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Accumulated Other Comprehensive Loss

B. Accumulated Other Comprehensive Loss

The following table details the activity of the four components that comprise Accumulated other comprehensive loss for both Arconic’s shareholders and noncontrolling interests:


	Arconic									Noncontrolling Interests
	2016			2015			2014			2016			2015			2014
Pension and other postretirement benefits (U)
Balance at beginning of period	$	(3,611	)	$	(3,601	)	$	(3,532	)	$	(56	)	$	(64	)	$	(51	)
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit		(1,112	)		(478	)		(492	)		(9	)		5			(22	)
Tax benefit (expense)		380			170			167			3			(1	)		7
Total Other comprehensive (loss) income before reclassifications, net of tax		(732	)		(308	)		(325	)		(6	)		4			(15	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		389			458			394			4			6			3
Tax expense⁽²⁾		(136	)		(160	)		(138	)		(1	)		(2	)		(1	)
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁸⁾		253			298			256			3			4			2
Total Other comprehensive (loss) income		(479	)		(10	)		(69	)		(3	)		8			(13	)
Transfer to Alcoa Corporation		2,080			-			-			59			-			-
Balance at end of period	$	(2,010	)	$	(3,611	)	$	(3,601	)	$	-		$	(56	)	$	(64	)
Foreign currency translation
Balance at beginning of period	$	(2,412	)	$	(846	)	$	179		$	(780	)	$	(351	)	$	(110	)
Other comprehensive income (loss)⁽³⁾		268			(1,566	)		(1,025	)		182			(429	)		(241	)
Transfer to Alcoa Corporation		1,455			-			-			596			-			-
Balance at end of period	$	(689	)	$	(2,412	)	$	(846	)	$	(2	)	$	(780	)	$	(351	)
Available-for-sale securities
Balance at beginning of period	$	(5	)	$	-		$	2		$	-		$	-		$	-
Other comprehensive income (loss)⁽⁴⁾		137			(5	)		(2	)		-			-			-
Transfer to Alcoa Corporation		-			-			-			-			-			-
Balance at end of period	$	132		$	(5	)	$	-		$	-		$	-		$	-
Cash flow hedges
Balance at beginning of period	$	597		$	(230	)	$	(308	)	$	(3	)	$	(2	)	$	(2	)
Other comprehensive (loss) income:
Net change from periodic revaluations		(843	)		1,138			78			36			(1	)		-
Tax benefit (expense)		252			(340	)		(21	)		(10	)		-			-
Total Other comprehensive (loss) income before reclassifications, net of tax		(591	)		798			57			26			(1	)		-
Net amount reclassified to earnings:
Aluminum contracts⁽⁵⁾		1			21			27			-			-			-
Energy contracts⁽⁶⁾		(49	)		6			-			(34	)		-			-
Foreign exchange contracts⁽⁵⁾		-			5			(3	)		-			-			-
Interest rate contracts⁽⁷⁾		9			1			1			5			-			-
Nickel contracts⁽⁶⁾		1			2			-			-			-			-
Sub-total		(38	)		35			25			(29	)		-			-
Tax benefit (expense)⁽²⁾		12			(6	)		(4	)		8			-			-
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁸⁾		(26	)		29			21			(21	)		-			-
Total Other comprehensive (loss) income		(617	)		827			78			5			(1	)		-
Transfer to Alcoa Corporation		19			-			-			(2	)		-			-
Balance at end of period	$	(1	)	$	597		$	(230	)	$	-		$	(3	)	$	(2	)

⁽¹⁾	These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note U).

⁽²⁾	These amounts were included in 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⁾	Realized gains and losses were included in Other income, net on the accompanying Statement of Consolidated Operations.

⁽⁵⁾	These amounts were included in Sales on the accompanying Statement of Consolidated Operations.

⁽⁶⁾	These amounts were included in Cost of goods sold on the accompanying Statement of Consolidated Operations.

⁽⁷⁾	These amounts were included in Interest expense on the accompanying Statement of Consolidated Operations.

⁽⁸⁾	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 7.

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

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Discontinued Operations and Disposal Groups [Abstract]

Separation Transaction and Discontinued Operations

12 Months Ended

Dec. 31, 2016

Separation Transaction and Discontinued Operations

C. Separation Transaction and Discontinued Operations

On November 1, 2016, Arconic completed the Separation Transaction. Alcoa Inc., which was re-named Arconic Inc., continues to own the Global Rolled Products (except for the Warrick, IN rolling operations and the equity interest in the rolling mill at the joint venture in Saudi Arabia), Engineered Products and Solutions, and Transportation and Construction Solutions segments. Alcoa Corporation includes the Alumina and Primary Metals segments and the aforementioned Warrick, IN rolling operations and equity interest in the rolling mill at the joint venture in Saudi Arabia, both of which were formally part of the Global Rolled Products segment.

Arconic completed the Separation Transaction by distribution on November 1, 2016 of 80.1% of the outstanding common stock of Alcoa Corporation to the Company’s shareholders of record (the “Distribution”) as of the close of business on October 20, 2016 (the “Record Date”). Arconic retained 19.9% of the Alcoa Corporation common stock (36,311,767 shares). In the Distribution, each Company shareholder received one share of Alcoa Corporation common stock for every three shares of Arconic common stock held as of the close of business on the Record Date. Shareholders received cash in lieu of fractional shares of Alcoa Corporation common stock.

Arconic has recorded the 19.9% retained interest in Alcoa Corporation common stock as a cost method investment in Investment in common stock of Alcoa Corporation in the December 2016 Consolidated Balance Sheet. The fair value was based on the closing stock price of Alcoa Corporation as of December 31, 2016 multiplied by the number of shares of Alcoa Corporation common stock owned by the Company as of December 31, 2016. The changes in fair value since November 1, 2016 were recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheet.

On October 31, 2016, Arconic entered into several agreements with Alcoa Corporation that govern the relationship of the parties following the completion of the Separation Transaction. These agreements include the following: Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Alcoa Corporation to Arconic Inc. Patent, Know-How, and Trade Secret License Agreement, Arconic Inc. to Alcoa Corporation Patent, Know-How, and Trade Secret License Agreement, Alcoa Corporation to Arconic Inc. Trademark License Agreement, Toll Processing and Services Agreement, Master Agreement for the Supply of Primary Aluminum, Massena Lease and Operations Agreement, Fusina Lease and Operations Agreement, and Stockholder and Registration Rights Agreement.

Effective November 1, 2016, Arconic entered into a Toll Processing and Services Agreement with Alcoa Corporation for the tolling of metal for the Warrick, IN rolling mill which became a part of Alcoa Corporation upon completion of the Separation Transaction. As part of this arrangement, Arconic will provide a toll processing service to Alcoa Corporation to produce can sheet products at its facility in Tennessee through the expected end date of the contract, December 31, 2018. Alcoa Corporation will supply all required raw materials to Arconic and Arconic will process the raw materials into finished can sheet coils ready for shipment to the end customer. Tolling revenues for the two month period ending December 31, 2016 and accounts receivable were not material to the consolidated results of operations and financial position for the year ended December 31, 2016.

As part of the Separation Transaction, Arconic was required to provide maximum potential future payment guarantees for Alcoa Corporation issued on behalf of a third party, guarantees related to two Alcoa Corporation energy supply contracts and certain Alcoa Corporation environmental liabilities, letters of credit and surety bonds related to Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016, and letters of credit for certain Alcoa Corporation equipment leases and energy contracts (see Note L).

Additionally, under the Separation and Distribution Agreement, the Company has recorded a receivable of $243 due from Alcoa Corporation for a certain asset sale. This amount was included in Other receivables in the December 2016 Consolidated Balance Sheet.

The results of operations of Alcoa Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below:


	Ten months ended October 31,			Year ended December 31,
	2016			2015			2014
Sales	$	6,752		$	10,121		$	11,364
Cost of goods sold (exclusive of expenses below)		5,655			7,965			8,782
Selling, general administrative, and other expenses		164			214			231
Research and development		28			69			95
Provision for depreciation, depletion and amortization		593			772			935
Restructuring and other charges		102			981			854
Interest expense		28			25			31
Other (income) expenses, net		(75	)		30			52
Income from discontinued operations before income taxes		257			65			384
Provision for income taxes		73			106			146
Income (loss) from discontinued operations after income taxes		184			(41	)		238
Less: Net income (loss) from discontinued operations attributable to noncontrolling interests		63			124			(91	)
Net income (loss) from discontinued operations	$	121		$	(165	)	$	329

During 2016 and 2015, Arconic recognized $193 ($158 after-tax) and $24 ($24 after-tax), respectively, in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations for costs related to the Separation Transaction. In addition, Arconic also incurred capital expenditures and debt issuance costs of $110 during 2016 related to the Separation Transaction. None of the aforementioned costs and expenses related to the Separation Transaction were reclassified into discontinued operations.

On November 1, 2016, management evaluated the net assets of Alcoa Corporation for potential impairment and determined that no impairment charge was required.

The carrying amount of the major classes of assets and liabilities related to Alcoa Corporation classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet at December 31, 2015 consisted of the following:


Total assets of discontinued operations:
Cash and cash equivalents	$	557
Receivables from customers		380
Other receivables		128
Inventories		1,158
Prepaid expenses and other current assets		333
Current assets of discontinued operations		2,556
Properties, plants, and equipment, net		9,390
Goodwill		152
Investments		1,472
Deferred income taxes		1,360
Other noncurrent assets		2,224
Noncurrent assets of discontinued operations		14,598
Total assets of discontinued operations	$	17,154
Total liabilities of discontinued operations:
Accounts payable, trade	$	1,379
Accrued compensation and retirement costs		440
Taxes, including income taxes		136
Other current liabilities		563
Long-term debt due within one year		18
Current liabilities of discontinued operations	$	2,536
Long-term debt less amount due within one year		207
Accrued pension benefits		1,373
Accrued other postretirement benefits		1,189
Other noncurrent liabilities and deferred credits		1,910
Noncurrent liabilities of discontinued operations		4,679
Total liabilities of discontinued operations	$	7,215

The cash flows related to Alcoa Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows for all periods presented. The following table presents depreciation, depletion and amortization, restructuring and other charges, and purchases of property, plant and equipment of the discontinued operations related to Alcoa Corporation:


For the year ended December 31,	2016		2015		2014
Depreciation, depletion and amortization	$	593	$	772	$	935
Restructuring and other charges	$	102	$	981	$	854
Capital expenditures	$	298	$	391	$	444

The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

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Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

12 Months Ended

Dec. 31, 2016

Restructuring and Other Charges

D. Restructuring and Other Charges

Restructuring and other charges for each year in the three-year period ended December 31, 2016 were comprised of the following:


	2016			2015			2014
Asset impairments	$	80		$	-		$	65
Layoff costs		70			97			105
Net loss on divestitures of businesses (F)		3			136			111
Other		27			(11	)		43
Reversals of previously recorded layoff costs		(25	)		(8	)		(10	)
Restructuring and other charges	$	155		$	214		$	314

Layoff costs were recorded based on approved detailed action plans submitted by the operating locations that specified positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements, and the expected timetable for completion of the plans.

2016 Actions. In 2016, Arconic recorded Restructuring and other charges of $155 ($114 after-tax), which were comprised of the following components: $57 ($46 after-tax) for costs related to the exit of certain legacy Firth Rixson operations in the U.K.; $37 ($24 after-tax) for exit costs related to the decision to permanently shut down a can sheet facility; $20 ($14 after-tax) for costs related to the closures of five facilities, primarily in the Transportation and Construction Solutions segment and Engineered Products and Solutions segment, including the separation of approximately 280 employees; $53 ($33 after-tax) for other layoff costs, including the separation of approximately 1,315 employees (30 in TCS, 1,045 in EPS, 30 in GRP and 210 in Corporate); $11 ($8 after-tax) for other miscellaneous items, including $3 ($2 after-tax) for the sale of Remmele Medical, an RTI subsidiary; $2 ($1 after-tax) for a pension settlement; and $25 ($12 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In 2016, management made the decision to exit certain legacy Firth Rixson facilities in the U.K. Costs related to these actions included asset impairments and accelerated depreciation of $51; other exit costs of $4; and $2 for the separation of 60 employees.

Also in 2016, management approved the shutdown and demolition of the can sheet facility in Tennessee upon completion of the Toll Processing and Services Agreement with Alcoa Corporation. Costs related to this action included $21 in asset impairments; $9 in other exit costs; and $7 for the separation of 145 employees. The other exit costs of $9 represent $4 in asset retirement obligations and $3 in environmental remediation, both of which were triggered by the decision to permanently shut down and demolish the can sheet facility in Tennessee, and $2 in other exit costs.

As of December 31, 2016, approximately 880 of the 1,800 employees were separated. The remaining separations for 2016 restructuring programs are expected to be completed by the end of 2017. In 2016, cash payments of $16 were made against layoff reserves related to 2016 restructuring programs.

2015 Actions. In 2015, Arconic recorded Restructuring and other charges of $214 ($192 after-tax), which were comprised of the following components: a $136 ($134 after-tax) net loss related to the March 2015 divestiture of a rolling mill in Russia and post-closing adjustments associated with the December 2014 divestitures of three rolling mills located in Spain and France; $97 ($70 after-tax) for layoff costs, including the separation of approximately 1,505 employees (425 in the Transportation and Construction Solutions segment, 590 in the Engineered Products and Solutions segment, 90 in the Global Rolled Products segment, and 400 in Corporate); an $18 ($13 after-tax) gain on the sale of land related to one of the rolling mills in Australia that was permanently closed in December 2014 (see 2014 Actions below); a net charge of $7 ($4 after-tax) for other miscellaneous items; and $8 ($3 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of December 31, 2016, approximately 1,100 of the 1,240 (previously 1,505) employees were separated. The total number of employees associated with 2015 restructuring programs was updated to reflect employees, who were initially identified for separation, accepting other positions within Arconic and natural attrition. The remaining separations for 2015 restructuring programs are expected to be completed by the end of 2017. In 2016 and 2015, cash payments of $55 and $18, respectively, were made against layoff reserves related to 2015 restructuring programs.

2014 Actions. In 2014, Arconic recorded Restructuring and other charges of $314 ($249 after-tax), which were comprised of the following components: $154 ($107 after-tax) for exit costs related to the decision to permanently shut down and demolish two rolling mills (see below); a $111 ($112 after-tax) net loss primarily for the divestitures of three rolling mills in Spain and France (see Note F); $49 ($28 after-tax) for other layoff costs, including the separation of approximately 1,035 employees (470 in the Engineered Products and Solutions segment, 410 in the Transportation and Construction Solutions segment, 45 in the Global Rolled Products segment, and 110 in Corporate); a net charge of $10 ($7 after-tax) for other miscellaneous items; and $10 ($5 after-tax) for the reversal of a number of layoff reserves related to prior periods.

In early 2014, management approved the permanent shutdown of Arconic’s two rolling mills in Australia, Point Henry and Yennora. This decision was made due to the significant impact of excess can sheet capacity in both Australia and Asia. The two rolling mills had a combined can sheet capacity of 200,000 metric-tons-per-year and were closed by the end of 2014. Costs related to the shutdown of the two rolling mills included $56 for the separation of approximately 470 employees; accelerated depreciation of $58 as the rolling mills continued to operate during 2014; asset impairments of $7 representing the write-off of the remaining book value of all related properties, plants, and equipment; and $33 in other exit costs. Additionally, in 2014, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value, resulting in a charge of $13 ($9 after-tax), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The other exit costs of $33 represent $18 in environmental remediation and $8 in asset retirement obligations, both of which were triggered by the decisions to permanently shut down and demolish the aforementioned structures in Australia, and $7 in other related costs, including supplier and customer contract-related costs. Demolition and remediation activities related to the two rolling mills began in mid-2015 and are expected to be completed by the end of 2018.

As of December 31, 2016, the separations associated with 2014 restructuring programs were essentially complete. In 2016, 2015, and 2014, cash payments of $3, $27, and $54, respectively, were made against layoff reserves related to 2014 restructuring programs.

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


	2016		2015		2014
Global Rolled Products	$	40	$	121	$	267
Engineered Products and Solutions		78		46		13
Transportation and Construction Solutions		14		8		10
Segment total		132		175		290
Corporate		23		39		24
Total restructuring and other charges	$	155	$	214	$	314

Activity and reserve balances for restructuring charges were as follows:


	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2013	$	37		$	29		$	66
2014:
Cash payments		(75	)		(16	)		(91	)
Restructuring charges		105			43			148
Other*		(19	)		(36	)		(55	)
Reserve balances at December 31, 2014		48			20			68
2015:
Cash payments		(45	)		(12	)		(57	)
Restructuring charges		97			7			104
Other*		(16	)		(6	)		(22	)
Reserve balances at December 31, 2015		84			9			93
2016:
Cash payments		(73	)		(13	)		(86	)
Restructuring charges		70			27			97
Other*		(31	)		(14	)		(45	)
Reserve balances at December 31, 2016	$	50		$	9			59

Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation. In 2016 and 2014, Other for other exit costs also included a reclassification of $8 and $8, respectively, in asset retirement and $2 and $18, respectively, in environmental obligations, as these liabilities were included in Arconic’s separate reserves for asset retirement obligations and environmental remediation. In 2015, Other for other exit costs included a reclassification of $5 for certain obligations included in Arconic’s separate reserves for warranties, lease terminations and tax indemnities. In 2016, Other for other exit costs also included a reclassification of $4 in legal obligations, as these liabilities were included in Arconic’s separate reserves for legal costs.

The remaining reserves are expected to be paid in cash during 2017.

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

E. Goodwill and Other Intangible Assets

The following table details the changes in the carrying amount of goodwill:


	Global Rolled Products			Engineered Products and Solutions			Transportation and Construction Solutions			Corporate*			Total
Balance at December 31, 2014:
Goodwill	$	210		$	4,458		$	114		$	333		$	5,115
Accumulated impairment losses		-			-			(28	)		-			(28	)
		210			4,458			86			333			5,087
Acquisitions and Divestitures (F)		(1	)		261			-			-			260
Impairment (A)		-			-			(25	)		-			(25	)
Translation and other		(8	)		(59	)		(3	)		(3	)		(73	)
Balance at December 31, 2015:
Goodwill		201			4,660			111			330			5,302
Accumulated impairment losses		-			-			(53	)		-			(53	)
		201			4,660			58			330			5,249
Acquisitions and Divestitures (F)		-			47			-			-			47
Translation and other		(20	)		(128	)		(1	)		1			(148	)
Balance at December 31, 2016:
Goodwill		181			4,579			110			331			5,201
Accumulated impairment losses		-			-			(53	)		-			(53	)
		181			4,579			57			331			5,148

As of December 31, 2016, the amount reflected in Corporate is allocated to Arconic’s three reportable segments ($60 to Global Rolled Products, $253 to Engineered Products and Solutions, and $18 to Transportation and Construction Solutions) for purposes of impairment testing (see Goodwill and Other Intangible Assets policy in Note A). This goodwill is reflected in Corporate for segment reporting purposes because it is not included in management’s assessment of performance by the three reportable segments.

In 2015, Arconic recognized an impairment of goodwill in the amount of $25 related to the annual impairment review of the soft alloy extrusion business in Brazil, included in the Transportation and Construction Solutions segment (see Goodwill and Other Intangible Assets policy in Note A).

Other intangible assets, which are included in Other noncurrent assets on the accompanying Consolidated Balance Sheet, were as follows:


December 31, 2016	Gross carrying amount		Accumulated amortization
Computer software	$	755	$	(623	)
Patents and licenses		110		(102	)
Other intangibles (F)		897		(81	)
Total amortizable intangible assets		1,762		(806	)
Indefinite-lived trade names and trademarks		32		-
Total other intangible assets	$	1,794	$	(806	)


December 31, 2015	Gross carrying amount		Accumulated amortization
Computer software	$	793	$	(643	)
Patents and licenses		110		(98	)
Other intangibles (F)		961		(64	)
Total amortizable intangible assets		1,864		(805	)
Indefinite-lived trade names and trademarks		45		-
Total other intangible assets	$	1,909	$	(805	)

Computer software consists primarily of software costs associated with an enterprise business solution (EBS) within Arconic to drive common systems among all businesses.

Amortization expense related to the intangible assets in the tables above for the years ended December 31, 2016, 2015, and 2014 was $65, $67, and $55, respectively, and is expected to be in the range of approximately $56 to $64 annually from 2017 to 2021.

Acquisitions and Divestitures

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

F. Acquisitions and Divestitures

Pro forma results of the Company, assuming all acquisitions described below were made at the beginning of the earliest prior period presented, would not have been materially different from the results reported.

2016 Divestitures. In April 2016, Arconic completed the sale of the Remmele Medical business to LISI MEDICAL for $102 in cash ($99 net of transaction costs), which was included in Proceeds from the sale of assets and businesses on the accompanying Statement of Consolidated Cash Flows. This business, which was part of the RTI International Metals Inc. (RTI) acquisition (see below), manufactures precision-machined metal products for customers in the minimally invasive surgical device and implantable device markets. Since this transaction occurred within a year of the completion of the RTI acquisition, no gain was recorded on this transaction as the excess of the proceeds over the carrying value of the net assets of this business was reflected as a purchase price adjustment (decrease to goodwill of $44) to the final allocation of the purchase price related to Arconic’s acquisition of RTI. While owned by Arconic, the operating results and assets and liabilities of this business were included in the Engineered Products and Solutions segment. This business generated sales of approximately $20 from January 1, 2016 through the divestiture date, April 29, 2016, and, at the time of the divestiture, had approximately 330 employees. This transaction is no longer subject to post-closing adjustments.

2015 Acquisitions. In March 2015, Arconic completed the acquisition of an aerospace structural castings company, TITAL, for $204 (€188) in cash (an additional $1 (€1) was paid in September 2015 to settle working capital in accordance with the purchase agreement). TITAL, a privately held company with approximately 650 employees based in Germany, produces aluminum and titanium investment casting products for the aerospace and defense markets. The purpose of this acquisition is to capture increasing demand for advanced jet engine components made of titanium, establish titanium-casting capabilities in Europe, and expand existing aluminum casting capacity. The assets, including the associated goodwill, and liabilities of this business were included within Arconic’s Engineered Products and Solutions segment since the date of acquisition. Based on the preliminary allocation of the purchase price, goodwill of $118 was recorded for this transaction. In the first quarter of 2016, the allocation of the purchase price was finalized, based, in part, on the completion of a third-party valuation of certain assets acquired, resulting in a $1 reduction of the initial goodwill amount. None of the $117 in goodwill is deductible for income tax purposes and no other intangible assets were identified. This transaction is no longer subject to post-closing adjustments.

In July 2015, Arconic completed the acquisition of RTI, a U.S. company that was publicly traded on the New York Stock Exchange under the ticker symbol “RTI.” Arconic purchased all outstanding shares of RTI common stock in a stock-for-stock transaction valued at $870 (based on the $9.96 per share July 23, 2015 closing price of Arconic’s common stock). Each issued and outstanding share of RTI common stock prior to the completion of the transaction was converted into the right to receive 2.8315 shares of Arconic common stock. In total, Arconic issued 29,132,471 shares (87,397,414 shares pre-reverse stock split – see Note A and Note P) of its common stock to consummate this transaction, which was not reflected in the accompanying Statement of Consolidated Cash Flows as it represents a noncash financing activity. The exchange ratio was the quotient of a $41 per RTI common share acquisition price and the $14.48 per share March 6, 2015 closing price of Arconic’s common stock. In addition to the transaction price, Arconic also paid $25 ($19 after-tax) in professional fees and costs related to this acquisition. This amount was recorded in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations.

RTI is a global supplier of titanium and specialty metal products and services for the commercial aerospace, defense, energy, and medical device end markets. The purpose of this acquisition was to expand Arconic’s range of titanium offerings and add advanced technologies and materials, primarily related to the aerospace end market. In 2014, RTI generated net sales of $794 and had approximately 2,600 employees. The operating results and assets and liabilities of RTI were included within Arconic’s Engineered Products and Solutions segment since the date of acquisition. Third-party sales and after-tax operating income (Arconic’s primary segment performance measure – see Note O) of RTI from the acquisition date through December 31, 2015 were $309 and less than $(1), respectively. During the third quarter of 2016, the final purchase price allocation was completed.

The following table represents the final allocation of the purchase price by major asset acquired and liability assumed, as well as the amount of goodwill recognized:


Assets:
Cash	$	303
Receivables from customers		94
Inventories		483
Prepaid expenses and other current assets		47
Properties, plants, and equipment		321
Goodwill		298
Other noncurrent assets		60
Total assets	$	1,606
Liabilities:
Accounts payable	$	86
Other current liabilities		94
Long-term debt due within one year		115
Long-term debt, less amount due within one year		387
Other noncurrent liabilities		96
Total liabilities	$	778
Equity:
Additional capital	$	60
Total equity	$	60

As reflected in the table above, Arconic recognized goodwill of $298, which represents the earnings growth potential of RTI, Arconic’s ability to expand its titanium capabilities in the aerospace market, and expected synergies from combining the operations of the two companies. This goodwill was allocated to a new Arconic reporting unit associated with the Engineered Products and Solutions segment, Arconic Titanium and Engineered Products, which consists solely of the acquired RTI business. None of this goodwill is deductible for income tax purposes.

The other noncurrent assets in the table above primarily represent intangible assets. These intangible assets consist mainly of customer relationships which are being amortized over a period of 20 years.

As part of this acquisition, Arconic assumed the obligation to repay two tranches of convertible debt; one tranche was due and settled in cash on December 1, 2015 (principal amount of $115) and the other tranche is due on October 15, 2019 (principal amount of $403). Upon conversion of the 2019 convertible notes in accordance with their terms, holders will receive, at Arconic’s election, cash, shares of common stock (approximately 14,156,000 shares currently, which gives the effect to the Reverse Stock Split (See Note A) and the Distribution of Alcoa Corporation), or a combination of cash and shares. This cash conversion feature requires the convertible notes to be bifurcated into a liability component and an equity component. The fair value of the liability component was determined by calculating the net present value of the cash flows of the convertible notes using the interest rate of a similar instrument without a conversion feature. The fair value of the equity component is the difference between the fair value of the entire instrument on the date of acquisition and the fair value of the liability and is included as Additional capital on the accompanying Consolidated Balance Sheet.

2015 Divestitures. In 2015, Arconic completed the divestiture of an operation in Russia (see below) and had post-closing adjustments, as provided for in the respective purchase agreements, related to the divestiture completed in December 2014 (see 2014 Divestitures below). The divestiture and post-closing adjustments combined resulted in net cash paid of $11 and a net loss of $137, which was recorded in Restructuring and other charges (see Note D) on the accompanying Statement of Consolidated Operations. These two divestitures are no longer subject to post-closing adjustments.

In March 2015, Arconic completed the sale of a rolling mill located in Belaya Kalitva, Russia to a wholly-owned subsidiary of Stupino Titanium Company. While owned by Arconic, the operating results and assets and liabilities of the rolling mill were included in the Global Rolled Products segment. The rolling mill generated sales of approximately $130 in 2014 and, at the time of divestiture, had approximately 1,870 employees.

2014 Acquisitions. In June 2014, Arconic signed a purchase agreement to acquire an aerospace jet engine components company, Firth Rixson, from Oak Hill Capital Partners for $2,850. The purchase price was composed of $2,350 in cash and $500 of Arconic common stock. The common stock component was equivalent to 12,174,337 shares (36,523,010 shares pre-reverse stock split – see Note A and Note P) at a per share price of $41.07 ($13.69 per share pre-reverse stock split), as determined in the agreement. In conjunction with the purchase agreement, Arconic also entered into an earn-out agreement, which states that Arconic will make earn-out payments up to an aggregate maximum amount of $150 through December 31, 2020 upon certain conditions (see below for additional information). On November 19, 2014, after satisfying all customary closing conditions and receiving the required regulatory approvals, Arconic completed the acquisition of Firth Rixson for $2,995. The purchase price was composed of $2,385 in cash (net of cash acquired) and $610 of Arconic common stock. The cash portion of the transaction price increased by $35 due to working capital and other adjustments based on the provisions of the purchase agreement. The common stock portion of the transaction price was based on the closing market price of $50.07 per share ($16.69 per share pre-reverse stock split) of Arconic’s common stock on the acquisition date.

In addition to the transaction price, Arconic also paid $42 ($34 after-tax) in professional fees and costs related to this acquisition. This amount was recorded in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations. Additionally, Arconic recorded $13 ($8 after-tax) in Interest expense on the accompanying Statement of Consolidated Operations for costs associated with the execution (in June 2014) and termination (in September 2014) of a $2,500 364-day senior unsecured bridge term loan facility. This facility was entered into for the purpose of financing all or a portion of the cash consideration for this acquisition and to pay fees and expenses incurred in connection therewith. However, in September 2014, the facility was no longer necessary as Arconic completed the issuance of $2,500 in debt and equity (see Note P) instruments to finance the acquisition.

Firth Rixson manufactures rings, forgings, and metal products for the aerospace end market, as well as other markets requiring highly engineered material applications. At acquisition, this business had 13 operating facilities in the United States, United Kingdom, Europe, and Asia employing approximately 2,400 people combined. The purpose of this acquisition was to strengthen Arconic’s aerospace business and position the Company to capture additional aerospace growth with a broader range of high-growth, value-add jet engine components. The operating results and assets and liabilities of Firth Rixson were included within the Engineered Products and Solutions segment since the date of acquisition. Third-party sales and after-tax operating income (Arconic’s primary segment performance measure—see Note O) of Firth Rixson from the acquisition date through December 31, 2014 were $81 and $(12), respectively.

The following table represents the final allocation of the purchase price by major asset acquired and liability assumed, as well as the amount of goodwill recognized and the net present value of the potential earn-out:


Assets:
Receivables from customers	$	193
Inventories		227
Prepaid expenses and other current assets		22
Properties, plants, and equipment		493
Goodwill		1,801
Other noncurrent assets		758
Total assets	$	3,494
Liabilities:
Accounts payable	$	162
Other current liabilities		100
Contingent consideration		130
Other noncurrent liabilities		107
Total liabilities	$	499

As reflected in the table above, Arconic recognized goodwill of $1,801, which represents the earnings growth potential of Firth Rixson and expected synergies from combining the operations of the two companies. The goodwill was allocated to two of Arconic’s reporting units associated with the Engineered Products and Solutions segment, Arconic Fastening Systems and Rings ($1,117) and Arconic Forgings and Extrusions ($684), on a relative fair value basis. None of the goodwill is deductible for income tax purposes.

The other noncurrent assets in the table above represent intangible assets, which were included in the other intangibles class (see Note E). These intangible assets consist primarily of customer relationships and contracts, backlog, qualifications, and technology, and have a weighted-average amortization period of 35 years.

The contingent consideration liability presented in the table above represents the net present value of the potential earn-out of $150 (Level 3 in the fair value hierarchy – see Note V). This earn-out is contingent on the Firth Rixson forging business in Savannah, Georgia achieving certain identified financial targets through December 31, 2020. During the fourth quarter of 2016, management determined that payment of the maximum amount was not probable based on the forecasted financial performance of this location. Therefore, the fair value of this liability was reduced by $56 with a corresponding credit to Other income, net on the accompanying Statement of Consolidated Operations. It is estimated that the earn-out will be paid in 2019 through 2020.

In August 2014, Arconic completed the acquisition of the 30% outstanding noncontrolling interest in the aluminum brazing sheet venture in Kunshan City, China from Shanxi Yuncheng Engraving Group for $28.

2014 Divestitures. In 2014, Arconic completed the sale of three rolling mills located in Spain (Alicante and Amorebieta) and France (Castelsarrasin) to a subsidiary of Atlas Holdings LLC. While owned by Arconic, the operating results and assets and liabilities of the rolling mills were included in the Global Rolled Products segment. The rolling mills combined generated sales of approximately $500 in 2013 and, at the time of divestiture, had approximately 750 employees. This transaction yielded net cash proceeds of $24 and resulted in a net loss of $116, which was recorded in Restructuring and other charges (see Note D) on the accompanying Statement of Consolidated Operations. This transaction was subject to certain post-closing adjustments as defined in the purchase agreement as of December 31, 2014 (see 2015 Divestitures above).

Inventories

12 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Inventories

G. Inventories


December 31,	2016		2015
Finished goods	$	625	$	672
Work-in-process		1,144		1,115
Purchased raw materials		408		425
Operating supplies		76		72
	$	2,253	$	2,284

At December 31, 2016 and 2015, the total amount of inventories valued on a LIFO basis was $947 and $1,009, respectively. If valued on an average-cost basis, total inventories would have been $371 and $387 higher at December 31, 2016 and 2015, respectively. During 2016 and 2015, reductions in LIFO inventory quantities caused partial liquidations of the lower cost LIFO inventory base. These liquidations resulted in the recognition of immaterial income amounts in both 2016 and 2015, respectively.

Properties, Plants, and Equipment, Net

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Properties, Plants, and Equipment, Net

H. Properties, Plants, and Equipment, Net


December 31,	2016		2015
Land and land rights	$	135	$	149
Structures:
Global Rolled Products		1,061		1,042
Engineered Products and Solutions		733		658
Transportation and Construction Solutions		254		239
Other		248		290
		2,296		2,229
Machinery and equipment:
Global Rolled Products		4,570		4,500
Engineered Products and Solutions		2,728		2,745
Transportation and Construction Solutions		723		682
Other		337		442
		8,358		8,369
Less: accumulated depreciation and amortization		10,789 6,073		10,747 6,143
Construction work-in-progress		4,716 783		4,604 821
	$	5,499	$	5,425

Other Noncurrent Assets

12 Months Ended

Dec. 31, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Noncurrent Assets

I. Other Noncurrent Assets


December 31,	2016		2015
Intangibles, net (E)	$	988	$	1,104
Investments		102		193
Cash surrender value of life insurance		14		492
Other		141		155
	$	1,245	$	1,944

Investments. As of December 31, 2016 and 2015, Investments were composed of exchange-traded fixed income and equity securities, which are classified as available-for-sale and are carried at fair value (see Note V) with unrealized gains and losses recognized in other comprehensive income. Unrealized and realized gains and losses related to these securities were immaterial in 2016, 2015, and 2014.

During 2016, Arconic sold various fixed income and equity securities held by its captive insurance company for $130, which is included in Sales of investments on the accompanying Statement of Consolidated Cash Flows, and recorded a loss of $3 ($2 after-tax) in Other income, net on the accompanying Statement of Consolidated Operations.

Cash surrender value of life insurance. In the first quarter of 2016, Arconic received $234 in proceeds from the redemption of certain company-owned life insurance policies. In the second quarter of 2016, Arconic liquidated additional company-owned life insurance policies for $223 in cash. Both of these amounts were included in Proceeds from the sale of assets and businesses on the accompanying Statement of Consolidated Cash Flows. As the cash received was equivalent to the cash surrender value of these policies, no gain or loss was recognized on the sales of these policies.

Debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

J. Debt

Long-Term Debt.


December 31,	2016			2015
5.55% Notes, due 2017	$	-		$	750
6.50% Bonds, due 2018		250			250
6.75% Notes, due 2018		750			750
5.72% Notes, due 2019		750			750
1.63% Convertible Notes, due 2019*		403			403
6.150% Notes, due 2020		1,000			1,000
5.40% Notes, due 2021		1,250			1,250
5.87% Notes, due 2022		627			627
5.125% Notes, due 2024		1,250			1,250
5.90% Notes, due 2027		625			625
6.75% Bonds, due 2028		300			300
5.95% Notes due 2037		625			625
Iowa Finance Authority Loan, due 2042 (4.75%)		250			250
Other**		(32	)		(41	)
		8,048			8,789
Less: amount due within one year		4			3
	$	8,044		$	8,786

*	Amount was assumed in conjunction with the acquisition of RTI (see Note F).

Other includes various financing arrangements related to subsidiaries, unamortized debt discounts related to the outstanding notes and bonds listed in the table above, an equity option related to the convertible notes due in 2019 (see Note F), adjustments to the carrying value of long-term debt related to an interest swap contract accounted for as a fair value hedge, and unamortized debt issuance costs (see Note A).

The principal amount of long-term debt maturing in each of the next five years is $4 in 2017, $1,035 in 2018, $1,134 in 2019, $1,002 in 2020, and $1,251 in 2021.

Public Debt—In December 2016, Arconic elected to call for redemption the $750 in outstanding principal of its 5.55% Notes due February 2017 (the “2017 Notes”) under the provisions of the 2017 Notes. The total cash paid to the holders of the called 2017 Notes was $770, which includes $17 in accrued and unpaid interest from the last interest payment date up to, but not including, the settlement date, and a $3 purchase premium. The purchase premium was recorded in Interest expense on the accompanying Statement of Consolidated Operations. This transaction was completed on December 30, 2016.

Credit Facilities. On July 25, 2014, Arconic entered into a Five-Year Revolving Credit Agreement (“the Credit Agreement”) with a syndicate of lenders and issuers named therein which provides for a senior unsecured revolving credit facility (the “Credit Facility”). The proceeds are to be used to provide working capital or for other general corporate purposes of Arconic. In September 2016, Arconic entered into an amendment to the Credit Agreement to permit the Separation Transaction and to amend certain terms of the Credit Agreement including the replacement of the existing financial covenant with a leverage ratio and reduction of total commitments available from $4,000 to $3,000. The amendment became effective on the separation date of November 1, 2016. The previous financial covenant, based upon Consolidated Net Worth (as defined in the Credit Agreement) was replaced. Arconic will be required to maintain a ratio of Indebtedness (as defined in the Credit Agreement), to Consolidated EBITDA (as defined in the Credit Agreement) of 5.50 to 1.00 for the period of the four fiscal quarters most recently ended, declining to 3.50 to 1.00 on December 31, 2019 and thereafter.

The Credit Agreement includes additional covenants, including, among others, (a) limitations on Arconic’s ability to incur liens securing indebtedness for borrowed money, (b) limitations on Arconic’s ability to consummate a merger, consolidation or sale of all or substantially all of its assets, and (c) limitations on Arconic’s ability to change the nature of its business. As of December 31, 2016, Arconic was in compliance with all such covenants.

The Credit Facility matures on July 25, 2020, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Arconic may make one additional one-year extension request during the remaining term of the Credit Facility, subject to the lender consent requirements set forth in the Credit Agreement. Under the provisions of the Credit Agreement, Arconic will pay a fee up to 0.30% (based on Arconic’s long-term debt ratings as of December 31, 2016) of the total commitment per annum to maintain the Credit Facility.

The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured, unsubordinated indebtedness of Arconic. Borrowings under the Credit Facility may be denominated in U.S. dollars or euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on the credit ratings of Arconic’s outstanding senior unsecured long-term debt. The applicable margin on base rate loans and LIBOR loans will be 0.70% and 1.70% per annum, respectively, based on Arconic’s long-term debt ratings as of December 31, 2016. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

The obligation of Arconic to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an “Event of Default” as defined in the Credit Agreement. Such Events of Default include, among others, (a) Arconic’s failure to pay the principal of, or interest on, borrowings under the Credit Facility, (b) any representation or warranty of Arconic in the Credit Agreement proving to be materially false or misleading, (c) Arconic’s breach of any of its covenants contained in the Credit Agreement, and (d) the bankruptcy or insolvency of Arconic.

There were no amounts outstanding at December 31, 2016 and 2015 and no amounts were borrowed during 2016, 2015 or 2014 under the Credit Facility. In addition to the Credit Facility above, Arconic has a number of other credit facilities that provide a combined borrowing capacity of $715 as of December 31, 2016, of which $465 is due to expire in 2017 and $250 is due to expire in 2018. The purpose of any borrowings under these credit arrangements is to provide for working capital requirements and for other general corporate purposes. The covenants contained in all these arrangements are the same as the Credit Agreement (see above).

In 2016, 2015 and 2014, Arconic borrowed and repaid $1,950, $1,890, and $1,640, respectively, under the respective credit arrangements. The weighted-average interest rate and weighted-average days outstanding of the respective borrowings during 2016, 2015, and 2014 were 1.88%, 1.61%, and 1.54%, respectively, and 49 days, 69 days, and 67 days, respectively.

Short-Term Borrowings. At December 31, 2016 and 2015, Short-term borrowings were $36 and $38, respectively. These amounts included $31 and $32 at December 31, 2016 and 2015, respectively, related to accounts payable settlement arrangements with certain vendors and third-party intermediaries. These arrangements provide that, at the vendor’s request, the third-party intermediary advances the amount of the scheduled payment to the vendor, less an appropriate discount, before the scheduled payment date and Arconic makes payment to the third-party intermediary on the date stipulated in accordance with the commercial terms negotiated with its vendors. Arconic records imputed interest related to these arrangements in Interest expense on the accompanying Statement of Consolidated Operations.

Commercial Paper. Arconic had no outstanding commercial paper at December 31, 2016 and 2015. In 2016 and 2015, the average outstanding commercial paper was $127 and $198, respectively. Commercial paper matures at various times within one year and had an annual weighted average interest rate of 1.05%, 0.6%, and 0.6% during 2016, 2015, and 2014, respectively.

Other Noncurrent Liabilities and Deferred Credits

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Other Noncurrent Liabilities and Deferred Credits

K. Other Noncurrent Liabilities and Deferred Credits


December 31,	2016		2015
Environmental remediation (L)	$	260	$	288
Income taxes (R)		154		13
Accrued compensation and retirement costs		216		237
Contingent payment related to an acquisition (F)		78		130
Other		162		160
	$	870	$	828

Contingencies and Commitments	12 Months Ended
Contingencies and Commitments	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Contingencies and Commitments	L. Contingencies and Commitments Contingencies Environmental Matters. Arconic participates in environmental assessments and cleanups at more than 100 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 the nature and extent of contamination, changes in remedial requirements, and technological changes, among others. Arconic’s remediation reserve balance was $308 and $306 at December 31, 2016 and December 31, 2015 (of which $48 and $18 was classified as a current liability), respectively, and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. In 2016, the remediation reserve was increased by $14 due to a net charge associated with a number of sites and was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The change in the reserve also reflects a decrease of $2 due to the effects of foreign currency translation and an increase of $3 related to the acquisition of RTI (see Note F). Payments related to remediation expenses applied against the reserve were $13 in 2016 and include expenditures currently mandated, as well as those not required by any regulatory authority or third party. Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be approximately 1% or less of cost of goods sold. The Separation and Distribution Agreement includes provisions for the assignment or allocation of environmental liabilities between Arconic and Alcoa Corporation including certain remediation obligations associated with environmental matters. In general, the respective parties will be responsible for the environmental matters associated with their operations, and with the properties and other assets assigned to each. The only material and reportable matter assigned to Arconic concerns the Grasse River at Arconic’s Massena West location, the status of which is as follows: Massena West, NY—Arconic has an ongoing remediation project related to Grasse River, which is adjacent to Arconic’s Massena plant site. Many years ago, it was determined that sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs). The project, which was selected by the U.S. Environmental Protection Agency (EPA) in a Record of Decision (ROD) issued in April 2013, is aimed at capping PCB contaminated sediments with concentration in excess of one part per million in the main channel of the river and dredging PCB contaminated sediments in the near-shore areas where total PCBs exceed one part per million. At December 31, 2016 and December 31, 2015, the reserve balance associated with this matter was $228 and $234, respectively. Arconic is in the planning and design phase, which is expected to be completed in 2017. Following that, the actual remediation fieldwork is expected to commence and take approximately four years. The majority of the project funding is expected to be spent between 2017 and 2021. Additionally, the Separation and Distribution Agreement lists environmental matters and sites where both parties, Arconic and Alcoa Corporation, share the liability. The Separation and Distribution Agreement provides for the allocation of responsibility between the two companies as well as identifies the lead party responsible for overall management of the matter. One such site previously reported on was Fusina, Italy. The share for this site allocated to Arconic is not material, and therefore, Arconic will no longer report on this matter unless and until some event in the future causes this to become material and reportable. Lastly, Arconic previously reported on other environmental matters associated with East St. Louis, IL, Sherwin, TX, Baie Comeau, Quebec, Canada and Mosjoen, Norway. Under the Separation and Distribution Agreement, the legal entities named as parties to these matters are now affiliated with Alcoa Corporation and/or Alcoa Corporation has agreed to take full responsibility for these locations and has agreed to indemnify Arconic for any future liability associated with these locations, including the need for any future environmental remediation. Therefore, Arconic will also no longer report on these matters unless and until some event in the future causes any of them to become material and reportable. Tax. Pursuant to the Tax Matters Agreement (see Note C) entered into between Arconic and Alcoa Corporation in connection with the Separation Transaction, Arconic shares responsibility with Alcoa Corporation, and Alcoa Corporation has agreed to partially indemnify Arconic with respect to the following matter. As previously reported, in September 2010, following a corporate income tax audit covering the 2003 through 2005 tax years, an assessment was received as a result of Spain’s tax authorities disallowing certain interest deductions claimed by a Spanish consolidated tax group owned by the Company. An appeal of this assessment in Spain’s Central Tax Administrative Court by the Company was denied in October 2013. In December 2013, the Company filed an appeal of the assessment in Spain’s National Court. Additionally, following a corporate income tax audit of the same Spanish tax group for the 2006 through 2009 tax years, Spain’s tax authorities issued an assessment in July 2013 similarly disallowing certain interest deductions. In August 2013, Arconic filed an appeal of this second assessment in Spain’s Central Tax Administrative Court, which was denied in January 2015. Arconic filed another appeal of this second assessment in Spain’s National Court in March 2015. The combined assessments (remeasured for a tax rate change enacted in November 2014) total $258 (€246). On January 16, 2017, Spain’s National Court issued a decision in favor of the Company related to the assessment received in September 2010. It is not yet known if Spain’s tax authorities will appeal this decision. Spain’s National Court has not yet rendered a decision related to the assessment received in July 2013. The Company believes it has meritorious arguments to support its tax position and intends to vigorously litigate the assessments through Spain’s court system. However, in the event the Company is unsuccessful, a portion of the assessments may be offset with existing net operating losses available to the Spanish consolidated tax group, which would be shared between Arconic and Alcoa Corporation as provided for in the Tax Matters Agreement related to the Separation Transaction. Additionally, it is possible that the Company may receive similar assessments for tax years subsequent to 2009. At this time, the Company is unable to reasonably predict an ultimate outcome for this matter. Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Arconic, including those pertaining to environmental, product liability, safety and health, and tax matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a particular 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 financial position of the Company. Commitments Purchase Obligations. Arconic has entered into purchase commitments for raw materials, energy and other goods and services, which total $490 in 2017, $90 in 2018, $73 in 2019, $64 in 2020, $2 in 2021, and $5 thereafter. Operating Leases. Certain land and buildings, plant equipment, vehicles, and computer equipment are under operating lease agreements. Total expense for all leases was $110 in 2016, $112 in 2015, and $112 in 2014. Under long-term operating leases, minimum annual rentals are $115 in 2017, $96 in 2018, $75 in 2019, $54 in 2020, $38 in 2021, and $116 thereafter. Guarantees. At December 31, 2016, Arconic has outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, energy contracts, and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between 2017 and 2026 was $51 at December 31, 2016. Pursuant to the Separation and Distribution Agreement, Arconic was required to provide maximum potential future payment guarantees for Alcoa Corporation issued on behalf of a third party of $354. These guarantees expire at various times between 2017 and 2024 and relate to project financing for Alcoa Corporation’s aluminum complex in Saudi Arabia. Additionally, Arconic was required to provide guarantees up to an estimated present value amount of $1,600 related to two long-term supply agreements for energy for Alcoa Corporation facilities. Per the Separation and Distribution Agreement, Arconic is only liable for these guaranteed amounts in the event of an Alcoa Corporation payment default. In December 2016, Arconic entered into a one year claims purchase agreement with a bank covering claims up to $245 related to the Saudi Arabian joint venture and two long-term energy supply agreements. The majority of the premium related to this claims purchase agreement is being paid by Alcoa Corporation. At December 31, 2016, the combined fair value of the three required guarantees was $35 which was included in Other Noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. Arconic was also required to provide guarantees of $50 related to two Alcoa Corporation energy supply contracts. These guarantees expire in March 2017. Additionally, Arconic was required to provide guarantees of $53 related to certain Alcoa Corporation environmental liabilities. Notification of a change in guarantor has been made to the appropriate environmental agencies and Alcoa Corporation is required by the end of March 2017 to self-bond or provide collateral. Letters of Credit. Arconic has outstanding letters of credit primarily related to workers’ compensation, energy contracts and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2017 was $212 at December 31, 2016. Pursuant to the Separation and Distribution Agreement, Arconic was required to retain letters of credit of $62 that had previously been provided related to both Arconic and Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016. Alcoa Corporation workers’ compensation claims and letter of credit fees paid by Arconic are being billed to and are being fully reimbursed by Alcoa Corporation. Additionally, Arconic was required to provide letters of credit for certain Alcoa Corporation equipment leases and energy contracts and, as a result, Arconic has $103 of outstanding letters of credit relating to these liabilities. The entire $103 of outstanding letters of credit were canceled in 2017 when Alcoa Corporation issued its own letters of credit to cover these obligations. Surety Bonds. Arconic has outstanding surety bonds primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these bonds, which automatically renew or expire at various dates, mostly in 2017, was $120 at December 31, 2016. Pursuant to the Separation and Distribution Agreement, Arconic was required to provide surety bonds related to Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016 and, as a result, Arconic has $22 in outstanding surety bonds relating to these liabilities. Alcoa Corporation workers’ compensation claims and surety bond fees paid by Arconic are being billed to and are being fully reimbursed by Alcoa Corporation.

Other Income, Net

12 Months Ended

Dec. 31, 2016

Other Income and Expenses [Abstract]

Other Income, Net

M. Other Income, Net


	2016			2015			2014
Equity income	$	(7	)	$	-		$	(2	)
Interest income		(16	)		(16	)		(19	)
Foreign currency (gains) losses, net		(4	)		51			23
Net loss (gain) from asset sales		11			(42	)		(13	)
Net loss (gain) on mark-to-market derivative contracts		1			(3	)		2
Other, net		(79	)		(18	)		4
	$	(94	)	$	(28	)	$	(5	)

In 2016, Other, net includes an adjustment of the contingent earn-out liability ($56) and a post-closing adjustment ($20) both related to the November 2014 acquisition of Firth Rixson. In 2015, Net gain from asset sales included a $19 gain related to the sale of land around Arconic’s former Sherwin, TX site and a $19 gain related to the sale of the remaining equity investment in a China rolling mill. In 2014, Net gain from asset sales included a $14 gain related to the sale of an equity investment in a China rolling mill.

Cash Flow Information

12 Months Ended

Dec. 31, 2016

Supplemental Cash Flow Elements [Abstract]

Cash Flow Information

N. Cash Flow Information

Cash paid for interest and income taxes was as follows:


	2016		2015		2014
Interest, net of amount capitalized	$	524	$	487	$	441
Income taxes, net of amount refunded	$	324	$	345	$	301

The details related to cash paid for acquisitions (including of a noncontrolling interest in 2014) were as follows:


	2016			2015			2014
Assets acquired	$	-		$	2,003		$	3,515
Liabilities assumed		-			(868	)		(345	)
Contingent consideration liability		-			-			(130	)
Equity issued		-			(870	)		(610	)
Noncontrolling interest acquired		-			-			31
Working capital adjustment		(10	)		-			-
Increase in Arconic’s shareholders’ equity		-			(60	)		(3	)
Cash paid		(10	)		205			2,458
Less: cash acquired		-			302			45
Net cash paid	$	(10	)	$	(97	)	$	2,413

Noncash Financing and Investing Activities. On October 5, 2016, Arconic completed a 1-for-3 Reverse Stock Split (see Note A). The Reverse Stock Split reduced the number of shares of common stock outstanding from approximately 1.3 billion shares to approximately 0.4 billion shares. The par value of the common stock remained at $1.00 per share. Accordingly, Common stock and Additional capital in the Company’s Consolidated Balance Sheet at December 31, 2016 reflect a decrease and increase of $877, respectively. This transaction was not reflected on the Statement of Consolidated Cash Flows for the year ended December 31, 2016 as it represents a noncash financing activity.

In August 2016, Arconic retired its outstanding treasury stock consisting of approximately 76 million shares (see Note P). As a result, Common stock and Additional capital were decreased by $76 and $2,563, respectively, to reflect the retirement of the treasury shares. This transaction was not reflected on the Statement of Consolidated Cash Flows for the year ended December 31, 2016 as it represents a noncash financing activity.

In July 2015, Arconic purchased all outstanding shares of RTI common stock in a stock-for-stock transaction valued at $870 (see Note F). As a result, Arconic issued 29 million shares (87 million shares—pre-Reverse Stock Split—see Note A and Note P) of its common stock to consummate this transaction, which was not reflected in the accompanying Statement of Consolidated Cash Flows as it represents a noncash financing activity.

In early 2014, holders of $575 principal amount of Arconic’s 5.25% Convertible Notes due March 15, 2014 (the “2014 Notes”) exercised their option to convert the 2014 Notes into 30 million shares (89 million shares—pre-Reverse Stock Split—see Note A and Note P) of Arconic common stock. This transaction was not reflected in the accompanying Statement of Consolidated Cash Flows as it represents a noncash financing activity.

In late 2014, Arconic paid $2,995 (net of cash acquired) to acquire Firth Rixson (see Note F). A portion of this consideration was paid through the issuance of 12 million shares (37 million shares—pre-Reverse Stock Split—see Note A and Note P) in Arconic common stock valued at $610. The issuance of common stock was not reflected in the accompanying Statement of Consolidated Cash Flows as it represents a noncash investing activity.

Segment and Geographic Area Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment and Geographic Area Information

O. Segment and Geographic Area Information

Arconic is a producer of products including precision castings and aerospace and industrial fasteners. Arconic’s products are used worldwide in transportation (including aerospace, automotive, truck, trailer, rail, and shipping), packaging, building and construction, oil and gas, defense, and industrial applications. Arconic’s segments are organized by product on a worldwide basis. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the after-tax operating income (ATOI) of each segment. Certain items such as the impact of LIFO inventory accounting; metal price lag (the timing difference created when the average price of metal sold differs from the average cost of the metal when purchased by the respective segment—generally when the price of metal increases, metal lag is favorable and when the price of metal decreases, metal lag is unfavorable); interest expense; noncontrolling interests; corporate expense (general administrative and selling expenses of operating the corporate headquarters and other global administrative facilities, corporate research and development expenses, along with depreciation and amortization on corporate-owned assets); restructuring and other charges; and other items, including intersegment profit eliminations, differences between tax rates applicable to the segments and the consolidated effective tax rate, and other nonoperating items such as foreign currency transaction gains/losses and interest income are excluded from segment ATOI. Segment assets exclude, among others, cash and cash equivalents; deferred income taxes; goodwill not allocated to businesses for segment reporting purposes; corporate fixed assets; and LIFO reserves.

The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note A). Transactions among segments are established based on negotiation among the parties. Differences between segment totals and Arconic’s consolidated totals for line items not reconciled are in Corporate.

Arconic’s operations consist of three worldwide reportable segments as follows:

Global Rolled Products. This segment produces aluminum sheet and plate for a variety of end markets. This segment includes sheet and plate sold directly to customers and through distributors related to the aerospace, automotive, commercial transportation, packaging, building and construction, and industrial products (mainly used in the production of machinery and equipment and consumer durables) end markets. A small portion of this segment also produces aseptic foil for the packaging end market. While the customer base for flat-rolled products is large, a significant amount of sales of sheet and plate is to a relatively small number of customers.

Engineered Products and Solutions. This segment produces products that are used mostly in the aerospace (commercial and defense), commercial transportation, and power generation end markets. Such products include fastening systems (titanium, steel, and nickel superalloys) and seamless rolled rings (mostly nickel superalloys); investment castings (nickel superalloys, titanium, and aluminum), including airfoils and forged jet engine components (e.g., jet engine disks); and extruded, machined and formed aircraft parts (titanium and aluminum), all of which are sold directly to customers and through distributors. More than 75% of the third-party sales in this segment are from the aerospace end market. A small part of this segment also produces various forged, extruded, and machined metal products (titanium, aluminum and steel) for the oil and gas, industrial products, automotive, and land and sea defense end markets. Seasonal decreases in sales are generally experienced in the third quarter of the year due to the European summer slowdown across all end markets.

Transportation and Construction Solutions. This segment produces products that are used mostly in the nonresidential building and construction and commercial transportation end markets. Such products include integrated aluminum structural systems, architectural extrusions, and forged aluminum commercial vehicle wheels, which are sold directly to customers and through distributors. A small part of this segment also produces aluminum products for the industrial products end market.

The operating results and assets of Arconic’s reportable segments were as follows:


	Global Rolled Products		Engineered Products and Solutions		Transportation and Construction Solutions		Total
2016
Sales:
Third-party sales	$	4,864	$	5,728	$	1,802	$	12,394
Intersegment sales		118		-		-		118
Total sales	$	4,982	$	5,728	$	1,802	$	12,512
Profit and loss:
Depreciation and amortization		201		255		48		504
Income taxes		107		298		67		472
ATOI		269		642		176		1,087
2015
Sales:
Third-party sales	$	5,253	$	5,342	$	1,882	$	12,477
Intersegment sales		125		-		-		125
Total sales	$	5,378	$	5,342	$	1,882	$	12,602
Profit and loss:
Depreciation and amortization		203		233		43		479
Income taxes		85		282		63		430
ATOI		225		595		166		986
2014
Sales:
Third-party sales	$	6,344	$	4,217	$	2,021	$	12,582
Intersegment sales		185		-		-		185
Total sales	$	6,529	$	4,217	$	2,021	$	12,767
Profit and loss:
Depreciation and amortization		211		137		42		390
Income taxes		67		298		69		434
ATOI		224		579		180		983
2016
Assets:
Capital expenditures	$	293	$	333	$	63	$	689
Goodwill		181		4,579		57		4,817
Total assets		3,891		10,542		982		15,415
2015
Assets:
Capital expenditures	$	256	$	383	$	77	$	716
Goodwill		201		4,660		58		4,919
Total assets		3,861		10,732		947		15,540

The following tables reconcile certain segment information to consolidated totals:


	2016			2015			2014
Sales:
Total segment sales	$	12,512		$	12,602		$	12,767
Elimination of intersegment sales		(118	)		(125	)		(185	)
Corporate		-			(64	)		(40	)
Consolidated sales	$	12,394		$	12,413		$	12,542


	2016			2015			2014
Net (loss) income attributable to Arconic:
Total segment ATOI	$	1,087		$	986		$	983
Unallocated amounts (net of tax):
Impact of LIFO		(11	)		66			(52	)
Metal price lag		21			(115	)		68
Interest expense		(324	)		(307	)		(287	)
Noncontrolling interests		-			(1	)		-
Corporate expense		(306	)		(252	)		(268	)
Impairment of goodwill		-			(25	)		-
Restructuring and other charges		(114	)		(192	)		(249	)
Discontinued operations		121			(165	)		329
Other ⁽¹⁾		(1,415	)		(317	)		(256	)
Consolidated net (loss) income attributable to Arconic	$	(941	)	$	(322	)	$	268

⁽¹⁾	Other for 2016, includes a charge for valuation allowances related to the Separation Transaction ($1,267), slightly offset by a favorable adjustment to the contingent earn-out liability and a post-closing adjustment both of which related to the November 2014 acquisition of Firth Rixson ($76).


December 31,	2016			2015
Assets:
Total segment assets	$	15,415		$	15,540
Unallocated amounts:
Cash and cash equivalents		1,863			1,362
Deferred income taxes		1,234			1,308
Corporate goodwill		331			330
Corporate fixed assets, net		308			279
LIFO reserve		(371	)		(387	)
Fair value of derivative contracts		24			-
Investment in common stock of Alcoa Corporation		1,020			-
Assets of discontinued operations		-			17,154
Other		214			891
Consolidated assets	$	20,038		$	36,477

Sales by major product grouping were as follows:


	2016		2015		2014
Sales:
Flat-rolled aluminum		4,864		5,253		6,344
Fastening systems		2,060		2,168		1,647
Investment castings		1,870		1,812		1,784
Other extruded and forged products		1,495		1,332		1,019
Architectural aluminum systems		1,010		951		1,002
Aluminum wheels		689		790		786
Other		406		107		(40	)
	$	12,394	$	12,413	$	12,542

Geographic information for sales was as follows (based upon the country where the point of sale occurred):


	2016		2015		2014
Sales:
United States	$	7,823	$	8,044	$	7,205
France		930		802		915
United Kingdom		711		698		464
Hungary		619		622		630
China		582		565		415
Russia		433		455		642
Germany		284		264		229
Canada		262		180		125
Brazil		250		297		417
Japan		145		138		157
Italy		127		139		150
Australia		53		49		523
Spain		4		2		460
Other		171		158		210
	$	12,394	$	12,413	$	12,542

Geographic information for long-lived assets was as follows (based upon the physical location of the assets):


December 31,	2016		2015
Long-lived assets:
United States	$	3,966	$	3,833
China		336		352
Russia		295		303
United Kingdom		232		312
Hungary		194		190
France		118		107
Other		358		328
	$	5,499	$	5,425

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Preferred and Common Stock

12 Months Ended

Dec. 31, 2016

Preferred and Common Stock

P. Preferred and Common Stock

Preferred Stock. Arconic has two classes of preferred stock: Class A Preferred Stock and Class B Serial Preferred Stock. Class A Preferred Stock has 660,000 shares authorized at a par value of $100 per share with an annual $3.75 cumulative dividend preference per share. There were 546,024 of such shares outstanding at December 31, 2016 and 2015. Class B Serial Preferred Stock has 10 million shares authorized at a par value of $1 per share. There were 2.5 million of such shares outstanding at December 31, 2016 and 2015 (see below).

In September 2014, Arconic completed a public offering under its shelf registration statement for $1,250 of 25 million depositary shares, each of which represents a 1/10th interest in a share of Arconic’s 5.375% Class B Mandatory Convertible Preferred Stock, Series 1, par value $1 per share, liquidation preference $500 per share (the “Mandatory Convertible Preferred Stock”). The 25 million depositary shares are equivalent to 2.5 million shares of Mandatory Convertible Preferred Stock. Each depositary share entitles the holder, through the depositary, to a proportional fractional interest in the rights and preferences of a share of Mandatory Convertible Preferred Stock, including conversion, dividend, liquidation, and voting rights, subject to terms of the deposit agreement. Arconic received $1,213 in net proceeds from the public offering reflecting an underwriting discount. The net proceeds were used, together with the net proceeds of issued debt, to finance the cash portion of the acquisition of Firth Rixson. The underwriting discount was recorded as a decrease to Additional capital. The Mandatory Convertible Preferred Stock constitutes a series of Arconic’s Class B Serial Preferred Stock, which ranks senior to Arconic’s common stock and junior to Arconic’s Class A Preferred Stock and existing and future indebtedness. Dividends on the Mandatory Convertible Preferred Stock are cumulative in nature and are paid at the rate of $26.8750 per annum per share, which commenced January 1, 2015 (paid on December 30, 2014). Holders of the Mandatory Convertible Preferred Stock generally have no voting rights.

On the mandatory conversion date, October 1, 2017, all outstanding shares of Mandatory Convertible Preferred Stock will automatically convert into shares of Arconic’s common stock. As a result of the Separation Transaction and the 1-for-3 Reverse Stock Split (see Note A), as defined in the terms of the Mandatory Convertible Preferred Stock, the conversion rate was adjusted and each share of Mandatory Convertible Preferred Stock is now convertible into not more than 15.6981 shares of common stock and not less than 13.0817 shares of common stock, subject to certain anti-dilution and other adjustments as described in the terms of the Mandatory Convertible Preferred Stock. At any time prior to October 1, 2017, a holder may elect to convert shares of Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of Mandatory Convertible Preferred Stock), at the minimum conversion rate of 13.0817 shares of common stock, subject to certain anti-dilution and other adjustments as described in the terms of the Mandatory Convertible Preferred Stock. Arconic does not have the right to redeem the Mandatory Convertible Preferred Stock.

If Arconic undergoes a fundamental change, as defined in the terms of the Mandatory Convertible Preferred Stock, holders may elect to convert their Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of Mandatory Convertible Preferred Stock), into shares of Arconic’s common stock. Holders who elect to convert will also receive any accumulated and unpaid dividends and a Fundamental Change Dividend Make-whole Amount (as defined in the terms of the Mandatory Convertible Preferred Stock) equal to the present value of all remaining dividend payments on the Mandatory Convertible Preferred Stock.

Common Stock. As discussed in Note A, Arconic completed a 1-for-3 Reverse Stock Split on October 5, 2016. The Reverse Stock Split reduced the number of shares of common stock outstanding from approximately 1.3 billion shares to 0.4 billion shares. The par value of the common stock remained at $1.00 per share. Accordingly, Common stock and Additional capital in the accompanying Consolidated Balance Sheet at December 31, 2016 reflect a decrease and increase of $877, respectively. The number of authorized shares of common stock was also decreased from 1.8 billion shares to 0.6 billion shares.

In August 2016, Arconic retired its outstanding treasury stock consisting of approximately 25 million shares (76 million shares pre-reverse stock split). As a result, Common stock and Additional capital in the accompanying 2016 Consolidated Balance Sheet were decreased by $76 and $2,563, respectively, to reflect the retirement of the treasury shares.

At December 31, 2016, 438,519,780 shares were issued and outstanding. Dividends paid in each of 2016, 2015 and 2014 were $0.36 per annum or $0.09 per quarter. The current dividend yield as authorized by Arconic’s Board of Directors is $0.24 per annum or $0.06 per quarter.

In July 2015, Arconic issued 29 million shares (87 million shares—pre-Reverse Stock Split) of common stock as consideration paid to acquire RTI (see Note F).

In early 2014, Arconic issued 30 million shares (89 million shares—pre-Reverse Stock Split) of common stock under the terms of Arconic’s 5.25% Convertible Notes due March 15, 2014. Also, in November 2014, Arconic issued 12 million shares (37 million shares—pre-Reverse Stock Split) of common stock as part of the consideration paid to acquire Firth Rixson (see Note F).

As of December 31, 2016, 45 million shares of common stock were reserved for issuance under Arconic’s stock-based compensation plans. Arconic buys shares in the open market to satisfy the exercise of stock options and the conversion of stock awards.

Share Activity (number of shares)


	Common stock
	Treasury			Outstanding
Balance at end of 2013		106,895,705			1,071,011,162
Conversion of convertible notes		-			89,383,953
Private placement		-			36,523,010
Issued for stock-based compensation plans		(19,745,536	)		19,745,536
Balance at end of 2014		87,150,169			1,216,663,661
Acquisition of RTI		-			87,397,414
Issued for stock-based compensation plans		(6,099,066	)		6,099,066
Balance at end of 2015		81,051,103			1,310,160,141
Treasury stock retirement		(75,831,443	)		-
Reverse Stock Split (A)		-			(876,942,489	)
Issued for stock-based compensation plans		(5,219,660	)		5,302,128
Balance at end of 2016		-			438,519,780

Stock-based Compensation

Arconic has a stock-based compensation plan under which stock options and stock awards are granted in January each year to eligible employees. Most plan participants can choose whether to receive their award in the form of stock options, restricted stock unit awards, or a combination of both. This choice is made before the grant is issued and is irrevocable. Stock options are granted at the closing market price of Arconic’s common stock on the date of grant and vest over a three-year service period (1/3 each year) with a ten-year contractual term. Restricted stock unit awards also vest over a three-year service period from the date of grant and certain of these awards also include performance conditions. For the majority of performance stock awards issued in 2016, 2015, and 2014, the final number of shares earned will be based on Arconic’s achievement of sales and profitability targets over the respective three-year performance periods. One-third of the award will be earned each year based on the performance against the pre-established targets for that year. The performance stock awards earned over the three-year period vest at the end of the third year.

In 2016, 2015, and 2014, Arconic recognized stock-based compensation expense of $76 ($51 after-tax), $77 ($51 after-tax), and $70 ($47 after-tax), respectively. For each of 2016, 2015, and 2014, approximately 80% of the stock-based compensation expense recognized related to restricted stock unit awards and no stock-based compensation expense was capitalized in any of those years. At December 31, 2016, there was $45 (pretax) of unrecognized compensation expense related to non-vested stock option grants and non-vested restricted stock unit award grants. This expense is expected to be recognized over a weighted average period of 1.5 years. As part of Arconic’s stock-based compensation plan design, individuals who are retirement-eligible have a six-month requisite service period in the year of grant. As a result, a larger portion of expense will be recognized in the first half of each year for these retirement-eligible employees. Of the total pretax compensation expense recognized in 2016, 2015, and 2014, $19, $15, and $11, respectively, pertains to the acceleration of expense related to retirement-eligible employees.

Stock-based compensation expense is based on the grant date fair value of the applicable equity grant. For restricted stock unit awards, the fair value was equivalent to the closing market price of Arconic’s common stock on the date of grant. For stock options, the fair value was estimated on the date of grant using a lattice-pricing model, which generated a result of $4.78, $10.07, and $6.40 per option in 2016, 2015, and 2014, respectively. The lattice-pricing model uses a number of assumptions to estimate the fair value of a stock option, including a risk-free interest rate, dividend yield, volatility, exercise behavior, and contractual life. The following paragraph describes in detail the assumptions used to estimate the fair value of stock options granted in 2016 (the assumptions used to estimate the fair value of stock options granted in 2015 and 2014 were not materially different, except as noted below).

The risk-free interest rate (2.06%) was based on a yield curve of interest rates at the time of the grant based on the contractual life of the option. The dividend yield (1.1%) was based on a one-year average. Volatility (44.5% for 2016, 36.5% for 2015, and 35.0% in 2014) was based on historical and implied volatilities over the term of the option. Arconic utilized historical option forfeiture data to estimate annual pre- and post-vesting forfeitures (7%). Exercise behavior (60%) was based on a weighted average exercise ratio (exercise patterns for grants issued over the number of years in the contractual option term) of an option’s intrinsic value resulting from historical employee exercise behavior. Based upon the other assumptions used in the determination of the fair value, the life of an option (5.7 years) was an output of the lattice-pricing model. The activity for stock options and stock awards during 2016 was as follows (options and awards in millions):


	Stock options^(A)(D)					Stock awards^(A)(D)
	Number of options			Weighted average exercise price		Number of awards			Weighted average FMV per award
Outstanding, January 1, 2016		11		$	35.72		7		$	34.13
Granted		3		$	20.22		4		$	20.64
Exercised		-		$	26.89		-		$	-
Converted		-		$	-		(3	)	$	26.72
Expired or forfeited		-		$	36.75		-		$	31.90
Cancelled due to Separation Transaction^(B)		(4	)	$	32.70		(2	)	$	30.46
Adjustment due to Separation Transaction^(C)(D)		3		$	24.14		2		$	22.20
Performance share adjustment		-		$	-		-		$	20.87
Outstanding, December 31, 2016		13		$	24.14		8		$	22.26

^(A)	The number of stock options, stock awards and the weighted average exercise price has been adjusted to reflect the Reverse Stock Split (see Note A).

^(B)	As a result of the Separation Transaction, all stock options and stock awards relating to Alcoa Corporation employees were canceled.

^(C)	As a result of the Separation Transaction, all stock options and stock awards relating to Arconic employees were adjusted to reflect the Separation Transaction.

^(D)

Both the effect of the Reverse Stock Split and the effect of the Separation Transaction were considered modifications of the original stock options and awards and the modifications were designed such that the intrinsic values of the stock option or stock award were the same both previous to and after the adjustments.

As of December 31, 2016, the number of stock options outstanding had a weighted average remaining contractual life of 5.99 years and a total intrinsic value of $10. Additionally, 8.9 million of the stock options outstanding were fully vested and exercisable and had a weighted average remaining contractual life of 4.75 years, a weighted average exercise price of $26.23, and a total intrinsic value of $0.2 as of December 31, 2016. In 2016, 2015, and 2014, the cash received from stock option exercises was $4, $25, and $150 and the total tax benefit realized from these exercises was $0, $6, and $28, respectively. The total intrinsic value of stock options exercised during 2016, 2015, and 2014 was $1, $19, and $84, respectively.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Earnings Per Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Q. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The number of shares and per share amounts for all periods presented below have been updated to reflect the Reverse Stock Split (see Note A). The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):


	2016			2015			2014
Net loss from continuing operations attributable to Arconic	$	(1,062	)	$	(156	)	$	(61	)
Net income from continuing operations attributable to noncontrolling interests		-			(1	)		-
Less: preferred stock dividends declared		69			69			21
Loss from continuing operations available to Arconic common shareholders		(1,131	)		(226	)		(82	)
Income (loss) from discontinued operations after income taxes and noncontrolling interests⁽¹⁾		121			165			(329	)
Net (loss) income available to Arconic common shareholders—basic		(1,010	)		(391	)		247
Add: interest expense related to convertible notes		-			-			-
Add: dividends related to mandatory convertible preferred stock		-			-			-
Net (loss) income available to Arconic common shareholders—diluted	$	(1,010	)	$	(391	)	$	247
Average shares outstanding—basic		438			420			387
Effect of dilutive securities:
Stock options		-			-			2
Stock and performance awards		-			-			4
Mandatory convertible preferred stock		-			-			-
Convertible notes		-			-			-
Average shares outstanding—diluted		438			420			393

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

In 2016, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive as Arconic generated a net loss. As a result, 39 million share equivalents related to the mandatory convertible preferred stock, 14 million share equivalents related to convertible notes, 13 million stock options, and 8 million stock awards were not included in the computation of diluted EPS. Had Arconic generated sufficient net income in 2016, 28 million, 10 million, 4 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.

In 2015, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive as Arconic generated a net loss. As a result, 26 million share equivalents related to mandatory convertible preferred stock, 7 million stock awards, 11 million stock options, and 5 million (weighted-average) share equivalents related to convertible debt (acquired from RTI – see Note F) were not included in the computation of diluted EPS. Had Arconic generated sufficient net income in 2015, 26 million, 5 million, 4 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.

In 2014, 6 million and 7 million share equivalents related to convertible notes and mandatory convertible preferred stock, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.

Options to purchase 10 million, 9 million, and 1 million shares of common stock at a weighted average exercise price of $26.93, $38.25, and $48.72 per share were outstanding as of December 31, 2016, 2015, and 2014, respectively, but were not included in the computation of diluted EPS because they were anti-dilutive, as the exercise prices of the options were greater than the average market price of Arconic’s common stock.

Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

R. Income Taxes

The components of income from continuing operations before income taxes were as follows:


	2016		2015		2014
United States	$	84	$	124	$	207
Foreign		330		59		(94	)
	$	414	$	183	$	113

The provision for income taxes consisted of the following:


	2016			2015			2014
Current:
Federal*	$	-		$	-		$	-
Foreign		133			115			70
State and local		1			(1	)		1
		134			114			71
Deferred:
Federal*		1,208			196			67
Foreign		136			29			37
State and local		(2	)		-			(1	)
		1,342			225			103
Total	$	1,476		$	339		$	174

*	Includes U.S. taxes related to foreign income

The exercise of employee stock options generated a tax benefit of $0, $2 and $8 in 2016, 2015 and 2014, respectively, representing only the difference between compensation expense recognized for financial reporting and tax purposes. These amounts increased equity and either decreased current taxes payable or increased deferred tax assets (net operating losses) in the respective periods.

Arconic has unamortized tax-deductible goodwill of $23 resulting from intercompany stock sales and reorganizations. Arconic recognizes the tax benefits (at a 25% rate) associated with this tax-deductible goodwill as it is being amortized for local income tax purposes rather than in the period in which the transaction is consummated.

A reconciliation of the U.S. federal statutory rate to Arconic’s effective tax rate was as follows (the effective tax rate for all periods was a provision on income):


	2016			2015			2014
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
Taxes on foreign operations		(10.2	)		2.5			(9.4	)
Permanent differences on restructuring and other charges and asset disposals		(107.8	)		3.6			(1.0	)
Non-deductible acquisition costs		8.4			7.1			7.3
Statutory tax rate and law changes⁽¹⁾		(15.7	)		(1.0	)		78.8
Tax holidays⁽²⁾		(0.8	)		(3.9	)		38.5
Tax credits		(1.2	)		(2.8	)		(1.9	)
Changes in valuation allowances		426.8			145.8			17.3
Impairment of goodwill		-			4.8			-
Company-owned life insurance/split-dollar net premiums		23.0			(3.0	)		(9.6	)
Changes in uncertain tax positions		2.3			(2.0	)		(5.6	)
Other		(3.3	)		(0.9	)		4.6
Effective tax rate		356.5	%		185.2	%		154.0	%

⁽¹⁾

In November 2014, Spain enacted corporate tax reform that changed the corporate tax rate from 30% in 2014 to 28% in 2015 to 25% in 2016. As a result, Arconic remeasured certain deferred tax assets related to Spanish subsidiaries. In December 2016, Spain and the United States enacted tax law changes which resulted in the remeasurement of certain deferred tax liabilities recorded by Arconic.

⁽²⁾	In 2014, a tax holiday for certain former Arconic subsidiaries in Brazil became effective (see below).

The components of net deferred tax assets and liabilities were as follows:


	2016					2015
December 31,	Deferred tax assets			Deferred tax liabilities		Deferred tax assets			Deferred tax liabilities
Depreciation	$	15		$	817	$	8		$	964
Employee benefits		1,382			8		1,521			11
Loss provisions		181			1		172			2
Tax loss carryforwards		1,540			-		926			-
Tax credit carryforwards		652			-		673			-
Other		184			93		311			31
		3,954			919		3,611			1,008
Valuation allowance		(1,940	)		-		(1,291	)		-
	$	2,014		$	919	$	2,320		$	1,008

The following table details the expiration periods of the deferred tax assets presented above:


December 31, 2016	Expires within 10 years			Expires within 11-20 years			No expiration*			Other*			Total
Tax loss carryforwards	$	81		$	744		$	715		$	-		$	1,540
Tax credit carryforwards		428			89			100			35			652
Other		-			-			72			1,690			1,762
Valuation allowance		(465	)		(663	)		(677	)		(135	)		(1,940	)
	$	44		$	170		$	210		$	1,590		$	2,014

Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference. A substantial amount of Other relates to employee benefits that will become deductible for tax purposes over an extended period of time as contributions are made to employee benefit plans and payments are made to retirees.

The total deferred tax asset (net of valuation allowance) is supported by projections of future taxable income exclusive of reversing temporary differences (59%) and taxable temporary differences that reverse within the carryforward period (41%).

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Arconic’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance. Existing valuation allowances are re-examined under the same standards of positive and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released. Deferred tax assets and liabilities are also re-measured to reflect changes in underlying tax rates due to law changes and the granting and lapse of tax holidays.

In 2016, Arconic recognized a $1,267 discrete income tax charge for valuation allowances related to the Separation Transaction, including $925 with respect to Alcoa Corporation’s net deferred tax assets in the United States, $302 with respect to Arconic’s foreign tax credits in the United States, $42 with respect to certain deferred tax assets in Luxembourg, and $(2) related to the net impact of other smaller items. After weighing all positive and negative evidence, as described above, management determined that the net deferred tax assets of Alcoa Corporation were not more likely than not to be realized due to lack of historical and projected domestic source taxable income. As such, a valuation allowance was recorded immediately prior to separation.

Upon separation, Arconic retained foreign tax credits in the United States which have a 10-year carryforward period with expirations ranging from 2017 to 2026 (as of December 31, 2016). Arconic also retained suspended foreign tax credit carryforwards whose expiration period begins when the credits become unsuspended. A valuation allowance of $135 was initially established in 2013 on a portion of the foreign tax credit carryforwards, primarily due to insufficient foreign source income to allow for full utilization of the credits within the expiration period. An incremental valuation allowance of $134 was recognized in 2015. At the end of 2015 and 2016, $15 and $128 of foreign tax credits respectively expired resulting in a corresponding decrease to the valuation allowance. As a result of the Separation Transaction, management determined that it was no longer more likely than not that Arconic would realize the full tax benefit of its foreign tax credit carryforwards based on changes in the availability of foreign sourced taxable income. After consideration of all available evidence including potential tax planning strategies and earnings of foreign subsidiaries projected to be distributable as taxable foreign dividends, an incremental valuation allowance of $302 was recognized in 2016. At December 31, 2016, the cumulative amount of the valuation allowance was $427. The need for this valuation allowance will be reassessed on a continuous basis in future periods and, as a result, the allowance may increase or decrease based on changes in facts and circumstances.

In addition, Arconic recognized a $42 discrete income tax charge in 2016 for a valuation allowance on the full value of certain net deferred tax assets in Luxembourg. Sources of taxable income which previously supported the net deferred tax asset are no longer available as a result of the Separation Transaction. The need for this valuation allowance will be reassessed on a continuous basis in future periods and, as a result, the allowance may increase or decrease based on changes in facts and circumstances.

In 2016, Arconic also recognized discrete income tax benefits related to the release of valuation allowances on certain net deferred tax assets in Russia and Canada of $19 and $20 respectively. After weighing all available evidence, management determined that it was more likely than not that the net income tax benefits associated with the underlying deferred tax assets would be realizable based on historic cumulative income and projected taxable income.

Arconic also recorded additional valuation allowances in Australia of $93 related to the Separation Transaction, in Spain of $163 related to a tax law change and in Luxembourg of $280 related to the Separation Transaction as well as a tax law change. These valuation allowances fully offset current year changes in deferred tax asset balances of each respective jurisdiction, resulting in no net impact to tax expense. The need for a valuation allowance will be reassessed on a continuous basis in future periods by each jurisdiction and, as a result, the allowances may increase or decrease based on changes in facts and circumstances.

In 2015, Arconic recognized an additional $141 discrete income tax charge for valuation allowances on certain deferred tax assets in Iceland and Suriname. Of this amount, an $85 valuation allowance was established on the full value of the deferred tax assets in Suriname, which were related mostly to employee benefits and tax loss carryforwards. These deferred tax assets have an expiration period ranging from 2016 to 2022 (as of December 31, 2015). The remaining $56 charge relates to a valuation allowance established on a portion of the deferred tax assets recorded in Iceland. These deferred tax assets have an expiration period ranging from 2017 to 2023. After weighing all available positive and negative evidence, as described above, management determined that it was no longer more likely than not that Arconic will realize the tax benefit of either of these deferred tax assets. This was mainly driven by a decline in the outlook of the Primary Metals business, combined with prior year cumulative losses and a short expiration period.

In December 2011, one of Arconic’s former subsidiaries in Brazil applied for a tax holiday related to its expanded mining and refining operations. During 2013, the application was amended and re-filed and, separately, a similar application was filed for another one of Arconic’s former subsidiaries in Brazil. The deadline for the Brazilian government to deny the application was July 11, 2014. Since Arconic did not receive notice that its applications were denied, the tax holiday took effect automatically on July 12, 2014. As a result, the tax rate applicable to qualified holiday income for these subsidiaries decreased significantly (from 34% to 15.25%), resulting in future cash tax savings over the 10-year holiday period (retroactively effective as of January 1, 2013). Additionally, a portion of one of the subsidiaries net deferred tax assets that reverses within the holiday period was remeasured at the new tax rate (the net deferred tax asset of the other subsidiary was not remeasured since it could still be utilized against the subsidiary’s future earnings not subject to the tax holiday). This remeasurement resulted in a decrease to that subsidiary’s net deferred tax assets and a noncash charge to earnings of $52 ($31 after noncontrolling interests).

The following table details the changes in the valuation allowance:


December 31,	2016			2015			2014
Balance at beginning of year	$	1,291		$	1,151		$	1,252
Increase to allowance		772			180			102
Release of allowance		(209	)		(42	)		(70	)
Acquisitions and divestitures (F)		(1	)		29			(36	)
Tax apportionment, tax rate and tax law changes		106			(15	)		(67	)
Foreign currency translation		(19	)		(12	)		(30	)
Balance at end of year	$	1,940		$	1,291		$	1,151

The cumulative amount of Arconic’s foreign undistributed net earnings for which no deferred taxes have been provided was approximately $450 at December 31, 2016. Arconic has a number of commitments and obligations related to the Company’s growth strategy in foreign jurisdictions. As such, management has no plans to distribute such earnings in the foreseeable future, and, therefore, has determined it is not practicable to determine the related deferred tax liability.

Arconic and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With a few minor exceptions, Arconic is no longer subject to income tax examinations by tax authorities for years prior to 2006. All U.S. tax years prior to 2016 have been audited by the Internal Revenue Service. Various state and foreign jurisdiction tax authorities are in the process of examining Arconic’s income tax returns for various tax years through 2015.

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:


December 31,	2016			2015			2014
Balance at beginning of year	$	18		$	7		$	8
Additions for tax positions of the current year		12			-			-
Additions for tax positions of prior years		-			14			4
Reductions for tax positions of prior years		-			(2	)		(3	)
Settlements with tax authorities		(1	)		-			(1	)
Expiration of the statute of limitations		(1	)		(1	)		-
Foreign currency translation		-			-			(1	)
Balance at end of year	$	28		$	18		$	7

For all periods presented, a portion of the balance at end of year pertains to state tax liabilities, which are presented before any offset for federal tax benefits. The effect of unrecognized tax benefits, if recorded, that would impact the annual effective tax rate for 2016, 2015, and 2014 would be approximately 6%, 7%, and 4%, respectively, of pretax book income. Arconic does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Statement of Consolidated Operations during 2017 (see Tax in Note L for a matter for which no reserve has been recognized).

It is Arconic’s policy to recognize interest and penalties related to income taxes as a component of the Provision for income taxes on the accompanying Statement of Consolidated Operations. In 2016, 2015, and 2014, Arconic did not recognize any interest or penalties. Due to the expiration of the statute of limitations, settlements with tax authorities, and refunded overpayments, Arconic recognized interest income of $1 in 2015 but did not recognize any interest income in 2016 or 2014. As of December 31, 2016 and 2015, the amount accrued for the payment of interest and penalties was $2 and $1, respectively.

Receivables

12 Months Ended

Dec. 31, 2016

Transfers and Servicing [Abstract]

Receivables

S. Receivables

Sale of Receivables Programs

Arconic has an arrangement with three financial institutions to sell certain customer receivables without recourse on a revolving basis. The sale of such receivables is completed through the use of a bankruptcy remote special purpose entity, which is a consolidated subsidiary of Arconic. This arrangement provides for minimum funding of $200 up to a maximum of $400 for receivables sold. On March 30, 2012, Arconic initially sold $304 of customer receivables in exchange for $50 in cash and $254 of deferred purchase price under this arrangement. Arconic has received additional net cash funding of $300 for receivables sold ($1,758 in draws and $1,458 in repayments) since the program’s inception, including $100 ($500 in draws and $400 in repayments) in 2016. No draws or repayments occurred in 2015.

As of December 31, 2016 and 2015, the deferred purchase price receivable was $83 and $249, respectively, which was included in Other receivables on the accompanying Consolidated Balance Sheet. The deferred purchase price receivable is reduced as collections of the underlying receivables occur; however, as this is a revolving program, the sale of new receivables will result in an increase in the deferred purchase price receivable. The net change in the deferred purchase price receivable was reflected in the (Increase) decrease in receivables line item on the accompanying Statement of Consolidated Cash Flows. This activity is reflected as an operating cash flow because the related customer receivables are the result of an operating activity with an insignificant, short-term interest rate risk.

In 2016 and 2015, the gross cash outflows and inflows associated with the deferred purchase price receivable were $5,340 and $5,406, respectively, and $6,893 and $7,001, respectively. The gross amount of receivables sold and total cash collected under this program since its inception was $29,938 and $29,505 respectively. Arconic services the customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded.

Allowance for Doubtful Accounts

The following table details the changes in the allowance for doubtful accounts related to customer receivables and other receivables:


	Customer receivables									Other receivables
December 31,	2016			2015			2014			2016			2015			2014
Balance at beginning of year	$	8		$	6		$	8		$	34		$	24		$	28
Provision for doubtful accounts		7			4			4			6			8			8
Write off of uncollectible accounts		(3	)		(2	)		(3	)		(1	)		2			(4	)
Recoveries of prior write-offs		(1	)		-			(2	)		1			(1	)		(7	)
Other		2			-			(1	)		(8	)		1			(1	)
Balance at end of year	$	13		$	8		$	6		$	32		$	34		$	24

Compensation and Retirement Disclosure [Abstract]

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References + Details

Interest Cost Components

12 Months Ended

Dec. 31, 2016

Text Block [Abstract]

Interest Cost Components

T. Interest Cost Components


	2016		2015		2014
Amount charged to expense	$	499	$	473	$	442
Amount capitalized		32		27		22
	$	531	$	500	$	464

Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2016

Pension and Other Postretirement Benefits

U. Pension and Other Postretirement Benefits

Arconic maintains pension plans covering most U.S. employees and certain employees in foreign locations. Pension benefits generally depend on length of service, job grade, and remuneration. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. Most salaried and non-bargaining hourly U.S. employees hired after March 1, 2006 participate in a defined contribution plan instead of a defined benefit plan.

Arconic also maintains health care and life insurance postretirement benefit plans covering eligible U.S. retired employees and certain retirees from foreign locations. Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage. Life benefits are generally provided by insurance contracts. Arconic retains the right, subject to existing agreements, to change or eliminate these benefits. All salaried and certain non-bargaining hourly U.S. employees hired after January 1, 2002 and certain bargaining hourly U.S. employees hired after July 1, 2010 are not eligible for postretirement health care benefits. All salaried and certain hourly U.S. employees that retire on or after April 1, 2008 are not eligible for postretirement life insurance benefits.

Effective January 1, 2015, Arconic no longer offers postretirement health care benefits to Medicare-eligible, primarily non-bargaining, U.S. retirees through Company-sponsored plans. Qualifying retirees (hired prior to January 1, 2002), both current and future, may access these benefits in the marketplace by purchasing coverage directly from insurance carriers. This change resulted in the adoption of a significant plan amendment by certain Arconic U.S. postretirement benefit plans in August 2014. Accordingly, these plans were required to be remeasured.

Effective August 1, 2016, in preparation for the Separation Transaction, certain U.S. pension and postretirement benefit plans were separated, requiring a remeasurement as of that date. Additionally, one pension plan was required to be remeasured as a result of settlement accounting. Together, these remeasurements resulted in an increase of $845 to Arconic’s pension liability and an increase of $551 (net of tax) to the plans’ unrecognized net actuarial loss (included in Accumulated other comprehensive loss).

The funded status of all of Arconic’s pension and other postretirement benefit plans are measured as of December 31 each calendar year.

Obligations and Funded Status


	Pension benefits						Other postretirement benefits
December 31,	2016			2015			2016			2015
Change in benefit obligation⁽¹⁾
Benefit obligation at beginning of year	$	14,247		$	15,019		$	2,319		$	2,368
Service cost		165			187			13			14
Interest cost		435			583			63			92
Amendments		2			18			-			-
Actuarial (gains) losses		770			(222	)		112			26
Acquisitions (F)		-			188			-			48
Transfer to Alcoa Corporation		(7,577	)		-			(1,340	)		-
Settlements		(82	)		(72	)		-			-
Curtailments		-			(12	)		-			(6	)
Benefits paid, net of participants’ contributions		(794	)		(1,033	)		(197	)		(235	)
Medicare Part D subsidy receipts		-			-			9			15
Foreign currency translation impact		(140	)		(409	)		1			(3	)
Benefit obligation at end of year⁽²⁾	$	7,026		$	14,247		$	980		$	2,319
Change in plan assets⁽¹⁾
Fair value of plan assets at beginning of year	$	10,928		$	11,717		$	-		$	-
Actual return on plan assets		89			24			-			-
Employer contributions		296			479			-			-
Participants’ contributions		16			21			-			-
Benefits paid		(762	)		(1,015	)		-			-
Administrative expenses		(65	)		(55	)		-			-
Acquisitions (F)		-			164			-			-
Transfer to Alcoa Corporation		(5,610	)		-			-			-
Settlements		(82	)		(72	)		-			-
Foreign currency translation impact		(144	)		(335	)		-			-
Fair value of plan assets at end of year⁽²⁾	$	4,666		$	10,928		$	-		$	-
Funded status*	$	(2,360	)	$	(3,319	)	$	(980	)	$	(2,319	)
Less: Amounts attributed to joint venture partners		-			30			-			-
Net funded status	$	(2,360	)	$	(3,289	)	$	(980	)	$	(2,319	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	6		$	9		$	-		$	-
Noncurrent assets of discontinued operations		-			35			-			-
Current liabilities		(21	)		(23	)		(91	)		(93	)
Current liabilities of discontinued operations		-			(12	)		-			(120	)
Noncurrent liabilities		(2,345	)		(1,925	)		(889	)		(917	)
Noncurrent liabilities of discontinued operations		-			(1,373	)		-			(1,189	)
Net amount recognized	$	(2,360	)	$	(3,289	)	$	(980	)	$	(2,319	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	2,979		$	5,351		$	150		$	398
Prior service cost (benefit)		15			70			(45	)		(106	)
Total, before tax effect		2,994			5,421			105			292
Less: Amounts attributed to joint venture partners		-			38			-			-
Net amount recognized, before tax effect	$	2,994		$	5,383		$	105		$	292
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial loss	$	(1,992	)	$	440		$	(224	)	$	23
Amortization of accumulated net actuarial loss		(380	)		(468	)		(24	)		(17	)
Prior service (benefit) cost		(42	)		(7	)		37			1
Amortization of prior service (cost) benefit		(13	)		(25	)		24			37
Total, before tax effect		(2,427	)		(60	)		(187	)		44
Less: Amounts attributed to joint venture partners		(38	)		(5	)		-			-
Net amount recognized, before tax effect	$	(2,389	)	$	(55	)	$	(187	)	$	44

⁽¹⁾	The roll forward of the benefit obligation and the roll forward of plan assets have not been restated for discontinued operations for 2015 as it is impractical to do so.

⁽²⁾

At December 31, 2016, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,707, $3,495, and $(2,212), respectively. At December 31, 2015, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $10,983, $8,077, and $(2,906), respectively.

Pension Plan Benefit Obligations


	Pension benefits
	2016		2015
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	7,026	$	14,247
Accumulated benefit obligation		6,850		13,832

The aggregate projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets was as follows:
Projected benefit obligation		6,995		14,146
Fair value of plan assets		4,629		10,786

The aggregate accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets was as follows:
Accumulated benefit obligation		6,104		12,510
Fair value of plan assets		3,894		9,512

Components of Net Periodic Benefit Cost


	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2016			2015			2014			2016			2015			2014
Service cost	$	155		$	175		$	166		$	13		$	14		$	15
Interest cost		431			577			630			63			92			114
Expected return on plan assets		(677	)		(753	)		(782	)		-			-			-
Recognized net actuarial loss		380			468			391			24			17			13
Amortization of prior service cost (benefit)		13			16			18			(24	)		(37	)		(25	)
Settlements⁽³⁾		19			16			26			-			-			-
Curtailments⁽⁴⁾		-			9			-			-			(4	)		-
Special termination benefits⁽⁵⁾		2			16			-			-			-			-
Net periodic benefit cost⁽⁶⁾	$	323		$	524		$	449		$	76		$	82		$	117
Discontinued operations		122			248			215			41			43			68
Net amount recognized in Statement of Consolidated Operations	$	201		$	276		$	234		$	35		$	39		$	49

Note:

the footnotes below include components of Net Periodic Benefit Cost related to Alcoa Corporation through the completion of the Separation Transaction.

⁽¹⁾	In 2016, 2015, and 2014, net periodic benefit cost for U.S pension plans was $261, $423, and $335, respectively.

⁽²⁾	In 2016, 2015, and 2014, net periodic benefit cost for other postretirement benefits reflects a reduction of $22, $34, and $38, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾

In 2016, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts. In 2015, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts. In 2014, settlements were due to workforce reductions (see Note D).

⁽⁴⁾	In 2015, curtailments were due to elimination of benefits or workforce reductions (see Note D).

⁽⁵⁾	In 2016 and 2015, special termination benefits were due to workforce reductions (see Note D).

⁽⁶⁾	Amounts attributed to joint venture partners are not included.

Amounts Expected to be Recognized in Net Periodic Benefit Cost


	Pension benefits		Other postretirement benefits
	2017		2017
Net actuarial loss recognition		216		8
Prior service cost (benefit) recognition		5		(8	)

Assumptions

Weighted average assumptions used to determine benefit obligations for U.S. pension and other postretirement benefit plans were as follows (assumptions for non-U.S plans did not differ materially):


December 31,	2016			2015
Discount rate		4.20	%		4.29	%
Rate of compensation increase		3.5			3.5

The discount rate is determined using a Company-specific yield curve model (above-median) developed with the assistance of an external actuary. The cash flows of the plans’ projected benefit obligations are discounted using a single equivalent rate derived from yields on high quality corporate bonds, which represent a broad diversification of issuers in various sectors, including finance and banking, consumer products, transportation, insurance, and pharmaceutical, among others. The yield curve model parallels the plans’ projected cash flows, which have an average duration of 11 years, and the underlying cash flows of the bonds included in the model exceed the cash flows needed to satisfy the Company’s plans’ obligations multiple times.

The rate of compensation increase is based upon actual experience. For 2017, the rate of compensation increase will be 3.5%, which approximates the five-year average.

Weighted average assumptions used to determine net periodic benefit cost for U.S. pension and other postretirement benefit plans were as follows (assumptions for non-U.S plans did not differ materially):


	2016			2015			2014
Discount rate*		4.29	%		4.00	%		4.80	%
Expected long-term rate of return on plan assets		7.75			7.75			8.00
Rate of compensation increase		3.50			3.50			3.50

In all periods presented, the respective discount rates were used to determine net periodic benefit cost for most U.S. pension plans for the full annual period. However, the discount rates for a limited number of plans were updated during 2016, 2015, and 2014 to reflect the remeasurement of these plans due to new union labor agreements, settlements, and/or curtailments. The updated discount rates used were not significantly different from the discount rates presented.

In conjunction with the annual measurement of the funded status of Arconic’s pension and other postretirement benefit plans at December 31, 2015, management elected to change the manner in which the interest cost component of net periodic benefit costs is determined in 2016 and beyond. Previously, the interest component was determined by multiplying the single equivalent rate and the aggregate discounted cash flows of the plans’ projected benefit obligations. Under the new methodology, the interest cost component is determined by aggregating the product of the discounted cash flows of the plans’ projected benefit obligations for each year and an individual spot rate (referred to as the “spot rate” approach). This change resulted in a lower interest cost component of net periodic benefit cost under the new methodology compared to the previous methodology of $84 for pension plans and $14 for other postretirement benefit plans. Management believes this new methodology, which represents a change in an accounting estimate, is a better measure of the interest cost as each year’s cash flows are specifically linked to the interest rates of bond payments in the same respective year.

The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets (a four-year average or the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop this assumption is one that relies on a combination of historical asset return information and forward-looking returns by asset class. As it relates to historical asset return information, management focuses on various historical moving averages when developing this assumption. While consideration is given to recent performance and historical returns, the assumption represents a long-term, prospective return. Management also incorporates expected future returns on current and planned asset allocations using information from various external investment managers and consultants, as well as management’s own judgment.

For 2016, 2015, and 2014, the expected long-term rate of return used by management was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class. These rates fell within the respective range of the 20-year moving average of actual performance and the expected future return developed by asset class. In 2015, the decrease of 25 basis points in the expected long-term rate of return was due to a decrease in the 20-year moving average of actual performance. For 2017, management anticipates that 7.75% will be the expected long-term rate of return.

Assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (assumptions for non-U.S plans did not differ materially):


	2016			2015			2014
Health care cost trend rate assumed for next year		5.5	%		5.5	%		5.5	%
Rate to which the cost trend rate gradually declines		4.5	%		4.5	%		4.5	%
Year that the rate reaches the rate at which it is assumed to remain		2020			2019			2018

The assumed health care cost trend rate is used to measure the expected cost of gross eligible charges covered by Arconic’s other postretirement benefit plans. For 2017, a 5.5% trend rate will be used, reflecting management’s best estimate of the change in future health care costs covered by the plans. The plans’ actual annual health care cost trend experience over the past three years has ranged from 3.6%. to 9.6% Management does not believe this three-year range is indicative of expected increases for future health care costs over the long-term.

Assumed health care cost trend rates have an effect on the amounts reported for the health care plan. A one-percentage point change in these assumed rates would have the following effects:


	1% increase		1% decrease
Effect on other postretirement benefit obligations	$	44	$	(40	)
Effect on total of service and interest cost components		4		(3	)

Plan Assets

Arconic’s pension plans’ investment policy and weighted average asset allocations at December 31, 2016 and 2015, by asset class, were as follows:


				Plan assets at December 31,
Asset class	Policy range			2016			2015
Equities		20–55	%		30	%		30	%
Fixed income		25–55	%		42			43
Other investments		15–35	%		28			27
Total					100	%		100	%

The principal objectives underlying the investment of the pension plans’ assets are to ensure that Arconic can properly fund benefit obligations as they become due under a broad range of potential economic and financial scenarios, maximize the long-term investment return with an acceptable level of risk based on such obligations, and broadly diversify investments across and within various asset classes to protect asset values against adverse movements. Specific objectives for long-term investment strategy include reducing the volatility of pension assets relative to pension liabilities and achieving risk factor diversification across the balance of the asset portfolio. The use of derivative instruments is permitted where appropriate and necessary for achieving overall investment policy objectives. The investment strategy has used long duration cash bonds and derivative instruments to offset a portion of the interest rate sensitivity of U.S. pension liabilities. Exposure to broad equity risk has been decreased and diversified through investments in discretionary and systematic macro hedge funds, long/short equity hedge funds, and global and emerging market equities. Investments are further diversified by strategy, asset class, geography, and sector to enhance returns and mitigate downside risk. A large number of external investment managers are used to gain broad exposure to the financial markets and to mitigate manager-concentration risk.

Investment practices comply with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and other applicable laws and regulations.

The following section describes the valuation methodologies used by the trustees to measure the fair value of pension plan assets, including an indication of the level in the fair value hierarchy in which each type of asset is generally classified (see Note V for the definition of fair value and a description of the fair value hierarchy).

Equities. These securities consist of: (i) direct investments in the stock of publicly traded U.S. and non-U.S. companies and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (ii) the plans’ share of commingled funds that are invested in the stock of publicly traded companies and are valued at the net asset value of shares held at December 31 (included in Level 1); and (iii) direct investments in long/short equity hedge funds and private equity (limited partnerships and venture capital partnerships) and are valued by investment managers based on the most recent financial information available, which typically represents significant unobservable data.

Fixed income. These securities consist of: (i) U.S. government debt and are generally valued using quoted prices (included in Level 1); (ii) publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds and debentures) and are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data (included in Level 2); (iii) cash and cash equivalents; and (iv) interest rate swaps and are generally valued using industry standard models with market-based observable inputs.

Other investments. These investments include, among others: (i) exchange traded funds, such as gold, and real estate investment trusts and are valued based on the closing price reported in an active market on which the investments are traded (included in Level 1) and (ii) direct investments of discretionary and systematic macro hedge funds and private real estate (includes limited partnerships) and are valued by investment managers based on the most recent financial information available, which typically represents significant unobservable data.

The fair value methods described above may not be indicative of net realizable value or reflective of future fair values. Additionally, while Arconic believes the valuation methods used by the plans’ trustees are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table presents the fair value of pension plan assets classified under the appropriate level of the fair value hierarchy:


December 31, 2016	Level 1		Level 2		Total
Equities:
Equity securities	$	393	$	-	$	393
Fixed income:
Intermediate and long duration government/credit	$	23	$	95	$	118
Other		1,060		51		1,111
	$	1,083	$	146	$	1,229
Other investments:
Real estate	$	81	$	-	$	81
Other		65		-		65
	$	146	$	-	$	146
Net plan assets subject to leveling	$	1,622	$	146	$	1,768
Plan assets measured at net asset value:
Equity securities					$	431
Long/short equity hedge funds						406
Private equity						165
Fixed income						729
Real estate						185
Discretionary and systematic macro hedge funds						784
Other investments						178
Total plan assets measured at net asset value					$	2,878
Net plan assets*					$	4,646


December 31, 2015	Level 1		Level 2		Total
Equities
Equity securities	$	826	$	-	$	826
Fixed income:
Intermediate and long duration government/credit	$	2,496	$	487	$	2,983
Other		-		307		307
	$	2,496	$	794	$	3,290
Other investments:
Real estate	$	158	$	-	$	158
Other		126		-		126
	$	284	$	-	$	284
Net plan assets subject to leveling	$	3,606	$	794	$	4,400
Plan assets measured at net asset value:
Equity securities					$	1,099
Long/short equity hedge funds						932
Private equity						466
Fixed income						1,413
Real estate						578
Discretionary and systematic macro hedge funds						1,671
Other investments						367
Total plan assets measured at net asset value					$	6,526
Net plan assets**					$	10,926

*	As of December 31, 2016, the total fair value of pension plans’ assets excludes a net receivable of $20, which represents assets due from the Alcoa Corporation as a result of plan separations and securities sold not yet settled plus interest and dividends earned on various investments.

**	As of December 31, 2015, the total fair value of pension plans’ assets excludes a net receivable of $2 which represents securities sold not yet settled plus interest and dividends earned on various investments.

Funding and Cash Flows

It is Arconic’s policy to fund amounts for pension plans sufficient to meet the minimum requirements set forth in applicable country benefits laws and tax laws, including the Pension Protection Act of 2006; the Worker, Retiree, and Employer Recovery Act of 2008; the Moving Ahead for Progress in the 21^st Century Act of 2012; the Highway and Transportation Funding Act of 2014; and the Bipartisan Budget Act of 2015 for U.S. plans. From time to time, Arconic contributes additional amounts as deemed appropriate. In 2016 and 2015, cash contributions to Arconic’s pension plans were $290 and $470. The minimum required contribution to pension plans in 2017 is estimated to be $310, of which $290 is for U.S. plans.

During the third quarter of 2016, the Pension Benefit Guaranty Corporation approved management’s plan to separate the Alcoa Inc. pension plans between Arconic and Alcoa Corporation in connection with the Separation Transaction. The plan stipulates that Arconic will make cash contributions totaling $150 over a period of 30 months to its two largest pension plans. The payments are expected to be made in increments no less than $50 each over the 30-month period, with the first payment due no later than six months after the separation date of November 1, 2016.

Benefit payments expected to be paid to pension and other postretirement benefit plans’ participants and expected Medicare Part D subsidy receipts are as follows utilizing the current assumptions outlined above:


Year ended December 31,	Pension benefits		Gross Other post- retirement benefits		Medicare Part D subsidy receipts		Net Other post- retirement benefits
2017	$	420	$	95	$	5	$	90
2018		425		95		5		90
2019		425		95		5		90
2020		430		95		5		90
2021		435		95		5		90
2022 through 2026		2,195		415		35		380
	$	4,330	$	890	$	60	$	830

Defined Contribution Plans

Arconic sponsors savings and investment plans in various countries, primarily in the United States. Expenses related to these plans were $71 in 2016, $83 in 2015, and $83 in 2014. In the United States, employees may contribute a portion of their compensation to the plans, and Arconic matches a portion of these contributions in equivalent form of the investments elected by the employee.

Other Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Other Financial Instruments

V. Other Financial Instruments

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 carrying values and fair values of Arconic’s financial instruments were as follows:


	2016				2015
December 31,	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,863	$	1,863	$	1,362	$	1,362
Restricted cash		15		15		37		37
Derivatives – current asset		14		14		67		67
Noncurrent receivables		21		21		17		17
Derivatives – noncurrent asset		10		10		31		31
Available-for-sale securities		102		102		193		193
Investment in common stock of Alcoa Corporation		1,020		1,020		-		-
Short-term borrowings		36		36		38		38
Derivatives – current liability		5		5		49		49
Commercial paper		-		-		-		-
Long-term debt due within one year		4		4		3		3
Derivatives – noncurrent liability		3		3		19		19
Contingent payment related to an acquisition		78		78		130		130
Long-term debt, less amount due within one year		8,044		8,519		8,786		8,714

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

Cash and cash equivalents, Restricted cash, Short-term borrowings, and Commercial paper. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents, Restricted cash, and Commercial paper were classified in Level 1, and Short-term borrowings were classified in Level 2.

Derivatives. The fair value of derivative contracts classified as Level 1 was based on identical unrestricted assets and liabilities. The fair value of derivative contracts classified as Level 2 was based on inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates).

Noncurrent receivables. The fair value of noncurrent receivables was based on anticipated cash flows, which approximates carrying value, and was classified in Level 2 of the fair value hierarchy.

Available-for-sale securities. The fair value of such securities was based on quoted market prices. These financial instruments consist of exchange-traded fixed income and equity securities, which are carried at fair value and were classified in Level 1 of the fair value hierarchy.

Investment in common stock of Alcoa Corporation (see Note C). The fair value was based on the closing stock price of Alcoa Corporation on the New York Stock Exchange at December 31, 2016 multiplied by the number of shares of Alcoa Corporation stock owned by Arconic as of December 31, 2016. This investment was classified in Level 1 of the fair value hierarchy.

Contingent payment related to an acquisition (see Note F). The fair value was based on the net present value of expected future cash flows and was classified in Level 3 of the fair value hierarchy.

Long-term debt due within one year and Long-term debt, less amount due within one year. The fair value was based on quoted market prices for public debt and on interest rates that are currently available to Arconic for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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Quarterly Financial Information Disclosure [Abstract]

Related Party Transactions	12 Months Ended
Related Party Transactions	Dec. 31, 2016
Related Party Transactions [Abstract]
Related Party Transactions	W. Related Party Transactions On October 31, 2016, Arconic entered into several agreements with Alcoa Corporation that govern the relationship of the parties following the completion of the Separation Transaction. These agreements include the following: Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Alcoa Corporation to Arconic Inc. Patent, Know-How, and Trade Secret License Agreement, Arconic Inc. to Alcoa Corporation Patent, Know-How, and Trade Secret License Agreement, Alcoa Corporation to Arconic Inc. Trademark License Agreement, Toll Processing and Services Agreement, Master Agreement for the Supply of Primary Aluminum, Massena Lease and Operations Agreement, Fusina Lease and Operations Agreement, and Stockholder and Registration Rights Agreement. Effective November 1, 2016, Arconic entered into a Toll Processing and Services Agreement with Alcoa Corporation for the tolling of metal for the Warrick, Indiana rolling mill which became a part of Alcoa Corporation on the completion of the Separation Transaction. As part of this arrangement, Arconic will provide a toll processing service to Alcoa Corporation to produce can sheet products at its facility in Tennessee through the expected end date of the contract, December 31, 2018. Alcoa Corporation will supply all required raw materials to Arconic and Arconic will process the raw materials into finished can sheet coils ready for shipment to the end customer. Tolling revenues for the two month period ending December 31, 2016 and accounts receivable at December 31, 2016 were not material to the consolidated results of operations and financial position for the year ended December 31, 2016. Additionally, Arconic buys products from and sells products to various related companies, including Alcoa Corporation, at negotiated prices between the two parties. These transactions, including accounts payable, were not material to the financial position or results of operations of Arconic for all periods presented.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	X. 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, except as noted below: On February 14, 2017, Arconic sold 23,353,000 of its shares of Alcoa Corporation common stock at $38.03 per share which resulted in $888 in cash proceeds and a pre-tax gain of approximately $350 to be recorded in Other income in the first quarter of 2017.

Quarterly Data

12 Months Ended

Dec. 31, 2016

Quarterly Data

Supplemental Financial Information (unaudited)

Quarterly Data

(in millions, except per-share amounts)


	First			Second		Third		Fourth⁽³⁾			Year
2016
Sales	$	3,055		$	3,234	$	3,138	$	2,967		$	12,394
Net income (loss) attributable to Arconic	$	16		$	135	$	166	$	(1,258	)	$	(941	)

Earnings per share attributable to Arconic common shareholders⁽¹⁾⁽²⁾:
Basic
Continuing operations	$	0.21		$	0.08	$	0.11	$	(2.98	)	$	(2.58	)
Discontinued operations		(0.21	)		0.19		0.23		0.07			0.27
Net income (loss) per share—basic	$	0.00		$	0.27	$	0.34	$	(2.91	)	$	(2.31	)

Diluted
Continuing operations	$	0.21		$	0.08	$	0.11	$	(2.98	)	$	(2.58	)
Discontinued operations		(0.21	)		0.19		0.22		0.07			0.27
Net income (loss) per share—diluted	$	0.00		$	0.27	$	0.33	$	(2.91	)	$	(2.31	)
2015
Sales	$	3,091		$	3,204	$	3,127	$	2,991		$	12,413
Net income (loss) attributable to Arconic	$	195		$	140	$	44	$	(701	)	$	(322	)

Earnings per share attributable to Arconic common shareholders⁽¹⁾⁽²⁾:
Basic
Continuing operations	$	(0.31	)	$	0.21	$	0.05	$	(0.48	)	$	(0.54	)
Discontinued operations		0.75			0.09		0.01		(1.16	)		(0.39	)
Net income (loss) per share—basic	$	0.44		$	0.30	$	0.06	$	(1.64	)	$	(0.93	)

Diluted
Continuing operations	$	(0.31	)	$	0.21	$	0.05	$	(0.48	)	$	(0.54	)
Discontinued operations		0.74			0.09		0.01		(1.16	)		(0.39	)
Net income (loss) per share—basic	$	0.43		$	0.30	$	0.06	$	(1.64	)	$	(0.93	)

⁽¹⁾	Per share amounts are calculated independently for each period presented; therefore, the sum of the quarterly per share amounts may not equal the per share amounts for the year.

⁽²⁾	Per share amounts for all periods presented have been updated to reflect the Reverse Stock Split (see Note A).

⁽³⁾

In the fourth quarter of 2016, as a result of the Separation Transaction, Arconic recorded a charge of $1,267 for valuation allowances on certain deferred tax assets. In the fourth quarter of 2015, operations related to Alcoa Corporation, which were recorded in discontinued operations, recorded a loss of $508 primarily relating to restructuring and other charges of $685.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation

Principles of Consolidation

Related Party Transactions

Cash Equivalents

Cash Equivalents. Cash equivalents are highly liquid investments purchased with an original maturity of three months or less.

Inventory Valuation

Properties, Plants, and Equipment


Segment	Structures		Machinery and equipment
Global Rolled Products		31		21
Engineered Products and Solutions		29		17
Transportation and Construction Solutions		27		19

Goodwill and Other Intangible Assets


Segment	Software		Other intangible assets
Global Rolled Products		8		9
Engineered Products and Solutions		7		34
Transportation and Construction Solutions		6		16

Revenue Recognition

Environmental Matters

Litigation Matters

Income Taxes

Stock-Based Compensation

Foreign Currency

Acquisitions

Discontinued Operations and Assets Held For Sale

Recently Adopted Accounting Guidance

Recently Issued Accounting Guidance

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Weighted-Average Useful Lives of Structures and Machinery and Equipment

The following table details the weighted-average useful lives of structures and machinery and equipment by reporting segment (numbers in years):


Segment	Structures		Machinery and equipment
Global Rolled Products		31		21
Engineered Products and Solutions		29		17
Transportation and Construction Solutions		27		19

Weighted-Average Useful Lives of Software and Other Intangible Assets

The following table details the weighted-average useful lives of software and other intangible assets by reporting segment (numbers in years):


Segment	Software		Other intangible assets
Global Rolled Products		8		9
Engineered Products and Solutions		7		34
Transportation and Construction Solutions		6		16

Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2016

Summary of Changes in Accumulated Other Comprehensive (Loss) by Component

The following table details the activity of the four components that comprise Accumulated other comprehensive loss for both Arconic’s shareholders and noncontrolling interests:


	Arconic									Noncontrolling Interests
	2016			2015			2014			2016			2015			2014
Pension and other postretirement benefits (U)
Balance at beginning of period	$	(3,611	)	$	(3,601	)	$	(3,532	)	$	(56	)	$	(64	)	$	(51	)
Other comprehensive (loss) income:
Unrecognized net actuarial loss and prior service cost/benefit		(1,112	)		(478	)		(492	)		(9	)		5			(22	)
Tax benefit (expense)		380			170			167			3			(1	)		7
Total Other comprehensive (loss) income before reclassifications, net of tax		(732	)		(308	)		(325	)		(6	)		4			(15	)
Amortization of net actuarial loss and prior service cost/benefit⁽¹⁾		389			458			394			4			6			3
Tax expense⁽²⁾		(136	)		(160	)		(138	)		(1	)		(2	)		(1	)
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁸⁾		253			298			256			3			4			2
Total Other comprehensive (loss) income		(479	)		(10	)		(69	)		(3	)		8			(13	)
Transfer to Alcoa Corporation		2,080			-			-			59			-			-
Balance at end of period	$	(2,010	)	$	(3,611	)	$	(3,601	)	$	-		$	(56	)	$	(64	)
Foreign currency translation
Balance at beginning of period	$	(2,412	)	$	(846	)	$	179		$	(780	)	$	(351	)	$	(110	)
Other comprehensive income (loss)⁽³⁾		268			(1,566	)		(1,025	)		182			(429	)		(241	)
Transfer to Alcoa Corporation		1,455			-			-			596			-			-
Balance at end of period	$	(689	)	$	(2,412	)	$	(846	)	$	(2	)	$	(780	)	$	(351	)
Available-for-sale securities
Balance at beginning of period	$	(5	)	$	-		$	2		$	-		$	-		$	-
Other comprehensive income (loss)⁽⁴⁾		137			(5	)		(2	)		-			-			-
Transfer to Alcoa Corporation		-			-			-			-			-			-
Balance at end of period	$	132		$	(5	)	$	-		$	-		$	-		$	-
Cash flow hedges
Balance at beginning of period	$	597		$	(230	)	$	(308	)	$	(3	)	$	(2	)	$	(2	)
Other comprehensive (loss) income:
Net change from periodic revaluations		(843	)		1,138			78			36			(1	)		-
Tax benefit (expense)		252			(340	)		(21	)		(10	)		-			-
Total Other comprehensive (loss) income before reclassifications, net of tax		(591	)		798			57			26			(1	)		-
Net amount reclassified to earnings:
Aluminum contracts⁽⁵⁾		1			21			27			-			-			-
Energy contracts⁽⁶⁾		(49	)		6			-			(34	)		-			-
Foreign exchange contracts⁽⁵⁾		-			5			(3	)		-			-			-
Interest rate contracts⁽⁷⁾		9			1			1			5			-			-
Nickel contracts⁽⁶⁾		1			2			-			-			-			-
Sub-total		(38	)		35			25			(29	)		-			-
Tax benefit (expense)⁽²⁾		12			(6	)		(4	)		8			-			-
Total amount reclassified from Accumulated other comprehensive loss, net of tax⁽⁸⁾		(26	)		29			21			(21	)		-			-
Total Other comprehensive (loss) income		(617	)		827			78			5			(1	)		-
Transfer to Alcoa Corporation		19			-			-			(2	)		-			-
Balance at end of period	$	(1	)	$	597		$	(230	)	$	-		$	(3	)	$	(2	)

⁽¹⁾	These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note U).

⁽²⁾	These amounts were included in 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⁾	Realized gains and losses were included in Other income, net on the accompanying Statement of Consolidated Operations.

⁽⁵⁾	These amounts were included in Sales on the accompanying Statement of Consolidated Operations.

⁽⁶⁾	These amounts were included in Cost of goods sold on the accompanying Statement of Consolidated Operations.

⁽⁷⁾	These amounts were included in Interest expense on the accompanying Statement of Consolidated Operations.

⁽⁸⁾	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 7.

Separation Transaction and Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2016

Alcoa Corporation [Member]

Summary of Discontinued Operations in Financial Statements

The results of operations of Alcoa Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below:


	Ten months ended October 31,			Year ended December 31,
	2016			2015			2014
Sales	$	6,752		$	10,121		$	11,364
Cost of goods sold (exclusive of expenses below)		5,655			7,965			8,782
Selling, general administrative, and other expenses		164			214			231
Research and development		28			69			95
Provision for depreciation, depletion and amortization		593			772			935
Restructuring and other charges		102			981			854
Interest expense		28			25			31
Other (income) expenses, net		(75	)		30			52
Income from discontinued operations before income taxes		257			65			384
Provision for income taxes		73			106			146
Income (loss) from discontinued operations after income taxes		184			(41	)		238
Less: Net income (loss) from discontinued operations attributable to noncontrolling interests		63			124			(91	)
Net income (loss) from discontinued operations	$	121		$	(165	)	$	329


Total assets of discontinued operations:
Cash and cash equivalents	$	557
Receivables from customers		380
Other receivables		128
Inventories		1,158
Prepaid expenses and other current assets		333
Current assets of discontinued operations		2,556
Properties, plants, and equipment, net		9,390
Goodwill		152
Investments		1,472
Deferred income taxes		1,360
Other noncurrent assets		2,224
Noncurrent assets of discontinued operations		14,598
Total assets of discontinued operations	$	17,154
Total liabilities of discontinued operations:
Accounts payable, trade	$	1,379
Accrued compensation and retirement costs		440
Taxes, including income taxes		136
Other current liabilities		563
Long-term debt due within one year		18
Current liabilities of discontinued operations	$	2,536
Long-term debt less amount due within one year		207
Accrued pension benefits		1,373
Accrued other postretirement benefits		1,189
Other noncurrent liabilities and deferred credits		1,910
Noncurrent liabilities of discontinued operations		4,679
Total liabilities of discontinued operations	$	7,215

The following table presents depreciation, depreciation and amortization, restructuring and other charges, and purchases of property, plant and equipment of the discontinued operations related to Alcoa Corporation:


For the year ended December 31,	2016		2015		2014
Depreciation, depletion and amortization	$	593	$	772	$	935
Restructuring and other charges	$	102	$	981	$	854
Capital expenditures	$	298	$	391	$	444

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Restructuring and Related Activities [Abstract]

Restructuring and Other Charges (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Restructuring and Other Charges

Restructuring and other charges for each year in the three-year period ended December 31, 2016 were comprised of the following:


	2016			2015			2014
Asset impairments	$	80		$	-		$	65
Layoff costs		70			97			105
Net loss on divestitures of businesses (F)		3			136			111
Other		27			(11	)		43
Reversals of previously recorded layoff costs		(25	)		(8	)		(10	)
Restructuring and other charges	$	155		$	214		$	314

Schedule of Restructuring and Other Charges by Reportable Segments, Pretax

The pretax impact of allocating such charges to segment results would have been as follows:


	2016		2015		2014
Global Rolled Products	$	40	$	121	$	267
Engineered Products and Solutions		78		46		13
Transportation and Construction Solutions		14		8		10
Segment total		132		175		290
Corporate		23		39		24
Total restructuring and other charges	$	155	$	214	$	314

Activity and Reserve Balances for Restructuring Charges

Activity and reserve balances for restructuring charges were as follows:


	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2013	$	37		$	29		$	66
2014:
Cash payments		(75	)		(16	)		(91	)
Restructuring charges		105			43			148
Other*		(19	)		(36	)		(55	)
Reserve balances at December 31, 2014		48			20			68
2015:
Cash payments		(45	)		(12	)		(57	)
Restructuring charges		97			7			104
Other*		(16	)		(6	)		(22	)
Reserve balances at December 31, 2015		84			9			93
2016:
Cash payments		(73	)		(13	)		(86	)
Restructuring charges		70			27			97
Other*		(31	)		(14	)		(45	)
Reserve balances at December 31, 2016	$	50		$	9			59

Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The following table details the changes in the carrying amount of goodwill:


	Global Rolled Products			Engineered Products and Solutions			Transportation and Construction Solutions			Corporate*			Total
Balance at December 31, 2014:
Goodwill	$	210		$	4,458		$	114		$	333		$	5,115
Accumulated impairment losses		-			-			(28	)		-			(28	)
		210			4,458			86			333			5,087
Acquisitions and Divestitures (F)		(1	)		261			-			-			260
Impairment (A)		-			-			(25	)		-			(25	)
Translation and other		(8	)		(59	)		(3	)		(3	)		(73	)
Balance at December 31, 2015:
Goodwill		201			4,660			111			330			5,302
Accumulated impairment losses		-			-			(53	)		-			(53	)
		201			4,660			58			330			5,249
Acquisitions and Divestitures (F)		-			47			-			-			47
Translation and other		(20	)		(128	)		(1	)		1			(148	)
Balance at December 31, 2016:
Goodwill		181			4,579			110			331			5,201
Accumulated impairment losses		-			-			(53	)		-			(53	)
		181			4,579			57			331			5,148

Other Intangible Assets

Other intangible assets, which are included in Other noncurrent assets on the accompanying Consolidated Balance Sheet, were as follows:


December 31, 2016	Gross carrying amount		Accumulated amortization
Computer software	$	755	$	(623	)
Patents and licenses		110		(102	)
Other intangibles (F)		897		(81	)
Total amortizable intangible assets		1,762		(806	)
Indefinite-lived trade names and trademarks		32		-
Total other intangible assets	$	1,794	$	(806	)


December 31, 2015	Gross carrying amount		Accumulated amortization
Computer software	$	793	$	(643	)
Patents and licenses		110		(98	)
Other intangibles (F)		961		(64	)
Total amortizable intangible assets		1,864		(805	)
Indefinite-lived trade names and trademarks		45		-
Total other intangible assets	$	1,909	$	(805	)

Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2016

Firth Rixson [Member]

Summary of Final Allocation of Purchase Price by Major Asset Acquired and Liability Assumed, Amount of Goodwill Recognized and Net Present Value of Potential Earn-out

The following table represents the final allocation of the purchase price by major asset acquired and liability assumed, as well as the amount of goodwill recognized:


Assets:
Cash	$	303
Receivables from customers		94
Inventories		483
Prepaid expenses and other current assets		47
Properties, plants, and equipment		321
Goodwill		298
Other noncurrent assets		60
Total assets	$	1,606
Liabilities:
Accounts payable	$	86
Other current liabilities		94
Long-term debt due within one year		115
Long-term debt, less amount due within one year		387
Other noncurrent liabilities		96
Total liabilities	$	778
Equity:
Additional capital	$	60
Total equity	$	60

RTI [Member]

Summary of Final Allocation of Purchase Price by Major Asset Acquired and Liability Assumed, Amount of Goodwill Recognized and Net Present Value of Potential Earn-out


Assets:
Receivables from customers	$	193
Inventories		227
Prepaid expenses and other current assets		22
Properties, plants, and equipment		493
Goodwill		1,801
Other noncurrent assets		758
Total assets	$	3,494
Liabilities:
Accounts payable	$	162
Other current liabilities		100
Contingent consideration		130
Other noncurrent liabilities		107
Total liabilities	$	499

Inventories (Tables)

12 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory Components

December 31,	2016		2015
Finished goods	$	625	$	672
Work-in-process		1,144		1,115
Purchased raw materials		408		425
Operating supplies		76		72
	$	2,253	$	2,284

Properties, Plants, and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Schedule of Properties, Plants, and Equipment, Net

December 31,	2016		2015
Land and land rights	$	135	$	149
Structures:
Global Rolled Products		1,061		1,042
Engineered Products and Solutions		733		658
Transportation and Construction Solutions		254		239
Other		248		290
		2,296		2,229
Machinery and equipment:
Global Rolled Products		4,570		4,500
Engineered Products and Solutions		2,728		2,745
Transportation and Construction Solutions		723		682
Other		337		442
		8,358		8,369
Less: accumulated depreciation and amortization		10,789 6,073		10,747 6,143
Construction work-in-progress		4,716 783		4,604 821
	$	5,499	$	5,425

Other Noncurrent Assets (Tables)

12 Months Ended

Dec. 31, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Noncurrent Assets

December 31,	2016		2015
Intangibles, net (E)	$	988	$	1,104
Investments		102		193
Cash surrender value of life insurance		14		492
Other		141		155
	$	1,245	$	1,944

Debt (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-Term Debt.


December 31,	2016			2015
5.55% Notes, due 2017	$	-		$	750
6.50% Bonds, due 2018		250			250
6.75% Notes, due 2018		750			750
5.72% Notes, due 2019		750			750
1.63% Convertible Notes, due 2019*		403			403
6.150% Notes, due 2020		1,000			1,000
5.40% Notes, due 2021		1,250			1,250
5.87% Notes, due 2022		627			627
5.125% Notes, due 2024		1,250			1,250
5.90% Notes, due 2027		625			625
6.75% Bonds, due 2028		300			300
5.95% Notes due 2037		625			625
Iowa Finance Authority Loan, due 2042 (4.75%)		250			250
Other**		(32	)		(41	)
		8,048			8,789
Less: amount due within one year		4			3
	$	8,044		$	8,786

*	Amount was assumed in conjunction with the acquisition of RTI (see Note F).

Other Noncurrent Liabilities and Deferred Credits (Tables)

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Schedule of Other Noncurrent Liabilities and Deferred Credits

December 31,	2016		2015
Environmental remediation (L)	$	260	$	288
Income taxes (R)		154		13
Accrued compensation and retirement costs		216		237
Contingent payment related to an acquisition (F)		78		130
Other		162		160
	$	870	$	828

Other Income, Net (Tables)

12 Months Ended

Dec. 31, 2016

Other Income and Expenses [Abstract]

Schedule of Other Expenses (Income), Net


	2016			2015			2014
Equity income	$	(7	)	$	-		$	(2	)
Interest income		(16	)		(16	)		(19	)
Foreign currency (gains) losses, net		(4	)		51			23
Net loss (gain) from asset sales		11			(42	)		(13	)
Net loss (gain) on mark-to-market derivative contracts		1			(3	)		2
Other, net		(79	)		(18	)		4
	$	(94	)	$	(28	)	$	(5	)

Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2016

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Paid for Interest and Income Taxes

Cash paid for interest and income taxes was as follows:


	2016		2015		2014
Interest, net of amount capitalized	$	524	$	487	$	441
Income taxes, net of amount refunded	$	324	$	345	$	301

Schedule of Cash Paid for Acquisitions Including Non-Controlling Interest

The details related to cash paid for acquisitions (including of a noncontrolling interest in 2014) were as follows:


	2016			2015			2014
Assets acquired	$	-		$	2,003		$	3,515
Liabilities assumed		-			(868	)		(345	)
Contingent consideration liability		-			-			(130	)
Equity issued		-			(870	)		(610	)
Noncontrolling interest acquired		-			-			31
Working capital adjustment		(10	)		-			-
Increase in Arconic’s shareholders’ equity		-			(60	)		(3	)
Cash paid		(10	)		205			2,458
Less: cash acquired		-			302			45
Net cash paid	$	(10	)	$	(97	)	$	2,413

Segment and Geographic Area Information (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Schedule of Operating Results and Assets of Arconic's Reportable Segments

The operating results and assets of Arconic’s reportable segments were as follows:


	Global Rolled Products		Engineered Products and Solutions		Transportation and Construction Solutions		Total
2016
Sales:
Third-party sales	$	4,864	$	5,728	$	1,802	$	12,394
Intersegment sales		118		-		-		118
Total sales	$	4,982	$	5,728	$	1,802	$	12,512
Profit and loss:
Depreciation and amortization		201		255		48		504
Income taxes		107		298		67		472
ATOI		269		642		176		1,087
2015
Sales:
Third-party sales	$	5,253	$	5,342	$	1,882	$	12,477
Intersegment sales		125		-		-		125
Total sales	$	5,378	$	5,342	$	1,882	$	12,602
Profit and loss:
Depreciation and amortization		203		233		43		479
Income taxes		85		282		63		430
ATOI		225		595		166		986
2014
Sales:
Third-party sales	$	6,344	$	4,217	$	2,021	$	12,582
Intersegment sales		185		-		-		185
Total sales	$	6,529	$	4,217	$	2,021	$	12,767
Profit and loss:
Depreciation and amortization		211		137		42		390
Income taxes		67		298		69		434
ATOI		224		579		180		983
2016
Assets:
Capital expenditures	$	293	$	333	$	63	$	689
Goodwill		181		4,579		57		4,817
Total assets		3,891		10,542		982		15,415
2015
Assets:
Capital expenditures	$	256	$	383	$	77	$	716
Goodwill		201		4,660		58		4,919
Total assets		3,861		10,732		947		15,540

Schedule of Reconciliation of Certain Segment Information to Consolidated Totals

The following tables reconcile certain segment information to consolidated totals:


	2016			2015			2014
Sales:
Total segment sales	$	12,512		$	12,602		$	12,767
Elimination of intersegment sales		(118	)		(125	)		(185	)
Corporate		-			(64	)		(40	)
Consolidated sales	$	12,394		$	12,413		$	12,542

Schedule of Segment ATOI to Consolidated Net (Loss) Income Attributable to Arconic


	2016			2015			2014
Net (loss) income attributable to Arconic:
Total segment ATOI	$	1,087		$	986		$	983
Unallocated amounts (net of tax):
Impact of LIFO		(11	)		66			(52	)
Metal price lag		21			(115	)		68
Interest expense		(324	)		(307	)		(287	)
Noncontrolling interests		-			(1	)		-
Corporate expense		(306	)		(252	)		(268	)
Impairment of goodwill		-			(25	)		-
Restructuring and other charges		(114	)		(192	)		(249	)
Discontinued operations		121			(165	)		329
Other ⁽¹⁾		(1,415	)		(317	)		(256	)
Consolidated net (loss) income attributable to Arconic	$	(941	)	$	(322	)	$	268

⁽¹⁾	Other for 2016, includes a charge for valuation allowances related to the Separation Transaction ($1,267), slightly offset by a favorable adjustment to the contingent earn-out liability and a post-closing adjustment both of which related to the November 2014 acquisition of Firth Rixson ($76).

Schedule of Segment Reporting Information to Consolidated Assets


December 31,	2016			2015
Assets:
Total segment assets	$	15,415		$	15,540
Unallocated amounts:
Cash and cash equivalents		1,863			1,362
Deferred income taxes		1,234			1,308
Corporate goodwill		331			330
Corporate fixed assets, net		308			279
LIFO reserve		(371	)		(387	)
Fair value of derivative contracts		24			-
Investment in common stock of Alcoa Corporation		1,020			-
Assets of discontinued operations		-			17,154
Other		214			891
Consolidated assets	$	20,038		$	36,477

Sales by Major Product Grouping

Sales by major product grouping were as follows:


	2016		2015		2014
Sales:
Flat-rolled aluminum		4,864		5,253		6,344
Fastening systems		2,060		2,168		1,647
Investment castings		1,870		1,812		1,784
Other extruded and forged products		1,495		1,332		1,019
Architectural aluminum systems		1,010		951		1,002
Aluminum wheels		689		790		786
Other		406		107		(40	)
	$	12,394	$	12,413	$	12,542

Schedule of Geographic Information for Sales

Geographic information for sales was as follows (based upon the country where the point of sale occurred):


	2016		2015		2014
Sales:
United States	$	7,823	$	8,044	$	7,205
France		930		802		915
United Kingdom		711		698		464
Hungary		619		622		630
China		582		565		415
Russia		433		455		642
Germany		284		264		229
Canada		262		180		125
Brazil		250		297		417
Japan		145		138		157
Italy		127		139		150
Australia		53		49		523
Spain		4		2		460
Other		171		158		210
	$	12,394	$	12,413	$	12,542

Schedule of Geographic Information for Long-Lived Assets

Geographic information for long-lived assets was as follows (based upon the physical location of the assets):


December 31,	2016		2015
Long-lived assets:
United States	$	3,966	$	3,833
China		336		352
Russia		295		303
United Kingdom		232		312
Hungary		194		190
France		118		107
Other		358		328
	$	5,499	$	5,425

Preferred and Common Stock (Tables)

12 Months Ended

Dec. 31, 2016