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 ~~June 30, 2021~~March 31, 2022


☐			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 ~~August~~May 2, ~~2021,~~2022, there were ~~109,377,065~~105,784,425 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’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements relating to the condition of, or trends or developments in, the ground transportation, aerospace, building and construction, industrial, packaging and other end markets; Arconic’s future financial results, operating performance, working capital, cash flows, liquidity and financial position; cost savings and restructuring programs; Arconic’s strategies, outlook, business and financial prospects; ~~any future~~ share repurchases; costs associated with pension and other postretirement benefit plans; projected sources of cash flow; and potential legal liability; the potential impact of the COVID-19 pandemic; the timing and 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.liability. These statements reflect beliefs and assumptions that are based on Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance, and 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’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;~~suppliers, including labor shortages and increased quarantine rates;

•deterioration in global economic and financial market conditions generally;

•unfavorable changes in the end markets 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;

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

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

•the loss of significant customers or adverse changes in customers’ business or financial condition;

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

•the impact of pricing volatility in raw ~~materials;~~materials and inflationary pressures on our costs of production;

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

•challenges to or infringements on our intellectual property rights;

•the inability to 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 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 trade and tax laws, sanctions, embargoes and other regulations;

•the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation and compliance matters;

•restrictions imposed by authorities on the operation of our Samara, Russia facility;

•the impact of the conflict between Russia and Ukraine on economic conditions in general and on our business and operations; and

•the other risk factors summarized in Arconic’s Form 10-K for the year ended December 31, ~~2020~~2021 and other 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 II Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and Part I Item 1A, “Risk Factors” in Arconic’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. Arconic disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Arconic Corporation and subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Sales (C and D)	Sales (C and D)	$	1,801	$	1,187	$	3,476	$	2,798	Sales (C and D)	$	2,191	$	1,675
Cost of goods sold (exclusive of expenses below) (L)		1,567		1,051		2,998		2,396
Cost of goods sold (exclusive of expenses below)										Cost of goods sold (exclusive of expenses below)	1,956		1,431
Selling, general administrative, and other expenses	Selling, general administrative, and other expenses	61		55		120		135		Selling, general administrative, and other expenses	65		59
Research and development expenses	Research and development expenses	9		8		17		19		Research and development expenses	9		8
Provision for depreciation and amortization	Provision for depreciation and amortization	62		68		125		128		Provision for depreciation and amortization	60		63
Restructuring and other charges (E)	Restructuring and other charges (E)	597		77		598		58		Restructuring and other charges (E)	5		1
Operating (loss) income		(495)		(72)		(382)		62
Interest expense (N)		25		40		48		75
Operating income										Operating income	96		113
Interest expense										Interest expense	25		23
Other expenses, net (F)	Other expenses, net (F)	15		16		37		42		Other expenses, net (F)	17		22
Loss before income taxes		(535)		(128)		(467)		(55)
Benefit for income taxes (H)		(108)		(32)		(92)		(5)
Net loss		(427)		(96)		(375)		(50)
Income before income taxes										Income before income taxes	54		68
Provision for income taxes (H)										Provision for income taxes (H)	12		16
Net income										Net income	42		52
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	0		0		0		0		Less: Net income attributable to noncontrolling interest	—		—
Net loss attributable to Arconic Corporation		$	(427)	$	(96)	$	(375)	$	(50)
Net income attributable to Arconic Corporation										Net income attributable to Arconic Corporation	$	42	$	52

Earnings Per Share Attributable to Arconic Corporation Common Stockholders (I):	Earnings Per Share Attributable to Arconic Corporation Common Stockholders (I):									Earnings Per Share Attributable to Arconic Corporation Common Stockholders (I):
Basic	Basic	$	(3.89)	$	(0.88)	$	(3.41)	$	(0.46)	Basic	$	0.40	$	0.48
Diluted	Diluted	$	(3.89)	$	(0.88)	$	(3.41)	$	(0.46)	Diluted	$	0.39	$	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
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


	Arconic Corporation				Noncontrolling interest				Total
First quarter ended March 31,	2022		2021		2022		2021		2022		2021
Net income	$	42	$	52	$	—	$	—	$	42	$	52
Other comprehensive loss, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	58		25		—		—		58		25
Foreign currency translation adjustments	(7)		(7)		—		—		(7)		(7)
Net change in unrecognized losses on cash flow hedges	(70)		(22)		—		—		(70)		(22)
Total Other comprehensive loss, net of tax	(19)		(4)		—		—		(19)		(4)
Comprehensive income	$	23	$	48	$	—	$	—	$	23	$	48

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

Arconic Corporation and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	540	$	787	Cash and cash equivalents	$	210	$	335
Receivables from customers, less allowances of $1 in both 2021 and 2020		828		631
Receivables from customers, less allowances of $1 in both 2022 and 2021 (Q)						Receivables from customers, less allowances of $1 in both 2022 and 2021 (Q)	1,038		922
Other receivables	Other receivables	190		128		Other receivables	216		226
Inventories (L)	Inventories (L)	1,397		1,043		Inventories (L)	1,833		1,630
Prepaid expenses and other current assets	Prepaid expenses and other current assets	63		53		Prepaid expenses and other current assets	72		55
Total current assets	Total current assets	3,018		2,642		Total current assets	3,369		3,168
Properties, plants, and equipment	Properties, plants, and equipment	7,432		7,409		Properties, plants, and equipment	7,552		7,529
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	4,802		4,697		Less: accumulated depreciation and amortization	4,918		4,878
Properties, plants, and equipment, net	Properties, plants, and equipment, net	2,630		2,712		Properties, plants, and equipment, net	2,634		2,651
Goodwill	Goodwill	391		390		Goodwill	319		322
Operating lease right-of-use assets (M)	Operating lease right-of-use assets (M)	136		144		Operating lease right-of-use assets (M)	122		122
Deferred income taxes	Deferred income taxes	273		329		Deferred income taxes	236		229
Other noncurrent assets	Other noncurrent assets	95		97		Other noncurrent assets	88		88
Total assets	Total assets	$	6,543	$	6,314	Total assets	$	6,768	$	6,580
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Short-term debt (N)						Short-term debt (N)	$	100	$	—
Accounts payable, trade	Accounts payable, trade	$	1,427	$	1,106	Accounts payable, trade	1,781		1,718
Accrued compensation and retirement costs	Accrued compensation and retirement costs	127		118		Accrued compensation and retirement costs	115		116
Taxes, including income taxes	Taxes, including income taxes	42		33		Taxes, including income taxes	62		61
Environmental remediation (P)		75		90
Environmental remediation (O)						Environmental remediation (O)	16		15
Operating lease liabilities (M)	Operating lease liabilities (M)	36		36		Operating lease liabilities (M)	34		35
Fair value of hedging instruments and derivatives (P)						Fair value of hedging instruments and derivatives (P)	117		23
Other current liabilities	Other current liabilities	143		90		Other current liabilities	99		95
Total current liabilities	Total current liabilities	1,850		1,473		Total current liabilities	2,324		2,063
Long-term debt (N)		1,593		1,278
Accrued pension benefits (G)		737		1,343
Long-term debt						Long-term debt	1,595		1,594
Accrued pension benefits						Accrued pension benefits	663		717
Accrued other postretirement benefits	Accrued other postretirement benefits	459		479		Accrued other postretirement benefits	400		411
Environmental remediation (P)		60		66
Environmental remediation (O)						Environmental remediation (O)	45		49
Operating lease liabilities (M)	Operating lease liabilities (M)	103		111		Operating lease liabilities (M)	90		90
Deferred income taxes	Deferred income taxes	14		15		Deferred income taxes	11		12
Other noncurrent liabilities and deferred credits		99		102
Other noncurrent liabilities						Other noncurrent liabilities	79		85
Total liabilities	Total liabilities	4,915		4,867		Total liabilities	5,207		5,021
Contingencies and commitments (P)		0		0
Contingencies and commitments (O)						Contingencies and commitments (O)	0		0
Equity	Equity					Equity
Arconic Corporation stockholders’ equity:	Arconic Corporation stockholders’ equity:					Arconic Corporation stockholders’ equity:
Common stock	Common stock	1		1		Common stock	1		1
Additional capital	Additional capital	3,351		3,348		Additional capital	3,363		3,368
Accumulated deficit	Accumulated deficit	(530)		(155)		Accumulated deficit	(510)		(552)
Treasury stock (J)	Treasury stock (J)	(9)		0		Treasury stock (J)	(177)		(161)
Accumulated other comprehensive loss (K)	Accumulated other comprehensive loss (K)	(1,199)		(1,761)		Accumulated other comprehensive loss (K)	(1,130)		(1,111)
Total Arconic Corporation stockholders’ equity	Total Arconic Corporation stockholders’ equity	1,614		1,433		Total Arconic Corporation stockholders’ equity	1,547		1,545
Noncontrolling interest	Noncontrolling interest	14		14		Noncontrolling interest	14		14
Total equity	Total equity	1,628		1,447		Total equity	1,561		1,559
Total liabilities and equity	Total liabilities and equity	$	6,543	$	6,314	Total liabilities and equity	$	6,768	$	6,580

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

Arconic Corporation and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)


		Six months ended June 30,
		2021		2020
Three months ended March 31,						Three months ended March 31,	2022		2021
Operating Activities	Operating Activities					Operating Activities
Net loss		$	(375)	$	(50)
Adjustments to reconcile net loss to cash used for operations:
Net income						Net income	$	42	$	52
Adjustments to reconcile net income to cash used for operations:						Adjustments to reconcile net income to cash used for operations:
Depreciation and amortization	Depreciation and amortization	125		128		Depreciation and amortization	60		63
Deferred income taxes	Deferred income taxes	(113)		50		Deferred income taxes	(4)		4
Restructuring and other charges (E)	Restructuring and other charges (E)	598		58		Restructuring and other charges (E)	5		1
Net periodic pension benefit cost (G)	Net periodic pension benefit cost (G)	40		39		Net periodic pension benefit cost (G)	16		22
Stock-based compensation	Stock-based compensation	7		12		Stock-based compensation	5		2
Amortization of debt issuance costs (N)		1		21
Amortization of debt issuance costs						Amortization of debt issuance costs	1		2
Other	Other	15		2		Other	11		12
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		(247)		(184)
(Increase) Decrease in inventories		(357)		115
(Increase) in prepaid expenses and other current assets		(10)		(25)
Increase (Decrease) in accounts payable, trade (A)		323		(334)
(Increase) in receivables (Q)						(Increase) in receivables (Q)	(110)		(186)
(Increase) in inventories						(Increase) in inventories	(206)		(161)
(Increase) Decrease in prepaid expenses and other current assets						(Increase) Decrease in prepaid expenses and other current assets	(10)		3
Increase in accounts payable, trade						Increase in accounts payable, trade	116		117
(Decrease) in accrued expenses	(Decrease) in accrued expenses	(34)		(92)		(Decrease) in accrued expenses	(28)		(33)
Increase in taxes, including income taxes	Increase in taxes, including income taxes	14		54		Increase in taxes, including income taxes	1		9
Pension contributions (G)	Pension contributions (G)	(453)		(44)		Pension contributions (G)	(4)		(201)
(Increase) Decrease in noncurrent assets		(4)		21
Decrease in noncurrent assets						Decrease in noncurrent assets	1		—
Increase in noncurrent liabilities	Increase in noncurrent liabilities	9		7		Increase in noncurrent liabilities	1		—
Cash used for operations	Cash used for operations	(461)		(222)		Cash used for operations	(103)		(294)
Financing Activities	Financing Activities					Financing Activities
Net transfers from former parent company		0		216
Separation payment to former parent company (A)		—		(728)
Net change in short term borrowings (original maturities of three months or less) (N)						Net change in short term borrowings (original maturities of three months or less) (N)	100		(9)
Additions to debt (original maturities greater than three months) (N)	Additions to debt (original maturities greater than three months) (N)	319		2,400		Additions to debt (original maturities greater than three months) (N)	—		319
Debt issuance costs (N)	Debt issuance costs (N)	(5)		(57)		Debt issuance costs (N)	(1)		(4)
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		Repurchases of common stock (J)	(16)		—
Other	Other	(17)		0		Other	(11)		(9)
Cash provided from financing activities	Cash provided from financing activities	288		731		Cash provided from financing activities	72		297
Investing Activities	Investing Activities					Investing Activities
Capital expenditures (A)		(72)		(87)
Proceeds from the sale of assets and businesses (O)		(2)		102
Cash (used for) provided from investing activities		(74)		15
Capital expenditures						Capital expenditures	(95)		(28)
Other						Other	1		1
Cash used for investing activities						Cash used for investing activities	(94)		(27)
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	0		(1)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	—		—
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	(247)		523		Net change in cash and cash equivalents and restricted cash	(125)		(24)
Cash and cash equivalents and restricted cash at beginning of year	Cash and cash equivalents and restricted cash at beginning of year	787		72		Cash and cash equivalents and restricted cash at beginning of year	335		787
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	540	$	595	Cash and cash equivalents and restricted cash at end of period	$	210	$	763

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

Arconic Corporation and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(dollars in millions)

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


	Common shares outstanding	Common stock		Additional capital		Accumulated deficit		Treasury stock		Accumulated other comprehensive loss		Noncontrolling interest		Total equity

Balance at December 31, 2020	109,205,226	$	1	$	3,348	$	(155)	$	—	$	(1,761)	$	14	$	1,447
Net income	—	—		—		52		—		—		—		52
Other comprehensive loss (K)	—	—		—		—		—		(4)		—		(4)
Stock-based compensation	818,918	—		2		—		—		—		—		2
Other	—	—		(7)		—		—		—		—		(7)
Balance at March 31, 2021	110,024,144	$	1	$	3,343	$	(103)	$	—	$	(1,765)	$	14	$	1,490

Balance at December 31, 2021	105,326,885	$	1	$	3,368	$	(552)	$	(161)	$	(1,111)	$	14	$	1,559
Net income	—	—		—		42		—		—		—		42
Other comprehensive loss (K)	—	—		—		—		—		(19)		—		(19)
Repurchases of common stock (J)	(505,982)	—		—		—		(16)		—		—		(16)
Stock-based compensation	963,522	—		5		—		—		—		—		5
Other	—	—		(10)		—		—		—		—		(10)
Balance at March 31, 2022	105,784,425	$	1	$	3,363	$	(510)	$	(177)	$	(1,130)	$	14	$	1,561

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, except per-share amounts)

A. ~~The Separation and~~ Basis of Presentation

The interim Consolidated Financial Statements of Arconic Corporation and its subsidiaries (“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 ~~2020~~2021 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 Arconic’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, 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 “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”)).

~~Change in Inventory Accounting Principle.~~ ~~Effective July~~ On April 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 L~~ ~~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. 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.

~~Coronavirus.~~ Our operations and financial results have been, and may continue to be, adversely affected by the coronavirus (COVID-19) pandemic. As a result of the COVID-19 pandemic, several of our automotive and aerospace customers temporarily suspended operations at different points throughout 2020. While many of our customers have resumed operations as it relates to the 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. 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, including but not limited to the recoverability of goodwill and long-lived assets and the 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.

~~The Separation.~~ ~~On February 8, 2019,~~(the “Separation Date”), ParentCo ~~announced that its Board of Directors approved a plan to separate~~separated into 2two standalone, publicly-traded companies, Arconic Corporation and Howmet (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 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 to ParentCo common stockholders of record as of the close of business on March 19, 2020 (the “Record Date”). At the time of the Separation, ParentCo common stockholders were to receive one share of Arconic common stock for every four shares of ParentCo common stock (the “Separation Ratio”) held as of the Record Date (ParentCo common stockholders were to receive cash in lieu of fractional shares).

In connection with the Separation, as of March 31, 2020, ~~Arconic~~the Company and Howmet entered into several agreements to ~~implement~~effect the legal and structural separation between the two companies; govern the relationship between Arconic and Howmet after the completion of the Separation; and allocate between Arconic and Howmet various assets, liabilities, and obligations,Separation, including ~~among other things, employee benefits, environmental liabilities, intellectual property, and tax-related assets and liabilities. These agreements included~~ a Separation and Distribution Agreement and a Tax Matters ~~Agreement, Employee Matters Agreement,~~Agreement. See Note A to the Consolidated Financial Statements in Part II Item 8 of Arconic Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information. Also, references in these Notes to “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 ~~certain Patent, Know-How, Trade Secret License and Trademark License Agreements. The Separation and Distribution Agreement identified~~Alcoa Corporation.

In the ~~assets~~2022 first quarter, the Company recorded a net gain of $3 in Cost of goods sold related to the unrealized impact associated with the change in the estimated fair value of natural gas supply contracts now determined to be transferred, the liabilities to be assumed, and the contracts to be transferred to each of Arconic and Howmet 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 from a portion of the aggregate net proceeds of previously executed financing arrangementsderivatives (see ~~2020 Activity in~~ Note NP). ~~In connection with~~This amount was comprised of an unrealized loss of $5 for the ~~Separation, 109,021,376 shares~~2022 first quarter, an unrealized gain of ~~Arconic common stock were distributed to ParentCo stockholders. This was determined by applying~~$6 for the ~~Separation Ratio to the 436,085,504 shares~~2021 annual period, and an unrealized gain of ParentCo’s outstanding common stock as of the Record Date. “Regular-way” trading of Arconic’s common stock began with the opening of the New York Stock Exchange on April 1, 2020 under the ticker symbol “ARNC.” 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 was allocated a pro rata portion of these costs based on segment revenue (see Cost Allocations below). ParentCo recognized $38 in$2 for the 2020 ~~six-month period for such costs, of which $18 was allocated to Arconic.~~fourth quarter. The ~~allocated amount was included in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations.~~

~~Principles of Consolidation.~~ ~~The Company’s Consolidated Financial Statements include the accounts of Arconic and companies in which Arconic 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 did not operate as a separate, standalone entity. 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. ParentCo’s net investment in these operations was reflected as Parent Company net investment on the Company’s Consolidated Financial Statements. All significant transactions and accounts within Arconic were eliminated. All significant intercompany transactions between ParentCo and Arconic were included within Parent Company net investment on 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.~~

~~Arconic’s Consolidated Financial Statements include general corporate expenses of ParentCo that~~out-of-period amounts were not ~~historically charged~~material 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 includedany interim or annual period.

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 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 Company’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Arconic 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:~~


~~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)~~

~~_____________________~~

* In the 2020 six-month period, amount includes an allocation of $18 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 may not include all of the actual expenses that would have been incurred and may not reflect 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 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 and ParentCo, including sales to the Howmet Aerospace Businesses, 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 Arconic’s Consolidated Balance Sheet as Parent Company net investment.

~~Cash 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 for any of the periods presented prior to the Separation Date. Only cash amounts specifically attributable to Arconic were reflected in the 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 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’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 Arconic’s Consolidated Balance Sheet. As of December 31, 2019, the amount of 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.

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’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 Arconic’s Consolidated Balance Sheet. As of December 31, 2019, the amount of Arconic’s accounts payables settled under such arrangements that had yet to be extinguished between ParentCo and third-party intermediaries was $1.

B. Recently Adopted and Recently Issued Accounting Guidance

~~Adopted~~

On January 1, 2021, Arconic adopted changes issued by the Financial Accounting Standards Board (FASB) to accounting for income taxes. The FASB issued this guidance to simplify various aspects related to the accounting for income taxes as part of the 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 income, such as franchise tax, as income-based tax and account for additional amounts incurred as non-income based tax; requiring an entity to 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 entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The adoption of this guidance did not have a material impact on the Consolidated Financial Statements. The Company will need to continue to consider this guidance in future 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~~London Inter-Bank Offered Rate (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 ~~June 30, 2021,~~March 31, 2022, Arconic has not experienced any unintended outcomes or consequences of reference rate reform that would necessitate the adoption of this guidance. Additionally, the Company’s credit agreement, which previously provided a credit facility that was referenced to LIBOR in certain borrowing situations, was amended in February 2022 to replace LIBOR with the Secured Overnight Financing Rate (SOFR) (see Note N). Accordingly, the Company ~~will~~does 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, 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, managementagreement. 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.

107

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.


Second quarter ended June 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
2021
First quarter ended March 31,										First quarter ended March 31,	Rolled Products		Building and Construction Systems		Extrusions		Total
2022										2022
Ground Transportation	Ground Transportation	$	610	$	0	$	24	$	634	Ground Transportation	$	726	$	—	$	29	$	755
Packaging										Packaging	397		—		—		397
Building and Construction	Building and Construction	51		257		0		308		Building and Construction	84		291		—		375
Packaging		276		0		0		276
Aerospace	Aerospace	124		0		27		151		Aerospace	167		—		43		210
Industrial Products and Other	Industrial Products and Other	413		0		19		432		Industrial Products and Other	430		—		25		455
Total end-market revenue	Total end-market revenue	$	1,474	$	257	$	70	$	1,801	Total end-market revenue	$	1,804	$	291	$	97	$	2,192
2020
2021										2021
Ground Transportation	Ground Transportation	$	250	$	0	$	7	$	257	Ground Transportation	$	637	$	—	$	25	$	662
Packaging										Packaging	219		—		—		219
Building and Construction	Building and Construction	33		230		0		263		Building and Construction	51		236		—		287
Packaging		195		0		0		195
Aerospace	Aerospace	173		0		64		237		Aerospace	109		—		29		138
Industrial Products and Other	Industrial Products and Other	229		0		10		239		Industrial Products and Other	348		—		21		369
Total end-market revenue	Total end-market revenue	$	880	$	230	$	81	$	1,191	Total end-market revenue	$	1,364	$	236	$	75	$	1,675

Six months ended June 30, Rolled
Products Building and
Construction
Systems Extrusions Total
2021
Ground Transportation $ 1,247 $ 0 $ 49 $ 1,296
Building and Construction 102 493 0 595
Packaging 495 0 0 495
Aerospace 233 0 56 289
Industrial Products and Other 761 0 40 801
Total end-market revenue $ 2,838 $ 493 $ 145 $ 3,476
2020
Ground Transportation $ 749 $ 0 $ 37 $ 786
Building and Construction 68 486 0 554
Packaging 373 0 0 373
Aerospace 398 0 139 537
Industrial Products and Other 514 0 38 552
Total end-market revenue $ 2,102 $ 486 $ 214 $ 2,802

118

D. Segment and Related Information

Arconic’s profit or loss measure for its reportable segments is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization). 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 2 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. 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) Research and development expenses, plus each of (i) Stock-based compensation expense, ~~and~~(ii) Metal price ~~lag.~~lag, and (iii) Unrealized (gains) losses on mark-to-market hedging instruments and derivatives (see below). Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

~~Also, effective July 1, 2020,~~Effective in the first quarter of 2022, management modified the Company’s definition of Segment Adjusted EBITDA to exclude the impact of unrealized gains and losses on mark-to-market hedging instruments and derivatives. This modification was deemed appropriate as Arconic is considering entering into additional hedging instruments in future reporting periods if favorable conditions exist to mitigate cost inflation. Certain of these instruments may not qualify for hedge accounting resulting in unrealized gains and losses being recorded directly to Sales or Cost of goods sold, as appropriate (i.e., mark-to-market). Additionally, this change was also applied to derivatives that do not qualify for hedge accounting for consistency purposes. The Company does not have a regular practice of entering into contracts that are treated as derivatives for accounting purposes. Ultimately, this change was made to maintain the transparency and visibility of the underlying operating performance of Arconic’s reportable segments. Prior to this change, the Company ~~changed its inventory cost method~~had a limited number of hedging instruments and derivatives that did not qualify for hedge accounting, the unrealized impact of which was not material 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~~Arconic’s Segment Adjusted EBITDA performance measure. Accordingly, prior ~~periods~~period information presented ~~in the accompanying Consolidated Financial Statements. See~~ ~~Note L~~ ~~for additional information.~~

~~Segment information for all prior periods presented~~ was not recast to reflect ~~the updated measure of segment profit or loss and the change in inventory cost method.~~this change.

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


Second quarter ended June 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
First quarter ended March 31,										First quarter ended March 31,	Rolled Products		Building and Construction Systems		Extrusions		Total
2022										2022
Sales:										Sales:
Third-party sales										Third-party sales	$	1,804	$	291	$	97	$	2,192
Intersegment sales										Intersegment sales	12		—		1		13
Total sales										Total sales	$	1,816	$	291	$	98	$	2,205
Segment Adjusted EBITDA										Segment Adjusted EBITDA	$	176	$	44	$	(5)	$	215
Provision for depreciation and amortization										Provision for depreciation and amortization	$	48	$	4	$	4	$	56
2021	2021									2021
Sales:	Sales:									Sales:
Third-party sales	Third-party sales	$	1,474	$	257	$	70	$	1,801	Third-party sales	$	1,364	$	236	$	75	$	1,675
Intersegment sales	Intersegment sales	10		0		0		10		Intersegment sales	7		—		—		7
Total sales	Total sales	$	1,484	$	257	$	70	$	1,811	Total sales	$	1,371	$	236	$	75	$	1,682
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	173	$	35	$	(8)	$	200	Segment Adjusted EBITDA	$	165	$	28	$	(4)	$	189
Provision for depreciation and amortization	Provision for depreciation and amortization	$	49	$	5	$	5	$	59	Provision for depreciation and amortization	$	48	$	4	$	6	$	58
2020
Sales:
Third-party sales		$	880	$	230	$	81	$	1,191
Intersegment sales		4		0		0		4
Total sales		$	884	$	230	$	81	$	1,195
Segment Adjusted EBITDA		$	85	$	37	$	(14)	$	108
Provision for depreciation and amortization		$	53	$	5	$	6	$	64

129

Six months ended June 30, Rolled
Products Building and
Construction
Systems Extrusions Total
2021
Sales:
Third-party sales $ 2,838 $ 493 $ 145 $ 3,476
Intersegment sales 17 0 0 17
Total sales $ 2,855 $ 493 $ 145 $ 3,493
Segment Adjusted EBITDA $ 338 $ 63 $ (12) $ 389
Provision for depreciation and amortization $ 97 $ 9 $ 11 $ 117
2020
Sales:
Third-party sales $ 2,102 $ 486 $ 214 $ 2,802
Intersegment sales 11 0 0 11
Total sales $ 2,113 $ 486 $ 214 $ 2,813
Segment Adjusted EBITDA $ 250 $ 67 $ (6) $ 311
Provision for depreciation and amortization $ 99 $ 9 $ 12 $ 120

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


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Total Segment Adjusted EBITDA	Total Segment Adjusted EBITDA	$	200	$	108	$	389	$	311	Total Segment Adjusted EBITDA	$	215	$	189
Unallocated amounts:	Unallocated amounts:									Unallocated amounts:
Corporate expenses(1)	Corporate expenses(1)	(10)		(7)		(19)		(9)		Corporate expenses(1)	(9)		(9)
Stock-based compensation expense	Stock-based compensation expense	(5)		(5)		(7)		(12)		Stock-based compensation expense	(5)		(2)
Metal price lag(2)	Metal price lag(2)	(11)		(10)		(6)		(14)		Metal price lag(2)	(36)		5
Unrealized gains on mark-to-market hedging instruments and derivatives (P)										Unrealized gains on mark-to-market hedging instruments and derivatives (P)	2		—
Provision for depreciation and amortization	Provision for depreciation and amortization	(62)		(68)		(125)		(128)		Provision for depreciation and amortization	(60)		(63)
Restructuring and other charges(3) (E)		(597)		(77)		(598)		(58)
Other(4)		(10)		(13)		(16)		(28)
Operating (loss) income		(495)		(72)		(382)		62
Restructuring and other charges (E)										Restructuring and other charges (E)	(5)		(1)
Other(3)										Other(3)	(6)		(6)
Operating income										Operating income	96		113
Interest expense	Interest expense	(25)		(40)		(48)		(75)		Interest expense	(25)		(23)
Other expenses, net (F)	Other expenses, net (F)	(15)		(16)		(37)		(42)		Other expenses, net (F)	(17)		(22)
Benefit for income taxes (H)		108		32		92		5
Provision for income taxes (H)										Provision for income taxes (H)	(12)		(16)
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	0		0		0		0		Net income attributable to noncontrolling interest	—		—
Consolidated net loss attributable to Arconic Corporation		$	(427)	$	(96)	$	(375)	$	(50)
Consolidated net income attributable to Arconic Corporation										Consolidated net income attributable to Arconic Corporation	$	42	$	52

________________

(1)Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities. The amount presented for the 2020 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~~).

(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.

~~(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.

1410

E. Restructuring and Other Charges

In the ~~2021 second~~2022 first quarter, ~~and six-month period,~~ Arconic recorded Restructuring and other charges of ~~$597 and $598, respectively,~~$5, which were comprised of the following components: a ~~$568~~$4 charge related to several legacy non-U.S. matters, including $1 for an environmental remediation obligation related to Italy (see Environmental Matters in Note O) and $1 for the full settlement of certain employee retirement benefits related to Brazil (see Note G); and a ~~$34~~$1 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 idling certain operations in the Extrusions segment (actions initiated in 2021).

In the 2021 first quarter, Arconic recorded Restructuring and other charges of $1, which were comprised of the following components: a $1 additional loss on the sale of an aluminum rolling mill in Brazil; a $1 ~~and $2, respectively,~~ credit for the reversal of reserves established in prior ~~periods (see below);~~periods; and 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 approximately 115 employees in the Extrusions segment.~~

In the 2020 second quarter and six-month period, Arconic recorded Restructuring and other charges of $77 and $58, respectively, which were comprised of the following components: a $55 charge for the settlement of certain employee retirement benefits (see ~~Note 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 O~~); a $17 charge for layoff costs associated with the separation of approximately 410 employees across the Company in response to the impact of the COVID-19 pandemic; a $12 credit for the reversal of reserves established in prior periods, including $5 related to an environmental 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 related to Brazil; a $2 charge (six-month period) for an allocation of ParentCo’s corporate restructuring activity (see Cost Allocations in ~~Note A); and a $2 and $6, respectively, net charge for other~~ items. As of June 30, 2021, the total expected employee separations related to actions initiated in the 2020 second quarter were 430. The reduction of 120 was due to employees initially identified for separation accepting other positions within the Company, natural attrition, and other events that occurred in the second half of 2020 and/or first half of 2021. Accordingly, the Company reduced its estimated layoff costs associated with these actions by $7, of which $2 were reflected as reversals in the 2021 six-month period (see above).

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:

Second quarter ended June 30, Six months ended June 30,
2021 2020 2021 2020
Rolled Products $ 0 $ 7 $ 1 $ 16
Building and Construction Systems 0 5 (1) 6
Extrusions 2 3 3 (28)
Segment total 2 15 3 (6)
Corporate 595 62 595 64
$ 597 $ 77 $ 598 $ 58

As of June 30, 2021, approximately 35 of the 115 employees associated with 2021 restructuring programs, approximately 465 of the 500 (previously 520) employees associated with 2020 restructuring programs, and approximately 360 of the 370 employees associated with 2019 restructuring programs were separated. The total number of employees related to the 2020 restructuring programs was updated to reflect employees initially identified for separation accepting other positions within the Company and natural attrition. The remaining separations for the 2021, 2020, and 2019 restructuring programs are expected to be completed between the remainder of 2021 and 2022.

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



First quarter ended March 31,	2022		2021
Rolled Products	$	—	$	1
Building and Construction Systems	—		(1)
Extrusions	1		1
Segment total	1		1
Corporate	4		—
	$	5	$	1

Activity and reserve balances for restructuring charges were as follows:


		Layoff costs		Other costs		Total			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	Reserve balances at December 31, 2020	13		1		14		Reserve balances at December 31, 2020	$	13	$	1	$	14
Cash payments	Cash payments	(7)		(2)		(9)		Cash payments	(10)		(5)		(15)
Restructuring charges	Restructuring charges	2		2		4		Restructuring charges	3		6		9
Other(2)		(2)		(1)		(3)
Reserve balances at June 30, 2021(3)		$	6	$	0	$	6
Other(1)								Other(1)	(4)		(1)		(5)
Reserve balances at December 31, 2021								Reserve balances at December 31, 2021	2		1		3
Cash payments								Cash payments	(1)		(1)		(2)
Restructuring charges								Restructuring charges	—		1		1
Other(1)								Other(1)	—		(1)		(1)
Reserve balances at March 31, 2022(2)								Reserve balances at March 31, 2022(2)	$	1	$	—	$	1

_____________________

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

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

~~(3)~~(2)The remaining reserves are expected to be paid in cash during the remainder of ~~2021, with the exception of $1 that is expected to be paid in 2022 related to special termination benefits.~~

2022.

1611

F. Other Expenses, Net


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Non-service costs — Pension and OPEB (G)	Non-service costs — Pension and OPEB (G)	$	16	$	18	$	36	$	39	Non-service costs — Pension and OPEB (G)	$	14	$	20
Foreign currency (gains) losses, net		(2)		(5)		0		8
Interest income		0		(2)		0		(4)
Foreign currency losses, net										Foreign currency losses, net	6		2
Other, net	Other, net	1		5		1		(1)		Other, net	(3)		—
		$	15	$	16	$	37	$	42		$	17	$	22

1712

G. Pension and Other Postretirement Benefits

The components of net periodic benefit cost for defined benefit plans were as follows:


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Pension benefits	Pension benefits									Pension benefits
Service cost	Service cost	$	5	$	5	$	11	$	10	Service cost	$	5	$	6
Interest cost	Interest cost	16		28		33		54		Interest cost	16		17
Expected return on plan assets	Expected return on plan assets	(27)		(45)		(60)		(85)		Expected return on plan assets	(24)		(33)
Recognized net actuarial loss	Recognized net actuarial loss	24		31		56		61		Recognized net actuarial loss	19		32
Amortization of prior service cost (benefit)		0		(1)		0		(1)
Settlements(1)		568		55		568		55
Net periodic benefit cost(2)		$	586	$	73	$	608	$	94
Settlements										Settlements	1		—
Net periodic benefit cost(1)										Net periodic benefit cost(1)	$	17	$	22

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

__________________

(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, Settlements were included within Restructuring and other charges, and all other components were included in Other expenses, net on the accompanying Statement of Consolidated Operations.

Pension Funding—~~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 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,~~Arconic had no minimum required funding due in the 2022 first quarter for these two plans. The Company ~~contributed~~expects to contribute a total of ~~$250~~$22 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 approximately 8,400 participants in 2 U.S. defined benefit pension plans to an insurance company. In connection with this transaction, the Company contributed a total of $250 to the 2 plans to maintain the funding level of the remaining plan 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 2 plans had an aggregate of approximately 23,000 participants.~~

This transaction represents a significant settlement event, and, as a result, the Company was required to 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 used in calculating the plan obligations increased to 3.10% as of April 30, 2021 from 2.54% as of December 31, 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 of $995 in plan obligations and the transfer of $1,007 in plan assets. The remeasurement of these 2 plans, together with the annuitization, resulted in a $152 net decrease to Accrued pension benefits and a $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 accelerated amortization of a portion of the existing net actuarial loss associated with~~ these 2 plans in the ~~amount~~remainder of ~~$549 ($423 after-tax). This amount was~~2022.

~~reclassified to earnings through Restructuring and other charges (see~~ ~~Note~~ E~~) from Accumulated other comprehensive loss (see~~ ~~Note~~ K).

1913

H. Income Taxes

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 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 ~~2021 six-month period,~~2022 first quarter, the estimated annual effective tax rate, before discrete items, applied to ordinary ~~loss~~income was ~~18.6%~~27.8%. This rate differs by ~~2.4~~6.8 percentage points from the U.S. federal statutory rate of 21.0% primarily due to estimated U.S. tax on ~~Global Intangible Low-Taxed Income, U.S. tax on foreign earnings, and~~global intangible low-taxed income, non-deductible costs, ~~partially offset by~~ the state tax impact of domestic taxable ~~losses.~~income, foreign losses in jurisdictions subject to existing valuation allowances, and U.S. tax on foreign earnings, partially offset by foreign income taxed in lower rate jurisdictions.

For the ~~2020 six-month period,~~2021 first quarter, the estimated annual effective tax rate, before discrete items, applied to ordinary ~~loss~~income was ~~105.5%~~27.9%. This rate differs by ~~84.5~~6.9 percentage points from the U.S. federal statutory rate of 21.0% primarily due to ~~non-benefitted foreign losses,~~estimated U.S. tax on global intangible low-taxed income, the state tax impact of domestic taxable income, and U.S. tax on foreign ~~earnings, and nondeductible costs related to the Separation.~~earnings.

The effective tax rate including discrete items was ~~20.2%~~22.2% in the 2022 first quarter and ~~19.7%~~23.5% 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.~~first quarter.

The following table details the components of ~~Benefit~~Provision for income taxes:

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)



First quarter ended March 31,	2022		2021
Pretax ordinary income at estimated annual effective tax rate	$	15	$	19
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	1		—
Discrete items	(4)		(3)
Provision for income taxes	$	12	$	16

__________________

* 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.

2014

I. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing Net ~~loss~~income 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 stockholders was as follows (shares in millions):


		Second quarter ended June 30,		Six months ended June 30,
		2021	2020	2021	2020
First quarter ended March 31,						First quarter ended March 31,	2022	2021
Weighted-average shares outstanding – basic	Weighted-average shares outstanding – basic	110.0	109.0	109.9	109.0	Weighted-average shares outstanding – basic	105.4	109.8
Dilutive share equivalents:
Effect of dilutive share equivalents:						Effect of dilutive share equivalents:
Stock units	Stock units	0	0	0	0	Stock units	3.0	3.3
Stock options	Stock options	0	0	0	0	Stock options	0.1	0.1
Weighted-average shares outstanding – diluted	Weighted-average shares outstanding – diluted	110.0	109.0	109.9	109.0	Weighted-average shares outstanding – diluted	108.5	113.2

Anti-dilutive share equivalents:	Anti-dilutive share equivalents:					Anti-dilutive share equivalents:
Stock units	Stock units	3.2	2.6	3.3	1.3	Stock units	—	—
Stock options*:	Stock options*:					Stock options*:
In-the-money	In-the-money	0.2	0	0.1	0	In-the-money	—	—
Out-of-the-money	Out-of-the-money	0	0	0	0	Out-of-the-money	—	—
		3.4	2.6	3.4	1.3		—	—

________________

* Stock options are in-the-money when the respective exercise price of each such option is less than the average market price of the Company’s common stock 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 for purposes of diluted EPS regardless of whether a company generates net income or a net loss. As of ~~June 30, 2020,~~March 31, 2022 and March 31, 2021, there were ~~1.1~~0.3 million and 0.4 million, respectively, out-of-the-money stock options outstanding with a weighted-average exercise price of ~~$26.05.~~$31.48 and $31.41, respectively.

2115

J. Preferred and Common Stock

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~~2022 first quarter, Arconic repurchased ~~246,011~~505,982 shares of the Company's common stock for $9$16 under this program. Cumulatively, the Arconic has repurchased 5,418,487 shares of the Company's common stock for $177 since the program’s inception.

2216

K. Accumulated Other Comprehensive ~~(Loss) Income~~Loss

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


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
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	$	(1,766)	$	(1,770)	$	(1,791)	$	(43)	Balance at beginning of period	$	(1,121)	$	(1,791)
Establishment of additional defined benefit plans		0		0		0		(1,752)
Separation-related adjustments (A)		0		(50)		0		(50)
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Unrecognized net actuarial loss and prior service cost/benefit	Unrecognized net actuarial loss and prior service cost/benefit	145		(40)		144		(38)		Unrecognized net actuarial loss and prior service cost/benefit	55		(1)
Tax (expense) benefit		(33)		10		(33)		9
Tax expense										Tax expense	(12)		—
Total Other comprehensive income (loss) before reclassifications, net of tax	Total Other comprehensive income (loss) before reclassifications, net of tax	112		(30)		111		(29)		Total Other comprehensive income (loss) before reclassifications, net of tax	43		(1)
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		Amortization of net actuarial loss and prior service cost/benefit(1)	20		33
Tax expense(2)	Tax expense(2)	(138)		(20)		(145)		(27)		Tax expense(2)	(5)		(7)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	455		66		481		90		Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	15		26
Total Other comprehensive income	Total Other comprehensive income	567		36		592		61		Total Other comprehensive income	58		25
Balance at end of period	Balance at end of period	$	(1,199)	$	(1,784)	$	(1,199)	$	(1,784)	Balance at end of period	$	(1,063)	$	(1,766)
Foreign currency translation	Foreign currency translation									Foreign currency translation
Balance at beginning of period	Balance at beginning of period	$	22	$	338	$	29	$	338	Balance at beginning of period	$	25	$	29
Separation-related adjustments (A)		0		(396)		0		(396)
Other comprehensive income:
Foreign currency translation(3)		13		5		6		(17)
Net amount reclassified to earnings from Accumulated other comprehensive income(3),(5)		0		0		0		22
Total Other comprehensive income		13		5		6		5
Other comprehensive loss(3)										Other comprehensive loss(3)	(7)		(7)
Balance at end of period	Balance at end of period	$	35	$	(53)	$	35	$	(53)	Balance at end of period	$	18	$	22
Cash flow hedges
Cash flow hedges (P)										Cash flow hedges (P)
Balance at beginning of period	Balance at beginning of period	$	(21)	$	0	$	1	$	0	Balance at beginning of period	$	(15)	$	1
Separation-related adjustments (A)		0		(4)		0		(4)
Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Net change from periodic revaluations	Net change from periodic revaluations	(59)		2		(94)		2		Net change from periodic revaluations	(143)		(35)
Tax benefit	Tax benefit	14		0		22		0		Tax benefit	33		8
Total Other comprehensive (loss) income before reclassifications, net of tax		(45)		2		(72)		2
Total Other comprehensive loss before reclassifications, net of tax										Total Other comprehensive loss before reclassifications, net of tax	(110)		(27)
Net amount reclassified to earnings(4)	Net amount reclassified to earnings(4)	40		(11)		47		(11)		Net amount reclassified to earnings(4)	53		7
Tax (expense) benefit(2)		(9)		2		(11)		2
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(5)		31		(9)		36		(9)
Tax expense(2)										Tax expense(2)	(13)		(2)
Total amount reclassified from Accumulated other comprehensive (loss) income, net of tax(5)										Total amount reclassified from Accumulated other comprehensive (loss) income, net of tax(5)	40		5
Total Other comprehensive loss	Total Other comprehensive loss	(14)		(7)		(36)		(7)		Total Other comprehensive loss	(70)		(22)
Balance at end of period	Balance at end of period	$	(35)	$	(11)	$	(35)	$	(11)	Balance at end of period	$	(85)	$	(21)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(1,199)	$	(1,848)	$	(1,199)	$	(1,848)	Accumulated other comprehensive loss	$	(1,130)	$	(1,765)

_____________________

(1)These amounts were included in the non-service component of net periodic benefit cost for pension and other postretirement benefits (see Note G). In all periods presented, the respective amounts include accelerated amortization related to the settlement of certain 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~~).

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

(3)In all periods presented, there were no tax impacts related to rate ~~changes. In the 2020 six-month period, the net amount~~changes and no amounts were 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.~~earnings.

(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.~~Operations (see Note P). For both periods presented, amounts related to energy and alloying materials were not material.

(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.

2417

L. Inventories


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Finished goods	Finished goods	$	363	$	282	Finished goods	$	449	$	350
Work-in-process	Work-in-process	889		635		Work-in-process	1,175		1,105
Purchased raw materials	Purchased raw materials	77		59		Purchased raw materials	141		109
Operating supplies	Operating supplies	68		67		Operating supplies	68		66
		$	1,397	$	1,043		$	1,833	$	1,630

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 $245 as of January 1, 2020. Additionally, certain financial statement line items in each of the accompanying Statement of Consolidated Operations, Statement of Consolidated Comprehensive Income, and Statement of Consolidated Cash Flows for the 2020 second quarter and six-month period were recast as follows:

As Previously Reported Effect of Change As Recast
Statement of Consolidated Operations for the second quarter ended June 30, 2020:
Cost of goods sold $ 1,046 $ 5 $ 1,051
Operating loss (67) (5) (72)
Loss before income taxes (123) (5) (128)
Benefit for income taxes (31) (1) (32)
Net loss (92) (4) (96)
Net loss attributable to Arconic Corporation (92) (4) (96)
Earnings per share attributable to Arconic Corporation common stockholders:
Basic $ (0.84) $ (0.04) $ (0.88)
Diluted (0.84) (0.04) (0.88)
Statement of Consolidated Operations for the six months ended June 30, 2020:
Cost of goods sold $ 2,373 $ 23 $ 2,396
Operating income 85 (23) 62
Loss before income taxes (32) (23) (55)
Benefit for income taxes 0 (5) (5)
Net loss (32) (18) (50)
Net loss attributable to Arconic Corporation (32) (18) (50)
Earnings per share attributable to Arconic Corporation common shareholders:
Basic $ (0.29) $ (0.17) $ (0.46)
Diluted (0.29) (0.17) (0.46)

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

2618

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~~$13 and ~~$30 in~~$16 for the ~~2021 second~~first quarter of 2022 and ~~six-month period, respectively, and $14 and $29 in the 2020 second quarter and six-month period,~~2021, respectively.

Right-of-use assets obtained in exchange for operating lease obligations ~~were $10~~ in the first quarter of 2022 and 2021 ~~six-month period~~were $11 and ~~$32 in the 2020 six-month period.~~$5, respectively.

Future minimum contractual operating lease obligations were as follows:


		June 30, 2021		December 31, 2020			March 31, 2022
2021		$	23	$	43
2022	2022	37		34		2022	$	31
2023	2023	29		26		2023	31
2024	2024	22		20		2024	24
2025	2025	17		16		2025	18
2026						2026	13
Thereafter	Thereafter	41		41		Thereafter	30
Total lease payments	Total lease payments	$	169	$	180	Total lease payments	$	147
Less: imputed interest	Less: imputed interest	30		33		Less: imputed interest	23
Present value of lease liabilities	Present value of lease liabilities	$	139	$	147	Present value of lease liabilities	$	124

~~The~~Arconic’s operating leases at both March 31, 2022 and December 31, 2021 had a weighted-average remaining lease term of 6.1 years and a weighted-average discount rate ~~for the Company’s operating leases at June 30, 2021 and December 31, 2020 was 6.3 years and 6.6 years, respectively, and~~of 5.8% ~~and 5.9%, respectively.~~.

2719

N. Debt

2022 Activity—Arconic maintains a five-year credit agreement, dated May 13, 2020, 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 (the “ABL Credit Facility”) to be used, generally, for working capital or other general corporate purposes. See 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, 2021 (filed on February 22, 2022) for additional information related to the ABL Credit Agreement.

On February 16, 2022, the Company’s ABL Credit Agreement was amended to increase the revolving commitments under the ABL Credit Facility to $1,200 from $800. Additionally, the accordion feature of the ABL Credit Facility was revised to provide for the Company to request a further increase to the revolving commitments in an aggregate principal amount equal to the greater of $350 and the excess of the borrowing base over the ABL Credit Facility commitments. Furthermore, the LIBOR-based floating interest rate was replaced with a term SOFR-based interest rate, plus a credit spread adjustment equal to 0.10%, 0.15% or 0.25% per annum for SOFR-based borrowings with interest periods of one month, three months, or six months, respectively, under the ABL Credit Facility. Arconic paid $1 in upfront costs associated with these amendments.

In March 2022, the Company borrowed $100 under the ABL Credit Facility. This borrowing was designated as a SOFR loan with an initial three-month interest period. As of March 31, 2022, the applicable rate on this borrowing was 2.50%. Arconic may repay early or extend a part or all of this borrowing.

Availability under the ABL Credit Facility is subject to a monthly borrowing base calculation, which, in general, is determined by applying a predetermined percentage to the amount of eligible accounts receivable and inventory, less customary reserves. As of March 31, 2022, the available balance was $1,065 (net of outstanding borrowing of $100 and letters of credit of $35).

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)~~(the “Existing 2028 Notes”). 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.~~Existing 2028 Notes. See 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, 2021 (filed on February 22, 2022) for additional information related to the Existing 2028 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~~).in April 2021. 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~~is paid semi-annually in February and August ~~commencing~~and commenced August 15, 2021.

~~2020 Activity~~—In connection with the capital structure to be established at the time of the Separation, Arconic secured $1,200 in third-party indebtedness. On February 7, 2020, 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”). 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, 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”). Arconic received $575 in net proceeds from the Term Loan 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~~ ~~in connection with the completion of the Separation (see~~ ~~Note 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 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 pandemic.

On May 13, 2020, Arconic executed a refinancing of its existing Credit Agreement in order to provide improved financial flexibility. 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”). Arconic received $691 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2025 Notes. Additionally, 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 Arconic to request one or more increases to the revolving commitments in an aggregate principal amount up to $350.

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 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 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, and the Credit Facility. In connection with the issuance of the 2025 Notes and the execution of the ABL Credit Agreement, 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 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.

~~ABL Credit Agreement—~~Availability under the ABL Credit Facility is subject to a monthly borrowing base calculation, which, in general, is determined by applying a predetermined percentage to the amount of eligible accounts receivable and inventory, less customary reserves. As of June 30, 2021, the available balance was $785.

~~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 June 30, 2021 and December 31, 2020, the 2028 Notes and 2025 Notes had a combined carrying value of $1,593 and $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.

2920

O. ~~Acquisitions and Divestitures~~

~~Divestitures~~

~~Itapissuma.~~ On February 1, 2020, Arconic completed the sale of its aluminum rolling mill (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 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 $60 (pretax) on this transaction, composed of the following: a charge of $53 in 2019 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; a charge of $6 in February 2020 for further necessary adjustments upon completion of the 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~~) on the Company’s Statement of Consolidated Operations in the respective reporting periods. This transaction is no longer subject to post-closing adjustments. Prior to the divestiture, this rolling mill’s operating results and assets and liabilities were reported in Arconic’s Rolled Products segment. The rolling mill generated third-party sales of $143 in 2019 and, at the time of divestiture, had approximately 500 employees.

~~Changwon.~~ On March 1, 2020, Arconic 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~~) on the accompanying Statement of Consolidated Operations. The gain is net of a $6 write-off of related goodwill. In May 2020, the 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 Arconic’s Extrusions segment. The extrusions plant generated third-party sales of $51 in 2019 and, at the time of divestiture, had approximately 160 employees.

P. Contingencies and Commitments

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

Contingencies

Environmental Matters. Arconic 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.

The Company’s remediation reserve balance was ~~$135~~$61 and ~~$156~~$64 (of which ~~$75~~$16 and ~~$90,~~$15, respectively, was classified as a current liability) at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated.

In the ~~2021 second~~2022 first quarter, the Company recorded a charge of $1 (see Note E) and ~~six-month period,~~increased the remediation reserve ~~was increased~~ by ~~$1.~~ the same amount to reflect an estimate of Arconic’s share of newly-identified costs for additional remediation work related to a recently completed project at a former site in Italy where the Company is one of several responsible parties. The additional remediation work is subject to review by Italy’s Ministry of the Environment.

Payments related to remediation expenses applied against the reserve were $4 ~~and $21~~ in the ~~2021 second~~2022 first quarter, ~~and six-month period, 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 2021 six-month period also reflects a decrease of $1 for other items.~~

The Separation and Distribution Agreement includes provisions for the assignment or allocation of environmental liabilities between Arconic and Howmet, 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 and Howmet 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 Company's largest reserve (next largest is $5), which relates to one of Arconic's current ~~status of one reserve, which represents the majority of the Company’s total remediation reserve balance, related to an active Arconic site.~~operating locations.

Massena West, NY—Arconic 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 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, 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 related to navigation issues identified by a local seaway development company. Accordingly,April 2020, the EPA ~~requested~~approved an addendum to the final remedial design ~~be submitted~~ to address ~~these issues. The proposed~~newly-identified matters, including river navigation issues, which resulted in changing the original remedy ~~is to dredge certain~~for a specific segment of the ~~sediments originally identified for capping in~~river to dredging from capping.

In the ~~affected areas~~2021 third quarter, following substantial completion of remedial construction activities on the Grasse River ~~resulting in incremental project costs. The EPA approved~~and an assessment of anticipated remaining future costs, primarily for post-construction monitoring, the ~~proposal in April 2020.~~reserve was reduced by $11. 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the reserve balance associated with this matter was ~~$97~~$28 and ~~$115,~~$30, respectively. ~~The majority~~Approximately $3 of the remaining expenditures ~~related~~represent costs that are expected to ~~the project~~be paid in 2022. The other $25 in

remaining expenditures, most of which relates to operations, maintenance, and monitoring work, are expected to occur between ~~the remainder of 2021~~2023 and ~~2022.~~

2027.

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 several times and most recently further postponed until ~~August 19, 2021.~~July 21, 2022. 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~~We continue to operate the Samara location without restrictions other than as disclosed above, and we maintain a renewable intercompany loan facility that could be, but has not yet been utilized.

The following table presents selected financial information related to our operations in Russia:


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	26	$	79
Receivables from customers	131		120
Inventories	130		102
Properties, plants and equipment, net	196		200
Accounts payable, trade	46		47

	For the first quarter ended March 31, 2022		For the year ended December 31, 2021
Third-party sales*	$	233	$	968
Segment Adjusted EBITDA	18		87

_____________________

*In all periods presented, Third-party sales includes aluminum products manufactured at Arconic’s plant in Russia and sold through the Company’s international selling company located in Hungary.

10% and 13% of Segment Adjusted EBITDA, respectively, for the Rolled Products segment. In March 2022, we announced a pause in new contracts in Russia and we are deliberately and actively pursuing additional options for our Russian business while complying with legal and contractual obligations.

We cannot at this time reasonably estimate the likelihood or timing of any resolution of the regulatory proceedings or underlying claims, whether such resolution would include the removal of the injunctions or the imposition of additional restrictions, or whether we would divest assets related to the ~~nature~~Samara facility. The potential impacts of ~~this matter, geopolitical tensions between~~an unfavorable resolution of the ~~U.S.~~proceedings and ~~Russia~~underlying claims include:

•continued unavailability of funds for the payment of dividends to Arconic Corporation;

•decreases in or loss of third-party sales and Segment Adjusted EBITDA generated by our Samara facility;

•restrictions on capital investments in the facility;

•losses on any potential divestiture;

•the inability of other Arconic facilities to assume capacity to offset decreases in sales or Segment Adjusted EBIDTA or to assume potential divested capacity; and

•increased expenses related to relocation of capacity to other facilities.

Any of the foregoing could have a ~~material adverse~~significant indirect impact on the performance of our other locations. In addition, any impact on our ability to ~~obtain~~fulfill delivery obligations could subject us to reputational harm and potential litigation involving customers and suppliers. Increased restrictions on our operation of the Samara facility may have a ~~favorable outcome in this matter, as well as~~material adverse effect on our financial condition, results of operations ~~in Russia, which represented 12% of our sales in 2020.~~or cash flows. Given the preliminary nature of this matter and the uncertainty of litigation and of efforts to resolve this matter with FAS, 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. Additionally, our operations in Russia, and our ability to resolve the proceedings and underlying claims related to our facility in Samara, Russia, are likely to be negatively impacted by the disruption and geopolitical instability resulting from the ongoing conflict between Russia and Ukraine.

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 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 (previously 5) claimants represented by SMQ Legal Services;

◦NaN (previously 4) claimants represented by Scott Moncrieff;

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

◦NaN (previously NaN) claimants represented by Russell Cooke ~~LLP;~~LLP. On March 29, 2022, Russell Cooke issued a further suit against the above-mentioned 21 Defendants on behalf of one Claimant. It is anticipated that the suits issued by Russell Cooke will be consolidated in due course;

◦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;~~Solicitor. On March 29, 2022, Hodge Jones and Allen issued a further suit against the above-mentioned 21 Defendants on behalf of five Claimants. It is anticipated that the suits issued by Hodge Jones and Allen will be consolidated in due course;

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

◦NaN (previously 5) claimants represented by Duncan Lewis Solicitors;

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

◦NaN claimants represented by Bindmans ~~LLP;~~LLP. On March 31, 2022, Bindmans issued a further suit against the above-mentioned 21 Defendants on behalf of five Claimants. It is anticipated that the suits issued by Bindmans will be consolidated in due course;

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

◦NaN (previously 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, 98 (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 710 (previously 5)7) firefighters have sought to be added to the suit.

•On June 12, 2020, 36 (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.

•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. On March 29, 2022, the Royal Borough of Kensington and Chelsea and the Royal Borough of Kensington and Chelsea Tenant Management Organisation Ltd sought permission to join two further Defendants to these proceedings, namely: (i) Whirlpool EMEA S.p.A.; and (ii) Whirlpool UK Appliances Limited.

All of these claims ~~have been~~were filed in the High Court in London. On October 2, 2020, the High Court ordered that: (a) the suits of the survivors and estates of decedents that were issued in June 2020 be stayed until a hearing scheduled by the High Court for June 9-10, 2021; and (b) that the suits of emergency responders be stayed until a hearing 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 athe next directions hearing, ~~to be~~which was held on April 26, 2022. The Senior Master has not yet issued a decision as to whether to continue the ~~first available date after May 3, 2022.~~stay following the April 26, 2022 directions hearing. The duration of the prior stay iswas 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. The parties have now agreed to overarching terms as to the form of Alternative Dispute Resolution that they are willing to participate in. Those discussions are ongoing.

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, which the Court denied on November 23, 2020. Plaintiffs are appealing this judgment; ParentCo Defendants are 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.~~is scheduled for June 6, 2022. 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. On June 23, 2021, the Court granted in part and denied in part the defendants’ motion to dismiss 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. On August 11, 2021, ParentCo filed a motion with the district court for certification of an interlocutory appeal and a stay pending appeal. The ~~parties stipulated~~motion seeks to appeal the aspect of the court’s June 23, 2021 opinion concerning the complaint’s pleading of ParentCo’s alleged scienter. Plaintiffs filed an opposition to the motion on August 17, 2021, and ParentCo filed a reply brief on August 24, 2021. On August 12, 2021, ~~deadline for~~ defendants ~~to file~~filed an answer to the second amended ~~complaint in light~~complaint. A status conference was held before the Court on January 11, 2022 during which the Court heard argument from both parties on the pending motion for certification of an interlocutory appeal. The motion remains pending before the ~~Court’s partial dismissal.~~district court. 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.

Tax. Under the terms of the agreements that govern the 2016 Separation Transaction, Arconic may be entitled to future economic benefits resulting from Alcoa Corporation’s utilization of certain value-added tax credits that were generated, in part, by the Company’s former operations in Brazil in years prior to 2015. Because Arconic is not party to the regulatory filings with the Brazilian government and, therefore, does not have a basis to conclude on the realizability of these value-added tax credits by Alcoa Corporation, the Company will recognize income when amounts are realized, if any.

General. In addition to the matters described above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Arconic, including those pertaining to environmental, product liability, safety and health, employment, tax, and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability 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 ~~Arconic’s~~the results of operations, financial position or cash ~~flows.~~flows of Arconic.

3627

P. Financial Instruments

Amounts designated below as kmt are thousand metric tons and MMBtu are million British thermal units.

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

The respective carrying value and fair value of Arconic’s financial instruments were as follows:


	March 31, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	210	$	210	$	335	$	335
Hedging instruments and derivatives - assets	7		7		1		1
Short-term debt	100		100		—		—
Hedging instruments and derivatives - liabilities	116		116		23		23
Long-term debt	1,595		1,621		1,594		1,692

The following methods were used to estimate the fair value of financial instruments:

Cash and cash equivalents and Short-term debt. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents were classified in Level 1 of the fair value hierarchy and Short-term debt was classified in Level 2 of the fair value hierarchy.

Hedging instruments and derivatives. Arconic is exposed to certain risks relating to its ongoing business operations, including financial, market, political, and economic risks. Information regarding the Company’s exposure to the risks of changing commodity prices is described below.

Arconic’s commodity and hedging activities are subject to the management, direction, and control of the Strategic Risk Management Committee (SRMC), which consists of at least three members, including the Company’s chief executive officer and chief financial officer. The remaining member(s) are other Arconic officers and/or employees as the chief executive officer may designate from time to time. Currently, the only other member of the SRMC is the Company’s treasurer. The SRMC meets on a periodic basis to review hedging positions and strategy and reports to the Audit and Finance Committee of Arconic’s Board of Directors on the scope of its activities.

The Company’s hedging instruments are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility, and to cover underlying exposures. Specifically, these instruments hedge forward sale commitments for aluminum and forward purchase commitments for aluminum, natural gas, and certain alloying materials. Arconic is not involved in trading activities for energy, weather derivatives, or other nonexchange commodity trading activities.

The fair value of the Company’s hedging instruments was based on quoted market prices (e.g., aluminum prices on the 10-year London Metal Exchange forward curve) and were classified in Level 1 of the fair value hierarchy. Most of these instruments are comprised of those that were designated as cash flow hedges while the remainder are marked-to-market as they

do not qualify for hedge accounting. As of March 31, 2022 and December 31, 2021, Arconic’s hedging instruments classified as liabilities consisted of $121 (283 kmt) and $18 (251 kmt), respectively, for aluminum cash flow hedges, $(11) (8.7 MMBtu) and $2 (3.3 MMBtu), respectively, for energy cash flow hedges, and $3 (7 kmt) and $3 (19 kmt), respectively, for aluminum hedges that did not qualify for hedge accounting. Also, the Company’s hedging instruments classified as assets as of March 31, 2022 and December 31, 2021 consisted of $1 (23 kmt) and $1 (14 kmt), respectively, for aluminum hedges that did not qualify for hedge accounting.

For hedging instruments designated as cash flow hedges, Arconic recognized in the 2022 first quarter an unrealized loss of $143 in Other comprehensive loss (see Note K), comprised of an unrealized loss of $156 for aluminum and an unrealized gain of $13 for energy, and both a realized loss of $54 in Sales and a realized gain of $1 in Cost of goods sold for aluminum, and, in the 2021 first quarter, an unrealized loss of $35 in Other comprehensive loss (see Note K), comprised of an unrealized loss of $36 for aluminum and an unrealized gain of $1 for alloying materials, and both a realized loss of $9 in Sales and a realized gain of $2 in Cost of goods sold for aluminum. The realized loss and gain in both periods were reclassified from Accumulated other comprehensive loss (see Note K).

For hedging instruments that do not qualify for hedge accounting, the Company recognized both an unrealized gain of $2 and a realized loss of $2 in Sales for aluminum in the 2022 first quarter. Unrealized and realized impacts were not material in the 2021 first quarter.

The disclosures with respect to commodity price risk do not consider the underlying commitments or anticipated transactions. If the underlying items were included, the gains or losses on the hedging instruments may be offset. Actual results will be determined by several factors that are not under Arconic’s control and could vary significantly from those factors disclosed.

The Company is exposed to credit loss in the event of nonperformance by counterparties on the above instruments, as well as credit or performance risk with respect to its hedged customers’ commitments. Arconic does not anticipate nonperformance by any of these parties. Contracts are with creditworthy counterparties and are further supported by cash or irrevocable letters of credit issued by carefully chosen banks. In addition, master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts.

Separately, Arconic has three natural gas supply contracts that are treated as derivatives for accounting purposes as they failed to qualify for the normal purchase normal sale exception due to net settlement provisions. These derivatives also do not qualify for hedge accounting. The Company does not have a regular practice of entering into contracts that are treated as derivatives for accounting purposes. As of March 31, 2022, Arconic’s derivatives classified as assets and liabilities consisted of $6 (1.5 MMBtu) and $3 (2.0 MMBtu), respectively. Additionally, in the 2022 first quarter, the Company recognized an unrealized gain of $3 in Cost of goods sold for these derivatives (see Note A).

Long-term debt. The fair value was based on quoted market prices for public debt and was classified in Level 2 of the fair value hierarchy.

Q. Receivables

On January 5, 2022, the Company entered into a one-year arrangement with a financial institution to sell certain customer receivables outright without recourse on a continuous basis. All such sales are at Arconic's discretion. Under this arrangement, the Company serves in an administrative capacity, including collection of the receivables from the respective customers and remittance of these cash collections to the financial institution. Accordingly, upon the sale of customer receivables to the financial institution, Arconic removes the underlying trade receivables from the Consolidated Balance Sheet and includes the reduction as a positive amount in the Decrease (Increase) in receivables line item within Operating Activities on the Statement of Consolidated Cash Flows.At no time can the outstanding balance due to the financial institution exceed $225 (increased in February from original amount of $100). In the 2022 first quarter, the Company sold $221 in customer receivables and remitted $158 in cash collections to the financial institution. Of the total amount of customer receivables sold in the 2022 first quarter, $77 were included in Receivables from customers on the accompanying Consolidated Balance Sheet as of December 31, 2021.

Q.R. Subsequent Events

Management evaluated all activity of Arconic and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements.

3731

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

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

References to “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”)).

~~The Separation.~~ On ~~February 8, 2019,~~April 1, 2020 (the “Separation Date”), ParentCo ~~announced that its Board of Directors approved a plan to separate~~separated into two standalone, publicly-traded companies, Arconic Corporation and Howmet (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 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).

In connection with the Separation, as of March 31, 2020, ~~Arconic~~the Company and Howmet entered into several agreements to ~~implement~~effect the legal and structural separation between the two companies; govern the relationship between Arconic and Howmet after the completion of the Separation; and allocate between Arconic and Howmet various assets, liabilities, and obligations,Separation, including ~~among other things, employee benefits, environmental liabilities, intellectual property, and tax-related assets and liabilities. These agreements included~~ a Separation and Distribution Agreement and a 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 and Howmet 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 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 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’s common stock began with the opening of the New York Stock Exchange on April 1, 2020 under the ticker symbol “ARNC.” 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 was allocated a pro rata portion of these costs based on segment revenue (see Cost Allocations below). ParentCo recognized $38Agreement. See Overview in the 2020 six-month period 2020 for such costs, of which $18 was allocated to Arconic. The allocated amount was included in Selling, general administrative, and other expenses on Arconic’s Statement of Consolidated Operations.

~~Basis of Presentation.~~ The Company’s Consolidated Financial Statements 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 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 the COVID-19 pandemic.

~~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.~~

Arconic’s Consolidated Financial Statements 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 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 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 Company’s Consolidated Balance Sheet. Financing costs related to these debt obligations were allocated to Arconic 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 Arconic’s Statement of Consolidated Operations within Interest expense.

~~The following table reflects the allocations described above:~~



~~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)~~

~~_____________________~~

* In the 2020 six-month period, amount includes an allocation of $18 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.~~

~~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’sManagement’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~~Operations in Part II Item 7 ~~in the Company’s~~of Arconic Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2020. Consistent with~~2021 for additional information.

Results of Operations

Outlook

In the ~~expectations included~~first quarter of 2022, we experienced strong pricing and higher volumes across most of the end-markets that we serve, while ground transportation volumes declined as several of our customers experienced temporary shutdowns 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,first quarter due to ~~ongoing issues in the~~ semiconductor ~~supply chain impacting automotive production at our customers (certain~~chip availability. Due to stronger than expected performance across much 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,~~portfolio as well as ~~our ability to pivot production capacity from~~ongoing supply chain issues in 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 productswe have revised certain expectations for sales by major end market, ~~we have improved our outlook and anticipate sales to increase by approximately 25% to 30% (versus prior expectation of 20% to 25%)~~as previously disclosed 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 may continue to be, adversely affected by the COVID-19 pandemic. As a result of the COVID-19 pandemic, several of our automotive and aerospace customers temporarily suspended 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 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. 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, including but not limited to the recoverability of goodwill and long-lived assets and the 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 our diverse end markets and geographic composition mitigate a portion of the impact on the Company from any singular area of decline. Additionally, our operating footprint benefits from a highly variable cost structure and we are able to actively manage our operations to effectively flex activity, if necessary, to respond to changing end market conditions. However, the geographic locations in which our products are manufactured, distributed, or sold continue to be in varying stages of 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 our employees is our highest priority. We continue to maintain our previously implemented heightened measures at all 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~~2021. Consistent with the ~~continuing~~expectations included in the Form 10-K, the revised expectations do not include the impact of changes in aluminum prices. For the ~~COVID-19 pandemic on~~ground transportation end market, we have lowered our ~~operations.~~sales outlook to reflect anticipated growth of approximately 5% to 10% (versus prior expectation of 10% to 15%) in 2022 compared with 2021 due to lingering semiconductor chip supply issues that reduced production in the first quarter of 2022 and lowered expectations for the full year 2022. For the industrial products end market, we anticipate sales to grow by approximately 10% to 15% (versus prior expectation of 5% to 10%) in 2022 compared with 2021, driven by improved pricing and our ability to pivot some unused automotive capacity to industrial production. For the building and construction end market, we anticipate sales to increase by approximately 15% to 20% (versus prior expectation of 5% to 10%) in 2022 compared with 2021, driven by growth in North American non-residential construction activity and our ability to capture meaningful price increases to address inflationary cost pressures. For the packaging end market, we have lowered our sales outlook to reflect anticipated growth of approximately 20% to 40% (versus prior expectation of 40% to 45%) in 2022 compared with 2021, as the North American can sheet ramp up is expected to be partially offset by lower sales in Russia. For the aerospace end market, we expect sales to grow by approximately 30% to 40% (versus prior expectation of 25% to 35%) from 2021, as aircraft build rates continue to increase in 2022.

~~Earnings Summary~~Legal Proceedings Involving our Samara Facility

~~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~~Our subsidiaries that own and operate our facility located in ~~accounting principle~~Samara, Russia are, and have been ~~retrospectively applied~~since the Separation, subject to ~~all prior periods presented in~~proceedings initiated by Russian regulatory authorities as a result of alleged violations of Russian Federal Law No. 57-FZ. In connection with these proceedings, authorities have imposed injunctions prohibiting, among other actions, the ~~Company’s Consolidated Financial Statements.~~payment of dividends, placement of bonds, amendments to organizational documents, and changes to the subsidiaries’ chief executive officer and board of directors. See Note L O to the Consolidated Financial Statements in Part I, Item 11. “Financial Statements” under the caption “Contingencies and Commitments—Contingencies—Litigation—Federal Antimonopoly Service Of The Russian Federation Litigation” for additional information regarding the proceedings. The proceedings and underlying claims may not be resolved favorably, are likely to continue to be delayed, may be resolved in a manner that results in permanent injunctions similar to or more restrictive than the current injunctions, and could result in a decision or a requirement to divest some or all of the assets located at the Samara facility.

The following table presents selected financial information related to our operations in Russia:


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	26	$	79
Receivables from customers	131		120
Inventories	130		102
Properties, plants and equipment, net	196		200
Accounts payable, trade	46		47

	For the first quarter ended March 31, 2022		For the year ended December 31, 2021
Third-party sales*	$	233	$	968
Segment Adjusted EBITDA	18		87

_____________________

*In all periods presented, Third-party sales includes aluminum products manufactured at Arconic’s plant in Russia and sold through the Company’s international selling company located in Hungary.

At March 31, 2022 and December 31, 2021, the Cash and cash equivalents presented above were held in Russia and were not available for dividends. Cash and cash equivalents held in Russia represented 2% of Arconic’s liquidity (comprised of Cash and cash equivalents of $210 and undrawn availability of $1,065 under Arconic’s ABL Credit Agreement (see Note N)) at March 31, 2022. In addition, for the quarter ended March 31, 2022 and year ended December 31, 2021, our Samara, Russia facility generated 13% and 16% of Third-party sales (including packaging, industrial, aerospace, and defense), respectively, and 10% and 13% of Segment Adjusted EBITDA, respectively, for the Rolled Products segment. In March 2022, we announced a pause in new contracts in Russia and we are deliberately and actively pursuing additional options for our Russian business while complying with legal and contractual obligations.

We cannot at this ~~Form 10-Q.~~time reasonably estimate the likelihood or timing of any resolution of the regulatory proceedings or underlying claims, whether such resolution would include the removal of the injunctions or the imposition of additional restrictions, or whether we would divest assets related to the Samara facility. The potential impacts of an unfavorable resolution of the proceedings and underlying claims include:

•continued unavailability of funds for the payment of dividends to Arconic Corporation;

•decreases in or loss of third-party sales and Segment Adjusted EBITDA generated by our Samara facility;

•restrictions on capital investments in the facility;

•losses on any potential divestiture;

•the inability of other Arconic facilities to assume capacity to offset decreases in sales or Segment Adjusted EBIDTA or to assume potential divested capacity; and

•increased expenses related to relocation of capacity to other facilities.

Any of the foregoing could have a significant indirect impact on the performance of our other locations. In addition, any impact on our ability to fulfill delivery obligations could subject us to reputational harm and potential litigation involving customers and suppliers. Increased restrictions on our operation of the Samara facility may have a material adverse effect on our financial condition, results of operations or cash flows. Our operations in Russia, and our ability to resolve the proceedings and underlying claims related to our facility in Samara, Russia, are likely to be negatively impacted by the disruption and geopolitical instability resulting from the ongoing conflict between Russia and Ukraine. See Part II, Item 1A “Risk Factors—The ongoing conflict between Russia and Ukraine has resulted in geopolitical instability and disruption that are likely to adversely affect our business, financial condition, results of operations or cash flows” for additional information.

Earnings Summary

Sales. Sales were ~~$1,801~~$2,191 in the 2022 first quarter compared to $1,675 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.~~first quarter. The increase of ~~$614,~~$516, or ~~52%~~31%, ~~in the second quarter comparison and $678, or 24%, in the six-month period comparison~~ was principally due to ~~improved volumes in most~~higher aluminum prices, favorable product pricing, and favorable product mix driven by increased sales to the packaging and aerospace 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.~~continues. 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.~~foreign currency movements driven by a weaker euro.

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, the Company’s sales for the ~~2021 second~~2022 first quarter and ~~six-month period include $1~~2021 first quarter included $2 and ~~$9,~~$8, respectively, associated with this settlement.

Cost of goods sold ~~(COGS)~~. COGS was ~~$1,567,~~$1,956, or ~~87.0%~~89.3% of Sales, in the 2022 first quarter compared to $1,431, or 85.4% 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).first quarter. The percentage was negatively impacted ~~in the six-month period comparison~~ by ~~unfavorable product mix driven by depressed sales to the aerospace end market~~higher costs for direct materials, including energy, alloying materials, and transportation, and higher aluminum prices (underlying metal price is contractually passed-through to most customers at cost),. These negative impacts were 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~~favorable product pricing driven by ~~significantly lower production levels~~pricing pressures primarily in North America as a result of ~~the COVID-19 pandemic, partially offset by higher costs for labor (see Labor costs below) and direct materials.~~inflation.

Selling, general administrative, and other expenses ~~(SG&A)~~. SG&A was ~~$61~~$65 in the 2022 first quarter compared to $59 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.~~first quarter. The increase of $6, or ~~11%~~10%, ~~in the second quarter comparison~~ was mostly caused by an increase in labor costs, ~~(see Cost~~higher stock-based employee compensation expense, and the absence of ~~goods sold above), partially~~a 2021 refund of a non-income based tax, all somewhat 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%~~3.0% in the ~~2021 second~~2022 first 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.~~first quarter.

~~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 the

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

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

•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;

•~~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 401(k) match program for U.S. salaried employees.~~

Effective September 1, 2020, the Company restored both the salaries of all salaried employees and the 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.

Provision for depreciation and amortization ~~(D&A)~~. D&A was ~~$62~~$60 in the 2022 first quarter compared to $63 in the 2021 ~~second quarter compared to $68 in the 2020 second quarter and $125 in the 2021 six-month period compared to $128 in the 2020 six-month period.~~first quarter. The decrease of ~~$6, or 9%, in the second quarter comparison and~~ $3, or 2%5%, ~~in the six-month period comparison~~ was ~~mainly caused by~~primarily due to the absence of ~~an impairment of abandoned projects~~depreciation resulting from asset retirements and ~~plant equipment ($6). This positive impact~~a decrease in ~~the six-month period comparison was partially offset by new depreciation for assets placed into service in the second half of 2020~~amortization related to ~~an automotive and industrial product expansion at the Company’s Tennessee rolling facility and unfavorable foreign currency movements due to a weaker U.S. dollar.~~intangible assets.

Restructuring and other charges. Restructuring and other charges were ~~$597~~$5 in the 2022 first quarter and ~~$598~~$1 in the 2021 ~~second quarter and six-month period, respectively, and $77 and $58 in the 2020 second quarter and six-month period, respectively.~~first quarter. See Note E to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information. 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~~ to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Interest expense. Interest expense was $25 in the ~~2021 second~~2022 first quarter compared to ~~$40 in the 2020 second quarter and $48~~$23 in the 2021 ~~six-month period compared to $75 in the 2020 six-month period.~~

first quarter. The ~~decrease~~increase of ~~$15,~~$2, or ~~38%~~9%, ~~in the second quarter comparison~~ was principally related to the ~~absence of $19 for~~$100 borrowed in March 2022 under the ~~write-off~~ABL Credit Facility and ~~immediate expensing of debt issuance costs as a result of a debt refinancing in May 2020, partially offset by a higher amount of~~additional 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 for additional information related to both of 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 higher amount of interest associated with both a $700 debt 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 for additional information related to these financing transactions.

Other expenses, net. Other expenses, net was ~~$15~~$17 in the 2022 first quarter and ~~$37~~$22 in the 2021 ~~second quarter and six-month period, respectively, and $16 and $42 in the 2020 second quarter and six-month period, respectively.~~first quarter. See Note F to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional ~~information~~information.

~~Benefit~~Provision for income taxes. The Company’s effective tax rate, including discrete items, was ~~20.2%~~22.2% in the 2022 first quarter and ~~19.7%~~23.5% in the 2021 ~~second quarter and six-month period, respectively, and 25.0% and 9.1% in the 2020 second quarter and six-month period, respectively.~~first quarter. See Note H to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Segment Information

Arconic’s profit or loss measure for its reportable segments is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization). 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 2 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. 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) Research and development expenses, plus each of (i) Stock-based compensation expense, ~~and~~(ii) Metal price ~~lag.~~lag, and (iii) Unrealized (gains) losses on mark-to-market hedging instruments and derivatives (see below). Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

~~Also, effective July 1, 2020,~~Effective in the first quarter of 2022, management modified the Company’s definition of Segment Adjusted EBITDA to exclude the impact of unrealized gains and losses on mark-to-market hedging instruments and derivatives. This modification was deemed appropriate as Arconic is considering entering into additional hedging instruments in future reporting periods if favorable conditions exist to mitigate cost inflation. Certain of these instruments may not qualify for hedge accounting resulting in unrealized gains and losses being recorded directly to Sales or Cost of goods sold, as appropriate (i.e., mark-to-market). Additionally, this change was also applied to derivatives that do not qualify for hedge accounting for consistency purposes. The Company does not have a regular practice of entering into contracts that are treated as derivatives for accounting purposes. Ultimately, this change was made to maintain the transparency and visibility of the underlying operating performance of Arconic’s reportable segments. Prior to this change, the Company ~~changed its inventory cost method~~had a limited number of hedging instruments and derivatives that did not qualify for hedge accounting, the unrealized impact of which was not material 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~~Arconic’s Segment Adjusted EBITDA performance measure. Accordingly, prior ~~periods~~period information 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.~~

~~Segment information for all prior periods presented~~ was not recast to reflect ~~the updated measure of segment profit or loss and the change in inventory cost method.~~this change.

Rolled Products


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Third-party sales	Third-party sales	$	1,474	$	880	$	2,838	$	2,102	Third-party sales	$	1,804	$	1,364
Intersegment sales	Intersegment sales	10		4		17		11		Intersegment sales	12		7
Total sales	Total sales	$	1,484	$	884	$	2,855	$	2,113	Total sales	$	1,816	$	1,371
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	173	$	85	$	338	$	250	Segment Adjusted EBITDA	$	176	$	165
Third-party aluminum shipments (kmt)	Third-party aluminum shipments (kmt)	353		246		698		565		Third-party aluminum shipments (kmt)	347		345

Third-party sales for the Rolled Products segment increased ~~$594,~~$440, or ~~68%~~32%, in the ~~2021 second~~2022 first quarter ~~and $736, or 35%, in the 2021 six-month period~~ compared to the same ~~periods~~period in ~~2020. In both comparisons, the~~2021. The improvement was largely the result of ~~a net increase in volumes and~~price increases, due to higher aluminum prices ~~slightly offset by unfavorable~~and adjustments for inflation impacts, and favorable product mix, driven by ~~depressed sales to~~ the ~~aerospace end market.~~

~~The net increase in volumes in both comparisons was largely attributable to most end markets served by this segment, including ground transportation (commercial transportation and automotive),~~packaging, 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 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 aerospace end market due to the economic impact of the COVID-19 pandemic and lower production of the Boeing 737 MAX (six-month period). Also, the overall improvement in volume related to the ground transportation end market was slightly tempered by the semiconductor chip shortage affecting the automotive component of this market.

~~In the second quarter and six-month period comparisons, the~~markets. The higher aluminum prices were largely driven by a ~~61% and 41%, respectively,~~56% rise in the average LME aluminum price and sharp increases in regional premiums, including a ~~192% and 89%, respectively,~~119% increase in the average Midwest premium (United States).

The net impact of volume in the 2022 first quarter compared with the 2021 first quarter was a relatively small increase; however, the individual change in many of the end markets served by this segment was notable. In particular, favorable impacts were experienced in packaging, as the can sheet operation at the Tennessee rolling mill continues to ramp up to full capacity (expected to be essentially complete at the end of the 2022 second quarter), and in aerospace, as recovery from the COVID-19 pandemic continues. These higher volumes were mostly offset by a ~~58%~~decrease in both ground transportation and ~~43%, respectively, increase~~industrial products, driven by supply chain disruptions such as the global semiconductor chip shortage and/or delays in ~~the average Shanghai Futures Exchange~~receipt of aluminum ~~price (Asia).~~ingot.

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~~2022 first quarter and ~~six-month period include $1~~2021 first quarter included $2 and ~~$9,~~$8, respectively, associated with this settlement.

Segment Adjusted EBITDA for this segment increased ~~$88,~~$11, or ~~104%, and $88, or 35%~~7%, in the ~~2021 second~~2022 first quarter ~~and six-month period comparison, respectively,~~ compared with the corresponding ~~periods~~period in ~~2020. In both comparisons, the~~2021. The improvement was principally ~~driven by~~related to price increases due to adjustments for inflation impacts and 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~~benefit derived from 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~~2021 period. These positive impacts were mostly offset by higher costs for ~~labor (see Labor costs under Results of Operations above) and~~ direct materials, including ~~transportation~~energy and alloying ~~materials.~~materials, and transportation, maintenance, and labor.

Building and Construction Systems


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Third-party sales	Third-party sales	$	257	$	230	$	493	$	486	Third-party sales	$	291	$	236
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	35	$	37	$	63	$	67	Segment Adjusted EBITDA	$	44	$	28

Third-party sales for the Building and Construction Systems segment increased ~~$27,~~$55, or ~~12%~~23%, in the ~~2021 second~~2022 first quarter ~~and $7, or 1%, in the 2021 six-month period~~ compared to the same ~~periods~~period in ~~2020. In the second quarter comparison, the~~2021. The improvement was mostly attributable to ~~higher volumes due~~multiple product price increases implemented since March 2021 across the entire portfolio to address inflationary cost pressures.

Segment Adjusted EBITDA for this segment increased ~~demand in Europe and favorable foreign currency movements due to a stronger euro. The increase~~$16, or 57%, in the ~~six-month~~2022 first quarter compared with the corresponding period ~~comparison~~in 2021. The improvement was ~~mainly due~~primarily related to favorable ~~foreign currency movements due to a stronger euro,~~product pricing and productivity gains, partially offset by ~~lower volumes~~higher costs for direct materials, including aluminum and energy, and transportation and maintenance. The productivity gains were driven by higher production utilization in the 2022 first quarter compared to the 2021 first quarter due to ~~decreased demand~~the lessened impact of the COVID-19 pandemic.

Extrusions



First quarter ended March 31,	2022		2021
Third-party sales	$	97	$	75
Segment Adjusted EBITDA	$	(5)	$	(4)
Third-party aluminum shipments (kmt)	10		9

Third-party sales for the Extrusions segment increased $22, or 29%, in ~~North America as a~~the 2022 first quarter compared to the same period in 2021. The improvement was principally the result of price increases, due to higher aluminum prices and adjustments for inflation impacts, and an increase in volumes, both aerospace and ground transportation, due to the ~~economic~~lessened impact of the COVID-19 pandemic.

Segment Adjusted EBITDA for this segment decreased ~~$2,~~$1, or ~~5%, and $4, or 6%~~25%, in the ~~2021 second~~2022 first quarter ~~and six-month period, respectively,~~ compared with the corresponding ~~periods~~period in ~~2020. In both comparisons, the decline~~2021. The decrease was ~~primarily related~~mainly attributable to higher costs for direct materials, including ~~metal,~~aluminum and ~~labor (see Labor costs under Results of Operations above),~~energy, mostly offset ~~(second quarter) and somewhat offset (six-month period)~~ by 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. The decrease in the six-month period comparison was also negatively impacted by lower volumesprice increases 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 identified operational inefficiencies in the Extrusions portfolio. The Lafayette casthouse action will occur in multiple phases and is expected to be 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 Lafayetteadjustments 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 customer qualification costs. These items were not material, individually or in the aggregate, and were reported in Corporate (i.e., not included in Extrusion’s Segment Adjusted EBITDA).

Third-party sales for the Extrusions segment decreased $11, or 14%, in the 2021 second quarter and $69, or 32%, in the 2021 six-month period compared to the same periods in 2020. In both comparisons, the decline was principally the result of a net decrease in volumes, somewhat offset (second quarter) and slightly offset (six-month period) by higher aluminum prices. The decrease in the six-month period comparison was also negatively impacted by the absence of sales ($8) related to the divestiture of an extrusions plant in South Korea (March 2020). 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 improvement in the ground transportation and industrial products end markets.

Segment Adjusted EBITDA for this segment increased $6 and decreased $6 in the 2021 second quarter and six-month period, respectively, compared with the corresponding periods in 2020. In the second quarter comparison, the improvement was mainly attributable to the absence of costs ($12) related to both inventory write-downs and customer settlements, partially offset by lower volumes related to the aerospace end market and higher labor costs (see 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), partially offset by the absence of costs ($12) related to both inventory write-downs and customer settlements.inflation impacts.

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


		Second quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
First quarter ended March 31,										First quarter ended March 31,	2022		2021
Total Segment Adjusted EBITDA	Total Segment Adjusted EBITDA	$	200	$	108	$	389	$	311	Total Segment Adjusted EBITDA	$	215	$	189
Unallocated amounts:	Unallocated amounts:									Unallocated amounts:
Corporate expenses(1)	Corporate expenses(1)	(10)		(7)		(19)		(9)		Corporate expenses(1)	(9)		(9)
Stock-based compensation expense	Stock-based compensation expense	(5)		(5)		(7)		(12)		Stock-based compensation expense	(5)		(2)
Metal price lag(2)	Metal price lag(2)	(11)		(10)		(6)		(14)		Metal price lag(2)	(36)		5
Unrealized gains on mark-to-market hedging instruments and derivatives										Unrealized gains on mark-to-market hedging instruments and derivatives	2		—
Provision for depreciation and amortization	Provision for depreciation and amortization	(62)		(68)		(125)		(128)		Provision for depreciation and amortization	(60)		(63)
Restructuring and other charges(3)		(597)		(77)		(598)		(58)
Other(4)		(10)		(13)		(16)		(28)
Operating (loss) income		(495)		(72)		(382)		62
Restructuring and other charges										Restructuring and other charges	(5)		(1)
Other(3)										Other(3)	(6)		(6)
Operating income										Operating income	96		113
Interest expense	Interest expense	(25)		(40)		(48)		(75)		Interest expense	(25)		(23)
Other expenses, net	Other expenses, net	(15)		(16)		(37)		(42)		Other expenses, net	(17)		(22)
Benefit for income taxes		108		32		92		5
Provision for income taxes										Provision for income taxes	(12)		(16)
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	—		—		—		—		Net income attributable to noncontrolling interest	—		—
Consolidated net loss attributable to Arconic Corporation		$	(427)	$	(96)	$	(375)	$	(50)
Consolidated net income attributable to Arconic Corporation										Consolidated net income attributable to Arconic Corporation	$	42	$	52

__________________

(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 ~~to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.~~

Environmental Matters

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

Liquidity and Capital Resources

~~In preparing~~At March 31, 2022, the ~~Statement~~Company’s Cash and cash equivalents were $210, of ~~Consolidated~~which $26, or 12%, was held in Russia. Cash ~~Flows~~and cash equivalents held in Russia represented 2% of Arconic’s total liquidity at March 31, 2022. Cash and cash equivalents held in Russia are currently subject to injunctions imposed by regulatory authorities that prohibit the distribution of dividends. We cannot at this time reasonably estimate the likelihood or timeline of a resolution involving the removal of these injunctions, and accordingly cannot reasonably estimate when, if at all, the funds will be available for the ~~nine months ended September 30, 2020, management identified~~payment of dividends to Arconic Corporation. We maintain a ~~misclassification~~renewable intercompany loan facility that could be utilized but we have as yet not utilized this facility. In addition, Arconic has a number of commitments and obligations related to the ~~non-cash portion of properties, plants,~~Company’s operations in various foreign jurisdictions, resulting in the need for cash outside the United States. Management continuously evaluates the Company’s local 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 usedglobal cash needs for future business 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.which may influence future repatriation decisions.

Operating Activities

Cash used for operations was ~~$461~~$103 in the 2022 three-month period compared with $294 in the 2021 ~~six-month period compared with $222 in the 2020 six-month~~three-month period.

In the ~~2021 six-month~~2022 three-month period, cash used for operations was comprised mostly of ~~pension contributions of $453 (see below),~~ an unfavorable change in working capital of ~~$311, a net loss of $375, and~~$237, partially offset by a positive add-back for non-cash transactions in earnings of ~~$673.~~$94 and net income of $42. The impact in working capital was ~~partially~~largely driven by higher aluminum prices due to an increase in both the average LME price and regional premiums.

~~The minimum required~~In the 2021 three-month period, cash used for operations was comprised of an unfavorable change in working capital of $251 and pension contributions ~~to Arconic’s funded defined benefit pension plans~~of $201, somewhat offset by a positive add-back for non-cash transactions in ~~2021 is estimated to be $192,~~earnings of ~~which $183 is for U.S. plans.~~ $106 and net income of $52.

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,~~ Arconic had no minimum required funding due in the 2022 first quarter for these two plans. The Company ~~contributed~~expects to contribute a total of ~~$250~~$22 to ~~its~~these two ~~funded U.S. defined benefit pension~~ plans in the remainder of 2022.

Financing Activities

Cash provided from financing activities was $72 in the 2022 three-month period compared with $297 in the 2021 three-month period. The source of cash in the 2022 three-month period was mostly due to ~~maintain~~$100 borrowed under the ~~funding level~~ABL Credit Facility (see 2022 Debt Activity below), somewhat offset by $16 for the repurchase of 505,982 shares of the ~~remaining plan obligations not transferred~~Company’s common stock (see Share Repurchase Program below). In the 2021 three-month period, the source of cash reflects $315 in net proceeds from the issuance of new indebtedness (see 2021 Debt Activity below).

2022 Debt Activity—Arconic maintains a five-year credit agreement, dated May 13, 2020, 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 (the “ABL Credit Facility”) to be used, generally, for working capital or other general corporate purposes. See 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, 2021 (filed on February 22, 2022) for additional information related to the ABL Credit Agreement.

On February 16, 2022, the Company’s ABL Credit Agreement was amended to increase the revolving commitments under ~~a group annuity contract (see U.S. Pension Plan Annuitization in~~the ABL Credit Facility to $1,200 from $800 (available balance as of March 31, 2022 was $1,065 – see Note GN to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). ~~This contribution~~ Additionally, the accordion feature of the ABL Credit Facility was ~~funded with the net proceeds from a March 2021 debt offering (see 2021 Activity in Financing Activities below).~~

~~Also in April 2021,~~revised to provide for the Company ~~received $9 as one~~to request a further increase to the revolving commitments in an aggregate principal amount equal to the greater of ~~two installments related to a settlement agreement reached~~$350 and the excess of the borrowing base over the ABL Credit Facility commitments. Furthermore, the LIBOR-based floating interest rate was replaced with a ~~customer~~term SOFR-based interest rate, plus a credit spread adjustment equal to 0.10%, 0.15% or 0.25% per annum for SOFR-based borrowings with interest periods of one month, three months, or six months, respectively, under the ABL Credit Facility. Arconic paid $1 in ~~March 2021. See Sales under Results of Operations above for additional information.~~upfront costs associated with these amendments.

In March 2022, the ~~2020 six-month period, cash used for operations~~Company borrowed $100 under the ABL Credit Facility. This borrowing was ~~comprised of~~designated as a SOFR loan with 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 $28.

Cash used for operations for the 2020 six-month period includes an unfavorable adjustment of $184 related to the change in the Company’s customer and other receivables balances as of June 30, 2020 ($681) and December 31, 2019 ($520). The unfavorable adjustment (i.e., increase in receivables) was derived by calculating the difference in the receivables balances as of June 30, 2020 and December 31, 2019 after excluding the effects of divestitures and foreign currency translation. The $184 was 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 2020, certain identified customer receivables related to the Arconic Corporation Businesses were sold on a revolving basis to a ParentCo subsidiary under this program and were considered to be effectively and immediately settled for cash.initial three-month interest period. As of ~~December~~March 31, ~~2019,~~2022, the ~~amount of Arconic’s outstanding customer receivables sold to ParentCo’s subsidiary~~applicable rate on this borrowing was ~~$281. As~~2.50%. Arconic may repay early or extend a result, the Company’s customer receivables balance as of 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 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 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 $466 would have been lower by $281. ~~See Cash Management in~~ ~~Note A~~ ~~to the Consolidated Financial Statements in Part I Item 1~~part or all of this ~~Form 10-Q.~~borrowing.

~~Financing Activities~~37

Cash provided from financing activities was $288 in the 2021 six-month period compared with $731 in the 2020 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 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).

2021 Debt 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)~~(the “Existing 2028 Notes”). 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.~~Existing 2028 Notes. See 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, 2021 (filed on February 22, 2022) for additional information related to the Existing 2028 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~~ ~~to the Consolidated Financial Statements~~ in ~~Part I Item 1 of this Form 10-Q)~~.April 2021. 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~~is paid semi-annually in February and August ~~commencing~~and commenced August 15, 2021.

~~2020 Activity~~—In connection with the capital structure to be established at the time of the Separation, Arconic secured $1,200 in third-party indebtedness. On February 7, 2020, 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”). 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, 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”). Arconic received $575 in net proceeds from the Term Loan 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~~ 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 executed a refinancing of its existing Credit Agreement in order to provide improved financial flexibility. 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”). Arconic received $691 in net proceeds from the debt offering reflecting a discount to the initial purchasers of the 2025 Notes. Additionally, 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 (the available balance as of June 30, 2021 was $785 – see ~~ABL Credit Agreement in~~ ~~Note N~~ ~~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 Arconic to request one or more increases to the revolving commitments in an aggregate principal amount up to $350.

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 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, and the Credit Facility. In connection with the issuance of the 2025 Notes and the execution of the ABL Credit Agreement, 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 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~~2022 first quarter, Arconic repurchased ~~246,011~~505,982 shares of the ~~Company’s~~Company's common stock for $9$16 under this ~~program. See~~program (see Part II Item 2 in this Form 10-Q for additional ~~information.~~information).

Investing Activities

Cash used for investing activities was ~~$74~~$94 in the 2022 three-month period compared with $27 in the 2021 ~~six-month period compared with cash provided from investing activities of $15 in the 2020 six-month~~three-month period. The use of cash in the ~~2021 six-month~~2022 three-month period was due to ~~$72~~$95 in capital expenditures, mostly due to growth spend at the ~~majority~~U.S. rolling mills. The use of ~~which~~cash in the 2021 three-month period was due to $28 in capital expenditures, largely 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, mostly offset by capital expenditures of $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.

4838

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

4939

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

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

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the ~~second~~first quarter of ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

5040

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The information set forth in “Litigation” in Note PO to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q is incorporated herein by reference.

5141

Item 1A. Risk Factors.

The ongoing conflict between Russia and Ukraine has resulted in geopolitical instability and disruption that are likely to adversely affect our business, financial condition, results of operations or cash flows.

The conflict between Russia and Ukraine has resulted in disruption and instability in global markets and various industries that are likely to negatively impact our business, financial condition, results of operations or cash flows. The U.S. government and the governments of other countries have announced trade restrictions, export controls, sanctions and other actions, and have threatened additional actions, against Russia. In response, Russia has taken actions that have further restricted various business, commercial and other activities in or involving Russia. These actions have resulted in, and will likely continue to result in, among other things, significant or complete restrictions on exports to and imports from, and other commerce and business dealings involving, Russia, certain regions of Ukraine, and Belarus, as well as specifically identified companies and individuals, and the withdrawal from or reductions of operations in Russia of customers and suppliers. In response to the conflict, in March 2022 we announced that we had paused new contracts in Russia and would fulfill existing obligations in accordance with applicable laws, regulations and international rules. The extent of the impact of the reduction in our operations, or of current or future actions taken by Russia, the U.S. or other governments, is not reasonably possible to predict, but could include, among other impacts: expropriation or other loss (whether partial or entirely) of assets or property; restrictions on our operations, including plant idling or closure; an inability to obtain raw materials, equipment, parts, and other key supplies; continued reduction or cessation of our customers’ operations in Russia causing a decrease in demand for our products; increased inflationary pressures on raw materials; an increase in the frequency and severity of cyber attacks; volatility in currency exchange and interest rates; negative developments in the ongoing legal proceedings involving our facility in Samara, Russia; and additional adverse legal proceedings in Russia. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Legal Proceedings Involving our Samara Facility” for additional information regarding the proceedings involving our facility in Samara and the potential impact of the proceedings on our business.

In addition, the effects of the ongoing conflict between Russia and Ukraine, and the actions taken by governments or companies in response, could increase the likelihood or impact of any risks to our business, financial condition, results of operations or cash flows described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K, including risks related to ongoing legal proceedings involving our facility in Samara, Russia; inflation, volatility in aluminum prices and currency exchange rates; global operations; loss of customers; reduction in demand; intellectual property; disruption of facility operations; and cyber-security.

Item 2. Unregistered Sales of Equity Securities and 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


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*
January 1 - January 31, 2022	180,043	$	30.83	180,043	$	133,000,000
February 1 - February 28, 2022	325,939	$	31.09	325,939	$	123,000,000
March 1 - March 31, 2022	—	$	—	—	$	123,000,000
Total for quarter ended March 31, 2022	505,982			505,982

________________

* 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 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 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.

5243

~~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 named executive officers to the shareholders on an annual basis. In light of the recommendation and the 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 frequency of votes on executive compensation.

Item 6. Exhibits.


10.1			~~Commitment~~Amendment No. 1 to the Credit Agreement, dated ~~April 21, 2021, by and~~as of February 16, 2022, among Arconic Corporation, ~~Massachusetts Mutual Life Insurance Company~~the guarantors party thereto, the Lenders and ~~State Street Global Advisors Trust Company~~Issuing Banks party thereto and Deutsche Bank AG New York Branch, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~April 27, 2021)~~February 17, 2022)
10.2			~~Amended and Restated~~Amendment No. 2 to the Credit Agreement, dated as of February 16, 2022, among Arconic Corporation, ~~2020 Annual Cash Incentive Plan~~the guarantors party thereto, the Lenders and Issuing Banks party thereto and Deutsche Bank AG New York Branch, as Administrative Agent (incorporated by reference to Exhibit 1010..2 1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on ~~May 21, 2021)~~February 17, 2022)
10.3			~~Amended and Restated~~Employment Letter Agreement between 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)~~and Daniel G. Fayock, dated as of March 7, 2022
~~31.~~31			Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.~~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

5444

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

~~August~~May 3, ~~2021~~2022			/s/ Erick R. Asmussen
Date			Erick R. Asmussen
			Executive Vice President,
			Chief Financial Officer
			(Principal Financial Officer)

~~August~~May 3, ~~2021~~2022			/s/ Mary E. Zik
Date			Mary E. Zik
			Vice President, Controller
			(Principal Accounting Officer)

5545


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3832

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4939

Item 4.	Controls and Procedures	5040

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	5141

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

~~Item 5.~~	~~Other Information~~	5343

Item 6.	Exhibits	5444

SIGNATURES		5545


	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


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

Statement of Consolidated Operations for the six months ended June 30, 2020:
Cost of goods sold	$	2,373	$	23	$	2,396
Operating income	85		(23)		62
Loss before income taxes	(32)		(23)		(55)
Benefit for income taxes	0		(5)		(5)
Net loss	(32)		(18)		(50)
Net loss attributable to Arconic Corporation	(32)		(18)		(50)
Earnings per share attributable to Arconic Corporation common shareholders:
Basic	$	(0.29)	$	(0.17)	$	(0.46)
Diluted	(0.29)		(0.17)		(0.46)