Howmet Aerospace (HWM) 10-K risk factor changes: FY2018 vs FY2017

[removed: Demand for commercial] aircraft [removed: 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 [added: technological improvements to new engines.]

[added: As discussed in [Part I, Item 1.](#sD7F49A25979D5C108C137F3E38ED38BC)] (Business-Competitive Conditions) of this report, the markets for Arconic’s products are highly competitive.

New product [removed: offerings or] [added: offerings,] new technologies in the marketplace [added: or new facilities] may compete with or replace Arconic products.

For more information on Arconic’s research and development programs, see “Research and Development” in [removed: Part] [added: [Part] I, Item [removed: 1.][added: 1](#sD7F49A25979D5C108C137F3E38ED38BC).]

[removed: (Business)] [added: (Business-Research and Development)] of this report.

There can be no assurance that any of Arconic’s new products or services, development programs or technologies will be commercially [removed: feasible] [added: adopted] or beneficial to Arconic.

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 [added: difficulties in their businesses.]

Product manufacturing or performance issues could result in recalls, customer penalties, contract cancellation and product liability exposure, including if any of our products are [removed: defective] [added: non-compliant] or are used in [removed: a] [added: an unintended and/or unapproved] manner that results in injuries or other damages.

Arconic is currently under contract to supply components for a number of new and existing commercial, general [removed: aviation and] [added: aviation,] military aircraft [added: and aircraft engine] programs and is the sole supplier of aluminum sheet for a number of aluminum-intensive automotive vehicle programs.

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

The pursuit of remedies for any misappropriation of [removed: such] [added: 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 [removed: them.][added: it.]

Developments or assertions by or against Arconic relating to intellectual property rights, and any inability to protect or enforce [removed: these] [added: Arconic’s] rights sufficiently, could adversely affect Arconic’s business and competitive position.

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 [removed: various] [added: customers, suppliers, unions, local or national governments, or other] stakeholders.

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

[removed: Cyber] [added: 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 [added: 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.

[added: 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.

On May 1, 2017, Standard and Poor’s Ratings Services [added: (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 [removed: November 1, 2016,] [added: October 8, 2018,] Moody’s Investor Service (Moody’s) [removed: downgraded] [added: affirmed] Arconic’s long-term debt rating [removed: from Ba1,] [added: at Ba2,] a non-investment grade, [removed: to Ba2] [added: with a stable outlook,] and its short-term debt rating [removed: from Speculative Grade Liquidity-1 to] [added: at] Speculative Grade Liquidity-2.

On [removed: April 21, 2016,] [added: 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 [removed: current] outlook from [removed: positive] [added: stable] to [removed: evolving.][added: positive.]

[removed: Increased debt levels, macroeconomic conditions,] a [removed: deterioration in the Company’s debt protection metrics, a] contraction in the Company’s liquidity, or other factors could potentially trigger such actions.

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 [removed: Standard and Poor’s] [added: S&P] or [removed: a further downgrade by] 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 [removed: condition] [added: condition, liquidity] and results of operations.

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 [added: [Part II, Item 7.](#sABFB35B3ABC35ACA8334EDF8420839C7) (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Note [G](#s5C3410A307745CF2B281FD3E3F45FB4C) to the Consolidated Financial Statements-Pension and Other Postretirement Benefits in] Part II, Item [removed: 7.][added: 8.]

Changes in applicable domestic or foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive [removed: effect, could affect the Company’s tax expense and profitability.]

The Company continues to review the components of the 2017 [removed: Act] [added: 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 [removed: amounts, possibly materially,] [added: amounts] due to, among other things, changes in interpretations and assumptions the Company has [removed: made; guidance that may be issued;] [added: made to date;] and actions the Company may take as a result of the 2017 [removed: Act.][added: Act and related guidance.]

[removed: The] [added: These] changes to the U.S. corporate tax system [removed: resulting from the 2017 Act] could have a substantial impact, positive or negative, on Arconic’s future effective tax rate, cash tax expenditures, and deferred tax assets and liabilities.

Although the Company’s pricing of products is generally intended to pass the risk of metal price fluctuations on to the Company’s [removed: customers,] [added: customers or is otherwise hedged, there are situations where] Arconic [removed: may be] [added: is] unable to pass on the entire cost of increases to its customers and there [removed: can be] [added: 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 [removed: customers.][added: 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.]

[removed: If this occurs, it] [added: systems or enhancing current systems,] could have [removed: a material] [added: an] 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, [removed: and other] economic [removed: factors] [added: 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 [added: financial environment could affect Arconic’s revenues, expenses and results of operations.]

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 [removed: implementation process in which ideas are executed in a disciplined manner to generate savings, and overhead cost reductions.]

Arconic’s results of operations may be affected by changes in the availability or cost of raw materials [removed: (e.g.,] [added: (including, but not limited to,] aluminum, [added: cobalt,] nickel, titanium [removed: dioxide),] [added: 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 [removed: entities,] [added: 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.

Arconic may be unable to offset fully the effects of raw material shortages or higher costs through [added: customer] price increases, productivity improvements or cost reduction programs.

For more information, see “Employees” in [removed: Part] [added: [Part] I, Item [removed: 1.][added: 1.](#sD7F49A25979D5C108C137F3E38ED38BC) (Business) of this report.]

While Arconic [removed: was] previously [added: has been] successful in renegotiating its collective bargaining agreements with various unions, Arconic may not be able to satisfactorily renegotiate [added: all] collective bargaining agreements in the United States and other countries when they expire.

Arconic’s results of operations or liquidity in a particular period could be affected by new or increasingly stringent laws, [removed: regulatory requirements or interpretations, or outcomes of significant legal proceedings or investigations adverse to Arconic.]

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

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.

| • | kidnapping of personnel; |

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.

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.

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

technological improvements to new engines.

As discussed in Part I, Item 1.

difficulties in their businesses.

A decline in the Company’s financial performance or outlook

Additionally, Moody’s changed the outlook from negative to stable (ratings and outlook were affirmed on November 2, 2017).

On July 7, 2016, Fitch changed the current outlook from evolving to stable (ratings and outlook were affirmed on July 3, 2017).

(Management’s Discussion

and Analysis of Financial Condition and Results of Operations) and Note T to the Consolidated Financial Statements-Pension and Other Postretirement Benefits in Part II, Item 8.

As a result, Arconic may be exposed to such price fluctuations during the time lag.

financial environment could affect Arconic’s revenues, expenses and results of operations.

(Legal Proceedings) of this report and in Note L to the Consolidated Financial Statements in Part II, Item 8.

This could lead to

anti-takeover measures without shareholder approval.

In the

| Item 1B. | Unresolved Staff Comments. |

None.

(dollars in millions, except per-share [removed: amounts and aluminum prices;] [added: amounts;] shipments in thousands of metric tons \[kmt\])

Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, [removed: packaging,] building and construction, [removed: oil and gas,] [added: industrial applications,] defense, [removed: consumer electronics,] and [removed: industrial applications.][added: packaging.]

Based upon the country where the point of sale occurred, the United States and Europe generated [removed: 63%] [added: 65%] and [removed: 26%,] [added: 24%,] respectively, of Arconic’s sales in [removed: 2017.][added: 2018.]

Management Review of [removed: 2017] [added: 2018] and Outlook for the Future

In [removed: 2017,] [added: 2018,] Arconic’s revenues increased [removed: 5%] [added: 8%] over [removed: 2016] [added: 2017] as a result of higher volumes across all segments including strong volume growth in [removed: our aerospace, automotive,] [added: aerospace engines] and [added: defense, automotive,] commercial [removed: transportation markets,] [added: transportation, industrial,] and [added: building and construction end markets;] higher aluminum pricing [added: and favorable product mix] primarily impacting the Global Rolled Products [removed: segment,] [added: segment; and favorable foreign currency movements;] partially offset by [added: a decline in volumes in] the [removed: planned ramp down and Toll Processing] [added: 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 [removed: Services Agreement (the “Toll Processing Agreement”) relating to] [added: $46 from] the [removed: Company’s] [added: ramp down of Arconic's] North [removed: America] [added: American] packaging [removed: business] [added: operations (completed] in [removed: Tennessee,] [added: December 2018);] and [removed: unfavorable] [added: costs of $38 in 2018 related to settlements of certain customer claims primarily related to] product [removed: pricing and mix.][added: introductions.]

Loss from continuing operations after income taxes was $74 [removed: in 2017] [added: for 2017, or $0.28 per diluted share,] compared [removed: to] [added: with] $1,062 [removed: in 2016.][added: for 2016, or $2.58 per share.]

There were several significant items that impacted the fourth quarter of [removed: 2017.][added: 2018.]

[removed: The] [added: In 2017, the] Company recorded a [removed: charge of $719 ($719 pre-tax) associated with] [added: loss on] the [removed: impairment] [added: sale] of [removed: goodwill in] the [removed: forgings and extrusions business] [added: Fusina, Italy rolling mill of $60] and a charge [removed: of $41 ($41 pre-tax)] for the impairment of assets [removed: in] [added: associated with] the [added: sale of the] Latin America extrusions business [removed: in conjunction with an agreement to sell the business.][added: of $41.]

Management has [removed: also intensified] [added: continued] its [added: intensified] focus on capital efficiency.

This focus and the related results enabled Arconic to end [removed: 2017] [added: 2018] with a solid financial position.

The following financial information reflects certain key measures of Arconic’s [removed: 2017] [added: 2018] results:

| • | Cash on hand at the end of the year of [removed: $2,150;] [added: $2,277;] and |

| • | Total debt of [removed: $6,844,] [added: $6,330,] a decrease in total debt of [removed: $1,240] [added: $514] from [removed: 2016.] [added: 2017.] |

[removed: Beginning in] [added: In] the first quarter of 2018, the [removed: Company's] [added: Company changed its] primary measure of segment performance [removed: will change] from Adjusted [removed: EBITDA] [added: earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”)] to [removed: Operating income,] [added: Segment operating profit,] which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations.

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 [removed: Operations Agreement, Fusina Lease and Operations Agreement, and Stockholder and Registration Rights Agreement.]

[removed: Sales—Sales] [added: Sales] for 2017 were $12,960 compared with [removed: sales of] $12,394 in 2016, an increase of $566, or 5%.

[removed: Cost of Goods Sold (COGS)—COGS] [added: COGS] as a percentage of Sales was [removed: 79.9%] [added: 78.9%] in 2017 compared with [removed: 79.2%] [added: 78.2%] in 2016.

COGS as a percentage of Sales was [removed: 79.2%] [added: 81.3%] in [removed: 2016] [added: 2018] compared with [removed: 81.4%] [added: 78.9%] in [removed: 2015.][added: 2017.]

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 [removed: efforts (see Restructuring and Other Charges below),] [added: efforts,] partially offset by proxy, advisory and governance-related costs of $58, external legal and other advisory costs related to Grenfell Tower of [removed: $14] [added: $14,] and costs associated with the Company’s Delaware reincorporation of $3 in 2017.

The decrease in [removed: 2017 as compared to 2016] [added: both periods] was [removed: driven by] [added: the result of] lower spending.

[removed: Provision for Depreciation and Amortization (D&A)—The] [added: The] provision for D&A was [removed: $551] [added: $576] in [removed: 2017] [added: 2018] compared with [added: $551 in 2017 and] $535 in 2016.

The increase [removed: of $16, or 3%,] [added: in both periods] was primarily due to capital projects placed into service.

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

| | [removed: 2017] [added: 2018] | | | [removed: 2016] | [added: 2017] | | [removed: 2015] | | [added: 2016] | [added: | |]

| Restructuring and other charges | [removed: $] [added: (9] | [removed: 165] | [added: )] | [removed: $] | [removed: 155] [added: (165] | | [removed: $] [added: )] | [removed: 214] | [added: (155] | [added: | ) |]

Interest [removed: Expense—Interest] expense was $496 in 2017 compared with $499 in 2016.

Other [removed: Income, Net—Other] income, net was [removed: $640] [added: $486] in 2017 compared with [removed: $94] [added: Other expense, net of $41] in 2016.

The increase [added: in other income, net] of [removed: $546] [added: $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 [removed: 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),] [added: Exchange,] income of $25 associated with a higher reversal of a contingent earn-out liability related to the Firth Rixson acquisition (see Note [removed: F] [added: [T](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9)] to the Consolidated Financial Statements in Part [removed: II] [added: II,] Item [removed: 8 of this Form 10-K for additional information), and income of $25 due to the reversal of a liability associated with a separation-related guarantee.][added: 8.]

Other [removed: income,] [added: expense,] net was [removed: $94] [added: $79] in [removed: 2016] [added: 2018] compared with [removed: $28] [added: Other income, net of $486] in [removed: 2015.][added: 2017.]

[removed: Income Taxes—Arconic’s] [added: Arconic’s] effective tax rate was 115.7% in 2017 compared with the U.S. federal statutory rate of 35%.

The effective tax rate [removed: primarily] differs from the U.S. federal statutory rate [added: 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.

[removed: 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 Income Taxes under Critical Accounting Policies and Estimates below), 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.

Arconic’s effective tax rate was [removed: 185.2%] [added: 26.0%] in [removed: 2015] [added: 2018] compared with the U.S. federal statutory rate of [removed: 35%.][added: 21%.]

Management anticipates that the effective tax rate in [removed: 2018] [added: 2019] will be between [removed: 27%] [added: 26.5%] and [removed: 29%.][added: 28.5%.]

[removed: Loss] [added: Income] from continuing operations after income taxes [removed: and noncontrolling interests—Loss] [added: was $642 for 2018, or $1.30 per diluted share, compared to a loss] from continuing operations after income taxes [removed: and noncontrolling interests was] [added: of] $74 for 2017, or $0.28 per [removed: diluted share, compared to $1,062 for 2016, or $2.58 per] share.

[removed: depreciation,] [added: Provision for Depreciation] and [removed: amortization (“Adjusted EBITDA”).][added: Amortization (D&A).]

Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance [removed: in 2017 was Adjusted EBITDA.][added: is Segment operating profit.]

Prior period [added: financial] information has been recast to conform to current year presentation.

[removed: The Adjusted EBITDA presented] [added: Segment operating profit] may not be comparable to similarly titled measures of other companies.

The following information provides [removed: sales] [added: Sales] and [removed: Adjusted EBITDA] [added: Segment operating profit] for each reportable segment, as well as certain shipment [removed: and realized price] data for Global Rolled Products, for each of the three years in the period ended December 31, [removed: 2017.][added: 2018.]

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.

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.

| • | Sales of $14,014, up 8% from 2017, with growth from all segments as key end markets remained healthy, and Net income of $642, or $1.30 per diluted share; |

| • | Total segment operating profit of $1,581, a decrease of $97, or 6%, from 20171; |

| • | 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; |

| • | 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 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; and |

| • | 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 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.

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.

In the segments, Adjusted EBITDA increased over 2016 as a result of the aforementioned higher volumes and continued focus on net cost savings that more than offset negative factors including product pricing pressures, ramp up costs associated with new aerospace engine parts, aerospace customer inventory destocking and reduced build rates, and higher aluminum prices.

Also in the fourth quarter of 2017, the Company recorded income of $97 ($106 pre-tax) associated with the reversal of liabilities for a contingent earn-out and a separation-related guarantee.

The Company was also impacted by the Tax Cuts and Jobs Act enacted on December 22, 2017 (“the 2017 Act”), and recorded 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.

The impact of the 2017 Act provisions will be updated over the course of 2018, in accordance with guidance issued by the Securities and Exchange Commission which has provided a one-year measurement period to finalize the accounting impacts of the new legislation, and as additional guidance is issued and the new law is further analyzed.

Additionally during 2017, the Company disposed of its retained interest in Alcoa Corporation common stock and recorded gains of $405 ($518 pre-tax), and the Company redeemed debt of $1,250, recording charges of $49 ($76 pre-tax) primarily for the premium paid for the early redemption of the debt.

See discussion that follows under Results of Operations below for further information on 2017 results.

| | |

| --- | --- |

| • | Sales of $12,960 and Net loss of $74, or 0.28 per diluted share; |

| • | Consolidated adjusted EBITDA of $1,761, an increase of 17% from 20161; |

| • | Cash from operations of $701; |

| • | Capital expenditures of $596; |

(1) For the reconciliation of Net loss attributable to Arconic to Consolidated adjusted EBITDA and related information, see page 45.

In 2018, management projects that sales will be up 3% to 6% based on volume and share gains, as well as higher aluminum prices.

In aerospace, it is anticipated that the favorable impact of share gains on new platforms and engines will be somewhat offset by lower pricing and the mix of wide-body and narrow-body aircraft produced.

Management also expects strong growth in automotive sheet and commercial transportation markets, particularly due to North American and European heavy-duty truck production increases, while the industrial gas turbine market will continue declining throughout 2018.

Looking ahead over the next year, management will continue to focus on improving operating performance through cost reductions, margin enhancement, and profitable revenue generation.

As part of this effort, the Company made the decision to freeze its U.S. defined benefit pension plans for all U.S.-based salaried and non-bargained hourly employees effective April 1, 2018, and the Company intends to relocate its global headquarters by the end of 2018 out of New York City to a more cost-effective location.

Management has initiated a review of the Company’s strategy and portfolio.

Additionally, each of the segments are projected to achieve net cost savings in 2018.

As a result, adjusted earnings per share is anticipated to increase and free cash flow is also expected to improve in 2018 through increased focus on driving operational improvements and working capital efficiency.

To further enhance the Company’s financial position and return capital to shareholders, Arconic’s Board of Directors authorized a share repurchase program of up to $500 of its outstanding common stock and a $500 early debt reduction.

Under the share repurchase program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate.

Repurchases will be subject to market conditions, legal requirements and other considerations.

The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the share repurchase program may be suspended, modified or terminated at any time without prior notice.

For the early debt reduction, Arconic intends to redeem in March 2018 all of its outstanding 5.72% Notes due in 2019.

As part of this change, LIFO and metal price lag will be included in the Operating income of the segments.

In conjunction with the implementation of the new accounting guidance on changes to the classification of certain cash receipts and cash payments within the statement of cash flows (effective January 1, 2018 and to be applied retrospectively), specifically as it relates to the requirement to reclassify cash received from net sales of beneficial interest in sold receivables from Cash from operations to Cash provided from investing activities, the Company has changed the calculation of its measure of free cash flow to Cash from operations plus cash received from net sales of beneficial interest in sold receivables, less Capital expenditures.

This change to our measure of free cash flow is being implemented to ensure consistent presentation of this measure across all historical periods, once the required accounting guidance reclassification is reflected in our financial results beginning in the first quarter of 2018.

The adoption of this accounting change does not reflect a change in our underlying business or activities.

Sales for 2016 were $12,394 compared with sales of $12,413 in 2015, a decline of $19, or less than 1%.

The relatively flat performance was the result of a full-year effect of two 2015 acquisitions in the Engineered Products and Solutions segment and automotive volume increases in the Global Rolled Products segment, which were more than offset by the ramp-down of the Tennessee packaging business and the impact of aluminum prices in the Global Rolled Products segment and unfavorable product price and mix across all segments.

The primary drivers in the improvement in COGS as a percentage of sales were productivity gains across all segments and higher volume in the Engineered Products and Solutions segment due to the benefit of a full-year effect of two 2015 acquisitions.

This benefit was somewhat offset by overall cost increases across all segments and unfavorable product pricing and mix impacts primarily in the Engineered Products and Solutions and Global Rolled Products segments.

Selling, General Administrative, and Other Expenses (SG&A) — SG&A expenses were $731, or 5.6% of Sales, in 2017 compared with $942, or 7.6% of Sales, in 2016.

SG&A expenses were $942, or 7.6% of Sales, in 2016 compared with $765, or 6.2% of Sales, in 2015.

The increase in SG&A was primarily due to costs related to the Separation Transaction of $193 in 2016, an increase of $169 from 2015 separation costs.

Research and Development Expenses (R&D)—R&D expenses were $111 in 2017 compared with $132 in 2016 and $169 in 2015.

The decrease in 2016 as compared to 2015 was driven by the decrease in spending for the Micromill™ in San Antonio, TX which was completed in 2015 and began production of automotive sheet, on a limited basis, for the Global Rolled Products segment.

The provision for D&A was $535 in 2016 compared with $508 in 2015.

The Company’s Internet address is [removed: http://www.arconic.com.][added: [http://www.arconic.com](#).]

The SEC maintains an Internet site that contains these reports at [removed: http://www.sec.gov.][added: [http://www.sec.gov](#).]

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: [removed: Part] [added: [Part] I, Item [removed: 1A.][added: 1A.](#s2164004AF13A5D55A823C2CE7DEA9CBF) (Risk Factors), [Part II, Item 7.](#sABFB35B3ABC35ACA8334EDF8420839C7) (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](#s97FF02E8251959C18AD80CCED7E73ECC) to the Consolidated Financial Statements in Part II, Item 8.]

[added: For additional discussion of the EP&S segment's business, see “Results of Operations—Segment Information” in [Part II, Item 7.](#sABFB35B3ABC35ACA8334EDF8420839C7)] (Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations), including the disclosures under Segment Information and Critical Accounting Policies and Estimates, and Note K] [added: Operations)] and [removed: the Derivatives Section of] Note [removed: U] [added: [C](#s105F3B8925F15BE5A0C8BEDB34329779)] to the Consolidated Financial Statements in Part II, Item 8.

Arconic [added: (“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, [removed: packaging,] building and construction, [removed: oil and gas,] [added: industrial applications,] defense, [removed: consumer electronics,] and [removed: industrial applications.][added: packaging.]

Based upon the country where the point of sale occurred, the United States and Europe generated [removed: 63%] [added: 65%] and [removed: 26%,] [added: 24%,] respectively, of Arconic’s sales in [removed: 2017.][added: 2018.]

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 [removed: between Arconic Pennsylvania and Arconic Delaware.]

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 [removed: 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 [removed: Part] [added: [Part] II, Item [removed: 8] [added: 8](#s12DCBA6673EF51FEB21C31D760B588DE)] (Financial Statements and Supplementary Data).

| Item | [added: |] Page(s) |

| Discussion of Recent Business Developments: | | [added: |]

| Management’s Discussion and Analysis of Financial Condition and Results of Operations: | | [added: |]

| Notes to Consolidated Financial Statements: | | [added: |]

| [Note D. Restructuring and Other [removed: Charges](#s36CECA57A8A85FB0B26FC6772840F381)] [added: Charges](#s97C849B4BB4E52F3AE88F238930B348E)] | [removed: [76](#s36CECA57A8A85FB0B26FC6772840F381)] | [added: [70](#s97C849B4BB4E52F3AE88F238930B348E) |]

| [Note [removed: F.] [added: T.] Acquisitions and [removed: Divestitures](#sCC26AC6E99215D7E84EDCCE19D02810E)] [added: Divestitures](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9)] | [removed: [79](#sCC26AC6E99215D7E84EDCCE19D02810E)] | [added: [96](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9) |]

| [Note [removed: K.] [added: U.] Contingencies and [removed: Commitments](#sCF424879BB2D58DE80F8F9B7AD27CAEA)] [added: Commitments](#s97FF02E8251959C18AD80CCED7E73ECC)] | [removed: [84](#sCF424879BB2D58DE80F8F9B7AD27CAEA)] | [added: [97](#s97FF02E8251959C18AD80CCED7E73ECC) |]

| [Note [removed: Q.] [added: H.] Income [removed: Taxes](#s6CAFD9A394595F509465A21698D8D889)] [added: Taxes](#sF377BEFA160F55899B747D4729F6F4B2)] | [removed: [96](#s6CAFD9A394595F509465A21698D8D889)] | [added: [80](#sF377BEFA160F55899B747D4729F6F4B2) |]

| Segment Information: | | [added: |]

| Business Descriptions, Principal Products, Principal Markets, Methods of Distribution, Seasonality and Dependence Upon Customers: | | [added: |]

| [Engineered Products and [removed: Solutions](#s897721980741509AA91C1EB1E5F27D55)] [added: Solutions](#s7BB9AE3B71F5517AB1B0219A399154DD)] | [removed: [40](#s897721980741509AA91C1EB1E5F27D55)] | [added: [40](#s7BB9AE3B71F5517AB1B0219A399154DD) |]

| [Global Rolled [removed: Products](#sE6D8C28DA2DC5B009EE2D82EDB704C9C)] [added: Products](#sE8B7C80F5165516388929DA73F4063A4)] | [removed: [41](#sE6D8C28DA2DC5B009EE2D82EDB704C9C)] | [added: [41](#sE8B7C80F5165516388929DA73F4063A4) |]

| [Transportation and Construction [removed: Solutions](#s289C21573BF751D6A556FEE3CA21E1ED)] [added: Solutions](#s18AB619887265FB2BA11A493150FD250)] | [removed: [42](#s289C21573BF751D6A556FEE3CA21E1ED)] | [added: [42](#s18AB619887265FB2BA11A493150FD250) |]

| Financial Information about Segments and [removed: Financial Information about] Geographic Areas: | | [added: |]

| [Note [removed: N.] [added: C.] Segment and Geographic Area [removed: Information](#sC28DA2D2F85059048023B340B793A9DD)] [added: Information](#s105F3B8925F15BE5A0C8BEDB34329779)] | [removed: [88](#sC28DA2D2F85059048023B340B793A9DD)] | [added: [66](#s105F3B8925F15BE5A0C8BEDB34329779) |]

Products that contributed 10% or more to consolidated revenues for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] were:

| | For the [removed: Years] [added: Year] Ended December 31, | | | | | | [added: | |]

| | [removed: 2017] [added: 2018] | | [removed: 2016] | [added: 2017] | [removed: 2015] | | [added: 2016 | |]

| [removed: Flat-rolled aluminum] [added: Innovative flat-rolled products] | [removed: 39] [added: 40] | % | [added: |] 39 | % | [removed: 42] | [added: 39 |] % |

| Fastening systems [removed: and rings] | [removed: 16] [added: 11] | % | [removed: 17] | [added: 11 |] % | [removed: 18] | [added: 12 |] % |

Arconic has no [removed: customers] [added: customer] that [removed: account] [added: accounts] for [removed: more than] 10% [added: or more] of its consolidated revenues.

Such products include fastening systems (titanium, steel, and nickel superalloys); seamless rolled rings [removed: (mostly nickel superalloys);] [added: (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.

[removed: APP produced] [added: AEN produces] investment cast [removed: airfoils] [added: airfoils, seamless rolled rings and closed-die (including isothermal) forged turbine disks] for aero engine and industrial gas [removed: turbines and] [added: turbines, as well as other] structural aero engine [removed: and airframe] components.

[removed: APP] [added: AEN] also [removed: provided] [added: provides] additive manufacturing technologies, superalloy [removed: and titanium] ingots, [added: open-die forging,] machining, performance coatings, and hot isostatic pressing for high performance parts.

[removed: AFSR produced] [added: AFS produces] aerospace fastening [removed: systems and seamless rolled rings,] [added: systems,] as well as commercial transportation fasteners.

[removed: AFE produced] [added: AES produces titanium and aluminum ingots and mill products for aerospace and] defense [removed: airframe] [added: applications and is vertically integrated to produce structural investment castings,] forgings and extrusions, [removed: such as forged bulkheads, wing] [added: for airframe, wing, aero-engine,] and landing gear components, [removed: closed-die aero engine forgings, such] as [removed: disks, and] [added: well as] lightweight drive shafts for [added: the] commercial transportation industries.

[removed: ATEP produced titanium aero ingots and mill products, and provided] [added: AES also provides] multi-material airframe subassemblies and solutions related to advanced technologies and materials, such as 3D printing and titanium aluminides.

The three [removed: new] business units are Arconic Engines; Arconic Fastening Systems; and Arconic Engineered Structures.

Arconic Engines [removed: (AE).][added: (AEN).]

For additional discussion of the [removed: EP&S's] [added: Global Rolled Products segment’s] business, see “Results of Operations—Segment Information” in [added: [Part II, Item 7.](#sABFB35B3ABC35ACA8334EDF8420839C7) (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Note [C](#s105F3B8925F15BE5A0C8BEDB34329779) to the Consolidated Financial Statements in] Part II, Item [removed: 7.][added: 8.]

between Arconic Pennsylvania and Arconic Delaware.

Alcoa Corporation stock (the “Debt-for-Equity Exchange”) and recorded a gain of $167 million.

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; and |

| • | 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.

| [Overview and Results of Operations](#sCEDBE3EE14CA562986360B6D654B3816) | | [35](#sCEDBE3EE14CA562986360B6D654B3816) |

| [Note G. Pension and Other Postretirement Benefits](#s5C3410A307745CF2B281FD3E3F45FB4C) | | [73](#s5C3410A307745CF2B281FD3E3F45FB4C) |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| Engines | 21 | % | | 21 | % | | 21 | % |

| Engineered structures | 13 | % | | 13 | % | | 14 | % |

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.

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.

(Risk Factors), Part II, Item 7.

| [Overview—Results of Operations (Earnings Summary)](#s7C5B605C79405005B1C40576BEBEE01A) | [34](#s7C5B605C79405005B1C40576BEBEE01A) |

| [Note C. Separation Transaction and Discontinued Operations](#sAE006C17BBE057CD86867EA93ECE7DB0) | [74](#sAE006C17BBE057CD86867EA93ECE7DB0) |

| [Note E. Goodwill and Other Intangible Assets](#s0237B742D02B5D7DAD5FE4DBE9E6A18D) | [78](#s0237B742D02B5D7DAD5FE4DBE9E6A18D) |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Investment castings | 15 | % | 15 | % | 15 | % |

| Other extruded and forged products | 12 | % | 12 | % | 11 | % |

See Note N to the Consolidated Financial Statements in Part II, Item 8.

(Financial Statements and Supplementary Data) for operating results of the Company’s reportable segments.

Throughout 2017, EP&S was comprised of four business units: Arconic Power and Propulsion; Arconic Fastening Systems and Rings; Arconic Forgings and Extrusions; and Arconic Titanium and Engineered Products.

Arconic Power and Propulsion (APP).

Arconic Fastening Systems and Rings (AFSR).

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 Forgings and Extrusions (AFE).

Arconic Titanium and Engineered Products (ATEP).

AE will produce 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.

AE also will provide additive manufacturing technologies, superalloy ingots, open-die forging, machining, performance coatings, and hot isostatic pressing for high performance parts.

AFS will produce aerospace fastening systems, as well as commercial transportation fasteners.

AES will produce 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 will also provide multi-material airframe subassemblies and solutions related to advanced technologies and materials, such as 3D printing and titanium aluminides.

In November 2017, Arconic announced a multi-year cooperative research agreement with Airbus to advance metal 3D printing for aircraft manufacturing.

Together, the companies will develop customized processes and parameters to produce and qualify large, structural 3D printed components, such as pylon spars and rib structures, up to approximately 1 meter (3 feet) in length.

The arrangement combines Arconic’s expertise in metal additive manufacturing and metallurgy with Airbus’s design and qualification capabilities.

In September 2017, the Company announced that Airbus and Arconic achieved a 3D printing first - the installation of a 3D printed titanium bracket on a series production Airbus commercial aircraft, the A350 XWB.

Arconic is 3D printing these parts using laser power bed technologies at its additive manufacturing facility in Austin, Texas.

This 3D printed titanium bracket is part of an ongoing arrangement between the Company and Airbus.

In 2016, Arconic announced three agreements with Airbus to produce titanium and nickel 3D printed parts for commercial aircraft, including the A320 platform and A350 XWB.

These agreements draw on Arconic’s cutting-edge 3D printing technology capabilities, including laser powder bed and electron beam processes.

| Hungary | | Eger | | Forgings |

| | | Newbury Park, CA | | Fasteners |

| | | Burlington, MA2 | | Powdered Metal Parts |

| | | Sullivan, MO | | Titanium Mill Products |

In July 2017, GRP announced a new organization, streamlining and consolidating its businesses into a single group organization structure.

For additional discussion of the Global Rolled Products segment’s business, see “Results of Operations—Segment Information” in Part II, Item 7.

In November 2017, the Company announced plans to install a new horizontal heat treat furnace at its Davenport, Iowa facility.

This new furnace will enable Arconic to heat treat longer and thicker plate than ever before, including material for its new state of the art "very thick plate stretcher."

This stretcher, the world’s largest, improves the performance of thick aluminum and aluminum-lithium plate in aerospace and industrial applications, and enables the Company to produce the largest high-strength monolithic wing ribs in the industry.

In April 2017, the Company announced the completion of the installation of the stretcher.

The most significant of these matters, the remediation of the Grasse River in Massena, NY, is discussed in the Environmental Matters section of Note [removed: K] [added: [U](#s97FF02E8251959C18AD80CCED7E73ECC)] to the Consolidated Financial Statements under the caption “Environmental [removed: Matters” on page 84.][added: Matters”.]

[removed: A purported class action complaint was filed on July 18, 2017 in the United States District Court for the Southern District of New York] [added: Arconic Inc. et al.,] against Arconic Inc., [removed: as well as] two former Arconic [removed: executives and] [added: executives,] several current and former Arconic directors, and banks that acted as underwriters for Arconic’s September 18, 2014 preferred stock [removed: offering.][added: offering (the “Preferred Offering”).]

The [removed: plaintiffs seek,] [added: consolidated amended complaint seeks,] among other things, unspecified compensatory [removed: and rescissory] damages and an award of attorney and expert fees and expenses.

On February 7, 2018, on motion from certain putative class members, the court consolidated [removed: Sullivan and] Howard [removed: v.][added: and Sullivan, closed Sullivan, and appointed lead plaintiffs in the consolidated case.]

[removed: A] [added: As previously reported, a] purported class action complaint [added: related to the Grenfell Tower fire] was filed on August 11, 2017 in the United States District Court for [added: the] Western District of Pennsylvania against Arconic [removed: Inc.,] [added: Inc.] and Klaus Kleinfeld.

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 [removed: 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 [removed: these shareholder demand letters] and [removed: consider] [added: make recommendations to] the [added: Board regarding the] appropriate course of [removed: action.][added: action with respect to these shareholder demand letters.]

As previously reported, in [removed: September 2010,] [added: July 2013,] following a [added: Spanish] corporate income tax audit covering the [removed: 2003] [added: 2006] through [removed: 2005] [added: 2009] tax years, an assessment was received [removed: as a result of Spain’s tax authorities] [added: mainly] disallowing certain interest deductions claimed by a Spanish consolidated tax group owned by the Company.

[removed: An] [added: In August 2013, the Company filed an] appeal of this assessment in Spain’s Central Tax Administrative [removed: Court by the Company] [added: Court, which] was denied in [removed: October 2013.][added: January 2015.]

[removed: However, in] [added: In] the event the Company is [removed: unsuccessful,] [added: unsuccessful in appealing the assessment to the Supreme Court of Spain,] a portion of the [removed: assessments] [added: assessment] may be offset with existing net operating losses [added: 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.

Additionally, while the tax years 2010 through 2013 are closed to audit, it is possible that the Company may receive [removed: similar] assessments for tax years subsequent to 2013.

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 [added: the Company and Alcoa Corporation for claims subject to indemnification.]

Also as previously reported, on March 1, 2012, Arconic was served with a separate multi-plaintiff action complaint involving [removed: approximately 200 individual persons alleging claims essentially identical to those set forth in the Abednego v.]

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, [removed: employment and] [added: employment,] tax [added: and antitrust] matters.

Therefore, it is possible that the Company’s liquidity or results of operations in a [removed: particular] period could be materially affected by one or more of these other matters.

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.

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 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.

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.

authorize the Company to initiate litigation against members of management, the Board and others.

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.

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.

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.

Any potential assessment for an individual tax year is not expected to be material to the Company’s consolidated operations.

Red Dust Docket Cases, (St. Croix) f/k/a Abednego, Laurie L.A., et al.

St. Croix Alumina, L.L.C., et al.

approximately 200 individual persons alleging claims essentially identical to those set forth in the Abednego v.

v.

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.

As previously reported, on June 21, 2017, the UK Environment Agency (the “Agency”) confirmed that it will prosecute Firth Rixson Metals Limited in Chesterfield (UK) Magistrates Court in relation to an environmental incident that took place on April 22, 2015 at the Company’s Glossop UK site.

It is alleged that an acid scrubber unit at the site caused a leak into the local river resulting in environmental damage, including the death of approximately 200 fish.

Arconic was not successful in persuading the Agency to drop the prosecution in lieu of an enforcement undertaking (a civil remedy) despite the fact that cyanide, a compound not used on the site, had been identified in the samples of water taken at the time.

A hearing before the Court was held on September 13, 2017 at which Firth Rixson pled guilty to the underlying offense of allowing a release to occur to the nearby stream.

A follow-up hearing was held on December 6, 2017 at which the Court accepted Firth Rixson’s guilty plea.

The Court categorized the Company’s level of culpability as negligent and the level of harm to the environment as level 2 (on a scale of 1 to 4 with 1 being the most serious).

The Court fined Firth Rixson £80,000 (converted to approximately $108,355) plus costs of approximately £19,000 (converted to $25,734).

The Company paid the fine and costs and accordingly, this matter is now closed and no further reports will be made.

Sullivan v.

Arconic Inc. et al.

The complaint alleges that statements in the registration statement for Arconic’s September 18, 2014 preferred stock offering were false and misleading in light of the subsequent Grenfell Tower fire.

The complaint also alleges that Arconic’s failure to disclose at the time of the offering that it was obtaining significant profits through sales that exposed it to substantial liability violated the federal securities laws.

On August 25, 2017, this case was dismissed by the plaintiff without prejudice and re-filed on September 15, 2017 in the United States District Court for the Western District of Pennsylvania.

Arconic Inc. et al., another case pending in the Western District of Pennsylvania (described below), and appointed lead plaintiffs in the consolidated case.

The complaint alleges that Arconic and Mr. Kleinfeld made various false and misleading statements, and omitted to disclose material information, about the Company’s business and financial prospects and, specifically, the risks of the Reynobond PE product.

The complaint alleges that the statements in Arconic’s Form 10-K for the fiscal years ended December 31, 2012, 2013, 2014, 2015 and 2016, its 2012, 2013, 2014, 2015 and 2016 Annual Reports, and its 2016 Annual Highlights Report about management’s recognition of its responsibility to conduct the Company’s affairs according to the highest standards of personal and corporate conduct and within the laws of the host countries in which it operates, and its failure to disclose that Arconic knowingly supplied highly flammable Reynobond PE cladding panels for use in construction that significantly increased the risk of property damage, injury and death, were false and misleading in violation of the federal securities laws and artificially inflated the prices of Arconic’s

securities.

The plaintiffs seek, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses.

On February 7, 2018, on motion from certain putative class members, the court consolidated Howard and Sullivan v.

Arconic Inc. et al., another case pending in the Western District of Pennsylvania (described above), and appointed lead plaintiffs in the consolidated case.

In addition, lawsuits are pending in state court in New York and federal court in Pennsylvania, initiated, respectively, by another purported shareholder and by the Company, concerning the shareholder’s claimed right, which the Company contests, to inspect the Company’s books and records related to the Grenfell Tower fire and Reynobond PE.

In December 2013, the Company filed an appeal of the assessment in Spain’s National Court.

On January 16, 2017, Spain’s National Court issued a decision in favor of the Company related to the assessment received in September 2010.

The Spanish Tax Administration did not file an appeal within the applicable period.

Based on this decision and recent confirming correspondence from the Spanish Tax Administration, the matter is now closed.

The Company will not be responsible for any assessment related to the 2003 through 2005 tax years.

Additionally, following a corporate income tax audit of the same Spanish tax group for the 2006 through 2009 tax years, Spain’s tax authorities issued an assessment in July 2013, similarly disallowing certain interest deductions.

In August 2013, the Company filed an appeal of this second assessment in Spain’s Central Tax Administrative Court, which was denied in January 2015.

The Company filed an appeal of this second assessment in Spain’s National Court in March 2015.

Spain’s National Court has not yet rendered a decision related to the assessment received in July 2013.

The assessment for the 2006 through 2009 tax years is $155 million (€130 million), including interest.

The Company believes it has meritorious arguments to support its tax position and intends to vigorously litigate the assessments through Spain’s court system.

the Company and Alcoa Corporation for claims subject to indemnification.

Abednego and Abraham cases.

As a result of the devastation caused by two hurricanes, court operations were suspended until very recently.

For The Fiscal Year Ended December 31, [removed: 2017][added: 2018]

Investor [removed: Relations------------— (212)] [added: Relations----------------(212)] 836-2758

Office of the [removed: Secretary-------—(212)] [added: Secretary-----------(212)] 836-2732

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

Large accelerated filer \[✓\] Accelerated filer \[\] Non-accelerated filer \[\] [removed: (Do not check if a smaller reporting company)]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange [added: Act).]

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 [removed: $10] [added: $8] billion.

As of February [removed: 16, 2018,] [added: 15, 2019,] there were [removed: 482,772,252] [added: 484,940,842] shares of common stock, par value $1.00 per share, of the registrant outstanding.

Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for its [removed: 2018] [added: 2019] Annual Meeting of Shareholders to be filed pursuant to Regulation 14A (Proxy Statement).

| Item 1. | [removed: [Business](#s8961812FE3B6557DA93BB763C924CA95)] [added: [Business](#sD7F49A25979D5C108C137F3E38ED38BC)] | [removed: [1](#s8961812FE3B6557DA93BB763C924CA95)] [added: [1](#sD7F49A25979D5C108C137F3E38ED38BC)] |

| Item 1A. | [Risk [removed: Factors](#sEF92B12A64DA5A03A3FD43717FAFE9C5)] [added: Factors](#s2164004AF13A5D55A823C2CE7DEA9CBF)] | [removed: [15](#sEF92B12A64DA5A03A3FD43717FAFE9C5)] [added: [14](#s2164004AF13A5D55A823C2CE7DEA9CBF)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s1216C7C9EEDF52D69519F8CD311521C5)] [added: Comments](#sAFFC204E785254B8B533A15617CEA3E9)] | [removed: [27](#s1216C7C9EEDF52D69519F8CD311521C5)] [added: [28](#sAFFC204E785254B8B533A15617CEA3E9)] |

| Item 2. | [removed: [Properties](#s543A29026AEB5A90BA9FF51EB8559FC8)] [added: [Properties](#sD020FD42886C5996A41E30AAFB1957F2)] | [removed: [27](#s543A29026AEB5A90BA9FF51EB8559FC8)] [added: [29](#sD020FD42886C5996A41E30AAFB1957F2)] |

| Item 3. | [Legal [removed: Proceedings](#s0D1FC2CCF2B45C49A620AE3E6CF2E16B)] [added: Proceedings](#sDFBFC3CE7CF75A9A86DB41AEA873831D)] | [removed: [28](#s0D1FC2CCF2B45C49A620AE3E6CF2E16B)] [added: [30](#sDFBFC3CE7CF75A9A86DB41AEA873831D)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s8E17E8542F84576ABA5E7A9FBBB4EADB)] [added: Disclosures](#sF84EFE8FFBA6519F974D16668D70A4CF)] | [removed: [30](#s8E17E8542F84576ABA5E7A9FBBB4EADB)] [added: [32](#sF84EFE8FFBA6519F974D16668D70A4CF)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sB98F32AB548D54DE9EB3E4F7E77ADC40)] [added: Securities](#s58714DD8FFBB5DD4B9AA3EC58D9FF58D)] | [removed: [31](#sB98F32AB548D54DE9EB3E4F7E77ADC40)] [added: [32](#s58714DD8FFBB5DD4B9AA3EC58D9FF58D)] |

| Item 6. | [Selected Financial [removed: Data](#s23E1D5A82DED5BC0906BA859E9BDE687)] [added: Data](#s05A7E15CFC0B5A6AAFD5AEC8B2770659)] | [removed: [33](#s23E1D5A82DED5BC0906BA859E9BDE687)] [added: [34](#s05A7E15CFC0B5A6AAFD5AEC8B2770659)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sDDF791F2F0205A229D620051C289988B)] [added: Operations](#sABFB35B3ABC35ACA8334EDF8420839C7)] | [removed: [34](#sDDF791F2F0205A229D620051C289988B)] [added: [35](#sABFB35B3ABC35ACA8334EDF8420839C7)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s6B4FA71438D951BDB3A1C0BE7DBC2D48)] [added: Risk](#s5A2C65FF4AE05C6CB68D03229C726C31)] | [removed: [57](#s6B4FA71438D951BDB3A1C0BE7DBC2D48)] [added: [51](#s5A2C65FF4AE05C6CB68D03229C726C31)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s96C756390AAD594D8A167876843B9B0F)] [added: Data](#s12DCBA6673EF51FEB21C31D760B588DE)] | [removed: [57](#s96C756390AAD594D8A167876843B9B0F)] [added: [52](#s12DCBA6673EF51FEB21C31D760B588DE)] |

| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s6E9F29277794571B8A8750433D1AE227)] [added: Disclosure](#s2CB5905A8F0E5E8BA74543EE599ACCD1)] | [removed: [113](#s6E9F29277794571B8A8750433D1AE227)] [added: [103](#s2CB5905A8F0E5E8BA74543EE599ACCD1)] |

| Item 9A. | [Controls and [removed: Procedures](#s14A7A94F89085802BBC536A01C9645CF)] [added: Procedures](#s95E849A608BA5428952060278CD039F9)] | [removed: [113](#s14A7A94F89085802BBC536A01C9645CF)] [added: [103](#s95E849A608BA5428952060278CD039F9)] |

| Item 9B. | [Other [removed: Information](#s4B5E777818F95DDE80EBE948ACFE927A)] [added: Information](#s866283CEA2F5567998B7D2097D502DE9)] | [removed: [113](#s4B5E777818F95DDE80EBE948ACFE927A)] [added: [104](#s866283CEA2F5567998B7D2097D502DE9)] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#sDE4354079F7E588CA544F10DC3ED10C2)] [added: Governance](#sFEE5A4BE7C975F7A90AA29B14CA5A1E9)] | [removed: [114](#sDE4354079F7E588CA544F10DC3ED10C2)] [added: [104](#sFEE5A4BE7C975F7A90AA29B14CA5A1E9)] |

| Item 11. | [Executive [removed: Compensation](#s0F73B656AC3958238C766F8003E7A46E)] [added: Compensation](#sF4A5070A4A055C399A6DF0C5BA7C9E34)] | [removed: [114](#s0F73B656AC3958238C766F8003E7A46E)] [added: [104](#sF4A5070A4A055C399A6DF0C5BA7C9E34)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s3BBB26BD13E4541BBBDF1022A81BC694)] [added: Matters](#s71EA23214C545D2CA55BF913E2469EC6)] | [removed: [114](#s3BBB26BD13E4541BBBDF1022A81BC694)] [added: [104](#s71EA23214C545D2CA55BF913E2469EC6)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s1EC0EC10573A54A0BCC4D183F69D24F6)] [added: Independence](#s9B754715E29D54BAABC8E0425F1AE5DB)] | [removed: [114](#s1EC0EC10573A54A0BCC4D183F69D24F6)] [added: [104](#s9B754715E29D54BAABC8E0425F1AE5DB)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s724B0ABE05295797ABB040F24B05FA43)] [added: Services](#s414DCDDCF3805BB6BA08758BD90A008C)] | [removed: [114](#s724B0ABE05295797ABB040F24B05FA43)] [added: [104](#s414DCDDCF3805BB6BA08758BD90A008C)] |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#sC2396C06F57856F79582AB78E9DC9C20)] [added: Schedules](#s32D3B62E659F552198C4EF66B82EC357)] | [removed: [115](#sC2396C06F57856F79582AB78E9DC9C20)] [added: [105](#s32D3B62E659F552198C4EF66B82EC357)] |

| Item 16. | [Form 10-K [removed: Summary](#s1CAAFC88B6885029A473A3CC8E6982D7)] [added: Summary](#s46A7144FA1535A4CB78A00000CF1397C)] | [removed: [124](#s1CAAFC88B6885029A473A3CC8E6982D7)] [added: [114](#s46A7144FA1535A4CB78A00000CF1397C)] |

10-K 1 form10k_4q18.htm 10-K

| | [Signatures](#s5F093B87505455FEA0481AC8348E1A92) | [115](#s5F093B87505455FEA0481AC8348E1A92) |

10-K 1 form10k.htm 10-K

| | | |

Act).

| | [Signatures](#s19E137604DBF5CD28395F4482AD958B0) | [125](#s19E137604DBF5CD28395F4482AD958B0) |

None.

See Notes [A](#s60CBB4B121B95CCDA4CEF49C188950F5) and [N](#s12879FEEC21A5C7093F10826CD163AEA) to the Consolidated Financial Statements in Part II, Item 8.

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

See Notes A and H to the financial statements for information on properties, plants and equipment.

See disposition of retained shares in Note [removed: C] [added: [V](#s35170AD9B0E957C38780BD844682BDD2)] 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 [removed: 12,271] [added: 11,668] as of February [removed: 16, 2018.][added: 15, 2019.]

The following graph compares the most recent five-year performance of the Company’s common stock with (1) the Standard & Poor’s [added: (S&P)] 500® [removed: Index and] [added: Index,] (2) the [removed: Standard & Poor’s] [added: S&P] 500® Materials Index, a group of 25 companies categorized by Standard & Poor’s as active in the “materials” market [added: 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, [removed: 2012,] [added: 2013,] and the reinvestment of dividends.

[removed: ][added: ]

Copyright© [removed: 2018] [added: 2019] Standard & Poor's, a division of S&P Global.

| As of December 31, | [removed: 2012 | | |] 2013 | | | [added: |] 2014 | | | [added: |] 2015 | | | [added: |] 2016 | | | [added: |] 2017 | | | [added: | 2018 | | |]

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.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| Arconic Inc. | $ | 100 | | | $ | 149.83 | | | $ | 94.62 | | | $ | 80.22 | | | $ | 119.02 | | | $ | 74.47 | |

| S&P 500® Index | 100 | | | | 113.69 | | | | 115.26 | | | | 129.05 | | | | 157.22 | | | | 150.33 | | |

| S&P 500® Materials Index | 100 | | | | 106.91 | | | | 97.95 | | | | 114.30 | | | | 141.55 | | | | 120.74 | | |

| S&P Aerospace & Defense Select Industry Index | 100 | | | | 111.43 | | | | 117.49 | | | | 139.70 | | | | 197.50 | | | | 181.56 | | |

| S&P 500® Industrials Index | 100 | | | | 109.83 | | | | 107.04 | | | | 127.23 | | | | 153.99 | | | | 133.53 | | |

The following table sets forth, for the periods indicated, the high and low sales prices and quarterly dividend amounts per share of the Company’s common stock as reported on the New York Stock Exchange, adjusted to take into account the Reverse Stock Split effected on October 6, 2016.

The prices listed below for those dates prior to November 1, 2016 reflect stock trading prices of Alcoa Inc. prior to the Separation of Alcoa Corporation from the Company on November 1, 2016, and therefore are not comparable to the Company’s post-Separation prices.

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| | 2017 | | | | | | | | | 2016 | | | | | | | | |

| Quarter | High | | | Low | | | Dividend | | | High | | | Low | | | Dividend | | |

| First | $ | 30.69 | | $ | 18.64 | | $ | 0.06 | | $ | 30.66 | | $ | 18.42 | | $ | 0.09 | |

| Second | 28.65 | | | 21.76 | | | 0.06 | | | 34.50 | | | 26.34 | | | 0.09 | | |

| Third | 26.84 | | | 22.67 | | | 0.06 | | | 32.91 | | | 27.09 | | | 0.09 | | |

| Fourth (Separation occurred on November 1, 2016) | 27.85 | | | 22.74 | | | 0.06 | | | 32.10 | | | 16.75 | | | 0.09 | | |

| Year | $ | 30.69 | | $ | 18.64 | | $ | 0.24 | | $ | 34.50 | | $ | 16.75 | | $ | 0.36 | |

| Arconic Inc. | $ | 100 | | $ | 124.15 | | $ | 186.02 | | $ | 117.48 | | $ | 99.40 | | $ | 147.47 | |

| S&P 500® Index | 100 | | | 132.39 | | | 150.51 | | | 152.59 | | | 170.84 | | | 208.14 | | |

| S&P 500® Materials Index | 100 | | | 125.60 | | | 134.28 | | | 123.03 | | | 143.56 | | | 177.79 | | |

| For the year ended December 31, | [added: 2018 | | | |] 2017 | | | [removed: 2016] | [added: 2016] | | [removed: 2015] | | [added: 2015] | [removed: 2014] | | | [removed: 2013] [added: 2014] | | |

| Sales | $ | [removed: 12,960] [added: 14,014] | | [added: |] $ | [removed: 12,394] [added: 12,960] | | [added: |] $ | [removed: 12,413] [added: 12,394] | | [added: |] $ | [removed: 12,542] [added: 12,413] | | [added: |] $ | [removed: 11,997] [added: 12,542] | |

| Amounts attributable to Arconic: | | | | | | | | | | | | | | | | [added: | | | |]

| [removed: Loss] [added: Income (loss)] from continuing operations(1) | $ | [removed: (74] [added: 642] | [removed: )] | [added: |] $ | [removed: (1,062] [added: (74] | ) | [added: |] $ | [removed: (157] [added: (1,062] | ) | [added: |] $ | [removed: (61] [added: (157] | ) | [added: |] $ | [removed: (63] [added: (61] | ) |

| Income (loss) from discontinued operations(2) | — | | | [removed: 121] | [added: —] | | [removed: (165] | | [removed: )] [added: 121] | [removed: 329] | | | [removed: (2,222] [added: (165] | | ) | [added: | 329 | | |]

| Net [removed: (loss)] income [added: (loss)] | $ | [added: 642 | | | $ |] (74 | ) | [added: |] $ | (941 | ) | [added: |] $ | (322 | ) | [removed: $] | [removed: 268 | |] $ | [removed: (2,285] [added: 268] | [removed: )] |

| [removed: (Loss) earnings] [added: Earnings (loss)] per share attributable to Arconic common shareholders:(3) | | | | | | | | | | | | | | | | [added: | | | |]

| Basic: | | | | | | | | | | | | | | | | [added: | | | |]

| [removed: Loss] [added: Income (loss)] from continuing operations | $ | [removed: (0.28] [added: 1.33] | [removed: )] | [added: |] $ | [removed: (2.58] [added: (0.28] | ) | [added: |] $ | [removed: (0.54] [added: (2.58] | ) | [added: |] $ | [removed: (0.21] [added: (0.54] | ) | [added: |] $ | [removed: (0.18] [added: (0.21] | ) |

| Income (loss) from discontinued operations | — | | | [removed: 0.27] | [added: —] | | [removed: (0.39] | | [removed: )] [added: 0.27] | [removed: 0.85] | | | [removed: (6.23] [added: (0.39] | | ) | [added: | 0.85 | | |]

| Net [removed: (loss)] income [added: (loss)] | $ | [added: 1.33 | | | $ |] (0.28 | ) | [added: |] $ | (2.31 | ) | [added: |] $ | (0.93 | ) | [removed: $] | [removed: 0.64 | |] $ | [removed: (6.41] [added: 0.64] | [removed: )] |

| Diluted: | | | | | | | | | | | | | | | | [added: | | | |]

| Income (loss) from discontinued operations | — | | | [removed: 0.27] | [added: —] | | [removed: (0.39] | | [removed: )] [added: 0.27] | [removed: 0.84] | | | [removed: (6.23] [added: (0.39] | | ) | [added: | 0.84 | | |]

| Net [removed: (loss)] income [added: (loss)] | $ | [added: 1.30 | | | $ |] (0.28 | ) | [added: |] $ | (2.31 | ) | [added: |] $ | (0.93 | ) | [removed: $] | [removed: 0.63 | |] $ | [removed: (6.41] [added: 0.63] | [removed: )] |

| Cash dividends declared per common [removed: share(3)] [added: share(1)] | $ | 0.24 | | [added: |] $ | [removed: 0.36] [added: 0.24] | | [added: |] $ | 0.36 | | [added: |] $ | 0.36 | | [added: |] $ | 0.36 | |

| Total assets | [added: 18,693 | | | |] 18,718 | | | [removed: 20,038] | [added: 20,038] | | [removed: 36,477] | | [added: 36,477] | [removed: 37,298] | | | [removed: 35,623] [added: 37,298] | | |

| Total debt | [added: 6,330 | | | |] 6,844 | | | [removed: 8,084] | [added: 8,084] | | [removed: 8,827] | | [added: 8,827] | [removed: 8,445] | | | [removed: 7,826] [added: 8,445] | | |

| Capital expenditures: | | | | | | | | | | | | | | | | [added: | | | |]

| Capital expenditures—continuing operations | [added: 768 | | | |] 596 | | | [removed: 827] | [added: 827] | | [removed: 789] | | [added: 789] | [removed: 775] | | | [removed: 626] [added: 775] | | |

| Capital expenditures—discontinued operations | — | | | [removed: 298] | [added: —] | | [removed: 391] | | [added: 298] | [removed: 444] | | | [removed: 567] [added: 391] | | | [added: | 444 | | |]

| Total capital expenditures | $ | [removed: 596] [added: 768] | | [added: |] $ | [removed: 1,125] [added: 596] | | [added: |] $ | [removed: 1,180] [added: 1,125] | | [added: |] $ | [removed: 1,219] [added: 1,180] | | [added: |] $ | [removed: 1,193] [added: 1,219] | |

| (1) | Calculated from the accompanying Statement of Consolidated Operations as [removed: Loss] [added: 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 [removed: (loss)] from discontinued operations after income taxes less Net income from discontinued operations attributable to noncontrolling interests. |

| (3) | Per share data [removed: for all periods presented] has been retroactively restated to reflect the 1-for-3 reverse stock split which became effective on October 6, 2016 (see Note [removed: O] [added: [I](#s7F2B464684495A5799A0361F69764227)] to the Consolidated Financial Statements in Part [removed: II] [added: II,] Item [removed: 8] [added: 8. (Financial Statements and Supplementary Data)] of this Form 10-K). |

| (4) | Cash provided from [added: (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 [removed: A] [added: [A](#s60CBB4B121B95CCDA4CEF49C188950F5)] to the Consolidated Financial Statements in Part [removed: II] [added: II,] Item [removed: 8] [added: 8. (Financial Statements and Supplementary Data)] of this Form 10-K). [added: 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](#s60CBB4B121B95CCDA4CEF49C188950F5) 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 [removed: II Item 7 and the Consolidated Financial Statements and Notes in Part II] [added: II,] Item [removed: 8 of this Form 10-K.][added: 7.]

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| | | | | | | | | | | | | | | | | | | | |

| Income (loss) from continuing operations | $ | 1.30 | | | $ | (0.28 | ) | | $ | (2.58 | ) | | $ | (0.54 | ) | | $ | (0.21 | ) |

| Cash provided from (used for) operations(4) | 217 | | | | (39 | | ) | | 95 | | | | 764 | | | | 1,674 | | |

and the Consolidated Financial Statements and Notes in Part II, Item 8.

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

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| Cash provided from operations(4) | 701 | | | 870 | | | 1,582 | | | 1,674 | | | 1,578 | | |

Based on the assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 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, [removed: 2017] [added: 2018] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

We have audited the accompanying consolidated balance sheets of Arconic Inc. and its subsidiaries [added: (the "Company")] as of December 31, [removed: 2017] [added: 2018] and [removed: December 31, 2016,] [added: 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, [removed: 2017,] [added: 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, [removed: 2017,] [added: 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, [removed: 2017] [added: 2018] and [removed: December 31, 2016,] [added: 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2017] [added: 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, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [removed: ("PCAOB")] [added: (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.

[removed: February 23,] [added: |] 2018 [added: | | | | | | | | | | | | | | | |]

| For the year ended December 31, | [removed: 2017] [added: 2018] | | | [removed: 2016] | [added: 2017] | | [removed: 2015] | | [added: 2016] | [added: | |]

| [removed: Sales (N)] [added: Consolidated sales] | $ | [removed: 12,960] [added: 14,014] | | [added: |] $ | [removed: 12,394] [added: 12,960] | | [added: |] $ | [removed: 12,413] [added: 12,394] | |

| Cost of goods sold (exclusive of expenses below) | [removed: 10,357 | | | 9,811 | | | 10,104] [added: 5,655] | | |

| Selling, general administrative, and other expenses [removed: (C)] | [removed: 731 | | | 942 | | | 765] [added: 164] | | |

| Research and development [removed: expenses] | [removed: 111 | | | 132 | | | 169] [added: 28] | | |

| Provision for depreciation and amortization | [removed: 551] [added: 576] | | | [removed: 535] | [added: 551] | | [removed: 508] | | [added: 535] | [added: | |]

| Impairment of goodwill [removed: (A and E)] | [removed: 719] [added: —] | | | [removed: —] | [added: (719] | | [removed: 25] [added: )] | | [added: —] | [added: | |]

| Restructuring and other charges [removed: (D)] | [removed: 165] [added: (9] | | [added: )] | [removed: 155] | [added: (165] | | [removed: 214] [added: )] | | [added: (155] | [added: | ) |]

| Interest expense [removed: (S)] | [removed: 496] [added: (378] | | [added: )] | [removed: 499] | [added: (496] | | [removed: 473] [added: )] | | [added: (499] | [added: | ) |]

[removed: |] Other [removed: income, net (L) | (640 | | ) | (94 | | ) | (28 | | ) |][added: Expense (Income), Net]

| Income from continuing operations before income taxes | [removed: 470] [added: 868] | | | [removed: 414] | [added: 470] | | [removed: 183] | | [added: 414] | [added: | |]

| Provision for income taxes [removed: (Q)] [added: ([H](#sF377BEFA160F55899B747D4729F6F4B2))] | [removed: 544] [added: 226] | | | [removed: 1,476] | [added: 544] | | [removed: 339] | | [added: 1,476] | [added: | |]

| [removed: Loss] [added: Income (loss)] from continuing operations after income taxes | [removed: (74] [added: 642] | | [removed: )] | [removed: (1,062] | [added: (74] | [added: |] ) | [removed: (156] | [added: (1,062] | [added: |] ) |

| Income [removed: (loss)] from discontinued operations after income taxes [removed: (C)] | [removed: — | | |] 184 | | | [removed: (41 | | ) |]

| Net [removed: loss] [added: income (loss)] | [removed: (74] [added: 642] | | [removed: )] | [removed: (878] | [added: (74] | [added: |] ) | [removed: (197] | [added: (878] | [added: |] ) |

| Less: Net income from [removed: continuing] [added: discontinued] operations attributable to noncontrolling interests | [removed: — | | | — | | | 1] [added: 63] | | |

| Less: Net income from discontinued operations attributable to noncontrolling interests [removed: (C)] [added: ([V](#s35170AD9B0E957C38780BD844682BDD2))] | — | | | [removed: 63] | [added: —] | | [removed: 124] | | [added: 63] | [added: | |]

| Net [removed: loss] [added: income (loss)] Attributable to Arconic | $ | [removed: (74] [added: 642] | [removed: )] | [added: |] $ | [removed: (941] [added: (74] | ) | [added: |] $ | [removed: (322] [added: (941] | ) |

| Amounts Attributable to Arconic Common Shareholders [removed: (P):] [added: ([J](#s0242630D281959EB857CF99BC63FF5C0)):] | | | | | | | | | | [added: | |]

| Net [removed: loss] [added: income (loss)] | $ | [removed: (127] [added: 651] | [removed: )] | [added: |] $ | [removed: (1,010] [added: (127] | ) | [added: |] $ | [removed: (391] [added: (1,010] | ) |

| [removed: (Loss) earnings] [added: Earnings (loss)] per share—basic: | | | | | | | | | | [added: | |]

| Continuing operations | $ | [removed: (0.28] [added: 1.33] | [removed: )] | [added: |] $ | [removed: (2.58] [added: (0.28] | ) | [added: |] $ | [removed: (0.54] [added: (2.58] | ) |

| Discontinued operations | — | | | [removed: 0.27] | [added: —] | | [removed: (0.39] | | [removed: )] [added: 0.27] | [added: | |]

| Net [removed: loss] [added: earnings (loss)] per share-basic | $ | [removed: (0.28] [added: 1.33] | [removed: )] | [added: |] $ | [removed: (2.31] [added: (0.28] | ) | [added: |] $ | [removed: (0.93] [added: (2.31] | ) |

| [removed: (Loss) earnings] [added: Earnings (loss)] per share—diluted | | | | | | | | | | [added: | |]

| Net [removed: loss] [added: earnings (loss)] per share-diluted | $ | [removed: (0.28] [added: 1.30] | [removed: )] | [added: |] $ | [removed: (2.31] [added: (0.28] | ) | [added: |] $ | [removed: (0.93] [added: (2.31] | ) |

Statement of Consolidated Comprehensive [removed: (Loss)] Income [added: (Loss)]

| | Arconic | | | | | | | | | | [added: | |] Noncontrolling Interests | | | | | | | | | | [added: | |] Total | | | | | | | | | [added: | |]

| For the year ended December 31, | [added: 2018 | | | |] 2017 | | | [added: |] 2016 | | | [removed: 2015] | [added: 2018] | | | [added: |] 2017 | | | [removed: 2016] | [added: 2016] | | [removed: 2015] | | [added: 2018] | | [removed: 2017] | | [added: 2017] | [removed: 2016] | | | [removed: 2015] [added: 2016] | | |

| Net [removed: (loss)] income [added: (loss)] | $ | [added: 642 | | | $ |] (74 | ) | [added: |] $ | (941 | ) | [added: |] $ | [removed: (322] [added: —] | [removed: )] | | $ | — | | [added: |] $ | 63 | | [added: |] $ | [removed: 125] [added: 642] | | | $ | (74 | ) | [removed: $] | [removed: (878 | ) |] $ | [removed: (197] [added: (878] | ) |

| Other comprehensive [removed: (loss) income,] [added: income (loss),] net of tax [removed: (B):] [added: ([K](#s5F079C18089D5783B54A8C301385BC04)):] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits | [added: 255 | | | |] (220 | | ) | [added: |] (479 | | ) | [removed: (10] | [added: —] | [removed: )] | | [added: |] — | | | [added: |] (3 | | ) | [removed: 8] | [added: 255] | | | [added: |] (220 | | ) | [removed: (482] | [removed: | ) | (2] [added: (482] | | ) |

| /s/ John C. Plant |

| John C. Plant Chairman and Chief Executive Officer |

February 21, 2019

| Sales ([B](#s99844a1763d7413da8afceed68271b91) and [C](#s105F3B8925F15BE5A0C8BEDB34329779)) | $ | 14,014 | | | $ | 12,960 | | | $ | 12,394 | |

| Operating income | 1,325 | | | | 480 | | | | 954 | | |

| Continuing operations | $ | 1.30 | | | $ | (0.28 | ) | | $ | (2.58 | ) |

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| | | | | | | | | | | | |

| For the year ended December 31, | 2018 | | | | 2017 | | | | 2016 | | |

| Operating activities | | | | | | | | | | | |

| Impairment of goodwill ([A](#s60CBB4B121B95CCDA4CEF49C188950F5) and [O](#s608B5DED10B75767AFFC2ECF9CFCCC37)) | — | | | | 719 | | | | — | | |

| (Increase) in receivables ([A](#s60CBB4B121B95CCDA4CEF49C188950F5)) | (1,142 | | ) | | (915 | | ) | | (1,016 | | ) |

| Premiums paid on early redemption of debt ([A](#s60CBB4B121B95CCDA4CEF49C188950F5) and [P](#sB11988FB6568522FB46676EBD7EDB776)) | (17 | | ) | | (52 | | ) | | (3 | | ) |

| Cash receipts from sold receivables ([A](#s60CBB4B121B95CCDA4CEF49C188950F5) and [L](#sC6358D2470625B8E90534B63F1040010)) | 1,016 | | | | 792 | | | | 778 | | |

| Cash provided from investing activities | 565 | | | | 1,320 | | | | 591 | | |

| Cash, cash equivalents and restricted cash at beginning of year ([A](#s60CBB4B121B95CCDA4CEF49C188950F5)) | 2,153 | | | | 1,878 | | | | 1,957 | | |

| Cash, cash equivalents and restricted cash at end of year ([A](#s60CBB4B121B95CCDA4CEF49C188950F5)) | $ | 2,282 | | | $ | 2,153 | | | $ | 1,878 | |

| Adoption of accounting standard ([A](#s60CBB4B121B95CCDA4CEF49C188950F5)) | — | | | — | | | — | | | — | | | 367 | | | — | | | (367 | | ) | — | | | — | | |

| Net income | — | | | — | | | — | | | — | | | 642 | | | — | | | — | | | — | | | 642 | | |

| Other comprehensive income ([K](#s5F079C18089D5783B54A8C301385BC04)) | — | | | — | | | — | | | — | | | — | | | — | | | 85 | | | — | | | 85 | | |

| Balance at December 31, 2018 | $ | 55 | | $ | — | | $ | 483 | | $ | 8,319 | | $ | (358 | ) | $ | — | | $ | (2,926 | ) | $ | 12 | | $ | 5,585 | |

Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation (see below and Note [C](#s105F3B8925F15BE5A0C8BEDB34329779))

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.

| | | | |

| --- | --- | --- | --- |

| | | | |

See Note [N](#s12879FEEC21A5C7093F10826CD163AEA) for further information.

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.

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).

Arconic uses a

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.

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| /s/ Charles P. Blankenship |

| Charles P. Blankenship Chief Executive Officer |

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| Operating income | 326 | | | 819 | | | 628 | | |

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| --- | --- | --- | --- | --- | --- | --- |

| Investment in common stock of Alcoa Corporation (C and U) | — | | | 1,020 | | |

| Excess tax benefits from stock-based payment arrangements | — | | | — | | | (9 | | ) |

| (Increase) decrease in receivables | (124 | | ) | (238 | | ) | 212 | | |

| Cash provided from operations | 701 | | | 870 | | | 1,582 | | |

| Excess tax benefits from stock-based payment arrangements | — | | | — | | | 9 | | |

| Additions to investments | (2 | | ) | (52 | | ) | (134 | | ) |

| Other (C) | 245 | | | 16 | | | 25 | | |

| Cash provided from (used for) investing activities | 540 | | | (165 | | ) | (1,060 | | ) |

| Net change in cash and cash equivalents | 287 | | | (56 | | ) | 42 | | |

| Cash and cash equivalents at beginning of year | 1,863 | | | 1,919 | | | 1,877 | | |

| Balance at December 31, 2014 | $ | 55 | | $ | 3 | | $ | 1,304 | | $ | 9,284 | | $ | 9,379 | | $ | (3,042 | ) | $ | (4,677 | ) | $ | 2,488 | | $ | 14,794 | |

| Preferred–Class B @ $26.8750 per share | — | | | — | | | — | | | — | | | (67 | | ) | — | | | — | | | — | | | (67 | | ) |

| Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (106 | | ) | (106 | | ) |

| Contributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2 | | | 2 | | |

Certain prior year amounts have been reclassified to conform to the current year presentation.

Related Party Transactions.

Arconic buys products from and provides services to Alcoa Corporation following the separation at negotiated prices between the parties.

These transactions were not material to the financial position or results of operations of Arconic for all periods presented.

Effective May 2017, upon disposition of the remaining common stock that Arconic held in Alcoa Corporation, they are no longer deemed a related party.

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The amount of the impairment loss to be recorded is calculated as the excess of the carrying value of the assets

See Note F for information regarding asset impairments.

More than 85% of Arconic’s total goodwill at December 31, 2017 is allocated to two reporting units as follows: Arconic Fastening Systems and Rings (AFSR) ($2,221) and Arconic Power and Propulsion (APP) ($1,686) businesses, both of which are included in the Engineered Products and Solutions segment.

These amounts include an allocation of Corporate’s goodwill.

During the 2017 annual review of goodwill, management performed the qualitative assessment for one reporting unit, Arconic Wheel and Transportation Products (within the Transportation and Construction Solutions segment).

Management concluded that it was not more likely than not that the estimated fair value of the reporting unit was less than its carrying value.

As such, no further analysis was required.

However, the estimated fair value of AFE was lower than its carrying value.

In the fourth quarter of 2015, for the soft alloy extrusion business in Brazil, the estimated fair value as determined by the DCF model was lower than the associated carrying value of its reporting unit’s goodwill.

As a result, management determined that the implied fair value of the reporting unit’s goodwill was zero.

Management’s Report on Internal Control over Financial Reporting is included in Part II, Item 8 of this Form 10-K beginning on page [removed: 57.][added: [51](#s47946CEF9ECE56CCA433A8C36826A356).]

The effectiveness of Arconic’s internal control over financial reporting as of December 31, [removed: 2017] [added: 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 [removed: pages 58-59.][added: page [52](#s3FE1880AADC851E2BB950D33023D5F58).]

There have been no changes in internal control over financial reporting during the fourth quarter of [removed: 2017,] [added: 2018,] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 [removed: Registrant”.][added: Registrant.”]

(1) The Company’s consolidated financial statements, the notes thereto and the report of the Independent Registered Public Accounting Firm are on pages [removed: 59] [added: 53] through [removed: 114] [added: 102] of this report.

| [removed: [2(a).](http://www.sec.gov/Archives/edgar/data/4281/000119312514253112/d751304dex21.htm)] [added: [2(a)](http://www.sec.gov/Archives/edgar/data/4281/000119312514253112/d751304dex21.htm)] | | 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. |

| [removed: [2(b).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex21.htm)] [added: [2(b)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex21.htm)] | | 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. |

| [removed: [2(c).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex22.htm)] [added: [2(c)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex23.htm)] | | [removed: Transition Services] [added: Tax Matters] Agreement, dated as of October 31, 2016, by and between Arconic Inc. and Alcoa Corporation, incorporated by reference to exhibit [removed: 2.2] [added: 2.3] to the Company’s Current Report on Form 8-K (Commission file number 1-3610) dated November 4, 2016. |

| [removed: [2(d).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex23.htm)] [added: [2(d)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex24.htm)] | | [removed: Tax] [added: Employee] Matters Agreement, dated as of October 31, 2016, by and between Arconic Inc. and Alcoa Corporation, incorporated by reference to exhibit [removed: 2.3] [added: 2.4] to the Company’s Current Report on Form 8-K (Commission file number 1-3610) dated November 4, 2016. |

| [removed: [2(e).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex24.htm)] [added: [2(i)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex210.htm)] | | [removed: Employee Matters] [added: Massena Lease and Operations] Agreement, dated as of October 31, 2016, by and between Arconic Inc. and Alcoa Corporation, incorporated by reference to exhibit [removed: 2.4] [added: 2.10] to the Company’s Current Report on Form 8-K (Commission file number 1-3610) dated November 4, 2016. |

| [removed: [2(e)(1).](http://www.sec.gov/Archives/edgar/data/4281/000119312517062657/d293282dex2e1.htm)] [added: [2(d)(1)](http://www.sec.gov/Archives/edgar/data/4281/000119312517062657/d293282dex2e1.htm)] | | 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. |

| [removed: [2(f).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex25.htm)] [added: [2(e)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex25.htm)] | | 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. |

| [removed: [2(g).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex26.htm)] [added: [2(f)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex26.htm)] | | 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. |

| [removed: [2(h).](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex27.htm)] [added: [2(h)](http://www.sec.gov/Archives/edgar/data/4281/000119312516760363/d265925dex29.htm)] | | [removed: Alcoa Corporation to Arconic Inc. Trademark License Agreement,] [added: Master Agreement for the Supply of Primary Aluminum,] dated as of October 31, 2016, by and between Alcoa [removed: USA Corp.] [added: Corporation] and [added: its affiliates and] Arconic Inc., incorporated by reference to exhibit [removed: 2.7] [added: 2.9] to the Company’s Current Report on Form 8-K (Commission file number 1-3610) dated November 4, 2016. |