Howmet Aerospace (HWM) 10-K risk factor changes: FY2019 vs FY2018

[removed: The] [added: The] markets for Arconic’s products are highly cyclical and are influenced by a number of factors, including global economic [removed: conditions.][added: conditions.]

Arconic sells many products to industries that are cyclical, such as the aerospace, automotive, [removed: and] commercial transportation and [added: building and] construction industries, and the demand for its products is sensitive to, and quickly impacted by, demand for the finished goods manufactured by its customers in these industries, which may change as a result of changes in regional or worldwide economies, currency exchange rates, energy prices or other factors beyond its control.

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 [added: 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, the performance and cost of alternative materials, and technological improvements to aircraft.]

The military aerospace cycle is highly dependent on U.S. and foreign government funding; however, it is also driven by the effects of terrorism, a changing global political environment, U.S. foreign policy, the retirement of older [added: military] aircraft, and technological improvements to new engines.

Further, the demand for Arconic’s automotive and ground transportation products is driven by the number of vehicles produced by automotive [added: and commercial transportation] manufacturers and [removed: Arconic] [added: volume of aluminum] content per vehicle.

The automotive industry is sensitive to general economic conditions, including credit markets and interest rates, and consumer spending and [removed: preferences regarding vehicle ownership and usage, vehicle size, configuration and features.]

Automotive [added: and commercial transportation] sales and production can also be affected by other [removed: factors] [added: factors,] including the age of the vehicle fleet and related scrappage rates, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements and levels of [removed: competition.][added: competition both within and outside of the aluminum industry.]

[removed: While] Arconic [removed: believes that the long-term prospects for its products are positive, the Company] is unable to predict the future course of industry variables, the strength of the U.S., regional or global economies, or the effects of government [removed: intervention.][added: actions.]

[removed: Arconic] [added: Arconic] faces significant competition, which may have an adverse effect on [removed: profitability.][added: profitability.]

As discussed in [Part I, Item [removed: 1.](#sD7F49A25979D5C108C137F3E38ED38BC)] [added: 1.](#s4F41225C55C25FBBAC1F95009955909D)] (Business-Competitive Conditions) of this report, the markets for Arconic’s products are highly competitive.

As companies attempt to strengthen or [removed: hold] [added: maintain] their market positions in an evolving industry, companies could be acquired or [removed: may be unable to continue operations.][added: merged.]

Industry consolidation may result in stronger competitors who are better able to [added: obtain favorable terms from suppliers or who are better able to] compete as sole-source vendors for customers.

[removed: If there is consolidation among] [added: Consolidation within] Arconic’s customer [removed: base, those customers] [added: base] may [removed: be] [added: result in customers who are better] 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, [removed: customer pressures] [added: customers] require Arconic to reduce its pricing such that its gross margins are diminished, [removed: the Company] [added: Arconic] could decide not to sell certain products [removed: under such less favorable terms,] [added: to a particular customer, or not to sell certain products at all,] which would decrease Arconic’s revenue.

Consolidation [removed: among the Company’s] [added: within Arconic’s] customer base may also lead to reduced demand for Arconic’s [removed: solutions, replacement of Arconic products by the] [added: products, a] combined entity [added: replacing Arconic’s products] with those of Arconic’s competitors and cancellations of [removed: orders, each of which could have a material adverse effect on Arconic’s business, operating results and financial condition.][added: orders.]

[removed: Arconic] [added: Arconic] may be unable to develop innovative new products or implement technology initiatives [removed: successfully.][added: successfully.]

| • | identify and successfully execute on a strategy to remain an essential and sustainable element of its [removed: customer’s] [added: customers’] supply [removed: chain;] [added: chains;] |

Arconic is working on new developments for a number of strategic [removed: projects in all business segments,] [added: projects,] including [removed: additive manufacturing,] [added: advanced] alloy development, engineered finishes and product design, [removed: high speed continuous casting and] rolling technology, and other advanced manufacturing technologies.

For more [removed: information on Arconic’s research and development programs,] [added: information,] see [removed: “Research and Development”] [added: “Employees”] in [Part I, Item [removed: 1](#sD7F49A25979D5C108C137F3E38ED38BC).][added: 1](#s4F41225C55C25FBBAC1F95009955909D).]

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

While Arconic intends to continue [removed: committing substantial financial resources and effort] to [removed: the development of] [added: develop] innovative new products and services, it may not be able to successfully differentiate its products or services from those of its competitors or match the level of research and development spending of its competitors, including those developing technology to displace Arconic’s current products.

[removed: Arconic] [added: Arconic] could be adversely affected by changes in the business or financial condition or the loss of a significant customer or [removed: customers.][added: customers.]

[removed: A] [added: Additionally, a] significant downturn or deterioration in the business or financial condition or loss of a key customer [removed: or customers] supplied by Arconic could affect Arconic’s financial [removed: results in a particular period.][added: results.]

[removed: Arconic] [added: Arconic] could encounter manufacturing difficulties or other issues that impact product performance, quality or safety, which could affect Arconic’s reputation, business and financial [removed: statements.][added: statements.]

Such problems could have an adverse impact on the Company’s ability to fulfill orders or on product quality or [added: on] performance.

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

[removed: Because of approval and license] requirements applicable to manufacturers and/or their suppliers, alternatives to mitigate manufacturing disruptions may not be readily available to [removed: the Company] [added: Arconic] or its customers.

Accordingly, manufacturing problems, product defects or other risks associated with our products, [removed: including their use or application,] could result in significant costs to and liability for [removed: Arconic] [added: us] that could have a material adverse effect on [removed: its] [added: our] business, financial condition or results of operations, including the payment of potentially substantial monetary damages, fines or penalties, as well as negative publicity and damage to [removed: the Company’s] [added: our] reputation, which could adversely impact product demand and customer relationships.

[removed: Arconic’s] [added: Arconic’s] business depends, in part, on its ability to meet increased program demand successfully and to mitigate the impact of program cancellations, reductions and [removed: delays.][added: delays.]

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

[removed: Arconic] [added: Arconic] could be adversely affected by reductions in defense [removed: spending.][added: spending.]

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

Arconic has operations or activities in numerous countries and regions outside the United States, including Europe, [removed: Brazil,] Canada, China, [removed: Japan,] [added: Japan] and Russia.

As a result, [removed: the Company’s] [added: Arconic’s] global operations are affected by economic, political and other conditions in the foreign countries in which Arconic does business as well as U.S. laws regulating international trade, including:

| • | economic and commercial instability risks, including those caused by sovereign and private debt default, corruption, and changes in local government laws, regulations and policies, such as those related to tariffs, sanctions and trade [removed: barriers,] [added: barriers (including tariffs imposed by the United States as well as retaliatory tariffs imposed by China or other foreign entities),] taxation, exchange controls, employment regulations and repatriation of [added: assets or] earnings; |

| • | major public health issues such as an outbreak of a pandemic or epidemic (such as Sudden Acute Respiratory Syndrome, Avian Influenza, H7N9 virus, [added: coronavirus (including the novel strain that surfaced in Wuhan, China in December 2019, which has resulted in travel restrictions and shutdown of certain businesses in the region),] or the Ebola virus), which could cause disruptions in Arconic’s [removed: operations] [added: operations, workforce] or [removed: workforce;] [added: supply chain;] |

| • | difficulties enforcing [removed: intellectual property and] contractual rights [added: and intellectual property, including a lack of remedies for misappropriation] in certain jurisdictions; |

| • | compliance with the Foreign Corrupt Practices Act [removed: (“FCPA”)] and other anti-bribery and corruption laws; |

| • | compliance with U.S. laws concerning trade, including the International Traffic in Arms [removed: Regulations (“ITAR”),] [added: Regulations,] the Export Administration [removed: Regulations (“EAR”),] [added: Regulations,] and the sanctions, regulations and embargoes administered by the U.S. Department of Treasury’s Office of Foreign [removed: Asset Controls (“OFAC”);] [added: Assets Control;] |

| • | imposition of currency controls; [added: and] |

Risks Related to Our Business

preferences regarding vehicle ownership and usage, vehicle size, configuration and features.

The result of these developments could have a material adverse effect on Arconic’s business, operating results and financial condition.

Arconic has long-term contracts with a significant number of its customers, some of which are subject to renewal, renegotiation or re-pricing at periodic intervals or upon changes in competitive supply conditions.

Arconic’s failure to successfully renew, renegotiate or favorably re-price such agreements, or a material deterioration in or termination of these customer relationships, could result in a reduction or loss in customer purchase volume or revenue.

For example, in 2019, Boeing announced a temporary reduction in the production rate of, and subsequently announced a temporary suspension of production of, the Boeing 737 MAX aircraft, which has resulted in, and is expected to continue to result in, a reduction in sales of aluminum sheet and plate and other products that Arconic produces for Boeing airplanes.

As no firm timeline has been established for either the adjustment of Boeing’s manufacturing plans, or for returning the aircraft into service, we are currently unable to definitively quantify any such potential impact.

If Arconic’s customers reduce, terminate or delay purchases from Arconic due to the foregoing factors or otherwise and Arconic is unsuccessful in enforcing its contract rights or replacing such business in whole or in part or replaces it with less profitable business, our financial condition and results of operations may be adversely affected.

Because of approval, license and qualification

Product liability, product safety, personal injury, property damage, and recall claims and investigations may materially affect Arconic’s financial condition and damage Arconic’s reputation.

The manufacture and sale of our products exposes Arconic to potential product liability, personal injury, property damage and related claims.

These claims may arise from failure to meet product specifications, design flaws in our products, malfunction of our products, misuse of our products, use of our products in an unintended, unapproved or unrecommended manner, or use of our products with systems not manufactured or sold by us.

Moreover, events that give rise to actual, potential or perceived product safety concerns could expose Arconic to government investigations or regulatory enforcement actions.

There can be no assurance that Arconic will be successful in defending any such proceedings or that insurance available to Arconic will be sufficient to cover any losses associated with such proceedings.

An adverse outcome in one or more of these proceedings or investigations could: (i) have a material adverse effect on Arconic’s business, financial condition or profitability; (ii) impose substantial monetary damages and/or non-monetary penalties; (iii) result in additional litigation, regulatory investigations or other proceedings involving Arconic; result in loss of customers; (iv) require changes to our products or business operations; or (v) damage Arconic’s reputation and/or negatively impact the market price of Arconic’s common stock.

Product liability claims and related lawsuits and investigations, product recalls, and allegations of product safety or quality issues, regardless of their validity or ultimate outcome, may have a material adverse effect on Arconic’s business, financial condition and reputation and on our ability to attract and retain customers.

For further discussion of potential liability associated with some of our products, including proceedings and investigations relating to the June 13, 2017 fire at the Grenfell Tower in London, U.K., see [Part I, Item 3](#sE4498AA1E27A5E59AE61AB67CAF21E95).

(Legal Proceedings) of this report.

The Company’s international operations subject Arconic to complex and dynamic laws and regulations that, in some cases, could result in conflict or inconsistency between applicable laws and/or legal obligations.

Furthermore, because customers may be dependent on planned deliveries from us, customers that have to reschedule their own production due to our delivery delays may be able to pursue financial claims against us, and we may incur costs to correct such problems in addition to any liability resulting from such claims.

Despite its controls and safeguards, Arconic’s technology may be misappropriated by its employees, its competitors or other third parties.

trigger letter of credit or other collateral postings, or otherwise impair its business, financial condition, and results of operations.

The major credit rating agencies evaluate our creditworthiness and give us specified credit ratings.

These ratings are based on a number of factors, including our financial strength and financial policies as well as our strategies, operations, execution and timeliness of financial reporting.

These credit ratings are limited in scope, and do not address all material risks related to investment in us, but rather reflect only the view of each rating agency at the time the rating is issued.

Nonetheless, the credit ratings Arconic receives impact our borrowing costs as well as the terms upon which we will have access to capital.

Failure to maintain sufficiently high credit ratings could adversely affect the interest rate in future financings, our liquidity or our competitive position, and could also restrict our access to capital markets.

On February 7, 2019, S&P placed the rating on negative credit watch and, subsequently, on April 26, S&P affirmed the long-term debt rating at BBB- but changed the outlook to negative.

On January 28, 2020, S&P affirmed the long-term debt rating at BBB- but changed the outlook to stable in expectation of the Separation impact.

Moody’s ratings and outlooks were affirmed on November 2, 2017, October 8, 2018, and October 9, 2019.

On January 24, 2020, Moody’s affirmed the long-term debt rating at Ba2 but changed the outlook to negative.

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

On September 27, 2018, Fitch changed the outlook from stable to positive (ratings and outlook were affirmed on October 8, 2019).

Limitations on Arconic’s ability to access the global capital markets, a reduction in Arconic’s liquidity or an increase in borrowing costs could materially and adversely affect Arconic’s ability to maintain or grow its business, which in turn may adversely affect its financial condition, liquidity and results of operations.

liabilities, which may result in a significant charge to shareholders’ equity.

(Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Note [F](#s2DB91AED44975C118BBB41DF8AEE9BFF) to the Consolidated Financial Statements-Pension and Other Postretirement Benefits in [Part II, Item 8](#sF2632D3E53605B1596C942D86FA3D8E0).

national governments, or other stakeholders.

Further, since metal prices fluctuate among the various exchanges, Arconic competitors may enjoy a metal price advantage from time to time.

Arconic is dependent on a limited number of suppliers for a substantial portion of our aluminum and certain other raw materials essential to our operations.

Arconic has supply arrangements with a limited number of suppliers for aluminum and other raw materials.

aircraft purchasers to obtain required financing and numerous other factors including the effects of terrorism, health and safety concerns, environmental constraints imposed upon aircraft operators, the retirement of older aircraft, and technological improvements to new engines.

| | |

| --- | --- |

If Arconic is unsuccessful in replacing business lost from such customers, profitability may be adversely affected.

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

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.

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.

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

The major rating agencies routinely evaluate Arconic’s credit profile and assign debt ratings to the Company.

This evaluation is based on a number of factors, which include financial strength, business and financial risk, as well as transparency with rating agencies and timeliness of financial reporting.

On February 7, 2019, S&P changed the outlook from stable to negative credit watch.

a contraction in the Company’s liquidity, or other factors could potentially trigger such actions.

(Financial Statements and Supplementary Data).

effect, could affect the Company’s tax expense and profitability.

implementation process in which ideas are executed in a disciplined manner to generate savings, and operating cost reductions, including, among others, those announced on February 8, 2019, in connection with the Company’s ongoing strategic and portfolio review.

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

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

regulatory requirements or interpretations, or outcomes of significant legal proceedings or investigations adverse to Arconic.

This could lead to reduced sales or market acceptance of the Company’s products.

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

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

Arconic currently is, and may in the future become, subject to claims and litigation alleging violations of the securities laws.

Arconic is generally obliged, to the extent permitted by law, to indemnify its current and former directors and officers who are named as defendants in these types of lawsuits.

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

Arconic may be unable to achieve the full strategic and financial benefits expected to result from the Separation, or such benefits may be delayed or not occur at all.

The Separation is expected to provide the following benefits, among others: (i) enabling the management of each company to pursue more effectively its own distinct operating priorities and strategies, to focus on strengthening its core business and its unique needs, and to pursue distinct and targeted opportunities for long-term growth and profitability; (ii) permitting each company to allocate its financial resources to meet the unique needs of its own business, allowing each company to intensify its focus on its distinct strategic priorities and to pursue more effectively its own distinct capital structures and capital allocation strategies; (iii) allowing each company to articulate more effectively a clear investment thesis to attract a long-term investor base suited to its business and providing investors with two distinct and targeted investment opportunities; (iv) creating an independent equity currency tracking each company's underlying business, affording Arconic and Alcoa Corporation direct access to the capital markets and facilitating each company’s ability to consummate future acquisitions or other restructuring transactions utilizing its common stock; (v) allowing each company more consistent application of incentive structures and targets, due to the common nature of the underlying businesses; and (vi) separating and simplifying the structures required to manage two distinct and differing underlying businesses.

Arconic may not achieve these and other anticipated benefits for a variety of reasons, including, among others: (i) Arconic may be more susceptible to market fluctuations and other adverse events than if Alcoa Corporation were still a part of the Company because Arconic’s business is less diversified than it was prior to the completion of the Separation; and (ii) as a smaller, independent company, Arconic may be unable to obtain certain goods, services and technologies at prices or on terms as favorable as those it obtained prior to completion of the Separation.

If Arconic fails to achieve some or all of the benefits expected to result from the Separation, or if such benefits are delayed, it could have a material adverse effect on Arconic’s competitive position, business, financial condition, results of operations and cash flows.

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

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

The Separation and Distribution Agreement, the Tax Matters Agreement and the Employee Matters Agreement, together with the documents and agreements by which the internal reorganization of the

Company prior to the Separation was effected, determined the allocation of assets and liabilities between the companies following the Separation for those respective areas and included any necessary indemnifications related to liabilities and obligations.

Arconic will rely on Alcoa Corporation to satisfy its performance and payment obligations under these agreements.

If Alcoa Corporation is unable or unwilling to satisfy its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties and/or losses.

In connection with the Separation from Alcoa Corporation, Alcoa Corporation has agreed to indemnify Arconic for certain liabilities and Arconic has agreed to indemnify Alcoa Corporation for certain liabilities.

[removed: Overview][added: Overview]

[removed: Our Business][added: Our Business]

Arconic [added: Inc.] (“Arconic” or the “Company”) is a global leader in lightweight metals engineering and manufacturing.

Based upon the country where the point of sale occurred, the United States and Europe generated [removed: 65%] [added: 67%] and [removed: 24%,] [added: 23%,] respectively, of Arconic’s sales in [removed: 2018.][added: 2019.]

Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in [removed: these countries.][added: countries with such operating activities.]

[removed: Management] [added: Management] Review [removed: of 2018 and] [added: of 2019 and] Outlook for the [removed: Future][added: Future]

[removed: In 2018, Arconic’s revenues increased 8% over 2017 as a] [added: The increase was the] result of [removed: higher volumes across all segments including] strong volume growth [added: across both segments, primarily] in [added: the] aerospace engines and defense, automotive, commercial transportation, industrial, and building and construction end markets; higher aluminum [removed: pricing] [added: prices] and favorable product mix primarily [removed: impacting] [added: in] the [removed: Global Rolled Products] [added: GRP] segment; and favorable foreign currency movements; partially offset by a decline in volumes in the industrial gas turbine end market; lower sales of [removed: $90] [added: $190] from the [removed: divestiture] [added: divestitures] of the Latin America extrusions [removed: business (divested in April 2018), $54 from the divestiture of] [added: business,] the rolling mill in Fusina, Italy (divested in March 2017), and [removed: $46 from] the ramp down of Arconic's North American packaging [removed: operations (completed in December 2018);] [added: operations;] and costs of $38 in 2018 related to settlements of certain customer claims primarily related to product introductions.

Net income was $642 [removed: in 2018] [added: for 2018, or $1.30 per diluted share,] compared to a Net loss of $74 [removed: in 2017.][added: for 2017, or $0.28 per share.]

This focus and the related results enabled Arconic to end [removed: 2018] [added: 2019] with a solid financial position.

The following financial information reflects certain key [removed: measures] [added: highlights] of Arconic’s [removed: 2018] [added: 2019] results:

| • | Sales of [removed: $14,014,] [added: $14,192,] up [removed: 8%] [added: 1%] from [removed: 2017,] [added: 2018,] with growth [removed: from all segments as] [added: in] key end [removed: markets remained healthy,] [added: markets,] and Net income of [removed: $642,] [added: $470,] or [removed: $1.30] [added: $1.03] per diluted share; |

| • | Cash on hand at the end of the year of [removed: $2,277;] [added: $1,648;] and |

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

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: Earnings Summary][added: Earnings Summary]

[removed: The increase was the] [added: In 2019, Sales increased 1% over 2018 as a] result of [removed: strong] volume growth [removed: across all segments, primarily] in the [removed: aerospace engines and defense, automotive,] [added: aerospace, packaging,] commercial transportation, [removed: industrial,] and [removed: building and construction] [added: industrial] end markets; [removed: higher aluminum prices] and favorable product [removed: mix primarily] [added: pricing] in the Global Rolled Products [removed: segment;] [added: (GRP)] and [removed: favorable foreign currency movements;] [added: Engineered Products and Forgings (EP&F) segments;] partially offset by [removed: a decline in volumes in the industrial gas turbine end market;] lower [added: aluminum prices; and lower] sales of [removed: $190] [added: $216] from [removed: the] divestitures of [added: forgings businesses in] the [added: United Kingdom (divested in December 2019) and Eger, Hungary (divested in December 2018),] Latin America extrusions [removed: business] (divested in April 2018), [removed: the rolling mill in Fusina, Italy (divested in March 2017),] and the [added: completed] ramp down of Arconic's North American packaging operations [removed: (completed in] [added: (in] December [removed: 2018); and costs of $38 in 2018 related to settlements of certain customer claims primarily related to product introductions.][added: 2018).]

The increase was the result of higher aluminum prices; unfavorable aerospace product mix; higher transportation costs; manufacturing inefficiencies in [removed: the] Engineered [removed: Structures business;] [added: Structures;] performance shortfalls in the [removed: disks operations;] [added: Disks asset group;] costs related to settlements of certain customer claims noted above; and the impact of a [removed: $23] charge related to a physical inventory adjustment at one plant in the [removed: Engineered Products and Solutions] [added: GRP] segment [added: of $23] that was recorded in the second quarter of 2018.

The decrease in SG&A [added: of $111, or 16%,] was the result of proxy, advisory and governance-related costs of $58, costs related to the [removed: separation] [added: Separation] of Alcoa Inc. of $18, and costs associated with the Company’s Delaware reincorporation of $3 in 2017, none of which recurred in 2018.

R&D expenses were $103 in 2018 compared with $109 in [removed: 2017 and $130 in 2016.][added: 2017.]

The decrease [removed: in both periods] [added: of $6, or 6%,] was the result of lower spending.

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

The increase [removed: in both periods] [added: of $25, or 5%,] was primarily due to capital projects placed into service.

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

[removed: Restructuring] [added: | Layoff] and [removed: Other Charges.][added: other restructuring payments | 34 | | | | 34 | | | | — | | | | — | | | | — | | |]

[added: Restructuring and Other Charges.] Restructuring and other charges were [removed: $9] [added: $620] in [removed: 2018] [added: 2019] compared with [added: $9 in 2018 and] $165 in 2017.

[removed: In 2017,] [added: Restructuring and other charges in 2017 primarily included a charge for layoff costs of $69, including] the [removed: Company recorded] [added: separation of approximately 880 employees;] a [removed: loss on] [added: charge related to] the sale of the [removed: Fusina,] Italy rolling mill of [removed: $60] [added: $60;] and a charge for the impairment of assets associated with the sale of the Latin America extrusions business of $41.

[added: See Note [C](#sD9CA82AEB8D2531F8E367A74B8644F4A)] to the [added: to the] Consolidated Financial Statements in Part II, Item 8.

(Financial Statements and Supplementary Data) of this Form [removed: 10-K.][added: 10-K), and]

See Note [removed: [T](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9) to the] [added: [B](#s6D1A6D3CB1AE5D8F8AB3BC646DBF5A1B)] to the Consolidated Financial Statements in Part II, Item 8.

[added: |] Other [removed: Expense (Income), Net.][added: (expense) income, net | (122 | | ) | | (79 | | ) | | 486 | | |]

The decrease in [removed: other] [added: Other] income, net of $565 was the result of gains recorded during 2017 related to the sale of a portion of Arconic’s investment in Alcoa Corporation common stock of $351, the Debt-for-Equity Exchange (in April and May 2017, the Company acquired a portion of its outstanding notes held by two investment banks (the “Investment Banks”) in exchange for cash and the Company’s remaining 12,958,767 shares (valued at $35.91 per share) in Alcoa Corporation stock and recorded a gain of $167), income [removed: of $81] associated with an adjustment to the contingent earn-out liability related to the Firth Rixson acquisition [added: of $81] (see Note [removed: [T](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9)] [added: [S](#sAB6AFBDCB1595BF083BB1852A6CBD598)] to the Consolidated Financial Statements in Part II, Item 8.

[removed: (Financial Statements and Supplementary Data) of this Form 10-K), and] income [removed: of $25] due to the reversal of a liability associated with a separation-related [removed: guarantee,] [added: guarantee of $25,] none of which recurred in 2018, and unfavorable foreign currency movements, somewhat offset by lower non-service related net periodic benefit cost and the benefit of $29 from establishing a tax indemnification receivable reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve (see Note [removed: [U](#s97FF02E8251959C18AD80CCED7E73ECC)] [added: [T](#s2A85739D7FC7592FABE89F6D193202CB)] to the Consolidated Financial Statements in Part II, Item 8.

[added: Other Expense (Income), Net.] Other [removed: income,] [added: expense,] net was [removed: $486] [added: $122] in [removed: 2017] [added: 2019] compared with [removed: Other expense, net of $41] [added: $79] in [removed: 2016.][added: 2018.]

[removed: The Company] [added: Arconic] was required to provide [removed: a guarantee] [added: guarantees related to two long-term supply agreements] for [removed: an] [added: energy for] Alcoa Corporation [removed: electricity contract] [added: facilities] in the event of an Alcoa Corporation payment default.

Arconic’s effective tax rate was 356.5% in 2016 compared with the U.S. [removed: federal statutory rate of 35%.][added: fed]

[removed: Management] [added: Arconic] anticipates that the effective tax rate in [removed: 2019] [added: 2020] will be between 26.5% and 28.5%.

However, [added: the planned Separation of Arconic, other] business portfolio actions, changes in the current economic environment, tax legislation or rate changes, currency fluctuations, ability to realize deferred tax assets, movements in stock price impacting tax benefits or deficiencies on stock-based payment awards, and the results of operations in certain taxing jurisdictions may cause this estimated rate to fluctuate.

The increase in results of $716 was due in part to the following items that occurred in 2017 but did not recur in 2018: a charge for goodwill impairment of $719 ($719 pre-tax); gains related to the sale of a portion of Arconic’s investment in Alcoa Corporation common stock and the Debt-for-Equity Exchange of $405 ($518 pre-tax); and favorable adjustments [removed: of $97 ($106 pre-tax)] to contingent earn-out and guarantee liabilities [removed: as noted below.][added: of $97 ($106 pre-tax).]

Additional favorable impacts in 2018 included: volume growth across [removed: all] [added: both] segments; lower SG&A expenses due to proxy and separation costs incurred in 2017 and not recurring in 2018, as well as lower incentive compensation accruals; lower Restructuring and other charges driven primarily by the gain on sale of the Texarkana rolling mill, offset by pension settlement charges and the loss on sale of the [removed: Eger, Hungary] forgings [removed: business;] [added: business in Hungary;] lower Interest expense due to lower debt levels; lower pension expenses; and lower Income taxes.

These favorable impacts were partially offset by unfavorable aerospace product mix, higher aluminum prices, manufacturing inefficiencies in [removed: the] Engineered [removed: Structures business,] [added: Structures,] performance shortfalls in the [removed: disks operations,] [added: Disks asset group,] settlements of certain customer claims, and an unfavorable physical inventory adjustment at one plant.

In addition, Arconic has operating activities in numerous countries and regions outside the United States, including Europe, Canada, China, Japan, and Russia.

In the segments, Segment operating profit increased 27% from 2018 due to favorable product pricing, net cost savings, lower raw material costs including aluminum price, and higher volumes, partially offset by the impact of the Tennessee plant transition to industrial production, operational challenges at one aluminum extrusions plant, and higher variable compensation costs.

| • | Total segment operating profit of $2,015, an increase of $429, or 27%, from 20181; |

| • | Cash provided from operations of $406; cash used for financing activities of $1,568, reflecting the Company’s repurchase of $1,150 of its common stock and the repayment of convertible notes in 2019; and cash provided from investing activities of $583; |

| • | Total debt of $5,940, a decrease of $390 from 2018, reflecting repayment of $403 of convertible notes in October 2019. |

The Company rapidly executed on the separation plan that was announced in February 2019 and is targeting completion of the separation on April 1, 2020.

The company will separate into two independent, publicly-traded companies, to be named Howmet Aerospace Inc. (Remain Co.) and Arconic Corporation (Spin Co.) (the “Separation of Arconic”).

Remain Co. will be comprised of the Company’s Engineered Products and Forgings businesses (engine products, fastening systems, engineered structures and forged wheels) and will be renamed Howmet Aerospace Inc. at separation and change its stock ticker from “ARNC” to “HWM.” Spin Co. will be comprised of the Company’s Global Rolled Products businesses (global rolled products, aluminum extrusions and building and construction systems) and will be held by a new company that will be named Arconic Corporation at separation and that intends to list its common stock on the New York Stock Exchange under the symbol “ARNC.”

On February 5, 2020, Arconic’s Board of Directors approved the completion of the Separation of Arconic by means of a pro rata distribution by the Company of all of the outstanding common stock of Arconic Corporation, with each Arconic Inc. stockholder of record as of the close of business on March 19, 2020 receiving one share of Arconic Corporation common stock for every four shares of the Company’s common stock held as of the record date.

On February 7, 2020, the Company announced that Arconic Rolled Products Corporation (the “Issuer”), which is currently a wholly-owned subsidiary of Arconic,

closed its offering of $600 aggregate principal amount of 6.125% second-lien notes due 2028.

The proceeds will be used to make a payment to Arconic to fund the transfer of certain assets to the Issuer in connection with the separation and for general corporate purposes.

On February 13, 2020, the Registration Statement on Form 10 for Arconic Rolled Products Corporation was declared effective by the Securities and Exchange Commission.

In conjunction with the Separation of Arconic, the Company realigned its reporting segments in the third quarter of 2019 by eliminating its Transportation and Construction Solutions segment and transferring the forged wheels business to the EP&F segment and transferring the building and construction systems business to the GRP segment.

The Company also executed on its plan to sell businesses that do not best fit into one of its two segments, having signed or closed on divestitures in 2019 resulting in proceeds of approximately $190.

Sales. Sales for 2019 were $14,192 compared with $14,014 in 2018, an increase of $178, or 1%.

The increase was primarily due to volume growth in the aerospace, packaging, commercial transportation, and industrial end markets; favorable product pricing and mix in the GRP segment; and favorable product pricing in the EP&F segment when fulfilling volume above contractual share, renewing contracts, and selling non-contractual spot business; partially offset by lower aluminum prices; lower sales of $216 from the completed ramp down of Arconic's North American packaging operations (in December 2018) and the divestitures of forgings businesses in the United Kingdom (divested in December 2019) and Hungary (divested in December 2018), and the Latin America extrusions business (divested in April 2018); and unfavorable foreign currency movements.

Cost of Goods Sold (COGS). COGS as a percentage of Sales was 79.1% in 2019 compared with 81.3% in 2018.

The decrease was primarily due to lower raw material costs including aluminum prices; net cost savings; favorable product pricing; and costs incurred in 2018 that did not recur in 2019 related to settlements of certain customer claims of $38 noted above and a charge related to a physical inventory adjustment at one plant in the GRP segment of $23.

These positive impacts were partially offset by unfavorable product mix; a charge for environmental remediation at Grasse River of $25; the impairment of energy business assets of $10; and a charge primarily for a one-time signing bonus for employees associated with the collective bargaining agreement negotiation of $9.

In June of 2019 the Company and the United Steelworkers reached a tentative three-year labor agreement covering approximately 3,400 employees at four U.S. locations; the previous labor agreement expired on May 15, 2019.

The tentative agreement was ratified on July 11, 2019.

Additionally, in 2019, the Company sustained a fire at a fasteners plant in France and recorded charges of $26 for higher operating costs, equipment and inventory damage, and repairs and cleanup costs.

The Company submitted an insurance claim and received a partial settlement of $25, which was in excess of its $10 insurance deductible.

The insurance claim included $8 of margin not recognized from lost revenue due to the fire.

The Company anticipates a charge of approximately $10 to $15 in the first quarter of 2020, with additional impacts in subsequent quarters as the business continues to recover from the fire, which are also expected to be covered by insurance proceeds.

Selling, General Administrative, and Other Expenses (SG&A). SG&A expenses were $704, or 5.0% of Sales, in 2019 compared with $604, or 4.3% of Sales, in 2018.

The increase in SG&A of $100, or 17%, was primarily due to costs associated with the planned Separation of Arconic of $78 and higher annual incentive compensation accruals and executive compensation costs, partially offset by lower costs driven by overhead cost reductions and lower net legal and other advisory costs related to Grenfell Tower of $10, primarily due to insurance reimbursements.

Research and Development Expenses (R&D). R&D expenses were $70 in 2019 compared with $103 in 2018.

The decrease of $33, or 32%, was primarily due to the consolidation of the Company's primary R&D facility in conjunction with ongoing cost reduction efforts.

Provision for Depreciation and Amortization (D&A). The provision for D&A was $536 in 2019 compared with $576 in 2018.

The decrease of $40, or 7%, was primarily due to the impact of divestitures, as well as asset impairments in the EP&F segment during the second quarter of 2019 (see Note [M](#sC671688584E8565FB69B015B8859DB9B) to the Consolidated Financial Statements in Part II, Item 8.

Restructuring and other charges in 2019 primarily included asset impairments of $556, related to the Disks asset group of $428, agreements to sell the Company’s Brazilian rolling mill operations, the U.K. forgings business, and a small additive business of $112, and a trade name intangible asset and properties, plant, and equipment related to the Company’s primary research and development facility of $25; and a charge for layoff costs of $103, including the separation of approximately 1,310 employees; partially offset by a benefit from the elimination of the life insurance benefit for the U.S. salaried and non-bargaining hourly retirees of the Company and its subsidiaries of $58; and a gain for contingent consideration received from the sale of the Texarkana rolling mill of $20.

Restructuring and other charges in 2018 primarily included a charge for pension and other postretirement benefits net settlements and curtailments of $91; a loss on the sale of the Hungary forgings business of $43; and a charge for layoff costs of $20, including the separation of approximately 125 employees; partially offset by a gain on the asset sale of the Texarkana rolling mill of $154.

Interest Expense. Interest expense was $338 in 2019 compared with $378 in 2018.

The decrease of $40, or 11%, was primarily due to lower debt outstanding, driven by the repayment of the aggregate outstanding principal amount of the 1.63% Convertible Notes of approximately $403 on October 15, 2019, as well as costs incurred of $19 in 2018 related to the premium paid on the early redemption of the Company’s then outstanding 5.72% Senior Notes due 2019 that did not recur in 2019.

The increase of $43 was primarily due to an increase in deferred compensation arrangements and related investment performance and the benefit recognized in 2018 from establishing a tax indemnification receivable reflecting Alcoa Corporation’s 49% share of a Spanish tax reserve of $29 that did not recur in 2019, partially offset by favorable foreign currency movements.

Income Taxes. Arconic’s effective tax rate was 18.3% in 2019 compared with the U.S. federal statutory rate of 21%.

The effective rate differs from the U.S. federal statutory rate primarily as a result of a $94 net benefit related to a U.S. tax election which caused the deemed liquidation of a foreign subsidiary’s assets into its U.S. tax parent, a $24 net benefit associated with the deduction of foreign taxes that were previously claimed as a U.S. foreign tax credit, and a $12 net benefit for foreign tax rate changes, partially offset by the tax impact of $89 of non-deductible executive compensation and transaction costs, $53 of impairment charges related to the Company’s Brazilian rolling mill operations and other foreign losses with no tax benefit, a $14 charge for U.S. state taxes, and by foreign income subject to U.S. taxes.

Net Income. Net income was $470 for 2019, or $1.03 per diluted share, compared to Net income of $642 for 2018, or $1.33 per share.

In addition, Arconic has operating activities in Brazil, Canada, China, Japan, and Russia, among others.

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.

There were several significant items that impacted the fourth quarter of 2018.

The Company recognized proceeds of approximately $300 in cash and recorded a gain of $119 ($154 pre-tax) on the sale of the Texarkana rolling mill.

The Company recorded a loss of $39 ($43 pre-tax) on the sale of the Eger, Hungary forgings business.

The Company also recorded a charge of $72 ($92 pre-tax) for pension plan settlement charges associated with significant lump sum payments made to participants.

Additionally, the Company recorded several discrete tax items, including benefits related to the reversal of a foreign deferred tax liability of $74 as well as the release of valuation allowances and revaluation of deferred taxes.

| | |

| --- | --- |

| • | 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; |

| • | Total debt of $6,330, a decrease in total debt of $514 from 2017. |

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.

[removed: General][added: General]

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

[removed: Forward-Looking Statements][added: Forward-Looking Statements]

For a discussion of some of the specific factors that may cause Arconic’s actual results to differ materially from those projected in any forward-looking statements, see the following sections of this report: [Part I, Item [removed: 1A.](#s2164004AF13A5D55A823C2CE7DEA9CBF)] [added: 1A.](#s37AD6CCE74325EF2812B0C3EAC0942D4)] (Risk Factors), [Part II, Item [removed: 7.](#sABFB35B3ABC35ACA8334EDF8420839C7)] [added: 7.](#s25186CBC7A5D52B2907CADC3BA1E73D5)] (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 [removed: [U](#s97FF02E8251959C18AD80CCED7E73ECC)] [added: [T](#s2A85739D7FC7592FABE89F6D193202CB)] to the Consolidated Financial Statements in Part II, Item 8.

[removed: Overview][added: Overview]

Arconic [added: Inc.] (“Arconic” or the “Company”) is a global leader in lightweight metals engineering and manufacturing.

Based upon the country where the point of sale occurred, the United States and Europe generated [removed: 65%] [added: 67%] and [removed: 24%,] [added: 23%,] respectively, of Arconic’s sales in [removed: 2018.][added: 2019.]

Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in [removed: these countries.][added: countries with such operating activities.]

[removed: Background][added: Background]

[removed: Arconic] [added: *Arconic] Inc. [removed: Reincorporation][added: Reincorporation*]

[removed: Alcoa] [added: *Alcoa] Corporation Separation [removed: Transaction][added: Transaction*]

On November 1, 2016, Alcoa Inc. completed the separation of its business into two independent, publicly traded companies (the [removed: “Separation”)] [added: “Separation of Alcoa”)] – Alcoa Corporation and Arconic Inc. (the new name for Alcoa Inc.).

Following the [removed: Separation,] [added: Separation of Alcoa,] Alcoa Corporation holds the Alumina and Primary Metals segments, the rolling mill at the Warrick, Indiana operations and the 25.1% stake in the Ma’aden Rolling Company in Saudi Arabia previously held by the Company.

The Separation [added: of Alcoa] was effected by a pro rata distribution of 80.1% of the outstanding shares of Alcoa Corporation common stock to the Company’s shareholders (the [removed: “Distribution”).][added: “Distribution of Alcoa”).]

The Company did not issue fractional shares of Alcoa Corporation common stock in the [removed: Distribution.][added: Distribution of Alcoa.]

The Company distributed 146,159,428 shares of common stock of Alcoa Corporation in the Distribution [added: of Alcoa] and retained 36,311,767 shares, or approximately 19.9%, of the common stock of Alcoa Corporation immediately following the [removed: Distribution.][added: Distribution of Alcoa.]

As a result of the [removed: Distribution,] [added: Distribution of Alcoa,] Alcoa Corporation became an independent public company trading under the symbol “AA” on the New York Stock Exchange, and the Company trades under the symbol “ARNC” on the New York Stock Exchange.

The gains of $351 million and $167 million associated with the disposition of the Alcoa Corporation shares were recorded in Other [removed: Income, Net] [added: expense (income), net] in the accompanying Statement of Consolidated Operations in [Part II, Item [removed: 8](#s12DCBA6673EF51FEB21C31D760B588DE)] [added: 8](#sF2632D3E53605B1596C942D86FA3D8E0)] (Financial Statements and Supplementary Data).

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

[removed: Recent Developments][added: Recent Developments]

Management and the Board [removed: have] [added: had] 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.

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 [removed: have] [added: had] been previously identified in the strategy and portfolio review.

[removed: Description] [added: Description] of the [removed: Business][added: Business]

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

| [Overview and Results of [removed: Operations](#sCEDBE3EE14CA562986360B6D654B3816)] [added: Operations](#sFB85BCD8D4D351C391F5D3C2F20FE4C5)] | | [removed: [35](#sCEDBE3EE14CA562986360B6D654B3816)] [added: [37](#sFB85BCD8D4D351C391F5D3C2F20FE4C5)] |

| [Note [removed: D.] [added: C.] Restructuring and Other [removed: Charges](#s97C849B4BB4E52F3AE88F238930B348E)] [added: Charges](#sD9CA82AEB8D2531F8E367A74B8644F4A)] | | [removed: [70](#s97C849B4BB4E52F3AE88F238930B348E)] [added: [72](#sD9CA82AEB8D2531F8E367A74B8644F4A)] |

| [Note [removed: G.] [added: F.] Pension and Other Postretirement [removed: Benefits](#s5C3410A307745CF2B281FD3E3F45FB4C)] [added: Benefits](#sD62CE343E57E547883CCD03E28243FC5)] | | [removed: [73](#s5C3410A307745CF2B281FD3E3F45FB4C)] [added: [75](#sD62CE343E57E547883CCD03E28243FC5)] |

| [Note [removed: H.] [added: G.] Income [removed: Taxes](#sF377BEFA160F55899B747D4729F6F4B2)] [added: Taxes](#s1DC690E617575A6EB9DE2E8429251B9A)] | | [removed: [80](#sF377BEFA160F55899B747D4729F6F4B2)] [added: [82](#s1DC690E617575A6EB9DE2E8429251B9A)] |

| [Note [removed: T.] [added: S.] Acquisitions and [removed: Divestitures](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9)] [added: Divestitures](#sAB6AFBDCB1595BF083BB1852A6CBD598)] | | [removed: [96](#sE85C8D6CD8F35EAD9DF070D8D1D3FCD9)] [added: [98](#sAB6AFBDCB1595BF083BB1852A6CBD598)] |

| [Note [removed: U.] [added: T.] Contingencies and [removed: Commitments](#s97FF02E8251959C18AD80CCED7E73ECC)] [added: Commitments](#s2A85739D7FC7592FABE89F6D193202CB)] | | [removed: [97](#s97FF02E8251959C18AD80CCED7E73ECC)] [added: [100](#s2A85739D7FC7592FABE89F6D193202CB)] |

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

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

| [Note [removed: C.] [added: B.] Segment and Geographic Area [removed: Information](#s105F3B8925F15BE5A0C8BEDB34329779)] [added: Information](#s6D1A6D3CB1AE5D8F8AB3BC646DBF5A1B)] | | [removed: [66](#s105F3B8925F15BE5A0C8BEDB34329779)] [added: [67](#s6D1A6D3CB1AE5D8F8AB3BC646DBF5A1B)] |

[removed: Major] [added: Major] Product [removed: Revenues][added: Sales]

Products that contributed 10% or more to consolidated [removed: revenues] [added: sales] for the years ended December 31, [added: 2019,] 2018, [removed: 2017] and [removed: 2016,] [added: 2017,] were:

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

| | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | |

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

| Engineered structures | [removed: 13] [added: 8] | % | | 13 | % | | [removed: 14] [added: 13] | % |

| Fastening systems | 11 | % | | 11 | % | | [removed: 12] [added: 11] | % |

In addition, Arconic has operating activities in numerous countries and regions outside the United States, including Europe, Canada, China, Japan, and Russia.

Arconic has two reportable segments, which are organized by product on a worldwide basis: Engineered Products and Forgings (EP&F) and Global Rolled Products (GRP).

On February 8, 2019, Arconic announced, as part of its strategy and portfolio review, a separation of its portfolio into two independent, publicly-traded companies (the “Separation of Arconic”).

The Engineered Products and Forgings (EP&F) businesses (engine products, fastening systems, engineered structures and forged wheels) will remain in the existing company, which will be renamed Howmet Aerospace Inc. and change its stock ticker from “ARNC” to “HWM” in connection with the separation.

The Global Rolled Products (GRP) businesses (global rolled products, aluminum extrusions and building and construction systems) will be held by a new company that will be named Arconic Corporation at separation and that intends to list its common stock on the New York Stock Exchange under the symbol “ARNC.”

On February 6, 2020, the Company announced that its Board of Directors has approved the completion of the Separation of Arconic.

Myers will serve as Arconic Corporation Chief Executive Officer.

The Arconic Inc. Board has also named new directors to the Arconic Corporation and Howmet Aerospace Boards:

| • | Joining the Arconic Corporation Board of Directors will be: Timothy Myers; William Austen; Christopher Ayers*; Margaret Billson; Austin Camporin; Jacques Croisetiere; Elmer Doty*; Carol Eicher; Fritz Henderson; E. Stanley O’Neal*; and Jeffrey Stafeil. |

Will resign from the Arconic Inc. Board*

| • | Joining the Howmet Aerospace Board will be: Joseph Cantie; Robert Leduc; Jody Miller; and Nicole Piasecki. |

The Separation of Arconic will occur by means of a pro rata distribution by Arconic Inc. (which will be renamed Howmet Aerospace Inc.) of all of the outstanding common stock of Arconic Corporation (the “Distribution of Arconic”).

The Distribution of Arconic is intended to qualify as a tax-free transaction to Arconic Inc. stockholders for U.S. federal income tax purposes.

*Distribution of Arconic Information*

At the time of separation, Arconic Inc. stockholders are expected to receive one share of Arconic Corporation common stock for every four shares of Arconic Inc. common stock held as of the record date.

The record date will be March 19, 2020 and the time of the distribution will be 12:01 A.M. on April 1, 2020.

At the time of separation, stockholders of Arconic Inc. will retain their shares of Arconic Inc. Due to the name change of Arconic Inc. to Howmet Aerospace Inc. upon separation, these shares will become Howmet Aerospace Inc. shares.

No fractional shares of Arconic Corporation common stock will be issued in the distribution, and stockholders will receive cash in lieu of fractional shares.

The separation distribution is expected to be paid on April 1, 2020 to Arconic Inc. stockholders of record as of the close of business on the record date.

The distribution remains subject to the satisfaction or waiver of the conditions described in Arconic Rolled Products Corporation’s Registration Statement on Form 10, as amended.

The Form 10 has been filed by Arconic Rolled Products Corporation with the SEC and is available at www.arconic.com.

No action is required by Arconic Inc. stockholders to receive shares of Arconic Corporation common stock in the distribution.

Arconic Inc. expects to make available an information statement to all stockholders entitled to receive the distribution of shares of Arconic Corporation common stock.

The information statement is filed as an exhibit to Arconic Rolled Products Corporation’s Registration Statement on Form 10 and describes Arconic Corporation and certain risks of owning Arconic Corporation common stock and provides other information regarding the separation and distribution.

*Trading Common Stock*

Arconic Inc. stockholders who hold shares of common stock on the record date of March 19, 2020, and decide to sell any of those shares before the distribution date, should consult their stockbroker, bank or other nominee to understand whether the shares of Arconic Inc. common stock will be sold with or without entitlement to Arconic Corporation common stock pursuant to the distribution.

Beginning on or about March 18, 2020, and continuing up to and through the distribution date, two markets are expected for Arconic Inc. common stock: the “regular-way” market and the “ex-distribution” market.

Shares that trade in the “regular-way” market will be entitled to shares of Arconic Corporation common stock distributed pursuant to the distribution; shares that trade in the “ex-distribution” market will trade under the symbol HWM WI and without an entitlement to shares of Arconic Corporation common stock distributed pursuant to the distribution.

Arconic Corporation anticipates “when-issued” trading of its common stock will begin on or about March 18, 2020, under the symbol ARNC WI, and will continue up to and through the distribution date.

“Regular-way” trading in Arconic Corporation’s common stock is expected to begin on April 1, 2020.

The separation date may change if certain conditions are not satisfied by that date, as described in Arconic Rolled Products Corporation’s information statement filed with the Form 10.

*Note Offering*

On February 7, 2020, the Company announced that Arconic Rolled Products Corporation (the “Issuer”), which is currently a wholly-owned subsidiary of Arconic, closed its offering of $600,000,000 aggregate principal amount of 6.125% second-lien notes due 2028 (the “Notes”).

The Issuer intends to use the proceeds from the offering to make a payment to Arconic to fund the transfer of certain assets from Arconic to the Issuer in connection with the Separation of Arconic and for general corporate purposes.

The net proceeds from the offering will be held in escrow until the completion of the Separation of Arconic and the satisfaction of certain other escrow release conditions.

Prior to the separation, the Notes will not be guaranteed.

Following the separation, the Notes will be guaranteed by certain of the Issuer’s wholly-owned domestic subsidiaries.

Each of the Notes and the related guarantees will be secured on a second-priority basis by liens on certain assets of the Issuer and the guarantors.

The Notes and related guarantees were sold in a private placement to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-United States persons in offshore transactions in accordance with Regulation S under the Securities Act.

The Notes and related guarantees have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Securities Act.

(Financial Statements and Supplementary Data).

In addition, Arconic has operating activities in Brazil, Canada, China, Japan, and Russia, among others.

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

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.

| | | |

| [Transportation and Construction Solutions](#s18AB619887265FB2BA11A493150FD250) | | [42](#s18AB619887265FB2BA11A493150FD250) |

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

In January 2018, EP&S announced a change in the organizational structure of the segment, from four business units to three business units, with a focus on aligning its internal structure to core markets and customers and reducing costs.

The three business units are Arconic Engines; Arconic Fastening Systems; and Arconic Engineered Structures.

Arconic Engines (AEN).

Arconic Fastening Systems (AFS).

The

Arconic Engineered Structures (AES).

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.

| | | | | |

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

| United Kingdom | | Darley Dale | | Forgings |

| | | Meadowhall | | Forgings |

| | | Provincial Park | | Forgings |

[removed: Environmental Matters][added: Environmental Matters]

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: [U](#s97FF02E8251959C18AD80CCED7E73ECC)] [added: [T](#s2A85739D7FC7592FABE89F6D193202CB)] to the Consolidated Financial Statements under the caption “Environmental Matters”.

[removed: Reynobond PE][added: Reynobond PE]

As previously reported, on June 13, 2017, the Grenfell Tower in London, [removed: UK] [added: U.K.] caught fire resulting in fatalities, injuries and damage.

Regulatory investigations into the overall Grenfell Tower matter are being conducted, including a criminal investigation by the London [removed: Metro Police,] [added: Metropolitan Police Service (the “Police”),] a Public Inquiry by the British government and a [removed: consumer protection inquiry by a French public authority.]

The Company [removed: will] no longer [removed: sell] [added: sells] the PE product for architectural use on buildings.

[removed: Howard] [added: *Howard] v.

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

A related purported class action complaint was filed in the United States District Court for the Western District of Pennsylvania on [removed: August 25,] [added: September 15,] 2017, under the caption [removed: Sullivan] [added: *Sullivan] v.

Arconic Inc. et [removed: al.,] [added: al.*,] against Arconic [removed: Inc., two] [added: Inc. three] former Arconic executives, several current and former Arconic directors, and banks that acted as underwriters for Arconic’s September 18, 2014 preferred stock offering (the “Preferred Offering”).

The plaintiff in [removed: Sullivan] [added: *Sullivan*] had previously filed a purported class action against the same defendants on July 18, 2017 in the Southern District of New York and, on August 25, 2017, voluntarily dismissed that action without prejudice.

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

The consolidated amended complaint [removed: alleges] [added: alleged] 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 [removed: alleges] [added: alleged] 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, [removed: 2015] [added: 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, [removed: 2015] [added: 2015,] and 2016 Annual Reports, [removed: and] its 2016 Annual Highlights [removed: Report.][added: Report, and on its official website.]

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

[removed: Raul] [added: *Raul] v.

[added: Albaugh, et al.*] As previously reported, on June 22, 2018, a derivative complaint was filed nominally on behalf of Arconic by a purported Arconic [removed: shareholder] [added: stockholder] against [removed: all current] [added: the then] members of Arconic’s Board of [removed: Directors,] [added: Directors and] 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 [added: and second amended complaint] in [removed: Howard,] [added: *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 [removed: Securities] Exchange Act [removed: 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 [removed: Howard] [added: *Howard*] case, the Grenfell Tower [removed: public inquiry] [added: Public Inquiry] in London, and the investigation by the [removed: London Metropolitan] Police [removed: Service] and on [removed: June] [added: July] 23, 2018, the Court approved the stay.

Given the preliminary nature of [removed: these matters] [added: this matter] and the uncertainty of litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome.

[removed: The] [added: *Stockholder Demands.* As previously reported, the] Board of Directors [removed: has] also received letters, purportedly sent on behalf of [removed: shareholders,] [added: stockholders,] reciting allegations similar to those made in the federal court lawsuits and demanding that the Board [added: authorize the Company to initiate litigation against members of management, the Board, and others.]

The Board of Directors [removed: has] appointed a Special Litigation Committee of the Board to [removed: review] [added: review, investigate,] and make recommendations to the Board regarding the appropriate course of action with respect to these [removed: shareholder] [added: stockholder] demand letters.

[removed: Other Matters][added: Other Matters]

[removed: Tax][added: *Tax*]

Pursuant to the Tax Matters Agreement, dated as of October 31, 2016, entered into between the Company and Alcoa Corporation in connection with the [removed: Separation,] [added: Separation of Alcoa,] the Company shares responsibility with Alcoa Corporation for, and Alcoa Corporation has agreed to partially indemnify the Company with respect to, the following matter.

The Company estimates the revised assessment to be [removed: $174] [added: $172] million [removed: (€152] [added: (€154] million), including interest.

[removed: The Company has petitioned to] [added: In March 2019,] the Supreme Court of Spain [added: accepted the Company’s petition] to review the National Court’s [removed: decision.][added: decision, and the Company has filed a formal appeal of the assessment.]

[removed: If the petition is accepted, the] [added: The] Supreme Court [removed: will review] [added: is reviewing] the assessment on its merits and [added: will] render a final decision.

In the event the Company [removed: is unsuccessful in appealing the assessment to] [added: receives an unfavorable ruling from] the Supreme Court of Spain, a portion of the assessment may be offset with existing net operating losses and tax credits available to the Spanish consolidated tax group, which would be shared between the Company and Alcoa Corporation as provided for in the Tax Matters Agreement.

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

[removed: Matters] [added: *Matters] Previously Reported – Alcoa [removed: Corporation][added: Corporation*]

The Separation and Distribution Agreement, dated October 31, 2016, entered into between the Company and Alcoa Corporation in connection with the [removed: Separation,] [added: Separation of Alcoa,] provides for cross-indemnities between the Company and Alcoa Corporation for claims subject to indemnification.

[removed: St.] [added: *St.] Croix [removed: Proceedings][added: Proceedings*]

[removed: Red] [added: *Red] Dust Docket Cases, (St. Croix) f/k/a Abednego, Laurie L.A., et al.

[added: St. Croix Alumina, L.L.C., et al.*] As previously reported, on January 14, 2010, Arconic was served with a multi-plaintiff action complaint involving several thousand individual persons claiming to be residents of St. Croix who are alleged to have suffered personal injury or property damage from Hurricane Georges or winds blowing material from the St. Croix Alumina, L.L.C. (“SCA”) facility on the island of St. Croix (U.S. Virgin Islands) since the time of the hurricane.

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

Following the court’s July 7, 2017 order, a total of 429 complaints were filed and accepted by the court by the deadline of July 30, 2017 (and consolidated into the [removed: Red] [added: *Red] Dust [removed: Claims] [added: Claims*] docket (Master Case No.: SX-15-CV-620)).

[removed: Other Contingencies][added: Other Contingencies]

consumer protection inquiry by a French public authority.

The Public Inquiry was announced by the U.K. Prime Minister on June 15, 2017 and subsequently was authorized to examine the circumstances leading up to and surrounding the Grenfell Tower fire in order to make findings of fact and recommendations to the U.K. Government on matters such as the design, construction, and modification of the building, the role of relevant public authorities and contractors, the implications of the fire for the adequacy and enforcement of relevant regulations, arrangements in place for handling emergencies, and the handling of concerns from residents, among other things.

Hearings for Phase 1 of the Public Inquiry began on May 21, 2018 and concluded on December 12, 2018.

Phase 2 hearings of the Public Inquiry began in early 2020, following which a final report will be written and subsequently published.

AAP SAS is participating as a Core Participant in the Public Inquiry and is also cooperating with the ongoing parallel investigation by the Police.

Given the preliminary nature of these investigations and the uncertainty of potential future litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome.

*Behrens et al.

Arconic Inc. et al.* As previously reported, on June 6, 2019, 247 plaintiffs comprised of survivors and estates of decedents of the Grenfell Tower fire filed a complaint against “Arconic Inc., Alcoa Inc., and Arconic Architectural Products, LLC” (collectively, for purposes of the description of such proceeding, the “Arconic Defendants”), as well as Saint-Gobain Corporation, d/b/a Celotex and Whirlpool Corporation, in the Court of Common Pleas of Philadelphia County.

The complaint alleges claims under Pennsylvania state law for products liability and wrongful death related to the fire.

In particular, the plaintiffs allege that the Arconic Defendants knowingly supplied a dangerous product (Reynobond PE) for installation on the Grenfell Tower despite knowing that Reynobond PE was unfit for use above a certain height.

The Arconic Defendants removed the case to the United States District Court for the Eastern District of Pennsylvania on June 19, 2019.

On August 29, 2019, the Arconic Defendants moved to dismiss the complaint on the bases, among other things, that: (i) the case should be heard in the United Kingdom, not the United States; (ii) there is no jurisdiction over necessary parties; and (iii) Pennsylvania products liability law does not apply to manufacture and sale of product overseas.

On December 23, 2019, the Court issued an order denying the motion to dismiss the complaint on bases (ii) and (iii) and suggesting a procedure for limited discovery followed by further briefing on those subjects.

Discovery is ongoing on defendants’ motion to have the case dismissed in favor of a UK forum (forum non conveniens).

On January 23, 2020, the Court ordered that the parties complete discovery relating to forum non conveniens by March 16, 2020, and that briefing conclude on April 13, 2020.

The Court will hold oral argument on this motion on May 7, 2020.

On June 21, 2019, the Court granted the defendants’ motion to dismiss in full, dismissing the consolidated amended complaint in its entirety without prejudice.

On July 23, 2019, the lead plaintiffs filed a second amended complaint.

The second amended complaint alleges generally the same claims as the consolidated amended complaint with certain additional allegations, as well as claims that the risk factors set forth in the registration statement for the Preferred Offering were inadequate and that certain additional statements in the sources identified above were misleading.

The second amended complaint seeks, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses.

On September 11, 2019, all defendants moved to dismiss the second amended

complaint.

Plaintiffs’ opposition to that motion was filed on November 1, 2019 and all defendants filed a reply brief on November 26, 2019.

Given the preliminary nature of this matter and the uncertainty of litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome.

Given the preliminary nature of this matter and the uncertainty of litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome.

On May 22, 2019, the Special Litigation Committee, following completion of its investigation into the claims demanded in the demand letters, recommended to the Board that it reject the demands to authorize commencement of litigation.

On May 28, 2019, the Board adopted the Special Litigation Committee’s findings and recommendations and rejected the demands that it authorize commencement of actions to assert the claims set forth in the demand letters.

In the third quarter of 2018, Arconic established an income tax reserve, and an indemnification receivable representing Alcoa Corporation’s 49% share of the liability.

As of the end of 2019, the balances of the reserve, including interest, and the receivable are $59 million (€53 million) and $29 million (€26 million), respectively.

to the Company’s consolidated operations.

v.

AAP SAS has sought and received core participant status in the Public Inquiry.

Arconic Inc. et al.

Briefing on that motion is now closed and the parties await a ruling.

Albaugh, et al.

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.

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.

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

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

On December 11, 2017, the court issued a new scheduling order and further set a scheduling conference for January 18, 2018.

At that conference, the court set the next status conference for late July 2018.

The July 2018 status conference was canceled.

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.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: \[ x \]] [added: ☒] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

[removed: For] [added: For] The Fiscal Year [removed: Ended December] [added: Ended December] 31, [removed: 2018][added: 2019]

[removed: \[ \]] [added: ☐] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

[removed: ARCONIC INC.][added: ARCONIC INC.]

[removed: Registrant’s] [added: (Registrant’s] telephone [removed: numbers:][added: numbers, including area code)]

| Title of each class | [added: Trading Symbol] | Name of each exchange on which registered |

| [removed: Common] [added: Common] Stock, par value $1.00 per [removed: share] [added: share] | [added: ARNC] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: $3.75] [added: $3.75] Cumulative Preferred Stock, par value $100.00 per [removed: share] [added: share] | [added: ARNC PR] | [removed: NYSE American] [added: NYSE American] |

Securities registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Smaller reporting company [removed: \[\]] [added: ☐] Emerging growth company [removed: \[\]][added: ☐]

Yes [added: ☐] No ✓.

The aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant, as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately [removed: $8] [added: $11] billion.

As of February [removed: 15, 2019,] [added: 21, 2020,] there were [removed: 484,940,842] [added: 435,918,568] shares of common stock, par value $1.00 per share, of the registrant outstanding.

[removed: Documents] [added: Documents] incorporated by [removed: reference.][added: reference.]

Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for its [removed: 2019] [added: 2020] Annual Meeting of Shareholders to be filed pursuant to Regulation 14A (Proxy Statement).

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

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

| Item 1. | [removed: [Business](#sD7F49A25979D5C108C137F3E38ED38BC)] [added: [Business](#s4F41225C55C25FBBAC1F95009955909D)] | [removed: [1](#sD7F49A25979D5C108C137F3E38ED38BC)] [added: [1](#s4F41225C55C25FBBAC1F95009955909D)] |

| Item 1A. | [Risk [removed: Factors](#s2164004AF13A5D55A823C2CE7DEA9CBF)] [added: Factors](#s37AD6CCE74325EF2812B0C3EAC0942D4)] | [removed: [14](#s2164004AF13A5D55A823C2CE7DEA9CBF)] [added: [15](#s37AD6CCE74325EF2812B0C3EAC0942D4)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sAFFC204E785254B8B533A15617CEA3E9)] [added: Comments](#sF0017534B23256E4BA3F4A89CBB0A70B)] | [removed: [28](#sAFFC204E785254B8B533A15617CEA3E9)] [added: [29](#sF0017534B23256E4BA3F4A89CBB0A70B)] |

| Item 2. | [removed: [Properties](#sD020FD42886C5996A41E30AAFB1957F2)] [added: [Properties](#s00CE4FE3AA2959C4A04C464CB28B94D9)] | [removed: [29](#sD020FD42886C5996A41E30AAFB1957F2)] [added: [29](#s00CE4FE3AA2959C4A04C464CB28B94D9)] |

| Item 3. | [Legal [removed: Proceedings](#sDFBFC3CE7CF75A9A86DB41AEA873831D)] [added: Proceedings](#sE4498AA1E27A5E59AE61AB67CAF21E95)] | [removed: [30](#sDFBFC3CE7CF75A9A86DB41AEA873831D)] [added: [29](#sE4498AA1E27A5E59AE61AB67CAF21E95)] |

| Item 4. | [Mine Safety [removed: Disclosures](#sF84EFE8FFBA6519F974D16668D70A4CF)] [added: Disclosures](#s0406674959D25E1DB3727F2F065156A6)] | [removed: [32](#sF84EFE8FFBA6519F974D16668D70A4CF)] [added: [32](#s0406674959D25E1DB3727F2F065156A6)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s58714DD8FFBB5DD4B9AA3EC58D9FF58D)] [added: Securities](#s4B1C309ACA5D5AA9B817AA4A0AF2F460)] | [removed: [32](#s58714DD8FFBB5DD4B9AA3EC58D9FF58D)] [added: [33](#s4B1C309ACA5D5AA9B817AA4A0AF2F460)] |

| Item 6. | [Selected Financial [removed: Data](#s05A7E15CFC0B5A6AAFD5AEC8B2770659)] [added: Data](#s4E7E18A6EEC456049A7AF5BF3718D673)] | [removed: [34](#s05A7E15CFC0B5A6AAFD5AEC8B2770659)] [added: [36](#s4E7E18A6EEC456049A7AF5BF3718D673)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sABFB35B3ABC35ACA8334EDF8420839C7)] [added: Operations](#s25186CBC7A5D52B2907CADC3BA1E73D5)] | [removed: [35](#sABFB35B3ABC35ACA8334EDF8420839C7)] [added: [37](#s25186CBC7A5D52B2907CADC3BA1E73D5)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s5A2C65FF4AE05C6CB68D03229C726C31)] [added: Risk](#sC181B387496D5785923468562FCCA7CE)] | [removed: [51](#s5A2C65FF4AE05C6CB68D03229C726C31)] [added: [52](#sC181B387496D5785923468562FCCA7CE)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s12DCBA6673EF51FEB21C31D760B588DE)] [added: Data](#sF2632D3E53605B1596C942D86FA3D8E0)] | [removed: [52](#s12DCBA6673EF51FEB21C31D760B588DE)] [added: [53](#sF2632D3E53605B1596C942D86FA3D8E0)] |

| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s2CB5905A8F0E5E8BA74543EE599ACCD1)] [added: Disclosure](#sD9C9B2F8D857520487E0EB464B669D5F)] | [removed: [103](#s2CB5905A8F0E5E8BA74543EE599ACCD1)] [added: [107](#sD9C9B2F8D857520487E0EB464B669D5F)] |

| Item 9A. | [Controls and [removed: Procedures](#s95E849A608BA5428952060278CD039F9)] [added: Procedures](#s774B45F04E22531889F3E61D9350B875)] | [removed: [103](#s95E849A608BA5428952060278CD039F9)] [added: [107](#s774B45F04E22531889F3E61D9350B875)] |

| Item 9B. | [Other [removed: Information](#s866283CEA2F5567998B7D2097D502DE9)] [added: Information](#s10090BBAF90559DEA658847AEF8E16AF)] | [removed: [104](#s866283CEA2F5567998B7D2097D502DE9)] [added: [107](#s10090BBAF90559DEA658847AEF8E16AF)] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#sFEE5A4BE7C975F7A90AA29B14CA5A1E9)] [added: Governance](#s1F55709BD0245972B33D77195F1BCE90)] | [removed: [104](#sFEE5A4BE7C975F7A90AA29B14CA5A1E9)] [added: [107](#s1F55709BD0245972B33D77195F1BCE90)] |

| Item 11. | [Executive [removed: Compensation](#sF4A5070A4A055C399A6DF0C5BA7C9E34)] [added: Compensation](#s437F313B8C235B158D8572FF5054909C)] | [removed: [104](#sF4A5070A4A055C399A6DF0C5BA7C9E34)] [added: [107](#s437F313B8C235B158D8572FF5054909C)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s71EA23214C545D2CA55BF913E2469EC6)] [added: Matters](#sE1216C4546C85120A59DB1CC86E98128)] | [removed: [104](#s71EA23214C545D2CA55BF913E2469EC6)] [added: [107](#sE1216C4546C85120A59DB1CC86E98128)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s9B754715E29D54BAABC8E0425F1AE5DB)] [added: Independence](#s2B533F945AAC5F0B9D2C09FDAA66A9A5)] | [removed: [104](#s9B754715E29D54BAABC8E0425F1AE5DB)] [added: [108](#s2B533F945AAC5F0B9D2C09FDAA66A9A5)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s414DCDDCF3805BB6BA08758BD90A008C)] [added: Services](#s528CC64121F25D96A707EABA55592F98)] | [removed: [104](#s414DCDDCF3805BB6BA08758BD90A008C)] [added: [108](#s528CC64121F25D96A707EABA55592F98)] |

OR

201 Isabella Street, Suite 200, Pittsburgh, Pennsylvania 15212-5872

Investor Relations----------------(412) 553-1950

Office of the Secretary-----------(412) 553-1940

| | [Signatures](#sE434883E219C5D5592FC2E71EADA486A) | [118](#sE434883E219C5D5592FC2E71EADA486A) |

10-K 1 form10k_4q18.htm 10-K

OR

390 Park Avenue, New York, New York 10022-4608

Investor Relations----------------(212) 836-2758

Office of the Secretary-----------(212) 836-2732

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

\[\]

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

Arconic’s [added: principal office and] corporate center is located at 201 Isabella Street, [added: Suite 200,] Pittsburgh, Pennsylvania 15212-5858.

See Notes [removed: [A](#s60CBB4B121B95CCDA4CEF49C188950F5)] [added: [A](#s792B3A61CBD854F4B7F52195BE220AB9)] and [removed: [N](#s12879FEEC21A5C7093F10826CD163AEA)] [added: [M](#sC671688584E8565FB69B015B8859DB9B)] to the Consolidated Financial Statements in [removed: Part] [added: [Part] II, Item [removed: 8.][added: 8.](#sF2632D3E53605B1596C942D86FA3D8E0) (Financial Statements and Supplementary Data) of this Form 10-K.]

[removed: ENGINEERED] [added: ENGINEERED] PRODUCTS AND [removed: SOLUTIONS][added: FORGINGS]

See the table and related text in the [removed: Engineered] [added: Engineered] Products and [removed: Solutions Facilities] [added: Forgings Facilities] section on page [removed: 6] [added: 7] of this report.

[removed: GLOBAL] [added: GLOBAL] ROLLED [removed: PRODUCTS][added: PRODUCTS]

See the table and related text in the [removed: Global] [added: Global] Rolled Products [removed: Facilities] [added: Facilities] section on page [removed: 8] [added: 10] of this report.

Arconic’s principal office is located at 390 Park Avenue, New York, New York 10022-4608.

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

TRANSPORTATION AND CONSTRUCTION SOLUTIONS

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

[removed: PART II][added: PART II]

Prior to the Separation of Alcoa Corporation from the Company, the Company’s common stock traded under the symbol “AA.” In connection with the [removed: separation,] [added: Separation of Alcoa,] on November 1, 2016, the Company changed its stock symbol and its common stock began trading under the symbol “ARNC.”

The Separation [added: of Alcoa] was effected by means of a pro rata distribution by the Company of 80.1% of the outstanding shares of Alcoa Corporation common stock to the Company’s shareholders.

The Company retained 19.9% of the outstanding common stock of Alcoa Corporation immediately following the [removed: Separation.][added: Separation of Alcoa.]

See disposition of retained shares in Note [removed: [V](#s35170AD9B0E957C38780BD844682BDD2)] [added: [U](#sB66B10D9998E59BFAEA8A8C459F071E4)] to the Consolidated Financial Statements in [removed: Part] [added: [Part] II Item [removed: 8] [added: 8](#sF2632D3E53605B1596C942D86FA3D8E0)] of this Form 10-K.

The number of holders of record of common stock was approximately [removed: 11,668] [added: 10,874] as of February [removed: 15, 2019.][added: 21, 2020.]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The following graph compares the most recent five-year performance of the Company’s common stock with (1) the Standard & Poor’s (S&P) 500® Index, (2) the S&P 500® [removed: Materials] [added: Industrials] Index, a group of [removed: 25] [added: 70] companies categorized by Standard & Poor’s as active in the [removed: “materials”] [added: “industrials”] market sector, [added: and] (3) the S&P Aerospace & Defense Select Industry Index, a group of [removed: 33] [added: 32] companies categorized by Standard & Poor’s as active in the “aerospace & defense” [removed: 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.][added: industry.]

The graph assumes, in each case, an initial investment of $100 on December 31, [removed: 2013,] [added: 2014,] and the reinvestment of dividends.

Historical prices prior to the [removed: separation] [added: Separation] of Alcoa [removed: Corporation from the Company] on November 1, 2016, have been adjusted to reflect the value of the Separation transaction.

[removed: ][added: ]

[removed: Copyright© 2019] [added: Copyright© 2020] Standard & Poor's, a division of S&P Global.

All rights [removed: reserved.][added: reserved.]

| [removed: As] [added: As] of December [removed: 31,] [added: 31,] | [removed: 2013] [added: 2014] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2018] [added: 2019] | | |

On November 1, 2016, the Company completed the Separation of Alcoa.

In conjunction with the Separation of Arconic, the Company will remain publicly traded and will change its name to “Howmet Aerospace Inc.” (“Howmet Aerospace”) and its stock symbol from “ARNC” to “HWM”, and “Arconic Rolled Products Corporation” will change its name to “Arconic Corporation” and its common stock will be listed on the New York Stock Exchange under the symbol “ARNC.”

| Arconic Inc. | $ | 100 | | | $ | 63.15 | | | $ | 53.54 | | | $ | 79.44 | | | $ | 49.70 | | | $ | 91.24 | |

| S&P 500® Index | 100 | | | | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | | |

| S&P 500® Industrials Index | 100 | | | | 97.47 | | | | 115.85 | | | | 140.22 | | | | 121.58 | | | | 157.29 | | |

| S&P Aerospace & Defense Select Industry Index | 100 | | | | 105.43 | | | | 125.36 | | | | 177.24 | | | | 162.93 | | | | 212.35 | | |

Issuer Purchases of Equity Securities

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

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

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

| Period | | Total Number of Shares Purchased | | | Average Price Paid Per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs(1) | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | |

| October 1 - October 31, 2019 | | — | | | $ | — | | | — | | | $ | 400,000,000 | |

| November 1 - November 30, 2019(2) | | 1,626,681 | | | $ | 30.74 | | | 1,626,681 | | | $ | 350,000,000 | |

| December 1 - December 31, 2019 | | — | | | $ | — | | | — | | | $ | 350,000,000 | |

| Total for quarter ended December 31, 2019 | | 1,626,681 | | | | | | | | | | | | |

(1) On February 5, 2018, the Company announced that its Board of Directors (the Board) had authorized the repurchase of up to $500 million of the Company's outstanding common stock (the "February 2018 Share Repurchase Program").

There was no stated expiration for the February 2018 Share Repurchase Program, and no shares were repurchased during 2018.

On February 8, 2019, the Company announced that the Board had authorized the repurchase of an additional $500 million of the Company's outstanding common stock, effective through the end of 2020.

On May 20, 2019, the Company announced that the Board had authorized the repurchase of a further $500 million of the Company's outstanding common stock (the "May 2019 Share Repurchase Program").

There was no stated expiration for the May 2019 Share Repurchase Program.

(2) On November 14, 2019, the Company entered into an agreement with Citigroup Global Markets Inc. to repurchase $50 million of its common stock (the “November 2019 share repurchase program”), pursuant to the share repurchase programs previously authorized by its Board.

All of the shares repurchased were immediately retired.

After giving effect to the November 2019 share repurchase program, $350 million remains available under the prior authorizations by the Board for share repurchases through the end of 2020.

On November 1, 2016, the Company completed the Separation of its business into two independent, publicly traded companies: the Company and Alcoa Corporation.

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 | | |

[removed: The separation of] [added: Effective November 1, 2016,] Alcoa Inc. [added: separated] into two standalone, publicly-traded companies, Arconic Inc. (the new name for Alcoa Inc.) and Alcoa [removed: Corporation, became effective on November 1, 2016] [added: Corporation] (the “Separation [removed: Transaction”).][added: of Alcoa”).]

The [removed: financial] results of [added: operations of] Alcoa Corporation for all periods prior to the Separation [removed: Transaction have been] [added: of Alcoa were] retrospectively reflected in the [removed: Statement of Consolidated Operations] [added: table above] as discontinued operations and, as such, [removed: have been] [added: were] excluded from continuing operations [removed: and segment results] for [removed: 2016 and] all prior periods presented prior to the Separation [removed: Transaction.][added: of Alcoa.]

[removed: (dollars] [added: (dollars] in millions, except per-share [removed: amounts)][added: amounts)]

| [removed: For] [added: For] the year ended December [removed: 31,] [added: 31,] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Sales | $ | [removed: 14,014] [added: 14,192] | | | $ | [removed: 12,960] [added: 14,014] | | | $ | [removed: 12,394] [added: 12,960] | | | $ | [removed: 12,413] [added: 12,394] | | | $ | [removed: 12,542] [added: 12,413] | |

| Income (loss) from continuing [removed: operations(1)] [added: operations] | $ | [removed: 642] [added: 470] | | | $ | [removed: (74] [added: 642] | [removed: )] | | $ | [removed: (1,062] [added: (74] | ) | | $ | [removed: (157] [added: (1,062] | ) | | $ | [removed: (61] [added: (157] | ) |

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

| Net income (loss) | $ | [removed: 642] [added: 470] | | | $ | [removed: (74] [added: 642] | [removed: )] | | $ | [removed: (941] [added: (74] | ) | | $ | [removed: (322] [added: (941] | ) | | $ | [removed: 268] [added: (322] | [added: )] |

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

| Income (loss) from continuing operations | $ | [removed: 1.33] [added: 1.05] | | | $ | [removed: (0.28] [added: 1.33] | [removed: )] | | $ | [removed: (2.58] [added: (0.28] | ) | | $ | [removed: (0.54] [added: (2.58] | ) | | $ | [removed: (0.21] [added: (0.54] | ) |

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

| Net income (loss) | $ | [removed: 1.33] [added: 1.05] | | | $ | [removed: (0.28] [added: 1.33] | [removed: )] | | $ | [removed: (2.31] [added: (0.28] | ) | | $ | [removed: (0.93] [added: (2.31] | ) | | $ | [removed: 0.64] [added: (0.93] | [added: )] |

| Income (loss) from continuing operations | $ | [removed: 1.30] [added: 1.03] | | | $ | [removed: (0.28] [added: 1.30] | [removed: )] | | $ | [removed: (2.58] [added: (0.28] | ) | | $ | [removed: (0.54] [added: (2.58] | ) | | $ | [removed: (0.21] [added: (0.54] | ) |

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

| Net income (loss) | $ | [removed: 1.30] [added: 1.03] | | | $ | [removed: (0.28] [added: 1.30] | [removed: )] | | $ | [removed: (2.31] [added: (0.28] | ) | | $ | [removed: (0.93] [added: (2.31] | ) | | $ | [removed: 0.63] [added: (0.93] | [added: )] |

| Cash dividends declared per common [removed: share(1)] [added: share] | $ | [removed: 0.24] [added: 0.12] | | | $ | 0.24 | | | $ | [removed: 0.36] [added: 0.24] | | | $ | 0.36 | | | $ | 0.36 | |

| Total assets | [removed: 18,693] [added: 17,578] | | | | [removed: 18,718] [added: 18,693] | | | | [removed: 20,038] [added: 18,718] | | | | [removed: 36,477] [added: 20,038] | | | | [removed: 37,298] [added: 36,477] | | |

| Total debt | [removed: 6,330] [added: 5,940] | | | | [removed: 6,844] [added: 6,330] | | | | [removed: 8,084] [added: 6,844] | | | | [removed: 8,827] [added: 8,084] | | | | [removed: 8,445] [added: 8,827] | | |

| Cash provided from (used for) [removed: operations(4)] [added: operations] | [added: 406 | | | |] 217 | | | | (39 | | ) | | 95 | | | | 764 | | | [removed: | 1,674 | | |]

| Capital expenditures—continuing operations | [removed: 768] [added: 586] | | | | [removed: 596] [added: 768] | | | | [removed: 827] [added: 596] | | | | [removed: 789] [added: 827] | | | | [removed: 775] [added: 789] | | |

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

| Total capital expenditures | $ | [removed: 768] [added: 586] | | | $ | [removed: 596] [added: 768] | | | $ | [removed: 1,125] [added: 596] | | | $ | [removed: 1,180] [added: 1,125] | | | $ | [removed: 1,219] [added: 1,180] | |

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 [removed: Part] [added: [Part] II, Item [removed: 7.][added: 7](#s25186CBC7A5D52B2907CADC3BA1E73D5).]

and the Consolidated Financial Statements and Notes in [removed: Part] [added: [Part] II, Item [removed: 8.][added: 8](#sF2632D3E53605B1596C942D86FA3D8E0).]

The cash flow information presented in the table above included the cash flows related to Alcoa Corporation for the first ten months of 2016 and full year 2015.

The cash flows related to Alcoa Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows for 2016 and all prior periods presented.

| | |

| --- | --- |

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

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

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

| (4) | Cash provided from (used for) operations has not been restated for discontinued operations presentation for 2016 and all prior periods presented (see Basis of Presentation section of Note [A](#s60CBB4B121B95CCDA4CEF49C188950F5) to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data) of this Form 10-K). Cash provided from (used for) operations in 2014 has not been recast for the impact of the new accounting pronouncements that were adopted in the first quarter of 2018 (see Recently Adopted Accounting Guidance section of Note [A](#s60CBB4B121B95CCDA4CEF49C188950F5) to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data) of this Form 10-K). |

[removed: Management’s] [added: Management’s] Reports to Arconic [removed: Shareholders][added: Shareholders]

[removed: Management’s] [added: Management’s] Report on Financial Statements and [removed: Practices][added: Practices]

[removed: Management’s] [added: Management’s] Report on Internal Control over Financial [removed: Reporting][added: Reporting]

In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in [removed: Internal] [added: *Internal] Control—Integrated Framework [removed: (2013),] [added: (2013)*,] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria in [removed: Internal] [added: *Internal] Control—Integrated Framework [removed: (2013)] [added: (2013)*] issued by the COSO.

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

[removed: Report] [added: Report] of Independent Registered Public Accounting [removed: Firm][added: Firm]

To the [removed: Shareholders and] Board of Directors [added: and Shareholders] of Arconic Inc.

[removed: Opinions] [added: Opinions] on the Financial Statements and Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the accompanying consolidated balance [removed: sheets] [added: sheet] of Arconic Inc. and its subsidiaries (the [removed: "Company")] [added: “Company”)] as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of operations, [added: of] comprehensive [removed: (loss) income,] [added: income (loss), of] changes in [removed: equity,] [added: equity] and [added: of] cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] 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: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: 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: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] 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: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the COSO.

[removed: Basis] [added: Basis] for [removed: Opinions][added: Opinions]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

[added: |] February 21, 2019 [added: | 31,908,831 | | | | |]

[removed: Arconic] [added: Arconic] and [removed: subsidiaries][added: subsidiaries]

[removed: Statement] [added: Statement] of Consolidated [removed: Operations][added: Operations]

[removed: (in] [added: (in] millions, except per-share [removed: amounts)][added: amounts)]

| [removed: For] [added: For] the year ended December [removed: 31,] [added: 31,] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Cost of goods sold (exclusive of expenses below) | [removed: 11,397] [added: 11,227] | | | | [removed: 10,221] [added: 11,397] | | | | [removed: 9,696] [added: 10,221] | | |

| Selling, general administrative, and other expenses | [removed: 604] [added: 704] | | | | [removed: 715] [added: 604] | | | | [removed: 924] [added: 715] | | |

| Research and development expenses | [removed: 103] [added: 70] | | | | [removed: 109] [added: 103] | | | | [removed: 130] [added: 109] | | |

| Provision for depreciation and amortization | [removed: 576] [added: 536] | | | | [removed: 551] [added: 576] | | | | [removed: 535] [added: 551] | | |

| Impairment of goodwill [removed: ([A](#s60CBB4B121B95CCDA4CEF49C188950F5)] [added: ([A](#s792B3A61CBD854F4B7F52195BE220AB9)] and [removed: [O](#s608B5DED10B75767AFFC2ECF9CFCCC37))] [added: [N](#sD209846A5BE057B3883D890F3DAAD2DF))] | — | | | | [removed: 719] [added: —] | | | | [removed: —] [added: 719] | | |

| Restructuring and other charges [removed: ([D](#s97C849B4BB4E52F3AE88F238930B348E))] | [removed: 9] [added: 620] | | | | [removed: 165] [added: 9] | | | | [removed: 155] [added: 165] | | |

| Operating income | [removed: 1,325] [added: 1,035] | | | | [removed: 480] [added: 1,325] | | | | [removed: 954] [added: 480] | | |

| Interest expense [removed: ([E](#s1535747FD4105D83AAC602EF01BE0EBA))] | [removed: 378] [added: (338] | | [added: )] | | [removed: 496] [added: (378] | | [added: )] | | [removed: 499] [added: (496] | | [added: )] |

| Other [removed: expense (income),] [added: (expense) income,] net [removed: ([F](#s75F53F04908F5FBCABE87E965A9EC5C2))] | [removed: 79] [added: (122] | | [added: )] | | [removed: (486] [added: (79] | | ) | | [removed: 41] [added: 486] | | |

| Income [removed: from continuing operations] before income taxes | [removed: 868] [added: 575] | | | | [removed: 470] [added: 868] | | | | [removed: 414] [added: 470] | | |

| Provision for income taxes [removed: ([H](#sF377BEFA160F55899B747D4729F6F4B2))] [added: ([G](#s1DC690E617575A6EB9DE2E8429251B9A))] | [removed: 226] [added: 105] | | | | [removed: 544] [added: 226] | | | | [removed: 1,476] [added: 544] | | |

| Net income (loss) | [removed: 642] [added: $] | [added: 470] | | | [removed: (74] [added: $] | [added: 642] | [removed: )] | | [removed: (878] [added: $] | [added: (74] | ) |

| Net income (loss) [removed: Attributable to Arconic] | $ | [added: 470 | | | $ |] 642 | | | $ | (74 | ) | | $ | [removed: (941] [added: —] | [added: | | $ | — | | | $ | — | | | $ | 470 | | | $ | 642 | | | $ | (74 |] ) |

| [removed: Amounts] [added: Amounts] Attributable to Arconic Common Shareholders [removed: ([J](#s0242630D281959EB857CF99BC63FF5C0)):] [added: ([I](#s6A59BB18819152BB9DD38BDE67BE35E3)):] | | | | | | | | | | | |

| Net income (loss) | $ | [removed: 651] [added: 477] | | | $ | [removed: (127] [added: 651] | [removed: )] | | $ | [removed: (1,010] [added: (127] | ) |