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Debt | 12 Months Ended
--- | ---
Dec. 31, 2017
Debt Disclosure [Abstract] |
Debt | Debt Long-Term Debt.
December 31, | 2017 | 2016
6.50% Bonds, due 2018 | $ | — |  | $ | 250 |
6.75% Notes, due 2018 | — |  | 750 |
5.72% Notes, due 2019 | 500 |  | 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** | (23 | ) | (32 | )
| 6,807 |  | 8,048 |
Less: amount due within one year | 1 |  | 4 |
| $ | 6,806 |  | $ | 8,044 |
* | 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 that was unwound during 2017, and unamortized debt issuance costs.
The principal amount of long-term debt maturing in each of the next five years is $1 in 2018, $903 in 2019, $1,000 in 2020, $1,250 in 2021, and $627 in 2022. Public Debt—In April 2017, the Company announced three separate cash tender offers by the Investment Banks for the purchase of the Company’s 6.50% Bonds due 2018 (the “6.50% Bonds”), 6.75% Notes due 2018 (the “6.75% Notes”), and 5.72% Notes due 2019 (the “5.72% Notes”), up to a maximum purchase amount of $1,000 aggregate principal amount of notes, subject to certain conditions. The Investment Banks purchased notes totaling $805 aggregate principal amount, including $150 aggregate principal amount of 6.50% Bonds, $405 aggregate principal amount of 6.75% Notes, and $250 aggregate principal amount of $5.72% Notes. During the second quarter of 2017, the Company agreed to acquire the notes from the Investment Banks for $409 in cash plus its remaining investment in Alcoa Corporation common stock (12,958,767 shares valued at $35.91 per share) for total consideration of $874 including accrued and unpaid interest. The Company recorded a charge of $58 ($27 in cash) primarily for the premium for the early redemption of the notes, a benefit of $8 for the proceeds of a related interest rate swap agreement, and a charge of $2 for legal fees associated with the transaction in Interest expense, and recorded a gain of $167 in Other income, net in the accompanying Statement of Consolidated Operations for the Debt-for-Equity Exchange. On June 19, 2017, the Company completed the early redemption of its remaining outstanding 6.50% Bonds, with aggregate principal amount of $100, and its remaining outstanding 6.75% Notes, with aggregate principal amount of $345, for $479 in cash including accrued and unpaid interest. As a result of the early redemption of the 6.50% Bonds and 6.75% Notes, the Company recorded a charge of $24 in Interest expense in the accompanying Statement of Consolidated Operations for the premium paid for the early redemption of these notes in excess of their carrying value. 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. The Company has the option to redeem certain of its Notes and Bonds in whole or part, at any time at a redemption price equal to the greater of principal amount or the sum of the present values of the remaining scheduled payments, discounted using a defined treasury rate plus a spread, plus in either case accrued and unpaid interest to the redemption date. 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. By an Extension Request and Amendment Letter dated as of June 5, 2015, the maturity date of the Credit Facility was extended to July 25, 2020. 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 is required to maintain a ratio of Indebtedness (as defined in the Credit Agreement), to Consolidated EBITDA (as defined in the Credit Agreement) of 4.50 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, 2017, 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, 2017) 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, 2017. 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, 2017 and 2016 and no amounts were borrowed during 2017, 2016 or 2015 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, 2017, of which $640 is due to expire in 2018 and $75 is due to expire in 2019. 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 2017, 2016 and 2015, Arconic borrowed and repaid $810, $1,950, and $1,890, respectively, under the respective credit arrangements. The weighted-average interest rate and weighted-average days outstanding of the respective borrowings during 2017, 2016 and 2015 were 2.6%, 1.9%, and 1.6%, respectively, and 46 days, 49 days, and 69 days, respectively. Short-Term Debt. At December 31, 2017 and 2016, short-term debt was $38 and $40, respectively. These amounts included $33 and $31 at December 31, 2017 and 2016, 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, 2017 and 2016. In 2017 and 2016, the average outstanding commercial paper was $67 and $127, respectively. Commercial paper matures at various times within one year and had an annual weighted average interest rate of 1.6%, 1.1%, and 0.6% during 2017, 2016, and 2015, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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