) Letter	Agreement,	by	and	between	Arconic	Inc.	and	Mark	J.	Krakowiak,	dated	as	of	January	20,	2018,	incorporated	by	reference	to	exhibit 10(ii)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(hh) 	 Letter	Agreement,	from	Arconic	Inc.	to	Ken	Giacobbe,	dated	as	of	February	14,	2019.

10(ii) Arconic	Global	Pension	Plan,	as	amended	and	restated	effective	August	1,	2016,	incorporated	by	reference	to	exhibit	10(bb)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2016.

10(jj) Global	Expatriate	Employee	Policy	(pre-January	1,	2003),	incorporated	by	reference	to	exhibit	10(uu)	to	the	Company's	Annual	Report	on Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2005.

10(kk) Arconic	Inc.	Legal	Fee	Reimbursement	Plan,	effective	as	of	April	30,	2018,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	March	31,	2018.

10(ll) Summary	Description	of	Equity	Choice	Program	for	Performance	Equity	Award	Participants,	dated	November	2005,	incorporated	by	reference to	exhibit	10.6	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	November	16,	2005.

10(mm) 2013	Arconic	Stock	Incentive	Plan,	as	Amended	and	Restated,	incorporated	by	reference	to	exhibit	10.1	to	the	Company's	Current	Report	on Form	8-K	(Commission	file	number	1-3610)	dated	May	22,	2018.

10(mm)(1) Terms	and	Conditions	(Australian	Addendum)	to	the	2013	Arconic	Stock	Incentive	Plan,	effective	May	3,	2013,	incorporated	by	reference	to exhibit	10(d)	to	the	Company's	Current	Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	8,	2013.

10(nn) RTI	International	Metals,	Inc.	2004	Stock	Plan,	incorporated	by	reference	to	exhibit	4(b)	to	the	Company's	Current	Report	on	Form	8-K (Commission	file	number	1-3610)	dated	July	23,	2015.

10(oo) RTI	International	Metals,	Inc.	2014	Stock	and	Incentive	Plan,	incorporated	by	reference	to	exhibit	4(a)	to	the	Company's	Current	Report	on Form	8-K	(Commission	file	number	1-3610)	dated	July	23,	2015.

10(oo)(1) First	Amendment	to	the	RTI	International	Metals,	Inc.	2014	Stock	and	Incentive	Plan,	as	amended	and	assumed	by	Arconic	Inc.,	dated	February 1,	2018,	incorporated	by	reference	to	exhibit	10(oo)(1)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for the	year	ended	December	31,	2017.

10(pp) Form	of	Award	Agreement	for	Stock	Options,	effective	May	8,	2009,	incorporated	by	reference	to	exhibit	10.2	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	13,	2009.

10(qq) Form	of	Award	Agreement	for	Stock	Options,	effective	January	1,	2010,	incorporated	by	reference	to	exhibit	10(ddd)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2009.

10(rr) Terms	and	Conditions	for	Stock	Options,	effective	January	1,	2011,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's	Quarterly Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2011.

10(ss) Terms	and	Conditions	for	Stock	Option	Awards,	effective	May	3,	2013,	incorporated	by	reference	to	exhibit	10(b)	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-3610)	dated	May	8,	2013.

10(tt) Terms	and	Conditions	for	Stock	Option	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	effective	July	22,	2016,	incorporated	by reference	to	Exhibit	10(d)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30, 2016.

10(uu) Global	Stock	Option	Award	Agreement,	effective	January	19,	2018,	incorporated	by	reference	to	exhibit	10(uu)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(vv) Form	of	Stock	Option	Award	Agreement,	incorporated	by	reference	to	exhibit	10(f)	to	the	Company's	Quarterly	Report	on	Form	10-Q (Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2018.

10(ww) Terms	and	Conditions	for	Restricted	Share	Units,	effective	May	3,	2013,	incorporated	by	reference	to	exhibit	10(c)	to	the	Company's	Current Report	on	Form	8-K	(Commission	file	number	1-	3610)	dated	May	8,	2013.

10(xx) Terms	and	Conditions	for	Restricted	Share	Units	under	the	2013	Arconic	Stock	Incentive	Plan,	effective	July	22,	2016,	incorporated	by reference	to	Exhibit	10(c)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30, 2016.

10(yy) Terms	and	Conditions	for	Restricted	Share	Units	for	Annual	Director	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	effective November	30,	2016,	incorporated	by	reference	to	exhibit	10(vv)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2016.

10(zz) Terms	and	Conditions	for	Restricted	Share	Units	for	Annual	Director	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	as	Amended	and Restated,	effective	December	5,	2017,	incorporated	by	reference	to	exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q (Commission	file	number	1-3610)	for	the	quarter	ended	March	31,	2018.

10(aaa) Terms	and	Conditions	for	Deferred	Fee	Restricted	Share	Units	for	Director	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	effective November	30,	2016,	incorporated	by	reference	to	exhibit	10(ww)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2016.

10(bbb) Terms	and	Conditions	for	Restricted	Share	Units	issued	on	or	after	January	13,	2017,	under	the	2013	Arconic	Stock	Incentive	Plan,	effective January	13,	2017,	incorporated	by	reference	to	exhibit	10(xx)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2016.

10(ccc) Terms	and	Conditions	for	Restricted	Share	Units	-	Interim	CEO	(David	P.	Hess)	Award,	effective	October	23,	2017,	incorporated	by	reference to	exhibit	10(ccc)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(ddd) Terms	and	Conditions	for	Restricted	Share	Units	-	Non-Executive	Chairman	(John	C.	Plant)	Director	Award,	effective	October	23,	2017, incorporated	by	reference	to	exhibit	10(ddd)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year ended	December	31,	2017.

10(eee) Terms	and	Conditions	for	Restricted	Share	Units	-	Non-Executive	Chairman	(John	C.	Plant)	Director	Award,	effective	October	23,	2018, incorporated	by	reference	to	exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter ended	September	30,	2018.

10(fff) Global	Restricted	Share	Unit	Award	Agreement,	effective	January	19,	2018,	incorporated	by	reference	to	exhibit	10(eee)	to	the	Company's Annual	Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(ggg) Terms	and	Conditions	for	Restricted	Share	Units	issued	on	or	after	January	19,	2018,	under	the	2013	Arconic	Stock	Incentive	Plan,	effective January	19,	2018,	incorporated	by	reference	to	exhibit	10(fff)	to	the	Company's	Annual	Report	on	Form	10-K	(Commission	file	number	1- 3610)	for	the	year	ended	December	31,	2017.

10(hhh) Form	of	Restricted	Share	Unit	Award	Agreement,	incorporated	by	reference	to	exhibit	10(g)	to	the	Company's	Quarterly	Report	on	Form	10-Q (Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2018.

10(iii) Terms	and	Conditions	for	Special	Retention	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	effective	January	1,	2015,	incorporated	by reference	to	exhibit	10(a)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30, 2015.

10(jjj) Terms	and	Conditions	for	Special	Retention	Awards	under	the	2013	Arconic	Stock	Incentive	Plan,	effective	July	22,	2016,	incorporated	by reference	to	exhibit	10(e)	to	the	Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30, 2016.

10(kkk) Global	Special	Retention	Award	Agreement,	effective	January	19,	2018,	incorporated	by	reference	to	exhibit	10(kkk)	to	the	Company's	Annual Report	on	Form	10-K	(Commission	file	number	1-3610)	for	the	year	ended	December	31,	2017.

10(lll) Special	Retention	Award	Agreement	-	Katherine	H.	Ramundo,	effective	May	16,	2018,	incorporated	by	reference	to	exhibit	10(d)	to	the Company's	Quarterly	Report	on	Form	10-Q	(Commission	file	number	1-3610)	for	the	quarter	ended	June	30,	2018.

101.	LAB 		 XBRL	Taxonomy	Extension	Label	Linkbase	Document.

101.	PRE 		 XBRL	Taxonomy	Extension	Presentation	Linkbase	Document.

	*	Exhibit	Nos.	10(h)	through	10(nnn)	are	management	contracts	or	compensatory	plans	required	to	be	filed	as	Exhibits	to	this	Form	10-K.

Amendments	and	modifications	to	other	Exhibits	previously	filed	have	been	omitted	when	in	the	opinion	of	the	registrant	such	Exhibits	as	amended	or	modified	are	no longer	material	or,	in	certain	instances,	are	no	longer	required	to	be	filed	as	Exhibits.

No	other	instruments	defining	the	rights	of	holders	of	long-term	debt	of	the	registrant	or	its	subsidiaries	have	been	filed	as	Exhibits	because	no	such	instruments	met	the threshold	materiality	requirements	under	Regulation	S-K.	The	registrant	agrees,	however,	to	furnish	a	copy	of	any	such	instruments	to	the	Commission	upon	request.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	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.

Paul	Myron

Vice	President	and	Controller	(Also	signing	as	Principal	Accounting	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in	the capacities	and	on	the	dates	indicated.

James	F.	Albaugh,	Amy	E.	Alving,	Christopher	L.	Ayers,	Arthur	D.	Collins,	Jr.,	Elmer	L.	Doty,	Rajiv	L.	Gupta,	David	P.	Hess,	Sean	O.	Mahoney,	David	J.	Miller,	E.

Stanley	O'Neal,	and	Ulrich	R.	Schmidt,	each	as	a	Director,	on	February	21,	2019,	by	Paul	Myron,	their	Attorney-in-Fact.*

*By /s/	Paul	Myron

Attorney-in-Fact


considering the average exercise price of options , what is the increase in the total value of stock options observed during 2016 and 2017 , in millions of dollars?
    stock_options_increase_2016_2017 = 11 * 33.32 - 13 * 26.93
 answer = stock_options_increase_2016_2017