UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September~~June 30, ~~2022~~2023


☐			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 ~~October 31, 2022,~~July 28, 2023, there were ~~101,484,590~~100,346,464 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; share repurchases; costs associated with pension and other postretirement benefit plans; projected sources of cash flow; ~~and~~ potential legal ~~liability.~~liability; the impact of inflationary price pressures; and the potential impact of public health epidemics or pandemics, including the COVID-19 pandemic. 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, including labor shortages and increased quarantine rates;~~suppliers;

•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;~~safety, or timely delivery;

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

•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 and other regulations, potential expropriation of properties located outside the U.S., sanctions, tariffs, embargoes and ~~other regulations;~~renegotiation or nullification of existing agreements;

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

•~~restrictions imposed by authorities on our Russian operations;~~

•~~our ability to complete the announced divestiture of our Russian operations and the impact of such divestiture on our business and operations;~~

•reactions to or consequences of our announcement regarding the sale of our Russian operations, including the potential for our Russian operations to be nationalized or otherwise expropriated by the Russian government;

•the impact of the ongoing conflict between Russia and Ukraine on economic conditions in general and on our business and operations, including sanctions, tariffs, and increased energy prices;

•the timing, receipt, and terms and conditions of any required governmental and regulatory approvals of our proposed transaction with funds managed by affiliates of Apollo and Irenic (each as defined below) that could reduce anticipated benefits or cause the parties to abandon the proposed transaction;

•the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction;

•the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all;

•risks related to disruption of management time from ongoing business operations due to the proposed transaction;

•the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of our common stock;

•the risk of any unexpected costs or expenses resulting from the proposed transaction;

•the risk of any litigation relating to the proposed transaction;

•the risk that the proposed transaction and its announcement could have an adverse effect on our ability to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders, and other business relationships and on our operating results and business generally; and

•the other risk factors summarized in ~~Arconic’s~~our Form 10-K for the year ended December 31, ~~2021~~2022 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, ~~2021.~~2022. 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)


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Sales (C and D)	Sales (C and D)	$	2,280	$	1,890	$	7,019	$	5,366	Sales (C and D)	$	1,990	$	2,548	$	3,919	$	4,739
Cost of goods sold (exclusive of expenses below)	Cost of goods sold (exclusive of expenses below)	2,074		1,676		6,288		4,674		Cost of goods sold (exclusive of expenses below)	1,724		2,258		3,448		4,214
Selling, general administrative, and other expenses	Selling, general administrative, and other expenses	62		63		200		183		Selling, general administrative, and other expenses	79		73		151		138
Research and development expenses	Research and development expenses	9		8		27		25		Research and development expenses	9		9		18		18
Provision for depreciation and amortization	Provision for depreciation and amortization	59		61		181		186		Provision for depreciation and amortization	52		62		105		122
Restructuring and other charges (E)	Restructuring and other charges (E)	112		14		119		612		Restructuring and other charges (E)	9		2		9		7
Operating (loss) income		(36)		68		204		(314)
Operating income										Operating income	117		144		188		240
Interest expense	Interest expense	27		26		78		74		Interest expense	25		26		50		51
Other expenses, net (F)		27		15		9		52
(Loss) Income before income taxes		(90)		27		117		(440)
(Benefit) Provision for income taxes (H)		(25)		11		25		(81)
Net (loss) income		(65)		16		92		(359)
Less: Net income attributable to noncontrolling interest		—		—		1		—
Net (loss) income attributable to Arconic Corporation		$	(65)	$	16	$	91	$	(359)
Other expenses (income), net (F)										Other expenses (income), net (F)	16		(35)		27		(18)
Income before income taxes										Income before income taxes	76		153		111		207
Provision for income taxes (H)										Provision for income taxes (H)	17		38		27		50
Net income										Net income	59		115		84		157
Less: Net income attributable to noncontrolling interest (O)										Less: Net income attributable to noncontrolling interest (O)	—		1		—		1
Net income attributable to Arconic Corporation										Net income attributable to Arconic Corporation	$	59	$	114	$	84	$	156

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	$	(0.64)	$	0.15	$	0.87	$	(3.28)	Basic	$	0.59	$	1.08	$	0.84	$	1.48
Diluted	Diluted	$	(0.64)	$	0.15	$	0.85	$	(3.28)	Diluted	$	0.58	$	1.05	$	0.82	$	1.44

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

Arconic Corporation and subsidiaries

Statement of Consolidated Comprehensive ~~(Loss)~~ Income (unaudited)

(in millions)


		Arconic Corporation				Noncontrolling interest				Total					Arconic Corporation				Noncontrolling interest (O)				Total
Third quarter ended September 30,		2022		2021		2022		2021		2022		2021
Net (loss) income		$	(65)	$	16	$	—	$	—	$	(65)	$	16
Other comprehensive (loss) income, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		55		45		—		—		55		45
Foreign currency translation adjustments		(72)		(11)		—		—		(72)		(11)
Net change in unrecognized losses on cash flow hedges		(17)		(13)		—		—		(17)		(13)
Total Other comprehensive (loss) income, net of tax		(34)		21		—		—		(34)		21
Comprehensive (loss) income		$	(99)	$	37	$	—	$	—	$	(99)	$	37

		Arconic Corporation				Noncontrolling interest				Total
Nine months ended September 30,		2022		2021		2022		2021		2022		2021
Net income (loss)		$	91	$	(359)	$	1	$	—	$	92	$	(359)
Second quarter ended June 30,														Second quarter ended June 30,	2023		2022		2023		2022		2023		2022
Net income														Net income	$	59	$	114	$	—	$	1	$	59	$	115
Other comprehensive income, net of tax (K):	Other comprehensive income, net of tax (K):													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	Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	139		637		—		—		139		637		Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	8		26		—		—		8		26
Foreign currency translation adjustments	Foreign currency translation adjustments	(134)		(5)		—		—		(134)		(5)		Foreign currency translation adjustments	(13)		(55)		—		—		(13)		(55)
Net change in unrecognized losses on cash flow hedges	Net change in unrecognized losses on cash flow hedges	103		(49)		—		—		103		(49)		Net change in unrecognized losses on cash flow hedges	33		190		—		—		33		190
Total Other comprehensive income, net of tax	Total Other comprehensive income, net of tax	108		583		—		—		108		583		Total Other comprehensive income, net of tax	28		161		—		—		28		161
Comprehensive income	Comprehensive income	$	199	$	224	$	1	$	—	$	200	$	224	Comprehensive income	$	87	$	275	$	—	$	1	$	87	$	276

															Arconic Corporation				Noncontrolling interest (O)				Total
Six months ended June 30,														Six months ended June 30,	2023		2022		2023		2022		2023		2022
Net income														Net income	$	84	$	156	$	—	$	1	$	84	$	157
Other comprehensive income, net of tax (K):														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														Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits	12		84		—		—		12		84
Foreign currency translation adjustments														Foreign currency translation adjustments	4		(62)		—		—		4		(62)
Net change in unrecognized losses on cash flow hedges														Net change in unrecognized losses on cash flow hedges	22		120		—		—		22		120
Total Other comprehensive income, net of tax														Total Other comprehensive income, net of tax	38		142		—		—		38		142
Comprehensive income														Comprehensive income	$	122	$	298	$	—	$	1	$	122	$	299

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

Arconic Corporation and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	312	$	335	Cash and cash equivalents	$	266	$	261
Receivables from customers, less allowances of $1 in both 2022 and 2021 (R)		846		922
Receivables from customers, less allowances of $2 in 2023 and $1 in 2022 (R)						Receivables from customers, less allowances of $2 in 2023 and $1 in 2022 (R)	907		791
Other receivables	Other receivables	170		226		Other receivables	138		183
Inventories (L)	Inventories (L)	1,750		1,630		Inventories (L)	1,544		1,622
Fair value of hedging instruments and derivatives (Q)	Fair value of hedging instruments and derivatives (Q)	138		1		Fair value of hedging instruments and derivatives (Q)	56		21
Prepaid expenses and other current assets		90		54
Prepaid expenses and other current assets (P)						Prepaid expenses and other current assets (P)	158		124
Total current assets	Total current assets	3,306		3,168		Total current assets	3,069		3,002
Properties, plants, and equipment	Properties, plants, and equipment	7,492		7,529		Properties, plants, and equipment	7,037		6,957
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	5,014		4,878		Less: accumulated depreciation and amortization	4,688		4,596
Properties, plants, and equipment, net (E)		2,478		2,651
Properties, plants, and equipment, net						Properties, plants, and equipment, net	2,349		2,361
Goodwill	Goodwill	294		322		Goodwill	294		292
Operating lease right-of-use assets (M)	Operating lease right-of-use assets (M)	110		122		Operating lease right-of-use assets (M)	110		115
Deferred income taxes	Deferred income taxes	157		229		Deferred income taxes	170		188
Other noncurrent assets	Other noncurrent assets	77		88		Other noncurrent assets	54		57
Total assets	Total assets	$	6,422	$	6,580	Total assets	$	6,046	$	6,015
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Short-term debt (N)		$	150	$	—
Accounts payable, trade		1,489		1,718
Accounts payable, trade (R)						Accounts payable, trade (R)	$	1,489	$	1,578
Accrued compensation and retirement costs	Accrued compensation and retirement costs	127		116		Accrued compensation and retirement costs	112		119
Taxes, including income taxes	Taxes, including income taxes	74		61		Taxes, including income taxes	34		43
Environmental remediation (P)	Environmental remediation (P)	27		15		Environmental remediation (P)	34		40
Operating lease liabilities (M)	Operating lease liabilities (M)	31		35		Operating lease liabilities (M)	36		34
Fair value of hedging instruments and derivatives (Q)	Fair value of hedging instruments and derivatives (Q)	1		23		Fair value of hedging instruments and derivatives (Q)	13		7
Other current liabilities		101		95
Other current liabilities (P)						Other current liabilities (P)	181		150
Total current liabilities	Total current liabilities	2,000		2,063		Total current liabilities	1,899		1,971
Long-term debt	Long-term debt	1,596		1,594		Long-term debt	1,598		1,597
Accrued pension benefits (G)		589		717
Accrued pension benefits						Accrued pension benefits	582		586
Accrued other postretirement benefits	Accrued other postretirement benefits	392		411		Accrued other postretirement benefits	295		302
Environmental remediation (P)	Environmental remediation (P)	52		49		Environmental remediation (P)	38		45
Operating lease liabilities (M)	Operating lease liabilities (M)	82		90		Operating lease liabilities (M)	78		83
Deferred income taxes	Deferred income taxes	11		12		Deferred income taxes	6		3
Other noncurrent liabilities	Other noncurrent liabilities	71		85		Other noncurrent liabilities	66		71
Total liabilities	Total liabilities	4,793		5,021		Total liabilities	4,562		4,658
Contingencies and commitments (P)	Contingencies and commitments (P)					Contingencies and commitments (P)
Equity
Arconic Corporation stockholders’ equity:
Stockholders’ Equity						Stockholders’ Equity
Common stock	Common stock	1		1		Common stock	1		1
Additional capital	Additional capital	3,377		3,368		Additional capital	3,379		3,373
Accumulated deficit	Accumulated deficit	(461)		(552)		Accumulated deficit	(650)		(734)
Treasury stock (J)	Treasury stock (J)	(300)		(161)		Treasury stock (J)	(347)		(346)
Accumulated other comprehensive loss (K)	Accumulated other comprehensive loss (K)	(1,003)		(1,111)		Accumulated other comprehensive loss (K)	(899)		(937)
Total Arconic Corporation stockholders’ equity		1,614		1,545
Noncontrolling interest		15		14
Total equity		1,629		1,559
Total liabilities and equity		$	6,422	$	6,580

Total stockholders’ equity						Total stockholders’ equity	1,484		1,357
Total liabilities and stockholders’ equity						Total liabilities and stockholders’ equity	$	6,046	$	6,015

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

Arconic Corporation and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)


		Nine months ended September 30,					Six months ended June 30,
		2022		2021			2023		2022
Operating Activities	Operating Activities					Operating Activities
Net income (loss)		$	92	$	(359)
Adjustments to reconcile net income (loss) to cash provided from (used for) operations:
Net income						Net income	$	84	$	157
Adjustments to reconcile net income to cash provided from operations:						Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization	Depreciation and amortization	181		186		Depreciation and amortization	105		122
Deferred income taxes	Deferred income taxes	(16)		(111)		Deferred income taxes	23		26
Restructuring and other charges (E)	Restructuring and other charges (E)	119		612		Restructuring and other charges (E)	9		7
Net periodic pension benefit cost (G)	Net periodic pension benefit cost (G)	53		55		Net periodic pension benefit cost (G)	34		34
Stock-based compensation	Stock-based compensation	19		15		Stock-based compensation	18		13
Amortization of debt issuance costs		4		4
Other	Other	(9)		17		Other	23		(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:
Decrease (Increase) in receivables (R)		66		(307)
(Increase) in inventories		(170)		(488)
(Increase) in receivables (R)						(Increase) in receivables (R)	(84)		(141)
Decrease (Increase) in inventories						Decrease (Increase) in inventories	82		(304)
(Increase) in prepaid expenses and other current assets	(Increase) in prepaid expenses and other current assets	(31)		(7)		(Increase) in prepaid expenses and other current assets	(40)		(19)
(Decrease) Increase in accounts payable, trade	(Decrease) Increase in accounts payable, trade	(143)		388		(Decrease) Increase in accounts payable, trade	(43)		196
(Decrease) in accrued expenses	(Decrease) in accrued expenses	(25)		(55)		(Decrease) in accrued expenses	(37)		(17)
Increase in taxes, including income taxes		19		15
Pension contributions (G)		(22)		(456)
Decrease (Increase) in noncurrent assets		3		(5)
Increase (Decrease) in noncurrent liabilities		10		(7)
Cash provided from (used for) operations		150		(503)
(Decrease) Increase in taxes, including income taxes						(Decrease) Increase in taxes, including income taxes	(26)		5
Pension contributions						Pension contributions	(19)		(13)
Decrease in noncurrent assets						Decrease in noncurrent assets	9		1
Increase in noncurrent liabilities						Increase in noncurrent liabilities	12		4
Cash provided from operations						Cash provided from operations	150		59
Financing Activities	Financing Activities					Financing Activities
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)	150		—		Net change in short term borrowings (original maturities of three months or less) (N)	—		50
Additions to debt (original maturities greater than three months) (N)		—		319
Debt issuance costs (N)		(1)		(5)
Repurchases of common stock (J)	Repurchases of common stock (J)	(139)		(106)		Repurchases of common stock (J)	(1)		(53)
Other	Other	(9)		(18)		Other	(12)		(11)
Cash provided from financing activities		1		190
Cash used for financing activities						Cash used for financing activities	(13)		(14)
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(175)		(123)		Capital expenditures	(139)		(128)
Other	Other	4		(2)		Other	7		1
Cash used for investing activities	Cash used for investing activities	(171)		(125)		Cash used for investing activities	(132)		(127)
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	(3)		—		Effect of exchange rate changes on cash and cash equivalents and restricted cash	—		(1)
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	(23)		(438)		Net change in cash and cash equivalents and restricted cash	5		(83)
Cash and cash equivalents and restricted cash at beginning of year	Cash and cash equivalents and restricted cash at beginning of year	335		787		Cash and cash equivalents and restricted cash at beginning of year	261		335
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	312	$	349	Cash and cash equivalents and restricted cash at end of period	$	266	$	252

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)


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

Balance at June 30, 2021		109,933,436	$	1	$	3,351	$	(530)	$	(9)	$	(1,199)	$	14	$	1,628
Balance at March 31, 2022																	Balance at March 31, 2022	105,784,425	$	1	$	3,363	$	(510)	$	(177)	$	(1,130)	$	14	$	1,561
Net income	Net income	—	—		—		16		—		—		—		16		Net income	—	—		—		114		—		—		1		115
Other comprehensive income (K)	Other comprehensive income (K)	—	—		—		—		—		21		—		21		Other comprehensive income (K)	—	—		—		—		—		161		—		161
Repurchases of common stock (J)	Repurchases of common stock (J)	(2,862,694)	—		—		—		(97)		—		—		(97)		Repurchases of common stock (J)	(1,324,027)	—		—		—		(37)		—		—		(37)
Stock-based compensation	Stock-based compensation	26,844	—		8		—		—		—		—		8		Stock-based compensation	38,660	—		8		—		—		—		—		8
Other		—	—		2		—		—		—		—		2
Balance at September 30, 2021		107,097,586	$	1	$	3,361	$	(514)	$	(106)	$	(1,178)	$	14	$	1,578
Balance at June 30, 2022																	Balance at June 30, 2022	104,499,058	$	1	$	3,371	$	(396)	$	(214)	$	(969)	$	15	$	1,808

Balance at June 30, 2022		104,499,058	$	1	$	3,371	$	(396)	$	(214)	$	(969)	$	15	$	1,808
Net loss		—	—		—		(65)		—		—		—		(65)
Other comprehensive loss (K)		—	—		—		—		—		(34)		—		(34)
Repurchases of common stock (J)		(3,033,663)	—		—		—		(86)		—		—		(86)
Balance at March 31, 2023																	Balance at March 31, 2023	99,424,955	$	1	$	3,379	$	(709)	$	(347)	$	(927)	$	—	$	1,397
Net income																	Net income	—	—		—		59		—		—		—		59
Other comprehensive income (K)																	Other comprehensive income (K)	—	—		—		—		—		28		—		28
Stock-based compensation	Stock-based compensation	19,195	—		6		—		—		—		—		6		Stock-based compensation	918,482	—		12		—		—		—		—		12
Other	Other	—	—		—		—		—		—		—		—		Other	—	—		(12)		—		—		—		—		(12)
Balance at September 30, 2022		101,484,590	$	1	$	3,377	$	(461)	$	(300)	$	(1,003)	$	15	$	1,629

Balance at December 31, 2020		109,205,226	$	1	$	3,348	$	(155)	$	—	$	(1,761)	$	14	$	1,447
Net loss		—	—		—		(359)		—		—		—		(359)
Other comprehensive income (K)		—	—		—		—		—		583		—		583
Repurchases of common stock (J)		(3,108,705)	—		—		—		(106)		—		—		(106)
Stock-based compensation		1,001,065	—		15		—		—		—		—		15
Other		—	—		(2)		—		—		—		—		(2)
Balance at September 30, 2021		107,097,586	$	1	$	3,361	$	(514)	$	(106)	$	(1,178)	$	14	$	1,578
Balance at June 30, 2023																	Balance at June 30, 2023	100,343,437	$	1	$	3,379	$	(650)	$	(347)	$	(899)	$	—	$	1,484

Balance at December 31, 2021	Balance at December 31, 2021	105,326,885	$	1	$	3,368	$	(552)	$	(161)	$	(1,111)	$	14	$	1,559	Balance at December 31, 2021	105,326,885	$	1	$	3,368	$	(552)	$	(161)	$	(1,111)	$	14	$	1,559
Net income	Net income	—	—		—		91		—		—		1		92		Net income	—	—		—		156		—		—		1		157
Other comprehensive income (K)	Other comprehensive income (K)	—	—		—		—		—		108		—		108		Other comprehensive income (K)	—	—		—		—		—		142		—		142
Repurchases of common stock (J)	Repurchases of common stock (J)	(4,863,672)	—		—		—		(139)		—		—		(139)		Repurchases of common stock (J)	(1,830,009)	—		—		—		(53)		—		—		(53)
Stock-based compensation	Stock-based compensation	1,021,377	—		19		—		—		—		—		19		Stock-based compensation	1,002,182	—		13		—		—		—		—		13
Other	Other	—	—		(10)		—		—		—		—		(10)		Other	—	—		(10)		—		—		—		—		(10)
Balance at September 30, 2022		101,484,590	$	1	$	3,377	$	(461)	$	(300)	$	(1,003)	$	15	$	1,629
Balance at June 30, 2022																	Balance at June 30, 2022	104,499,058	$	1	$	3,371	$	(396)	$	(214)	$	(969)	$	15	$	1,808

Balance at December 31, 2022																	Balance at December 31, 2022	99,432,194	$	1	$	3,373	$	(734)	$	(346)	$	(937)	$	—	$	1,357
Net income																	Net income	—	—		—		84		—		—		—		84
Other comprehensive income (K)																	Other comprehensive income (K)	—	—		—		—		—		38		—		38
Repurchases of common stock (J)																	Repurchases of common stock (J)	(35,615)	—		—		—		(1)		—		—		(1)
Stock-based compensation																	Stock-based compensation	946,858	—		18		—		—		—		—		18
Other																	Other	—	—		(12)		—		—		—		—		(12)
Balance at June 30, 2023																	Balance at June 30, 2023	100,343,437	$	1	$	3,379	$	(650)	$	(347)	$	(899)	$	—	$	1,484

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 and per metric ton amounts)

A. Basis of Presentationand Proposed Merger

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 ~~2021~~2022 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, ~~2021,~~2022, 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”)). On April 1, 2020 (the “Separation Date”), ParentCo separated into two standalone, publicly-traded companies, Arconic Corporation and Howmet (the “Separation”). In connection with the Separation, as of March 31, 2020, the Company and Howmet entered into several agreements to effect the Separation, including a Separation and Distribution Agreement and a Tax Matters 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~~2022 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 Alcoa Corporation.

Proposed Merger. On May 4, 2023, Arconic entered into an Agreement and Plan of Merger (the “Merger Agreement”) to be acquired by funds managed by affiliates of Apollo Global Management, Inc., along with a minority investment from funds managed by affiliates of Irenic Capital Management LP, in an all-cash transaction that values Arconic at an enterprise value of approximately $5,000 (the “Transaction”). On the terms and subject to the conditions of the Merger Agreement, the Company’s stockholders will receive $30.00 per share in cash in exchange for each share of outstanding common stock. The Transaction is expected to close in the third quarter of 2023, subject to customary closing conditions, including approval by the Company’s stockholders. The Merger Agreement was adopted by the Company’s stockholders at a special meeting of the Company’s stockholders on July 25, 2023. Upon the closing of the Transaction, Arconic will operate as a privately-held company. In the ~~2022 first~~2023 second quarter, Arconic recognized $11 in Restructuring and other charges (see Note E) on the ~~Company recorded a net gain~~accompanying Statement of ~~$3 in Cost of goods sold related to the unrealized impact~~Consolidated Operations for incurred fees and expenses associated with the ~~change in the estimated fair value of natural gas supply contracts now determined~~Transaction. Additional merger-related costs are expected to be ~~derivatives (see~~ ~~Note Q). This amount was comprised~~recognized in a future period; however, such amounts are contingent on the outcome of ~~an unrealized loss~~the Transaction. Assuming the Transaction closes, the Company expects to recognize approximately $60 of ~~$5 for~~additional acquisition-related expenses, which have not been accrued to date, associated with contractual agreements that are contingent upon the ~~2022 first quarter, an unrealized gain~~closing of ~~$6 for~~ the ~~2021 annual period, and an unrealized gain of $2 for the 2020 fourth quarter. The out-of-period amounts were not material to any interim or annual period.~~

Transaction.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, 2023, Arconic adopted changes issued by the Financial Accounting Standards Board (FASB) to the disclosure of supplier finance programs. The FASB issued this guidance to address a perceived lack of transparency about such programs, which may prevent an understanding by financial statement users of the effect these programs have on an entity’s working capital, liquidity, and cash flows. Supplier finance programs (also may be referred to as reverse factoring, payables finance, or structured payables arrangements) allow a buyer to offer its suppliers the option for access to payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary on the basis of invoices that the buyer has confirmed as valid. Generally, a buyer (i) enters into an agreement with a finance provider or an intermediary to establish the program, (ii) purchases goods and services from suppliers with a promise to pay at a later date, and (iii) notifies the finance provider or intermediary of the supplier invoices that it has confirmed as valid. The suppliers may then request early payment directly from the finance provider or intermediary for those confirmed invoices. In the fiscal year of adoption, the guidance requires a buyer in a supplier finance program to disclose the following information in all reporting periods: (i) the key terms of the program, including a description of the payment terms and any assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary, and (ii) for the obligations that the buyer has confirmed as valid to the finance provider or intermediary, the amount outstanding that remains unpaid by the buyer as of the end of the reporting period and a description of where those obligations are presented in the balance sheet. In subsequent years, only the amount of obligations outstanding that the buyer has confirmed as valid to the finance provider or intermediary as of the end of the reporting period is required disclosure for interim periods while all the previously mentioned information is required disclosure for annual periods, including an incremental requirement to present a roll forward of the obligations, including the amount of obligations confirmed and the amount of obligations subsequently paid. The Company has an existing arrangement with a financial institution to make available this type of program to its suppliers. Other than disclosing the required information (see Note R), the adoption of this guidance did not have an impact on the Consolidated Financial Statements.

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 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.~~expire (see below). 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. AsIn December 2022, the FASB extended the expiration of ~~September~~the optional expedients and exceptions to December 31, 2024. Through June 30, ~~2022,~~2023, 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). 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.

In September 2022, the FASB issued guidance to enhance the transparency of supplier finance programs. Under the new guidance, a buyer in a supplier finance program must disclose at least annually qualitative and quantitative information about its supplier finance programs to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. These changes become effective for Arconic on January 1, 2023. The Company has an existing arrangement with a financial institution that provides for a capacity of up to $250. Other than complying with the disclosure requirements, management has determined that the adoption of this guidance will not have an impact on the Consolidated Financial Statements.

C. Revenue from Contracts with Customers

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


Third quarter ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
Second quarter ended June 30,										Second quarter ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2023										2023
Ground Transportation										Ground Transportation	$	764	$	—	$	23	$	787
Building and Construction										Building and Construction	51		319		—		370
Aerospace										Aerospace	241		—		73		314
Packaging										Packaging	194		—		—		194
Industrial Products and Other										Industrial Products and Other	279		—		29		308
Total end-market revenue										Total end-market revenue	$	1,529	$	319	$	125	$	1,973
2022	2022									2022
Ground Transportation	Ground Transportation	$	758	$	—	$	27	$	785	Ground Transportation	$	844	$	—	$	28	$	872
Packaging		405		—		—		405
Building and Construction	Building and Construction	63		321		—		384		Building and Construction	94		329		—		423
Aerospace	Aerospace	202		—		46		248		Aerospace	200		—		49		249
Packaging										Packaging	518		—		—		518
Industrial Products and Other										Industrial Products and Other	457		—		28		485
Total end-market revenue*										Total end-market revenue*	$	2,113	$	329	$	105	$	2,547

Six months ended June 30,										Six months ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2023										2023
Ground Transportation										Ground Transportation	$	1,502	$	—	$	49	$	1,551
Building and Construction										Building and Construction	90		627		—		717
Aerospace										Aerospace	483		—		139		622
Packaging										Packaging	411		—		—		411
Industrial Products and Other	Industrial Products and Other	433		—		25		458		Industrial Products and Other	547		—		57		604
Total end-market revenue	Total end-market revenue	$	1,861	$	321	$	98	$	2,280	Total end-market revenue	$	3,033	$	627	$	245	$	3,905
2021
2022										2022
Ground Transportation	Ground Transportation	$	681	$	—	$	25	$	706	Ground Transportation	$	1,570	$	—	$	57	$	1,627
Packaging		325		—		—		325
Building and Construction	Building and Construction	70		257		—		327		Building and Construction	178		620		—		798
Aerospace	Aerospace	134		—		28		162		Aerospace	367		—		92		459
Packaging										Packaging	915		—		—		915
Industrial Products and Other	Industrial Products and Other	349		—		21		370		Industrial Products and Other	887		—		53		940
Total end-market revenue		$	1,559	$	257	$	74	$	1,890

Total end-market revenue*										Total end-market revenue*	$	3,917	$	620	$	202	$	4,739

__________________

*In November 2022, Arconic completed the sale of all of its operations in Russia (see Note O), the results of which were previously reported in the Company’s Rolled Products segment. In the 2022 second quarter and six-month period, Third-party sales for the Rolled Products segment included $314 and $547, respectively, related to these former operations.

Nine months ended September 30, Rolled
Products Building and
Construction
Systems Extrusions Total
2022
Ground Transportation $ 2,328 $ — $ 84 $ 2,412
Packaging 1,320 — — 1,320
Building and Construction 241 941 — 1,182
Aerospace 569 — 138 707
Industrial Products and Other 1,320 — 78 1,398
Total end-market revenue $ 5,778 $ 941 $ 300 $ 7,019
2021
Ground Transportation $ 1,928 $ — $ 74 $ 2,002
Packaging 820 — — 820
Building and Construction 172 750 — 922
Aerospace 367 — 84 451
Industrial Products and Other 1,110 — 61 1,171
Total end-market revenue $ 4,397 $ 750 $ 219 $ 5,366

The average aluminum price per metric ton was $2,811 and $2,913 in the 2023 second quarter and six-month period, respectively, and $3,687 and $3,874 in the 2022 second quarter and six-month period, respectively, consisting of the London Metal Exchange aluminum price and the Midwest premium (United States).

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). 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, (ii) Metal price lag, and (iii) Unrealized (gains) losses on mark-to-market hedging instruments and ~~derivatives (see below).~~derivatives. Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

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 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 Arconic’s Segment Adjusted EBITDA performance measure. Accordingly, prior period information presented was not recast to reflect 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):


Third quarter ended September 30,		Rolled Products		Building and Construction Systems		Extrusions		Total
2022
Second quarter ended June 30,										Second quarter ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2023										2023
Sales:	Sales:									Sales:
Third-party sales	Third-party sales	$	1,861	$	321	$	98	$	2,280	Third-party sales	$	1,529	$	319	$	125	$	1,973
Intersegment sales	Intersegment sales	10		—		—		10		Intersegment sales	8		—		5		13
Total sales	Total sales	$	1,871	$	321	$	98	$	2,290	Total sales	$	1,537	$	319	$	130	$	1,986
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	111	$	49	$	(13)	$	147	Segment Adjusted EBITDA	$	158	$	53	$	(1)	$	210
Provision for depreciation and amortization	Provision for depreciation and amortization	$	48	$	4	$	5	$	57	Provision for depreciation and amortization	$	42	$	4	$	4	$	50
2021
2022										2022
Sales:										Sales:
Third-party sales*										Third-party sales*	$	2,113	$	329	$	105	$	2,547
Intersegment sales										Intersegment sales	11		—		—		11
Total sales										Total sales	$	2,124	$	329	$	105	$	2,558
Segment Adjusted EBITDA*										Segment Adjusted EBITDA*	$	174	$	53	$	(12)	$	215
Provision for depreciation and amortization										Provision for depreciation and amortization	$	49	$	5	$	6	$	60

Six months ended June 30,										Six months ended June 30,	Rolled Products		Building and Construction Systems		Extrusions		Total
2023										2023
Sales:	Sales:									Sales:
Third-party sales	Third-party sales	$	1,559	$	257	$	74	$	1,890	Third-party sales	$	3,033	$	627	$	245	$	3,905
Intersegment sales	Intersegment sales	9		—		1		10		Intersegment sales	19		—		5		24
Total sales	Total sales	$	1,568	$	257	$	75	$	1,900	Total sales	$	3,052	$	627	$	250	$	3,929
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	155	$	34	$	(7)	$	182	Segment Adjusted EBITDA	$	275	$	107	$	(5)	377
Provision for depreciation and amortization	Provision for depreciation and amortization	$	48	$	4	$	6	$	58	Provision for depreciation and amortization	$	84	$	8	$	7	$	99

2022										2022
Sales:										Sales:
Third-party sales*										Third-party sales*	$	3,917	$	620	$	202	$	4,739
Intersegment sales										Intersegment sales	23		—		1		24
Total sales										Total sales	$	3,940	$	620	$	203	$	4,763
Segment Adjusted EBITDA*										Segment Adjusted EBITDA*	$	350	$	97	$	(17)	$	430
Provision for depreciation and amortization										Provision for depreciation and amortization	$	97	$	9	$	10	$	116

__________________

Nine months ended September 30, Rolled
Products Building and
Construction
Systems Extrusions Total
2022
Sales:
Third-party sales $ 5,778 $ 941 $ 300 $ 7,019
Intersegment sales 33 — 1 34
Total sales $ 5,811 $ 941 $ 301 $ 7,053
Segment Adjusted EBITDA $ 461 $ 146 $ (30) $ 577
Provision for depreciation and amortization $ 145 $ 13 $ 15 $ 173
2021
Sales:
Third-party sales $ 4,397 $ 750 $ 219 $ 5,366
Intersegment sales 26 — 1 27
Total sales $ 4,423 $ 750 $ 220 $ 5,393
Segment Adjusted EBITDA $ 493 $ 97 $ (19) $ 571
Provision for depreciation and amortization $ 145 $ 13 $ 17 $ 175
party sales and Segment Adjusted EBITDA for the Rolled Products segment included $314 and $24, respectively, and $547 and $42, respectively, related to these former operations.

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

Third quarter ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Total Segment Adjusted EBITDA $ 147 $ 182 $ 577 $ 571
Unallocated amounts:
Corporate expenses(1)
(4) (7) (23) (26)
Stock-based compensation expense (6) (8) (19) (15)
Metal price lag(2)
15 (21) 9 (27)
Unrealized (losses) gains on mark-to-market hedging instruments and derivatives (Q)
(7) — 16 —
Provision for depreciation and amortization (59) (61) (181) (186)
Restructuring and other charges(3) (E)
(112) (14) (119) (612)
Other(4)
(10) (3) (56) (19)
Operating (loss) income (36) 68 204 (314)
Interest expense (27) (26) (78) (74)
Other expenses, net (F)
(27) (15) (9) (52)
Benefit (Provision) for income taxes (H)
25 (11) (25) 81
Net income attributable to noncontrolling interest — — (1) —
Consolidated net (loss) income attributable to Arconic Corporation $ (65) $ 16 $ 91 $ (359)

~~________________~~


	Second quarter ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Total Segment Adjusted EBITDA	$	210	$	215	$	377	$	430
Unallocated amounts:
Corporate expenses(1)	(11)		(10)		(20)		(19)
Stock-based compensation expense	(12)		(8)		(18)		(13)
Metal price lag(2)	(20)		30		(20)		(6)
Unrealized gains (losses) on mark-to-market hedging instruments and derivatives (Q)	18		21		(2)		23
Provision for depreciation and amortization	(52)		(62)		(105)		(122)
Restructuring and other charges(3) (E)	(9)		(2)		(9)		(7)
Other(4)	(7)		(40)		(15)		(46)
Operating income	117		144		188		240
Interest expense	(25)		(26)		(50)		(51)
Other (expenses) income, net (F)	(16)		35		(27)		18
Provision for income taxes (H)	(17)		(38)		(27)		(50)
Net income attributable to noncontrolling interest (O)	—		(1)		—		(1)
Consolidated net income attributable to Arconic Corporation	$	59	$	114	$	84	$	156

_____________________

(1)Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.

(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. In the 2022 ~~third~~second quarter and ~~nine-month~~six-month period, the respective amounts include costs related to ~~environmental remediation charges of $9 and $18, respectively (see Environmental Matters in~~ ~~Note P). Additionally in the 2022 nine-month period, Other includes costs related to the~~a new union labor agreement of $19 (see Note G)~~. These~~ and environmental remediation charges of $9, both of which were recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

1110

E. Restructuring and Other Charges

In the ~~2022 third~~2023 second quarter and six-month period, Arconic recorded Restructuring and other charges of ~~$112,~~$9 which were comprised of the following components: an $11 charge for costs incurred related to the Transaction (see Note A) and a $2 net credit for other items.

In the 2022 second quarter and six-month period, Arconic recorded Restructuring and other charges of $2 and $7, respectively, which were comprised of the following components: a ~~$92 asset impairment charge related to the Extrusions segment (see below); a $15 charge for the settlement of a certain employee retirement benefits (see~~ ~~Note G~~);$1 and ~~a net~~ $5, ~~charge for other items.~~

In the 2022 nine-month period, Arconic recorded Restructuring and other charges of $119, which were comprised of the following components: a $92 asset impairment charge related to the Extrusions segment (see below); a $15 charge for the settlement of certain employee retirement benefits (see ~~Note G); a $5~~respectively, charge related to several legacy non-U.S. matters, including $1 (six-month period) for an environmental remediation obligation related to Italy ~~(see Environmental Matters in~~ ~~Note P~~) and $1 (six-month period) for the full settlement of certain employee retirement benefits related to Brazil (see Note G); and a $1 and $2, respectively, charge related to idling certain operations in the Extrusions segment (actions initiated in 2021)~~; and a net $5 charge for other items.~~

In the 2022 third quarter, management initiated a business review of the Extrusions segment aimed at identifying alternatives to improve the financial performance of this segment in future periods. Management continues to assess alternatives and no decisions or commitments were made as of September 30, 2022. In connection with this review, the Company updated its five-year strategic plan, the results of which indicated that there is an expected decline in the forecasted financial performance for the Extrusions segment (and asset group), including continued forecasted losses. As such, management evaluated the recoverability of the long-lived assets of the Extrusions asset group by comparing the aggregate carrying value to the undiscounted future cash flows. The result of this evaluation was that the long-lived assets were deemed to be impaired as the aggregate carrying value exceeded the undiscounted future cash flows. The impairment charge was measured as the difference between the aggregate carrying value and aggregate fair value of the long-lived assets. Fair value was determined using an orderly liquidation methodology for the machinery and equipment and a sales comparison approach for the land and structures. As a result, the Company recorded an impairment charge of $90 for Properties, plants, and equipment and $2 for intangible assets (included within Other noncurrent assets).

In the 2021 third quarter Arconic recorded Restructuring and other charges of $14, which were comprised of the following components: a $5 charge for the settlement of certain employee retirement benefits (see ~~Note G~~); a $3 charge related to several legal matters, including the assumption of a related environmental remediation obligation; a $3 charge related to idling certain operations in the Extrusions segment; a $3 charge for the settlement of legacy tax matters related to Brazil; a $1 charge for other items; and a $1 credit for the reversal of reserves established in prior periods.

In the 2021 nine-month period, Arconic recorded Restructuring and other charges $612, which were comprised of the following components: a $573 charge for the settlement of certain employee retirement benefits (see ~~Note G~~); a $34 charge for the impairment of several buildings and equipment due to management's decision to abandon these assets located at the Company’s primary research and development facility; a $6 charge related to idling certain operations in the Extrusions segment, including layoff costs associated with approximately 115 employees; a $4 net benefit for the settlement of legacy tax matters related to Brazil; a $3 charge related to several legal matters, including the assumption of a related environmental remediation obligation; a $3 credit for the reversal of reserves established in prior periods; a $1 additional loss on the sale of an aluminum rolling mill in Brazil; and a $2 net charge for other items.

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


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Rolled Products	Rolled Products	$	1	$	—	$	1	$	1	Rolled Products	$	(1)	$	—	$	(1)	$	—
Building and Construction Systems	Building and Construction Systems	2		—		2		(1)		Building and Construction Systems	—		—		—		—
Extrusions	Extrusions	88		3		90		6		Extrusions	—		1		—		2
Segment total	Segment total	91		3		93		6		Segment total	(1)		1		(1)		2
Corporate	Corporate	21		11		26		606		Corporate	10		1		10		5
		$	112	$	14	$	119	$	612		$	9	$	2	$	9	$	7

~~Activity and reserve balances for restructuring charges were as follows:~~

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

~~_____________________~~

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

~~(2)The remaining reserves are expected to be paid in cash during the remainder of 2022.~~

1311

F. Other Expenses (Income), Net


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Non-service costs — Pension and OPEB (G)	Non-service costs — Pension and OPEB (G)	$	19	$	13	$	49	$	49	Non-service costs — Pension and OPEB (G)	$	16	$	16	$	33	$	30
Foreign currency losses (gains), net		13		2		(29)		2
Foreign currency gains, net										Foreign currency gains, net	(1)		(48)		(1)		(42)
Other, net	Other, net	(5)		—		(11)		1		Other, net	1		(3)		(5)		(6)
		$	27	$	15	$	9	$	52		$	16	$	(35)	$	27	$	(18)

In the 2022 ~~third~~second quarter and ~~nine-month~~six-month period, Foreign currency ~~losses (gains),~~gains, net includes ~~an $11 loss and~~ a ~~$39~~$54 gain ~~respectively,~~ for the remeasurement of monetary balances, primarily cash, related to the Company’s former operations in Russia from rubles to ~~the~~ U.S. dollar. This ~~loss and~~ gain ~~were~~was the result of a significant ~~weakening and~~ strengthening ~~respectively,~~ of the ruble against the U.S. dollar in the ~~respective periods.~~2022 second quarter.

1412

G. Pension and Other Postretirement Benefits

The components of net periodic benefit cost for defined benefit pension and other postretirement benefit plans were as follows:


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Pension benefits	Pension benefits									Pension benefits
Service cost	Service cost	$	3	$	5	$	12	$	16	Service cost	$	3	$	4	$	6	$	9
Interest cost	Interest cost	18		15		51		48		Interest cost	25		17		51		33
Expected return on plan assets	Expected return on plan assets	(21)		(24)		(68)		(84)		Expected return on plan assets	(23)		(23)		(46)		(47)
Recognized net actuarial loss		18		19		56		75
Amortization of net actuarial loss										Amortization of net actuarial loss	10		19		20		38
Amortization of prior service cost	Amortization of prior service cost	1		—		2		—		Amortization of prior service cost	2		—		3		—
Settlements ~~(1)~~	Settlements ~~(1)~~	15		5		16		573		Settlements ~~(1)~~	—		—		—		1
Net periodic benefit cost(2)		$	34	$	20	$	69	$	628
Net periodic benefit cost*										Net periodic benefit cost*	$	17	$	17	$	34	$	34

Other postretirement benefits	Other postretirement benefits									Other postretirement benefits
Service cost	Service cost	$	1	$	2	$	3	$	5	Service cost	$	1	$	1	$	2	$	2
Interest cost	Interest cost	2		3		8		8		Interest cost	4		3		8		6
Recognized net actuarial loss		2		2		6		7
Amortization of net actuarial loss										Amortization of net actuarial loss	—		2		1		4
Amortization of prior service benefit	Amortization of prior service benefit	(2)		(2)		(6)		(5)		Amortization of prior service benefit	(2)		(2)		(4)		(4)
Net periodic benefit cost(2)		$	3	$	5	$	11	$	15

Net periodic benefit cost*										Net periodic benefit cost*	$	3	$	4	$	7	$	8

_____________________

~~__________________~~

(1) In the 2022 third quarter and nine-month period, Settlements included $15 related to the payment of lump-sum benefits (see below). Settlements included $549 in the 2021 nine-month period due to the purchase of a group annuity contract and $5 and $24 in the 2021 third quarter and nine-month period, respectively, related to the payment of lump-sum benefits (see Note H 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)).

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

~~Pension Funding~~—In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract. Arconic had no minimum required funding due in the 2022 first quarter and contributed $7 in both the 2022 second quarter and third quarter to these two plans. The Company expects to contribute a total of $8 to these two plans in the remainder of 2022.

United Steelworkers Labor Agreement—On May 14, 2022, the Company and the United Steelworkers reached a tentative four-year labor agreement covering approximately 3,300 employees at four U.S. locations; the previous labor agreement expired on May 15, 2022. The tentative agreement was ratified by the union employees on June 1, 2022. In the 2022 second quarter and six-month period, Arconic recognized $19 in Cost of goods sold on the accompanying Statement of Consolidated Operations primarily for a one-time signing bonus for the covered employees. Additionally, the new labor agreement provides for, among other items, established annual wage increases and higher multipliers used to calculate the union employees’ future pension retirement benefits.

The change to the pension benefits qualifies as a significant plan amendment to the Company’s U.S. hourly defined benefit pension plan, and, as a result, Arconic was required to complete a remeasurement of this plan (generally completed as of December 31st each year), including an interim actuarial valuation of the plan obligations. Communication of the benefit change to the union employees occurred on May 15, 2022, and the effective date of this amendment was May 16, 2022. For purposes of performing an interim remeasurement of the plan, the Company applied a practical expedient to the remeasurement date and selected May 31, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 4.66% at May 31, 2022 from 2.96% at December 31, 2021. The remeasurement of this plan, together with the amendment for increased benefits, resulted in a $13 net decrease to Accrued pension benefits and a $10 (after-tax) net decrease to Accumulated other comprehensive loss (see Note K) ~~on the accompanying Consolidated Balance Sheet.~~. Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 ~~will increase~~increased by $8, comprised of a $2 decrease in service cost and a $10 increase in non-service costs. These amounts ~~will be~~were recognized ratably over the remainder of 2022 (June through December).

~~Lump Sum Benefit Payments~~—In the 2022 third quarter, management concluded that it was now probable that lump-sum benefit payments expected to be paid in 2022 under Arconic’s U.S. salary defined benefit pension plan will exceed the pre-determined threshold (sum of annual service cost and interest cost) requiring settlement accounting. As a result, the Company was required to complete a remeasurement of this plan (generally completed as of December 31st each year), including an interim actuarial valuation of the plan obligations. For purposes of performing an interim remeasurement of the plan, Arconic applied a practical expedient to the remeasurement date and selected September 30, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 5.71% at September 30, 2022 from 2.82% at December 31, 2021. The remeasurement of this plan, together with the settlement of benefits, resulted in a $34 net decrease to Accrued pension benefits and a $26 (after-tax) net decrease to Accumulated other comprehensive loss (see ~~Note K~~) on the accompanying Consolidated Balance Sheet. Unfavorable plan asset performance offset most of the impact of the increase in the discount rate. Also, the settlement resulted in the accelerated amortization of a portion of the existing net actuarial loss associated with this plan in the amount of $15 ($12 after-tax). This amount was reclassified to earnings through Restructuring and other charges (see ~~Note E) from Accumulated other comprehensive loss (see~~ ~~Note K~~). Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 will increase by $8, all of which relates to non-service costs. This amount will be recognized ratably over the remainder of 2022 (October through December).

1613

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~~the realizability of deferred tax assets in future years 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 ~~2022 nine-month~~2023 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary income was ~~26.7%~~27.0%. This rate differs by ~~5.7~~6.0 percentage points from the U.S. federal statutory rate of 21.0% primarily due to the state tax impact of domestic taxable income, U.S. tax on foreign earnings, and non-deductible costs, partially offset by a valuation allowance release for a capital loss carryforward and non-taxable income. In the 2023 six-month period, Arconic realized capital gain income supporting the utilization of the capital loss carryforward.

For the 2022 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 25.6%. This rate differs by 4.6 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, the state tax impact of domestic taxable income, and U.S. tax on foreign earnings, ~~non-deductible costs, and losses in jurisdictions subject to existing valuation allowances,~~ partially offset by non-taxable income and foreign income taxed in lower rate jurisdictions.

For the 2021 nine-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary loss was 17.1%. This rate differs by 3.9 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 non-deductible costs, partially offset by the state tax impact of domestic taxable losses.

The effective tax rate including discrete items was ~~27.8%~~22.4% and ~~21.4%~~24.3% in the 2023 second quarter and six-month period, respectively, and 24.8% and 24.2% in the 2022 ~~third~~second quarter and ~~nine-month period respectively, and 40.7% and 18.4% in the 2021 third quarter and nine-month~~six-month period, respectively.

The following table presents the components of ~~(Benefit)~~ Provision for income taxes:


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Pretax ordinary (loss) income at estimated annual effective tax rate		$	(24)	$	5	$	31	$	(75)
Pretax ordinary income at estimated annual effective tax rate										Pretax ordinary income at estimated annual effective tax rate	$	21	$	39	$	30	$	53
Impact of change in estimated annual effective tax rate on previous quarter’s pretax income	Impact of change in estimated annual effective tax rate on previous quarter’s pretax income	2		7		—		—		Impact of change in estimated annual effective tax rate on previous quarter’s pretax income	(1)		(1)		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	—		—		1		(2)		Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	—		—		—		1
Discrete items	Discrete items	(3)		(1)		(7)		(4)		Discrete items	(3)		—		(3)		(4)
(Benefit) Provision for income taxes		$	(25)	$	11	$	25	$	(81)

Provision for income taxes										Provision for income taxes	$	17	$	38	$	27	$	50

__________________

* 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.

1714

I. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing Net income attributable to Arconic 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 common stockholders was as follows (shares in millions):


		Third quarter ended September 30,		Nine months ended September 30,			Second quarter ended June 30,		Six months ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Weighted-average shares outstanding – basic	Weighted-average shares outstanding – basic	102.3	108.7	104.4	109.5	Weighted-average shares outstanding – basic	100.1	105.7	99.8	105.5
Effect of dilutive share equivalents:	Effect of dilutive share equivalents:					Effect of dilutive share equivalents:
Stock units	Stock units	—	3.3	2.6	—	Stock units	2.0	2.2	2.3	2.7
Stock options	Stock options	—	0.1	0.1	—	Stock options	—	0.1	—	0.1
Weighted-average shares outstanding – diluted	Weighted-average shares outstanding – diluted	102.3	112.1	107.1	109.5	Weighted-average shares outstanding – diluted	102.1	108.0	102.1	108.3

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

~~________________~~_____________________

* 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 ~~September~~June 30, 2023 and June 30, 2022, ~~and September 30, 2021,~~ there were ~~0.4~~0.1 million and ~~0.2~~0.3 million, respectively, out-of-the-money stock options outstanding with a weighted-average exercise price of ~~$28.16~~$32.73 and ~~$32.73,~~$31.48, respectively.

1815

J. Preferred and Common Stock

On November 16, 2022, 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 $200 over a two-year period expiring November 17, 2024. Repurchases under the program may be made from time to time, as the Company deems appropriate, 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 purchase. 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 2023 six-month period, Arconic repurchased 35,615 shares of the Company’s common stock for $1 under this program. Cumulatively, Arconic has repurchased 2,107,450 shares of the Company’s common stock for $47 since the program’s inception.

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 2022 ~~third~~second quarter and ~~nine-month~~six-month period, Arconic repurchased ~~3,033,663~~1,324,027 and ~~4,863,672~~1,830,009 shares, respectively, of the Company's common stock for ~~$86~~$37 and ~~$139,~~$53, respectively, under this program. Cumulatively, Arconic ~~has~~ repurchased 9,776,177 shares of the Company’s common stock for $300 since the program’s inception, resulting in completion of the total ~~authorization.~~authorization under this program in August 2022. In connection with the establishment of the new repurchase program (see above), this repurchase program was terminated. Repurchases under the program were made from time to time, as the Company deemed 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. This program was intended to comply with Rule 10b5-1 and all purchases were made in compliance with Rule 10b-18, including without limitation the timing, price, and volume restrictions thereof.

1916

K. Accumulated Other Comprehensive Loss

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


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
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	$	(1,037)	$	(1,199)	$	(1,121)	$	(1,791)	Balance at beginning of period	$	(888)	$	(1,063)	$	(892)	$	(1,121)
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	36		34		105		178		Unrecognized net actuarial loss and prior service cost/benefit	(1)		14		(2)		69
Tax expense		(8)		(8)		(23)		(41)
Total Other comprehensive income before reclassifications, net of tax		28		26		82		137
Tax benefit (expense)										Tax benefit (expense)	1		(3)		—		(15)
Total Other comprehensive income (loss) before reclassifications, net of tax										Total Other comprehensive income (loss) before reclassifications, net of tax	—		11		(2)		54
Amortization of net actuarial loss and prior service cost/benefit(1)	Amortization of net actuarial loss and prior service cost/benefit(1)	34		25		74		651		Amortization of net actuarial loss and prior service cost/benefit(1)	10		20		20		40
Tax expense(2)	Tax expense(2)	(7)		(6)		(17)		(151)		Tax expense(2)	(2)		(5)		(6)		(10)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	27		19		57		500		Total amount reclassified from Accumulated other comprehensive loss, net of tax(5)	8		15		14		30
Total Other comprehensive income	Total Other comprehensive income	55		45		139		637		Total Other comprehensive income	8		26		12		84
Balance at end of period	Balance at end of period	$	(982)	$	(1,154)	$	(982)	$	(1,154)	Balance at end of period	$	(880)	$	(1,037)	$	(880)	$	(1,037)
Foreign currency translation	Foreign currency translation									Foreign currency translation
Balance at beginning of period	Balance at beginning of period	$	(37)	$	35	$	25	$	29	Balance at beginning of period	$	(34)	$	18	$	(51)	$	25
Other comprehensive loss(3)		(72)		(11)		(134)		(5)
Other comprehensive (loss) income(3)										Other comprehensive (loss) income(3)	(13)		(55)		4		(62)
Balance at end of period	Balance at end of period	$	(109)	$	24	$	(109)	$	24	Balance at end of period	$	(47)	$	(37)	$	(47)	$	(37)
Cash flow hedges (Q)	Cash flow hedges (Q)									Cash flow hedges (Q)
Balance at beginning of period	Balance at beginning of period	$	105	$	(35)	$	(15)	$	1	Balance at beginning of period	$	(5)	$	(85)	$	6	$	(15)
Other comprehensive income (loss):
Other comprehensive income:										Other comprehensive income:
Net change from periodic revaluations	Net change from periodic revaluations	78		(66)		136		(160)		Net change from periodic revaluations	55		201		34		58
Tax (expense) benefit		(19)		15		(32)		37
Total Other comprehensive income (loss) before reclassifications, net of tax		59		(51)		104		(123)
Tax expense										Tax expense	(13)		(46)		(8)		(13)
Total Other comprehensive income before reclassifications, net of tax										Total Other comprehensive income before reclassifications, net of tax	42		155		26		45
Net amount reclassified to earnings:	Net amount reclassified to earnings:									Net amount reclassified to earnings:
Aluminum(4)	Aluminum(4)	(93)		50		13		98		Aluminum(4)	(18)		53		(17)		106
Energy(4)	Energy(4)	(8)		—		(15)		—		Energy(4)	6		(7)		11		(7)
Alloying materials(4)	Alloying materials(4)	1		(1)		1		(2)		Alloying materials(4)	1		—		1		—
Sub-total	Sub-total	(100)		49		(1)		96		Sub-total	(11)		46		(5)		99
Tax benefit (expense)(2)	Tax benefit (expense)(2)	24		(11)		—		(22)		Tax benefit (expense)(2)	2		(11)		1		(24)
Total amount reclassified from Accumulated other comprehensive income, net of tax(5)	Total amount reclassified from Accumulated other comprehensive income, net of tax(5)	(76)		38		(1)		74		Total amount reclassified from Accumulated other comprehensive income, net of tax(5)	(9)		35		(4)		75
Total Other comprehensive (loss) income		(17)		(13)		103		(49)
Total Other comprehensive income										Total Other comprehensive income	33		190		22		120
Balance at end of period	Balance at end of period	$	88	$	(48)	$	88	$	(48)	Balance at end of period	$	28	$	105	$	28	$	105
Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(1,003)	$	(1,178)	$	(1,003)	$	(1,178)	Accumulated other comprehensive loss	$	(899)	$	(969)	$	(899)	$	(969)

_____________________

(1)These amounts were included in the non-service component of net periodic benefit cost for pension and other postretirement benefits (see Note G). The accelerated amortization related to the settlement of certain employee retirement benefits was $15 and $16 in the 2022 third quarter and nine-month period, respectively, and $5 and $573 in the 2021 third quarter and nine-month period, respectively (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 and no amounts were reclassified to earnings.

(4)A portion of the amounts related to aluminum were reported in each of Sales and Cost of goods sold on the accompanying Statement of Consolidated Operations (see Note Q). The amounts related to energy and alloying materials were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations (see Note Q).

(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.

2118

L. Inventories

September 30, 2022 December 31, 2021
Finished goods $ 358 $ 350
Work-in-process 1,188 1,105
Purchased raw materials 137 109
Operating supplies 67 66
$ 1,750 $ 1,630


	June 30, 2023		December 31, 2022
Finished goods	$	334	$	343
Work-in-process	1,033		1,106
Purchased raw materials	118		118
Operating supplies	59		55
	$	1,544	$	1,622

2219

M. Leases

Arconic 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 ~~$13~~$14 and ~~$40~~$28 in the 2023 second quarter and six-month period, respectively, and $14 and $27 in the 2022 ~~third~~second quarter and ~~nine-month period, respectively, and $15 and $45 in the 2021 third quarter and nine-month~~six-month period, respectively.

Right-of-use assets obtained in exchange for operating lease obligations ~~were $22~~ in the 2023 and 2022 ~~nine-month period~~six-month periods were $12 and ~~$13 in the 2021 nine-month period.~~$18, respectively.

Future minimum contractual operating lease obligations were as follows:


		September 30, 2022			June 30, 2023
2022		$	10
2023	2023	34		2023	$	21
2024	2024	27		2024	35
2025	2025	20		2025	27
2026	2026	14		2026	19
2027				2027	9
Thereafter	Thereafter	31		Thereafter	22
Total lease payments	Total lease payments	$	136	Total lease payments	$	133
Less: imputed interest	Less: imputed interest	23		Less: imputed interest	19
Present value of lease liabilities	Present value of lease liabilities	$	113	Present value of lease liabilities	$	114

The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~6.0~~5.0 years and ~~6.1~~5.2 years, respectively, and ~~6.0%~~6.6% and ~~5.8%~~6.3%, respectively.

2320

N. Debt

~~2022 Activity~~—Arconic maintains a ~~five-year~~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 $1,200 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~~2022 (filed on February ~~22, 2022)~~21, 2023) 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 the ~~2022 nine-month~~2023 six-month period, the Company borrowed ~~$250~~$175 and repaid ~~$100~~$175 under the ABL Credit Facility. These borrowings were designated as SOFR loans with ~~either~~ an initial one-month ~~or three-month~~ interest period. ~~Arconic may repay early or extend a part or all of these borrowings.~~ In the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, the weighted-average interest rate and weighted-average days outstanding of the borrowings was ~~5.03%~~6.80% and ~~4.02%~~6.61%, respectively, and 7436 days and ~~105~~55 days, respectively. 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. In June 2022, the Company extended this borrowing for an additional three-month period. The applicable rate on this borrowing was 2.50% through June 15, 2022 and 4.22% beginning June 16, 2022. On June 30, 2022, Arconic repaid early $50 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 ~~September~~June 30, ~~2022,~~2023, the available balance was ~~$1,039~~$1,189 (net of outstanding ~~borrowings of $150 and~~ letters of credit of $11).

~~In October~~

O. Acquisitions and Divestitures

Russia. On November 15, 2022, Arconic completed the ~~Company repaid an additional $50~~sale of all of its operations in Russia to Promishlennie Investitsii LLC, the majority owner of VSMPO-AVISMA Corporation. The legal form of the ~~outstanding borrowings under~~transaction was a stock sale of all the ~~ABL Credit Facility.~~

~~2021 Activity—On March 3, 2021,~~Company’s Russian subsidiaries. At that time, VSMPO-AVISMA owned a limited portion of one of these legal entities, which was reported as Noncontrolling interest in the ~~Company completed a Rule 144A (U.S. Securities Act~~accompanying Consolidated Financial Statements prior to consummation 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 (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 Existing 2028 Notes.sale transaction. See Note QS 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~~2022 (filed on February ~~22, 2022)~~21, 2023) 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 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 is paid semi-annually in February and August and commenced August 15, 2021.transaction.

~~O. Acquisitions and Divestitures~~

~~Russia.~~ On May 19, 2022, the Company announced that it is pursuing a sale of its operations in Russia. This decision was the result of a strategic review of alternatives performed by management with respect to Arconic’s ~~Russian operations in consideration of the sanctions and other trade restrictions levied against Russia beginning in February 2022 and preliminary injunctions imposed on the Company’s~~former operations in Russia ~~by the Federal Antimonopoly Service of the Russian Federation in April 2020 (see Litigation in~~ ~~Note P~~), which include a prohibition on the ability of Arconic’s legal entity in Russia to pay dividends to the parent company. The Company is continuing to conduct business in Russia to fulfill existing obligations in accordance with applicable laws, regulations, and international rules. Arconic has engaged with both the U.S. government and Russian government with the objective of executing a lawful sale of its Russian operations. The Company has had several interested parties in the process and is ultimately working towards completion of a sale of its Russian operations to a third party pursuant to a framework agreement, the closing of which is subject to the receipt of governmental approvals and other conditions and contingencies. The process for obtaining government approvals and executing a transaction is unusually complex given current geopolitical factors and ongoing proceedings involving the Company’s operations in Russia, creating uncertainty with respect to the Company’s ability to estimate the timing or likelihood of a transaction as of September 30, 2022. We continue to monitor the situation, while assessing the financial impact and outlook for our operations in this market. As such, the Company conducted an analysis during the third quarter of 2022. Based on the Company’s analysis and review of current circumstances, there was no impairment recorded during the third quarter of 2022. The Company estimates that a charge of up to approximately $500 may be recognized if a sale is consummated or if we conclude that an impairment should be recorded.

~~The Company’s operations in Russia are~~were comprised of one principal location in Samara, which ~~manufactures~~manufactured sheet, plate, extrusions, and forgings across all of ~~Arconic’s~~the Company’s end markets. ~~The Samara facility has continued to operate at relatively normal levels although such operations may decrease over time due~~Prior to the ~~imposed sanctions and other trade restrictions, particularly if these are further elevated, as well as supplier and customer constraints. While~~sale transaction, the imposition of sanctions and trade restrictions limit a Russian entity’s ability to export goods, Samara’s operations primarily serve customer demand within Russia. The Samara facility generated third-party sales of approximately $970 in 2021 and had approximately $520 in net assets (excluding intercompany balances) and approximately 2,900 employees as of September 30, 2022 (see Litigation in ~~Note P~~ ~~for additional financial information).~~

The Company’s local Russian management team continues to operate the Samara facility without undue influence imposed by any third-party, including the Russian government. Additionally, other than the prohibition on dividend payments to the parent company, Arconic has not encountered any other significant impacts related to its control over its Russian subsidiaries. As a result, the Company reported the financialoperating results of ~~its Russian operations in~~ Arconic’s Consolidated Financial Statements as of and for the three- and nine-month periods ended September 30, 2022, and will continue to do so until such time as circumstances warrant otherwise. Furthermore, while the Company is pursuing a sale of itsformer operations in Russia were reported in the ~~related assets and liabilities will continue to be classified as held and in-use and will continue to be reported within the~~Company’s Rolled Products ~~segment, as~~segment. The following table presents selected financial information related to Arconic’s former operations in Russia:


	Second quarter ended June 30, 2022		Six months ended June 30, 2022
Third-party sales*	$	314	$	547
Segment Adjusted EBITDA	24		42

_____________________

*Third-party sales include aluminum products manufactured at the ~~timing~~Company’s former plant in Russia and likelihood of any possible transaction is uncertain as of September 30, 2022. Moreover, Arconic has not recorded an impairment of long-lived or other assets given the relatively normal operating levels at Samara. That said, the situation is fluid and this fact pattern could change at any moment. As noted above, a charge of up to approximately $500 may be recognized if a sale is consummated or if we conclude that an impairment should be recorded.sold through Arconic’s international selling company located in Hungary.

Building and Construction Systems. On June 6, 2022, the Company announced that it iswas evaluating strategic options for the businesses that comprise the Building and Constructions Systems segment, including exploring a sale of its architectural systems business (Kawneer® brand). Subsequent to this announcement, Arconic initiated a sale process ofwith respect to its architectural systems business, which has six principal locations in the United States, Canada, and Europe. Products manufactured under the Kawneer brand include windows, doors, and curtain walls. This business generated third-party sales of approximately ~~$740~~$970 in ~~2021~~2022 and had approximately ~~2,800~~2,900 employees as of ~~September~~June 30, ~~2022.~~2023.

On August 2, 2022, the Company announced a pause in the sale process of this business due to ~~current~~unfavorable economic conditions, particularly uncertainty in the debt markets. This business will remain classified as held and in-use in Arconic’s Consolidated Financial Statements and will continue to be reported within the Building and Construction Systems segment.

2522

P. Contingencies and Commitments

Unless specifically described to the contrary, all matters within Note P are the full responsibility of Arconic pursuant to the Separation and Distribution 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 ~~$79~~$72 and ~~$64~~$85 (of which ~~$27~~$34 and ~~$15,~~$40, respectively, was classified as a current liability) at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated.

In the ~~2022 third quarter and nine-month~~2023 six-month period, the remediation reserve was increased by ~~$11 and $22, respectively. The change~~$1 due to a charge (recorded in Cost of goods sold) related to the ~~remediation reserve in the 2022 third quarter~~estimated costs of future operations, maintenance, and nine-month period, includes a charge of $9 and $13, respectively, for the Massena location (see below) and a charge of $2 (both periods) for other items, including incremental estimated expenditures associated with active remediation systems and/or monitoring ~~and inspection programs~~activities at several sites.

Additionally, in the 2022 nine-month period, the Company recorded a charge of $5 for the planned removal of polychlorinated biphenyls (PCBs)-contaminated soil from certain portions of a ditch that is adjacent to the Company’s facility in Lafayette, Indiana under a previously issued corrective action order with the Indiana Department of Environmental Management (remediation to be completed over a two-year period beginning in 2023) and a charge of $1 (see ~~Note E~~) 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 $1$4 and ~~$7,~~$14, respectively, in the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, which include expenditures currently mandated, as well as those not required by any regulatory authority or third party.

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 ~~$7)~~$6), which relates to one of Arconic's current operating locations.

Massena, 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 ~~PCBs.~~polychlorinated biphenyls (PCBs). The project, which was selected by the ~~EPA~~U.S. Environmental Protection Agency (EPA) in a Record of Decision issued in April 2013, iswas 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. The EPA approved the final design phase of the project in March 2019. Following the EPA’s approval, the actual remediation fieldwork commenced. In April 2020, the EPA approved an addendum to the final remedial design to address newly-identified matters, including river navigation issues, which resulted in changing the original remedy for a specific segment of the river to dredging from capping. The Company attained substantial completion of remedial construction activities on the Grasse River in September 2021. ~~As a~~

~~result, along with an assessment of anticipated remaining future costs, primarily for post-construction monitoring, the reserve was reduced by $11.~~

In March 2022, an ice jam event occurred in a section of the river where athe cap was installed. The ice accumulation caused a blockage in the river that restricted flow, which resulted in high forces being placed on the bottom sediments as the river worked its way through the obstruction. Once the ice cleared and it was safe to enter the river, Arconic investigated and analyzed the cap for any damage. It was determined that ~~certain~~portions of the cap ~~was~~were damaged and there was disturbance to the underlying sediments. As a result, inover the ~~2022 second quarter,~~next several months, the Company ~~submitted~~performed extensive environmental, geotechnical, and ice modeling investigations to support the ~~EPA, as well as other stakeholders,~~preparation of a proposed plan to repair the damaged cap and contain the exposed sediment. ~~At that time, management had preliminarily~~These activities were completed in September 2022 and led to a completed design and estimated ~~that the~~ cost of $22 for the proposed ~~plan would be $11,~~repair remedy, which ~~contemplated completing~~included consideration of a temporary work stoppage due to the winter

season extending the repair work ininto 2023 and the ~~second half~~impact of ~~2022.~~cost inflation for labor and materials. Arconic’s existing reserve included consideration of potential future cap repairs given the magnitude and nature of ~~this type of remediation.~~the previously completed remediation project. As a result, in ~~the~~ 2022, ~~second quarter,~~ the Company increased the reserve balance for this matter by $4$13 for the ~~incremental amount needed to cover the estimated cost of the proposed plan.~~

In the 2022 third quarter, Arconic completed extensive environmental, geotechnical, and ice modeling investigations to determine the final design and cost of the repair remedy. Ultimately, these investigations revealed that the concept of the proposed remedy is appropriate but the design and, therefore, cost of the project need to be changed compared to the preliminary analysis and cost estimate prepared in the 2022 second quarter. Accordingly, the cost of the proposed plan increased to $22, which also considers the fact that the repair work will now extend into 2023, including a temporary work stoppage due to the upcoming winter season, and the impact of cost inflation for labor and materials. As a result, in the 2022 third quarter, the Company increased the reserve balance by $9 for the further incremental amount needed to cover the estimated cost of the proposed plan. On October 3, 2022, Arconic submitted an Analysis of Alternatives report to the ~~EPA. The~~EPA setting forth four potential remedies, including the Company’s proposed plan. On December 22, 2022, at the EPA’s request, Arconic submitted a revised Analysis of Alternatives report to address two additional repair remedies for a total of six potential alternatives. Arconic is now waiting on the EPA’s response but continues to maintain an active dialogue with the EPA, as well as other stakeholders, all in support of the EPA making a final decision, which the Company expects ~~to receive~~in the ~~EPA’s decision by no later than March 31, 2023.~~near term. Arconic’s proposed remedy is consistent with the Record of Decision issued for the original remediation project (see above). In advance of the EPA’s decision, the Company performed a portion of the work associated with its proposed remedy in order to reduce the environmental risk associated with the exposed sediments. This work was completed by the end of November 2022.

As the project progresses, further changes to the reserve may be required due to factors such as, among others, the EPA’s selection of a remedy that differs from Arconic’s proposed plan, additional changes in other remedial requirements, increased site restoration costs, and incremental ongoing operation and maintenance costs.

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the reserve balance associated with this matter was $30 and $38, ~~and $30,~~ respectively. ~~Expenditures for~~Timing of expenditures is contingent on the EPA’s decision with respect to the repair ~~work related to~~remedy and the ~~ice jam event are expected to be $2 in the remainder~~subsequent mobilization of ~~2022 and $17 in 2023. The other $19 in remaining expenditures, most of which relates to operations, maintenance, and monitoring work, are expected to occur between 2023 and 2027.~~third-party contractors.

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.

~~Federal Antimonopoly Service Of The Russian Federation Litigation~~—The Federal Antimonopoly Service of the Russian Federation (“FAS”) filed a lawsuit on March 17, 2020 with the Arbitrazh (State Commercial) Court of Samara Region against two of the Company’s subsidiaries, Arconic Rus Investment Holdings LLC (“LLC ARIH”) and AlTi Forge Holding Sarl (the “Arconic Russian Holding Companies”), naming Elliott Associates L.P., Elliott International L.P., and Elliot International Capital Advisors Inc. (“Elliott”) as third parties. Also named as interested parties are: Parent Co. and certain of its foreign subsidiaries; and Arconic Netherland B.V., the Company’s subsidiary that directly and indirectly owns LLC ARIH, Arconic SMZ JSC and JSC AlTi Forge (the “Arconic Russian Subsidiaries”). FAS alleges that Elliott indirectly acquired control over the Arconic Russian Subsidiaries when, in May 2019, directors who had previously been nominated by Elliott and appointed or elected to Parent Co.’s board of directors pursuant to certain settlement agreements among Parent Co. and Elliott constituted a majority of that board as a result of a reduction in the size of the board. FAS claims alleged non-compliance with Russian Federal Law No. 57-FZ, which governs foreign ownership of certain Russian companies and requires certain governmental approvals for a foreign investor to acquire control over strategically important Russian companies. On April 6, 2020, the Samara Court granted preliminary 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 has been postponed several times, most recently until December 22, 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 preliminary injunctions granted on April 6, 2020. We continue to operate the Samara location subject to the restrictions 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:~~

September 30, 2022(1)
December 31, 2021
Cash and cash equivalents $ 174 $ 79
Receivables from customers 98 120
Inventories 122 102
Properties, plants and equipment, net 186 200
Accounts payable, trade 27 47
For the nine months ended September 30, 2022 For the year ended December 31, 2021
Third-party sales(2)
$ 787 $ 968
Segment Adjusted EBITDA 62 87

~~_____________________~~

~~(1)As of September 30, 2022, our Russia operations had approximately $520 in net assets (excluding intercompany balances).~~

~~(2)In both 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 September 30, 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 13% of Arconic’s liquidity (comprised of Cash and cash equivalents of $312 and undrawn availability of $1,039 under Arconic’s ABL Credit Agreement (see ~~Note N~~)) at September 30, 2022. Cash and cash equivalents held in Russia increased $95 from December 31, 2021 to September 30, 2022, primarily due to increased earnings, currency appreciation, and lower aluminum prices. In addition, for the nine months ended September 30, 2022 and year ended December 31, 2021, our Samara, Russia facility generated 14% and 16% of Third-party sales (mostly packaging and industrial), respectively, and 13% of Segment Adjusted EBITDA for the Rolled Products segment. In May 2022, we announced that we would pursue the sale of our operations in Russia (see ~~Note O~~). As a condition of the acquisition of the Samara facility in 2005 by our former parent company, our Samara facility has an ongoing legal obligation to manufacture semi-finished products for Russian customers for defense applications. The sale of such products represented 1% of the third-party sales generated by our Samara facility for both the nine months ended September 30, 2022 and year ended December 31, 2021.

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 will be able to successfully complete the sale of our Russian operations. The potential impacts of an unfavorable resolution of the proceedings and underlying claims, and our decision to pursue the sale of our Russian operations include:

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

•~~a restriction on the disposition of shares or assets;~~

•~~decreases in or loss of third-party sales and Segment Adjusted EBITDA generated by our Russian operations;~~

•~~restrictions on capital investments in the facility;~~

•~~our ability to sell our Russian operations, and any losses on, and transaction expenses associated with, any such sale;~~

•~~our ability to access or repatriate the proceeds of any such sale; and~~

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 operations in Russia may have a material adverse effect on our financial condition, results of operations 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 and concluded in 2022, following which a final report will be written and subsequently published. As Phase 2 of the public inquiry ~~continues,~~concluded, 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~~

Claims brought by Survivors and Estates of Decedents

Beginning in 2020, multiple claimant groups comprised of survivors and estates of decedents of the Grenfell Tower fire ~~have~~comprised of approximately 1,000 claimants filed claims in the U.K. arising from that fire ~~including as follows:~~

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

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

•~~On June 26, 2020, three 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:~~numerous defendants including AAP SAS, Arconic Corporation, Howmet Aerospace Inc., and other defendants. These claims were consolidated and stayed by the ~~Royal Borough~~Court in order for the claimants and defendants to discuss alternate dispute resolution. The substantial majority of ~~Kensington~~these suits were settled in the first quarter of 2023 pursuant to the terms of a confidential settlement agreement and ~~Chelsea,~~are now discontinued and closed. Those suits that have not settled are the ~~Royal Borough~~subject of ~~Kensington~~ongoing alternate dispute resolution discussions though there is no certainty that such discussions will result in any settlement. The suits that remain are stayed until the next case management conference, which was postponed until a to-be-determined date in either October or November 2023 (previously scheduled for June 27, 2023). At December 31, 2022, based on a potential settlement of these suits, Arconic recorded a reserve of $61 for its share of a settlement and ~~Chelsea Tenant Management Organisation Ltd,~~a related receivable of $53 for costs to be covered by insurance proceeds. The reserve was reported in Other current liabilities and the ~~London Fire Commissioner,~~receivable was reported in Prepaid expenses and other current assets on 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, Whirlpoolaccompanying Consolidated Balance Sheet. In the 2023 first quarter, the Company ~~Polska Sp.z.o.o. and Whirlpool Corporation. These suits include as follows (represent preliminary best estimates of claimants in each suit):~~

◦~~Seven claimants represented by Deighton Pierce Glynn;~~

◦~~Six (previously five) claimants represented by SMQ Legal Services;~~

◦~~Three (previously four) claimants represented by Scott Moncrieff;~~

◦~~Thirty-one (previously twenty-seven) claimants represented by Saunders Law;~~

◦~~Thirty-three (previously thirty-four) claimants represented by Russell Cooke LLP. On March 29, 2022, Russell Cooke issued a further suit~~paid $43 for legal settlements applied against the ~~above-mentioned 21 Defendants on behalf~~reserve and received insurance proceeds of ~~one Claimant. The suits issued by Russell Cooke were consolidated;~~

◦~~Forty-seven (previously forty) claimants represented by Imran Khan & Partners;~~

◦~~Sixty-one (previously fifty-eight) claimants represented by Howe & Co.;~~

◦~~One hundred fourteen claimants represented by Hodge Jones and Allen Solicitor. On March 29, 2022, Hodge Jones and Allen issued a further suit~~$41. Also, in July 2023, the Company paid an additional $8 against the ~~above-mentioned 21 Defendants on behalf of four (previously five) Claimants. The suits issued~~previously established reserve.

Claims brought by ~~Hodge Jones and Allen were consolidated;~~Emergency Responders

◦~~Twenty-three (previously nineteen) claimants represented by Hickman & Rose;~~

◦~~Ten (previously five) claimants represented by Duncan Lewis Solicitors;~~

◦~~One hundred thirteen (previously one hundred eighteen) claimants represented by Birnberg Peirce;~~

◦Three hundred forty-one claimants represented by Bindmans LLP. On March 31, 2022, Bindmans issued a further suit against the above-mentioned 21 Defendants on behalf of five Claimants. The suits issued by Bindmans were consolidated;

◦~~Seventy-six (previously eighty-two) claimants represented by Bhatt Murphy Ltd; and~~

◦~~Twenty-six (previously twenty-four) claimants represented by Slater & Gordon.~~

~~Multiple~~Beginning in 2020, multiple claimant groups comprised of emergency responders who attended the Grenfell Tower fire ~~have also~~comprised of approximately 150 claimants filed claims against AAP SAS and other defendants in the London High Court arising ~~from~~out of the fire. These claims were consolidated and stayed by the Court in order for the claimants and defendants to discuss alternate dispute resolution. Those alternate dispute resolutions discussions are ongoing though there is no certainty that ~~fire, including as follows:~~such discussions will result in any settlement. Given the preliminary nature of these matters and the uncertainty of litigation, Arconic 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 the above-referenced disputes. The suits remain stayed until the next case management conference, which was postponed until a to-be-determined date in either October or November 2023 (previously scheduled for June 27, 2023).

•~~On June 11, 2020, 98 (previously 80) firefighters represented~~Claim brought by ~~Thompsons Solicitors filed suit against AAP SAS, as well as the~~ Royal Borough of Kensington and Chelsea and 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 10 (previously 7) firefighters have sought to be added to the suit.Ltd.

•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, two 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. One of the original firefighter claimants has now withdrawn from the suit.

~~On December 17,~~In 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;~~against AAP SAS and ~~(2) AAP SAS. The Claimants seek~~other defendants seeking 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~~fire. These claims were ~~filed in~~stayed by 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 heard together at a procedural hearing on July 7-8, 2021, before Senior Master Fontaine. At the hearing, the Senior Master made several directionsorder for the ~~future management of the Grenfell Tower litigation, including staying all suits against Arconic Corporation~~claimants and its affiliates until the next directions hearing, which was held on April 26, 2022. On July 28, 2022, the Senior Master stayed the cases for another 12 months until the next case management conference, which will be scheduled on a date after April 27, 2023.

~~The stay is intended~~defendants to allow Arconic Corporation, along with several other co-defendants to the above-mentioned litigations, to engage in discussions with the claimants' legal representatives in an attempt to reach a mutually agreeable settlement. The parties have agreed to overarching terms as to the form of Alternative Dispute Resolution that they are willing to participate in anddiscuss alternate dispute resolution. Those alternate dispute resolutions discussions are ~~ongoing.~~

ongoing though there is no certainty that such discussions will result in any settlement. Given the preliminary nature of these matters and the uncertainty of litigation, Arconic ~~Corporation~~ cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome in ~~any of~~ the above-referenced disputes. The suits remain stayed until the next case management conference, which was postponed until a to-be-determined date either in October or November 2023 (previously scheduled for June 27, 2023).

United States Litigation.

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)~~that 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.States. On September 16, 2020, the Court issued an order granting ParentCo 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~~appealed this ~~judgment;~~judgment and ParentCo Defendants ~~are cross-appealing~~ cross-appealed

one of the conditions. ~~The briefing has now been completed and oral argument is scheduled for June 6, 2022. Oral argument was held on Plaintiffs’ appeal in the Third Circuit on June 7, 2022.~~ On July 8, 2022, the Third Circuit decided the appeal in the Behrens matter in the ~~defendants favor. The Third Circuit affirmed the district court’s dismissal of plaintiffs’ case on forum non conveniens grounds. The Court also granted~~ ParentCo Defendants’ ~~cross-appeal, invalidating~~favor and invalidated one of the trial court’s dismissal conditions that would have left open the possibility for ~~Plaintiffs~~plaintiffs to return to the United States for a trial on ~~damages if defendants were found liable in English courts and if~~damages. On January 5, 2023, the ~~English court made certain other legal and factual findings. On July 22, 2022, the Plaintiffs~~plaintiffs filed a petition seeking ~~a panel rehearing, or~~ ~~en banc~~ rehearing, of the Third Circuit’s July 8, 2022 decision, which the Third Circuit denied on October 7, 2022. Because Plaintiffs have not exhausted all appellate options 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 lossesreview in the ~~event of an unfavorable outcome.~~U.S. Supreme Court. The Supreme Court denied that petition on February 21, 2023. This case is fully dismissed and closed.

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, three 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 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, defendants filed an answer to the second amended 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. On July 29, 2022, the Court denied the motion for certification of an interlocutory appeal and ordered the parties to submit a proposed scheduling order, which the parties jointly filed on August 29, 2022. The Court held a status conference on September 14, 2022, and ~~the parties now await an order from~~on December 2, 2022, the Court issued an initial Case Management Order (“CMO”) setting ~~the schedule~~forth dates for class certification briefing and discovery. ~~Given~~In March 2023, following successive mediation sessions, the ~~preliminary nature~~parties reached a settlement in principle that remains subject to court approval and, among other things, is to be covered by insurance proceeds, in exchange for the dismissal of ~~this matter~~the action and a release of all claims against the defendants. The settlement is without admission of fault or wrongdoing by the defendants. Plaintiffs filed a Stipulation of Settlement, a motion to preliminarily approve the settlement, and related papers with the court on April 21, 2023. In the 2023 six-month period, Arconic recorded a $74 charge to Costs of goods sold to establish a reserve for the settlement and a $74 benefit to Cost of goods sold for a related receivable for costs to be covered by insurance proceeds. The reserve was reported in Other current liabilities and the ~~uncertainty of litigation, Arconic Corporation cannot reasonably estimate at this time~~receivable was reported in Prepaid expenses and other current assets on the ~~likelihood of an unfavorable outcome or~~accompanying Consolidated Balance Sheet. The settlement was preliminarily approved by the ~~possible loss or range of losses in the event of an unfavorable outcome.~~Court on May 2, 2023. The final approval hearing is scheduled for August 9, 2023.

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 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.

Other. In 2018, Arconic entered into a consent order with the Iowa Department of Natural Resources (IDNR) to address overflows of stormwater combined with untreated process water from the Company’s Davenport plant which the IDNR alleged were unlawful bypasses prohibited by the facility’s wastewater discharge permit. These overflows occurred during periodic storm events that Arconic timely reported to the IDNR. The consent order required the Company to submit a feasibility study by November 1, 2022 evaluating the reasonableness, estimated cost, impact, and overall feasibility of all actions that could be implemented to avoid unlawful bypasses from occurring in the future. After conducting extensive monitoring, analysis, and investigative work, the Company submitted the feasibility study to the IDNR in October 2022. Arconic’s recommended approach, as documented in the feasibility study, consists of amending its wastewater discharge permit and constructing certain improvements to stormwater and process water systems expecting to result in estimated future capital expenditures of approximately $25 to $30, assuming Arconic’s approach is approved. In 2022, the Company established a reserve of $0.5 to cover future operating expenses associated with this proposed approach. On February 23, 2023, the IDNR informed Arconic of a regulatory approach that differs from Arconic’s proposed approach but that will require similar improvements. The Company now must submit a project schedule based on the IDNR’s approach by October 30, 2023. The consent order requires the Company to implement the approved remedy by November 1, 2028. Approval of a final remedy by the IDNR may result in additional expenditure and/or liability.

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 the results of operations, financial position or cash flows of Arconic.

3327

Q. Financial Instruments

Amounts designated below as kmt are thousand metric tons, ~~and~~ MMBtu are million British thermal ~~units.~~units, and MWh are megawatt hours.

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

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

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

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

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


		September 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
		Carrying value		Fair value		Carrying value		Fair value			Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	Cash and cash equivalents	$	312	$	312	$	335	$	335	Cash and cash equivalents	$	266	$	266	$	261	$	261
Hedging instruments and derivatives - assets	Hedging instruments and derivatives - assets	136		136		1		1		Hedging instruments and derivatives - assets	53		53		21		21
Short-term debt		150		150		—		—
Hedging instruments and derivatives - liabilities	Hedging instruments and derivatives - liabilities	1		1		23		23		Hedging instruments and derivatives - liabilities	14		14		8		8
Long-term debt	Long-term debt	1,596		1,470		1,594		1,692		Long-term debt	1,598		1,620		1,597		1,539

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

Cash and cash ~~equivalents and Short-term debt.~~equivalents. 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.

Separately, Arconic has several energy 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.

The following table presents the fair value and amount of underlying by type for all hedging ~~instruments:~~instruments and derivatives:


		September 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
Assets	Assets									Assets
Cash flow hedges	Cash flow hedges									Cash flow hedges
Aluminum	Aluminum	$	109	230	kmt	$	—	—		Aluminum	$	48	242	kmt	$	—	17	kmt
Energy		10		8.6	MMBtu	—		—
Alloying materials		(4)		5	kmt	—		—
Alloying materials*										Alloying materials*	(1)		1	kmt	(1)		1	kmt
Marked-to-market	Marked-to-market									Marked-to-market
Aluminum	Aluminum	1		17	kmt	1		14	kmt	Aluminum	9		33	kmt	6		60	kmt
Energy	Energy	3		0.2	MMBtu	—		—		Energy	(3)		4.7	MMBtu	16		12.1	MMBtu
		$	119			$	1				$	53			$	21

Liabilities	Liabilities									Liabilities
Cash flow hedges	Cash flow hedges									Cash flow hedges
Aluminum		$	—	—		$	18	251	kmt
Aluminum*										Aluminum*	$	—	29	kmt	$	(14)	368	kmt
Energy	Energy	—		—		2		3.3	MMBtu	Energy	9		7.5	MMBtu	5		6.3	MMBtu
Alloying materials	Alloying materials	—		—		—		—	kmt	Alloying materials	1		6	kmt	1		3	kmt
Marked-to-market	Marked-to-market									Marked-to-market
Aluminum	Aluminum	—		—		3		19	kmt	Aluminum	2		1	kmt	12		53	kmt
Energy										Energy
Natural Gas										Natural Gas	2		2.7	MMBtu	4		0.6	MMBtu
Electricity										Electricity	—		8,314	MWh	—
		$	—			$	23				$	14			$	8

__________________

The hedging instruments are classified as assets or liabilities based on the overall position of all instruments held with respective counterparties.

3529

The following table presents the unrealized and realized gains and losses associated with those hedging instruments designated as cash flow hedges:


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Unrealized	Unrealized									Unrealized
Other comprehensive loss
Other comprehensive income (loss)										Other comprehensive income (loss)
Aluminum	Aluminum	$	66	$	(66)	$	113	$	(161)	Aluminum	$	58	$	203	$	49	$	47
Energy	Energy	14		—		27		—		Energy	(1)		—		(14)		13
Alloying materials	Alloying materials	(2)		—		(4)		1		Alloying materials	(2)		(2)		(1)		(2)
		$	78	$	(66)	$	136	$	(160)		$	55	$	201	$	34	$	58

Realized*	Realized*									Realized*
Sales	Sales									Sales
Aluminum	Aluminum	$	90	$	(52)	$	(17)	$	(104)	Aluminum	$	18	$	(53)	$	17	$	(107)
Cost of goods sold	Cost of goods sold									Cost of goods sold
Aluminum	Aluminum	(3)		(2)		(4)		(6)		Aluminum	—		—		—		(1)
Energy	Energy	(8)		—		(15)		—		Energy	6		(7)		11		(7)
Alloying materials	Alloying materials	1		(1)		1		(2)		Alloying materials	1		—		1		—
		$	100	$	(49)	$	1	$	(96)		$	11	$	(46)	$	5	$	(99)

__________________

*In all periods presented, these amounts were reclassified from Accumulated other comprehensive loss (see Note K).

~~For~~The following table presents the unrealized and realized gains and losses associated with those hedging instruments that do not qualify for hedge accounting and derivatives:


	Second quarter ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Unrealized
Sales
Aluminum	$	19	$	4	$	14	$	6
Cost of goods sold
Energy*	1		(20)		16		(23)
	$	18	$	24	$	(2)	$	29
Realized
Sales
Aluminum	$	(10)	$	4	$	(6)	$	2
Cost of goods sold
Energy	4		—		5		—
	$	(14)	$	4	$	(11)	$	2

__________________

*In the 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 ~~2022 third quarter and nine-month period, the Company recognized both~~estimated fair value of natural gas supply contracts determined to be derivatives. This amount was comprised of an unrealized loss of $5 ~~and~~for the 2022 first quarter, an unrealized gain of ~~$1, respectively, and a realized gain of $3 and $5, respectively, in Sales~~$6 for ~~aluminum, and an unrealized loss of $1~~the 2021 annual period, and an unrealized gain of $2 ~~respectively, and a realized gain of $2 (both periods) in Cost of goods sold~~ for ~~energy. Unrealized and realized impacts~~the 2020 fourth quarter. The out-of-period amounts were not material ~~in the 2021 third quarter and nine-month~~to any interim or annual period.

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~~may be 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 September 30, 2022, Arconic’s derivatives classified as assets and liabilities consisted of $16 (9.1 MMBtu) and $1 (6.0 MMBtu), respectively. Additionally, in the 2022 third quarter and nine-month period, the Company recognized an unrealized loss of $5 and an unrealized gain of $15, respectively, 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.

3631

R. ~~Receivables~~Working Capital Programs

~~On January 5, 2022, the Company entered into~~Receivables. Arconic has two separate arrangements, each with a ~~one-year arrangement with a~~single financial institution, to sell certain customer receivables outright without recourse on a continuous basis. All such sales are at ~~Arconic's~~the Company’s discretion. The first arrangement, which was executed in January 2022, relates to certain of Arconic’s U.S. operations and automatically renews each year unless terminated in accordance with the provisions of the underlying purchase agreement. The second arrangement, which was executed in July 2022, relates to certain of the Company’s European operations. Under ~~this arrangement, the Company~~both arrangements, Arconic serves in an administrative capacity, including collection of the receivables from the respective customers and remittance of these cash collections to the respective financial institution. Accordingly, upon the sale of customer receivables to the financial ~~institution, Arconic~~institutions, the Company removes the underlying trade receivables from ~~the~~its Consolidated Balance Sheet and includes the reduction as a positive amount in the (Increase) in receivables line item within Operating Activities on ~~the~~its Statement of Consolidated Cash Flows.At no time can the outstanding balance due to the respective financial institution exceed $225 ~~(increased in February from original amount~~and $46 (€42.5) for the U.S. and European, respectively, arrangements. In the 2023 six-month period, Arconic sold customer receivables of ~~$100).~~$184 and remitted cash collections of $182 to the financial institutions. In the 2022 ~~nine-month~~six-month period, the Company sold customer receivables of ~~$963~~$550, collected cash from customers of $438, and remitted cash collections ~~of $805~~ to the financial ~~institution. Of~~institution of $425 under the ~~total~~U.S. arrangement.

Supplier Finance Program. Arconic has an existing arrangement (capacity of $225 – reduced by $25 in the 2023 second quarter) with a financial institution to make available a finance program to the Company’s suppliers. Under this program, Arconic agrees to pay the financial institution the stated amount of ~~customer receivables sold~~confirmed invoices from its designated suppliers on the respective original maturity date of the invoices. The supplier invoices that have been confirmed as valid under the program require payment in full within no more than 120 days of the invoice date. The Company or the financial institution may terminate the arrangement upon at least 30 days’ notice. Arconic does not determine the terms or conditions of the arrangement between the financial institution and the suppliers nor does the Company participate in the transactions between its suppliers and the financial institution. As of June 30, 2023 and December 31, 2022, ~~nine-month period, $77~~Arconic had outstanding obligations of $132 and $124, respectively, which have been confirmed as valid to the financial institution, under this program. These outstanding obligations were ~~included~~reported in ~~Receivables from customers~~Accounts payable, trade on the accompanying Consolidated Balance ~~Sheet as of December 31, 2021.~~

Sheet.

3732

S. 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.~~Statements, except as described below.

The Merger Agreement was adopted by the Company’s stockholders at a special meeting of the Company’s stockholders on July 25, 2023 (see Note A).

On July 31, 2023, the Company provided notice to the trustee and registrar under the applicable indenture relating to the Company’s 6.0% Senior Secured First-Lien Notes due 2025 (the “2025 Notes”) and 6.125% Senior Secured Second-Lien Notes due 2028 (the “2028 Notes”) that on August 10, 2023 (the “Redemption Date”), subject to and conditioned upon the closing of the Transaction (the “Condition”), the Company intends to redeem the aggregate principal amount of $700 for the 2025 Notes and $900 for the 2028 Notes at a redemption price equal to 101.500% and 103.063%, respectively, of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Redemption Date, in accordance with the terms of the respective indenture. At the Company’s discretion, the Redemption Date may be delayed until such time as the Condition is satisfied (or waived by the Company in its sole discretion). The Company may rescind the notices of redemption in its sole discretion if the Condition is not satisfied.

3833

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~~Proposed Merger

On May 4, 2023, Arconic entered into an Agreement and Plan of Merger (the “Merger Agreement”) to ~~“ParentCo” refer to~~be acquired by funds managed by affiliates of Apollo Global Management, Inc. (“Apollo”), along with a minority investment from funds managed by affiliates of Irenic Capital Management LP (“Irenic”), in an all-cash transaction that values Arconic ~~Inc., a Delaware corporation, and its consolidated subsidiaries (through March 31, 2020,~~ at ~~which time it was renamed Howmet Aerospace Inc. (“Howmet”)~~an enterprise value of approximately $5,000 (the “Transaction” or the “Merger”). On ~~April 1, 2020 (the “Separation Date”), ParentCo separated into two standalone, publicly-traded companies,~~the terms and subject to the conditions of the Merger Agreement, the Company’s stockholders will receive $30.00 per share in cash in exchange for each share of outstanding common stock. The Transaction is expected to close in the third quarter of 2023, subject to customary closing conditions, including approval by the Company’s stockholders. The Merger Agreement was adopted by the Company’s stockholders at a special meeting of the Company’s stockholders on July 25, 2023. Upon the closing of the Transaction, Arconic ~~Corporation~~will operate as a privately-held company. In the 2023 second quarter, Arconic recognized $11 in Restructuring and ~~Howmet (the “Separation”). In connection~~other charges on the Company’s Statement of Consolidated Operations for incurred fees and expenses associated with the ~~Separation, as~~Transaction. Additional merger-related costs are expected to be recognized in a future period; however, such amounts are contingent on the outcome of ~~March 31, 2020,~~the Transaction. Assuming the Transaction closes, the Company ~~and Howmet entered into several~~expects to recognize approximately $60 of additional acquisition-related expenses, which have not been accrued to date, associated with contractual agreements ~~to effect~~that are contingent upon the ~~Separation, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Overview in~~closing of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of Arconic Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.Transaction.

Results of Operations

~~Outlook~~Earnings Summary

Management has revised certain expectations for sales by major end market, from what had been previously disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in both Part I Item 2Sales. Sales were $1,990 in the ~~Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2022 and in Part II Item 7~~2023 second quarter compared to $2,548 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Consistent with the disclosure included in the Form 10-K, the revised expectations do not include the impact of changes in aluminum prices.

•~~Ground Transportation: we lowered our sales outlook at the end of third quarter~~ 2022 to reflect anticipated growth of approximately 0% to 5% (versus prior expectation of 5% to 10%) in 2022 compared with 2021 due to continued supply chain challenges being experienced by original equipment manufacturers.

•Industrial Products: we lowered our sales outlook at the end of third quarter 2022 to reflect anticipated growth of approximately (10)% to 0% (versus prior expectation of 5% to 10%) in 2022 compared with 2021 due to operational issues at our Tennessee and Lancaster plants that are impacting shipments in this end market.

•~~Building and Construction: we raised our sales outlook at the end of first quarter 2022 (unchanged at the end of both~~ second quarter and ~~third quarter 2022) to reflect anticipated growth of approximately 15% to 20% (versus prior expectation of 5% to 10%)~~$3,919 in ~~2022~~the 2023 six-month period compared with ~~2021, driven by growth~~$4,739 in ~~North American non-residential construction activity~~the 2022 six-month period. The decrease of $558, or 22%, in the second quarter comparison and ~~our ability to capture meaningful price increases to address inflationary cost pressures.~~

•~~Packaging: we lowered our sales outlook at~~$820, or 17%, in the ~~end of third quarter 2022 to reflect anticipated growth of approximately 20% to 30% (versus prior expectation of 20% to 40%) in 2022 compared with 2021 due to lower export sales from China and Russia.~~

•Aerospace: we lowered our sales outlook at the end of third quarter 2022 to reflect anticipated growth of approximately 30% to 40% (versus prior expectation of 35% to 45%) in 2022 compared with 2021 due to production challenges at our Davenport plant that are impacting shipments in this end market.

~~Legal Proceedings Involving our Russian Operations~~

Our subsidiaries that own and operate our facility located in Samara, Russia are, and have been since the Separation, subject to 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 preliminary injunctions prohibiting, among other actions, the disposition of shares or assets, the payment of dividends, placement of bonds, amendments to organizational documents, and changes to the subsidiaries’ chief executive officer and board of directors. See ~~Note P~~ to the Consolidated Financial Statements in Part I, Item 1. “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 preliminary injunctions, and could result in a requirement by the Russian government that we divest some or all of the assets located at the Samara facility, requirements related to or restrictions on the terms of any such divestiture, or the nationalization or other expropriation of our Russian operations by the Russian government.

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

~~_____________________~~

~~(1)As of September 30, 2022, our Russia operations had approximately $520 in net assets (excluding intercompany balances).~~

At September 30, 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 13% of Arconic’s liquidity (comprised of Cash and cash equivalents of $312 and undrawn availability of $1,039 under Arconic’s ABL Credit Agreement (see ~~Note N~~ to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q)) at September 30, 2022. Cash and cash equivalents held in Russia increased $95 from December 31, 2021 to September 30, 2022,six-month period comparison was primarily due to ~~increased earnings, currency appreciation,~~the absence of sales ($314 and ~~lower aluminum prices. In addition, for~~$547 in the ~~nine months ended September 30,~~ 2022 second quarter and year ended December 31, 2021, our Samara, Russia facility generated 14% and 16% of Third-party sales (mostly packaging and industrial), respectively, and 13% of Segment Adjusted EBITDA for the Rolled Products segment. As a condition of the acquisition of the Samara facility in 2005 by oursix-month period, respectively) from Arconic’s former parent company, our Samara facility has an ongoing legal obligation to manufacture semi-finished products for Russian customers for defense applications. The sale of such products represented 1% of the third-party sales generated by our Samara facility for both the nine months ended September 30, 2022 and year ended December 31, 2021.

~~In May 2022, we announced that we would pursue the sale of our~~ operations in ~~Russia. Arconic has engaged with both the U.S. government and Russian government with the objective of executing a lawful sale of its Russian operations. The Company has had several interested parties~~Russia, which were sold in the process and is ultimately working towards completion of a sale of its Russian operations to a third party pursuant to a framework agreement, the closing of which is subject to the receipt of governmental approvals and other conditions and contingencies. See2022 fourth quarter (see Note O to the Consolidated Financial Statements in Part I Item 1 of this Form ~~10-Q.~~

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 will be able to successfully complete the sale of our Russian operations. The potential impacts of an unfavorable resolution of the proceedings10-Q), lower aluminum prices, and ~~underlying claims, and our decision to pursue the sale of our Russian operations, include:~~

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

•~~a restriction on the disposition of shares or assets;~~

•~~decreases in or loss of third-party sales and Segment Adjusted EBITDA generated~~lower volumes, partially offset by ~~our Russian operations;~~

•~~restrictions on capital investments in the facility;~~

•~~our ability to sell our Russian operations and any losses on, and transaction expenses associated with, any such sale;~~

•~~our ability to access or repatriate the proceeds of any such sale; and~~

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 existing contractual obligations could subject us to reputational harm and potential litigation involving customers and suppliers. Increased restrictions on our operations in Russia may have a material adverse effect on our

financial condition, results of operations or cash flows. Our operations in Russia, our ability to resolve the proceedings and underlying claims related to our facility in Samara, Russia, and our ability to complete the sale of our Russian operations 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 continued geopolitical instability and disruption, which are likely to adversely affect our business, financial condition, results of operations or cash flows and our ability to complete the sale of our Russian operations.” ~~for additional information.~~

~~Earnings Summary~~

~~Sales.~~ Sales were $2,280 in the 2022 third quarter compared to $1,890 in the 2021 third quarter and $7,019 in the 2022 nine-month period compared with $5,366 in the 2021 nine-month period. The increase of $390, or 21%, in the third quarter comparison was primarily due to favorable impacts from ~~aluminum hedging activities, favorable~~ product pricing and ~~favorable~~ product mix, somewhat offset by lower aluminum prices. In the nine-month period comparison, the improvement of $1,653, or 31%, was principally due to higher aluminum prices, favorable impacts from aluminum hedging activities, favorable product pricing, and favorable product mix, all of which were slightly offset by unfavorable foreign currency movements driven by a weaker euro.mix.

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 each of the 2022 and 2021 third quarter included $2 and the 2022 and 2021 nine-month period included $5 and $11, respectively, associated with this settlement.

Cost of goods sold. COGS was ~~$2,074,~~$1,724, or ~~91.0%~~86.6% of Sales, in the 2023 second quarter compared to $2,258, or 88.6% of Sales, in the 2022 ~~third~~second quarter ~~compared to $1,676,~~and $3,448, or ~~88.7%~~88.0% of Sales, in the ~~2021 third quarter and $6,288,~~2023 six-month period compared with $4,214, or ~~89.6%~~88.9% of Sales, in the 2022 ~~nine-month period compared with $4,674, or 87.1% of Sales, in the 2021 nine-month~~six-month period. In the ~~third~~second quarter and ~~nine-month~~six-month period comparisons, the percentage was ~~negatively~~positively impacted by favorable product pricing and lower aluminum prices, partially offset by higher costs for ~~direct~~ materials ~~including alloying materials,~~other than aluminum, labor and energy, and ~~transportation,~~for the six-month period comparison, the carryover impact of the operational issues ~~and production outages affecting~~in the Rolled Products segment, and higher aluminum prices (underlying metal price is contractually passed-through to most customers at cost). These negative impacts were partially offset by favorable product pricing driven by pricing pressures primarily in North America as a result2022 fourth quarter on the moving average costs of ~~inflation.~~Arconic’s U.S. rolling mills.

Additionally, on May 14, 2022, the Company and the United Steelworkers reached a tentative four-year labor agreement covering approximately 3,300 employees at four U.S. locations; the previous labor agreement expired on May 15, 2022. ~~The~~the tentative agreement was ratified by the union employees on June 1, 2022. In the 2022 ~~nine-month~~second quarter and six-month period, Arconic recognized $19 in Cost of goods sold primarily for a one-time signing bonus for the covered employees.

Selling, general administrative, and other expenses. SG&A ~~was $62~~expenses were $79 in the 2023 second quarter compared to $73 in the 2022 ~~third~~second quarter and $151 in the 2023 six-month period compared to ~~$63 in the 2021 third quarter and $200~~$138 in the 2022 ~~nine-month~~six-month period. In the second quarter and six-month period ~~compared to $183 in~~comparisons, the ~~2021 nine-month period. The decrease~~increase of ~~$1,~~$6, or 2%8%, ~~in the third quarter comparison~~and $13, or 9%, respectively, was mostly due to ~~lower incentive compensation expense mostly offset by an increase in labor costs and legal fees. The increase of $17, or 9%, in the 2022 nine-month period comparison was largely attributable to~~ higher ~~labor costs,~~ stock-based employee compensation expense and ~~legal fees.~~labor costs. SG&A expenses as a percentage of Sales ~~was 2.7%~~were 4.0% in the 2023 second quarter compared to 2.9% in the 2022 ~~third~~second quarter and 3.9% in the 2023 six-month period compared to ~~3.3% in the 2021 third quarter and 2.8%~~2.9% in the 2022 ~~nine-month period compared to 3.4% in the 2021 nine-month~~six-month period.

Provision for depreciation and amortization. D&A was ~~$59~~$52 in the 2023 second quarter compared to $62 in the 2022 ~~third~~second quarter and $105 in the 2023 six-month period compared to ~~$61 in the 2021 third quarter and $181~~$122 in the 2022 ~~nine-month~~six-month period. In the second quarter and six-month period ~~compared to $186 in~~comparisons, the ~~2021 nine-month period. The~~ decrease of ~~$2,~~$10, or 3%16%, ~~in the third quarter comparison,~~ and ~~$5,~~$17, or ~~3%, in the nine-month period~~14% was mainly ~~caused by~~due to the absence of depreciation resulting from ~~asset retirements~~the sale of Arconic’s operations in Russia in the 2022 fourth quarter ($7 and $13 in the 2022 second quarter and six-month period, respectively– see Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q) and a decrease in amortization related to intangible assets.

Restructuring and other charges. Restructuring and other charges were ~~$112~~$9 in the 2023 second quarter and ~~$119~~six-month period and $2 and $7 in the 2022 ~~third~~second quarter and ~~nine-month period, respectively, and $14 and $612 in the 2021 third quarter and nine-month~~six-month period, respectively. See Note E to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

~~Interest expense~~. Interest expense was $27 in the 2022 third quarter compared to $26 in the 2021 third quarter and $78 in the 2022 nine-month period compared to $74 in the 2021 nine-month period. The increase of $1, or 4%, in the third quarter comparison was principally related to $150 borrowed, of which $50 was repaid, under the ABL Credit Facility. The increase of $4, or 5%, in the nine-month period comparison was principally related to $250 borrowed, of which $100 was repaid, under the ABL Credit Facility, and additional interest associated with a $300 debt offering completed in March 2021. See Financing Activities under Liquidity and Capital Resources below for additional information related to these financing transactions.

Other expenses (income), net. Other expenses, net was ~~$27~~$16 and $9$27 in the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, respectively, compared to ~~$15~~Other income, net of $35 and ~~$52~~$18 in the ~~2021 third~~2022 second quarter and ~~nine-month~~six-month period, respectively. See Note F to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Provision ~~(Benefit)~~ for income taxes. The Company’s effective tax rate, including discrete items, was ~~27.8%~~22.4% and ~~21.4%~~24.3% in the 2023 second quarter and six-month period, respectively, and 24.8% and 24.2% in the 2022 ~~third~~second quarter and ~~nine-month period, respectively, and 40.7% and 18.4% in the 2021 third quarter and nine-month~~six-month period, respectively. See Note H to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Segment Information

Arconic’s profit or loss measure for its reportable segments is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization). 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, (ii) Metal price 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.

Rolled Products


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Third-party sales	Third-party sales	$	1,861	$	1,559	$	5,778	$	4,397	Third-party sales	$	1,529	$	2,113	$	3,033	$	3,917
Intersegment sales	Intersegment sales	10		9		33		26		Intersegment sales	8		11		19		23
Total sales	Total sales	$	1,871	$	1,568	$	5,811	$	4,423	Total sales	$	1,537	$	2,124	$	3,052	$	3,940
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	111	$	155	$	461	$	493	Segment Adjusted EBITDA	$	158	$	174	$	275	$	350
Third-party aluminum shipments (kmt)	Third-party aluminum shipments (kmt)	345		345		1,067		1,043		Third-party aluminum shipments (kmt)	293		375		578		722

Third-party sales for the Rolled Products segment ~~increased $302,~~decreased $584, or ~~19%~~28%, in the ~~2022 third~~2023 second quarter and ~~$1,381,~~$884, or ~~31%~~23%, in the ~~2022 nine-month~~2023 six-month period compared to the same periods in ~~2021.~~2022. In both comparisons, the ~~third quarter comparison, the increase~~decrease was primarily due to ~~favorable impacts from aluminum hedging activities, price increases for~~ the ~~pass-through~~absence of ~~certain inflation impacts,~~sales ($314 and favorable product mix, somewhat offset by lower aluminum prices (see below). The improvement in the nine-month period comparison was largely the result of higher aluminum prices (see below), favorable impacts from aluminum hedging activities, price increases for the pass-through of certain inflation impacts, favorable product mix, and a net increase in volumes (see below).

In the third quarter comparison, the lower aluminum prices were mostly driven by an 11% decrease in the average LME aluminum price and a decline in regional premiums, including a 21% decrease in the average Midwest premium (United States). The higher aluminum prices in the nine-month period comparison were largely driven by a 19% rise in the average LME aluminum price and increases in regional premiums, including a 31% increase in the average Midwest premium (United States).

The net increase in volumes in the nine-month period comparison was mostly due to improvements in the packaging, aerospace, and automotive component of ground transportation end markets. Volume related to the packaging end market increased significantly as the can sheet operation at the Tennessee rolling mill essentially reached full capacity by the end of the

2022 second quarter. Higher volume associated with the aerospace end market was driven by continued recovery from the COVID-19 pandemic. An improvement in volume for the automotive component of ground transportation was due to slow recovery from the global semiconductor chip shortage. These higher volumes were partially offset by a decline in both industrial products and the commercial transportation component of ground transportation end markets, both of which were impacted by supply chain disruptions. Additionally, the Rolled Products segment experienced operational challenges and production outages associated with electrical and mechanical issues at the Tennessee rolling mill and disruptions in both the Tennessee and Davenport casting operations.

~~Segment Adjusted EBITDA for this segment decreased $44, or 28%, and $32, or 6%,~~$547 in the 2022 ~~third~~second quarter and ~~nine-month~~six-month period, ~~respectively, compared with the corresponding periods~~respectively) from this segment’s former operations in 2021. The decline in both comparisons was principally related to higher costs for alloying materials, energy, maintenance, and transportation all due to inflation, the impact of the previously mentioned operational challenges and production outages, and increased expenses for labor as this segment increases its workforce to address current and future volume growth. These higher costsRussia, which were ~~partially offset by customer price increases due to adjustments for inflation impacts and,~~sold in the ~~nine-month period comparison, a benefit derived from the absence of below normal absorption of fixed costs that occurred in the 2021 first quarter.~~

~~The Company is working towards completion of a sale of its operations in Russia. See “—Legal Proceedings Involving our Russian Operations” and~~2022 fourth quarter (see Note O to the Consolidated Financial Statements in Part I Item 1 of this Form ~~10-Q~~10-Q), as well as lower aluminum prices (see below), and a net decrease in volumes of the ongoing operations (see below). These negative impacts were somewhat offset by favorable product mix driven by aerospace and price increases across most end markets.

In the second quarter and six-month period comparisons, the lower aluminum prices were mostly driven by a decrease of 21% and 24%, respectively, in the average LME aluminum price and a decline in regional premiums, including a decrease of 32% and 27%, respectively, in the average Midwest premium (United States).

The net decrease in volumes of the ongoing operations in both comparisons was mostly due to a decline in the industrial products end market caused by lower demand. Additionally, to a lesser extent, a decrease in volume related to both the packaging and building and construction end markets contributed to the decline in the second quarter and six-month period, respectively, comparisons. This lower volume was mainly driven by weaker demand in Asia for ~~additional information.~~the packaging end market and in both Europe and North America for the building and construction end market. These negative impacts were partially offset by improvements in the automotive component of the ground transportation end market and the aerospace end market. An improvement in volume for the automotive component of ground transportation was primarily due to recovery from the global semiconductor chip shortage and supply chain disruptions. Higher volume associated with the aerospace end market was principally driven by continued recovery from the COVID-19 pandemic.

Segment Adjusted EBITDA for this segment decreased $16, or 9%, and $75, or 21%, in the 2023 second quarter and six-month period, respectively, compared with the corresponding periods in 2022. The decline in both comparisons was principally related to the absence of the contribution made in the 2022 second quarter and six-month period of $24 and $42, respectively, by this segment’s former operations in Russia, which were sold in the 2022 fourth quarter (see Note O to the Consolidated

Financial Statements in Part I Item 1 of this Form 10-Q), the carryover impact of the operational issues in the 2022 fourth quarter on the moving average costs of the U.S. rolling mills in the 2023 six-month period, higher input costs due to inflation, and increased expenses for labor as this segment increased its workforce to address current and future volume growth. These negative impacts were partially offset by favorable product mix and customer price increases due to adjustments for inflation impacts.

Building and Construction Systems


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Third-party sales	Third-party sales	$	321	$	257	$	941	$	750	Third-party sales	$	319	$	329	$	627	$	620
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	49	$	34	$	146	$	97	Segment Adjusted EBITDA	$	53	$	53	$	107	$	97

Third-party sales for the Building and Construction Systems segment ~~increased $64,~~decreased $10, or ~~25%~~3%, in the ~~2022 third~~2023 second quarter and ~~$191,~~increased $7, or ~~25%~~1%, in the ~~2022 nine-month~~2023 six-month period compared to the same periods in ~~2021. In both comparisons,~~2022. The decline in the ~~improvement~~2023 second quarter comparison was mostly attributable to a decrease in volumes across the entire portfolio, partially offset by multiple product price increases implemented in 2021 and the 2022 first quarter across the entire portfolio to address inflationary cost pressures. The increase in the 2023 six-month period comparison was mostly attributable to multiple product price increases implemented ~~since March~~in 2021 and the 2022 first quarter across the entire portfolio to address inflationary cost ~~pressures.~~pressures, partially offset by a decrease in volumes across the entire portfolio.

Segment Adjusted EBITDA for this segment remained flat and increased ~~$15,~~$10, or ~~44%, and $49, or 51%~~10%, in the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, respectively, compared with the corresponding periods in ~~2021. In both comparisons,~~2022. The 2023 second quarter comparison was impacted by favorable product pricing, offset by higher costs for alloying materials, maintenance, and labor, all due to inflation. The improvement in the ~~improvement~~2023 six-month period was primarily related to favorable product pricing, partially offset by higher costs for ~~aluminum,~~ alloying materials, maintenance, and ~~transportation,~~labor, all due to inflation.

The Company iswas evaluating strategic options for the businesses that comprise the Building and Construction Systems segment. See Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional information.

Extrusions


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Third-party sales	Third-party sales	$	98	$	74	$	300	$	219	Third-party sales	$	125	$	105	$	245	$	202
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	(13)	$	(7)	$	(30)	$	(19)	Segment Adjusted EBITDA	$	(1)	$	(12)	$	(5)	$	(17)
Third-party aluminum shipments (kmt)	Third-party aluminum shipments (kmt)	9		9		28		26		Third-party aluminum shipments (kmt)	10		9		20		19

Third-party sales for the Extrusions segment increased ~~$24,~~$20, or ~~32%~~19%, in the ~~2022 third~~2023 second quarter and ~~$81,~~increased $43, or ~~37%~~21%, in the ~~2022 nine-month~~2023 six-month period compared to the same periods in ~~2021. In both comparisons, the~~2022. The improvement was principally the result of favorable product mix, primarily due to higher volumes for aerospace, ~~and automotive;~~as well as price increases ~~due~~ to ~~adjustments for~~

~~inflation impacts and~~offset higher ~~aluminum prices; and a net increase in volumes, mostly driven by aerospace due to the lessened impact of the COVID-19 pandemic.~~input costs.

Segment Adjusted EBITDA for this segment ~~decreased $6,~~increased $11, or ~~86%~~92%, and ~~$11,~~$12, or ~~58%~~71%, in the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, respectively, compared with the corresponding periods in ~~2021.~~2022. The ~~decrease~~increase in both comparisons was mainly attributable to the realization of previous customer price increases and favorable product mix, somewhat offset by increased spending on equipment repairs and outside services and higher costs for aluminum, transportation, outside services, and energy. The higher costs were the result of both increased pricing due to inflation and usage due to operational issues. These negative impacts were mostly offset by customer price increases due to adjustments for inflation impacts. Overall, operational issues are driving underperformance in this segment.alloying metal.

In the 2022 third quarter, management initiated a business review of the Extrusions segment aimed at identifying alternatives to improve the financial performance of this segment in future periods. Management continues to assess alternatives and no decisions or commitments were made as of September 30, 2022. In connection with this review, the Company updated its five-year strategic plan, the results of which indicated that there is an expected decline in the forecasted financial performance for the Extrusions segment (and asset group), including continued forecasted losses. As such, management evaluated the recoverability of the long-lived assets of the Extrusions asset group by comparing the aggregate carrying value to the undiscounted future cash flows. The result of this evaluation was that the long-lived assets were deemed to be impaired as the aggregate carrying value exceeded the undiscounted future cash flows. The impairment charge was measured as the difference between the aggregate carrying value and aggregate fair value of the long-lived assets. Fair value was determined using an orderly liquidation methodology for the machinery and equipment and a sales comparison approach for the land and structures. As a result, the Company recorded an impairment charge of $92, composed of $90 for Properties, plants, and equipment and $2 for intangible assets (included within Other noncurrent assets), in Restructuring and other charges on the Company’s Statement of Consolidation Operations (see

~~Note~~E

~~to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). This charge was not included in Extrusion’s Segment Adjusted EBITDA.~~

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


		Third quarter ended September 30,				Nine months ended September 30,					Second quarter ended June 30,				Six months ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Total Segment Adjusted EBITDA	Total Segment Adjusted EBITDA	$	147	$	182	$	577	$	571	Total Segment Adjusted EBITDA	$	210	$	215	$	377	$	430
Unallocated amounts:	Unallocated amounts:									Unallocated amounts:
Corporate expenses(1)	Corporate expenses(1)	(4)		(7)		(23)		(26)		Corporate expenses(1)	(11)		(10)		(20)		(19)
Stock-based compensation expense	Stock-based compensation expense	(6)		(8)		(19)		(15)		Stock-based compensation expense	(12)		(8)		(18)		(13)
Metal price lag(2)	Metal price lag(2)	15		(21)		9		(27)		Metal price lag(2)	(20)		30		(20)		(6)
Unrealized (losses) gains on mark-to-market hedging instruments and derivatives		(7)		—		16		—
Unrealized gains (losses) on mark-to-market hedging instruments and derivatives										Unrealized gains (losses) on mark-to-market hedging instruments and derivatives	18		21		(2)		23
Provision for depreciation and amortization	Provision for depreciation and amortization	(59)		(61)		(181)		(186)		Provision for depreciation and amortization	(52)		(62)		(105)		(122)
Restructuring and other charges(3)	Restructuring and other charges(3)	(112)		(14)		(119)		(612)		Restructuring and other charges(3)	(9)		(2)		(9)		(7)
Other(4)	Other(4)	(10)		(3)		(56)		(19)		Other(4)	(7)		(40)		(15)		(46)
Operating (loss) income		(36)		68		204		(314)
Operating income										Operating income	117		144		188		240
Interest expense	Interest expense	(27)		(26)		(78)		(74)		Interest expense	(25)		(26)		(50)		(51)
Other expenses, net		(27)		(15)		(9)		(52)
Benefit (Provision) for income taxes		25		(11)		(25)		81
Other (expenses) income, net										Other (expenses) income, net	(16)		35		(27)		18
Provision for income taxes										Provision for income taxes	(17)		(38)		(27)		(50)
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	—		—		(1)		—		Net income attributable to noncontrolling interest	—		(1)		—		(1)
Consolidated net (loss) income attributable to Arconic Corporation		$	(65)	$	16	$	91	$	(359)

Consolidated net income attributable to Arconic Corporation										Consolidated net income attributable to Arconic Corporation	$	59	$	114	$	84	$	156

__________________

(1)Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.

(3)In the ~~2022 third~~2023 second quarter and ~~nine-month~~six-month period, Restructuring and other charges includes ~~a $92 asset impairment charge~~$11 for costs incurred related to the ~~Extrusions segment~~Transaction (see ~~Extrusions above)~~Proposed Merger above and Note E to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q).

(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. In the 2022 ~~third~~second quarter and ~~nine-month~~six-month period, the respective amounts include costs related to a new union labor agreement of $19 and environmental remediation charges of $9, ~~and $18, respectively. Additionally in the 2022 nine-month period, Other includes costs related to the new union labor agreement~~both of ~~$19. These charges~~which were recorded in Cost of goods sold on ~~Arconic’s~~the Company’s Statement of Consolidated Operations. See Note G ~~and~~ ~~Environmental Matters in~~ ~~Note P, respectively,~~ to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Environmental Matters

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

Liquidity and Capital Resources

At September 30, 2022, the Company’s Cash and cash equivalents were $312, of which $174, or 56%, was held in Russia. Cash and cash equivalents held in Russia represented 13% of Arconic’s total liquidity at September 30, 2022. Cash and cash equivalents held in Russia increased $95 from December 31, 2021 to September 30, 2022, primarily due to increased earnings, currency appreciation, and lower aluminum prices. Cash and cash equivalents held in Russia are currently subject to preliminary injunctions imposed by regulatory authorities that, among other things, 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 payment of dividends to Arconic. We maintain a 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 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 global cash needs for future business operations, which may influence future repatriation decisions.

Operating Activities

Cash provided from operations was $150 in the ~~2022 nine-month~~2023 six-month period compared with ~~cash used for operations of $503~~$59 in the ~~2021 nine-month~~2022 six-month period.

In the ~~2022 nine-month~~2023 six-month period, cash provided from operations was mostly comprised of a positive add-back for non-cash transactions in earnings of ~~$351~~$212 and net income of ~~$92,~~$84, partially offset by an unfavorable change in working capital of ~~$284.~~$148.

In the 2022 six-month period, cash provided from operations was mostly comprised of a positive add-back for non-cash transactions in earnings of $190 and net income of $157, mostly offset by an unfavorable change in working capital of $280. The change in working capital was largely driven by higher aluminum prices due to an increase in both the average LME price and regional premiums. Additionally, the unfavorable change in working capital includes a benefit of ~~$158~~$112 related to customer

receivables sold to a financial institution where the underlying trade receivables were uncollected as of ~~September~~June 30, ~~2022 (see~~2022. See Note R to the Consolidated Financial Statements in Part I Item 1 of this Form ~~10-Q).~~10-Q.

In the 2021 nine-month period, cash used for operations was mostly comprised of pension contributions of $456 (see below), an unfavorable change in working capital of $454, and a net loss of $359, partially offset by a positive add-back for non-cash transactions in earnings of $778. The impact in working capital was partially driven by higher aluminum prices due to an increase in both the average LME price and regional premiums.

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. Additionally, in April 2021, Arconic contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract. This contribution was funded with the net proceeds from a March 2021 debt offering (see 2021 Debt Activity in Financing Activities below). The Company had no minimum required funding due in the 2022 first quarter and contributed $7 in both the 2022 second quarter and third quarter to these two plans. Arconic expects to contribute a total of $8 to these two plans in the remainder of 2022.

The Company received $5 and $11 in the 2022 and 2021 nine-month period, respectively, related to a settlement agreement reached with a customer in March 2021. See Sales under Results of Operations above for additional information.

Financing Activities

Cash ~~provided from~~used for financing activities was $1$13 in the 2023 six-month period compared with $14 in the 2022 ~~nine-month period compared with $190 in the 2021 nine-month~~six-month period. The ~~source~~use of cash in the ~~2022 nine-month~~2023 six-month period was ~~principally~~primarily due to ~~$150~~tax payments in ~~net borrowings under~~connection with the ~~ABL Credit~~

~~Facility (see 2022 Debt Activity below) mostly offset by the repurchase~~withholding of ~~4,863,672~~ shares upon vesting of ~~the Company’s common~~ stock ~~for $139 (see Share Repurchase Program below).~~units. In the ~~2021 nine-month~~2022 six-month period, the ~~source~~use of cash reflects ~~$314 in net proceeds from the issuance of new indebtedness (see 2021 Debt Activity below), somewhat offset by $106~~$53 for the repurchase of ~~3,108,705~~1,830,009 shares of the Company’s common stock (see Share Repurchase ~~Program~~Programs below), somewhat offset by $50 in net borrowings under the ABL Credit Facility (see 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 $1,200 senior secured asset-based revolving credit facility (the “ABL Credit Facility”) to be used, generally, for working capital or other general corporate ~~purposes.~~purposes (available balance as of June 30, 2023 was $1,189 – see Note N to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). 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~~2022 (filed on February ~~22, 2022)~~21, 2023) 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 (available balance as of September 30, 2022 was $1,039 – see ~~Note N~~ to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q). 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 the ~~2022 nine-month~~2023 six-month period, the Company borrowed ~~$250~~$175 and repaid ~~$100~~$175 under the ABL Credit Facility. These borrowings were designated as ~~SOFR~~Secured Overnight Financing Rate (SOFR) loans with ~~either~~ an initial one-month ~~or three-month~~ interest period. ~~Arconic may repay early or extend a part or all of these borrowings.~~ In the ~~2022 third quarter and nine-month~~2023 six-month period, the weighted-average interest rate and weighted-average days outstanding of the borrowings was ~~5.03%~~6.6% and ~~4.02%, respectively, and 74~~55 days, ~~and 105 days,~~ respectively.

In ~~October~~March 2022, the Company ~~repaid an additional $50 of the outstanding borrowings~~borrowed $100 under the ABL Credit Facility.

~~2021 Debt Activity—On March 3, 2021,~~ This borrowing was designated as a SOFR loan with an initial three-month interest period. In June 2022, the Company ~~completed a Rule 144A (U.S. Securities Act of 1933, as amended) debt offering~~extended this borrowing for an additional ~~$300~~three-month period. The applicable rate on this borrowing was 2.50% through June 15, 2022 and 4.22% beginning June 16, 2022. On June 30, 2022, Arconic repaid early $50 of this borrowing.

Share Repurchase Programs—On November 16, 2022, 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 ~~principal amount~~transactional value 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 (the “Existing 2028 Notes”). Other than with respect to the date of issuance and issue price, the Additional 2028 Notes are treated as$200 over a ~~single series with and have the same terms as the Existing 2028 Notes. See Note Q to the Consolidated Financial Statements in~~two-year period expiring November 17, 2024 (see Part II Item ~~8 of Arconic’s Annual Report on~~2 in this Form ~~10-K for the year ended December 31, 2021 (filed on February 22, 2022)~~10-Q for additional ~~information related to~~information). In 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~~2023 six-month period, Arconic repurchased 35,615 shares of the ~~Additional 2028 Notes, the Company received $315 in net proceeds from the debt offering. Arconic used the net proceeds of~~Company’s common stock for $1 under this issuance to fund an annuitization of certain U.S. defined benefit pension plan obligations 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 is paid semi-annually in February and August and commenced August 15, 2021.program.

~~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 2022 second quarter and ~~2021 nine-month periods,~~six-month period, Arconic repurchased ~~4,863,672~~1,324,027 and ~~3,108,705,~~1,830,009 shares, respectively, ~~shares~~ of the Company's common stock for ~~$139~~$37 and ~~$106,~~$53, respectively, under this program. Cumulatively, Arconic repurchased 9,776,177 shares of the Company’s common stock for $300, resulting in the completion of the total authorization under this program in August 2022. In connection with the establishment of the new repurchase program (see ~~Part II Item 2 in~~above), this ~~Form 10-Q for additional information).~~repurchase program was terminated.

Investing Activities

Cash used for investing activities was ~~$171~~$132 in the 2023 six-month period compared with $127 in the 2022 ~~nine-month period compared with $125 in the 2021 nine-month~~six-month period. The use of cash in the ~~2022 nine-month~~2023 six-month period was primarily due to ~~$175~~$139 in capital expenditures, mostly due to sustaining spend at the U.S. rolling mills, slightly offset by proceeds received related to an eminent domain proceeding against land owned by Arconic. The use of cash in the 2022 six-month period was primarily due to $128 in capital expenditures, mostly due to growth spend at the U.S. rolling mills. ~~The use of cash in the 2021 nine-month period was due to $123 in capital expenditures, largely attributable to sustaining spend at the U.S. rolling mills.~~

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.

4738

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

4839

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 ~~third~~second quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

4940

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

5041

Item 1A. Risk Factors.

~~The ongoing conflict between Russia and Ukraine has resulted in continued geopolitical instability and disruption, which are likely to adversely affect our~~Arconic’s business, financial condition and operating results may be affected by a number of factors including, but not limited, to those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Any of the risks described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

Except as set forth below, there have been no material changes in the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Risks Related to the Proposed Merger

The announcement and pendency of the Merger could adversely impact the Company’s business, financial condition, and results of ~~operations or cash flows~~operations.

Uncertainty about the effect of the Merger on the Company’s employees, customers, and ~~our~~other parties may have an adverse effect on the Company’s business, financial condition, and results of operation regardless of whether the Merger is completed. These risks to the Company’s business include the following, all of which could be exacerbated by a delay in the completion of the Merger:

•the impairment of the Company’s ability to ~~complete~~ attract, retain, and motivate its employees, including key personnel;

•the ~~sale~~diversion of ~~our Russian~~significant management time and resources towards the completion of the Merger;

•difficulties maintaining relationships with customers, suppliers, and other business partners;

•delays or deferments of certain business decisions by the Company’s customers, suppliers, and other business partners;

•the inability to pursue alternative business opportunities or make appropriate changes to the Company’s business because the Merger Agreement requires the Company to use reasonable best efforts to conduct its business in the ordinary course, use commercially reasonable efforts to preserve its business organization intact and maintain existing relations with key customers, suppliers, lenders, partners, officers, employees, governmental entities and other third parties with whom the Company and its subsidiaries have significant business relationships or regulatory relationships, and refrain from taking certain actions prior to the completion of the Merger;

•litigation relating to the Merger and the costs related thereto; and

•the incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger.

Litigation relating to the Merger has been filed against the Company and its Board of Directors, and demand letters have been received by the Company, which could prevent or delay the completion of the Merger or result in the payment of damages.

In connection with the Merger, complaints have been filed in federal court as individual actions. The complaints are captioned O’Dell v. Arconic Corporation, et al., 1:23-cv-04971 (S.D.N.Y. June 13, 2023); Wang v. Arconic Corporation, et al.,1:23-cv-05091 (S.D.N.Y. June 16, 2023); Bushansky v. Arconic Corporation, et al.,1:23-cv-05167 (S.D.N.Y. June 19, 2023); Williams v. Arconic Corporation, et al., 1:23-cv-05235 (S.D.N.Y. June 21, 2023); Rosenfeld v. Arconic Corporation, et al., 1:23-cv-05313 (S.D.N.Y. June 22, 2023); Laskaris v. Arconic Corporation, et al., 1:23-cv-05461 (S.D.N.Y. June 27, 2023); and Lawrence v. Arconic Corporation, et al., 1:23-cv-00720-UNA (D. Del. July 3, 2023) (the “Federal Complaints”). In addition, one complaint has been filed in Pennsylvania state court in connection with the Merger, captioned Garfield v. Austen, et al., No. GD23-00772 (Pa. Ct. Com. Pl., Allegheny Cty. Civ. Div., June 23, 2023) (the “State Complaint” and, together with the Federal Complaints, the “Complaints”).

The Federal Complaints generally allege that the Definitive Proxy Statement or the preliminary proxy statement filed by the Company with the SEC on June 2, 2023 in connection with the Merger (the “Preliminary Proxy Statement”) misrepresents and/or omits certain purportedly material information. The Federal Complaints assert violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-9 promulgated thereunder against the Company and the members of its Board of Directors. The State Complaint generally alleges, in connection with the Preliminary

Proxy Statement and/or the Definitive Proxy Statement, violation of the Pennsylvania Securities Act of 1972, 70 P.S. § 1-401, et seq., as well as negligent misrepresentation and concealment under Pennsylvania common law, against the Company, the members of its Board of Directors, and Apollo. The Complaints seek, among other things: (a) an injunction enjoining the consummation of the Merger; (b) rescission or rescissory damages in the event the Merger is consummated; (c) direction that defendants account for all damages suffered as a result of any misconduct; (d) direction that defendants file a proxy statement that does not contain alleged misstatements and/or omissions; (e) a declaration that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder; (f) a declaration that defendants violated 70 P.S. § 1-401 and/or Pennsylvania common law; (g) an award of punitive damages, as allowed by law; (h) costs of the action, including reasonable plaintiffs’ attorneys’ fees and experts’ fees and expenses; and (i) other relief the court may deem just and proper.

In addition to the Complaints, certain purported shareholders of the Company have sent demand letters (the “Demands”) alleging similar deficiencies and/or omissions regarding the disclosures made in the Preliminary Proxy Statement or the Definitive Proxy Statement. In addition to the Complaints and the Demands, on July 21, 2023, a purported Arconic shareholder filed a complaint in the Delaware Court of Chancery seeking to compel inspection of the Company’s books and records under 8 Del C. § 220 relating to, among other items, the Company’s entry into the Merger (the “§ 220 Complaint,” and together with the Complaints and the Demands, the “Matters”). The shareholder also filed a letter with the court stating that the § 220 Complaint was filed to preserve standing while the parties determine whether the matter may be resolved without court intervention.

The Company cannot predict the outcome of the Matters but believes that they are without merit, and that no further disclosure is required under applicable law. To avoid the risk of the complaints and demand letters delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Arconic determined to make voluntary supplemental disclosures related to the Merger for the purpose of mooting any alleged disclosure issues. The litigation-related supplemental disclosures were filed by Arconic on a Form 8-K on July 14, 2023. As of the date of this report, all of the Complaints have been voluntarily dismissed.

Failure to consummate the Merger within the expected timeframe or at all could adversely impact the Company’s business, financial condition, and results of operations.

The conflict between Russia and Ukraine has resulted in, and is expected to continue to result 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, banking, 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. Any significant escalationcompletion of the ~~conflict or expansion of the actions of governments will further exacerbate the instability and disruption, and the impact on our business, financial condition, results of operations or cash flows.~~

We continue to fulfill existing obligations in accordance with applicable laws, regulations and international rules. In May 2022 we announced our intention to pursue a sale of our operations in Russia. Arconic has engaged with both the U.S. government and Russian government with the objective of executing a lawful sale of its Russian operations. The Company has had several interested parties in the process and is ultimately working towards completion of a sale of its Russian operations to a third party pursuant to a framework agreement, the closing of whichMerger is subject to the satisfaction or waiver of certain customary mutual closing conditions, including the absence of any injunction by any court or other tribunal of competent jurisdiction, or adoption of any law, that prohibits or makes the consummation of the Merger illegal and the receipt of ~~governmental approvals~~certain regulatory approvals. The obligation of each party to consummate the Merger is also conditioned upon certain unilateral closing conditions, including the other party’s representations and ~~other conditions and contingencies. See “Management’s Discussion and Analysis—Results of Operations—Legal Proceedings Involving our Russian Operations” and~~ ~~Note O~~warranties being accurate (subject to ~~the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q. The extent of the impact of the reduction in our operations~~certain customary materiality exceptions) and the ~~sale of our Russian operations,~~other party having in all material respects performed and complied with its covenants in the Merger Agreement. There can be no assurance that these conditions will be satisfied in a timely manner or ~~of current~~at all or ~~future actions taken by Russia,~~that the ~~U.S. or other governments,~~Merger will be completed.

If the Merger is not ~~reasonably possible~~completed, the Company’s stockholders will not receive any payment for their shares in connection with the Merger. Instead, the Company will remain an independent public company, and the shares will continue to ~~predict, but could include, among other impacts: embargoes; expropriation or other loss (whether partial or full) of assets or property; restrictions~~be traded on ~~our operations, including plant idling or closure; an inability to obtain raw materials, equipment, parts,~~the New York Stock Exchange. The Company’s ongoing business may be materially adversely affected, and other key supplies and services; continued reduction or cessation of our customers’ operations in Russia causing a decrease in demand for our products; increased inflationary pressures on raw materials and other supply chain costs; shipping and trade route restrictions; 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. The completion and timing of the sale of our Russian operations isCompany would be subject to a number of risks, including ~~among~~the following:

•the Company may experience negative publicity, which could have an adverse effect on its ongoing operations including, but not limited to, retaining and attracting customers, suppliers, and other ~~risks: our or~~ business partners;

•the ~~buyer’s ability~~Company would incur significant costs in future periods relating to ~~obtain necessary regulatory approvals~~the Merger, such as legal, accounting, financial advisor, printing, and other professional services fees, which may relate to activities that the Company would not have undertaken other than to complete the ~~sale,~~Merger;

•the Company may be required to pay a cash termination fee as required under the Merger Agreement, which may require the Company to use available cash that would have otherwise been available for general corporate purposes or ~~any conditions imposed in connection~~other uses and could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with ~~regulatory approval~~the Company or deter such third party from making a competing acquisition proposal; and

•the Merger Agreement places certain restrictions on the conduct of the ~~sale; our~~Company’s business, which may have delayed or prevented the ~~buyer’s ability to satisfy~~Company from undertaking business opportunities that, absent the ~~conditions and contingencies related to the sale; and the ability of the buyer to access funding to timely complete the sale. In addition, the terms of the sale transaction~~Merger Agreement, it may not reflect the fair value of the assets associated with our Russian operations, including the Samara facility, we may be unable to access or repatriate some or all of the proceeds of the sale or may incur significant taxes, fees or penalties associated with repatriation, and we may recognize significant charges related to the sale.have pursued.

~~See “Management’s Discussion~~

If the Merger is not consummated, the risks described above may materialize and ~~Analysis of Financial Condition and Results of Operations – Results of Operations – Legal Proceedings Involving our Russian Operations” for additional information regarding~~they may have a material adverse effect on the ~~proceedings involving our facility in Samara and the potential impact of the proceedings, or of a sale of our Russian~~Company’s business operations, ~~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”~~and stock price, especially to the extent that the current market price 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, energy prices and currency exchange rates; global operations; loss of customers; reduction in demand; intellectual property; disruption of facility operations; and cyber-security.the Company’s common stock reflects an assumption that the Merger will be completed.

5144

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*
July 1 - July 31, 2022 1,776,471 $ 28.35 1,776,471 $ 36,000,000
August 1 - August 31, 2022 1,257,192 $ 28.56 1,257,192 $ —
September 1 - September 30, 2022 — $ — — $ —
Total for quarter ended
September 30, 2022
3,033,663 3,033,663


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, 2023	—	$	—	—	$	153,000,000
May 1 - May 31, 2023	—	—		—	153,000,000
June 1 - June 30, 2023	—	—		—	153,000,000
Total for quarter ended June 30, 2023	—			—

________________

* On ~~May 4, 2021,~~November 16, 2022, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase ~~shares~~up to $200 million of ~~its outstanding~~ common stock ~~up to an aggregate transactional value of $300 million over~~for a two-year period expiring ~~April 28, 2023.~~November 17, 2024. Repurchases under the program ~~were~~may be made from time to time, as the Company ~~deemed~~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 purchase, if any. The share repurchase program may be increased or otherwise modified, renewed, suspended, or terminated by the Company at any time, without prior notice. In connection with the establishment of this share repurchase program, the prior $300 million repurchase program, which the Company completed in August 2022, was terminated. This program ~~was~~is intended to comply with Rule 10b5-1 and all purchases ~~were~~shall be made in compliance with Rule 10b-18, including without limitation the timing, price, and volume restrictions thereof.

5245

Item 6. Exhibits.


~~10.1~~			~~Employment Letter Agreement between Arconic Corporation and Diana B. Perreiah, dated as of August 5, 2022~~
~~10.2~~			~~Employment Letter Agreement between Arconic Corporation and Robert L. Woodall, dated as of August 5, 2022~~
31			Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL)

5346

SIGNATURES

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


			Arconic Corporation

~~November 1, 2022~~July 31, 2023			/s/ Erick R. Asmussen
Date			Erick R. Asmussen
			Executive Vice President,
			Chief Financial Officer
			(Principal Financial Officer)

~~November 1, 2022~~July 31, 2023			/s/ Mary E. Zik
Date			Mary E. Zik
			Vice President, Controller
			(Principal Accounting Officer)

5447


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3934

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4839

Item 4.	Controls and Procedures	4940

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	5041

Item 1A.	Risk Factors	5142

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5245

Item 6.	Exhibits	5346

SIGNATURES		5447


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


	September 30, 2022(1)		December 31, 2021
Cash and cash equivalents	$	174	$	79
Receivables from customers	98		120
Inventories	122		102
Properties, plants and equipment, net	186		200
Accounts payable, trade	27		47

	For the nine months ended September 30, 2022		For the year ended December 31, 2021
Third-party sales(2)	$	787	$	968
Segment Adjusted EBITDA	62		87