UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September~~June 30, ~~2020~~2021


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

Commission File Number 1-39162


ARCONIC CORPORATION
(Exact name of registrant as specified in its charter)

Delaware

84-2745636

(State or other jurisdiction of incorporation or organization)

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

201 Isabella Street,

Suite 400,

Pittsburgh,

Pennsylvania

15212-5872

(Address of principal executive offices)

(Zip Code)

(412)-992-2500

(Registrant’s telephone number, including area code)

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ARNC	New York Stock Exchange

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

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

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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

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

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

As of ~~November 9, 2020,~~August 2, 2021, there were ~~109,145,215~~109,377,065 shares of common stock, par value $0.01 per share, of the registrant outstanding.

TABLE OF CONTENTS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect ~~Arconic Corporation’s~~Arconic’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements ~~regarding~~ ~~forecasts~~ relating to the ~~aerospace,~~condition of, or trends or developments in, the ground transportation, aerospace, building and construction, industrial, packaging and other end markets; ~~statements and guidance regarding~~Arconic’s future financial results, operating performance, working capital, cash flows, liquidity and financial position; ~~statements about~~ cost savings and restructuring programs; ~~statements about Arconic Corporation’s~~Arconic’s strategies, outlook, business and financial prospects; ~~statements related to~~any future share repurchases; costs associated with pension and other postretirement benefit plans; ~~statements regarding~~ projected sources of cash flow; ~~statements regarding~~ potential legal liability; ~~statements regarding~~ the potential impact of the COVID-19 pandemic; the timing and ~~statements regarding~~levels of potential recovery from the COVID-19 pandemic within our end markets; and the impact of actions to mitigate the impact of the COVID-19. pandemic. These statements reflect beliefs and assumptions that are based on ~~Arconic Corporation’s~~Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic ~~Corporation~~ believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future ~~performance. Although Arconic Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, these expectations may not be attained~~performance, and ~~it is possible that~~ actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond ~~Arconic Corporation’s~~Arconic’s control. Such risks and uncertainties include, but are not limited to:

•continuing uncertainty regarding the duration and impact of the COVID-19 pandemic on our business and the businesses of our customers and suppliers;

•~~existing and any future adverse effects~~deterioration in ~~connection with COVID-19, including, among other things, severe restrictions on~~global economic activity as a result of reactions of governmental and other authorities (including shelter-in-place or stay-at-home orders), the impact on global supply and demand, the suspension or reduction of operations by our customers, suppliers and other commercial counterparties, the impact on our liquidity and financial flexibility, actions we may take to mitigate the impact of COVID-19 and the potential for COVID-19 related issues to significantly heighten the other risks customarily associated with our business (including those identified below);market conditions generally;

•unfavorable changes in the end markets ~~served by Arconic Corporation;~~

•~~competition from new product offerings, disruptive technologies, industry consolidation or other developments;~~

•~~the loss of key customers or significant changes in the business or financial condition of customers;~~

•~~manufacturing difficulties or other issues that impact product performance, quality or safety;~~

•~~the inability to meet demand for our product successfully or to mitigate the impact of cancellations of orders or reductions or delays caused by supply chain disruptions;~~

•the outcome of product liability, product safety, personal injury, property damage, and recall claims and investigations, which can expose Arconic Corporation to substantial costs, liabilities and reputational harm;

•political, economic and regulatory risks relating to Arconic Corporation’s global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations;

•~~a material disruption of Arconic Corporation’s operations, particularly at one or more of Arconic Corporation’s manufacturing facilities;~~we serve;

•the inability to achieve the level of revenue growth, cash generation, cost savings, benefits of our management of legacy liabilities, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted;

•~~the impact of potential cyber-attacks and information technology or data security breaches;~~

•~~the inability to develop innovative new products or implement technology initiatives successfully;~~

•~~challenges to or infringements on Arconic Corporation’s intellectual property rights;~~

•adverse changes in discount rates or investment returns on pension assets;

•~~Arconic Corporation’s inability to realize expected benefits,~~competition from new product offerings, disruptive technologies, industry consolidation or other developments;

•the loss of significant customers or adverse changes in ~~each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, expansions,~~customers’ business or ~~joint ventures;~~financial condition;

•~~our inability to adequately mitigate~~ manufacturing difficulties or other issues that impact product performance, quality or safety;

•the impact of ~~increases in the cost of aluminum or~~pricing volatility in ~~the availability or costs of other~~ raw materials;

•a significant downturn in the business or financial condition of a ~~significant supplier;~~key supplier or other supply chain disruptions;

•challenges to or infringements on our intellectual property rights;

•the inability to ~~adequately mitigate~~ successfully implement our re-entry into the U.S. packaging market or to realize the expected benefits of other strategic initiatives or projects;

•the inability to identify or successfully respond to changing trends in our end markets;

•the impact of ~~changes in~~potential cyber attacks and information technology or data security breaches;

•geopolitical, economic, and regulatory risks relating to our global operations, including compliance with U.S. and foreign ~~currency exchange rates on costs~~trade and ~~results;~~tax laws, sanctions, embargoes and other regulations;

•the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation and compliance ~~and remediation, which can expose Arconic Corporation to substantial costs and liabilities;~~

•~~a determination by the IRS that the distribution or certain related transactions should be treated as taxable transactions;~~

•~~risks associated with indebtedness, including potential restrictions on our operations and the impact of events of default;~~

•the risk that we are unable to fully realize the expected benefits of the separation, or that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the separation, once fully realized, will exceed our estimates;matters; and

•the ~~impact of operating our business separate from ParentCo (as defined herein), which could result~~other risk factors summarized in ~~disruption of our ongoing business and diversion of management’s attention from other business concerns and impact our relationships with customers, suppliers, employees~~Arconic’s Form 10-K for the year ended December 31, 2020 and other ~~business counterparties.~~reports filed with the U.S. Securities and Exchange Commission.

The above list of factors is not exhaustive or necessarily in order of importance. Market projections are subject to the risks discussed above and in this report, and other risks in the market. For additional information concerning factors that could cause actual results to differ materially from the information contained in this report, reference is made to the information in Part I Item 1A, “Risk Factors” in ~~the Company’s~~Arconic’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019 and Part II Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. Market projections are subject to the risks discussed in this report and other risks in the market.~~2020. Arconic ~~Corporation~~ disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Arconic Corporation and subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Sales to unrelated parties $ 1,391 $ 1,764 $ 4,132 $ 5,427
Sales to related parties (A) 24 41 81 142
Total Sales (C and D) 1,415 1,805 4,213 5,569
Cost of goods sold (exclusive of expenses below) (K) 1,218 1,565 3,614 4,849
Selling, general administrative, and other expenses 59 82 194 255
Research and development expenses 8 9 27 34
Provision for depreciation and amortization 63 63 191 190
Restructuring and other charges (E) 3 64 61 104
Operating income 64 22 126 137
Interest expense 22 29 97 86
Other expenses (income), net (F) 27 0 69 (4)
Income (Loss) before income taxes 15 (7) (40) 55
Provision for income taxes (H) 10 17 5 46
Net income (loss) 5 (24) (45) 9
Less: Net income attributable to noncontrolling interest 0 0 0 0
Net income (loss) attributable to Arconic Corporation $ 5 $ (24) $ (45) $ 9
Earnings per Share Attributable to Arconic Corporation Common Shareholders (I):
Basic $ 0.05 $ (0.22) $ (0.41) $ 0.08
Diluted $ 0.05 $ (0.22) $ (0.41) $ 0.08


	Second quarter ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Sales (C and D)	$	1,801	$	1,187	$	3,476	$	2,798
Cost of goods sold (exclusive of expenses below) (L)	1,567		1,051		2,998		2,396
Selling, general administrative, and other expenses	61		55		120		135
Research and development expenses	9		8		17		19
Provision for depreciation and amortization	62		68		125		128
Restructuring and other charges (E)	597		77		598		58
Operating (loss) income	(495)		(72)		(382)		62
Interest expense (N)	25		40		48		75
Other expenses, net (F)	15		16		37		42
Loss before income taxes	(535)		(128)		(467)		(55)
Benefit for income taxes (H)	(108)		(32)		(92)		(5)
Net loss	(427)		(96)		(375)		(50)
Less: Net income attributable to noncontrolling interest	0		0		0		0
Net loss attributable to Arconic Corporation	$	(427)	$	(96)	$	(375)	$	(50)

Earnings Per Share Attributable to Arconic Corporation Common Stockholders (I):
Basic	$	(3.89)	$	(0.88)	$	(3.41)	$	(0.46)
Diluted	$	(3.89)	$	(0.88)	$	(3.41)	$	(0.46)

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

Arconic Corporation and subsidiaries

Statement of Consolidated Comprehensive Income (Loss) (unaudited)

(in millions)

Arconic Corporation Noncontrolling interest Total
Third quarter ended September 30, 2020 2019 2020 2019 2020 2019
Net income (loss) $ 5 $ (24) $ 0 $ 0 $ 5 $ (24)
Other comprehensive income, net of tax (J):
Change in unrecognized net actuarial loss and prior service benefit related to pension and other postretirement benefits 31 1 0 0 31 1
Foreign currency translation adjustments 37 45 0 0 37 45
Net change in unrecognized losses on cash flow hedges 12 0 0 0 12 0
Total Other comprehensive income, net of tax 80 46 0 0 80 46
Comprehensive income $ 85 $ 22 $ 0 $ 0 $ 85 $ 22
Arconic Corporation Noncontrolling interest Total
Nine months ended September 30, 2020 2019 2020 2019 2020 2019
Net (loss) income $ (45) $ 9 $ 0 $ 0 $ (45) $ 9
Other comprehensive income, net of tax (J):
Change in unrecognized net actuarial loss and prior service benefit related to pension and other postretirement benefits 92 1 0 0 92 1
Foreign currency translation adjustments 42 59 0 0 42 59
Net change in unrecognized losses on cash flow hedges 5 0 0 0 5 0
Total Other comprehensive income, net of tax 139 60 0 0 139 60
Comprehensive income $ 94 $ 69 $ 0 $ 0 $ 94 $ 69


	Arconic Corporation				Noncontrolling interest				Total
Second quarter ended June 30,	2021		2020		2021		2020		2021		2020
Net loss	$	(427)	$	(96)	$	0	$	0	$	(427)	$	(96)
Other comprehensive income, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	567		36		0		0		567		36
Foreign currency translation adjustments	13		5		0		0		13		5
Net change in unrecognized losses on cash flow hedges	(14)		(7)		0		0		(14)		(7)
Total Other comprehensive income, net of tax	566		34		0		0		566		34
Comprehensive income (loss)	$	139	$	(62)	$	0	$	0	$	139	$	(62)

	Arconic Corporation				Noncontrolling interest				Total
Six months ended June 30,	2021		2020		2021		2020		2021		2020
Net loss	$	(375)	$	(50)	$	0	$	0	$	(375)	$	(50)
Other comprehensive income, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	592		61		0		0		592		61
Foreign currency translation adjustments	6		5		0		0		6		5
Net change in unrecognized losses on cash flow hedges	(36)		(7)		0		0		(36)		(7)
Total Other comprehensive income, net of tax	562		59		0		0		562		59
Comprehensive income	$	187	$	9	$	0	$	0	$	187	$	9

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

Arconic Corporation and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	802	$	72	Cash and cash equivalents	$	540	$	787
Receivables from customers, less allowances of $1 in 2020 and $2 in 2019 (A)		629		384
Receivables from customers, less allowances of $1 in both 2021 and 2020						Receivables from customers, less allowances of $1 in both 2021 and 2020	828		631
Other receivables	Other receivables	129		136		Other receivables	190		128
Inventories (K)		901		1,137
Inventories (L)						Inventories (L)	1,397		1,043
Prepaid expenses and other current assets	Prepaid expenses and other current assets	60		28		Prepaid expenses and other current assets	63		53
Total current assets	Total current assets	2,521		1,757		Total current assets	3,018		2,642
Properties, plants, and equipment	Properties, plants, and equipment	7,336		7,210		Properties, plants, and equipment	7,432		7,409
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	4,628		4,466		Less: accumulated depreciation and amortization	4,802		4,697
Properties, plants, and equipment, net	Properties, plants, and equipment, net	2,708		2,744		Properties, plants, and equipment, net	2,630		2,712
Goodwill	Goodwill	381		386		Goodwill	391		390
Operating lease right-of-use assets (L)		140		125
Operating lease right-of-use assets (M)						Operating lease right-of-use assets (M)	136		144
Deferred income taxes	Deferred income taxes	296		14		Deferred income taxes	273		329
Other noncurrent assets	Other noncurrent assets	100		32		Other noncurrent assets	95		97
Total assets	Total assets	$	6,146	$	5,058	Total assets	$	6,543	$	6,314
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable, trade	Accounts payable, trade	$	836	$	1,061	Accounts payable, trade	$	1,427	$	1,106
Accrued compensation and retirement costs	Accrued compensation and retirement costs	132		80		Accrued compensation and retirement costs	127		118
Taxes, including income taxes	Taxes, including income taxes	32		21		Taxes, including income taxes	42		33
Environmental remediation (O)		97		83
Operating lease liabilities (L)		34		33
Environmental remediation (P)						Environmental remediation (P)	75		90
Operating lease liabilities (M)						Operating lease liabilities (M)	36		36
Other current liabilities	Other current liabilities	95		63		Other current liabilities	143		90
Total current liabilities	Total current liabilities	1,226		1,341		Total current liabilities	1,850		1,473
Long-term debt (M)		1,277		250
Accrued pension benefits (G)		1,355		63
Long-term debt (N)						Long-term debt (N)	1,593		1,278
Accrued pension benefits (G)						Accrued pension benefits (G)	737		1,343
Accrued other postretirement benefits ~~(G)~~	Accrued other postretirement benefits ~~(G)~~	471		1		Accrued other postretirement benefits ~~(G)~~	459		479
Environmental remediation (O)		84		125
Operating lease liabilities (L)		109		96
Environmental remediation (P)						Environmental remediation (P)	60		66
Operating lease liabilities (M)						Operating lease liabilities (M)	103		111
Deferred income taxes	Deferred income taxes	12		159		Deferred income taxes	14		15
Other noncurrent liabilities and deferred credits	Other noncurrent liabilities and deferred credits	124		50		Other noncurrent liabilities and deferred credits	99		102
Total liabilities	Total liabilities	4,658		2,085		Total liabilities	4,915		4,867
Contingencies and commitments (O)
Contingencies and commitments (P)						Contingencies and commitments (P)	0		0
Equity	Equity					Equity
Arconic Corporation shareholders’ equity:
Parent Company net investment (A)		0		2,664
Arconic Corporation stockholders’ equity:						Arconic Corporation stockholders’ equity:
Common stock	Common stock	1		0		Common stock	1		1
Additional capital	Additional capital	3,332		0		Additional capital	3,351		3,348
Accumulated deficit	Accumulated deficit	(91)		0		Accumulated deficit	(530)		(155)
Accumulated other comprehensive (loss) income (J)		(1,768)		295
Total Arconic Corporation shareholders’ equity		1,474		2,959
Treasury stock (J)						Treasury stock (J)	(9)		0
Accumulated other comprehensive loss (K)						Accumulated other comprehensive loss (K)	(1,199)		(1,761)
Total Arconic Corporation stockholders’ equity						Total Arconic Corporation stockholders’ equity	1,614		1,433
Noncontrolling interest	Noncontrolling interest	14		14		Noncontrolling interest	14		14
Total equity	Total equity	1,488		2,973		Total equity	1,628		1,447
Total liabilities and equity	Total liabilities and equity	$	6,146	$	5,058	Total liabilities and equity	$	6,543	$	6,314

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

Arconic Corporation and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)


		Nine months ended September 30,					Six months ended June 30,
		2020		2019			2021		2020
Operating Activities	Operating Activities					Operating Activities
Net (loss) income		$	(45)	$	9
Adjustments to reconcile net (loss) income to cash provided from operations:
Net loss						Net loss	$	(375)	$	(50)
Adjustments to reconcile net loss to cash used for operations:						Adjustments to reconcile net loss to cash used for operations:
Depreciation and amortization	Depreciation and amortization	191		190		Depreciation and amortization	125		128
Deferred income taxes	Deferred income taxes	28		11		Deferred income taxes	(113)		50
Restructuring and other charges (E)		61		104
Net periodic pension benefit cost (G)		61		4
Restructuring and other charges (E)						Restructuring and other charges (E)	598		58
Net periodic pension benefit cost (G)						Net periodic pension benefit cost (G)	40		39
Stock-based compensation	Stock-based compensation	18		28		Stock-based compensation	7		12
Amortization of debt issuance costs (M)		23		0
Amortization of debt issuance costs (N)						Amortization of debt issuance costs (N)	1		21
Other	Other	(2)		7		Other	15		2
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:	Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:					Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
(Increase) in receivables	(Increase) in receivables	(250)		(48)		(Increase) in receivables	(247)		(184)
Decrease (Increase) in inventories		197		(30)
(Increase) Decrease in inventories						(Increase) Decrease in inventories	(357)		115
(Increase) in prepaid expenses and other current assets	(Increase) in prepaid expenses and other current assets	(24)		(12)		(Increase) in prepaid expenses and other current assets	(10)		(25)
(Decrease) in accounts payable, trade (A)		(165)		(96)
Increase (Decrease) in accounts payable, trade (A)						Increase (Decrease) in accounts payable, trade (A)	323		(334)
(Decrease) in accrued expenses	(Decrease) in accrued expenses	(153)		(48)		(Decrease) in accrued expenses	(34)		(92)
Increase in taxes, including income taxes	Increase in taxes, including income taxes	75		13		Increase in taxes, including income taxes	14		54
Pension contributions		(44)		(2)
Decrease (Increase) in noncurrent assets		28		(6)
Pension contributions (G)						Pension contributions (G)	(453)		(44)
(Increase) Decrease in noncurrent assets						(Increase) Decrease in noncurrent assets	(4)		21
Increase in noncurrent liabilities	Increase in noncurrent liabilities	19		21		Increase in noncurrent liabilities	9		7
Cash provided from operations		18		145
Cash used for operations						Cash used for operations	(461)		(222)
Financing Activities	Financing Activities					Financing Activities
Net transfers from (to) former parent company		216		(69)
Separation payment to former parent company (A)		(728)		—
Additions to debt (original maturities greater than three months) (M)		2,400		0
Debt issuance costs (M)		(57)		0
Payments on debt (original maturities greater than three months) (M)		(1,100)		0
Net transfers from former parent company						Net transfers from former parent company	0		216
Separation payment to former parent company (A)						Separation payment to former parent company (A)	—		(728)
Additions to debt (original maturities greater than three months) (N)						Additions to debt (original maturities greater than three months) (N)	319		2,400
Debt issuance costs (N)						Debt issuance costs (N)	(5)		(57)
Payments on debt (original maturities greater than three months) (N)						Payments on debt (original maturities greater than three months) (N)	0		(1,100)
Repurchases of common stock (J)						Repurchases of common stock (J)	(9)		0
Other	Other	4		1		Other	(17)		0
Cash provided from (used for) financing activities		735		(68)
Cash provided from financing activities						Cash provided from financing activities	288		731
Investing Activities	Investing Activities					Investing Activities
Capital expenditures (A)		(126)		(120)
Proceeds from the sale of assets and businesses (N)		102		11
Cash used for investing activities		(24)		(109)
Capital expenditures (A)						Capital expenditures (A)	(72)		(87)
Proceeds from the sale of assets and businesses (O)						Proceeds from the sale of assets and businesses (O)	(2)		102
Cash (used for) provided from investing activities						Cash (used for) provided from investing activities	(74)		15
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	1		(2)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	0		(1)
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	730		(34)		Net change in cash and cash equivalents and restricted cash	(247)		523
Cash and cash equivalents and restricted cash at beginning of year	Cash and cash equivalents and restricted cash at beginning of year	72		81		Cash and cash equivalents and restricted cash at beginning of year	787		72
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	802	$	47	Cash and cash equivalents and restricted cash at end of period	$	540	$	595

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

Arconic Corporation and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(in millions)

Parent
Company net
investment Common stock Additional capital Accumulated deficit Accumulated
other
comprehensive
income (loss) Noncontrolling
interest Total
equity
Balance at June 30, 2019 $ 2,841 $ — $ — $ — $ 264 $ 12 $ 3,117
Net loss (24) — — — — — (24)
Other comprehensive income (J) — — — — 46 — 46
Change in ParentCo contribution (138) — — — — — (138)
Other — — — — — 2 2
Balance at September 30, 2019 $ 2,679 $ — $ — $ — $ 310 $ 14 $ 3,003
Balance at June 30, 2020 $ 0 $ 1 $ 3,318 $ (96) $ (1,848) $ 14 $ 1,389
Net income 0 — — 5 — — 5
Other comprehensive income (J) — — — — 80 — 80
Separation-related adjustments — — 8 — — — 8
Stock-based compensation — — 6 — — — 6
Balance at September 30, 2020 $ 0 $ 1 $ 3,332 $ (91) $ (1,768) $ 14 $ 1,488

Balance at December 31, 2018 $ 2,707 $ — $ — $ — $ 250 $ 12 $ 2,969
Adoption of accounting standard 73 — — — — — 73
Net income 9 — — — — — 9
Other comprehensive income (J) — — — — 60 — 60
Change in ParentCo contribution (111) — — — — — (111)
Other 1 — — — — 2 3
Balance at September 30, 2019 $ 2,679 $ — $ — $ — $ 310 $ 14 $ 3,003
Balance at December 31, 2019 $ 2,664 $ — $ — $ — $ 295 $ 14 $ 2,973
Net income (loss) 46 — — (91) — — (45)
Other comprehensive income (J) — — — — 139 — 139
Establishment of additional defined benefit plans (G) 349 — — — (1,752) — (1,403)
Change in ParentCo contribution 217 — — — — — 217
Separation payment to former parent company (A) (728) — — — — — (728)
Separation-related adjustments (2,548) 3,322 — (450) — 324
Issuance of common stock — 1 (1) — — — —
Stock-based compensation — — 11 — — — 11
Balance at September 30, 2020 $ 0 $ 1 $ 3,332 $ (91) $ (1,768) $ 14 $ 1,488


	Parent Company net investment		Common stock		Additional capital		Accumulated deficit		Treasury stock		Accumulated other comprehensive (loss) income		Noncontrolling interest		Total equity

Balance at March 31, 2020	$	3,276	$	0	$	0	$	0	$	0	$	(1,432)	$	13	$	1,857
Net loss	—		—		—		(96)		—		—		—		(96)
Other comprehensive income (K)	—		—		—		—		—		34		—		34
Separation payment to former parent company (A)	(728)		—		—		—		—		—		—		(728)
Separation-related adjustments	(2,548)		—		3,314		—		—		(450)		—		316
Issuance of common stock	—		1		(1)		—		—		—		—		0
Stock-based compensation	—		—		5		—		—		—		—		5
Other	—		—		—		—		—		—		1		1
Balance at June 30, 2020	$	0	$	1	$	3,318	$	(96)	$	0	$	(1,848)	$	14	$	1,389

Balance at March 31, 2021	$	0	$	1	$	3,343	$	(103)	$	0	$	(1,765)	$	14	$	1,490
Net loss	—		—		—		(427)		—		—		—		(427)
Other comprehensive income (K)	—		—		—		—		—		566		—		566
Repurchases of common stock (J)	—		—		—		—		(9)		—		—		(9)
Stock-based compensation	—		—		5		—		—		—		—		5
Other	—		—		3		—		—		—		—		3
Balance at June 30, 2021	$	0	$	1	$	3,351	$	(530)	$	(9)	$	(1,199)	$	14	$	1,628

Balance at December 31, 2019	$	2,664	$	0	$	0	$	0	$	0	$	295	$	14	$	2,973
Net income (loss)	46		—		—		(96)		—		—		—		(50)
Other comprehensive income (K)	—		—		—		—		—		59		—		59
Establishment of additional defined benefit plans	349		—		—		—		—		(1,752)		—		(1,403)
Change in ParentCo contribution	217		—		—		—		—		—		—		217
Separation payment to former parent company (A)	(728)		—		—		—		—		—		—		(728)
Separation-related adjustments	(2,548)		—		3,314		—		—		(450)		—		316
Issuance of common stock	—		1		(1)		—		—		—		—		0
Stock-based compensation	—		—		5		—		—		—		—		5
Balance at June 30, 2020	$	0	$	1	$	3,318	$	(96)	$	0	$	(1,848)	$	14	$	1,389

Balance at December 31, 2020	$	0	$	1	$	3,348	$	(155)	$	0	$	(1,761)	$	14	$	1,447
Net loss	—		—		—		(375)		—		—		—		(375)
Other comprehensive income (K)	—		—		—		—		—		562		—		562
Repurchases of common stock (J)	—		—		—		—		(9)		—		—		(9)
Stock-based compensation	—		—		7		—		—		—		—		7
Other	—		—		(4)		—		—		—		—		(4)
Balance at June 30, 2021	$	0	$	1	$	3,351	$	(530)	$	(9)	$	(1,199)	$	14	$	1,628

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

Arconic Corporation and subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

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

A. The Separation and Basis of Presentation

The interim Consolidated Financial Statements of Arconic Corporation and its subsidiaries (“~~Arconic Corporation”~~Arconic” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The ~~2019~~2020 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). This Form 10-Q report should be read in conjunction with ~~the Company’s~~Arconic’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, which includes all disclosures required by GAAP. In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates upon subsequent resolution of identified matters.

References ~~in these Notes~~ to ~~(i)~~ “ParentCo” refer to Arconic Inc., a Delaware corporation, and its consolidated subsidiaries (through March 31, 2020, at which time it was renamed Howmet Aerospace Inc. (“Howmet”), and (ii) “2016 Separation Transaction” refer to the November 1, 2016 separation of Alcoa Inc., a Pennsylvania corporation, into two standalone, publicly-traded companies, Arconic Inc. and Alcoa Corporation.).

Change in Inventory Accounting Principle. Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the accompanying Consolidated Financial Statements. See Note KL for additional information.

Statement of Consolidated Cash Flows. In preparing the Statement of Consolidated Cash Flows for the nine months ended September 30, 2020, management identified a misclassification related to the non-cash portion of properties, plants, and equipment additions. This non-cash portion is the result of the timing difference that exists between when the Company records such additions as assets on its Consolidated Balance Sheet and when such additions have been paid in cash. ~~Accordingly,~~As a result, the amount of (Decrease) in accounts payable, trade previously reported in Cash used for operations for each of the three months ended March 31, 2020 and the six months ended June 30, 2020 was overstated by $35 and $43, respectively, and the amount of Capital expenditures previously reported in Cash provided from investing activities for each of the three months ended March 31, 2020 and the six months ended June 30, 2020 was understated by $35 and $43, respectively. ~~The~~Accordingly, the amounts for (Decrease) in accounts payable, trade and Capital expenditures on the accompanying Statement of Consolidated Cash Flows for the ~~nine~~six months ended ~~September~~June 30, 2020 ~~are correctly stated. Additionally, financial information for the referenced prior periods not presented herein will be corrected, as applicable, in future filings.~~were revised.

Coronavirus. Our operations and financial results have been, and ~~are expected to~~may continue to be, adversely affected by the ~~current~~ coronavirus (COVID-19) pandemic. ~~Since Arconic’s launch as a standalone company on April 1, 2020, market conditions have been changing rapidly and unpredictably.~~ As a result of the COVID-19 pandemic, several of our automotive and aerospace customers temporarily suspended ~~operations.~~operations at different points throughout 2020. While many of our customers have resumed operations as it relates to the ~~Company is~~COVID-19 pandemic, we are unable to estimate with certainty at this time the status, frequency, or duration of any potential reoccurrences of customer shutdowns, or the duration or extent of resumed operations. In 2019, Arconic derived approximately 35% of its revenue from the ground transportation end market—including approximately 13% of its revenue from Ford, our largest customer—and 18% from the aerospace end market. Due to the impacts of the COVID-19 pandemic on our customers, we are experiencing, and expect to continue experiencing, lower demand and volume for certain of our products. These trends may lead to charges, impairments, and other adverse financial impacts over ~~time. The duration~~time, including but not limited to the recoverability of goodwill and long-lived assets and the ~~current disruptions to our customers and related financial impact to us has been estimated, but remains highly uncertain at this time.~~realizability of deferred tax assets. The impact on our business, results of operations, financial condition, liquidity, and/or cash flows will be magnified if the disruption from the COVID-19 pandemic continues for an extended period.

As a result of these developments, Arconic Corporation implemented several measures to mitigate the impacts of COVID-19 on the Company’s business, results of operations, financial condition, liquidity, and cash flows:

•~~deferred initiating a dividend on common stock;~~

•~~reduced the CEO’s salary and the Board of Directors’ cash compensation by 30% (see below);~~

•~~reduced salaries for senior-level management by 20% and for all other salaried employees by 10% (see below);~~

•~~restructuring of the salaried workforce, targeting a 10% reduction;~~

•~~idling of various production facilities based on market conditions within the regions where the Company operates;~~

•decreasing production and operating with a reduced labor force through shortened work weeks, shift reductions, layoffs, and the elimination of temporary workers and contractors at U.S.-based rolling and extrusion facilities;

•~~implementing a combination of modified schedules, adjusted work hours, lower costs, and/or delayed raises at all rolling mill facilities in Europe, China and Russia;~~

•~~suspended the 401K match program for U.S. salaried employees (see below); and~~

•~~reducing capital expenditures by approximately $50, or approximately 30%.~~

Effective September 1, 2020, the Company restored both the salaries of all salaried employees and the 401K match of all salaried U.S. employees, including executive officers, to the levels in effect prior to the actions described above. Also effective September 1, 2020, the Company restored the annual cash retainers payable to the non-employee members of the Company’s Board of Directors to the levels in effect prior to the previous reduction described above.

The Separation. On February 8, 2019, ParentCo announced that its Board of Directors approved a plan to separate into 2 standalone, publicly-traded companies (the “Separation”). The spin-off company, later named Arconic Corporation, was to include the rolled aluminum products, aluminum extrusions, and architectural products operations of ParentCo, as well as the Latin America extrusions operations sold in April 2018, (collectively, the “Arconic Corporation Businesses”). The existing ~~publicly traded~~publicly-traded company, ParentCo, was to continue to own the engine products, engineered structures, fastening systems, and forged wheels operations (collectively, the “Howmet Aerospace Businesses”).

368(a)(1)(D) of the U.S. Internal Revenue Code (i.e., a transaction that is generally tax-free for U.S. federal income tax purposes); and the U.S. Securities and Exchange Commission (the “SEC”) declaring effective a Registration Statement on Form 10, as amended, filed with the SEC on February 13, 2020 (effectiveness was declared by the SEC on February 13, 2020).

On February 5, 2020, ParentCo’s Board of Directors approved the completion of the Separation by means of a pro rata distribution by ParentCo of all of the outstanding shares of Arconic common stock ~~of Arconic Corporation~~ to ParentCo common ~~shareholders~~stockholders of record as of the close of business on March 19, 2020 (the “Record Date”). At the time of the Separation, ParentCo common ~~shareholders~~stockholders were to receive one share of Arconic ~~Corporation~~ common stock for every four shares of ParentCo common stock (the “Separation Ratio”) held as of the Record Date (ParentCo common ~~shareholders~~stockholders were to receive cash in lieu of fractional shares).

In connection with the Separation, as of March 31, 2020, Arconic ~~Corporation~~ and Howmet ~~Aerospace~~ entered into several agreements to implement the legal and structural separation between the two companies; govern the relationship between Arconic ~~Corporation~~ and Howmet ~~Aerospace~~ after the completion of the Separation; and allocate between Arconic ~~Corporation~~ and Howmet ~~Aerospace~~ various assets, liabilities, and obligations, including, among other things, employee benefits, environmental liabilities, intellectual property, and tax-related assets and liabilities. These agreements included a Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, and certain Patent, Know-How, Trade Secret License and Trademark License Agreements. The Separation and Distribution Agreement identified the assets to be transferred, the liabilities to be assumed, and the contracts to be transferred to each of Arconic ~~Corporation~~ and Howmet ~~Aerospace~~ as part of the Separation, and provided for when and how these transfers and assumptions were to occur.

On April 1, 2020 (the “Separation Date”), the Separation was completed and became effective at 12:01 a.m. Eastern Daylight Time. To effect the Separation, ParentCo undertook a series of transactions to separate the net assets and certain legal entities of ParentCo, resulting in a cash payment of $728 to ParentCo by Arconic ~~Corporation~~ from a portion of the aggregate net proceeds of previously executed financing arrangements (see 2020 Activity in Note M)N). In connection with the Separation, 109,021,376 shares of Arconic ~~Corporation~~ common stock were distributed to ParentCo stockholders. This was determined by applying the Separation Ratio to the 436,085,504 shares of ParentCo’s outstanding common stock as of the Record Date. “Regular-way” trading of ~~Arconic Corporation’s~~Arconic’s common stock began with the opening of the New York Stock Exchange on April 1, 2020 under the ticker symbol “ARNC.” ~~Arconic Corporation’s~~Arconic’s common stock has a par value of $0.01 per share.

ParentCo incurred costs to evaluate, plan, and execute the Separation, and Arconic ~~Corporation~~ was allocated a pro rata portion of these costs based on segment revenue (see Cost Allocations below). ParentCo recognized $38 in the 2020 ~~nine-month~~six-month period ~~and $25 and $44 in the 2019 third quarter and nine-month period, respectively,~~ for such costs, of which $18 ~~in the 2020 nine-month period and $13 and $23 in the 2019 third quarter and nine-month period, respectively,~~ was allocated to ~~Arconic Corporation.~~Arconic. The allocated ~~amounts were~~amount was included in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations.

~~Basis of Presentation.~~ The Consolidated Financial Statements of Arconic Corporation are prepared in conformity with GAAP. In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations related to COVID-19. Management has made its best estimates using all relevant information available at the time, but it is possible that these estimates will differ from actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19.

Principles of Consolidation. The Company’s Consolidated Financial Statements ~~of Arconic Corporation~~ include the accounts of Arconic ~~Corporation~~ and companies in which Arconic ~~Corporation~~ has a controlling interest. Intercompany transactions have been eliminated.

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

Prior to the Separation Date, Arconic ~~Corporation~~ did not operate as a separate, standalone entity. ~~Arconic Corporation’s~~Arconic’s operations were included in ParentCo’s financial results. Accordingly, for all periods prior to the Separation Date, the accompanying Consolidated Financial Statements were prepared from ParentCo’s historical accounting records and were presented on a standalone basis as if the Arconic Corporation Businesses had been conducted independently from ParentCo. Such Consolidated Financial Statements include the historical operations that were considered to comprise the Arconic Corporation Businesses, as well as certain assets and liabilities that were historically held at ParentCo’s corporate level but were specifically identifiable or otherwise attributable to ~~Arconic Corporation.~~Arconic. ParentCo’s net investment in these operations was reflected as Parent Company net investment on the ~~accompanying~~Company’s Consolidated Financial Statements. All significant transactions and accounts within Arconic ~~Corporation~~ were eliminated. All significant intercompany transactions between ParentCo and Arconic ~~Corporation~~ were included within Parent Company net investment on ~~the accompanying~~Arconic’s Consolidated Financial Statements.

Cost Allocations. The description and information on cost allocations is applicable for all periods included in the Company’s Consolidated Financial Statements prior to the Separation Date.

on the accompanying Statement of Consolidated Operations within Cost of goods sold, Selling, general administrative and other expenses, and Research and development expenses. These expenses were allocated to Arconic ~~Corporation~~ on the basis of direct usage when identifiable, with the remainder allocated based on the Arconic Corporation Businesses’ segment revenue as a percentage of ParentCo’s total segment revenue, as reported in the respective periods.

All external debt not directly attributable to the Arconic Corporation Businesses was excluded from the ~~accompanying~~Company’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Arconic ~~Corporation~~ based on the ratio of capital invested by ParentCo in the Arconic Corporation Businesses to the total capital invested by ParentCo in both the Arconic Corporation Businesses and the Howmet Aerospace Businesses, and were included on the accompanying Statement of Consolidated Operations within Interest expense.

The following table reflects the allocations described above:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Cost of goods sold(1)
$ 0 $ 4 $ 0 $ 11
Selling, general administrative, and other expenses(2)
0 27 25 80
Research and development expenses 0 1 0 8
Provision for depreciation and amortization 0 4 1 9
Restructuring and other charges (E) 0 2 2 5
Interest expense 0 29 28 86
Other expenses (income), net (F) 0 1 (5) 4


Six months ended June 30,	2020
Cost of goods sold	$	0
Selling, general administrative, and other expenses*	25
Research and development expenses	0
Provision for depreciation and amortization	1
Restructuring and other charges (E)	2
Interest expense	28
Other (income), net (F)	(5)

_____________________

(1) For all periods presented, amount principally relates to an allocation of expenses for ParentCo’s retained pension and other postretirement benefit obligations associated with closed and sold operations.

~~(2)~~* In the 2020 ~~nine-month period and the 2019 third quarter and nine-month~~six-month period, amount includes an allocation of $18 ~~$13, and $23, respectively,~~ for costs incurred by ParentCo associated with the Separation (see above).

Management believes the assumptions regarding the allocation of ParentCo’s general corporate expenses and financing costs were reasonable.

Nevertheless, the Company’s Consolidated Financial Statements ~~of Arconic Corporation~~ may not include all of the actual expenses that would have been incurred and may not reflect ~~Arconic Corporation’s~~Arconic’s consolidated results of operations, financial position, and cash flows had it been a standalone company during the periods prior to the Separation Date. Actual costs that would have been incurred if Arconic ~~Corporation~~ had been a standalone company would depend on multiple factors, including organizational structure, capital structure, and strategic decisions made in various areas, including information technology and infrastructure. Transactions between Arconic ~~Corporation~~ and ParentCo, including sales to the Howmet Aerospace Businesses, ~~were presented as related party transactions in these Consolidated Financial Statements and~~ were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these transactions was reflected on the accompanying Statement of Consolidated Cash Flows as a financing activity and on ~~the accompanying~~Arconic’s Consolidated Balance Sheet as Parent Company net investment.

Cash ~~management.~~Management. The description and information on cash management is applicable for all periods included in the Company’s Consolidated Financial Statements prior to the Separation Date.

Cash was managed centrally with certain net earnings reinvested locally and working capital requirements met from existing liquid funds. Accordingly, the cash and cash equivalents held by ParentCo at the corporate level were not attributed to Arconic ~~Corporation~~ for any of the periods presented prior to the Separation Date. Only cash amounts specifically attributable to Arconic ~~Corporation~~ were reflected in the ~~accompanying~~Company’s Consolidated Balance Sheet. Transfers of cash, both to and from ParentCo’s centralized cash management system, were reflected as a component of Parent Company net investment on ~~the accompanying~~Arconic’s Consolidated Balance Sheet and as a financing activity on the accompanying Statement of Consolidated Cash Flows.

ParentCo had an arrangement with several financial institutions to sell certain customer receivables without recourse on a revolving basis. The sale of such receivables was completed through the use of a bankruptcy-remote special-purpose entity, which was a consolidated subsidiary of ParentCo. In connection with this arrangement, in all periods prior to January 1, 2020, certain of ~~Arconic Corporation’s~~Arconic’s customer receivables were sold on a revolving basis to this bankruptcy-remote subsidiary of ParentCo; these sales were reflected as a component of Parent Company net investment on ~~the accompanying~~Arconic’s Consolidated Balance Sheet. As of December 31, 2019, the amount of ~~Arconic Corporation’s~~Arconic’s outstanding customer receivables sold to ParentCo’s subsidiary was $281. Effective January 2, 2020, in preparation for the Separation, ParentCo’s arrangement was amended to no longer include customer receivables associated with the Arconic Corporation Businesses, as well as to remove previously included customer

receivables related to the Arconic Corporation Businesses not yet collected as of January 2, 2020. Accordingly, uncollected customer receivables of $281 related to the Arconic Corporation Businesses were removed from the program and the right to collect and receive the cash from the customer was returned to ~~Arconic Corporation.~~Arconic.

ParentCo participated in several accounts payable settlement arrangements with certain vendors and third-party intermediaries. These arrangements provided that, at the vendor’s request, the third-party intermediary advance the amount of the scheduled payment to the vendor, less an appropriate discount, before the scheduled payment date and ParentCo make payment to the third-party intermediary on the date stipulated in accordance with the commercial terms negotiated with its vendors. In connection with these arrangements, certain of ~~Arconic Corporation’s~~Arconic’s accounts payable were settled, at the vendor’s request, before the scheduled payment date; these settlements were reflected as a component of Parent Company net investment on ~~the accompanying~~Arconic’s Consolidated Balance Sheet. As of December 31, 2019, the amount of ~~Arconic Corporation’s~~Arconic’s accounts payables settled under such arrangements that had yet to be extinguished between ParentCo and third-party intermediaries was $1.

~~Related Party Transactions.~~ Transactions between the Arconic Corporation Businesses and the Howmet Aerospace Businesses have been presented as related party transactions on the accompanying Consolidated Financial Statements. Sales to the Howmet Aerospace Businesses from the Arconic Corporation Businesses were $24 and $81 in the 2020 third quarter and nine-month period, respectively, and $41 and $142 in the 2019 third quarter and nine-month period, respectively. As of September 30, 2020, outstanding receivables from the Howmet Aerospace Businesses were $13 and were included in Receivables from customers on the accompanying Consolidated Balance Sheet.

~~Goodwill.~~ During the first quarter of 2020, the equity value of Arconic Corporation’s peer group companies, and the overall U.S. stock market declined significantly amid market volatility. In addition, as a result of the COVID-19 pandemic and measures designed to contain the spread, sales globally to customers in the ground transportation and aerospace industries that are impacted by COVID-19 have been and are expected to be negatively impacted as a result of disruption in demand. As a result of these macroeconomic factors, the Company performed a qualitative assessment to evaluate whether it is more likely than not that the fair value of any of its reporting units is less than the respective carrying values. As a result of this assessment, the Company concluded that no further analysis was required and no impairment exists. The Company revisited this assessment in both the second and third quarters of 2020 amid the continued widespread impact of COVID-19 and arrived at the same conclusion. If Arconic Corporation’s actual results or external market factors further decline significantly, future goodwill impairment charges may be necessary and could be material.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, ~~2020,~~2021, Arconic ~~Corporation~~ adopted changes issued by the Financial Accounting Standards Board (FASB) to ~~credit losses. This~~accounting for income taxes. The FASB issued this guidance ~~added a new impairment model (known~~to simplify various aspects related to the accounting for income taxes as part of the ~~current expected credit loss (CECL) model), which~~overall initiative to reduce complexity in accounting standards. These changes include the removal of certain exceptions and the simplification of several provisions, including: requiring an entity to recognize tax that is partially based on ~~expected losses rather than~~income, such as franchise tax, as income-based tax and account for additional amounts incurred ~~losses. Under this model,~~as non-income based tax; requiring an entity ~~is required~~ to ~~recognize~~evaluate when a step up in tax basis of goodwill should be considered part of the original business combination or a separate transaction; and requiring an ~~allowance equivalent~~entity to ~~its estimate~~reflect the effect of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. This model does not have a minimum threshold for recognition of impairment losses and requiresan enacted change in tax laws or rates in the ~~measurement of expected credit losses on assets~~annual effective tax rate computation in the interim period that ~~have a low risk of loss.~~includes the enactment date. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements. ~~This guidance~~The Company will need to ~~be considered~~continue to consider this guidance in future ~~assessments of credit losses.~~periods.

Issued

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. These expedients and exceptions may be used when applying GAAP, if certain criteria are met, to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of such reform. The purpose of this guidance is to provide relief to entities from experiencing unintended accounting and/or financial reporting outcomes or consequences due to reference rate reform. This guidance became effective immediately on March 12, 2020 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022, after which time the expedients and exceptions expire. In January 2021, the FASB issued clarifying guidance to specify that certain of the optional expedients and exceptions apply to derivatives that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. This additional guidance may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively in the manner previously described for the guidance issued on March 12, 2020. As of ~~September~~June 30, ~~2020, the Company~~2021, Arconic has not experienced any unintended outcomes or consequences of reference rate reform that would necessitate the adoption of this guidance. Additionally, the Company will not need to consider the application of this guidance related to its credit agreement, which is scheduled to mature on May 13, 2025 and provides a credit facility that is referenced to LIBOR in certain borrowing situations, ~~(see Note M),~~ as the terms of such agreement currently provide for a replacement rate if LIBOR is discontinued by the end of 2021 as expected. That said, management will continue to closely monitor all potential instances of reference rate reform to determine if adoption of this guidance becomes necessary in the future.

1110

C. Revenue from Contracts with Customers

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


Third quarter ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
Second quarter ended June 30,										Second quarter ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2021										2021
Ground Transportation										Ground Transportation	$	610	$	0	$	24	$	634
Building and Construction										Building and Construction	51		257		0		308
Packaging										Packaging	276		0		0		276
Aerospace										Aerospace	124		0		27		151
Industrial Products and Other										Industrial Products and Other	413		0		19		432
Total end-market revenue										Total end-market revenue	$	1,474	$	257	$	70	$	1,801
2020	2020									2020
Ground Transportation	Ground Transportation	$	493	$	0	$	25	$	518	Ground Transportation	$	250	$	0	$	7	$	257
Building and Construction	Building and Construction	42		241		0		283		Building and Construction	33		230		0		263
Packaging										Packaging	195		0		0		195
Aerospace	Aerospace	107		0		44		151		Aerospace	173		0		64		237
Industrial Products and Other	Industrial Products and Other	252		0		13		265		Industrial Products and Other	229		0		10		239
Packaging		198		0		0		198
Total end-market revenue	Total end-market revenue	$	1,092	$	241	$	82	$	1,415	Total end-market revenue	$	880	$	230	$	81	$	1,191
2019
Ground Transportation		$	592	$	0	$	26	$	618
Building and Construction		47		282		0		329
Aerospace		243		0		68		311
Industrial Products and Other		279		0		32		311
Packaging		236		0		0		236
Total end-market revenue		$	1,397	$	282	$	126	$	1,805


Nine months ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
Six months ended June 30,										Six months ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2021										2021
Ground Transportation										Ground Transportation	$	1,247	$	0	$	49	$	1,296
Building and Construction										Building and Construction	102		493		0		595
Packaging										Packaging	495		0		0		495
Aerospace										Aerospace	233		0		56		289
Industrial Products and Other										Industrial Products and Other	761		0		40		801
Total end-market revenue										Total end-market revenue	$	2,838	$	493	$	145	$	3,476
2020	2020									2020
Ground Transportation	Ground Transportation	$	1,242	$	0	$	62	$	1,304	Ground Transportation	$	749	$	0	$	37	$	786
Building and Construction	Building and Construction	110		727		0		837		Building and Construction	68		486		0		554
Packaging										Packaging	373		0		0		373
Aerospace	Aerospace	505		0		183		688		Aerospace	398		0		139		537
Industrial Products and Other	Industrial Products and Other	766		0		51		817		Industrial Products and Other	514		0		38		552
Packaging		571		0		0		571
Total end-market revenue	Total end-market revenue	$	3,194	$	727	$	296	$	4,217	Total end-market revenue	$	2,102	$	486	$	214	$	2,802
2019
Ground Transportation		$	1,878	$	0	$	88	$	1,966
Building and Construction		149		855		0		1,004
Aerospace		754		0		221		975
Industrial Products and Other		826		0		111		937
Packaging		687		0		0		687
Total end-market revenue		$	4,294	$	855	$	420	$	5,569

1211

D. Segment and Related Information

~~Effective in the second quarter of 2020, management elected to change the~~Arconic’s profit or loss measure ~~of the Company’s~~for its reportable segments ~~from Segment operating profit to~~is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) ~~for internal reporting and performance measurement purposes. This change was made to enhance the transparency and visibility of the underlying operating performance of each segment.~~. Effective in the third quarter of 2020, management refined the Company’s Segment Adjusted EBITDA measure to remove the impact of metal price lag (see footnote 42 to the Segment Adjusted EBITDA reconciliation below). This change was made to further enhance the transparency and visibility of the underlying operating performance of each segment by removing the volatility associated with metal prices.

~~Arconic Corporation~~ The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus each of (i) Cost of goods sold, (ii) Selling, general administrative, and other expenses, and (iii) ~~and~~ Research and development expenses, plus Stock-based compensation expense and Metal price lag. Previously, the Company calculated Segment operating profit as Segment Adjusted EBITDA minus each of (i) the Provision for depreciation and amortization, (ii) Stock-based compensation expense, and (iii) Metal price lag. Arconic Corporation’sArconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

Also, effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the accompanying Consolidated Financial Statements. See Note KL for additional information.

Segment information for all prior periods presented was recast to reflect the ~~new~~updated measure of segment profit or loss and the change in inventory cost method.

The operating results of ~~the Company’s~~Arconic’s reportable segments were as follows (differences between segment totals and the Company’s consolidated ~~amounts~~totals for line items not reconciled are in Corporate):


Third quarter ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
Second quarter ended June 30,										Second quarter ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2021										2021
Sales:										Sales:
Third-party sales										Third-party sales	$	1,474	$	257	$	70	$	1,801
Intersegment sales										Intersegment sales	10		0		0		10
Total sales										Total sales	$	1,484	$	257	$	70	$	1,811
Segment Adjusted EBITDA										Segment Adjusted EBITDA	$	173	$	35	$	(8)	$	200
Provision for depreciation and amortization										Provision for depreciation and amortization	$	49	$	5	$	5	$	59
2020	2020									2020
Sales:	Sales:									Sales:
Third-party sales-unrelated party		$	1,073	$	241	$	77	$	1,391
Third-party sales-related party		19		0		5		24
Third-party sales										Third-party sales	$	880	$	230	$	81	$	1,191
Intersegment sales	Intersegment sales	3		0		1		4		Intersegment sales	4		0		0		4
Total sales	Total sales	$	1,095	$	241	$	83	$	1,419	Total sales	$	884	$	230	$	81	$	1,195
Segment Adjusted EBITDA(1)		$	138	$	40	$	(6)	$	172
Segment Adjusted EBITDA										Segment Adjusted EBITDA	$	85	$	37	$	(14)	$	108
Provision for depreciation and amortization	Provision for depreciation and amortization	$	48	$	5	$	6	$	59	Provision for depreciation and amortization	$	53	$	5	$	6	$	64
2019
Sales:
Third-party sales-unrelated party		$	1,366	$	282	$	116	$	1,764
Third-party sales-related party		31		0		10		41
Intersegment sales		4		0		1		5
Total sales		$	1,401	$	282	$	127	$	1,810
Segment Adjusted EBITDA(1),(2)		$	160	$	39	$	(8)	$	191
Provision for depreciation and amortization		$	46	$	4	$	7	$	57

1312


Nine months ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
Six months ended June 30,										Six months ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2021										2021
Sales:										Sales:
Third-party sales										Third-party sales	$	2,838	$	493	$	145	$	3,476
Intersegment sales										Intersegment sales	17		0		0		17
Total sales										Total sales	$	2,855	$	493	$	145	$	3,493
Segment Adjusted EBITDA										Segment Adjusted EBITDA	$	338	$	63	$	(12)	$	389
Provision for depreciation and amortization										Provision for depreciation and amortization	$	97	$	9	$	11	$	117
2020	2020									2020
Sales:	Sales:									Sales:
Third-party sales-unrelated party		$	3,144	$	727	$	265	$	4,136
Third-party sales-related party		50		0		31		81
Third-party sales										Third-party sales	$	2,102	$	486	$	214	$	2,802
Intersegment sales	Intersegment sales	14		0		1		15		Intersegment sales	11		0		0		11
Total sales	Total sales	$	3,208	$	727	$	297	$	4,232	Total sales	$	2,113	$	486	$	214	$	2,813
Segment Adjusted EBITDA(1)		$	388	$	107	$	(12)	$	483
Segment Adjusted EBITDA										Segment Adjusted EBITDA	$	250	$	67	$	(6)	$	311
Provision for depreciation and amortization	Provision for depreciation and amortization	$	147	$	14	$	18	$	179	Provision for depreciation and amortization	$	99	$	9	$	12	$	120
2019
Sales:
Third-party sales-unrelated party		$	4,193	$	855	$	379	$	5,427
Third-party sales-related party		101		0		41		142
Intersegment sales		20		0		1		21
Total sales		$	4,314	$	855	$	421	$	5,590
Segment Adjusted EBITDA(1),(2)		$	499	$	96	$	(6)	$	589
Provision for depreciation and amortization		$	139	$	14	$	22	$	175

The following table reconciles total Segment Adjusted EBITDA to consolidated net ~~income (loss)~~loss attributable to Arconic Corporation:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Total Segment Adjusted EBITDA(1),(2)
$ 172 $ 191 $ 483 $ 589
Unallocated amounts:
Corporate expenses(1),(3)
(6) (10) (15) (43)
Stock-based compensation expense (6) (10) (18) (28)
Metal price lag(4)
(16) (10) (30) (33)
Provision for depreciation and amortization (63) (63) (191) (190)
Restructuring and other charges (E) (3) (64) (61) (104)
Other(1),(5)
(14) (12) (42) (54)
Operating income(2)
64 22 126 137
Interest expense (22) (29) (97) (86)
Other (expenses) income, net(1) (F)
(27) 0 (69) 4
Provision for income taxes(2)
(10) (17) (5) (46)
Net income attributable to noncontrolling interest 0 0 0 0
Consolidated net income (loss) attributable to Arconic Corporation(2)
$ 5 $ (24) $ (45) $ 9


	Second quarter ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Total Segment Adjusted EBITDA	$	200	$	108	$	389	$	311
Unallocated amounts:
Corporate expenses(1)	(10)		(7)		(19)		(9)
Stock-based compensation expense	(5)		(5)		(7)		(12)
Metal price lag(2)	(11)		(10)		(6)		(14)
Provision for depreciation and amortization	(62)		(68)		(125)		(128)
Restructuring and other charges(3) (E)	(597)		(77)		(598)		(58)
Other(4)	(10)		(13)		(16)		(28)
Operating (loss) income	(495)		(72)		(382)		62
Interest expense	(25)		(40)		(48)		(75)
Other expenses, net (F)	(15)		(16)		(37)		(42)
Benefit for income taxes (H)	108		32		92		5
Net income attributable to noncontrolling interest	0		0		0		0
Consolidated net loss attributable to Arconic Corporation	$	(427)	$	(96)	$	(375)	$	(50)

________________

Company as a result of the Separation. As a result, beginning in the first quarter of 2020 for these U.S. plans and in the second quarter of 2020 for these non-U.S. plans, Arconic Corporation applied defined benefit plan accounting resulting in benefit plan expense being recorded in operating income (service cost) and nonoperating income (nonservice cost). In all historical periods prior to these respective timeframes, Arconic Corporation was considered a participating employer in ParentCo’s defined benefit plans and, therefore, applied multiemployer plan accounting resulting in the Company’s share of benefit plan expense being recorded entirely in operating income. Also, Arconic Corporation is the plan sponsor of certain other non-U.S. defined benefit plans that contain participants related only to the Arconic Corporation Businesses and, therefore, the related benefit plan expense was recorded in accordance with defined benefit plan accounting in all periods presented. The following table presents the total benefit plan expense (excluding settlements and curtailments) recorded by Arconic Corporation based on the foregoing in each period presented:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Segment Adjusted EBITDA:
Rolled Products $ (5) $ (16) $ (13) $ (47)
Building and Construction Systems 0 (1) (1) (4)
Extrusions (2) (4) (5) (13)
Segment total (7) (21) (19) (64)
Unallocated amounts:
Corporate expenses 0 (3) 0 (11)
Other 0 (3) 1 (7)
Subtotal 0 (6) 1 (18)
Other expenses, net (20) (1) (59) (2)
Total $ (27) $ (28) $ (77) $ (84)

~~(2)~~Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the accompanying Consolidated Financial Statements. See Note K for additional information.

~~(3)~~Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative ~~facilities, as well as research and development expenses of the corporate technical center. Amounts~~facilities. The amount presented for ~~all periods prior to second quarter~~the 2020 ~~represent~~six-month period includes an allocation of ParentCo’s corporate expenses, including research and development expenses, for the portion of the period prior to the Separation Date (see Cost Allocations in Note A)A).

~~(4)~~(2)Metal price lag represents the financial impact of the timing difference between when aluminum prices included in Sales are recognized and when aluminum purchase prices included in Cost of goods sold are realized. This adjustment aims to remove the effect of the volatility in metal prices and the calculation of this impact considers applicable metal hedging transactions.

~~(5)~~(3)Restructuring and other charges includes a charge for the settlement of certain employee retirement benefits of $568 in the 2021 second quarter and six-month period and $55 in the 2020 second quarter and six-month period (see Note G).

(4)Other includes certain items that impact Cost of goods sold and Selling, general administrative, and other expenses on the Company’s Statement of Consolidated Operations that are not included in Segment Adjusted EBITDA.

1514

E. Restructuring and Other Charges

In the ~~2020 third~~2021 second quarter and six-month period, Arconic ~~Corporation~~ recorded ~~a net charge of $3 in~~ Restructuring and other charges of $597 and $598, respectively, which were comprised of the following components: a $3$568 charge for the settlement of certain employee retirement benefits (see Note G)G); a $34 charge for the impairment of several buildings and equipment due to management's decision to abandon these assets located at the Company’s primary research and development facility; a $7 benefit for the settlement of a legacy tax matter related to Brazil; a $1 and $2, respectively, credit for the reversal of reserves established in prior ~~periods;~~periods (see below); a $1 additional loss (six-month period) on the sale of an aluminum rolling mill in Brazil (see Itapissuma in Note O); and a $3 and $4, respectively, net charge for other items, including layoff costs associated with ~~the separation of~~ approximately 30115 employees in the Extrusions ~~segment in response to the impact of COVID 19; and a $1 charge for other items.~~segment.

In the 2020 ~~nine-month~~second quarter and six-month period, Arconic ~~Corporation~~ recorded ~~a net charge of $61 in~~ Restructuring and other charges of $77 and $58, respectively, which were comprised of the following components: a ~~$58~~$55 charge for the settlement of certain employee retirement benefits (see Note G)G); a $25 net gain (six-month period) related to the sales of an extrusions plant in South Korea and an aluminum rolling mill in Brazil (see Note N)O); ~~an $18~~a $17 charge for layoff costs associated with the separation of approximately ~~440~~410 employees across the Company in response to the impact of ~~COVID 19 (see Note A);~~the COVID-19 pandemic; a ~~$14~~$12 credit for the reversal of reserves established in prior periods, including $5 related to an environmental ~~matter (see Note O);~~matter; an $11 charge for costs, of which $8 is for layoff costs associated with approximately 140 employees, related to the planned closure and related reorganizations of several small facilities in the Building and Construction Systems and Extrusions segments; a $4 charge for legacy non-income tax matters inrelated to Brazil; a $2 charge (six-month period) for an allocation of ParentCo’s corporate restructuring activity (see Cost Allocations in Note A)A); and a $7$2 and $6, respectively, net charge for other items.

In As of June 30, 2021, the ~~2019 third~~total expected employee separations related to actions initiated in the 2020 second quarter ~~and nine-month period, Arconic Corporation recorded a net charge~~were 430. The reduction of ~~$64 and $104, respectively, in Restructuring~~120 was due to employees initially identified for separation accepting other positions within the Company, natural attrition, and other ~~charges, which were comprised~~events that occurred in the second half of 2020 and/or first half of 2021. Accordingly, the ~~following components: a $59 impairment charge (both periods) for the assets~~Company reduced its estimated layoff costs associated with ~~an aluminum rolling mill~~these actions by $7, of which $2 were reflected as reversals in ~~Brazil as a result of signing a definitive sale agreement~~the 2021 six-month period (see Note N); a $3 and $28 charge, respectively, for layoff costs, including the separation of approximately 120 and 370 employees, respectively, (all within the Rolled Products and Building and Construction Systems segments); a $10 charge (nine-month period) for the impairment of the carrying value of a tradename intangible asset; a $2 and $5 net charge, respectively, for an allocation of ParentCo’s corporate restructuring activity (see Cost Allocations in Note A); and a $2 net charge (nine-month period) for other items.above).

~~Arconic Corporation~~The Company does not include Restructuring and other charges in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Rolled Products	Rolled Products	$	(1)	$	61	$	15	$	69	Rolled Products	$	0	$	7	$	1	$	16
Building and Construction Systems	Building and Construction Systems	0		2		6		31		Building and Construction Systems	0		5		(1)		6
Extrusions	Extrusions	1		(1)		(27)		(1)		Extrusions	2		3		3		(28)
Segment total	Segment total	0		62		(6)		99		Segment total	2		15		3		(6)
Corporate	Corporate	3		2		67		5		Corporate	595		62		595		64
		$	3	$	64	$	61	$	104		$	597	$	77	$	598	$	58

As of ~~September~~June 30, ~~2020,~~2021, approximately ~~310~~35 of the ~~580~~115 employees associated with 2021 restructuring programs, approximately 465 of the 500 (previously 520) employees associated with 2020 restructuring programs, and approximately ~~340~~360 of the 370 ~~(previously 480)~~ employees associated with 2019 restructuring programs were separated. The total number of employees ~~associated with 2019~~related to the 2020 restructuring programs was updated to reflect ~~the reversal of a program initiated by ParentCo in 2019, natural attrition, and~~ employees initially identified for separation accepting other positions within the ~~Company. Most of the~~Company and natural attrition. The remaining separations for the 2021, 2020, and 2019 restructuring programs are expected to be completed ~~during~~between the remainder of ~~2020.~~ 2021 and 2022.

In the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period, Arconic ~~Corporation~~ made cash payments of $3$1 (both periods) against layoff reserves related to the 2021 restructuring programs, $1 and ~~$8,~~$4, respectively, against layoff reserves related to the 2020 restructuring programs, and $2$1 and ~~$8,~~$2, respectively, against layoff reserves related to the 2019 restructuring programs.

1615

Activity and reserve balances for restructuring charges were as follows:

Layoff costs Other costs Total
Reserve balances at December 31, 2018 $ 1 $ 3 $ 4
Cash payments (12) (3) (15)
Restructuring charges 30 2 32
Other(1)
1 (1) 0
Reserve balances at December 31, 2019 20 1 21
Separation-related adjustments(2)
2 0 2
Cash payments (16) (2) (18)
Restructuring charges 26 3 29
Other(1)
(9) (1) (10)
Reserve balances at September 30, 2020(3)
$ 23 $ 1 $ 24


	Layoff costs		Other costs		Total
Reserve balances at December 31, 2019	$	20	$	1	$	21
Separation-related adjustments(1)	2		0		2
Cash payments	(24)		(3)		(27)
Restructuring charges	23		4		27
Other(2)	(8)		(1)		(9)
Reserve balances at December 31, 2020	13		1		14
Cash payments	(7)		(2)		(9)
Restructuring charges	2		2		4
Other(2)	(2)		(1)		(3)
Reserve balances at June 30, 2021(3)	$	6	$	0	$	6

_____________________

(1) ~~Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation.~~

~~(2)~~ Represents liabilities transferred from ParentCo on April 1, 2020 in connection with the Separation (see Note A)A).

(2)Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation.

(3)The remaining reserves are expected to be paid in cash during the remainder of ~~2020,~~2021, with the exception of ~~$12~~$1 that is expected to be paid in ~~2021 ($11) and~~ 2022 ~~($1)~~ related to special termination benefits.

1716

F. Other Expenses, ~~(Income),~~ Net


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Non-service costs — Pension and OPEB (G)		$	20	$	1	$	59	$	2
Foreign currency losses (gains), net		5		2		13		(3)
Non-service costs — Pension and OPEB (G)										Non-service costs — Pension and OPEB (G)	$	16	$	18	$	36	$	39
Foreign currency (gains) losses, net										Foreign currency (gains) losses, net	(2)		(5)		0		8
Interest income	Interest income	0		(3)		(4)		(11)		Interest income	0		(2)		0		(4)
Other, net	Other, net	2		0		1		8		Other, net	1		5		1		(1)
		$	27	$	0	$	69	$	(4)
											$	15	$	16	$	37	$	42

1817

G. Pension and Other Postretirement Benefits

Arconic Corporation sponsors several defined benefit pension and other postretirement plans covering eligible employees and retirees in U.S. and foreign locations, as well as certain legacy plans previously sponsored by ParentCo. Prior to January 1, 2020 for U.S. plans and prior to April 1, 2020 for certain non-U.S. plans, eligible employees and retirees related to the Arconic Corporation Businesses participated in ParentCo-sponsored defined benefit pension and other postretirement plans (the “Shared Plans”), which included participants related to the Howmet Aerospace Businesses and ParentCo corporate participants, as well as eligible retirees from previously closed or sold operations. Also, prior to the Separation Date, other eligible employees and retirees related to the Arconic Corporation Businesses participated in certain non-U.S. defined benefit pension and other postretirement plans (the “Direct Plans”).

The Company accounted for the portion of the Shared Plans related to its employees as multiemployer benefit plans. Accordingly, Arconic Corporation did not record an asset or liability to recognize the funded status of the Shared Plans. However, the related pension and other postretirement benefit expenses attributable to Arconic Corporation were based primarily on pensionable compensation of active Arconic Corporation participants and estimated interest costs, respectively. The Company also recorded an allocation of pension and other postretirement benefit expenses for the Shared Plans attributable to ParentCo corporate participants, as well as to participants related to closed and sold operations (see Cost Allocations in Note A).

The Direct Plans were accounted for as defined benefit pension and other postretirement plans. Accordingly, the funded status of each Direct Plan was recorded in the Company’s Consolidated Balance Sheet. Actuarial gains and losses that had not yet been recognized in earnings were recorded in Accumulated other comprehensive loss until they were amortized as a component of net periodic benefit cost. The determination of benefit obligations and recognition of expenses related to Direct Plans were dependent on various assumptions, including discount rates, long-term expected rates of return on plan assets, and future compensation increases. Management developed each assumption using relevant company experience in conjunction with market-related data for each of the plans.

In preparation for the Separation, effective January 1, 2020, certain U.S. pension and other postretirement benefit plans previously sponsored by ParentCo (the “U.S. Shared Plans” – see above) were separated into standalone plans for both Arconic Corporation (the “New Direct Plans”) and Howmet Aerospace. Accordingly, on January 1, 2020, Arconic Corporation recognized an aggregate liability of $1,920, of which $60 was current, reflecting the combined net unfunded status of the New Direct Plans, comprised of a benefit obligation of $4,255 and plan assets of $2,335, as well as $1,752 (net of tax impact) in Accumulated other comprehensive loss representing a net actuarial loss. In 2020, Arconic Corporation expects to recognize approximately $100 in combined net periodic benefit cost, of which approximately $25 is service cost. Also, in 2020, Arconic Corporation expects to make approximately $260 in pension contributions and $55 in other postretirement benefit payments, related to the New Direct Plans.

Additionally, effective on the Separation Date, certain other Shared Plans (the “Additional New Direct Plans,” and, collectively with the Direct Plans and New Direct Plans, the “Cumulative Direct Plans”) were assumed by Arconic Corporation. Accordingly, on April 1, 2020, Arconic Corporation recognized a noncurrent asset of $65 and a noncurrent liability of $15, reflecting the combined net funded status of the Additional New Direct Plans, as well as $50 (net of tax impact) in Accumulated other comprehensive loss representing a net actuarial loss.

In 2020, the Company expects to make approximately $280 in pension contributions to the Cumulative Direct Plans. This amount includes the previously mentioned $260 related to the New Direct Plans and $10 related to a non-U.S. plan (see below).

~~The following table summarizes the total expenses (excluding settlements and curtailments) recognized by Arconic Corporation related to the pension and other postretirement benefits described above:~~

Pension benefits Other postretirement benefits
Third quarter ended September 30, Nine months ended September 30, Third quarter ended September 30, Nine months ended September 30,
Type of Plan Type of Expense 2020 2019 2020 2019 2020 2019 2020 2019
Cumulative Direct Plans Net periodic benefit cost $ 22 $ 1 $ 61 $ 4 $ 5 $ 0 $ 17 $ 0
Shared Plans Multiemployer contribution 0 16 0 46 0 4 0 15
Shared Plans Cost allocation 0 5 (1) 15 0 2 0 4
$ 22 $ 22 $ 60 $ 65 $ 5 $ 6 $ 17 $ 19

The components of net periodic benefit cost for defined benefit plans ~~classified as Cumulative Direct Plans~~ were as follows:


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Pension benefits	Pension benefits									Pension benefits
Service cost	Service cost	$	6	$	1	$	16	$	2	Service cost	$	5	$	5	$	11	$	10
Interest cost	Interest cost	27		1		81		3		Interest cost	16		28		33		54
Expected return on plan assets	Expected return on plan assets	(42)		(2)		(127)		(4)		Expected return on plan assets	(27)		(45)		(60)		(85)
Recognized net actuarial loss	Recognized net actuarial loss	31		1		92		3		Recognized net actuarial loss	24		31		56		61
Amortization of prior service benefit		0		0		(1)		0
Settlement		3		0		58		0
Net periodic benefit cost*		$	25	$	1	$	119	$	4
Amortization of prior service cost (benefit)										Amortization of prior service cost (benefit)	0		(1)		0		(1)
Settlements(1)										Settlements(1)	568		55		568		55
Net periodic benefit cost(2)										Net periodic benefit cost(2)	$	586	$	73	$	608	$	94

Other postretirement benefits	Other postretirement benefits									Other postretirement benefits
Service cost	Service cost	$	1	$	0	$	3	$	0	Service cost	$	2	$	1	$	3	$	2
Interest cost	Interest cost	2		0		10		0		Interest cost	2		4		5		8
Recognized net actuarial loss	Recognized net actuarial loss	3		0		6		0		Recognized net actuarial loss	3		1		5		3
Amortization of prior service benefit	Amortization of prior service benefit	(1)		0		(2)		—		Amortization of prior service benefit	(2)		0		(3)		(1)
Net periodic benefit cost*		$	5	$	0	$	17	$	0
Net periodic benefit cost(2)										Net periodic benefit cost(2)	$	5	$	6	$	10	$	12

__________________

*(1) In the 2021 second quarter and six-month period, Settlements were due to the purchase of a group annuity contract ($549 – see U.S. Pension Plan Annuitization below) and the payment of lump-sum benefits ($19).

(2) Service cost was included within Cost of goods sold, ~~Settlement was~~Settlements were included within Restructuring and other charges, and all other components were included in Other expenses, ~~(income),~~ net on the accompanying Statement of Consolidated Operations.

~~U.K.~~ Pension ~~Plan Annuitization—~~Funding~~In June 2020, Arconic Corporation and Howmet Aerospace, together, executed several liability management actions related~~—The minimum required contributions to ~~approximately 1,800 participants in a U.K.~~Arconic’s funded defined benefit pension ~~plan. The primary action was~~plans in 2021 is estimated to be $192, of which $183 is for U.S. plans. In January 2021, the ~~purchase~~Company contributed a total of $200 to its 2 funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract (see U.S. Pension Plan Annuitization below).

U.S. Pension Plan Annuitization—In April 2021, Arconic purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of ~~certain plan~~approximately 8,400 participants in 2 U.S. defined benefit pension plans to an insurance company. ~~On a combined basis, these actions resulted in the settlement of approximately $400 in plan obligations and the transfer of approximately $460 in plan assets.~~ In ~~the 2020 second quarter,~~connection with this transaction, the Company contributed ~~$10~~a total of $250 to the ~~plan~~2 plans to ~~facilitate these actions and~~ maintain the funding level of the remaining plan ~~obligations.~~obligations not transferred. This contribution was funded with the net proceeds from a March 2021 debt offering (see 2021 Activity in Note N). Prior to this action, these ~~actions, this plan~~2 plans had an aggregate of approximately ~~3,350 participants combined.~~23,000 participants.

~~Accordingly, this plan~~This transaction represents a significant settlement event, and, as a result, the Company was required to ~~be remeasured, and through this process,~~complete a remeasurement of these 2 plans (generally completed on an annual basis as of December 31, 2020), including an interim actuarial valuation of the plan obligations. Accordingly, the weighted-average discount rate ~~was updated~~used in calculating the plan obligations increased to ~~1.55% at June~~3.10% as of April 30, ~~2020~~2021 from ~~2.05% at~~2.54% as of December 31, ~~2019.~~2020. The remeasurement resulted in a combined projected benefit obligation and fair value of plan assets of $3,337 and $2,790, respectively, as of April 30, 2021. From these amounts, the group annuity transaction resulted in the settlement ~~events,~~of $995 in plan obligations and the transfer of $1,007 in plan assets. The remeasurement of these 2 plans, together with the ~~remeasurement of the plan,~~annuitization, resulted in a ~~$250~~$152 net ~~reduction to the Company’s remaining plan obligation and both a~~ decrease to ~~the Company’s~~Accrued pension ~~benefit asset~~benefits and a ~~settlement charge of $58~~$117 (after-tax) net decrease to Accumulated other comprehensive loss (see Note K) on the accompanying Consolidated Balance Sheet. Additionally, the annuitization resulted in ~~the 2020 nine-month period ($3 in the 2020 third quarter). The settlement charge represents~~ the accelerated amortization of a portion of the existing net actuarial loss associated with ~~this plan.~~these 2 plans in the amount of $549 ($423 after-tax). This amount was

reclassified to earnings through Restructuring and other charges (see Note E)E) from Accumulated other comprehensive loss. Subsequent to this remeasurement, the remaining respective plan obligations and plan assets attributable to Arconic Corporation and Howmet Aerospace were transferred into separate plans and the existing U.K. plan was terminated. Immediately following the completion of the transfer, the Company’s remaining plan obligation was approximately $240 and the plan assets were approximately $260 related to 1,050 plan participants.

~~U.S. OPEB Plan Amendment—~~loss (see In July 2020, Arconic Corporation and the United Steelworkers agreed to modify the medical benefit coverage offered to certain Medicare-eligible participants under the Company's U.S. other postretirement benefit plan, as provided for in the current master collective bargaining agreement between the parties. Effective January 1, 2021, this modification results in lower premiums and increased benefits to the participants. This change qualifies as a significant plan amendment to the Company's U.S. other postretirement benefit plan. Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated to 2.54% at July 31, 2020 from 3.17% at December 31, 2019. The amendment, together with the remeasurement of this plan, resulted in a net decrease to both the Company's otherNote K).

postretirement benefits liability of $7 and Accumulated other comprehensive loss of $5 (after-tax). The impact of this change on the Company's annual net periodic benefit cost is not material. The Company's estimated annual benefit payments will decrease by approximately $20 beginning in 2021.

2119

H. Income Taxes

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

For the ~~2020 nine-month~~2021 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary loss was ~~11.7% (benefit on a loss)~~18.6%. This rate differs by ~~9.3~~2.4 percentage points from the U.S. federal statutory rate of 21.0% primarily due to ~~nondeductible costs in the United States,~~estimated U.S. tax on Global Intangible Low-Taxed Income, U.S. tax on foreign earnings, ~~foreign losses taxed in lower rate jurisdictions,~~ and ~~losses in foreign jurisdictions subject to existing valuation allowances.~~non-deductible costs, partially offset by the state tax impact of domestic taxable losses.

For the ~~2019 nine-month~~2020 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary ~~income~~loss was ~~80.0% (provision on income)~~105.5%. This rate differs by ~~59.0~~84.5 percentage points from the U.S. federal statutory rate of 21.0% primarily due to non-benefitted foreign ~~income taxed in higher rate jurisdictions,~~ losses, ~~in foreign jurisdictions subject to existing valuation allowances, certain nondeductible costs related to the Separation, estimated U.S. tax on Global Intangible Low-Taxed Income, and~~ the state tax impact of domestic taxable ~~income.~~income, U.S. tax on foreign earnings, and nondeductible costs related to the Separation.

~~For the third quarter of 2020 and 2019, the~~The effective tax rate including discrete items was ~~66.7% (provision on income)~~20.2% and ~~242.9% (provision on a loss),~~19.7% in the 2021 second quarter and six-month period, respectively, and was 25.0% and 9.1% in the 2020 second quarter and six-month period, respectively.

The ~~tax provisions~~following table details the components of Benefit for ~~the third quarter of 2020 and 2019 were comprised of the following components:~~income taxes:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Pretax income at estimated annual effective income tax rate before discrete items $ 2 $ (5) $ (5) $ 45
Impact of change in estimated annual effective tax rate on previous quarter’s pretax income 51 22 0 0
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized* (48) 0 1 0
Other discrete items 5 0 9 1
Provision for income taxes $ 10 $ 17 $ 5 $ 46


	Second quarter ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Pretax ordinary loss at estimated annual effective tax rate	$	(100)	$	(135)	$	(87)	$	(58)
Impact of change in estimated annual effective tax rate on previous quarter’s pretax income	(6)		55		0		0
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	(2)		48		(2)		49
Discrete items	0		0		(3)		4
Benefit for income taxes	$	(108)	$	(32)	$	(92)	$	(5)

__________________

* The interim period impact related to operational losses in foreign jurisdictions for which no tax benefit is recognized will reverse by the end of the calendar year.

2220

I. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing Net ~~income (loss)~~loss attributable to Arconic Corporation by the weighted-average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. Specific to Arconic, such share equivalents consist of outstanding employee stock awards (excluding out-of-the-money stock options – see below). For periods in which the Company generates net income, the diluted weighted-average number of shares include common share equivalents associated with outstanding employee stock awards. For periods in which the Company generates a net loss, common share equivalents are excluded from the diluted weighted-average number of shares as their effect is anti-dilutive.

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


		Third quarter ended September 30,		Nine months ended September 30,			Second quarter ended June 30,		Six months ended June 30,
		2020	2019	2020	2019		2021	2020	2021	2020
Weighted-average shares outstanding – basic	Weighted-average shares outstanding – basic	109	109	109	109	Weighted-average shares outstanding – basic	110.0	109.0	109.9	109.0
Effect of dilutive share equivalents:
Dilutive share equivalents:						Dilutive share equivalents:
Stock units						Stock units	0	0	0	0
Stock options	Stock options	—	—	—	—	Stock options	0	0	0	0
Weighted-average shares outstanding – diluted						Weighted-average shares outstanding – diluted	110.0	109.0	109.9	109.0

Anti-dilutive share equivalents:						Anti-dilutive share equivalents:
Stock units	Stock units	4	—	—	—	Stock units	3.2	2.6	3.3	1.3
Weighted-average shares outstanding – diluted		113	109	109	109
Stock options*:						Stock options*:
In-the-money						In-the-money	0.2	0	0.1	0
Out-of-the-money						Out-of-the-money	0	0	0	0
							3.4	2.6	3.4	1.3

________________

In the 2020 nine-month period, basic weighted-average shares outstanding and diluted weighted-average shares outstanding were the same because the effect of common share equivalents was anti-dilutive since Arconic Corporation generated a net loss. Had Arconic Corporation generated net income in the 2020 nine-month period, 2 million common share equivalents, respectively, related to outstanding stock units and stock* Stock options would have been included in diluted weighted-average shares outstanding. These common share equivalents do not consider 1 million stock options outstanding as of September 30, 2020 with a weighted average exercise price of $27.97 asare in-the-money when the respective exercise price of ~~these options was greater~~each such option is less than the average market price of ~~Arconic Corporation’s common stock.~~

~~Prior to~~ the ~~Separation Date, Arconic Corporation did not have any publicly-traded issued and outstanding~~Company’s common stock ~~or any~~during the applicable period presented. Conversely, stock options are out-of-the-money when the respective exercise price of each such option is more than the average market price of the Company’s common stock during the applicable period presented. Out-of-the-money stock options never result in common share ~~equivalents. Accordingly, in the 2019 third quarter and nine-month period, the~~equivalents for purposes of diluted EPS ~~included on the accompanying Statement~~regardless of ~~Consolidated Operations was calculated based on the 109,021,376 shares~~whether a company generates net income or a net loss. As of ~~Arconic Corporation common~~June 30, 2020, there were 1.1 million out-of-the-money stock ~~distributed on the Separation Date in connection~~options outstanding with ~~the completion~~a weighted-average exercise price of ~~the Separation (see Note A).~~$26.05.

2321

J. Preferred and Common Stock

J.On May 4, 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. Repurchases under the program may be made from time to time, as the Company deems appropriate, solely through open market repurchases effected through a broker dealer, based on a variety of factors such as price, capital position, liquidity, financial performance, alternative uses of capital, and overall market conditions. There can be no assurance as to the number of shares the Company will repurchase. The share repurchase program may be increased or otherwise modified, renewed, suspended or terminated by the Company at any time, without prior notice. This program is intended to comply with Rule 10b5-1 and all purchases shall be made in compliance with Rule 10b-18, including without limitation the timing, price, and volume restrictions thereof. In the 2021 second quarter, Arconic repurchased 246,011 shares of the Company's common stock for $9 under this program.

K. Accumulated Other Comprehensive (Loss) Income

The following table details the activity of the three components that comprise Accumulated other comprehensive (loss) income for Arconic ~~Corporation~~ (such activity for Noncontrolling interest was immaterial for all periods presented):


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Pension and other postretirement benefits (G)
Pension and other postretirement benefits (G)										Pension and other postretirement benefits (G)
Balance at beginning of period	Balance at beginning of period	$	(1,784)	$	(32)	$	(43)	$	(32)	Balance at beginning of period	$	(1,766)	$	(1,770)	$	(1,791)	$	(43)
Establishment of additional defined benefit plans	Establishment of additional defined benefit plans	—		—		(1,752)		—		Establishment of additional defined benefit plans	0		0		0		(1,752)
Separation-related adjustments (A)		0		0		(50)		0
Separation-related adjustments (A)										Separation-related adjustments (A)	0		(50)		0		(50)
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Unrecognized net actuarial loss and prior service benefit		4		1		(34)		(1)
Unrecognized net actuarial loss and prior service cost/benefit										Unrecognized net actuarial loss and prior service cost/benefit	145		(40)		144		(38)
Tax (expense) benefit	Tax (expense) benefit	(1)		(1)		8		0		Tax (expense) benefit	(33)		10		(33)		9
Total Other comprehensive income (loss) before reclassifications, net of tax	Total Other comprehensive income (loss) before reclassifications, net of tax	3		0		(26)		(1)		Total Other comprehensive income (loss) before reclassifications, net of tax	112		(30)		111		(29)
Amortization of net actuarial loss and prior service benefit(1)		36		1		153		3
Amortization of net actuarial loss and prior service cost/benefit(1)										Amortization of net actuarial loss and prior service cost/benefit(1)	593		86		626		117
Tax expense(2)	Tax expense(2)	(8)		0		(35)		(1)		Tax expense(2)	(138)		(20)		(145)		(27)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	28		1		118		2		Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	455		66		481		90
Total Other comprehensive income	Total Other comprehensive income	31		1		92		1		Total Other comprehensive income	567		36		592		61
Balance at end of period	Balance at end of period	$	(1,753)	$	(31)	$	(1,753)	$	(31)	Balance at end of period	$	(1,199)	$	(1,784)	$	(1,199)	$	(1,784)
Foreign currency translation	Foreign currency translation									Foreign currency translation
Balance at beginning of period	Balance at beginning of period	$	(53)	$	296	$	338	$	282	Balance at beginning of period	$	22	$	338	$	29	$	338
Separation-related adjustments (A)		0		0		(396)		0
Separation-related adjustments (A)										Separation-related adjustments (A)	0		(396)		0		(396)
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Foreign currency translation(3)	Foreign currency translation(3)	37		45		20		59		Foreign currency translation(3)	13		5		6		(17)
Net amount reclassified to earnings from Accumulated other comprehensive income(3),(5)	Net amount reclassified to earnings from Accumulated other comprehensive income(3),(5)	0		0		22		0		Net amount reclassified to earnings from Accumulated other comprehensive income(3),(5)	0		0		0		22
Total Other comprehensive income	Total Other comprehensive income	37		45		42		59		Total Other comprehensive income	13		5		6		5
Balance at end of period	Balance at end of period	$	(16)	$	341	$	(16)	$	341	Balance at end of period	$	35	$	(53)	$	35	$	(53)
Cash flow hedges	Cash flow hedges									Cash flow hedges
Balance at beginning of period	Balance at beginning of period	$	(11)	$	0	$	0	$	0	Balance at beginning of period	$	(21)	$	0	$	1	$	0
Separation-related adjustments (A)		0		0		(4)		0
Other comprehensive income:
Separation-related adjustments (A)										Separation-related adjustments (A)	0		(4)		0		(4)
Other comprehensive loss:										Other comprehensive loss:
Net change from periodic revaluations	Net change from periodic revaluations	2		0		4		0		Net change from periodic revaluations	(59)		2		(94)		2
Tax expense		(1)		0		(1)		0
Total Other comprehensive income before reclassifications, net of tax		1		0		3		0
Tax benefit										Tax benefit	14		0		22		0
Total Other comprehensive (loss) income before reclassifications, net of tax										Total Other comprehensive (loss) income before reclassifications, net of tax	(45)		2		(72)		2
Net amount reclassified to earnings(4)	Net amount reclassified to earnings(4)	14		0		3		0		Net amount reclassified to earnings(4)	40		(11)		47		(11)
Tax expense(2)		(3)		0		(1)		0
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)		11		0		2		0
Total Other comprehensive income		12		0		5		0
Tax (expense) benefit(2)										Tax (expense) benefit(2)	(9)		2		(11)		2
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(5)										Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(5)	31		(9)		36		(9)
Total Other comprehensive loss										Total Other comprehensive loss	(14)		(7)		(36)		(7)
Balance at end of period	Balance at end of period	$	1	$	0	$	1	$	0	Balance at end of period	$	(35)	$	(11)	$	(35)	$	(11)
Accumulated other comprehensive (loss) income		$	(1,768)	$	310	$	(1,768)	$	310
Accumulated other comprehensive loss										Accumulated other comprehensive loss	$	(1,199)	$	(1,848)	$	(1,199)	$	(1,848)

_____________________

(1)These amounts were included in the non-service component of net periodic benefit cost for pension and other postretirement benefits (see Note G)G). In all periods presented, the ~~2020 third quarter and nine-month period, these~~respective amounts include ~~$3 and $58~~accelerated amortization related to the settlement of certain ~~pension benefits~~employee retirement benefits. The accelerated amortization was $568 for the second

quarter ended and six months ended June 30, 2021 and $55 for the second quarter ended and six months ended June 30, 2020 (see Note G)G).

(2)These amounts were reported in ~~Provision~~Benefit for income taxes on the accompanying Statement of Consolidated Operations.

(3)In all periods presented, there were no tax impacts related to rate changes. In the 2020 ~~nine-month~~six-month period, the net amount reclassified to earnings was reported in Restructuring and other charges on the accompanying Statement of Consolidated Operations related to the sale of certain foreign subsidiaries.

(4)These amounts relate to aluminum contracts, a portion of which were reported in both Sales and Cost of goods sold on the accompanying Statement of Consolidated Operations.

(5)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. These amounts were reflected on the accompanying Statement of Consolidated Operations in the line items indicated in footnotes 1 through 4.

2524

K.L. Inventories

September 30, 2020 December 31, 2019
Finished goods $ 242 $ 237
Work-in-process 525 746
Purchased raw materials 66 85
Operating supplies 68 69
$ 901 $ 1,137


	June 30, 2021		December 31, 2020
Finished goods	$	363	$	282
Work-in-process	889		635
Purchased raw materials	77		59
Operating supplies	68		67
	$	1,397	$	1,043

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. Management determined that this change in accounting principle is preferable because the average cost method more closely reflects the physical flow of inventories, improves comparability of the Company’s operating results with its industry peers, and provides an increased level of consistency in the measurement of inventories in the Company’s consolidated financial statements. All non-U.S. inventories and a small portion of U.S. inventories were previously, and continue to be, measured using a combination of first in, first out (FIFO) and average cost methods.

The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to all prior periods presented. This change resulted in an increase to Parent Company net investment of ~~$293~~$245 as of January 1, ~~2019.~~2020. Additionally, certain financial statement line items in ~~the accompanying Consolidated Balance Sheet as of December 31, 2019 and~~ each of the accompanying Statement of Consolidated Operations, Statement of Consolidated Comprehensive Income, and Statement of Consolidated Cash Flows for the ~~2019 third~~2020 second quarter and ~~nine-month~~six-month period were recast as follows:


		As Previously Reported		Effect of Change		As Recast			As Previously Reported		Effect of Change		As Recast
Statement of Consolidated Operations for the third quarter ended September 30, 2019:
Statement of Consolidated Operations for the second quarter ended June 30, 2020:								Statement of Consolidated Operations for the second quarter ended June 30, 2020:
Cost of goods sold								Cost of goods sold	$	1,046	$	5	$	1,051
Operating loss								Operating loss	(67)		(5)		(72)
Loss before income taxes								Loss before income taxes	(123)		(5)		(128)
Benefit for income taxes								Benefit for income taxes	(31)		(1)		(32)
Net loss								Net loss	(92)		(4)		(96)
Net loss attributable to Arconic Corporation								Net loss attributable to Arconic Corporation	(92)		(4)		(96)
Earnings per share attributable to Arconic Corporation common stockholders:								Earnings per share attributable to Arconic Corporation common stockholders:
Basic								Basic	$	(0.84)	$	(0.04)	$	(0.88)
Diluted								Diluted	(0.84)		(0.04)		(0.88)

Statement of Consolidated Operations for the six months ended June 30, 2020:								Statement of Consolidated Operations for the six months ended June 30, 2020:
Cost of goods sold	Cost of goods sold	$	1,543	$	22	$	1,565	Cost of goods sold	$	2,373	$	23	$	2,396
Operating income	Operating income	44		(22)		22		Operating income	85		(23)		62
Income (loss) before income taxes		15		(22)		(7)
Provision for income taxes		22		(5)		17
Loss before income taxes								Loss before income taxes	(32)		(23)		(55)
Benefit for income taxes								Benefit for income taxes	0		(5)		(5)
Net loss	Net loss	(7)		(17)		(24)		Net loss	(32)		(18)		(50)
Net loss attributable to Arconic Corporation	Net loss attributable to Arconic Corporation	(7)		(17)		(24)		Net loss attributable to Arconic Corporation	(32)		(18)		(50)
Earnings per share attributable to Arconic Corporation common shareholders:	Earnings per share attributable to Arconic Corporation common shareholders:							Earnings per share attributable to Arconic Corporation common shareholders:
Basic	Basic	$	(0.07)	$	(0.15)	$	(0.22)	Basic	$	(0.29)	$	(0.17)	$	(0.46)
Diluted	Diluted	(0.07)		(0.15)		(0.22)		Diluted	(0.29)		(0.17)		(0.46)

Statement of Consolidated Operations for the nine months ended September 30, 2019:
Cost of goods sold		$	4,810	$	39	$	4,849
Operating income		176		(39)		137
Income before income taxes		94		(39)		55
Provision for income taxes		55		(9)		46
Net income		39		(30)		9
Net income attributable to Arconic Corporation		39		(30)		9
Earnings per share attributable to Arconic Corporation common shareholders:
Basic		$	0.35	$	(0.27)	$	0.08
Diluted		0.35		(0.27)		0.08


	As Previously Reported		Effect of Change		As Recast
Statement of Consolidated Comprehensive Loss for the second quarter ended June 30, 2020:
Comprehensive loss	$	(58)	$	(4)	$	(62)
Comprehensive loss attributable to Arconic Corporation	(58)		(4)		(62)

Statement of Consolidated Comprehensive Income for the six months ended June 30, 2020:
Comprehensive income	$	27	$	(18)	$	9
Comprehensive income attributable to Arconic Corporation	27		(18)		9







Statement of Consolidated Cash Flows for the six months ended June 30, 2020:
Net loss	$	(32)	$	(18)	$	(50)
Deferred income taxes	55		(5)		50
Decrease in inventories	92		23		115

As Previously Reported Effect of Change As Recast
Statement of Consolidated Comprehensive Income for the third quarter ended September 30, 2019:
Comprehensive income $ 39 $ (17) $ 22
Comprehensive income attributable to Arconic Corporation 39 (17) 22
Statement of Consolidated Comprehensive Income for the nine months ended September 30, 2019:
Comprehensive income $ 99 $ (30) $ 69
Comprehensive income attributable to Arconic Corporation 99 (30) 69
Consolidated Balance Sheet as of December 31, 2019:
Inventories $ 820 $ 317 $ 1,137
Deferred income tax liabilities 87 72 159
Parent Company net investment 2,419 245 2,664
Statement of Consolidated Cash Flows for the nine months ended September 30, 2019:
Net income $ 39 $ (30) $ 9
Deferred income taxes 20 (9) 11
(Increase) in inventories (69) 39 (30)

The following table compares the amounts that were reported under average cost in the Consolidated Financial Statements as of and for the quarter and nine months ended September 30, 2020 with the amounts had they continued to be reported under LIFO:

As Reported under
Average Cost As Computed under LIFO Effect of Change
Statement of Consolidated Operations for the third quarter ended September 30, 2020:
Cost of goods sold $ 1,218 $ 1,232 $ (14)
Operating income 64 50 14
Income before income taxes 15 1 14
Provision for income taxes 10 6 4
Net income (loss) 5 (5) 10
Net income (loss) attributable to Arconic Corporation 5 (5) 10
Earnings per share attributable to Arconic Corporation common shareholders:
Basic $ 0.05 $ (0.05) $ 0.10
Diluted 0.05 (0.05) 0.10
Statement of Consolidated Operations for the nine months ended September 30, 2020:
Cost of goods sold $ 3,614 $ 3,605 $ 9
Operating income 126 135 (9)
Loss before income taxes (40) (31) (9)
Provision for income taxes 5 6 (1)

As Reported under
Average Cost As Computed under LIFO Effect of Change
Net loss (45) (37) (8)
Net loss attributable to Arconic Corporation (45) (37) (8)
Earnings per share attributable to Arconic Corporation common shareholders:
Basic $ (0.41) $ (0.34) $ (0.07)
Diluted (0.41) (0.34) (0.07)
Statement of Consolidated Comprehensive Income for the third quarter ended September 30, 2020:
Comprehensive income $ 85 $ 75 $ 10
Comprehensive income attributable to Arconic Corporation 85 75 10
Statement of Consolidated Comprehensive Income for the nine months ended September 30, 2020:
Comprehensive income $ 94 $ 102 $ (8)
Comprehensive income attributable to Arconic Corporation 94 102 (8)
Consolidated Balance Sheet as of September 30, 2020:
Inventories $ 901 $ 591 $ 310
Deferred income tax assets 296 366 (70)
Additional capital 3,332 3,098 234
Accumulated deficit (91) (97) 6
Statement of Consolidated Cash Flows for the nine months ended September 30, 2020:
Net loss $ (45) $ (37) $ (8)
Deferred income taxes 28 29 (1)
Decrease in inventories 197 188 9

L.M. Leases

Arconic Corporation leases certain land and buildings, plant equipment, vehicles, and computer equipment, which have been classified as operating leases. Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $14 and ~~$15 for~~$30 in the ~~third~~2021 second quarter ~~of 2020~~ and ~~2019,~~six-month period, respectively, and ~~$43~~$14 and ~~$47 for~~$29 in the ~~nine-month~~2020 second quarter and six-month period, ~~of 2020 and 2019,~~ respectively.

Right-of-use assets obtained in exchange for operating lease obligations were $10 in the 2021 six-month period and $32 in the 2020 ~~third quarter and nine-month period were $6 and $38, respectively.~~six-month period.

Future minimum contractual operating lease obligations were as follows:


		September 30, 2020		December 31, 2019
2020		$	11	$	38
							June 30, 2021		December 31, 2020
2021	2021	38		29		2021	$	23	$	43
2022	2022	31		22		2022	37		34
2023	2023	24		17		2023	29		26
2024	2024	19		14		2024	22		20
2025						2025	17		16
Thereafter	Thereafter	53		38		Thereafter	41		41
Total lease payments	Total lease payments	$	176	$	158	Total lease payments	$	169	$	180
Less: imputed interest	Less: imputed interest	33		29		Less: imputed interest	30		33
Present value of lease liabilities	Present value of lease liabilities	$	143	$	129	Present value of lease liabilities	$	139	$	147

The weighted-average remaining lease term and weighted-average discount rate for ~~Arconic Corporation’s~~the Company’s operating leases at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~6.7~~6.3 years and ~~6.7~~6.6 years, respectively, and ~~5.9%~~5.8% and ~~6.0%~~5.9%, respectively.

2927

M.N. Debt

2021 Activity—On March 3, 2021, the Company completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering for an additional $300 aggregate principal amount of 6.125% Senior Secured Second-Lien Notes due 2028 (the “Additional 2028 Notes”). The Additional 2028 Notes were issued under the indenture governing Arconic’s existing 6.125% Senior Secured Second-Lien Notes due 2028 (see 2020 Activity below). Other than with respect to the date of issuance and issue price, the Additional 2028 Notes are treated as a single series with and have the same terms as the referenced existing notes. The Additional 2028 Notes were sold at 106.25% of par (i.e., a premium) and, after reflecting a discount to the initial purchasers of the Additional 2028 Notes, the Company received $315 in net proceeds from the debt offering. Arconic used the net proceeds of this issuance to fund an annuitization of certain U.S. defined benefit pension plan obligations (see Note G). The premium ($19) and costs to complete the financing ($5) were deferred and are being amortized to interest expense over the term of the Additional 2028 Notes. The amortization of the premium is reflected as a reduction to interest expense and the amortization of the costs to complete the financing is reflected as an addition to interest expense. Interest on the Additional 2028 Notes will be paid semi-annually in February and August, commencing August 15, 2021.

2020 Activity—In connection with the capital structure to be established at the time of the Separation, Arconic ~~Corporation~~ secured $1,200 in third-party indebtedness. On February 7, 2020, ~~Arconic Corporation~~the Company completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering for $600 aggregate principal amount of 6.125% Senior Secured Second-Lien Notes due 2028 (the “2028 Notes”). ~~The Company~~Arconic received $593 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2028 Notes. Also, on March 25, 2020, ~~Arconic Corporation~~the Company entered into a credit agreement, which provided a $600 Senior Secured First-Lien Term Loan B Facility (variable rate and seven-year term) (the “Term Loan”) and a $1,000 Senior Secured First-Lien Revolving Credit Facility (variable rate and five-year term) (the “Credit Facility”), with a syndicate of lenders and issuers named therein (the “Credit Agreement”). ~~The Company~~Arconic received $575 in net proceeds from the Term Loan B reflecting upfront fees and costs to enter into the financing arrangement.

The Company used a portion of the $1,168 in net proceeds from the aggregate indebtedness to make a $728 payment to ParentCo on April 1, 2020 to fund the transfer of certain net assets from ParentCo to Arconic ~~Corporation~~ in connection with the completion of the Separation (see Note A)A). The payment to ParentCo was calculated as the difference between (i) the $1,168 of net proceeds from the aggregate indebtedness and (ii) the difference between a beginning cash balance at the Separation Date of $500, as provided for in the Separation and Distribution Agreement, and the amount of cash held by Arconic Corporation Businesses at March 31, 2020 ($60 – the sum of this amount and the aggregate indebtedness in (i) equals the sum of Cash and cash equivalents and Restricted cash on the Company’s Combined Balance Sheet as of March 31, 2020).

On April 2, 2020, Arconic ~~Corporation~~ borrowed $500, which was subject to an interest rate equal to the sum of the three-month LIBOR plus a 2.0% applicable margin, under the Credit Facility. This borrowing was a proactive measure taken by the Company to bolster its liquidity and preserve financial flexibility in light of uncertainties resulting from the COVID-19 ~~outbreak (see Note A).~~pandemic.

On May 13, 2020, Arconic ~~Corporation~~ executed a refinancing of its existing Credit Agreement in order to provide improved financial flexibility. ~~Arconic Corporation~~The Company completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering for $700 aggregate principal amount of 6.0% Senior Secured First-Lien Notes due 2025 (the “2025 Notes”). ~~The Company~~Arconic received $691 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2025 Notes. Additionally, ~~Arconic Corporation~~the Company entered into a five-year credit agreement with a syndicate of lenders named therein and Deutsche Bank AG New York Branch, as administrative agent (the “ABL Credit Agreement”). The ABL Credit Agreement provides for a senior secured asset-based revolving credit facility in an aggregate principal amount of $800 (see ABL Credit Agreement below), including a letter of credit sub-facility and a swingline loan sub-facility (the “ABL Credit Facility”). In addition, the ABL Credit Facility includes an accordion feature allowing ~~the Company~~Arconic to request one or more increases to the revolving commitments in an aggregate principal amount up to $350.

~~Arconic Corporation~~The Company used the net proceeds from the new indebtedness, together with cash on hand, to prepay in full the obligations outstanding under both the Term Loan ($600) and Credit Facility ($500) and to terminate in full the commitments under the Credit Agreement.

Descriptions of the 2028 Notes, 2025 Notes, and ABL Credit Agreement are set forth ~~below.~~in Note Q to the Consolidated Financial Statements in Part II Item 8 of Arconic’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021).

Term Loan B and the Credit Facility. The debt issuance costs were initially deferred and were being amortized to interest expense over the respective terms of the 2028 Notes, the Term Loan, B, and the Credit Facility. In connection with the issuance of the 2025 Notes and the execution of the ABL Credit Agreement, ~~the Company~~Arconic paid $15 in discounts to the initial purchasers and/or upfront fees and costs (the “new debt issuance costs”). As a result of applying both debt modification and debt extinguishment accounting, as appropriate based on the lender mix for each debt instrument, to the debt refinancing, the Company was required to write off $16 of the $30 in debt issuance costs and immediately expense $3 of the $15 in new debt issuance costs. This $19 was reported within Interest expense on the ~~Company's~~accompanying Statement of Consolidated Operations. The remaining $14 in debt issuance costs continued to be deferred and the remaining $12 in new debt issuance costs were deferred; both are being amortized to interest expense over the respective terms of the 2025 Notes and the ABL Credit Agreement.

Separately, in August 2012, ParentCo and the Iowa Finance Authority entered into a loan agreement for the proceeds from the issuance of $250 in Midwestern Disaster Area Revenue Bonds Series 2012 due 2042 (the “Bonds”). The Bonds were issued by the Iowa Finance Authority pursuant to the Heartland Disaster Tax Relief Act of 2008 for the purpose of financing all or part of the cost of acquiring, constructing, reconstructing, and renovating certain facilities (the “Project”) at Arconic Corporation’s rolling mill plant in Davenport, IA. The loan proceeds could only be used for this purpose and, therefore, were included on the

Company’s Combined Balance Sheet for all periods prior to the Separation Date. In accordance with the Separation and Distribution Agreement, as well as a Second Supplemental Tax and Project Certificate and Agreement, dated March 31, 2020, to the Tax Exemption Certificate and Agreement, dated August 14, 2012, (collectively, the “Tax Agreement”), ParentCo remained the borrower associated with the Bonds and Arconic Corporation is the legal owner of the Davenport facility, including the Project. The Company has no financial obligations related to the future debt service of the Bonds but is required to continue to operate, and maintain the location of, the Project in accordance with the Tax Agreement. Accordingly, the $250 carrying value of the Bonds, as well as related accrued interest, was removed from Arconic Corporation’s Consolidated Balance Sheet in connection with the Separation.

~~2028 Notes—Interest on the 2028 Notes is paid semi-annually in February and August, which commenced August 15, 2020.~~

Arconic Corporation has the option to redeem the 2028 Notes on at least 10 days, but not more than 60 days, prior notice to the holders of the 2028 Notes under multiple scenarios, including, in whole or in part, at any time or from time to time after February 14, 2023 at a redemption price specified in the indenture (up to 103.063% of the principal amount plus any accrued and unpaid interest in each case). At any time prior to February 15, 2023, the Company may redeem all or a part of the notes at a redemption price equal to 100% of the principal amount of the notes redeemed plus a “make-whole” redemption price determined as the greater of (1) 1.0% of the principal amount of such notes and (2) the excess, if any, of (a) the present value at the date of redemption of (i) 103.063% of the principal amount of such notes plus (ii) all required interest payments due on such notes (excluding accrued but unpaid interest to the date of redemption) through February 15, 2023, computed using a discount rate equal to, generally, the yield to maturity of United States Treasury securities with a constant maturity as of the date of redemption plus 50 basis points, over (b) the principal amount of such notes, as of, and accrued and unpaid interest, if any, to, but excluding, the date of redemption. Also, at any time prior to February 15, 2023, Arconic Corporation may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the notes at a redemption price equal to 106.125% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with the net cash proceeds of certain equity offerings, if at least 60% of the original aggregate principal amount of the notes remains outstanding immediately after such redemption and the redemption occurs within 120 days of the date of such equity offering. Additionally, the 2028 Notes are subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101% of the aggregate principal amount of the 2028 Notes repurchased, plus any accrued and unpaid interest on the 2028 Notes repurchased.

The 2028 Notes are senior secured obligations of Arconic Corporation and do not entitle the holders to any registration rights pursuant to a registration rights agreement. The Company does not intend to file a registration statement with respect to resales of or an exchange offer for the 2028 Notes. The 2028 Notes are guaranteed on a senior secured basis by Arconic Corporation and its subsidiaries that are guarantors (the “subsidiary guarantors” and, together with Arconic Corporation, the “guarantors”) under the ABL Credit Agreement (see below). Each of the subsidiary guarantors will be released from their 2028 Notes guarantees upon the occurrence of certain events, including the release of such guarantor from its obligations as a guarantor under the ABL Credit Agreement.

The 2028 Notes indenture includes several customary affirmative covenants. Additionally, the 2028 Notes indenture contains several negative covenants, that, subject to certain exceptions, limit the Company’s ability to, among other things, (i) make investments, loans, advances, guarantees, and acquisitions, (ii) pay dividends on or make other distributions in respect of capital stock and make other restricted payments and investments (as defined in the 2028 Notes), (iii) sell or transfer certain assets, and (iv) create liens on assets to secure debt.

The 2028 Notes rank equally in right of payment with all of Arconic Corporation’s existing and future senior indebtedness, including the facility under the ABL Credit Agreement (see below); rank senior in right of payment to any future subordinated obligations of Arconic Corporation; and are effectively subordinated to Arconic Corporation’s existing and future secured indebtedness that is secured on a first priority basis, including the 2025 Notes and the facility under the ABL Credit Agreement, to the extent of the value of property and assets securing such indebtedness.

~~2025 Notes—Interest on the 2025 Notes will be paid semi-annually in May and November, commencing November 15, 2020.~~

Arconic Corporation has the option to redeem the 2025 Notes on at least 10 days, but not more than 60 days, prior notice to the holders of the 2025 Notes under multiple scenarios, including, in whole or in part, at any time or from time to time after May 14, 2022 at a redemption price specified in the indenture (up to 103.0% of the principal amount plus any accrued and unpaid interest in each case). At any time prior to May 15, 2022, the Company may redeem all or a part of the notes at a redemption price equal to 100% of the principal amount of the notes redeemed plus a “make-whole” redemption price

determined as the greater of (1) 1.0% of the principal amount of such notes and (2) the excess, if any, of (a) the present value at the date of redemption of (i) 103.0% of the principal amount of such notes plus (ii) all required interest payments due on such notes (excluding accrued but unpaid interest to the date of redemption) through May 15, 2022, computed using a discount rate equal to, generally, the yield to maturity of United States Treasury securities with a constant maturity as of the date of redemption plus 50 basis points, over (b) the principal amount of such notes, as of, and accrued and unpaid interest, if any, to, but excluding, the date of redemption. Also, at any time prior to May 15, 2022, Arconic Corporation may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the notes at a redemption price equal to 106.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with the net cash proceeds of certain equity offerings, if at least 60% of the original aggregate principal amount of the notes remains outstanding immediately after such redemption and the redemption occurs within 120 days of the date of such equity offering. Additionally, the 2025 Notes are subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101% of the aggregate principal amount of the 2025 Notes repurchased, plus any accrued and unpaid interest on the 2025 Notes repurchased.

The 2025 Notes are senior secured obligations of Arconic Corporation and do not entitle the holders to any registration rights pursuant to a registration rights agreement. The Company does not intend to file a registration statement with respect to resales of or an exchange offer for the 2025 Notes. The 2025 Notes are guaranteed on a senior secured basis by Arconic Corporation and its subsidiaries that are guarantors (the “subsidiary guarantors” and, together with Arconic Corporation, the “guarantors”) under the ABL Credit Agreement (see below). Each of the subsidiary guarantors will be released from their 2025 Notes guarantees upon the occurrence of certain events, including the release of such guarantor from its obligations as a guarantor under the ABL Credit Agreement.

The 2025 Notes indenture includes several customary affirmative covenants. Additionally, the 2025 Notes indenture contains several negative covenants, that, subject to certain exceptions, limit the Company’s ability to, among other things, (i) pay dividends on or make other distributions in respect of capital stock and make other restricted payments and investments (as defined in the 2025 Notes), (ii) sell or transfer certain assets, (iii) incur indebtedness, and (iv) create liens on assets to secure debt.

The 2025 Notes are secured on a first priority basis by certain defined collateral (generally consisting of the Company’s and the Guarantors’ equipment, material owned U.S. real property, intellectual property, certain stock, and other tangible and intangible personal property, in each case, subject to certain exceptions) and on a second priority basis by certain other assets (generally consisting of substantially all of the accounts receivable, inventory, deposit accounts, securities accounts, commodities accounts, and cash assets of the Company and the Guarantors, and the proceeds thereof).

ABL Credit Agreement—Availability under the ABL Credit Facility is subject to a ~~quarterly~~monthly borrowing base calculation, ~~generally based upon~~which, in general, is determined by applying a ~~set~~predetermined percentage to the amount of eligible accounts receivable and inventory, less customary reserves. ~~During~~As of June 30, 2021, the ~~2020 third quarter, the calculated~~ available balance was ~~$681. On October 21, 2020, the calculated available balance for the 2020 fourth quarter was determined to be $678.~~$785.

The ABL Credit Facility is scheduled to mature on May 13, 2025, unless extended or earlier terminated in accordance with the ABL Credit Agreement. Under the provision of the ABL Credit Agreement, Arconic Corporation will pay a quarterly commitment fee ranging from 0.250% to 0.375% (based on Arconic Corporation’s leverage ratio) per annum on the unused portion of the ABL Credit Facility, which will be determined based on the Company’s average daily utilization. The ABL Credit Facility was undrawn as of September 30, 2020 and no amounts were borrowed since inception.

The ABL Credit Facility is subject to an interest rate for U.S. dollar borrowings equal to an applicable margin plus, at the Company’s option, of either (a) base rate (“ABR”) determined by reference to the highest of (1) Deutsche Bank AG New York Branch’s “prime rate,” (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5%, and (3) the one month adjusted LIBO Rate, plus 1% per annum or (b) an adjusted LIBO Rate (which will not be less than 0.75% per annum) (“LIBOR”). The applicable margin for the ABL Credit Facility through June 30, 2021 is (a) 1.25% for ABR loans and (b) 2.25% for LIBOR loans. Thereafter, the applicable margin for the ABL Credit Facility will be (a) 0.75% to 1.25% per annum for ABR loans and (b) 1.75% per annum to 2.25% per annum for LIBOR loans based on the average daily excess availability (as defined under the ABL Credit Agreement). Accordingly, the interest rates for the ABL Credit Facility will fluctuate based on changes in the ABR, LIBOR, and/or future changes in the average daily excess availability.

All obligations under the ABL Credit Facility are unconditionally guaranteed, jointly and severally, by substantially all of the direct and indirect wholly-owned material subsidiaries of the Company that are organized under the laws of the United States, any state thereof or the District of Columbia, subject to certain exceptions (collectively, the “Guarantors”). The

~~Company and the Guarantors entered into a guarantee under the ABL Credit Agreement concurrently with the effectiveness of the ABL Credit Agreement.~~

Subject to certain limitations, the ABL Credit Facility is secured on a first priority basis by certain defined collateral (generally consisting of substantially all of the accounts receivable, inventory, deposit accounts, securities accounts, commodities accounts, and cash assets of the Company and the Guarantors, and the proceeds thereof) and on a second-priority basis by certain defined collateral under the 2025 Notes (generally consisting of the Company and the Guarantors’ equipment, material owned U.S. real property, intellectual property, certain stock, and other tangible and intangible personal property, in each case, subject to exceptions as defined in the 2025 Notes). The Company and the Guarantors entered into collateral agreements concurrently with the effectiveness of the ABL Credit Agreement.

The ABL Credit Facility contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/repurchases, in respect of the Company’s and its subsidiaries’ equity interests, to engage in transactions with affiliates and to amend certain material documents.

In addition, the ABL Credit Facility contains a financial maintenance covenant applicable to any fiscal quarter in which the excess availability is less than the greater of (a) 10% of the lesser of (x) the aggregate amount of the commitments under the ABL Credit Facility and (y) the borrowing base and (b) $50. In such circumstances, until such time as excess availability shall have exceeded such threshold for at least 30 consecutive days, the Company would be required to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00. The ABL Credit Facility also requires the Company and its subsidiaries to maintain substantially all of the Company’s cash in accounts that are subject to the control of the agent, which control becomes applicable when (a) an event of default under the facility occurs and is continuing until the first day thereafter on which no event of default shall exist or (b) excess availability is less than the greater of (i) 12.5% of the lesser of (x) the aggregate amount of the commitments under the ABL Credit Facility and (y) the borrowing base or (ii) $62.5 for 5 consecutive business days until the first day thereafter on which excess availability shall have exceeded such threshold for at least 30 consecutive days.

The ABL Credit Facility contains customary events of default, including with respect to a failure to make payments thereunder, cross-default and cross-acceleration, certain bankruptcy and insolvency events, and customary change of control events.

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

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

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

•Level 3—Inputs that are both significant to the fair value measurement and unobservable.

As of ~~September~~June 30, ~~2020, the combined carrying value~~2021 and ~~fair value of~~December 31, 2020, the 2028 Notes and 2025 Notes ~~were $1,277~~had a combined carrying value of $1,593 and ~~$1,365,~~$1,278, respectively, and a combined fair value of $1,714 and $1,399, respectively. The fair value amounts for the 2028 Notes and 2025 Notes were based on quoted market prices for public debt and were classified in Level 2 of the fair value hierarchy.

3329

N.O. Acquisitions and Divestitures

Divestitures

Itapissuma. On February 1, 2020, Arconic ~~Corporation~~ completed the sale of its aluminum rolling mill ~~(specialty~~(aseptic foil and sheet products) in Itapissuma, Brazil to Companhia Brasileira de Alumínio for a net $46 in cash. In December 2020, the Company paid $4 in cash ~~resulting~~to Companhia Brasileira de Alumínio to settle certain working capital and other post-closing adjustments. Additionally, in June 2021, the Company paid $2 in cash to Companhia Brasileira de Alumínio to settle the remaining working capital and other post-closing adjustments. Arconic has recognized a cumulative loss of ~~$59~~$60 (pretax)~~. In 2019, Arconic Corporation recognized~~ on this transaction, composed of the following: a charge of $53 ~~(pretax), consisting of $59 (pretax)~~ in ~~the~~ 2019 ~~third quarter~~ for the non-cash impairment of the carrying value (i.e., write-down to fair value) of the rolling mill’s net assets, primarily properties, plants, and equipment, as a result of entering into an agreement in August 2019 to sell this rolling mill, and a $6 credit in the 2019 fourth quarter to reflect subsequent changes in both foreign currency exchange rates and working capital balances. Additionally, in the 2020 first quarter, Arconic Corporation recognizedmill; a charge of $6 ~~(pretax)~~in February 2020 for further necessary adjustments upon completion of the ~~divestiture.~~divestiture; and a charge of $1 in the 2021 first quarter for a then-proposed final settlement of the remaining post-closing adjustments and other items. Each of these amounts were recorded in Restructuring and other charges (see Note E)E) on the Company’s Statement of Consolidated Operations in the respective reporting periods. This transaction ~~remains~~is no longer subject to ~~certain~~ post-closing ~~adjustments as defined in the agreement.~~adjustments. Prior to the divestiture, this rolling mill’s operating results and assets and liabilities were reported in ~~the~~Arconic’s Rolled Products segment. The rolling mill generated third-party sales of $143 ~~$179, and $162~~ in 2019 ~~2018, and 2017, respectively,~~ and, at the time of divestiture, had approximately 500 employees.

Changwon. On March 1, 2020, Arconic ~~Corporation~~ completed the sale of its hard alloy extrusions plant in South Korea to SeAH Besteel Corporation for a net $55 in cash, resulting in a gain of $31 (pretax), which was recorded in Restructuring and other charges (see Note E)E) on the accompanying Statement of Consolidated Operations. The gain is net of a $6 write-off of related goodwill. In May 2020, the ~~2020 second quarter, Arconic Corporation~~Company received an additional $1 in cash as a result of a post-closing adjustment, which was previously contemplated in the aforementioned gain. This transaction is no longer subject to post-closing adjustments. Prior to the divestiture, this plant’s operating results and assets and liabilities were reported in ~~the~~Arconic’s Extrusions segment. The extrusions plant generated third-party sales of $51 ~~$53, and $50~~ in 2019 ~~2018, and 2017, respectively,~~ and, at the time of divestiture, had approximately 160 employees.

3430

O.P. Contingencies and Commitments

Unless specifically described to the contrary, all matters within Note OP are the full responsibility of Arconic ~~Corporation~~ pursuant to the Separation and Distribution Agreement (see Note A)A). Additionally, the Separation and Distribution Agreement provides for cross-indemnities between the Company and Howmet ~~Aerospace~~ for claims subject to indemnification.

Contingencies

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

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

~~Arconic Corporation’s~~The Company’s remediation reserve balance was ~~$181~~$135 and ~~$208~~$156 (of which ~~$97~~$75 and ~~$83,~~$90, respectively, was classified as a current liability) at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. ~~Additionally, Accounts payable, trade includes unpaid invoices of $22 related to environmental remediation projects as of December 31, 2019.~~

In the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period, the remediation reserve was increased by $1 and reduced by $3, respectively. The change to the remediation reserve in both periods includes a charge of $1 (recorded in Cost of goods sold) due to incremental estimated expenditures associated with active remediation systems and/or monitoring and inspection programs at several sites. Additionally, in the 2020 nine-month period, the change to the remediation reserve includes the reversal of a $5 liability (a credit was recorded in Restructuring and other charges – see Note E) previously established by ParentCo, as the underlying obligation no longer exists based on an assessment completed by Arconic Corporation management, and a charge of $1 (recorded in Restructuring and other charges – see Note E) to establish a liability related to the divestiture of a rolling mill in Brazil (see Note N).

$1. Payments related to remediation expenses applied against the reserve were ~~$33~~$4 and ~~$54~~$21 in the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period, ~~respectively. These amounts~~respectively, which include expenditures currently mandated, as well as those not required by any regulatory authority or third party. The change in the reserve in the ~~2020 nine-month~~2021 six-month period also reflects ~~both an increase of $13 for obligations transferred from ParentCo on April 1, 2020 in connection with the Separation (see below) and~~ a decrease of $5$1 for other items.

The Separation and Distribution Agreement includes provisions for the assignment or allocation of environmental liabilities between Arconic ~~Corporation~~ and Howmet, ~~Aerospace,~~ including certain remediation obligations associated with environmental matters. In general, the respective parties are responsible for the environmental matters associated with their operations, and with the properties and other assets assigned to each. Additionally, the Separation and Distribution Agreement lists environmental matters with a shared responsibility between the two companies with an allocation of responsibility and the lead party responsible for management of each matter. For matters assigned to Arconic ~~Corporation~~ and Howmet ~~Aerospace~~ under the Separation and Distribution Agreement, the companies have agreed to indemnify each other in whole or in part for environmental liabilities arising from operations prior to the Separation Date.

The following description provides details regarding the current status of one reserve, which represents the majority of the Company’s total remediation reserve balance, related to ~~a current~~an active Arconic ~~Corporation~~ site.

Massena West, NY—Arconic ~~Corporation~~ has an ongoing remediation project related to the Grasse River, which is adjacent to the Company’s Massena plant site. Many years ago, it was determined that sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs). The project, which was selected by the U.S. Environmental Protection Agency (EPA) in a Record of Decision issued in April 2013, is aimed at capping PCB contaminated sediments with concentration in excess of one part per million in the main channel of the river and dredging PCB contaminated sediments in the near-shore areas where total PCBs exceed one part per million. Arconic ~~Corporation~~ completed the final design phase of the project, which was approved by the EPA in March 2019. Following the EPA’s approval, the actual remediation fieldwork commenced.

In June 2019, ~~Arconic Corporation~~the Company increased the reserve balance by $25 due to changes required in the EPA-approved remedial design and post-construction monitoring. These changes were necessary due to several items, the majority of which ~~relates~~related to navigation issues identified by a local seaway development company. Accordingly, the EPA requested an addendum to the final remedial design be submitted to address these issues. The proposed remedy is to dredge certain of the sediments originally identified for capping in the affected areas of the Grasse River, resulting in incremental project costs. The EPA approved the proposal in April 2020. As the project progresses, further changes to the reserve may be required due to factors such as, among others, additional changes in remedial requirements, increased site restoration costs, and incremental ongoing operation and maintenance costs.

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the reserve balance associated with this matter was ~~$131~~$97 and ~~$171,~~$115, respectively. ~~Additionally, Accounts payable, trade includes unpaid invoices of $21 related to this project as of December 31, 2019.~~ The majority of the remaining expenditures related to the project are expected to occur between the remainder of ~~2020~~2021 and 2022.

Litigation.

All references to ParentCo in the matters described under this section Litigation refer to Arconic Inc. only and do not include its subsidiaries, except as otherwise stated.

Airbus Matters—In 2017, Airbus and various of its affiliates (“Airbus”) filed 3 separate confidential requests for arbitration against ParentCo and various of its then affiliates, one of which is Arconic Manufacturing (GB) Limited, an Arconic Corporation subsidiary, with the International Chamber of Commerce. Airbus specifically alleges that a defect exists in certain of our products sold to Airbus under various separate contracts. Airbus’s claims include claims of breach of certain alleged express and implied warranties and negligence. On June 12, 2020, Airbus filed its Second Memorial in the arbitration in which it claims damages attributed specifically to our products. In two of the three arbitrations, Airbus was seeking damages in excess of $200 and an order of indemnification with respect to conditional future losses; in the third of the arbitrations, Airbus is seeking an order of indemnification with respect to contingent future losses. A private and confidential arbitration hearing occurred in late October 2020 on two of the 3 requests for arbitration and on March 26, 2021, the Arbitral Panel issued final awards in those two arbitrations in favor of the Respondents (including Arconic Manufacturing (GB) Limited), rejecting Airbus’s claims and denying Airbus the relief sought. The hearing on the third request for arbitration was stayed. On June 1, 2021, the parties entered into a confidential agreement in settlement of all claims related to the matter. These proceedings are now fully resolved and closed.

Federal Antimonopoly Service Of The Russian Federation Litigation—The Federal Antimonopoly Service of the Russian Federation (“FAS”) filed a lawsuit on March 17, 2020 with the Arbitrazh (State Commercial) Court of Samara Region against 2 of the Company’s subsidiaries, Arconic Rus Investment Holdings LLC (“LLC ARIH”) and AlTi Forge Holding Sarl (the “Arconic Russian Holding Companies”), naming Elliott Associates L.P., Elliott International L.P., and Elliot International Capital Advisors Inc. (“Elliott”) as third parties. Also named as interested parties are: Parent Co. and certain of its foreign subsidiaries; and Arconic Netherland B.V., the Company’s subsidiary that directly and indirectly owns LLC ARIH, Arconic SMZ JSC and JSC AlTi Forge (the “Arconic Russian Subsidiaries”). FAS alleges that Elliott indirectly acquired control over the Arconic Russian Subsidiaries when, in May 2019, directors who had previously been nominated by Elliott and appointed or elected to Parent Co.’s board of directors pursuant to certain settlement agreements among Parent Co. and Elliott constituted a majority of that board as a result of a reduction in the size of the board. FAS claims alleged non-compliance with Russian Federal Law No. 57-FZ, which governs foreign ownership of certain Russian companies and requires certain governmental approvals for a foreign investor to acquire control over strategically important Russian companies. On April 6, 2020, the Samara Court granted injunctions against the Arconic Russian Holding Companies prohibiting the taking of certain corporate governance actions, including with respect to: (i) the disposal of shares in the Arconic Russian Subsidiaries; and (ii) the making of certain decisions with respect to the Arconic Russian Subsidiaries, including decisions regarding the payment of dividends, placement of bonds, amendment of bylaws and internal documents, the appointment, change and compensation of the Arconic Russian Subsidiaries’ CEO, and the election of the Arconic Russian Subsidiaries’ board of directors. On April 29, 2020, the Arconic Russian Holding Companies simultaneously filed an appeal and motion to revoke the previously issued injunctions. Both the appeal and motion to revoke were denied. A hearing on the merits of the claim was scheduled for June 8, 2021 but was postponed until August 19, 2021. As a consequence of the alleged violation, FAS is seeking removal and exclusion of the Arconic Russian Holding Companies from the affairs of the Arconic Russian Subsidiaries, resulting in the deprivation of the benefits of their ownership interests in the Arconic Russian Subsidiaries, including the rights currently restricted in the injunctions granted on April 6, 2020. Due to the nature of this matter, geopolitical tensions between the U.S. and Russia could have a material adverse impact on our ability to obtain a favorable outcome in this matter, as well as our operations in Russia, which represented 12% of our sales in 2020. Given the preliminary nature of this matter and the uncertainty of litigation, we 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.

Reynobond PE—On June 13, 2017, the Grenfell Tower in London, U.K. caught fire resulting in fatalities, injuries, and damage. A French subsidiary of Arconic Corporation (of ParentCo at that time), Arconic Architectural Products SAS (AAP SAS), supplied a product, Reynobond PE, to its customer, a cladding system fabricator, which used the product as one component of the overall cladding system on Grenfell Tower. The fabricator supplied its portion of the cladding system to the facade installer, who then completed and installed the system under the direction of the general contractor. Neither ParentCo nor AAP SAS was involved in the design or installation of the system used at the Grenfell Tower, nor did it have a role in any other aspect of the building’s refurbishment or original design. Regulatory investigations into the overall Grenfell Tower matter are being conducted, including a criminal investigation by the London Metropolitan Police Service (the “Police”), a Public Inquiry by the British government, and a 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. As Phase 2 of the public inquiry ~~resumed in July after a hiatus due to the COVID-19 pandemic,~~continues, the testimony has supported AAP SAS’s position that the choice of materials and the responsibility of ensuring compliance of the cladding system with relevant U.K. building code and regulations was with those individuals or entities who designed and installed the cladding system such as the architects, fabricators, contractors and building owners. The ongoing hearings in the U.K. have revealed serious doubts about whether these third parties had the necessary qualifications or expertise to carry out the refurbishment work at Grenfell Tower, adequately oversaw the process, conducted the required fire safety testing or analysis, or otherwise complied with their obligations under U.K. regulations. AAP SAS is participating as a Core Participant in the Public Inquiry and is also cooperating with the ongoing parallel investigation by the Police. Arconic Corporation does not sell and ParentCo previously stopped selling the PE product for architectural use on buildings. Given the preliminary nature of these investigations and the uncertainty of potential future litigation, Arconic Corporation 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.

United Kingdom Litigation. Multiple claimant groups comprised of survivors and estates of decedents of the Grenfell Tower fire have filed claims in the U.K. arising from that fire, including as follows:

•On June 12, 2020, 4 claimants represented by Birnberg Peirce Ltd filed suit against AAP SAS.

•On June 12, 2020, 2 claimants represented by Howe & Co Solicitors filed suit against AAP SAS.

•On June 26, 2020, 3 claimants represented by Russell-Cooke LLP filed suit against AAP SAS.

•On December 23, 2020, several additional suits were filed by claimant groups comprised of survivors and estates of decedents. These suits were all filed against the same group of 23 defendants: AAP SAS, Arconic Corporation, Howmet Aerospace Inc., the Royal Borough of Kensington and Chelsea, the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd, the London Fire Commissioner, the UK Home Office, The Ministry of Housing, Communities and Local Government, Rydon Maintenance Ltd, Celotex Ltd, Saint-Gobain Construction Products UK Limited, Kingspan Insulation Limited, Kingspan Group PLC (suits have since been discontinued), Studio E Architects Ltd (In liquidation), Harley Facades Ltd, Harley Curtain Wall Limited (In liquidation), CEP Architectural Facades Ltd, Exova (U.K.) Ltd, CS Stokes & Associates Ltd, Artelia Projects UK Limited (suits have since been discontinued), Whirlpool UK Appliances Limited, Whirlpool Company Polska Sp.z.o.o. and Whirlpool Corporation. These suits include as follows (represent preliminary best estimates of claimants in each suit):

◦NaN claimants represented by Deighton Pierce Glynn;

◦NaN claimants represented by SMQ Legal Services;

◦NaN claimants represented by Scott Moncrieff;

◦NaN (previously 6) claimants represented by Saunders Law;

◦NaN (previously NaN) claimants represented by Russell Cooke LLP;

◦NaN (previously 40) claimants represented by Imran Khan & Partners;

◦NaN (previously NaN) claimants represented by Howe & Co.;

◦NaN claimants represented by Hodge Jones and Allen Solicitor;

◦NaN (previously 19) claimants represented by Hickman & Rose;

◦NaN claimants represented by Duncan Lewis Solicitors;

◦NaN (previously 118) claimants represented by Birnberg Peirce;

◦NaN claimants represented by Bindmans LLP;

◦NaN (previously NaN) claimants represented by Bhatt Murphy Ltd; and

◦NaN claimants represented by Slater & Gordon.

Multiple claimant groups comprised of emergency responders who attended the Grenfell Tower fire have also filed claims against AAP SAS arising from that fire, including as follows:

•On June 11, 2020, 8098 (previously 80) firefighters represented by Thompsons Solicitors filed suit against AAP SAS, as well as the Royal Borough of Kensington and Chelsea, the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd, Celotex Ltd, Exova (U.K.) Ltd, Rydon Maintenance Ltd, Studio E Architects Ltd, Harley Facades Ltd, CEP Architectural Facades Ltd, CS Stokes & Associates Ltd, and the London Fire Commissioner. Since then, another 187 (previously 5) firefighters have sought to be added to the suit.

•On June 12, 2020, 2736 (previously 27) police officers represented by Penningtons Manches Cooper LLP filed suit against AAP SAS, as well as the Royal Borough of Kensington and Chelsea, the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd, Celotex Ltd, Exova (U.K.) Ltd, Rydon Maintenance Ltd, Studio E Architects Ltd, Harley Facades Ltd, CEP Architectural Facades Ltd, CS Stokes & Associates Ltd, London Fire Commissioner, and the Commissioner of the Police of the Metropolis. Since then, some claimants have withdrawn and others have sought to be added to the suit. ~~Currently, there are 37 police officer claimants.~~

•On June 12, 2020, 2 firefighters represented by Pattinson and Brewer filed suit against AAP SAS, as well as the Royal Borough of Kensington and Chelsea, the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd, Celotex Ltd, Exova (U.K.) Ltd, Rydon Maintenance Ltd, Studio E Architects Ltd, Harley Facades Ltd, CEP Architectural Facades Ltd, CS Stokes & Associates Ltd, and the London Fire Commissioner. A third firefighter, also represented by Pattinson and Brewer, brought a claim against the same defendants on June 15, 2020. NaN of the original firefighter claimants has now withdrawn from the suit.

On December 17, 2020, a claim was issued by the Royal Borough of Kensington and Chelsea and the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd against: (1) Whirlpool Company Polska Spolka z Organiczona; and (2) AAP SAS. The Claimants seek damages in respect of their own losses and/or a contribution to the extent that they are found to be liable by the London High Court for any losses arising out of the Grenfell Tower fire on June 14, 2017.

All of these claims have been filed in the High Court in London. On October 2, 2020, the High Court ordered ~~that~~that: (a) the suits of the survivors and estates of decedents that were issued in June 2020 be stayed until a hearing ~~to be~~ scheduled by the High Court ~~after April 13,~~for June 9-10, 2021; and (b) that the suits of emergency responders be stayed until a hearing ~~to be~~ scheduled by the High Court for July 7-8, 2021. The hearing scheduled for June 9-10, 2021 was subsequently vacated by the Court.

The above-mentioned suits brought by: (1) the survivors and estates of decedents; (2) the emergency responders; and (3) the Royal Borough of Kensington and Chelsea for contributions, were recently heard together at a procedural hearing on July 7-8, 2021, before Senior Master Fontaine. At the hearing, the Senior Master made several directions for the future management of the Grenfell Tower litigation, including staying all suits against Arconic Corporation and its affiliates until a directions hearing to be held on the first available date after May ~~31, 2021.~~ 3, 2022. The duration of the stay is intended to allow Arconic Corporation, along with several other co-defendants to the above-mentioned litigations, to engage in preliminary discussions with the claimants' legal representatives in an attempt to reach a mutually agreeable settlement.

Given the preliminary nature of these matters and the uncertainty of litigation, Arconic Corporation 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 in any of the above-referenced disputes.

Behrens et al. v. Arconic Inc. et al. 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 “ParentCo 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 ParentCo 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 ParentCo 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 ParentCo 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 product 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) suggesting a procedure for limited discovery followed by further briefing on those subjects. On September 16, 2020, the Court issued an order granting Defendants’ motion to dismiss on forum non conveniens grounds,

subject to certain conditions, determining that the United Kingdom, and not the United States, is the appropriate place for plaintiffs to bring their case. Plaintiffs subsequently filed a motion for reconsideration, ~~and~~which the Court denied on November 23, 2020. Plaintiffs are appealing this judgment; ParentCo Defendants are ~~preparing a response.~~cross-appealing one of the conditions. The briefing has now been completed and the parties are awaiting an oral argument date. Plaintiffs filed their opening appeal brief on March 8, 2021; Defendants opening brief was filed on April 21, 2021. Given the preliminary nature of this matter and the uncertainty of litigation, Arconic Corporation 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.

Howard v. Arconic Inc. et al. A purported class action complaint related to the Grenfell Tower fire was filed on August 11, 2017 in the United States District Court for the Western District of Pennsylvania against ParentCo and Klaus Kleinfeld. A related purported class action complaint was filed in the United States District Court for the Western District of Pennsylvania on September 15, 2017, under the caption Sullivan v. Arconic Inc. et al., against ParentCo, 3 former ParentCo executives, several current and former ParentCo directors, and banks that acted as underwriters for ParentCo’s September 18, 2014 preferred stock offering (the “Preferred Offering”). The plaintiff in Sullivan had previously filed a purported class action against the same defendants on July 18, 2017 in the Southern District of New York and, on August 25, 2017, voluntarily dismissed that action without prejudice. On February 7, 2018, on motion from certain putative class members, the court consolidated Howard and Sullivan, closed Sullivan, and appointed lead plaintiffs in the consolidated case. On April 9, 2018, the lead plaintiffs in the consolidated purported class action filed a consolidated amended complaint. The consolidated amended complaint 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 alleged that

between November 4, 2013 and June 23, 2017 ParentCo and Kleinfeld made false and misleading statements and failed to disclose material information about ParentCo’s commitment to safety, business and financial prospects, and the risks of the Reynobond PE product, including in ParentCo’s Form 10-Ks for the fiscal years ended December 31, 2013, 2014, 2015, and 2016, its Form 10-Qs and quarterly financial press releases from the fourth quarter of 2013 through the first quarter of 2017, its 2013, 2014, 2015, and 2016 Annual Reports, its 2016 Annual Highlights Report, and on its official website. The consolidated amended complaint sought, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses. On June 8, 2018, all defendants moved to dismiss the consolidated amended complaint for failure to state a claim. 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. On June 22, 2020, counsel for Arconic Corporation and the individual defendants filed a letter apprising the Court of a recent decision by the Third Circuit and discussing its relevance to the pending motion to dismiss. Pursuant to an Order by the Court directing the plaintiffs to respond to this letter, the plaintiffs filed a letter response on July 9, 2020. ~~The~~On June 23, 2021, the Court granted in part and denied in part the defendants’ motion to dismiss ~~remains pending.~~the second amended complaint. The Court dismissed with prejudice plaintiffs’ claim against ParentCo, certain officers and directors and the underwriters based on the registration statement for the Preferred Offering, with the exception of one statement and only as to purchases made before October 23, 2015. In addition, plaintiffs’ claim based on ParentCo’s statements in other SEC filings, in product brochures, and on websites was dismissed in its entirety as to Kleinfeld and dismissed in part and allowed in part as to ParentCo. The Court also dismissed the control-person liability claims in their entirety. The parties stipulated to an August 12, 2021 deadline for defendants to file an answer to the second amended complaint in light of the Court’s partial dismissal. Given the preliminary nature of this matter and the uncertainty of litigation, Arconic Corporation 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.

Raul v. Albaugh, et al. On June 22, 2018, a derivative complaint was filed nominally on behalf of ParentCo by a purported ParentCo stockholder against the then members of ParentCo’s Board of Directors and Klaus Kleinfeld and Ken Giacobbe, naming ParentCo 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 and second amended complaint in Howard, as well as allegations that the defendants improperly authorized the sale of Reynobond PE for unsafe uses, and asserts claims under Section 14(a) of the Securities Exchange Act of 1934, as amended, and Delaware state law. On July 13, 2018, the parties filed a stipulation agreeing to stay this case until the final resolution of the Howard case, the Grenfell Tower Public Inquiry in London, and the investigation by the Police and on July 23, 2018, the Court approved the stay. Given the preliminary nature of this matter and

the uncertainty of litigation, Arconic Corporation 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.

General. While Arconic Corporation believes that all the above referenced Reynobond PE cases are without merit and intends to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters.

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

3836

P.Q. Subsequent Events

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

In October 2018, Arconic Corporation sold its Texarkana (Texas) rolling mill and cast house, which had a combined net book value of $63, to Ta Chen International, Inc. for $302 in cash, subject to post-closing adjustments, plus additional contingent consideration of up to $50. The contingent consideration relates to the achievement of various milestones associated with operationalizing the rolling mill equipment within 36 months of the transaction closing date. Through 2019, the Company received contingent consideration of $25. On October 30, 2020, the Company received the remaining contingent consideration of $25.Statements.

3937

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

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

References to ~~(i)~~ “ParentCo” refer to Arconic Inc., a Delaware corporation, and its consolidated subsidiaries (through March 31, 2020, at which time it was renamed Howmet Aerospace Inc. (“Howmet”), and (ii) “2016 Separation Transaction” refer to the November 1, 2016 separation of Alcoa Inc., a Pennsylvania corporation, into two standalone, publicly-traded companies, Arconic Inc. and Alcoa Corporation.).

The Separation. On February 8, 2019, ParentCo announced that its Board of Directors approved a plan to separate into two standalone, publicly-traded companies (the “Separation”). The spin-off company, later named Arconic Corporation, was to include the rolled aluminum products, aluminum extrusions, and architectural products operations of ParentCo, as well as the Latin America extrusions operations sold in April 2018, (collectively, the “Arconic Corporation Businesses”). The existing ~~publicly traded~~publicly-traded company, ParentCo, was to continue to own the engine products, engineered structures, fastening systems, and forged wheels operations (collectively, the “Howmet Aerospace Businesses”).

The Separation was subject to a number of conditions, including, but not limited to: final approval by ParentCo’s Board of Directors (see below); receipt of an opinion of legal counsel (received on March 31, 2020) regarding the qualification of the distribution, together with certain related transactions, as a “reorganization” within the meaning of Sections 335 and 368(a)(1)(D) of the U.S. Internal Revenue Code (i.e., a transaction that is generally tax-free for U.S. federal income tax purposes); and the U.S. Securities and Exchange Commission (the “SEC”) declaring effective a Registration Statement on Form 10, as amended, filed with the SEC on February 13, 2020 (effectiveness was declared by the SEC on February 13, 2020).

On April 1, 2020 (the “Separation Date”), the Separation was completed and became effective at 12:01 a.m. Eastern Daylight Time. To effect the Separation, ParentCo undertook a series of transactions to separate the net assets and certain legal entities of ParentCo, resulting in a cash payment of $728 to ParentCo by Arconic ~~Corporation~~ from a portion of the aggregate net proceeds of previously executed financing arrangements (see 2020 Activity in Financing Activities in Liquidity and Capital Resources below). In connection with the Separation, 109,021,376 shares of Arconic ~~Corporation~~ common stock were distributed to ParentCo stockholders. This was determined by applying the Separation Ratio to the 436,085,504 shares of ParentCo’s outstanding common stock as of the Record Date. “Regular-way” trading of ~~Arconic Corporation’s~~Arconic’s common stock began with the opening of the New York Stock Exchange on April 1, 2020 under the ticker symbol “ARNC.” ~~Arconic Corporation’s~~Arconic’s common stock has a par value of $0.01 per share.

ParentCo incurred costs to evaluate, plan, and execute the Separation, and Arconic ~~Corporation~~ was allocated a pro rata portion of these costs based on segment revenue (see Cost Allocations below). ParentCo recognized $38 in the 2020 ~~nine-month~~six-month period ~~and $25 and $44 in the 2019 third quarter and nine-month period, respectively,~~2020 for such costs, of which $18 ~~in the 2020 nine-month period and $13 and $23 in the 2019 third quarter and nine-month period, respectively,~~ was allocated to ~~Arconic Corporation.~~Arconic. The allocated ~~amounts were~~amount was included in Selling, general administrative, and other expenses on ~~Arconic Corporation’s~~Arconic’s Statement of Consolidated Operations.

Basis of Presentation. The Company’s Consolidated Financial Statements ~~of Arconic Corporation~~ are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In accordance with GAAP, certain situations

require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates upon subsequent resolution of identified matters. These estimates are based on historical experience and, in some cases, assumptions

based on current and future market experience, including considerations related to ~~COVID-19.~~the coronavirus (COVID-19) pandemic. Management has made its best estimates using all relevant information available at the time, but it is possible that these estimates will differ from actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by ~~COVID-19.~~the COVID-19 pandemic.

~~Change in Inventory Accounting Principle.~~ Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the Company's Consolidated Financial Statements. See Note K to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.Arconic.

Cost Allocations. The description and information on cost allocations is applicable for all periods included in the Company’s Consolidated Financial Statements prior to the Separation Date.

~~The~~Arconic’s Consolidated Financial Statements ~~of Arconic Corporation~~ include general corporate expenses of ParentCo that were not historically charged to the Arconic Corporation Businesses for certain support functions that were provided on a centralized basis, such as expenses related to finance, audit, legal, information technology, human resources, communications, compliance, facilities, employee benefits and compensation, and research and development activities. These general corporate expenses were included on ~~the accompanying~~Arconic’s Statement of Consolidated Operations within Cost of goods sold, Selling, general administrative and other expenses, and Research and development expenses. These expenses were allocated to Arconic ~~Corporation~~ on the basis of direct usage when identifiable, with the remainder allocated based on the Arconic Corporation Businesses’ segment revenue as a percentage of ParentCo’s total segment revenue, as reported in the respective periods.

All external debt not directly attributable to the Arconic Corporation Businesses was excluded from the ~~accompanying~~Company’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Arconic ~~Corporation~~ based on the ratio of capital invested by ParentCo in the Arconic Corporation Businesses to the total capital invested by ParentCo in both the Arconic Corporation Businesses and the Howmet Aerospace Businesses, and were included on ~~the accompanying~~Arconic’s Statement of Consolidated Operations within Interest expense.

The following table reflects the allocations described above:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Cost of goods sold(1)
$ — $ 4 $ — $ 11
Selling, general administrative, and other expenses(2)
— 27 25 80
Research and development expenses — 1 — 8
Provision for depreciation and amortization — 4 1 9
Restructuring and other charges — 2 2 5
Interest expense — 29 28 86
Other expenses (income), net — 1 (5) 4



Six months ended June 30,	2020
Cost of goods sold	$	—
Selling, general administrative, and other expenses*	25
Research and development expenses	—
Provision for depreciation and amortization	1
Restructuring and other charges	2
Interest expense	28
Other (income), net	(5)

_____________________

Management believes the assumptions regarding the allocation of ParentCo’s general corporate expenses and financing costs were reasonable.

Consolidated Cash Flows as a financing activity and on the Company’s Consolidated Balance Sheet as Parent Company net investment.

Results of Operations

Outlook

In the 2021 second quarter and six-month period, we experienced revenue growth across several of the end-markets that we serve, as customer demand continues to rebound from the global economic impact of the COVID-19 pandemic. The Company also had strong operating performance in the first half of 2021. Management is revising certain expectations for sales by major end market for full year 2021 compared with full year 2020, as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I Item 2 in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2021 and in Part II Item 7 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Consistent with the expectations included in the referenced Form 10-Q and Form 10-K, the revised expectations do not include the impact of changes in aluminum prices. These expectations may change during the course of the year given the continued uncertainty in the global economy. For the ground transportation end market, we have changed our outlook and anticipate sales to increase by approximately 25% to 30% (versus prior expectation of 25% to 35%), principally in the automotive component of this end market, due to ongoing issues in the semiconductor supply chain impacting automotive production at our customers (certain of our automotive customers have announced temporary suspensions of operations in 2021). Some of this impact is being offset by strength in heavy duty truck and trailer, as well as our ability to pivot production capacity from automotive to industrial products end markets. The investments made to increase capabilities and capacity at our Tennessee facility provide flexibility to pivot production to industrial products. For the industrial products end market, we have improved our outlook and anticipate sales to increase by approximately 25% to 30% (versus prior expectation of 20% to 25%) in 2021 compared with 2020, driven by the aforementioned pivot in production from automotive. This end market continues to benefit from the U.S. trade case on imports of common alloy aluminum sheet that reached a favorable conclusion in March 2021, resulting in strong demand in the U.S. industrial markets. For the building and construction end market, we anticipate slightly positive growth in a range of approximately 0% to 5% (versus prior expectation of remaining relatively flat) in 2021 compared with 2020, reflecting some modest improvement through the second half of the year. For the packaging end market, we expect sales to increase by approximately 15% to 20% (versus prior expectation of 10% to 15%) in 2021 compared with 2020, as demand in Russia and China remains strong and we expect to benefit from access to new markets that were previously unavailable due to the Company's non-compete agreement that expired in the fourth quarter of 2020. Additionally, we anticipate some modest impact in North America in late 2021 as we ramp up production at our Tennessee facility.

COVID-19 Pandemic

Our operations and financial results have been, and ~~are expected to~~may continue to be, adversely affected by the ~~current coronavirus (COVID-19)~~COVID-19 pandemic. ~~Since Arconic’s launch as a standalone company on April 1, 2020, market conditions have been changing rapidly and unpredictably.~~ As a result of the COVID-19 pandemic, several of our automotive and aerospace customers temporarily suspended ~~operations.~~operations at different points throughout 2020. While many of our customers have resumed operations (see Outlook above for other temporary suspensions associated with our automotive customers) as it relates to the ~~Company is~~COVID-19 pandemic, we are unable to estimate with certainty at this time the status, frequency, or duration of any potential reoccurrences of customer shutdowns, or the duration or extent of resumed operations. In 2019, Arconic derived approximately 35% of its revenue from the ground transportation end market—including approximately 13% of its revenue from Ford, our largest customer—and 18% from the aerospace end market. Due to the impacts of the COVID-19 pandemic on our customers, we are experiencing, and expect to continue experiencing, lower demand and volume for certain of our products. These trends may lead to charges, impairments, and other adverse financial impacts over ~~time. The duration~~time, including but not limited to the recoverability of goodwill and long-lived assets and the ~~current disruptions to our customers and related financial impact to us has been estimated, but remains highly uncertain at this time.~~realizability of deferred tax assets. The impact on our business, results of operations, financial condition, liquidity, and/or cash flows will be magnified if the disruption from the COVID-19 pandemic continues for an extended period.

We believe that ~~Arconic’s~~our diverse end markets and geographic composition mitigate a portion of the impact on the Company from any singular area of decline. Furthermore, despite the challenges that we currently face in North America and Europe, we are seeing positive momentum at our Chinese facilities that felt the full brunt of the COVID-19 pandemic in early 2020 and are now back to essentially normal production. Our Russian packaging facility is running at full operations due to strong end market demand. Moreover,Additionally, our operating footprint benefits from a highly variable cost structure and we are able to actively ~~managing~~manage our operations to effectively flex activity, if necessary, to respond to changing ~~automotive and aerospace~~end market conditions. However, the geographic locations in which our products are manufactured, distributed, or sold ~~are~~continue to be in varying stages of ~~continued~~ restrictions or lifting of restrictions, and the status of restrictions in certain areas may change on short notice. Because we rely on supply chain continuity, restrictions in one location may materially impact operations in multiple locations, and the impact of the COVID-19 pandemic in one location may have a disproportionate effect on our operations in the future.

The safety of ~~Arconic’s~~our employees is our highest priority. We continue to maintain our previously implemented heightened measures at all of our locations to maintain strict hygiene, increase social distancing, and enable employees to work remotely where possible.

The timing for the Company and/or our customers resuming operations and the levels of operations experienced before the COVID-19 pandemic depend on several factors beyond management’s control, including, among other things: the revision of governmental quarantine, shelter in place or similar social distancing orders or guidelines; the occurrence and magnitude of future outbreaks; the availability and/or distribution of vaccines or other medical remedies and preventive measures; the location of facilities; and determinations regarding, among other things, health and safety, demand for specific products, and broader economic conditions. We are continuing to monitor the impact this global event may have on the Company’s future results of operations, financial condition, liquidity, and cash flows.

See Part I Item 1A “Risk Factors” and Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed February 23, 2021) for additional information regarding the continuing impact of the COVID-19 pandemic on our operations.

Earnings Summary

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at last-in, first-out (LIFO) cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the Company’s Consolidated Financial Statements. See Note L to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Sales. Sales were $1,801 in the 2021 second quarter compared to $1,187 in the 2020 second quarter and $3,476 in the 2021 six-month period compared with $2,798 in the 2020 six-month period. The increase of $614, or 52%, in the second quarter comparison and $678, or 24%, in the six-month period comparison was principally due to improved volumes in most end markets, particularly ground transportation and industrial products, as recovery from the COVID-19 pandemic continues, and higher aluminum prices, driven by an increase in aluminum prices. These positive impacts were slightly offset (second quarter) and somewhat offset (six-month period) by both lower volume and unfavorable product mix due to depressed sales to the aerospace end market.

In ~~response~~March 2021, the Company entered into a settlement agreement with a customer related to the terms of an existing long-term contract. As a result, the customer agreed to pay Arconic $18, which will be recognized over the applicable three-year period. Accordingly, the Company’s sales for the 2021 second quarter and six-month period include $1 and $9, respectively, associated with this settlement.

Cost of goods sold (COGS). COGS was $1,567, or 87.0% of Sales, in the 2021 second quarter compared to $1,051, or 88.5% of Sales, in the 2020 second quarter and $2,998, or 86.2% of Sales, in the 2021 six-month period compared with $2,396, or 85.6% of Sales, in the 2020 six-month period. In the second quarter comparison, the percentage was positively impacted by net cost savings, mostly offset by higher aluminum prices (underlying metal price is contractually passed-through to customers at cost). The percentage was negatively impacted in the six-month period comparison by unfavorable product mix driven by depressed sales to the aerospace end market ~~conditions we~~and higher aluminum prices (underlying metal price is contractually passed-through to customers at cost), partially offset by net cost savings. In both comparisons, net cost savings were principally the result of the absence of below normal absorption of fixed costs that occurred in the 2020 periods driven by significantly lower production levels as a result of the COVID-19 pandemic, partially offset by higher costs for labor (see Labor costs below) and direct materials.

Selling, general administrative, and other expenses (SG&A). SG&A was $61 in the 2021 second quarter compared to $55 in the 2020 second quarter and $120 in the 2021 six-month period compared to $135 in the 2020 six-month period. The increase of $6, or 11%, in the second quarter comparison was mostly caused by an increase in labor costs (see Cost of goods sold above), partially offset by lower legal fees. In the six-month period comparison, the decrease of $15, or 11%, was largely attributable to the absence of an allocation ($18) of costs incurred for the Separation (see Cost Allocations under The Separation above) and lower stock-based employee compensation expense ($5), somewhat offset by higher labor costs (see Labor costs below). SG&A as a percentage of Sales was 3.4% in the 2021 second quarter compared to 4.6% in the 2020 second quarter and 3.5% in the 2021 six-month period compared to 4.8% in the 2020 six-month period.

Research and development expenses (R&D). R&D was $9 in the 2021 second quarter compared to $8 in the 2020 second quarter and $17 in the 2021 six-month period compared to $19 in the 2020 six-month period. The increase of $1, or 13%, in the second quarter comparison was primarily driven by higher labor costs (see Labor costs below). In the six-month period comparison, the decrease of $2, or 11%, was primarily driven by cost reduction efforts initiated in 2020.

Labor costs—The following description is applicable to COGS, SG&A, and R&D in the aggregate. Beginning in April 2020, management implemented a series of proactive actions to mitigate the impacts of the COVID-19 pandemic on ~~our~~the

Company. Many of these actions impacted both business ~~including~~unit and corporate employees resulting in the Company experiencing lower labor costs compared to 2019. These actions included the following:

•~~deferred initiating a dividend on common stock;~~

•~~reduced the CEO’s salary and the Board of Directors’ cash compensation by 30% (see below);~~

•~~reduced salaries for senior-level management by 20% and for all other salaried employees by 10% (see below);~~

•~~restructuring of the salaried workforce, targeting a 10% reduction;~~

•~~idling of~~idled various production facilities based on market conditions within the regions where the Company operates;

•~~decreasing~~decreased production and operating with a reduced labor force through shortened work weeks, shift reductions, layoffs, and the elimination of temporary workers and contractors at U.S.-based rolling and extrusion facilities;

•~~implementing~~implemented a combination of modified schedules, adjusted work hours, lower costs, and/or delayed raises at all rolling mill facilities in Europe, China, and Russia;

•reduced the CEO’s salary and the Board of Directors’ cash compensation by 30%;

•reduced salaries for senior-level management by 20% and for all other salaried employees by 10%; and

•suspended the ~~401K~~401(k) match program for U.S. salaried ~~employees (see below); and~~

•~~reducing capital expenditures by approximately $50, or approximately 30%.~~employees.

Effective September 1, 2020, the Company restored both the salaries of all salaried employees and the ~~401K~~401(k) match of all salaried U.S. employees, including executive officers, to the levels in effect prior to the actions described above. Also effective

September 1, 2020, the Company restored the annual cash retainers payable to the non-employee members of the Company’s Board of Directors to the levels in effect prior to the previous reduction described above. Additionally, by the end of 2020 and into 2021, the Company’s production facilities were operating at significantly higher levels compared to earlier in 2020. As a result, the Company experienced higher labor costs in the 2021 second quarter and six-month period compared to the same periods in 2020.

~~While~~Provision for depreciation and amortization (D&A). D&A was $62 in the ~~foregoing measures are anticipated~~2021 second quarter compared to ~~result~~$68 in ~~cost savings~~the 2020 second quarter and $125 in the 2021 six-month period compared to $128 in the 2020 six-month period. The decrease of ~~approximately $200 on~~$6, or 9%, in the second quarter comparison and $3, or 2%, in the six-month period comparison was mainly caused by the absence of an ~~annualized run-rate basis, plus~~impairment of abandoned projects and plant equipment ($6). This positive impact in the ~~additional $50~~six-month period comparison was partially offset by new depreciation for ~~capital expenditure reductions, we may not achieve~~assets placed into service in the ~~targeted levels~~second half of cost savings in connection with the measures described above or any other measures taken to date, and these measures may not be sufficient to offset the negative impact of the COVID-19 pandemic on our business. In addition, we may determine that it is necessary to modify or rescind cost-saving actions, in which case the planned cost savings would not be fully realized. Further disruptions and uncertainties2020 related to an automotive and industrial product expansion at the ~~COVID-19 pandemic could require us~~Company’s Tennessee rolling facility and unfavorable foreign currency movements due to take additional cost-saving actions or to modify or rescind current cost-saving actions, make additional modifications to our strategic plans and/or incur additional expenses as part of our continued response to the COVID-19 pandemic. The cost-savings measures taken to date,a weaker U.S. dollar.

Restructuring and ~~any cost-cutting measures we may need to take~~other charges. Restructuring and other charges were $597 and $598 in the ~~future, could have a material~~2021 second quarter and ~~adverse effect on our business, results of operations, financial condition, liquidity, and/or cash flows.~~

~~While we are continuing to evaluate the impact of this global event, our liquidity~~six-month period, respectively, and ~~financial position remains strong despite the COVID-19 pandemic’s impact to our business. Our business is flexible~~$77 and ~~our cash requirements are countercyclical. We expect working capital will be a source of cash~~$58 in the ~~near term,~~2020 second quarter and ~~together with the benefit of the recent management actions to reduce costs, we believe we have adequate liquidity to operate the Company over the next twelve months.~~

The timing for the Company and/or our customers resuming operations and the levels of operations experienced before the COVID-19 pandemic depend on numerous factors beyond the Company’s control, including, among other things: the revision of governmental quarantine, shelter in place or similar social distancing orders or guidelines; the occurrence and magnitude of future outbreaks; the availability of vaccines or other medical remedies and preventive measures; the location of facilities; and determinations regarding, among other things, health and safety, demand for specific products, and broader economic conditions. Arconic Corporation is continuing to evaluate the impact this global event may have on its future results of operations, financial condition, liquidity, and cash flows.

six-month period, respectively. See ~~Part II Item 1A “Risk Factors” for additional information regarding the continuing impact of the COVID-19 pandemic on our operations.~~

~~Earnings Summary:~~

Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the Company's Consolidated Financial Statements. See Note KE to the Consolidated Financial Statements in Part I Item 1 of this Form ~~10-Q.~~

~~Sales.~~ ~~Sales were $1,415 in~~10-Q for additional information. Restructuring and other charges includes a charge for the 2020 third quarter compared to $1,805 in the 2019 third quarter and $4,213 in the 2020 nine-month period compared with $5,569 in the 2019 nine-month period. The decrease of $390, or 22%, in the third quarter comparison and $1,356, or 24%, in the nine-month period comparison was principally due todepressed volumes within each of the Company's three segments, mainly caused by the economic impact of COVID-19 and/or production declines due to delays associated with the Boeing 737 MAX; lower aluminum prices in the Rolled Products segment, driven by a drop in both the average LME price and regional premiums; the absence of sales ($46-third quarter and $135-nine months) related to the divestitures of a rolling mill in Brazil (February 2020) and an extrusions plant in South Korea (March 2020); an unfavorable impact related to the curtailment of a rolling mill and both the exit and rationalization of two separate product lines in the Building and Construction Systems segment; and unfavorable product mix in the Rolled Products segment.

~~Cost of goods sold (COGS)~~. COGS was $1,218, or 86.1% of Sales, in the 2020 third quarter compared to $1,565, or 86.7% of Sales, in the 2019 third quarter and $3,614, or 85.8% of Sales, in the 2020 nine-month period compared with $4,849, or 87.1% of Sales, in the 2019 nine-month period. The percentage was positively impacted in both comparisons by net cost savings, including lower labor costs (see Outlook above), and the absencesettlement of certain employee retirement ~~benefit plan expenses ($17 and $53, respectively – see below), mostly offset by lower volumes and unfavorable product mix.~~

In preparation for the Separation, effective January 1, 2020, certain U.S. defined benefit pension and other postretirement plans previously sponsored by ParentCo were separated into standalone plans for both Arconic Corporation and Howmet Aerospace. Additionally, effective April 1, 2020, Arconic Corporation assumed a portionbenefits of the obligations associated with certain non-U.S. defined benefit pension plans that included participants related to both the Arconic Corporation Businesses and the Howmet Aerospace Businesses, as well as legacy defined benefit pension plans assigned to the Company as a result of the Separation. As a result, beginning$568 in the ~~first quarter of 2020 for these U.S. plans and in the~~2021 second quarter ~~of 2020 for these~~

~~non-U.S. plans, Arconic Corporation applied defined benefit plan accounting resulting in benefit plan expense being recorded in operating income (service cost)~~ and ~~nonoperating income (nonservice cost). In all historical periods prior to these respective timeframes, Arconic Corporation was considered a participating employer in ParentCo’s defined benefit plans~~six-month period and therefore, applied multiemployer plan accounting resulting in the Company’s share of benefit plan expense being recorded entirely in operating income. Also, Arconic Corporation is the plan sponsor of certain other non-U.S. defined benefit plans that contain participants related only to the Arconic Corporation Businesses and, therefore, the related benefit plan expense was recorded in accordance with defined benefit plan accounting in all periods presented. The following table presents the total benefit plan expense (excluding settlements and curtailments) recorded by Arconic Corporation based on the foregoing in each period presented:

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Cost of goods sold $ 7 $ 24 $ 18 $ 71
Selling, general administrative, and other expenses — 3 — 10
Research and development expenses — — — 1
Other expenses (income), net 20 1 59 2
Total $ 27 $ 28 $ 77 $ 84

~~Selling, general administrative, and other expenses (SG&A). SG&A was $59~~$55 in the 2020 ~~third quarter compared to $82 in the 2019 third~~second quarter and ~~$194 in the 2020 nine-month period compared to $255 in the 2019 nine-month~~six-month period.

The decrease of $23, or 28%, in the third quarter comparison and $61, or 24% in the nine-month period comparison was largely attributable to a combination of a lower corporate cost structure as a standalone company in the 2020 periods compared to an allocation of ParentCo’s corporate overhead (excluding costs for the Separation) in the 2019 periods and cost reduction actions in response to COVID-19 (see Outlook above), a lower allocation (decrease of $13 and $5, respectively) of costs incurred for the Separation (see Cost Allocations under The Separation above), and the absence of certain employee retirement benefit plan expenses ($3 and $10, respectively – see Cost of goods sold above).

~~SG&A as a percentage of Sales was 4.2% in the 2020 third quarter compared to 4.5% in the 2019 third quarter and 4.6% in both the 2020 nine-month period and the 2019 nine-month period.~~

~~Research and development expenses (R&D)~~ See . R&D was $8 in the 2020 third quarter compared to $9 in the 2019 third quarter and $27 in the 2020 nine-month period compared to $34 in the 2019 nine-month period. The decrease of $1, or 11%, in the third quarter comparison and $7, or 21%, in the nine-month period comparison was primarily driven by a lower amount of expenses associated with the Company's standalone R&D facility in the 2020 periods compared to the expenses allocated to Arconic Corporation by ParentCo (see Cost Allocations under The Separation above) in the 2019 periods. The lower cost structure was the result of the consolidation of this R&D facility in connection with cost reduction efforts initiated by ParentCo in 2019.

~~Restructuring and other charges~~Note G. Restructuring and other charges were comprised of net charges of $3 and $64 in the 2020 third quarter and 2019 third quarter, respectively, and net charges of $61 and $104 in the 2020 nine-month period and 2019 nine-month period, respectively. See Note E to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Interest expense. Interest expense was ~~$22~~$25 in the 2021 second quarter compared to $40 in the 2020 ~~third~~second quarter and $48 in the 2021 six-month period compared to ~~$29 in the 2019 third quarter and $97~~$75 in the 2020 ~~nine-month period compared to $86 in the 2019 nine-month~~six-month period.

The decrease of ~~$7,~~$15, or ~~24%~~38%, in the ~~third~~second quarter comparison was principally related to ~~a lower amount~~the absence of interest associated with the Company’s standalone outstanding debt (see Financing Activities under Liquidity and Capital Resources below) in the 2020 third quarter compared to the interest allocated to Arconic Corporation by ParentCo (see Cost Allocations under The Separation above) in the 2019 third quarter.

~~In the nine-month period comparison, the increase of $11, or 13%, was primarily due to~~$19 for the write-off and immediate expensing of ~~$19 in~~ debt issuance costs as a result of a debt refinancing ~~(see~~in May 2020, partially offset by a higher amount of interest associated with a $700 debt offering executed in May 2020 and new interest related to a $300 debt offering completed in March 2021. See Financing Activities under Liquidity and Capital Resources ~~below)~~below for additional information related to these financing transactions.

In the six-month period comparison, the decrease of $27, or 36%, was primarily due to the absence of both a $28 allocation of ParentCo's financing costs in the period prior to Separation (see Cost Allocations under The Separation above) and $19 for the write-off and immediate expensing of debt issuance costs as a result of a debt refinancing in May 2020, partially offset by a ~~lower~~higher amount of interest associated with ~~the Company’s standalone outstanding~~both a $700 debt ~~(see~~offering executed in May 2020 and a $600 debt offering completed in February 2020 and new interest related to a $300 debt offering executed in March 2021. See Financing Activities under Liquidity and Capital Resources ~~below) in the 2020 nine-month period~~

~~compared~~below for additional information related to ~~the interest allocated to Arconic Corporation by ParentCo (see Cost Allocations under The Separation above) in the 2019 nine-month period.~~these financing transactions.

Other expenses, ~~(income),~~ net. Other expenses, net was ~~$27~~$15 and $37 in the 2021 second quarter and six-month period, respectively, and $16 and $42 in the 2020 ~~third~~second quarter and ~~$69 in the 2020 nine-month~~six-month period, compared to Other income, net of less than $1 in the 2019 third quarter and $4 in the 2019 nine-month period. The unfavorable change of $27 in the third quarter comparison and $73 in the nine-month period comparison was mainly the result of an increase ($19 and $57, respectively) in non-service cost relatedrespectively. See Note F to the ~~new standalone U.S. pension and other postretirement benefit plans that became effective January~~Consolidated Financial Statements in Part I Item 1 ~~2020 (see Cost~~ of ~~goods sold above). Additionally, in the nine-month period comparison, net unfavorable foreign currency movements ($16) also contributed to the change.~~this Form 10-Q for additional information

~~Provision~~Benefit for income taxes. The Company’s effective tax rate, including discrete items, was ~~66.7% (provision on income)~~20.2% and 19.7% in the 2021 second quarter and six-month period, respectively, and 25.0% and 9.1% in the 2020 ~~third quarter compared to 242.9% (provision on a loss) in the 2019 third~~second quarter and ~~was 12.5% (provision on a loss) in the 2020 nine-month~~six-month period, ~~compared to 83.6% (provision on income) in the 2019 nine-month period.~~respectively. See Note H to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Segment Information

~~Effective in the second quarter of 2020, management elected to change the~~Arconic’s profit or loss measure ~~of the Company’s~~for its reportable segments ~~from Segment operating profit to~~is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) ~~for internal reporting and performance measurement purposes. This change was made to enhance the transparency and visibility of the underlying operating performance of each segment.~~. Effective in the third quarter of 2020, management refined the Company’s Segment Adjusted EBITDA measure to remove the impact of metal price lag (see footnote 42 to the Reconciliation of Total Segment Adjusted EBITDA below). This change was made to further enhance the transparency and visibility of the underlying operating performance of each segment by removing the volatility associated with metal prices.

Also, effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the ~~Company's~~Company’s Consolidated Financial Statements. See Note KL to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Segment information for all prior periods presented was recast to reflect the ~~new~~updated measure of segment profit or loss and the change in inventory cost method.

Rolled Products


		Third quarter ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019
Third-party sales*		$	1,092	$	1,397	$	3,194	$	4,294
											Second quarter ended June 30,				Six months ended June 30,
											2021		2020		2021		2020
Third-party sales										Third-party sales	$	1,474	$	880	$	2,838	$	2,102
Intersegment sales	Intersegment sales	3		4		14		20		Intersegment sales	10		4		17		11
Total sales	Total sales	$	1,095	$	1,401	$	3,208	$	4,314	Total sales	$	1,484	$	884	$	2,855	$	2,113
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	138	$	160	$	388	$	499	Segment Adjusted EBITDA	$	173	$	85	$	338	$	250
Third-party aluminum shipments (kmt)	Third-party aluminum shipments (kmt)	304		354		869		1,058		Third-party aluminum shipments (kmt)	353		246		698		565

~~__________________~~

*Sales to the Howmet Aerospace Businesses were $19 and $50 in the 2020 third quarter and nine-month period, respectively, and $31 and $101 in the 2019 third quarter and nine-month period, respectively. These sales are deemed to be related-party sales and are presented as such on Arconic Corporation’s Statement of Consolidated Operations. The product sold to the Howmet Aerospace Businesses consists of aluminum billet.

Third-party sales for the Rolled Products segment ~~decreased $305,~~increased $594, or ~~22%~~68%, in the ~~2020 third~~2021 second quarter and ~~$1,100,~~$736, or ~~26%~~35%, in the ~~2020 nine-month~~2021 six-month period compared to the same periods in ~~2019.~~2020. In both comparisons, the ~~decline~~improvement was ~~primarily due to depressed~~largely the result of a net increase in volumes ~~(see below), lower~~and higher aluminum prices, ~~(see below),~~slightly offset by unfavorable product mix ~~and~~driven by depressed sales to the absence of sales related to both the February 2020 divestiture of a rolling mill in Brazil ($33-third quarter and $104-nine months) and the December 2019 curtailment of operations in San Antonio (Texas).aerospace end market.

The ~~lower~~net increase in volumes in both comparisons ~~were~~was largely attributable to most end markets served by this segment, including ground transportation (commercial transportation and automotive), industrial products, and packaging. Each of these end markets have experienced varying levels of partial recovery from the economic impact of the COVID-19 pandemic. Additionally, volume related to the industrial products end market was favorably impacted by a ~~decline~~U.S. trade case, which reached a final determination in March 2021, that imposes significant duties on the import of common alloy aluminum sheet. These higher volumes were slightly offset by decreased volume in the ~~ground transportation~~aerospace end market due to the economic impact of ~~COVID-19. Specifically,~~the COVID-19 pandemic and lower production of the Boeing 737 MAX (six-month period). Also, the overall improvement in volume related to the ~~third quarter comparison, unfavorable impacts in~~ground transportation end market was slightly tempered by the ~~commercial transportation and brazing components were somewhat offset by increased volume in~~semiconductor chip shortage affecting the automotive component and in the nine-month period comparison, all three components were negatively impacted. Additionally, volumes related to the aerospace end market were also unfavorably impacted in both comparisons due to the economic impact of COVID-19 and production declines due to delays associated with the Boeing 737 MAX. Decreased volumes in the packaging end market due to pricing pressures in China also contributed to the decline in the nine-month period comparison. Furthermore, in the nine-month period comparison, a negative impact on volumes associated with the industrial products end market due to the economic impact of COVID-19 was mostly offset by a positive impact that occurred primarily in the 2020 first quarter due to new production capacity at Tennessee that began to ramp up in the 2019 first quarter.this market.

In the ~~third~~second quarter and ~~nine-month~~six-month period comparisons, the ~~lower~~higher aluminum prices were largely driven by a 3%61% and ~~10%~~41%, respectively, ~~drop~~rise in the average LME aluminum price, a 192% and ~~a 27% and 37%~~89%, respectively, ~~decrease~~increase in the average Midwest premium (United States), and a 58% and 43%, respectively, increase in the average Shanghai Futures Exchange aluminum price (Asia).

In March 2021, the Company entered into a settlement agreement with a customer related to the terms of an existing long-term contract. As a result, the customer agreed to pay Arconic $18, which will be recognized over the applicable three-year period. Accordingly, Rolled Products’ sales for the 2021 second quarter and six-month period include $1 and $9, respectively, associated with this settlement.

Segment ~~adjusted~~Adjusted EBITDA for this segment ~~decreased $22,~~increased $88, or ~~14%~~104%, and ~~$111,~~$88, or ~~22%~~35%, in the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period comparison, respectively, compared with the corresponding periods in ~~2019. The decline in~~2020. In both comparisons, the improvement was ~~largely attributable to lower~~principally driven by a net increase in volumes and net cost savings. These positive impacts in the six-month

period comparison were somewhat offset by unfavorable product mix driven by depressed sales to the aerospace end market. In both comparisons, net cost savings were principally the result of the absence of below normal absorption of fixed costs that occurred in the 2020 periods driven by significantly lower production levels as a result of the COVID-19 pandemic, partially offset by ~~net cost savings, including lower~~higher costs for labor ~~costs~~ (see ~~Outlook~~Labor costs under Results of Operations above), and ~~the absence of certain employee retirement benefit plan expenses (see footnote 1 to the Reconciliation of Total Segment Adjusted EBITDA below).~~direct materials, including transportation and alloying materials.

Building and Construction Systems


		Third quarter ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019
											Second quarter ended June 30,				Six months ended June 30,
											2021		2020		2021		2020
Third-party sales	Third-party sales	$	241	$	282	$	727	$	855	Third-party sales	$	257	$	230	$	493	$	486
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	40	$	39	$	107	$	96	Segment Adjusted EBITDA	$	35	$	37	$	63	$	67

Third-party sales for the Building and Construction Systems segment ~~decreased $41,~~increased $27, or ~~15%~~12%, in the ~~2020 third~~2021 second quarter and ~~$128,~~$7, or ~~15%~~1%, in the ~~2020 nine-month~~2021 six-month period compared to the same periods in ~~2019.~~2020. In ~~both comparisons,~~ the ~~decline~~second quarter comparison, the improvement was mostly attributable to higher volumes due to increased demand in Europe and favorable foreign currency movements due to a stronger euro. The increase in the six-month period comparison was mainly due to favorable foreign currency movements due to a stronger euro, partially offset by lower volumes ~~driven by~~due to decreased demand in North America as a result of the economic impact of the COVID-19 ~~the exit of the Reynobond product line in Europe, and the rationalization of the windows product line.~~pandemic.

Segment Adjusted EBITDA for this segment ~~increased $1,~~decreased $2, or 3%5%, and ~~$11,~~$4, or ~~11%~~6%, in the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period, respectively, compared with the corresponding periods in ~~2019. The increase in~~2020. In both comparisons, the decline was ~~principally~~primarily related to ~~net cost savings~~higher costs for direct materials, including metal, and ~~a decrease in employee retirement benefit plan expenses~~labor (see ~~footnote 1 to the Reconciliation~~Labor costs under Results of ~~Total Segment Adjusted EBITDA below)~~Operations above), mostly offset in(second quarter) and somewhat offset (six-month period) by the ~~third quarter comparison and partially offset in the nine-month period comparison by lower volumes.~~

~~Extrusions~~

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Third-party sales* $ 82 $ 126 $ 296 $ 420
Segment Adjusted EBITDA $ (6) $ (8) $ (12) $ (6)
Third-party aluminum shipments (kmt) 9 14 31 45

~~__________________~~

*~~Sales to the Howmet Aerospace Businesses were $5 and $31~~absence of below normal absorption of fixed costs that occurred in the 2020 ~~third quarter and nine-month period, respectively, and $10 and $41~~periods driven by significantly lower production levels as a result of the COVID-19 pandemic. The decrease in the ~~2019 third~~six-month period comparison was also negatively impacted by lower volumes due to decreased demand in North America as a result of the economic impact of the COVID-19 pandemic.

Extrusions


	Second quarter ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Third-party sales	$	70	$	81	$	145	$	214
Segment Adjusted EBITDA	$	(8)	$	(14)	$	(12)	$	(6)
Third-party aluminum shipments (kmt)	8		8		17		22

In the 2021 first quarter, management approved the idling of the casthouse at the Lafayette (Indiana) plant. Additionally, in the 2021 second quarter, management approved the idling of the operations at the Chandler (Arizona) plant. These actions were deemed necessary to address the ongoing depressed demand related to the aerospace end market and ~~nine-month period, respectively. These sales are deemed~~identified operational inefficiencies in the Extrusions portfolio. The Lafayette casthouse action will occur in multiple phases and is expected to be ~~related-party~~

~~sales~~completed by mid-2022. Ultimately, the casthouse function will be outsourced to third-party vendors. The Chandler action is expected to be completed in the 2021 third quarter. The commercial operations related to Chandler are in the process of being integrated into Lafayette for the foreseeable future. In the 2021 second quarter, the Company incurred certain charges related to these decisions such as inventory write-downs, severance costs, and ~~are presented as such on Arconic Corporation’s Statement of Consolidated Operations. The product sold to~~customer qualification costs. These items were not material, individually or in the ~~Howmet Aerospace Businesses consists of aluminum billet~~aggregate, and ~~forged aluminum stock.~~were reported in Corporate (i.e., not included in Extrusion’s Segment Adjusted EBITDA).

Third-party sales for the Extrusions segment decreased ~~$44,~~$11, or ~~35%~~14%, in the ~~2020 third~~2021 second quarter and ~~$124,~~$69, or ~~30%~~32%, in the ~~2020 nine-month~~2021 six-month period compared to the same periods in ~~2019.~~2020. In both comparisons, the decline was principally the result of ~~lower~~a net decrease in volumes, ~~related to~~somewhat offset (second quarter) and slightly offset (six-month period) by higher aluminum prices. The decrease in the ~~aerospace and ground transportation end markets, driven~~six-month period comparison was also negatively impacted by ~~the economic impact of COVID-19 and/or production declines due to delays associated with the Boeing 737 MAX, and~~ the absence of sales ($~~13-third quarter and $31-nine months)~~8) related to the divestiture of an extrusions plant in South Korea (March 2020). ~~These negative impacts were~~The net decrease in volumes in both comparisons was primarily due to a decline in the aerospace end market, driven by the economic impact of the COVID-19 pandemic, somewhat offset (second quarter) and slightly offset (six-month period) by ~~favorable aerospace mix~~improvement in ~~both comparisons.~~the ground transportation and industrial products end markets.

Segment ~~adjusted~~Adjusted EBITDA for this segment increased $2$6 and decreased $6 in the ~~2020 third~~2021 second quarter and ~~nine-month~~six-month period, respectively, compared with the corresponding periods in ~~2019. The increase in~~2020. In the ~~third~~second quarter comparison, the improvement was ~~largely driven by net cost savings, including lower labor costs (see Outlook under Results of Operations above), and~~mainly attributable to the absence of certain employee retirement benefit plan expenses (see footnote 1 to the Reconciliation of Total Segment Adjusted EBITDA below), mostly offset by lower volumes. In the nine-month period comparison, the decline was principally caused by lower volumes and costs ($12) related to both inventory write-downs and customer settlements, partially offset by ~~net cost savings, including~~ lower volumes related to the aerospace end market and higher labor costs (see ~~Outlook~~Labor costs under Results of Operations above). The decline in the six-month period comparison was largely driven by lower volumes related to the aerospace end market and higher labor costs (see Labor costs under Results of Operations above), ~~and~~partially offset by the absence of ~~certain employee retirement benefit plan expenses (see footnote 1~~costs ($12) related to ~~the Reconciliation of Total Segment Adjusted EBITDA below).~~both inventory write-downs and customer settlements.

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net ~~Income (Loss)~~Loss Attributable to Arconic Corporation


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Total Segment Adjusted EBITDA(1),(2)		$	172	$	191	$	483	$	589
Total Segment Adjusted EBITDA										Total Segment Adjusted EBITDA	$	200	$	108	$	389	$	311
Unallocated amounts:	Unallocated amounts:									Unallocated amounts:
Corporate expenses(1),(3)		(6)		(10)		(15)		(43)
Corporate expenses(1)										Corporate expenses(1)	(10)		(7)		(19)		(9)
Stock-based compensation expense	Stock-based compensation expense	(6)		(10)		(18)		(28)		Stock-based compensation expense	(5)		(5)		(7)		(12)
Metal price lag~~(4)~~(2)	Metal price lag~~(4)~~(2)	(16)		(10)		(30)		(33)		Metal price lag~~(4)~~(2)	(11)		(10)		(6)		(14)
Provision for depreciation and amortization	Provision for depreciation and amortization	(63)		(63)		(191)		(190)		Provision for depreciation and amortization	(62)		(68)		(125)		(128)
Restructuring and other charges(3)	Restructuring and other charges(3)	(3)		(64)		(61)		(104)		Restructuring and other charges(3)	(597)		(77)		(598)		(58)
Other(1),(5)		(14)		(12)		(42)		(54)
Operating income(2)		64		22		126		137
Other(4)										Other(4)	(10)		(13)		(16)		(28)
Operating (loss) income										Operating (loss) income	(495)		(72)		(382)		62
Interest expense	Interest expense	(22)		(29)		(97)		(86)		Interest expense	(25)		(40)		(48)		(75)
Other (expenses) income, net(1)		(27)		—		(69)		4
Provision for income taxes(2)		(10)		(17)		(5)		(46)
Other expenses, net										Other expenses, net	(15)		(16)		(37)		(42)
Benefit for income taxes										Benefit for income taxes	108		32		92		5
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	—		—		—		—		Net income attributable to noncontrolling interest	—		—		—		—
Consolidated net income (loss) attributable to Arconic Corporation(2)		$	5	$	(24)	$	(45)	$	9
Consolidated net loss attributable to Arconic Corporation										Consolidated net loss attributable to Arconic Corporation	$	(427)	$	(96)	$	(375)	$	(50)

__________________

(1)In preparation for the Separation, effective January 1, 2020, certain U.S. defined benefit pension and other postretirement plans previously sponsored by ParentCo were separated into standalone plans for both Arconic Corporation and Howmet Aerospace. Additionally, effective April 1, 2020, Arconic Corporation assumed a portion of the obligations associated with certain non-U.S. defined benefit pension plans that included participants related to both the Arconic Corporation Businesses and the Howmet Aerospace Businesses, as well as legacy defined benefit pension plans assigned to the Company as a result of the Separation. As a result, beginning in the first quarter of 2020 for these U.S. plans and in the second quarter of 2020 for these non-U.S. plans, Arconic Corporation applied defined benefit plan accounting resulting in benefit plan expense being recorded in operating income (service cost) and nonoperating income (nonservice cost). In all historical periods prior to these respective timeframes, Arconic Corporation was considered a participating employer in ParentCo’s defined benefit plans and, therefore, applied multiemployer plan accounting resulting in the Company’s share of benefit plan expense being recorded entirely in operating income. Also, Arconic Corporation is the plan sponsor of certain other non-U.S. defined benefit plans that contain participants related only to the Arconic Corporation Businesses and, therefore, the related benefit plan expense was recorded in accordance with defined benefit plan accounting in all

~~periods presented. The following table presents the total benefit plan expense (excluding settlements and curtailments) recorded by Arconic Corporation based on the foregoing in each period presented:~~

Third quarter ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Segment Adjusted EBITDA:
Rolled Products $ (5) $ (16) $ (13) $ (47)
Building and Construction Systems — (1) (1) (4)
Extrusions (2) (4) (5) (13)
Segment total (7) (21) (19) (64)
Unallocated amounts:
Corporate expenses — (3) — (11)
Other — (3) 1 (7)
Subtotal — (6) 1 (18)
Other expenses, net (20) (1) (59) (2)
Total $ (27) $ (28) $ (77) $ (84)

~~(2)~~Effective July 1, 2020, the Company changed its inventory cost method to average cost for all U.S. inventories previously carried at LIFO cost. The effects of the change in accounting principle have been retrospectively applied to all prior periods presented in the Company's Consolidated Financial Statements. See Note K to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Environmental Matters

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

Liquidity and Capital Resources

In preparing the Statement of Consolidated Cash Flows for the nine months ended September 30, 2020, management identified a misclassification related to the non-cash portion of properties, plants, and equipment additions. This non-cash portion is the result of the timing difference that exists between when the Company records such additions as assets on its Consolidated Balance Sheet and when such additions have been paid in cash. As a result, the amount of (Decrease) in accounts payable, trade previously reported in Cash used for operations for each of the three months ended March 31, 2020 and the six months ended June 30, 2020 was overstated by $35 and $43, respectively, and the amount of Capital expenditures previously

reported in Cash provided from investing activities for each of the three months ended March 31, 2020 and the six months ended June 30, 2020 was understated by $35 and $43, respectively. Accordingly, the amounts for (Decrease) in accounts payable, trade and Capital expenditures on the accompanying Statement of Consolidated Cash Flows for the six months ended June 30, 2020 were revised.

Operating Activities

Cash ~~provided from~~used for operations was ~~$18~~$461 in the 2021 six-month period compared with $222 in the 2020 ~~nine-month period compared with $145 in the 2019 nine-month~~six-month period.

In the ~~2020 nine-month~~2021 six-month period, cash ~~provided from~~used for operations was comprised of pension contributions of $453 (see below), an unfavorable change in working capital of $311, a net loss of $375, and a positive add-back for non-cash transactions in earnings of ~~$380~~$673. The impact in working capital was partially driven by higher aluminum prices due to an increase in both the average LME price and regional premiums.

The minimum required contributions to Arconic’s funded defined benefit pension plans in 2021 is estimated to be $192, of which $183 is for U.S. plans. In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17.

In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract (see U.S. Pension Plan Annuitization in Note G to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). This contribution was funded with the net proceeds from a March 2021 debt offering (see 2021 Activity in Financing Activities below).

Also in April 2021, the Company received $9 as one of two installments related to a settlement agreement reached with a customer in March 2021. See Sales under Results of Operations above for additional information.

In the 2020 six-month period, cash used for operations was comprised of an unfavorable change in working capital of $466 (see below), a net loss of $50, pension contributions of $44, a positive add-back for non-cash transactions in earnings of $310, and a favorable change in noncurrent assets and liabilities of ~~$47, mostly offset by~~$28.

Cash used for operations for the 2020 six-month period includes an unfavorable adjustment of $184 related to the change in ~~working capital~~the Company’s customer and other receivables balances as of ~~$320 (see below)~~June 30, 2020 ($681) and December 31, 2019 ($520). The unfavorable adjustment (i.e., ~~a net loss~~increase in receivables) was derived by calculating the difference in the receivables balances as of ~~$45,~~June 30, 2020 and ~~pension contributions~~December 31, 2019 after excluding the effects of ~~$44. In the 2019 nine-month period, cash provided from operations~~divestitures and foreign currency translation. The $184 was comprised of a positive add-back for non-cash transactions in earnings of $344, a favorable net change in noncurrent assets and liabilities of $15, and net income of $9, partially offset by an unfavorable change in working capital of $221 (see below) and pension contributions of $2.

~~In the 2020 nine-month period, working capital was significantly~~negatively impacted by the fact that customer receivables related to the Arconic Corporation Businesses were no longer included in ParentCo’s accounts receivable securitization program effective January 2, 2020. In periods prior to ~~the~~ 2020, ~~nine-month period,~~ certain identified customer receivables related to the Arconic

Corporation Businesses were sold on a revolving basis to a ParentCo subsidiary under this ~~program. Accordingly, sales~~program and were considered to be effectively and immediately settled for cash. As of ~~such~~December 31, 2019, the amount of Arconic’s outstanding customer receivables ~~were reflected~~sold to ParentCo’s subsidiary was $281. As a result, the Company’s customer receivables balance as ~~a component~~ of ~~Parent Company net investment on Arconic Corporation’s Consolidated Balance Sheet~~December 31, 2019 reflects the settlement of the $281 even though the third-party customers had not yet paid their obligations to ParentCo, as Arconic ~~Corporation~~ no longer had the right to collect and receive cash from the related customers. Had customer receivables related to the Arconic Corporation Businesses not been included in ParentCo’s program in 2019, the Company’s customer receivables balance as of December 31, 2019 ~~nine-month period,~~would have been higher by $281. Further, these outstanding receivables would have been collected by the Arconic Corporation Businesses from the third-party customers in the 2020 six-month period. Accordingly, the previously mentioned unfavorable change in working capital of ~~$221~~$466 would have ~~increased~~been lower by ~~$386.~~$281. See Cash Management in Note A to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Financing Activities

Cash provided from financing activities was ~~$735~~$288 in the 2021 six-month period compared with $731 in the 2020 ~~nine-month period compared with cash used for financing activities of $68 in the 2019 nine-month~~six-month period. The source of cash in the 2021 six-month period reflects $314 in net proceeds from the issuance of new indebtedness (see 2021 Activity below) and $9 for the repurchase of 246,011 shares of the Company’s common stock (see Share Repurchase Program below). In the 2020 ~~nine-month~~six-month period, the source of cash was due to $2,343 in net proceeds (reflects additional debt issuance costs paid from cash on hand) from the issuance of new indebtedness (see 2020 Activity below) and $216 in net cash funding provided by ParentCo prior to the Separation Date, partially offset by $1,100 for the repayment of debt (see 2020 Activity below) and a $728 payment to ParentCo in connection with the Separation (see The Separation above).

Senior Secured Second-Lien Notes due 2028 (see 2020 Activity below). Other than with respect to the date of ~~cash~~issuance and issue price, the Additional 2028 Notes are treated as a single series with and have the same terms as the referenced existing notes. The Additional 2028 Notes were sold at 106.25% of par (i.e., a premium) and, after reflecting a discount to the initial purchasers of the Additional 2028 Notes, the Company received $315 in net proceeds from the ~~2019 nine-month period was due~~debt offering. Arconic used the net proceeds of this issuance to ~~net cash funding returned~~fund an annuitization of certain U.S. defined benefit pension plan obligations (see Note G to ~~ParentCo.~~the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). The premium ($19) and costs to complete the financing ($5) were deferred and are being amortized to interest expense over the term of the Additional 2028 Notes. The amortization of the premium is reflected as a reduction to interest expense and the amortization of the costs to complete the financing is reflected as an addition to interest expense. Interest on the Additional 2028 Notes will be paid semi-annually in February and August, commencing August 15, 2021.

The Company used a portion of the $1,168 in net proceeds from the aggregate indebtedness to make a $728 payment to ParentCo on April 1, 2020 to fund the transfer of certain net assets from ParentCo to Arconic ~~Corporation~~ in connection with the completion of the Separation (see The Separation above). The payment to ParentCo was calculated as the difference between (i) the $1,168 of net proceeds from the aggregate indebtedness and (ii) the difference between a beginning cash balance at the Separation Date of $500, as provided for in the Separation and Distribution Agreement, and the amount of cash held by Arconic Corporation Businesses at March 31, 2020 ($60 – the sum of this amount and the aggregate indebtedness in (i) equals the sum of Cash and cash equivalents and Restricted cash on the Company’s Combined Balance Sheet as of March 31, 2020).

On May 13, 2020, Arconic ~~Corporation~~ executed a refinancing of its existing Credit Agreement in order to provide improved financial flexibility. ~~Arconic Corporation~~The Company completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering for $700 aggregate principal amount of 6.0% Senior Secured First-Lien Notes due 2025 (the “2025 Notes”). ~~The Company~~Arconic received $691 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2025 Notes. Additionally, ~~Arconic Corporation~~the Company entered into a five-year credit agreement with a syndicate of lenders named therein and Deutsche Bank AG New York Branch, as administrative agent (the “ABL Credit Agreement”). The ABL Credit Agreement provides for a senior secured asset-based revolving credit facility in an aggregate principal amount of $800 ~~(availability~~(the available balance as of June 30, 2021 was ~~$681 during the 2020 third quarter and was determined to be $678 for the 2020 fourth quarter~~$785 – see ABL Credit Agreement in Note MN to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q), including a letter of credit sub-facility and a swingline loan sub-facility (the “ABL Credit Facility”). In addition, the ABL Credit Facility includes an accordion feature allowing ~~the Company~~Arconic to request one or more increases to the revolving commitments in an aggregate principal amount up to $350.

~~See Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for descriptions~~Descriptions of the 2028 Notes, 2025 Notes, and ABL Credit ~~Agreement.~~

Agreement are set forth in Note Q to the Consolidated Financial Statements in Part II Item 8 of Arconic’s Annual Report on Form 10-K for the year ended December 31, 2020 (filed on February 23, 2021).

In connection with the issuance of the 2028 Notes and the execution of the Credit Agreement, the Company paid $42 in discounts to the initial purchasers and/or upfront fees and costs (the “debt issuance costs”), of which $30 was attributable to the Term Loan B and the Credit Facility. The debt issuance costs were initially deferred and were being amortized to interest expense over the respective terms of the 2028 Notes, the Term Loan, B, and the Credit Facility. In connection with the issuance of the 2025 Notes and the execution of the ABL Credit Agreement, ~~the Company~~Arconic paid $15 in discounts to the initial purchasers and/or upfront

fees and costs (the “new debt issuance costs”). As a result of applying both debt modification and debt extinguishment accounting, as appropriate based on the lender mix for each debt instrument, to the debt refinancing, the Company was required to write off $16 of the $30 in debt issuance costs and immediately expense $3 of the $15 in new debt issuance costs. This $19 was reported within Interest expense on ~~the Company’s~~Arconic’s Statement of Consolidated Operations. The remaining $14 in debt issuance costs continued to be deferred and the remaining $12 in new debt issuance costs were deferred; both are being amortized to interest expense over the respective terms of the 2025 Notes and the ABL Credit Agreement.

Share Repurchase Program—On May 4, 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. In the 2021 second quarter, Arconic repurchased 246,011 shares of the Company’s common stock for $9 under this program. See Part II Item 2 in this Form 10-Q for additional information.

Investing Activities

Cash used for investing activities was ~~$24~~$74 in the 2021 six-month period compared with cash provided from investing activities of $15 in the 2020 ~~nine-month period compared with $109 in the 2019 nine-month~~six-month period. The use of cash in the ~~2020 nine-month~~2021 six-month period was due to ~~$126~~$72 in capital expenditures, ~~mostly offset by~~the majority of which was attributable to sustaining spend at the U.S. rolling mills. In the 2020 six-month period, the source of cash was due to $102 in net proceeds received from the sales of an extrusions plant in South Korea and a rolling mill in ~~Brazil. In the 2019 nine-month period, the use of cash was due to~~Brazil, mostly offset by capital expenditures of ~~$120, slightly offset by $11 in proceeds received from two asset sales.~~$87.

Recently Adopted and Recently Issued Accounting Guidance

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

5048

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

5149

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

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

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the ~~third~~second quarter of ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

5250

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

~~Additional~~The information ~~regarding reportable legal proceedings is contained~~set forth in “Litigation” in Note OP to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q ~~and~~is incorporated herein by reference.

~~Airbus Matters~~
~~—In 2017, Airbus~~

Item 2. Unregistered Sales of Equity Securities and ~~various~~Use of Proceeds.


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs*	Approximate dollar value of shares that may yet be purchased under the plans or programs*
April 1 - April 30, 2021	—	$	—	—	$	—
May 1 - May 31, 2021	121,541	$	34.77	121,541	$	295,000,000
June 1 - June 30, 2021	124,470	$	34.59	124,470	$	291,000,000
Total for quarter ended June 30, 2021	246,011			246,011

________________

* On May 4, 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its ~~affiliates (“Airbus”) filed three separate confidential requests for arbitration against ParentCo~~outstanding common stock up to an aggregate transactional value of $300 million over a two-year period expiring April 28, 2023. Repurchases under the program may be made from time to time, as the Company deems appropriate, solely through open market repurchases effected through a broker dealer, based on a variety of factors such as price, capital position, liquidity, financial performance, alternative uses of capital, and ~~various~~overall market conditions. There can be no assurance as to the number of shares the Company will repurchase. The share repurchase program may be increased or otherwise modified, renewed, suspended or terminated by the Company at any time, without prior notice. This program is intended to comply with Rule 10b5-1 and all purchases shall be made in compliance with Rule 10b-18, including without limitation the timing, price, and volume restrictions thereof.

Item 5. Other Information

At the Annual Meeting of Shareholders held on May 20, 2021, Arconic’s shareholders voted, as recommended by the Board of Directors and on a non-binding advisory basis, in favor of Arconic submitting an advisory vote on the compensation of its ~~then affiliates, one of which is Arconic Manufacturing (GB) Limited,~~named executive officers to the shareholders on an Arconic Corporation subsidiary, with the International Chamber of Commerce. Airbus specifically alleges that a defect exists in certain of our products sold to Airbus under various separate contracts. Airbus’s claims include claims of breach of certain alleged express and implied warranties and negligence. On June 12, 2020, Airbus filed its Second Memorial in the arbitration in which it claims damages attributed specifically to our products. Airbus is seeking damages in excess of $200 million and an order of indemnification with respect to conditional future losses. A private and confidential arbitration hearing commenced in late October 2020 on twoannual basis. In light of the ~~three requests for arbitration with~~recommendation and the ~~second hearing~~result of the non-binding advisory vote, Arconic has decided to include a non-binding advisory vote on executive compensation in its proxy materials every year until the next required advisory vote on the ~~final request for arbitration scheduled for February 2021. While the amounts claimed in this matter may be substantial, the ultimate liability is not determinable because~~frequency of the considerable uncertainties that exist in this matter. Accordingly, it is possible that the Company’s liquidity or results of operations in a reporting period could be materially adversely affected by the Airbus arbitration. However, basedvotes on facts currently available, management believes that the disposition of the Airbus arbitration will not have a material adverse effect on the results of operations, financial position or cash flows of the Company.

~~Federal Antimonopoly Service Of The Russian Federation Litigation~~—The Federal Antimonopoly Service of the Russian Federation (“FAS”) filed a lawsuit on March 17, 2020 with the Arbitrazh (State Commercial) Court of Samara Region against two of the Company’s subsidiaries, Arconic Rus Investment Holdings LLC (“LLC ARIH”) and AlTi Forge Holding Sarl (the “Arconic Russian Holding Companies”), naming Elliott Associates L.P., Elliott International L.P., and Elliot International Capital Advisors Inc. (“Elliott”) as third parties. Also named as interested parties are: Parent Co. and certain of its foreign subsidiaries; and Arconic Netherland B.V., the Company’s subsidiary that directly and indirectly owns LLC ARIH, Arconic SMZ JSC and JSC AlTi Forge (the “Arconic Russian Subsidiaries”). FAS alleges that Elliott indirectly acquired control over the Arconic Russian Subsidiaries when, in May 2019, directors who had previously been nominated by Elliott and appointed or elected to Parent Co.’s board of directors pursuant to certain settlement agreements among Parent Co. and Elliott constituted a majority of that board as a result of a reduction in the size of the board. FAS claims alleged non-compliance with Russian Federal Law No. 57-FZ, which governs foreign ownership of certain Russian companies and requires certain governmental approvals for a foreign investor to acquire control over strategically important Russian companies. As a consequence of the alleged violation, FAS is seeking removal and exclusion of the Arconic Russian Holding Companies from the affairs of the Arconic Russian Subsidiaries, resulting in the deprivation of the right to vote at the general shareholders’ meetings of the Arconic Russian Subsidiaries. On April 6, 2020, the Samara Court granted injunctions against the Arconic Russian Holding Companies prohibiting the taking of certain corporate governance actions, including with respect to: (i) the disposal of shares in the Arconic Russian Subsidiaries; and (ii) the making of certain decisions with respect to the Arconic Russian Subsidiaries, including decisions regarding the payment of dividends, placement of bonds, amendment of bylaws and internal documents, the appointment, change and compensation of the Arconic Russian Subsidiaries’ CEO, and the election of the Arconic Russian Subsidiaries’ board of directors. On April 29, 2020, the Arconic Russian Holding Companies simultaneously filed an appeal and motion to revoke the previously issued injunctions. Both the appeal and motion to revoke were denied. The first of a series of one-day hearings on the merits of FAS’ statement of claim is scheduled for August 20, 2020. At the August 20, 2020 hearing and by written opinion on September 7, 2020, the Court postponed a hearing on the merits of the claim until March 2021. Given the preliminary nature of this matter and the uncertainty of litigation, Arconic Corporation 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.executive compensation.

~~Item 1A. Risk Factors.~~

The following disclosure modifies the description of risks and uncertainties previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. These risks and uncertainties, along with those previously disclosed, could materially adversely affect Arconic Corporation’s business or financial results. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also impair the Company’s business or financial results.

Our business, results of operations, financial condition, liquidity and cash flows have been, and are expected to continue to be, materially adversely affected by the effects of widespread public health epidemics/pandemics, including COVID-19, that are beyond our control.

Any outbreaks of contagious diseases, public health epidemics or pandemics or other adverse public health developments in countries where we, our employees, customers and suppliers operate could have a material and adverse effect on our business, results of operations, financial condition, liquidity and/or cash flows. Specifically, the recent COVID-19 pandemic continues to adversely impact our operations. The extent to which COVID-19 affects our operations over time will depend on future developments, which are highly uncertain and largely beyond our control, including the duration of the outbreak, the continued severity of the virus and the extent and effectiveness of actions that have been or may be taken to contain or treat its impact. These actions include, but are not limited to, declarations of states of emergency, shelter-in-place and stay-at-home orders, social distancing requirements, business closures and staged procedures for reopening, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations, many of which have been implemented across much of the globe, including the United States, and which have negatively affected our business and the business of many of our customers. Continued prolonged duration of the pandemic will increase its impact on our businesses and magnify the risks of a material adverse impact on our business, results of operations, financial condition, liquidity and/or cash flows, as well as on our business strategies and initiatives. The geographic locations in which our products are manufactured, distributed or sold are in varying stages of continued restrictions or lifting of restrictions, and the status of restrictions in certain areas may change on short notice. The scope and timing of any such reinstatements is difficult to predict. Because we rely on supply chain continuity, restrictions in one location may materially impact operations in multiple locations, and the impact of COVID-19 in one location may have a disproportionate effect on our operations in the future. We continue to monitor guidelines proposed by federal, state and local governments with respect to the proposed “reopening” measures, which may change over time depending on public health, safety and other considerations.

As a result of COVID-19 and the measures designed to contain its spread, our sales globally, including to customers in the ground transportation, aerospace and building and construction industries that are impacted by COVID-19, continue to be negatively impacted as a result of disruption in demand, which has had and is expected to continue to have a material adverse effect on our business, results of operations, financial condition, liquidity and cash flows. The COVID-19 pandemic subjects our operations, financial performance and financial condition to a number of risks, including, but not limited to those discussed below. The adverse effects of all of these risks on our business, results of operations, financial condition, liquidity and cash flows will be magnified if the disruption from COVID-19 continues for an extended period.

•Business and operations risks: We continue to monitor the evolving situation relating to COVID-19 to determine whether we will need to significantly modify our business practices or take actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, suppliers and shareholders. On April 8, 2020, we announced that we would idle or decrease production at certain of our manufacturing facilities. While we have since resumed some of these manufacturing operations, the extent and continuation of resumed operations, and future shutdowns will be dependent on facts and circumstances as they unfold, including the restrictions and limitations noted above. Furthermore, additional shutdowns, other than those required by governmental authorities, may be necessary to match our production of materials to the reduced demand of our customers. We may also face challenges in restoring our production levels, if and when COVID-19 abates, including as a result of government-imposed or other limitations that prevent the return of all or a portion of our workforce and/or our customers’ and suppliers’ workforces or continue to disrupt demand and limit the capabilities of our suppliers. Any of these limitations or restrictions could result in our being unable to fully perform, or increase our costs to perform, under production and delivery contracts. A sustained impact to our operations and financial results may require material impairments of our assets including, but not limited to, inventory, goodwill, intangible assets, long-lived assets, and right-of-use assets. While we have already taken action to reduce costs, including announcing certain temporary and permanent headcount and temporary salary reductions, deferring the initiation of post-separation dividends and reducing the levels of our capital expenditures, such cost-saving initiatives may not offset the material adverse effect of COVID-19 on our business, results of operations, financial condition, liquidity and/or cash flows to the extent anticipated. In addition, we have incurred

certain additional costs as a result of COVID-19, including increased operating costs associated with protective equipment and workforce restructuring actions. While the measures we have taken are anticipated to result in cost savings, we may not achieve the targeted levels of cost savings in connection with the measures described above or any other measures we have taken or may take. In addition, we may determine that it is necessary to modify or rescind cost-saving actions, in which case the planned cost savings would not be fully realized. Further disruptions and uncertainties related to the COVID-19 pandemic and/or the other risks described in this report could require us to take additional cost-saving actions or modify or rescind current cost-saving actions, make additional modifications to our strategic plans and/or incur additional expenses as part of our continued response to COVID-19.

•Customer and supplier risks: Due to the impacts of COVID-19 on our customers, we are experiencing, and expect to continue experiencing, lower demand and volume for our products, and we have limited visibility into future demand given the disruptions resulting from COVID-19. Several of our customers, including our significant ground transportation and aerospace customers, temporarily suspended operations or have taken cost-cutting actions. While many of these customers have resumed operations, it is impossible to predict when we will experience the positive impacts, if any, of such resumption. For customers who have not resumed operations, it is not possible to predict with certainty when such operations, or parts thereof, may be resumed. In addition, resumed operations may need to be suspended again on one or more occasions. We have provided concessions and contract modifications to certain customers, and may do so with additional customers, which may adversely affect our results of operations and cash flows. Similarly, our suppliers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications. If our suppliers’ operations are impacted, we may need to seek alternate suppliers, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers, each of which would affect our business, results of operations, financial condition, liquidity and/or cash flows.

•Market risks: The current financial market dynamics and volatility pose heightened risks to our financial position. For example, dramatically lowered interest rates and lower expected asset valuations and returns can materially impact the calculation of long-term liabilities such as our pension obligations. In addition, extreme volatility in financial and commodities markets has had and is expected to continue to have adverse impacts on other asset valuations, such as the value of the investment portfolios supporting our pension obligations.

•Liquidity and credit risks: Availability under the ABL Credit Agreement is based on a borrowing base calculation, and at September 30, 2020 our borrowing base was calculated at $678 million. A prolonged period of generating lower financial results and cash from operations could adversely affect our ability to draw under the ABL Credit Agreement, could also adversely affect our financial condition, including in respect of satisfying both required and voluntary pension funding requirements, and could otherwise negatively affect our ability to achieve our strategic objectives. These factors could also adversely affect our ability to maintain compliance with the springing financial maintenance covenant included in the ABL Credit Facility to the extent such covenant becomes applicable, including as a result of potential increases in our net debt or future reductions in our EBITDA. We may face credit rating downgrades as a result of weaker than anticipated performance of our businesses or other factors, including overall market conditions. Future downgrades could further adversely affect our cost of funding and related margins, liquidity, competitive position and access to capital markets, and have an adverse commercial impact on our business. Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding or our ability to refinance certain of our indebtedness, which could adversely affect our business, results of operations, financial condition, liquidity and/or cash flows. Although the U.S. federal and other governments have implemented a number of funding programs to support businesses, and may announce additional programs in the future, our ability or willingness to access funding under such programs may be limited by regulations or other guidance, including eligibility criteria, or by further change or uncertainty related to the terms of these programs.

•Employees: We may face risks associated with the actions we have taken in connection with the outbreak, including those associated with workforce reductions, the safety and welfare of our employees and the reduction of capital expenditures. For example, we may experience difficulties associated with hiring additional employees, returning employees from temporary furlough or replacing employees following the COVID-19 pandemic, or as we resume production in response to customer demand, in particular with respect to specialized roles. Increased turnover rates of our employees could increase operating costs and create challenges for us in maintaining high levels of employee awareness of and compliance with our internal procedures and regulatory compliance requirements, in addition to increasing our recruiting, training and supervisory costs. In addition, employee health

~~and safety initiatives, such as personal protective equipment, social distancing requirements and other initiatives have resulted and are expected to continue to result in increased expenses.~~

•End user risk: Our customers’ businesses may be impacted by the financial condition of or other restrictions on the end users of their products or services. In particular, the interruption of regional and international air travel from COVID-19 has resulted in a significant decrease in business and leisure traffic, which is having a material adverse effect on our air transportation customers. The economic impact on individual consumers has changed spending levels and consumption preferences, which is having a material adverse effect on our automotive customers. In both instances, this has in turn reduced demand for our services and products. Changes in passenger air travel trends and the employment and economic condition of individual consumers arising from COVID-19 may continue to develop or persist over time and further contribute to this adverse effect.

The COVID-19 pandemic may also exacerbate other risks disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, including, but not limited to, risks related to global economic conditions, competition, loss of customers, costs of supplies, manufacturing difficulties and disruptions, our credit profile, our credit ratings and interest rates. We expect that the longer the period of disruption from COVID-19 continues, the more material the adverse impacts will be on our business, results of operations, financial condition, liquidity and/or cash flows. In addition, the COVID-19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our business, results of operations, financial condition, liquidity and/or cash flows.

~~We have significant debt obligations, and may in the future incur, additional debt obligations that could adversely affect our business and profitability and our ability to meet other obligations.~~

On February 7, 2020, we completed an offering of $600 million principal amount of 6.125% Senior Secured Second Lien Notes due 2028. On May 13, 2020, we completed an offering of $700 million principal amount of 6.0% Senior Secured First-Lien Notes due 2025. Also on May 13, 2020, we entered into the ABL Credit Agreement, which provides for a senior secured asset-based revolving credit facility in an aggregate principal amount of $800 million, including a letter of credit sub-facility, a swingline loan sub-facility and an accordion feature allowing the Company to request one or more increases to the revolving commitments in an aggregate principal amount up to $350 million. We may also incur additional indebtedness in the future, including by drawing under the ABL Credit Facility.

~~The significant amount of debt we have incurred and may incur in the future may have important consequences to us, including:~~

•~~requiring a substantial portion of our cash flow from operations to make interest payments;~~

•~~making it more difficult to satisfy debt service and other obligations;~~

•~~increasing the risk of a future downgrade of our credit ratings or the credit ratings of debt, which could increase future debt costs and limit the future availability of debt financing;~~

•~~increasing our vulnerability to general adverse economic and industry conditions;~~

•~~reducing the cash flow available to fund our capital expenditures and other corporate purposes and to grow our business;~~

•~~limiting our flexibility in planning for, or reacting to, changes in our business and the industry;~~

•~~placing us at a competitive disadvantage relative to our competitors that may not be as highly leveraged with debt;~~

•~~limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase securities; and~~

•~~inhibit our ability to refinance our indebtedness on terms acceptable to us or at all.~~

Subject to the restrictions in the indenture governing the 2025 Notes, the indenture governing the 2028 Notes and the ABL Credit Agreement, we, including our subsidiaries, have the ability to incur significant additional indebtedness. Although the terms of the 2025 Notes indenture, the 2028 Notes indenture and the ABL Credit Facility include restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of important exceptions, and indebtedness incurred in compliance with these restrictions could be substantial. Adding new debt to our current debt levels could intensify the related risks that we and our subsidiaries face now or may face in the future. In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.

~~Our indebtedness restricts our current and future operations, which could adversely affect our ability to respond to changes in our business and manage our operations.~~

The terms of the 2025 Notes indenture, the 2028 Notes indenture and the ABL Credit Agreement include a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

•~~make investments, loans, advances, guarantees and acquisitions;~~

•~~dispose of assets;~~

•~~incur or guarantee additional debt and issue certain disqualified equity interests and preferred stock;~~

•~~make certain restricted payments, including a limit on dividends on equity securities or payments to redeem, repurchase or retire equity securities or other indebtedness;~~

•~~engage in transactions with affiliates;~~

•~~enter into certain restrictive agreements;~~

•~~create liens on assets to secure debt; and~~

•~~consolidate, merge, sell or otherwise dispose of all or substantially all of our or a subsidiary Guarantor’s assets.~~

These covenants limit our operational flexibility and could prevent us from taking advantage of business opportunities as they arise, growing our business or competing effectively. In addition, the ABL Credit Facility contains a financial maintenance covenant applicable when the excess availability is less than the greater of (a) 10% of the lesser of (x) the aggregate amount of the commitments under the ABL Credit Facility and (y) the borrowing base and (b) $50.0 million. In such circumstances, we would be required to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00. Our ability to draw under the ABL Credit Facility could be impacted by a number of factors, including but not limited to any impact by disruptions to our operations and financial performance.

The ABL Credit Facility also provides for “springing control” over the cash in our deposit accounts constituting ABL priority collateral for the ABL Credit Facility, and such cash management arrangement includes a cash sweep at any time that excess availability under the ABL Credit Facility is less than the greater of (x) 12.5% of the lesser of the borrowing base and the aggregate amount of the commitments under the ABL Credit Facility at such time and (y) $62.5 million for five consecutive business days. Such cash sweep, if in effect, will cause all our available cash in deposit accounts subject to such “springing control” to be applied to outstanding borrowings under our ABL Credit Facility. If we satisfy the conditions to borrowings under the ABL Credit Facility while any such cash sweep is in effect, we may be able to make additional borrowings under the ABL Credit Facility to satisfy our working capital and other operational needs. If we do not satisfy the conditions to borrowing, we will not be permitted to make additional borrowings under our ABL Credit Facility, and we may not have sufficient cash to satisfy our working capital and other operational needs.

Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. These covenants could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other opportunities. The breach of any of these covenants or restrictions could result in a default under the 2025 Notes indenture, the 2028 Notes indenture or the ABL Credit Agreement.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our business, financial condition, results of operations, liquidity or cash flows.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, including the 2025 Notes indenture, the 2028 Notes indenture and the ABL Credit Agreement, we may not be able to incur additional indebtedness and the holders of the defaulted indebtedness could cause all amounts outstanding with respect to that indebtedness to be immediately due and payable. We cannot assure you that our assets or cash flow would be sufficient to fully repay our outstanding indebtedness if accelerated upon an event of default, which could have a material adverse effect on our ability to continue to operate as a going concern. Further, if we are unable to repay, refinance or restructure our secured indebtedness, the holders of such indebtedness could proceed against the collateral securing that indebtedness. In addition, any event of default under or declaration of acceleration ~~under one debt instrument~~ ~~also could result in an event of default under one or more of the agreements governing our other indebtedness.~~

Item 6. Exhibits.


~~18.~~10.1			~~Letter from PricewaterhouseCoopers LLP, independent registered public accounting firm, regarding change in inventory accounting method~~Commitment Agreement, dated April 21, 2021, by and among Arconic Corporation, Massachusetts Mutual Life Insurance Company and State Street Global Advisors Trust Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2021)
10.2			Amended and Restated Arconic Corporation 2020 Annual Cash Incentive Plan (incorporated by reference to Exhibit 10 .1 to the Company's Current Report on Form 8-K filed on May 21, 2021)
10.3			Amended and Restated Arconic Corporation 2020 Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on April 20, 2021)
31.			Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

5854

SIGNATURES

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


			Arconic Corporation

~~November 10, 2020~~August 3, 2021			/s/ Erick R. Asmussen
Date			Erick R. Asmussen
			Executive Vice President,
			Chief Financial Officer
			(Principal Financial Officer)

~~November 10, 2020~~August 3, 2021			/s/ Mary E. Zik
Date			Mary E. Zik
			Vice President, Controller
			(Principal Accounting Officer)

5955


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4038

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5149

Item 4.	Controls and Procedures	5250

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	5351

Item ~~1A.~~2.	~~Risk Factors~~Unregistered Sales of Equity Securities and Use of Proceeds	5452

Item 5.	Other Information	53

Item 6.	Exhibits	5854

SIGNATURES		5955



Balance at December 31, 2018	$	2,707	$	—	$	—	$	—	$	250	$	12	$	2,969
Adoption of accounting standard	73		—		—		—		—		—		73
Net income	9		—		—		—		—		—		9
Other comprehensive income (J)	—		—		—		—		60		—		60
Change in ParentCo contribution	(111)		—		—		—		—		—		(111)
Other	1		—		—		—		—		2		3
Balance at September 30, 2019	$	2,679	$	—	$	—	$	—	$	310	$	14	$	3,003


Balance at December 31, 2019	$	2,664	$	—	$	—	$	—	$	295	$	14	$	2,973
Net income (loss)	46		—		—		(91)		—		—		(45)
Other comprehensive income (J)	—		—		—		—		139		—		139
Establishment of additional defined benefit plans (G)	349		—		—		—		(1,752)		—		(1,403)
Change in ParentCo contribution	217		—		—		—		—		—		217
Separation payment to former parent company (A)	(728)		—		—		—		—		—		(728)
Separation-related adjustments	(2,548)				3,322		—		(450)		—		324
Issuance of common stock	—		1		(1)		—		—		—		—
Stock-based compensation	—		—		11		—		—		—		11
Balance at September 30, 2020	$	0	$	1	$	3,332	$	(91)	$	(1,768)	$	14	$	1,488


	As Reported under Average Cost		As Computed under LIFO		Effect of Change
Statement of Consolidated Operations for the third quarter ended September 30, 2020:
Cost of goods sold	$	1,218	$	1,232	$	(14)
Operating income	64		50		14
Income before income taxes	15		1		14
Provision for income taxes	10		6		4
Net income (loss)	5		(5)		10
Net income (loss) attributable to Arconic Corporation	5		(5)		10
Earnings per share attributable to Arconic Corporation common shareholders:
Basic	$	0.05	$	(0.05)	$	0.10
Diluted	0.05		(0.05)		0.10

Statement of Consolidated Operations for the nine months ended September 30, 2020:
Cost of goods sold	$	3,614	$	3,605	$	9
Operating income	126		135		(9)
Loss before income taxes	(40)		(31)		(9)
Provision for income taxes	5		6		(1)