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Segment Information | 6 Months Ended
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Jun. 30, 2019
Segment Reporting [Abstract] |
Segment Information | Segment Information Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging. Arconic’s segments are organized by product on a worldwide basis. In the first quarter of 2019, management transferred its aluminum extrusions operations (Aluminum Extrusions) from the Arconic Engineered Structures (AES) business unit within the Engineered Products and Solutions (EP&S) segment to the Global Rolled Products (GRP) segment, based on synergies with GRP including similar customer base, technologies, and manufacturing capabilities. Prior period financial information has been recast to conform to current year presentation. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges. Segment operating profit includes the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Differences between segment totals and consolidated Arconic are in Corporate. As a result of the reorganization of Aluminum Extrusions noted above, management assessed and concluded that the remaining AES business unit and the Aluminum Extrusions business unit represent reporting units for purposes of evaluating goodwill for impairment. Goodwill of $110 was reallocated from the AES reporting unit to the Aluminum Extrusions reporting unit and these reporting units were evaluated for impairment during the first quarter of 2019. The estimated fair value of each of these reporting units substantially exceeded their carrying value; thus, there was no goodwill impairment. In the second quarter of 2019, management transferred its castings operations from the AES business unit to the Arconic Engines (AEN) business unit within the EP&S segment based on process expertise for investment castings that existed within AEN. As a result, goodwill of $105 was reallocated from the AES reporting unit to the AEN reporting unit and these reporting units were evaluated for impairment during the second quarter of 2019. The estimated fair value of each of these reporting units substantially exceeded their carrying value; thus, there was no impairment. Also in the second quarter of 2019, as a result of the decline in the forecasted financial performance and related impairment of long-lived assets of the Disks asset group within the AEN business unit (see Note M), an additional evaluation of the AEN reporting unit goodwill was performed. The estimated fair value of the reporting unit was substantially in excess of its carrying value; thus, there was no impairment of goodwill. The Company will continue to evaluate its organizational structure and portfolio in conjunction with its planned separation (see Note S), which may result in further changes to its reportable segments and the need to evaluate assets for impairment in future periods. The operating results of Arconic’s reportable segments were as follows:
| Engineered Products and Solutions |  | Global Rolled Products |  | Transportation and Construction Solutions |  | Total Segment
Second quarter ended June 30, 2019 |  |  |  |  |  |  |
Sales: |  |  |  |  |  |  |
Third-party sales | $ | 1,565 |  |  | $ | 1,577 |  |  | $ | 548 |  |  | $ | 3,690 |
Intersegment sales | — |  |  | 55 |  |  | — |  |  | 55 |
Total sales | $ | 1,565 |  |  | $ | 1,632 |  |  | $ | 548 |  |  | $ | 3,745 |
Profit and loss: |  |  |  |  |  |  |
Segment operating profit | $ | 286 |  |  | $ | 145 |  |  | $ | 107 |  |  | $ | 538 |
Restructuring and other charges | 442 |  |  | 2 |  |  | 25 |  |  | 469 |
Provision for depreciation and amortization | 62 |  |  | 54 |  |  | 13 |  |  | 129 |
Second quarter ended June 30, 2018 |  |  |  |  |  |  |
Sales: |  |  |  |  |  |  |
Third-party sales | $ | 1,474 |  |  | $ | 1,573 |  |  | $ | 562 |  |  | $ | 3,609 |
Intersegment sales | — |  |  | 61 |  |  | — |  |  | 61 |
Total sales | $ | 1,474 |  |  | $ | 1,634 |  |  | $ | 562 |  |  | $ | 3,670 |
Profit and loss: |  |  |  |  |  |  |
Segment operating profit | $ | 224 |  |  | $ | 111 |  |  | $ | 97 |  |  | $ | 432 |
Restructuring and other charges | 8 |  |  | 2 |  |  | — |  |  | 10 |
Provision for depreciation and amortization | 65 |  |  | 59 |  |  | 12 |  |  | 136 |
| Engineered Products and Solutions |  | Global Rolled Products |  | Transportation and Construction Solutions |  | Total Segment
Six months ended June 30, 2019 |  |  |  |  |  |  |
Sales: |  |  |  |  |  |  |
Third-party sales | $ | 3,067 |  |  | $ | 3,080 |  |  | $ | 1,083 |  |  | $ | 7,230 |
Intersegment sales | — |  |  | 110 |  |  | — |  |  | 110 |
Total sales | $ | 3,067 |  |  | $ | 3,190 |  |  | $ | 1,083 |  |  | $ | 7,340 |
Profit and loss: |  |  |  |  |  |  |
Segment operating profit | $ | 539 |  |  | $ | 252 |  |  | $ | 194 |  |  | $ | 985 |
Restructuring and other charges | 456 |  |  | 8 |  |  | 34 |  |  | 498 |
Provision for depreciation and amortization | 126 |  |  | 108 |  |  | 26 |  |  | 260 |
Six months ended June 30, 2018 |  |  |  |  |  |  |
Sales: |  |  |  |  |  |  |
Third-party sales | $ | 2,900 |  |  | $ | 3,054 |  |  | $ | 1,099 |  |  | $ | 7,053 |
Intersegment sales | — |  |  | 118 |  |  | — |  |  | 118 |
Total sales | $ | 2,900 |  |  | $ | 3,172 |  |  | $ | 1,099 |  |  | $ | 7,171 |
Profit and loss: |  |  |  |  |  |  |
Segment operating profit | $ | 433 |  |  | $ | 235 |  |  | $ | 164 |  |  | $ | 832 |
Restructuring and other charges | 9 |  |  | 1 |  |  | — |  |  | 10 |
Provision for depreciation and amortization | 130 |  |  | 115 |  |  | 25 |  |  | 270 |
The following table reconciles Total segment operating profit to Consolidated (loss) income before income taxes:
| Second quarter ended |  | Six months ended
| June 30, |  | June 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Total segment operating profit | $ | 538 |  |  | $ | 432 |  |  | $ | 985 |  |  | $ | 832 |
Unallocated amounts: |  |  |  |  |  |  |
Restructuring and other charges | (499 | ) |  | (15 | ) |  | (511 | ) |  | (22 | )
Corporate expense | (120 | ) |  | (93 | ) |  | (181 | ) |  | (153 | )
Consolidated operating (loss) income | $ | (81 | ) |  | $ | 324 |  |  | $ | 293 |  |  | $ | 657 |
Interest expense | (85 | ) |  | (89 | ) |  | (170 | ) |  | (203 | )
Other expense, net | (29 | ) |  | (41 | ) |  | (61 | ) |  | (61 | )
Consolidated (loss) income before income taxes | $ | (195 | ) |  | $ | 194 |  |  | $ | 62 |  |  | $ | 393 |
The total assets of Arconic's reportable segment were as follows:
| June 30, 2019 |  | December 31, 2018
Engineered Products and Solutions | $ | 9,681 |  |  | $ | 9,797 |
Global Rolled Products | 4,714 |  |  | 4,486 |
Transportation and Construction Solutions | 1,216 |  |  | 1,089 |
Total segment assets | $ | 15,611 |  |  | $ | 15,372 |
Segment assets at June 30, 2019 included operating lease right-of-use assets (see Notes B and N). Segment assets for the Engineered Products and Solutions segment at June 30, 2019 were impacted by a long-lived asset impairment charge of $428 (see Note M). The following table reconciles Total segment assets to Consolidated assets:
| June 30, 2019 |  | December 31, 2018
Total segment assets | $ | 15,611 |  |  | $ | 15,372 |
Unallocated amounts: |  |  |
Cash and cash equivalents | 1,357 |  |  | 2,277 |
Deferred income taxes | 568 |  |  | 573 |
Corporate fixed assets, net | 302 |  |  | 305 |
Fair value of derivative contracts | 5 |  |  | 37 |
Other | 70 |  |  | 129 |
Consolidated assets | $ | 17,913 |  |  | $ | 18,693 |
The following table disaggregates revenue by major end market served. Differences between segment totals and consolidated Arconic are in Corporate. For the second quarter and six months ended June 30, 2018, Corporate included $38 of costs related to settlements of certain customer claims primarily related to product introductions.
| Engineered Products and Solutions |  | Global Rolled Products |  | Transportation and Construction Solutions |  | Total Segment
Second quarter ended June 30, 2019 |  |  |  |  |  |  |
Aerospace | $ | 1,283 |  |  | $ | 328 |  |  | $ | — |  |  | $ | 1,611 |
Transportation | 85 |  |  | 632 |  |  | 258 |  |  | 975 |
Building and construction | — |  |  | 54 |  |  | 291 |  |  | 345 |
Industrial and Other | 197 |  |  | 563 |  |  | (1 | ) |  | 759 |
Total end-market revenue | $ | 1,565 |  |  | $ | 1,577 |  |  | $ | 548 |  |  | $ | 3,690 |
Second quarter ended June 30, 2018 |  |  |  |  |  |  |
Aerospace | $ | 1,187 |  |  | $ | 280 |  |  | $ | — |  |  | $ | 1,467 |
Transportation | 93 |  |  | 638 |  |  | 253 |  |  | 984 |
Building and construction | — |  |  | 60 |  |  | 297 |  |  | 357 |
Industrial and Other | 194 |  |  | 595 |  |  | 12 |  |  | 801 |
Total end-market revenue | $ | 1,474 |  |  | $ | 1,573 |  |  | $ | 562 |  |  | $ | 3,609 |
Six months ended June 30, 2019 |  |  |  |  |  |  |
Aerospace | $ | 2,533 |  |  | $ | 630 |  |  | $ | — |  |  | $ | 3,163 |
Transportation | 172 |  |  | 1,281 |  |  | 513 |  |  | 1,966 |
Building and construction | — |  |  | 103 |  |  | 572 |  |  | 675 |
Industrial and Other | 362 |  |  | 1,066 |  |  | (2 | ) |  | 1,426 |
Total end-market revenue | $ | 3,067 |  |  | $ | 3,080 |  |  | $ | 1,083 |  |  | $ | 7,230 |
Six months ended June 30, 2018 |  |  |  |  |  |  |
Aerospace | $ | 2,328 |  |  | $ | 528 |  |  | $ | — |  |  | $ | 2,856 |
Transportation | 166 |  |  | 1,260 |  |  | 496 |  |  | 1,922 |
Building and construction | — |  |  | 108 |  |  | 582 |  |  | 690 |
Industrial and Other | 406 |  |  | 1,158 |  |  | 21 |  |  | 1,585 |
Total end-market revenue | $ | 2,900 |  |  | $ | 3,054 |  |  | $ | 1,099 |  |  | $ | 7,053 |

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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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