Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-3610 | |
Entity Registrant Name | HOWMET AEROSPACE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 25-0317820 | |
Entity Address, Address Line One | 201 Isabella Street, | |
Entity Address, Address Line Two | Suite 200, | |
Entity Address, City or Town | Pittsburgh, | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15212-5872 | |
City Area Code | 412 | |
Local Phone Number | 553-1940 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 433,603,919 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000004281 | |
Current Fiscal Year End Date | --12-31 | |
Common stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $1.00 per share | |
Trading Symbol | HWM | |
Security Exchange Name | NYSE | |
Preferred stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | $3.75 Cumulative Preferred Stock, par value $100 per share | |
Trading Symbol | HWM PR | |
Security Exchange Name | NYSEAMER |
Statement of Consolidated Opera
Statement of Consolidated Operations (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Sales (D) | $ 1,134 | $ 1,794 | $ 4,021 | $ 5,364 |
Cost of goods sold (exclusive of expenses below) | 900 | 1,317 | 3,006 | 3,945 |
Selling, general administrative, and other expenses | 66 | 89 | 219 | 307 |
Research and development expenses | 5 | 6 | 13 | 22 |
Provision for depreciation and amortization | 68 | 70 | 212 | 224 |
Restructuring and other charges (E) | 22 | 56 | 166 | 572 |
Operating income | 73 | 256 | 405 | 294 |
Interest expense, net | 77 | 85 | 305 | 256 |
Other expense, net (F) | 8 | 8 | 0 | 26 |
Income (loss) before income taxes | (12) | 163 | 100 | 12 |
Provision (benefit) for income taxes (H) | (48) | 105 | (5) | 4 |
Income from continuing operations after income taxes | 36 | 58 | 105 | 8 |
Income from discontinued operations after income taxes (B) | 0 | 37 | 50 | 153 |
Net income (loss) | 36 | 95 | 155 | 161 |
Amounts Attributable to Howmet Aerospace Common Shareholders (I): | ||||
Net income (loss) | $ 35 | $ 94 | $ 153 | $ 159 |
Earnings per share - basic | ||||
Continuing operations (in usd per share) | $ 0.08 | $ 0.13 | $ 0.24 | $ 0.01 |
Discontinued operations (in usd per share) | 0 | 0.09 | 0.11 | 0.34 |
Earnings per share - diluted | ||||
Continuing operations (in usd per share) | 0.08 | 0.13 | 0.23 | 0.01 |
Discontinued operations (in usd per share) | $ 0 | $ 0.08 | $ 0.11 | $ 0.34 |
Average Shares Outstanding (I): | ||||
Average shares outstanding - basic (in shares) | 436 | 436 | 436 | 451 |
Average shares outstanding - diluted (in shares) | 439 | 457 | 440 | 455 |
Statement of Consolidated Compr
Statement of Consolidated Comprehensive Income (unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) attributable to common shareholders: | $ 36 | $ 95 | $ 155 | $ 161 |
Other comprehensive income (loss), net of tax (J): | ||||
Change in unrecognized net actuarial loss and prior service cost (benefit) related to pension and other postretirement benefits | 8 | 26 | 54 | 89 |
Foreign currency translation adjustments | 48 | (87) | (25) | (91) |
Net change in unrealized gains on available-for-sale securities | 0 | 1 | 0 | 4 |
Net change in unrecognized gains (losses) on cash flow hedges | 5 | 1 | 1 | (2) |
Total Other comprehensive income (loss), net of tax | 61 | (59) | 30 | 0 |
Comprehensive income | $ 97 | $ 36 | $ 185 | $ 161 |
Consolidated Balance Sheet (una
Consolidated Balance Sheet (unaudited) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and Cash Equivalents, at Carrying Value | $ 1,365 | $ 1,577 |
Receivables from customers, less allowances of $1 in 2020 and $1 in 2019 (K) | 310 | 583 |
Other receivables (K) | 120 | 349 |
Inventories (L) | 1,592 | 1,607 |
Prepaid expenses and other current assets | 213 | 285 |
Current assets of discontinued operations (B) | 0 | 1,442 |
Total current assets | 3,600 | 5,843 |
Properties, plants, and equipment, net (M) | 2,552 | 2,629 |
Goodwill (D) | 4,072 | 4,067 |
Deferred income taxes (A) | 262 | 209 |
Intangibles, net | 584 | 599 |
Other noncurrent assets (N) | 269 | 316 |
Noncurrent assets of discontinued operations (B) | 0 | 3,899 |
Total assets | 11,339 | 17,562 |
Current liabilities: | ||
Accounts payable, trade | 521 | 976 |
Accrued compensation and retirement costs | 215 | 285 |
Taxes, including income taxes | 82 | 65 |
Accrued interest payable | 99 | 112 |
Other current liabilities (N) | 276 | 229 |
Short-term debt (O) | 384 | 1,034 |
Current liabilities of discontinued operations (B) | 0 | 1,424 |
Total current liabilities | 1,577 | 4,125 |
Long-term debt, less amount due within one year (O and P) | 4,697 | 4,906 |
Accrued pension benefits (G) | 1,002 | 1,030 |
Accrued other postretirement benefits (G) | 191 | 200 |
Other noncurrent liabilities and deferred credits (N) | 371 | 438 |
Noncurrent liabilities of discontinued operations (B) | 0 | 2,258 |
Total liabilities | 7,838 | 12,957 |
Contingencies and commitments (R) | ||
Howmet Aerospace shareholders’ equity: | ||
Preferred stock | 55 | 55 |
Common stock | 434 | 433 |
Additional capital | 4,683 | 7,319 |
Retained earnings (A) | 258 | 113 |
Accumulated other comprehensive loss (J) | (1,929) | (3,329) |
Total Howmet Aerospace shareholders’ equity | 3,501 | 4,591 |
Noncontrolling interests | 0 | 14 |
Total equity | 3,501 | 4,605 |
Total liabilities and equity | $ 11,339 | $ 17,562 |
Consolidated Balance Sheet (u_2
Consolidated Balance Sheet (unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 1 | $ 1 |
Statement of Consolidated Cash
Statement of Consolidated Cash Flows (unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Operating activities | |||||
Net income | $ 36 | $ 95 | $ 155 | $ 161 | |
Adjustments to reconcile net income to cash used for operations: | |||||
Depreciation and amortization | 271 | 407 | |||
Deferred income taxes | 25 | (36) | |||
Restructuring and other charges | 148 | 630 | |||
Net loss from investing activities—asset sales | 6 | 6 | |||
Net periodic pension benefit cost (G) | 42 | 87 | |||
Stock-based compensation | 35 | 44 | |||
Other | 63 | 15 | |||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: | |||||
(Increase) in receivables | (117) | (957) | |||
(Increase) in inventories | (42) | (92) | |||
Decrease in prepaid expenses and other current assets | 1 | 17 | |||
(Decrease) in accounts payable, trade (A) | (439) | (2) | |||
(Decrease) in accrued expenses | (177) | (90) | |||
Increase in taxes, including income taxes | 41 | 92 | |||
Pension contributions | (110) | (217) | |||
(Increase) in noncurrent assets | (5) | (12) | |||
(Decrease) in noncurrent liabilities | (39) | (36) | |||
Cash (used for) provided by operations | (142) | 17 | |||
Financing Activities | |||||
Net change in short-term borrowings (original maturities of three months or less) | (8) | 0 | |||
Additions to debt (original maturities greater than three months) (B)(O) | 2,400 | 300 | |||
Payments on debt (original maturities greater than three months) (O) | (2,041) | (303) | |||
Debt issuance costs (B)(O) | (61) | 0 | |||
Premiums paid on early redemption of debt (O) | (59) | 0 | |||
Proceeds from exercise of employee stock options | 30 | 19 | |||
Dividends paid to shareholders | (10) | (48) | |||
Repurchase of common stock | (51) | (1,100) | |||
Net cash transferred to Arconic Corporation at separation (B) | (500) | 0 | |||
Other | (39) | (12) | |||
Cash used for financing activities | (339) | (1,144) | |||
Investing Activities | |||||
Capital expenditures (A)(D) | (36) | (127) | (220) | (532) | |
Proceeds from the sale of assets and businesses (B)(Q) | 114 | 27 | |||
Sale of debt securities | 0 | 47 | |||
Cash receipts from sold receivables (K) | 258 | 630 | |||
Other | 0 | (1) | |||
Cash provided from investing activities | 152 | 171 | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (6) | (2) | |||
Net change in cash, cash equivalents and restricted cash | (335) | (958) | |||
Cash, cash equivalents and restricted cash at beginning of period | 1,703 | 2,282 | $ 2,282 | ||
Cash, cash equivalents and restricted cash at end of period | $ 1,368 | $ 1,324 | $ 1,368 | $ 1,324 | $ 1,703 |
Statement of Changes in Consoli
Statement of Changes in Consolidated Equity (unaudited) - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | [1] | Preferred Class A | Preferred stock | Common stock | Additional capital | Retained earnings (Accumulated other comprehensive loss) | Retained earnings (Accumulated other comprehensive loss)Cumulative Effect, Period of Adoption, Adjustment | Retained earnings (Accumulated other comprehensive loss)Preferred Class A | Accumulated other comprehensive loss | Accumulated other comprehensive lossCumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interests | ||
Beginning balance at Dec. 31, 2018 | $ 5,569 | $ 73 | $ 55 | $ 483 | $ 8,319 | $ (374) | $ 75 | [1] | $ (2,926) | $ (2) | [1] | $ 12 | |||
Beginning balance (Accounting Standards Update 2014-09) at Dec. 31, 2018 | $ 73 | ||||||||||||||
Beginning balance (Accounting Standards Update 2017-12) at Dec. 31, 2018 | $ 2 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | 161 | 161 | |||||||||||||
Other comprehensive income (loss) | 0 | ||||||||||||||
Cash dividends declared: | |||||||||||||||
Preferred dividends declared, value | $ (2) | $ (2) | |||||||||||||
Common share, value | (55) | (55) | |||||||||||||
Stock-based compensation | 41 | 41 | |||||||||||||
Common stock issued: compensation plans | 3 | 3 | |||||||||||||
Repurchase and retirement of common stock | (1,100) | (52) | (1,048) | ||||||||||||
Other | 4 | 2 | 2 | ||||||||||||
Ending balance at Sep. 30, 2019 | 4,694 | 55 | 434 | 7,314 | (195) | (2,928) | 14 | ||||||||
Beginning balance at Jun. 30, 2019 | 4,850 | 55 | 440 | 7,484 | (272) | (2,869) | 12 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | 95 | 95 | |||||||||||||
Other comprehensive income (loss) | (59) | (59) | |||||||||||||
Cash dividends declared: | |||||||||||||||
Preferred dividends declared, value | (1) | (1) | |||||||||||||
Common share, value | (17) | (17) | |||||||||||||
Stock-based compensation | 16 | 16 | |||||||||||||
Common stock issued: compensation plans | 6 | 1 | 5 | ||||||||||||
Repurchase and retirement of common stock | (200) | (7) | (193) | ||||||||||||
Other | 4 | 2 | 2 | ||||||||||||
Ending balance at Sep. 30, 2019 | 4,694 | 55 | 434 | 7,314 | (195) | (2,928) | 14 | ||||||||
Beginning balance at Dec. 31, 2019 | 4,605 | 55 | 433 | 7,319 | 113 | (3,329) | 14 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | 155 | 155 | |||||||||||||
Other comprehensive income (loss) | 30 | 30 | |||||||||||||
Cash dividends declared: | |||||||||||||||
Preferred dividends declared, value | (2) | (2) | |||||||||||||
Common share, value | (8) | (8) | |||||||||||||
Stock-based compensation | 35 | 35 | |||||||||||||
Common stock issued: compensation plans | (8) | 3 | (11) | ||||||||||||
Repurchase and retirement of common stock | (51) | (2) | (49) | ||||||||||||
Distributions to Arconic Corp | (1,255) | (2,611) | 1,370 | (14) | |||||||||||
Ending balance at Sep. 30, 2020 | 3,501 | 55 | 434 | 4,683 | 258 | (1,929) | 0 | ||||||||
Beginning balance at Jun. 30, 2020 | 3,449 | 55 | 436 | 4,703 | 223 | (1,968) | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | 36 | 36 | |||||||||||||
Other comprehensive income (loss) | 61 | 61 | |||||||||||||
Cash dividends declared: | |||||||||||||||
Preferred dividends declared, value | $ (1) | $ (1) | |||||||||||||
Stock-based compensation | 12 | 12 | |||||||||||||
Common stock issued: compensation plans | (5) | (5) | |||||||||||||
Repurchase and retirement of common stock | (51) | (2) | (49) | ||||||||||||
Distributions to Arconic Corp | 0 | 22 | (22) | ||||||||||||
Ending balance at Sep. 30, 2020 | $ 3,501 | $ 55 | $ 434 | $ 4,683 | $ 258 | $ (1,929) | $ 0 | ||||||||
[1] | The Company entered into a sale leaseback arrangement in October 2018 for a cast house that is now part of Arconic Corporation, and due to continuing involvement, the gain on sale was deferred. In connection with the adoption of the new lease accounting standard on January 1, 2019, the arrangement no longer required that the gain be deferred. As such, the associated $73 deferred gain, net of tax was recognized as a cumulative effect of an accounting change within Accumulated deficit. Also, the Company adopted the new hedge accounting guidance on January 1, 2019. As a result, an adjustment of $2 was recognized as a cumulative effect of an accounting change within Accumulated deficit with an offset to Accumulated other comprehensive loss related to the elimination of a separate measurement of ineffectiveness for its cash flow hedges. |
Statement of Changes in Conso_2
Statement of Changes in Consolidated Equity (unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Common stock, dividends per share (in usd per share) | $ 0.04 | $ 0.02 | $ 0.12 | |
Preferred Class A | ||||
Preferred, dividends per share (in usd per share) | $ 0.9375 | $ 0.9375 | $ 2.8125 | $ 2.8125 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The interim Consolidated Financial Statements of Howmet Aerospace Inc. (formerly known as Arconic Inc.) and its subsidiaries (“Howmet” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2019 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2019, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation (see Note D ). The separation of Arconic Inc. into two standalone, publicly-traded companies, Howmet Aerospace Inc. and Arconic Corporation, (the “Arconic Inc. Separation Transaction”) became effective on April 1, 2020. The financial results of Arconic Corporation for all periods prior to the Arconic Inc. Separation Transaction have been retrospectively reflected in the Statement of Consolidated Operations as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. Certain adjustments to equity and reclassifications have been made related to the Arconic Inc. Separation Transaction. In addition, the related assets and liabilities associated with Arconic Corporation in the December 2019 Consolidated Balance Sheet are classified as assets and liabilities of discontinued operations. The cash flows, comprehensive income, and equity related to Arconic Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows, Statement of Consolidated Comprehensive Income (Loss), and Statement of Changes in Consolidated Equity, respectively, for all periods prior to the Arconic Inc. Separation Transaction. See Note B for additional information related to the Arconic Inc. Separation Transaction and discontinued operations. Year to date, the Company derived approximately 70% of its revenue from products sold to the aerospace end-market. As a result of the global pandemic coronavirus (“COVID-19”) and its impact on the aerospace industry to-date, the possibility exists that there could be a sustained impact to our operations and financial results. Since the start of the pandemic, certain original equipment manufacturer (“OEM”) customers have reduced production or suspended manufacturing operations in North America and Europe on a temporary basis. While the pandemic has resulted in the temporary closure of a small number of the Company's manufacturing facilities, all of our manufacturing facilities are currently operating. Since the duration of the pandemic is uncertain, the Company is taking a series of actions to address the financial impact, including announcing certain headcount reductions and reducing certain cash outflows by suspending dividends on common stock and reducing the level of its capital expenditures to preserve cash and maintain liquidity. The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19. The impact of COVID-19 is rapidly changing and of unknown duration and macroeconomic impact and as a result, these considerations remain highly uncertain. We have made our best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgements and estimations and assumptions that may be impacted by COVID-19. During the third quarter ended September 30, 2020, the Company identified a misclassification in the presentation of changes in accounts payable and capital expenditures in its previously issued Statement of Consolidated Cash Flows. Although management has determined that such misclassification did not materially misstate such prior financial statements, the Company has revised its Statement of Consolidated Cash Flows for the nine months ended September 30, 2019 resulting in a $117 increase to previously reported capital expenditures and decrease to cash provided from investing activities with a corresponding reduction in (decrease) in accounts payable, trade and increase in cash provided by operations. The Company will also prospectively revise, in connection with future filings, its Statement of Consolidated Cash Flows to increase its previously reported capital expenditures with a corresponding offset in accounts payable, trade of $55, $83 and $83 for the twelve months ended December 31, 2019, three months ended March 31, 2020, and six months ended June 30, 2020, respectively. |
Arconic Inc. Separation Transac
Arconic Inc. Separation Transaction and Discontinued Operations | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Arconic Inc. Separation Transaction and Discontinued Operations | Arconic Inc. Separation Transaction and Discontinued Operations On April 1, 2020, the Company completed the previously announced separation of its business into two independent, publicly-traded companies. Following the Arconic Inc. Separation Transaction, Arconic Corporation holds the Global Rolled Products businesses (global rolled products, aluminum extrusions, and building and construction systems) previously held by the Company. The Company retained the Engineered Products and Forgings businesses (engine products, fastening systems, engineered structures, and forged wheels). The Company's Board of Directors approved the completion of the separation on February 5, 2020, which was effected by the distribution (the “Distribution”) by the Company of all of the outstanding common stock of Arconic Corporation on April 1, 2020 to the Company’s stockholders who held shares as of the close of business on March 19, 2020 (the “Record Date”). In the Distribution, each Company stockholder of record as of the Record Date received one share of Arconic Corporation common stock for every four shares of the Company’s common stock held as of the Record Date. The Company did not issue fractional shares of Arconic Corporation common stock in the Distribution. Instead, each stockholder otherwise entitled to a fractional share of Arconic Corporation common stock received cash in lieu of fractional shares. On March 31, 2020, in connection with the Arconic Inc. Separation Transaction , the Company entered into several agreements with Arconic Corporation that govern the relationship between the Company and Arconic Corporation following the Distribution, including the following: a Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, Transition Services Agreement and certain Patent, Know-How, Trade Secret License and Trademark License Agreements. On February 7, 2020 Arconic Corporation completed an offering of $600 aggregate principal amount of 6.125% senior secured second-lien notes due 2028. On March 25, 2020, Arconic Corporation entered into a credit agreement which provided for a $600 aggregate principal amount seven-year senior secured first-lien loan B facility and a revolving credit facility which is guaranteed by certain of Arconic Corporation's wholly-owned domestic subsidiaries and secured on a first-priority basis by liens on substantially all assets of Arconic Corporation and subsidiary guarantors. Arconic Corporation used the proceeds to make payment to the Company to fund the transfer of certain assets to Arconic Corporation relating to the Arconic Inc. Separation Transaction and for general corporate purposes. The Company incurred debt issuance costs of $45 associated with these issuances for the first quarter of 2020 and nine months ended September 30, 2020. On February 1, 2020, Arconic Corporation completed the sale of its rolling mill in Itapissuma, Brazil for $50 in cash which resulted in a loss of $59, of which $53 was recognized in discontinued operations in the second half of 2019 and $6 in the first quarter of 2020 and nine months ended September 30, 2020. On March 1, 2020, Arconic Corporation sold its hard alloy extrusions plant in South Korea for $62 in cash, which resulted in a gain that was recognized in discontinued operations in the first quarter of 2020 and nine months ended September 30, 2020. During the third quarter of 2020, the Company identified and corrected a prior period equity misclassification of $22 million related to the distribution of pension plans and their related financial statement impacts which related to the distributions to Arconic Corporation. Management evaluated the impact of the misclassification within the components of equity on previously issued financial statements and concluded that it was not material. Discontinued Operations The results of operations of Arconic Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Sales $ — $ 1,765 $ 1,576 $ 5,427 Cost of goods sold — 1,483 1,292 4,612 Selling, general administrative, research and development and other expenses — 88 106 249 Provision for depreciation and amortization — 61 59 183 Restructuring and other charges — 63 (18) 58 Interest expense — — 7 — Other expense, net — 24 42 66 Income from discontinued operations — 46 88 259 Provision for income taxes — 9 38 106 Income from discontinued operations after income taxes $ — $ 37 $ 50 $ 153 The following table presents purchases of properties, plant and equipment, proceeds from the sale of businesses and the provision for depreciation and amortization of discontinued operations related to Arconic Corporation: Third quarter ended Nine months ended September 30, 2020 2020 2019 2020 2019 Capital expenditures $ — $ 40 $ 72 $ 175 Proceeds from the sales of businesses $ — $ — $ 112 $ — Provision for depreciation and amortization — 61 59 183 On April 1, 2020, management evaluated the net assets of Arconic Corporation for potential impairment and determined that no impairment charge was required. The cash flows and equity related to Arconic Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows or Statement of Comprehensive Income for all periods presented. The carrying amount of the major classes of assets and liabilities related to Arconic Corporation classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet consisted of the following: December 31, 2019 Total Assets of Discontinued Operations Cash and cash equivalents $ 71 Receivables from customers 385 Other receivables 135 Inventories 822 Prepaid expenses and other current assets 29 Current assets of discontinued operations 1,442 Properties, plants, and equipment, net 2,834 Goodwill 426 Intangibles, net 60 Deferred income taxes 383 Other noncurrent assets 196 Noncurrent assets of discontinued operations 3,899 Total assets of discontinued operations $ 5,341 Total Liabilities of Discontinued Operations: Accounts payable, trade $ 1,067 Accrued compensation and retirement costs 147 Taxes, including income taxes 22 Other current liabilities 188 Current liabilities of discontinued operations 1,424 Accrued pension benefits 1,430 Accrued other postretirement benefits 514 Other noncurrent liabilities and deferred credits 314 Noncurrent liabilities of discontinued operations 2,258 Total liabilities of discontinued operations $ 3,682 |
Recently Adopted and Recently I
Recently Adopted and Recently Issued Accounting Guidance | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Adopted and Recently Issued Accounting Guidance | Recently Adopted and Recently Issued Accounting Guidance Adopted On January 1, 2020, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to the impairment model for expected credit losses. The new impairment model (known as the current expected credit loss ("CECL") model) is based on expected losses rather than incurred losses. The Company recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments and requires the measurement of expected credit losses on assets including those that have a low risk of loss. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements. Issued In August 2018, the FASB issued guidance that impacts disclosures for defined benefit pension plans and other postretirement benefit plans. These changes become effective for the Company's 2020 annual report. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements and plans to adopt for the 2020 annual report. In December 2019, the FASB issued guidance that is intended to simplify various aspects related to the accounting for income taxes. These changes become effective on January 1, 2021, with early adoption permitted. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements and plans to adopt on January 1, 2021. In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. The Securities and Exchange Commission issued amendments to modernize the Regulation S-K disclosure requirements about description of business, legal proceedings and risk factors. The amendments permit registrants to take a more principles based approach to tailor business and risk factors disclosures to their circumstances and calls for enhanced human capital disclosures. The amendments, which became effective on November 9, 2020, are designed to improve the readability of these disclosures and discourage the repetition of non-material information. The adoption of this new guidance did not have a material impact on this Form 10-Q. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Following the Arconic Inc. Separation Transaction, Howmet’s operations consist of four worldwide reportable segments as follows: Engine Products Engine Products produces investment castings and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts. Fastening Systems Fastening Systems produces aerospace fastening systems, as well as commercial transportation fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. The business’s products are also critical components of automobiles, commercial transportation vehicles, and construction and industrial equipment. Engineered Structures Engineered Structures produces titanium and aluminum ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications. Forged Wheels Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation markets. Goodwill The Company had $4,072 of Goodwill at September 30, 2020, and the Company reviews it for impairment annually in the fourth quarter or more frequently if indicators exist or if a decision is made to sell or realign a business. On January 1, 2020, management transferred the Savannah business from the Engine Products segment to the Engineered Structures segment, based on synergies with forgings technologies and manufacturing capabilities. As a result of the reorganization, goodwill of $17 was reallocated from Engine Products to Engineered Structures, and these reporting units were evaluated for impairment during the first quarter of 2020. The estimated fair value of each of these reporting units substantially exceeded their carrying value; thus, there was no goodwill impairment at the date the business was transferred. During the first quarter of 2020, Howmet's market capitalization declined significantly compared to the fourth quarter of 2019. Over the same period, the equity value of our peer group companies, and the overall U.S. stock market also declined significantly amid market volatility. In addition, as a result of the COVID-19 pandemic and measures designed to contain the spread, sales globally to customers in the aerospace and commercial transportation industries that are impacted by COVID-19 have been and are expected to be negatively impacted as a result of disruption in demand. As a result of these macroeconomic factors, we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value. As a result of this assessment, the Company performed a quantitative impairment test in the first quarter for the Engineered Structures reporting unit and concluded that though the margin between the fair value of the reporting unit and carrying value had declined from approximately 60% to approximately 15%, it was not impaired. Consistent with prior practice, a discounted cash flow model was used to estimate the current fair value of the reporting unit. The significant assumptions and estimates utilized to determine fair value were developed utilizing current market and forecast information reflecting the disruption in demand that has and is expected to negatively impact the Company’s sales globally in the aerospace industry. In the second and third quarters of 2020, there were no indicators of impairment identified for the Engineered Structures reporting unit as the margin between fair value of the reporting unit and carrying value exceeded 20%. If our actual results or external market factors decline significantly from management’s estimates, future goodwill impairment charges may be necessary and could be material. The operating results of the Company’s reportable segments were as follows. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total Third quarter ended September 30, 2020 Sales: Third-party sales $ 485 $ 271 $ 206 $ 172 $ 1,134 Inter-segment sales 1 — 1 — 2 Total sales $ 486 $ 271 $ 207 $ 172 $ 1,136 Profit and loss: Segment operating profit $ 39 $ 33 $ 10 $ 35 $ 117 Restructuring and other charges 9 — 9 — 18 Provision for depreciation and amortization 31 12 13 10 66 Capital expenditures 15 9 3 6 33 Third quarter ended September 30, 2019 Sales: Third-party sales $ 844 $ 391 $ 318 $ 241 $ 1,794 Inter-segment sales 1 — 4 — 5 Total sales $ 845 $ 391 $ 322 $ 241 $ 1,799 Profit and loss: Segment operating profit $ 161 $ 102 $ 40 $ 60 $ 363 Restructuring and other charges 43 — 1 — 44 Provision for depreciation and amortization 31 12 15 8 66 Capital expenditures 39 7 4 11 61 Engine Products Fastening Systems Engineered Structures Forged Wheels Total Nine months ended September 30, 2020 Sales: Third-party sales $ 1,851 $ 982 $ 710 $ 476 $ 4,019 Inter-segment sales 4 — 6 — 10 Total sales $ 1,855 $ 982 $ 716 $ 476 $ 4,029 Profit and loss: Segment operating profit $ 309 $ 199 $ 57 $ 91 $ 656 Restructuring and other charges 44 26 21 3 94 Provision for depreciation and amortization 92 36 40 29 197 Capital expenditures 48 24 11 17 100 Nine months ended September 30, 2019 Sales: Third-party sales $ 2,492 $ 1,185 $ 943 $ 752 $ 5,372 Inter-segment sales 9 — 10 — 19 Total sales $ 2,501 $ 1,185 $ 953 $ 752 $ 5,391 Profit and loss: Segment operating profit $ 465 $ 297 $ 81 $ 193 $ 1,036 Restructuring and other charges 296 6 198 5 505 Provision for depreciation and amortization 100 36 46 24 206 Capital expenditures 165 24 22 56 267 The following table reconciles Total segment operating profit to Income (loss) from continuing operations before income taxes: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Total segment operating profit $ 117 $ 363 $ 656 $ 1,036 Unallocated amounts: Restructuring and other charges (22) (56) (166) (572) Corporate expense (22) (51) (85) (170) Consolidated operating income $ 73 $ 256 $ 405 $ 294 Interest expense, net (77) (85) (305) (256) Other expense, net (8) (8) — (26) Income (loss) from continuing operations before income taxes $ (12) $ 163 $ 100 $ 12 The following table reconciles Total segment capital expenditures, which are presented on an accrual basis, with Capital expenditures as presented on the statement of cash flows. Differences between segment and consolidated totals are in Corporate and discontinued operations, including the impact of changes in accrued capital expenditures during the period. Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Total segment capital expenditures $ 33 $ 61 $ 100 $ 267 Corporate and discontinued operations 3 66 120 265 Capital expenditures $ 36 $ 127 $ 220 $ 532 The following table disaggregates segment revenue by major end market served. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total Third quarter ended September 30, 2020 Aerospace - Commercial $ 199 $ 169 $ 104 $ — $ 472 Aerospace - Defense 142 37 82 — 261 Commercial Transportation — 38 — 172 210 Industrial and Other 144 27 20 — 191 Total end-market revenue $ 485 $ 271 $ 206 $ 172 $ 1,134 Third quarter ended September 30, 2019 Aerospace - Commercial $ 571 $ 267 $ 226 $ — $ 1,064 Aerospace - Defense 120 41 65 — 226 Commercial Transportation 5 59 — 241 305 Industrial and Other 148 24 27 — 199 Total end-market revenue $ 844 $ 391 $ 318 $ 241 $ 1,794 Nine months ended September 30, 2020 Aerospace - Commercial $ 1,018 $ 650 $ 432 $ — $ 2,100 Aerospace - Defense 394 120 216 — 730 Commercial Transportation — 118 — 476 594 Industrial and Other 439 94 62 — 595 Total end-market revenue $ 1,851 $ 982 $ 710 $ 476 $ 4,019 Nine months ended September 30, 2019 Aerospace - Commercial $ 1,689 $ 803 $ 672 $ — $ 3,164 Aerospace - Defense 350 115 194 — 659 Commercial Transportation 17 179 — 754 950 Industrial and Other 436 88 77 (2) 599 Total end-market revenue $ 2,492 $ 1,185 $ 943 $ 752 $ 5,372 In the nine months ended September 30 , 2020, the Company derived 70% of its revenue from aerospace end markets of which 11% related to General Electric Company. |
Restructuring and Other Charges
Restructuring and Other Charges | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Restructuring and Other Charges Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Layoff costs $ 17 $ — $ 93 $ 68 Reversals of previously recorded layoff reserves — — (10) (2) Pension, Other post-retirement benefits and Deferred Compensation - net settlements and curtailments 3 4 67 (8) Non-cash asset impairments — 8 — 442 Net loss on divestitures of assets and businesses — 42 9 54 Other 2 2 7 18 Restructuring and other charges $ 22 $ 56 $ 166 $ 572 In the third quarter of 2020, the Company recorded Restructuring and other charges of $22, which included a $17 charge for layoff costs, including the separation of 791 employees (415 in Engine Products and 376 in Engineered Structures); a $8 settlement accounting charge related to United Kingdom (U.K.) and U.S. pension plans, and a $2 charge for accelerated depreciation. These charges were partially offset by a $3 benefit from the termination of a deferred compensation plan and a $2 curtailment benefit related to a post-retirement plan. In the nine months ended September 30, 2020 the Company recorded Restructuring and other charges of $166, which included a $93 charge for layoff costs, including the separation of 3,772 employees (1,706 in Engine Products, 1,275 in Fastening Systems, 676 in Engineered Structures, 92 in Forged Wheels and 23 in Corporate); a $72 charge for U.K. and U.S. pension plans' settlement accounting; a $6 post-closing adjustment related to the sale of the Company’s U.K. forgings business; a $5 charge for impairment of assets associated with an agreement to sell an aerospace components business in the U.K that did not occur and the business was returned to held for use; a $2 charge for accelerated depreciation and a $5 charge for various other exit costs. These charges were partially offset by a benefit of $10 related to the reversal of a number of prior period programs; a $3 benefit from the termination of a deferred compensation plan; a $2 curtailment benefit related to a post-retirement plan and a gain of $2 on the sale of assets. In the third quarter of 2019, the Company recorded Restructuring and other charges of $56 which included a $43 charge for impairment of assets associated with an agreement to sell a U.K. forging business; a $8 charge for impairment of properties, plants, and equipment related to the Company’s primary research and development facility; a $4 settlement accounting charge related to U.S. pension plans; a $2 charge for various other exit costs including accelerated depreciation; partially offset by a net gain of $1 on the sale of assets. In the nine months ended September 30, 2019, the Company recorded Restructuring and other charges of $572 which included a $428 charge for impairment of the Disks long-lived asset group; a $68 charge for layoff costs, including the separation of 901 employees (103 in Engine Products, 112 in Engineered Structures, 132 in Fastening Systems, 60 in Forged Wheels and 494 in Corporate); a $43 charge for impairment of assets associated with an agreement to sell the UK forging business; a $14 charge for impairment of properties, plants, and equipment related to the Company’s primary research and development facility; a $12 charge for other exit costs from lease terminations primarily related to the exit of the corporate aircraft; a $12 loss on sale of assets primarily related to a small additive business; a $8 settlement accounting charge for U.S. pension plans; a $2 net charge for executive severance net of the benefit of forfeited executive stock compensation and a $4 charge for other exit costs; partially offset by a benefit of $16 related to the elimination of the life insurance benefit for the U.S. salaried and non-bargaining hourly retirees of the Company and its subsidiaries; a benefit of $2 for the reversal of a number of small layoff reserves related to prior periods and a net gain of $1 on the sales of assets. The Company recorded an impairment charge of $428 related to the Disks long-lived asset group in the second quarter ended June 30, 2019 and nine months ended September 30, 2019, of which $247 and $181 was related to the Engine Products and Engineered Structures segments, respectively, as the carrying value exceeded the forecasted undiscounted cash flows composed of a write-down of properties, plants and equipment, intangible assets and certain other noncurrent assets. Layoff costs Other exit costs Total Reserve balances at December 31, 2019 $ 13 $ — $ 13 Cash payments (38) — (38) Restructuring charges 150 16 166 Other (1) (67) (16) (83) Reserve balances at September 30, 2020 $ 58 $ — $ 58 (1) In 2020, Layoff costs included $72 in settlement accounting charges related to U.K. and U.S. pension plans, a $3 benefit from the termination of a deferred compensation plan and a $2 curtailment benefit related to a post-retirement plan; while Other exit costs included a charge of $5 for impairment of assets and a $6 post-closing adjustment related to the sale of a business; a $2 charge for accelerated depreciation and a $5 charge for other exit costs, which were offset by a gain of $2 on the sale of assets. The remaining Layoff cost reserves are expected to be paid in cash by the end of the third quarter of 2021. |
Other Expense, Net
Other Expense, Net | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Other Expense, Net | Other Expense, Net Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Non-service related net periodic benefit cost $ 8 $ 7 $ 19 $ 15 Interest income (1) (5) (5) (20) Foreign currency (gains) losses, net (5) 7 (12) 8 Net loss from asset sales 2 2 6 9 Deferred compensation 4 1 1 16 Other, net — (4) (9) (2) Total $ 8 $ 8 $ — $ 26 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 9 Months Ended |
Sep. 30, 2020 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits The components of net periodic benefit cost were as follows: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pension benefits Service cost $ 1 $ 6 $ 10 $ 19 Interest cost 17 59 81 177 Expected return on plan assets (21) (71) (115) (214) Recognized net actuarial loss 12 35 66 104 Amortization of prior service cost (benefit) — — — 1 Settlements 8 4 72 8 Net periodic benefit cost (1) 17 33 114 95 Discontinued operations — 21 20 69 Net amount recognized in continuing operations in Statement of Consolidated Operations $ 17 $ 12 $ 94 $ 26 Other postretirement benefits Service cost $ 1 $ 1 $ 3 $ 5 Interest cost 2 7 9 21 Recognized net actuarial loss — 1 2 3 Amortization of prior service cost (benefit) (2) (1) (5) (4) Curtailments (2) — (2) (58) Net periodic benefit cost (1) (1) 8 7 (33) Discontinued operations — 7 6 (22) Net amount recognized in continuing operations in Statement of Consolidated Operations $ (1) $ 1 $ 1 $ (11) (1) Service cost for continuing operations was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations. The amounts included in Net periodic benefit cost include costs related to both continuing and discontinued operations . Pension benefits In the second quarter ended June 30, 2020 and nine months ended September 30, 2020, the Company undertook a number of actions to reduce pension obligations in the U.K. by offering lump sum payments to certain plan participants and entering into group annuity contracts with a third-party carrier to pay and administer future annuity payments. The Company applied settlement accounting to these U.K. pension plans which resulted in settlement charges of $62 that were recorded in Restructuring and other charges in the Statement of Consolidated Operations in the second quarter ended June 30, 2020 and nine months ended September 30, 2020. In the third quarter and nine months ended September 30, 2020, the Company also applied settlement accounting to certain Canadian, U.K., and U.S. pension plans due to lump sum payments to participants which resulted in settlement charges of $8 and $10, respectively, that were recorded in Restructuring and other charges. In the third quarter and nine months ended September 30, 2019, the Company applied settlement accounting to certain U.S. pension plans due to lump sum payments to participants which resulted in settlement charges of $4 and $8 , respectively, that were recorded in Restructuring and other charges. Other postretirement benefits In the third quarter of 2020, the Company applied curtailment accounting due to a workforce reduction resulting in a decrease in expense of $2 which is recorded in Restructuring and other charges in the Statement of Consolidated Operations. In the second quarter of 2020, the Company communicated to plan participants that for its U.S. salaried and non-bargained hourly retirees of the Company and its subsidiaries, it would eliminate certain health care subsidies effective December 31, 2021 and that for certain bargained retirees of the Company, it would eliminate certain health care subsidies effective December 31, 2021 and the life insurance benefit effective August 1, 2020. As a result of these changes, in the second quarter ended June 30, 2020 and nine months ended September 30, 2020, the Company recorded a decrease to the Accrued other postretirement benefits liability of $6, which was offset in Accumulated other comprehensive loss. In the first quarter of 2019, the Company communicated to plan participants that for its U.S. salaried and non-bargained hourly retirees of the Company and its subsidiaries, it would eliminate the life insurance benefit effective May 1, 2019, and certain health care subsidies effective December 31, 2019. As a result of these changes, in the first quarter of 2019, the Company recorded a decrease to the Accrued other postretirement benefits liability of $75, which was offset by a curtailment benefit of $58 (of which $16 was recorded in Restructuring and other charges and $42 in discontinued operations in the Statement of Consolidated Operations) and $17 in Accumulated other comprehensive loss in the Statement of Changes in Consolidated Equity. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 34.5% in both the third quarter and nine months ended September 30, 2020, and 75.8% in both the third quarter and nine months ended September 30, 2019. The 2020 rate was higher than the U.S. federal statutory rate of 21% primarily due to U.S. tax on foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, and higher nondeductible expenses. The 2019 rate was higher due to U.S. tax on foreign earnings including estimated U.S. tax on Global Intangible Low-Taxed Income ("GILTI"), nondeductible impairment of certain domestic and foreign long-lived assets, and other nondeductible expenses. For the third quarter of 2020 and 2019, the tax rate including discrete items was 400.0% (benefit on a relatively small loss) and 64.4% (provision on income), respectively. For the third quarter of 2020, the Company recorded a discrete tax benefit of $41 related to a $36 benefit for a U.S. tax law change as described below, a net $6 benefit for prior year items, and a net $1 charge for other items. For the third quarter of 2019, the Company recorded a discrete tax charge of $14 related to a net $12 charge for prior year items, and a net $2 charge for other items. For the nine months ended September 30, 2020 and 2019, the tax rate including discrete items was 5.0% (benefit on income) and 33.3% (provision on income), respectively. For the nine months ended September 30, 2020, the Company recorded a discrete tax benefit of $39 related to a $36 benefit for a U.S. tax law change as described below, a $6 charge for the remeasurement of deferred tax balances in various jurisdictions as a result of the Arconic Inc. Separation Transaction, a $5 benefit for stock compensation, a net $2 benefit for prior year items, and a net $2 benefit for other items. For the nine months ended September 30, 2019, the Company recorded a discrete tax benefit of $23 related to a $25 benefit to deduct prior year foreign taxes rather than claim a U.S. foreign tax credit, a $12 benefit to remeasure certain deferred tax assets as a result of a foreign tax rate change, a net $12 charge for prior year items, and a net $2 charge for other items. The U.S. tax law change, applicable to taxable years beginning in 2018, relates to final regulations issued in July 2020 that provide for an exclusion of certain high-taxed foreign earnings from the calculation of tax on GILTI. The Company intends to amend its 2018 and 2019 U.S. income tax returns to elect the high-tax exclusion, thereby reducing the amount of GILTI in those years and resulting in a discrete tax benefit during the third quarter of 2020. The tax provisions for the third quarter and nine months ended September 30, 2020 and 2019 were comprised of the following: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pre-tax income (loss) at estimated annual effective income tax rate before discrete items $ (4) $ 124 $ 34 $ 9 Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income (2) (37) — — Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized (1) 4 — 18 Other discrete items (41) 14 (39) (23) Provision (benefit) for income taxes $ (48) $ 105 $ (5) $ 4 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 information used to compute basic and diluted EPS attributable to the Company's common shareholders was as follows (shares in millions): Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) attributable to common shareholders: Income (loss) from continuing operations attributable to common shareholders $ 36 $ 58 $ 105 $ 8 Income (loss) attributable from discontinued operations — 37 50 153 Net income (loss) attributable to common shareholders 36 95 155 161 Less: preferred stock dividends declared (1) (1) (2) (2) Net income available to the Company's common shareholders - basic 35 94 153 159 Add: Interest expense related to convertible notes — 3 — — Net income available to the Company's common shareholders - diluted $ 35 $ 97 $ 153 $ 159 Average shares outstanding - basic 436 436 436 451 Effect of dilutive securities: Stock options — 1 — 1 Stock and performance awards 3 5 4 3 Convertible notes (1) — 15 — — Average shares outstanding - diluted 439 457 440 455 (1) The convertible notes matured on October 15, 2019 (see Note O ). No shares of the Company’s common stock were issued in connection with the maturity or the final conversion of the convertible notes. As of October 15, 2019, the calculation of average diluted shares outstanding ceased to include the approximately 15 shares of common stock and the corresponding interest expense previously attributable to the convertible notes. Common stock outstanding at September 30, 2020 and 2019 was 434 and 434, respectively. The 15 decrease in the average shares outstanding for the nine months ended September 30, 2020 compared to same period in 2019 was primarily due to the 55 of shares repurchased during 2019. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of 2019 share repurchases was not realized in EPS in the nine months ended September 30, 2019, as the share repurchases occurred at varying points during 2019. The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions). Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Convertible notes — — — 15 Stock options (1) 3 3 3 3 (1) The weighted average exercise price per share of options excluded from diluted EPS was $26.03 and $32.64 as of September 30, 2020 and September 30, 2019, respectively. On May 20, 2019, the Company announced that its Board of Directors (the "Board") authorized the repurchase of $500 of the Company's outstanding common stock (the "Share Repurchase Program") by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions. There was no stated expiration for the Share Repurchase Program under which the Company may repurchase shares from time to time and pursuant to such terms, as and if it deems appropriate. The Share Repurchase Program may be suspended, modified or terminated at any time without prior notice. During August and September 2020, 2.9 shares were repurchased on the open market at an average price of $17.36 for approximately $51 in cash, including commission. All of the shares repurchased have been retired. After giving effect to the share repurchases made through September 30, 2020, approximately $299 remains available under the prior authorizations by the Board for the Share Repurchase Program. The amount of share repurchases by the Company may be limited under the terms of the Five-Year Revolving Credit Agreement. (See Note O .) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table details the activity of the four components that comprise Accumulated other comprehensive loss: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pension and other postretirement benefits (G) Balance at beginning of period $ (866) $ (2,281) $ (2,732) $ (2,344) Other comprehensive income: Unrecognized net actuarial loss and prior service cost/benefit (7) (6) (66) 60 Tax expense 3 2 11 (13) Total Other comprehensive income (loss) before reclassifications, net of tax (4) (4) (55) 47 Amortization of net actuarial loss and prior service cost (1) 16 39 133 54 Tax (expense) benefit (2) (4) (9) (24) (12) Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 12 30 109 42 Total Other comprehensive income 8 26 54 89 Transfer to Arconic Corporation $ (22) — $ 1,798 — Balance at end of period $ (880) $ (2,255) $ (880) $ (2,255) Foreign currency translation Balance at beginning of period $ (1,097) $ (587) $ (596) $ (583) Foreign currency translation 48 (87) (39) (91) Net amount reclassified from Accumulated other comprehensive loss (4) — — 14 — Other comprehensive income (loss) 48 (87) (25) (91) Transfer to Arconic Corporation — — (428) — Balance at end of period $ (1,049) $ (674) $ (1,049) $ (674) Available-for-sale securities Balance at beginning of period $ — $ — $ — $ (3) Other comprehensive income (loss) (5) — 1 — 4 Balance at end of period $ — $ 1 $ — $ 1 Cash flow hedges Balance at beginning of period $ (5) $ (1) $ (1) $ 4 Adoption of accounting standard — — — (2) Other comprehensive income (loss): Net change from periodic revaluations 2 — (6) (5) Tax expense 2 — 2 2 Total Other comprehensive income (loss) before reclassifications, net of tax 4 — (4) (3) Net amount reclassified to earnings 2 2 6 1 Tax expense (2) (1) (1) (1) — Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 1 1 5 1 Total Other comprehensive income (loss) 5 1 1 (2) Balance at end of period $ — $ — $ — $ — Accumulated other comprehensive loss $ (1,929) $ (2,928) $ (1,929) $ (2,928) (1) These amounts were recorded in Other expense, net (see Note F ). (2) These amounts were included in Provision (benefit) for income taxes on the Statement of Consolidated Operations. (3) A positive amount indicates a charge to earnings and a negative amount indicates a benefit to earnings. (4) Foreign currency translation charges were included in Restructuring and other charges on the Statement of Consolidated Operations due to the sale of foreign entities. (5) Realized gains and losses were included in Other expense, net on the Statement of Consolidated Operations. |
Receivables
Receivables | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Receivables | Receivables Sale of Receivables Programs The Company has two accounts receivable securitization arrangements. The first is an arrangement with several financial institutions to sell certain customer receivables without recourse on a revolving basis ("Receivables Sale Program"). The sale of such receivables is completed using a bankruptcy remote special purpose entity, which is a consolidated subsidiary of the Company. This arrangement historically provided up to a maximum funding of $400 for receivables sold. The Company maintains a beneficial interest, or a right to collect cash, on the sold receivables that have not been funded (deferred purchase program receivable). In the first quarter of 2020, the Company entered into an amendment to remove subsidiaries of Arconic Corporation from the sale of receivables program in preparation for the Arconic Inc. Separation Transaction and repurchased the remaining $282 unpaid receivables of Arconic Corporation in a non-cash transaction by reducing the amount of the deferred purchase program receivable. This amendment also reduced the maximum funding for receivables sold to $300. Effective September 30, 2020, the concentration limit of one customer may be reduced at the discretion of the financial institutions or automatically upon the downgrade of its debt rating as defined in the Receivables Sale Program agreement. A reduction in the customer's concentration limit would reduce the eligible receivable funding base thereby reducing the amount of future draws available and may also require repayment of a portion of existing draws. The Company had net cash repayments totaling $153 ($189 in draws and $342 in repayments) for the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, the deferred purchase program receivable was $53 and $246, respectively, which was included in Other receivables on the accompanying Consolidated Balance Sheet. The deferred purchase program 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 program receivable. The Company services the customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded. Cash receipts from customer payments on sold receivables (which are cash receipts on the underlying trade receivables that have been previously sold) as well as cash receipts and cash disbursements from draws and repayments under the program are presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows. On April 14, 2020, the Company’s credit rating was downgraded by Moody’s Investors Service, Inc., which resulted in a termination event under the provisions of the Receivables Sale Program agreement for which an amendment was executed on May 5, 2020 that cured it. This termination event under the Receivables Sale Program was not an event of default under the Company’s other financing and commercial agreements, including the Credit Agreement. The second arrangement is one in which the Company, through a wholly-owned special purpose entity (“SPE”), entered into a receivables purchase agreement (the “Receivables Purchase Agreement”) on June 30, 2020 such that the SPE may sell certain receivables to financial institutions until the earlier of June 30, 2021 or a termination event. The Receivables Purchase Agreement also contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. The SPE sold $46 and $123, respectively, of its receivables without recourse and received cash funding under this program during the third quarter and nine months ended September 30, 2020, resulting in derecognition of the receivables from the Company’s consolidated balance sheets. Cash received from collections of sold receivables is used by the SPE to fund additional purchases of receivables on a revolving basis, not to exceed $125, which is the aggregate maximum limit. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which was $28 at September 30, 2020. Costs associated with the sales of receivables are reflected in the Company’s Consolidated statements of operations for the periods in which the sales occur. Cash receipts from sold receivables are presented within Operating Activities in the Statement of Consolidated Cash Flows. Other Customer Receivable Sales In the third quarter and nine months ended September 30, 2020, the Company sold $8 and $32 of a certain customer’s receivables in exchange for cash, the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. The sale of these customer receivables partially offset the maximum funding reduction resulting from the Arconic Inc. Separation Transaction as well as customer concentration limits within the first accounts receivable securitization arrangement. In the third quarter and nine months ended September 30, 2020, the Company sold another customer’s receivables of $34 and $99 in exchange for cash, the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. The sale of these customer receivables was undertaken to offset a change in the customer’s payment patterns (customer had been taking a discount for paying early). |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories September 30, 2020 December 31, 2019 Finished goods $ 539 $ 524 Work-in-process 683 741 Purchased raw materials 326 299 Operating supplies 44 43 Total inventories $ 1,592 $ 1,607 At September 30, 2020 and December 31, 2019, the portion of inventories valued on a last-in, first-out (LIFO) basis was $488 and $503, respectively. If valued on an average-cost basis, total inventories would have been $127 and $133 higher at September 30, 2020 and December 31, 2019, respectively. |
Properties, Plants, and Equipme
Properties, Plants, and Equipment, net | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Properties, Plants, and Equipment, net | Properties, Plants, and Equipment, net September 30, 2020 December 31, 2019 Land and land rights $ 97 $ 99 Structures 1,016 938 Machinery and equipment 3,816 3,626 4,929 4,663 Less: accumulated depreciation and amortization 2,560 2,449 2,369 2,214 Construction work-in-progress 183 415 Properties, plants, and equipment, net $ 2,552 $ 2,629 During the third quarter of 2020, the Company identified a disclosure misclassification related to categories within properties, plants, and equipment at December 31, 2019, and corrected it in the current period by decreasing Land and land rights, Structures, Machinery and equipment, and Accumulated depreciation and amortization by $2, $120, $116, and $171, respectively, and increasing Construction work-in-progress by $67. Management evaluated the disclosure misclassification on previously issued financial statements and concluded that it was not material. The Company incurred capital expenditures which remain unpaid at September 30, 2020 and 2019 of $29 and $71, respectively, which will result in cash outflows for investing activities in subsequent periods. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $17 and $21 in the third quarter of 2020 and 2019, respectively. Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $53 and $64 in the nine months ended September 30, 2020 and 2019, respectively. Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows: September 30, 2020 December 31, 2019 Right-of-use assets classified in Other noncurrent assets $ 119 $ 125 Current portion of lease liabilities classified in Other current liabilities 36 38 Long-term portion of lease liabilities classified in Other noncurrent liabilities 91 98 Total lease liabilities $ 127 $ 136 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt September 30, 2020 December 31, 2019 6.150% Notes, due 2020 — 1,000 5.400% Notes, due 2021 361 1,250 5.870% Notes, due 2022 476 627 5.125% Notes, due 2024 1,250 1,250 6.875% Notes, due 2025 1,200 — 5.900% Notes, due 2027 625 625 6.750% Bonds, due 2028 300 300 5.950% Notes due 2037 625 625 4.750% Iowa Finance Authority Loan, due 2042 250 250 Other (1) (6) 13 5,081 5,940 Less: amount due within one year 384 1,034 Total long-term debt $ 4,697 $ 4,906 (1) Includes various financing arrangements related to subsidiaries, unamortized debt discounts and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above. Public Debt. On October 15, 2019, the 1.63% Convertible Notes matured in accordance with their terms and the Company repaid in cash the aggregate outstanding principal of $403 together with accrued and unpaid interest. On April 6, 2020, the Company completed the early redemption of all $1,000 of its 6.150% Notes due 2020 (the "6.150% Notes") and the early partial redemption of $300 of its 5.400% Notes due 2021 (the 5.400% Notes"). Holders of the 6.150% Notes were paid an aggregate of $1,020 and holders of the 5.400% Notes were paid an aggregate of $315, plus accrued and unpaid interest up to, but not including, the redemption date. The Company incurred early termination premium and accrued interest of $35 and $17, respectively, which has been recorded in Interest expense, net during the second quarter ended June 30, 2020 and nine months ended September 30, 2020 in the Statement of Consolidated Operations. On April 16, 2020, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission, which became effective automatically (the “Shelf Registration Statement”). The Shelf Registration Statement allows for offerings of debt securities from time to time. On April 24, 2020, the Company completed an offering of $1,200 aggregate principal amount of 6.875% Notes due 2025, the proceeds of which have been used to fund the cash tender offers noted below and to pay related transaction fees, including applicable premiums and expenses, with the remaining amount to be used for general corporate purposes. The Company incurred deferred financing costs of $14 associated with the issuance in the second quarter of 2020. On May 21, 2020, the Company completed a cash tender offer and redeemed $589 and $151 of principa l amount of the 5.400% Notes due 2021 and its 5.870% Notes due 2022, respectively. The amount of early tender premium and accrued interest and associated with the notes accepted for early settlement were $24 and $4, respectively, which was recorded in Interest expense, net during the second quarter ended June 30, 2020 and nine months ended September 30, 2020 in the Statement of Consolidated Operations. Credit Facilities. In March 2020, the Company entered into an amendment to its Five-Year Revolving Credit Agreement (the “Credit Agreement”). The amendment was entered into to permit the Arconic Inc. Separation Transaction and to amend certain terms of the Credit Agreement, including a change to the existing financial covenant and reduction of total commitments available from $3,000 to $1,500, effective April 1, 2020 and extended the maturity date from June 29, 2023 to April 1, 2025. The Company was required to maintain a ratio of Consolidated Net Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement) to be no greater than 3.50 to 1.00. On June 26, 2020, the Company entered into another amendment to its Credit Agreement to provide relief from its existing financial covenant through December 31, 2021 and reduce total commitment available from $1,500 to $1,000. The Company will be required to maintain a ratio of Consolidated Net Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement) as of the end of each fiscal quarter for the period of the four fiscal quarters of the Company most recently ended, to be no greater than (i) 5.00 to 1.00 for any quarter ending on or prior to December 31, 2020, (ii) 5.25 to 1.00 for the quarter ending March 31, 2021, (iii) 5.00 to 1.00 for the quarter ending June 30, 2021, (iv) 4.50 to 1.00 for the quarter ending September 30, 2021, and (v) 4.00 to 1.00 for the quarter ending December 31, 2021. The ratio returns to 3.50 to 1.00 for all periods thereafter. Under the amendment to the Credit Agreement, during the covenant relief period from June 30, 2020 through December 31, 2021 (unless the Company ends the covenant relief period earlier in accordance with the amendment), common stock dividends and share repurchases are permitted only if no borrowings are outstanding under the Credit Agreement and are limited to an aggregate amount of $100 through June 30, 2021, with such limit increasing by $150 to an aggregate amount of $250 after June 30, 2021 if the Consolidated Net Debt to Consolidated EBITDA ratio is no greater than 3.75 to 1.00. There were no amounts outstanding at September 30, 2020 or December 31, 2019, and no amounts were borrowed during 2020 or 2019 under the Credit Agreement. At September 30, 2020, the Company was in compliance with all covenants under the Credit Agreement. Availability under the Credit Agreement could be reduced in future periods if the Company fails to maintain the required ratios referenced above. In addition to the Credit Agreement, the Company has another credit agreement that provided a borrowing capacity of $100 at September 30, 2020 which expired on October 31, 2020. The purpose of any borrowings under this credit arrangement is to provide for working capital requirements and for other general corporate purposes. The covenants contained in this arrangement are the same as the Credit Agreement. During the nine months ended September 30, 2020, there were no borrowings or repayments under this other credit facility. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to the Company 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. September 30, 2020 December 31, 2019 Carrying Fair Carrying Fair Long-term debt, less amount due within one year $ 4,697 $ 5,079 $ 4,906 $ 5,337 Restricted cash, which was included in Prepaid assets and other current liabilities in the Consolidated Balance Sheet, was $3 and $55 at September 30, 2020 and December 31, 2019, respectively. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures 2020 Divestitures On January 31, 2020, the Company reached an agreement to sell a small manufacturing plant in the U.K. for $12 in cash, subject to working capital and other adjustments. The operating results and assets and liabilities of this plant are included in the Engineered Structures segment. As a result of entering into the agreement to sell, the Company recognized a charge of $12 related to a non-cash impairment of the net book value of the business, primarily properties, plants, and equipment in the first quarter ended March 31, 2020. As the sale is not expected to occur, the Company changed the classification of the assets from held for sale to held for use in the second quarter ended June 30, 2020 and recorded these assets at their lower of carrying value (assuming no initial reclassification for held for sale was made) or fair value. The result was a reversal of $7 related to a non-cash impairment in the second quarter of 2020. These charges were recorded in Restructuring and other charges in the Statement of Consolidated Operations. 2019 Divestitures On December 1, 2019, the Company completed the sale of its forgings business in the U.K. for $64 in cash, which resulted in a loss on sale of $46 that was recognized in 2019 (of which $43 and $3 was recognized in the third quarter and fourth quarter of 2019, respectively) and an incremental charge of $6 related to certain post-closing adjustments in the first quarter ended March 31, 2020 and nine months ended September 30, 2020. These charges were recorded in Restructuring and other charges in the Statement of Consolidated Operations. Of the cash proceeds received, $53 was recorded as Restricted cash within Prepaid expenses and other current assets on the Consolidated Balance Sheet at December 31, 2019 as its use is subject to restriction by the U.K. pension authority until certain U.K. pension plan changes were made and approved. In the second quarter of 2020, the restriction was removed, and the proceeds were reclassified to Cash and cash equivalents. The forgings business primarily produced steel, titanium, and nickel based forged components for aerospace, mining, and off-highway markets and its operating results and assets and liabilities were included in the Engine Products segment. The sale remains subject to certain remaining post-closing adjustments. This business generated third-party sales of $30 and $95 in the third quarter and nine months ended September 30, 2019, respectively, and had 540 employees at the time of divestiture. On May 31, 2019, the Company sold a small additive manufacturing facility within the Engineered Structures segment for $1 in cash, which resulted in a loss of $13 in the second quarter ended June 30, 2019 and nine months ended September 30, 2019 related to the non-cash impairment of the net book value of the business recorded in Restructuring and other charges in the Statement of Consolidated Operations. On August 15, 2019, the Company sold inventories and properties, plants and equipment related to a small energy business within the Engineered Structures segment for $13 in cash. As the sale was substantially complete as of June 30, 2019, and the sale price was estimated to be less than the carrying value, the Company recognized a charge of $9 in the second quarter ended June 30, 2019 and nine months ended September 30, 2019 related to inventory impairment and recorded the charge in Cost of goods sold in the Statement of Consolidated Operations. |
Contingencies and Commitments
Contingencies and Commitments | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | Contingencies and Commitments Contingencies Environmental Matters The Company participates in environmental assessments and cleanups at more than 30 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. The Company’s remediation reserve balance was $9 at September 30, 2020 and $8 at December 31, 2019, recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $4 and $3, respectively, were classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were less than $1 in the third quarter and nine months ended September 30, 2020 which includes 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. Tax Pursuant to the October 31, 2016 Tax Matters Agreement between the Company and Alcoa Corporation, Alcoa Corporation shares responsibility with and has agreed to partially indemnify the Company for the following matter. Additionally, as part of the March 31, 2020 Tax Matters Agreement between the Company and Arconic Corporation, Arconic Corporation also shares partial responsibility with and has agreed to partially indemnify the Company for its own share of the same matter. In connection with these indemnities, Alcoa Corporation and Arconic Corporation retain 49% and 34% of the total liability, respectively, for the following matter, and the Company retains the remaining 17% of the total liability. As previously reported, in July 2013, following a Spanish corporate income tax audit covering the 2006 through 2009 tax years, an assessment was received mainly disallowing certain interest deductions claimed by a Spanish consolidated tax group owned by the Company. In August 2013, the Company filed an appeal of this assessment in Spain’s Central Tax Administrative Court, which was denied in January 2015. The Company filed another appeal in Spain’s National Court in March 2015 which was denied in July 2018. The National Court’s decision requires the assessment for the 2006 through 2009 tax years to be reissued to take into account the outcome of the 2003 to 2005 audit which was closed in 2017. The Company estimates the revised assessment to be $181 (€155), including interest. In March 2019, the Supreme Court of Spain accepted the Company's petition to review the National Court’s decision, and the Company filed a formal appeal of the assessment. On October 13, 2020, the Supreme Court reviewed the assessment on its merits, and a final decision is expected to be rendered before the end of the year. In the event the Company receives an unfavorable ruling from the Supreme Court of Spain, a portion of the assessment may be offset with existing net operating losses and tax credits available to the Spanish consolidated tax group in existence during the audit period. In the third quarter of 2018, the Company established an income tax reserve and an indemnification receivable representing Alcoa Corporation’s 49% share of the liability. Pursuant to the Tax Matters Agreement with Arconic Corporation, as of the second quarter of 2020 the Company established an additional income tax receivable representing Arconic Corporation's 34% share of the total liability. As of September 30, 2020, the balances of the Company's reserve, including interest, and the receivables are $63 (€54) and $52 (€45), respectively. The tax years 2010 through 2013 are closed to audit. In July 2020, a Spanish corporate income tax audit covering the tax years 2014 through 2018 commenced. Any potential assessment for the tax period open to audit is not expected to be material to the Company’s consolidated operations. Reynobond PE Prior to the Arconic Inc. Separation Transaction on April 1, 2020, the Company was known as Arconic Inc. References to “Arconic Inc.” in this “Reynobond PE” section refer to Arconic Inc. only and do not include its subsidiaries, except as otherwise stated. On June 13, 2017, the Grenfell Tower in London, U.K. caught fire resulting in fatalities, injuries and damage. A French subsidiary of Arconic Inc., Arconic Architectural Products SAS (AAP SAS) (now a subsidiary of Arconic Corporation), supplied a product, Reynobond PE, to its customer, a cladding system fabricator, which used the product as one component of the overall cladding system on Grenfell Tower. The fabricator supplied its portion of the cladding system to the façade installer, who then completed and installed the system under the direction of the general contractor. Neither Arconic Inc. nor AAP SAS was involved in the design or installation of the system used at the Grenfell Tower, nor did it have a role in any other aspect of the building’s refurbishment or original design. Regulatory investigations into the overall Grenfell Tower matter are being conducted, including a criminal investigation by the London Metropolitan Police Service (the “Police”), a Public Inquiry by the British government and a consumer protection inquiry by a French public authority. The Public Inquiry was announced by the U.K. Prime Minister on June 15, 2017 and subsequently was authorized to examine the circumstances leading up to and surrounding the Grenfell Tower fire in order to make findings of fact and recommendations to the U.K. Government on matters such as the design, construction and modification of the building, the role of relevant public authorities and contractors, the implications of the fire for the adequacy and enforcement of relevant regulations, arrangements in place for handling emergencies and the handling of concerns from residents, among other things. Hearings for Phase 1 of the Public Inquiry began on May 21, 2018 and concluded on December 12, 2018. Phase 2 hearings of the Public Inquiry began in early 2020, following which a final report will be written and subsequently published. AAP SAS is participating as a Core Participant in the Public Inquiry and is also cooperating with the ongoing parallel investigation by the Police. The Company no longer sells the PE product for architectural use on buildings. Given the preliminary nature of these investigations and the uncertainty of potential future litigation, the Company cannot reasonably estimate at this time the likelihood of an unfavorable outcome or the possible loss or range of losses in the event of an unfavorable outcome. Pursuant to the Separation and Distribution Agreement, Arconic Corporation agreed to indemnify the Company for certain liabilities and the Company agreed to indemnify Arconic Corporation for certain liabilities. As a result of the Arconic Inc. Separation Transaction, Arconic Corporation holds the building and construction systems businesses previously held by the Company and AAP SAS is a subsidiary of Arconic Corporation; accordingly, Arconic Corporation has agreed to assume and indemnify the Company against potential liabilities associated with the June 13, 2017 fire at the Grenfell Tower in London, U.K., including the following legal proceedings in which Arconic Inc. and/or its then directors were named as parties: Behrens et al. v. Arconic Inc. et al. On June 6, 2019, 247 plaintiffs comprised of survivors and estates of decedents of the Grenfell Tower fire filed a complaint against “Arconic Inc., Alcoa Inc. and Arconic Architectural Products, LLC” (collectively, for purposes of the description of such proceeding, the “Arconic Defendants”), as well as Saint-Gobain Corporation, d/b/a Celotex and Whirlpool Corporation alleging claims under Pennsylvania state law for products liability and wrongful death related to the fire. In particular, the plaintiffs allege that the Arconic Defendants knowingly supplied a dangerous product ("Reynobond PE") for installation on the Grenfell Tower despite knowing that Reynobond PE was unfit for use above a certain height. The case was removed to the United States District Court for the Eastern District of Pennsylvania. Defendants moved to dismiss the case on numerous grounds, including forum non conveniens. Defendant Saint-Gobain Corporation was subsequently voluntarily dismissed from the case. On September 16, 2020, the court issued an order granting the remaining Defendants’ motion to dismiss on forum non conveniens grounds. Plaintiffs subsequently filed a motion for reconsideration of the judgment and Defendants are preparing a response. Howard v. Arconic Inc. et al. A purported class action complaint related to the Grenfell Tower fire was filed on August 11, 2017 in the United States District Court for the Western District of Pennsylvania against Arconic Inc. and Klaus Kleinfeld. A related purported class action complaint was filed in the United States District Court for the Western District of Pennsylvania on September 15, 2017, under the caption Sullivan v. Arconic Inc. et al. , against Arconic Inc., three former Arconic Inc. executives, several current and former directors, and certain banks. Howard and Sullivan were subsequently consolidated and the lead plaintiffs in the consolidated purported class action filed a consolidated amended complaint alleging violations of the federal securities laws and seeking, among other things, unspecified compensatory damages and an award of attorney and expert fees and expenses. After the court granted the defendants’ motion to dismiss in full, the lead plaintiffs filed a second amended complaint, and all defendants have moved to dismiss the second amended complaint. Raul v. Albaugh, et al. On June 22, 2018, a derivative complaint was filed nominally on behalf of Arconic Inc. by a purported Arconic Inc. stockholder against the then members of Arconic Inc.’s Board of Directors and Klaus Kleinfeld and Ken Giacobbe, naming Arconic Inc. as a nominal defendant, in the United States District Court for the District of Delaware. The complaint raises similar allegations as the consolidated amended complaint and second amended complaint in Howard , as well as allegations that the defendants improperly authorized the sale of Reynobond PE for unsafe uses, and asserts claims under federal securities laws and Delaware state law. The case has been stayed until the final resolution of the Howard case, the Grenfell Tower Public Inquiry in London, and the investigation by the Police. There can be no assurances regarding the ultimate resolution of these matters. Stockholder Demands. Prior to the Arconic Inc. Separation Transaction, the Board of Directors also received letters, purportedly sent on behalf of stockholders, reciting allegations similar to those made in the federal court lawsuits and demanding that the Board authorize the Company to initiate litigation against members of management, the Board and others. The Board of Directors appointed a Special Litigation Committee of the Board to review, investigate, and make recommendations to the Board regarding the appropriate course of action with respect to these stockholder demand letters. On May 22, 2019, the Special Litigation Committee, following completion of its investigation into the claims demanded in the demand letters, recommended to the Board that it reject the demands to authorize commencement of litigation. On May 28, 2019, the Board adopted the Special Litigation Committee’s findings and recommendations and rejected the demands that it authorize commencement of actions to assert the claims set forth in the demand letters. Other In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, safety and health, employment, tax and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company. Commitments Guarantees At September 30, 2020, the Company had 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 2020 and 2040, was $26 at September 30, 2020. In addition, pursuant to the Separation and Distribution Agreement between the Company and Alcoa Corporation, the Company was required to provide a guarantee for an energy supply agreement at an Alcoa Corporation facility that expires in 2047. This guarantee had a fair value of $17 and $9 at September 30, 2020 and December 31, 2019, respectively, and was included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. The Company was required to provide a guarantee up to an estimated present value of approximately $1,183 and $1,353 at September 30, 2020 and December 31, 2019, respectively. For this guarantee, subject to its provisions, the Company is secondarily liable in the event of a payment default by Alcoa Corporation. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. Letters of Credit The Company has outstanding letters of credit, primarily related to workers’ compensation, environmental obligations, and leasing obligations. The total amount committed under these annual letters of credit, which expire and automatically renew at various dates in 2020 and 2021, was $105 at September 30, 2020. Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company was required to retain letters of credit of $54 (which are included in the $105 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims which occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation and letter of credit fees paid by the Company are being proportionally billed to and are being reimbursed by Arconic Corporation and Alcoa Corporation. Also, the Company was required to provide letters of credit for certain Arconic Corporation environmental obligations and, as a result, the Company has $29 of outstanding letters of credit relating to liabilities (which are included in the $105 in the above paragraph). $13 of these outstanding letters of credit are pending cancellation and will be deemed cancelled once returned by the beneficiary. Arconic Corporation has issued surety bonds to cover these environmental obligations. Arconic Corporation is being billed for these letter of credit fees paid by the Company, and will reimburse the Company for any payments made under these letters of credit. Surety Bonds The Company 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 annual surety bonds, which expire and automatically renew at various dates, primarily in 2020, was $43 at September 30, 2020. Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company was required to provide surety bonds of $26 (which are included in the $43 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims which occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation claims paid and surety bond fees paid by the Company are being proportionately billed to and are being reimbursed by Arconic Corporation and Alcoa Corporation. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsManagement evaluated all activity of the Company 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. |
Recently Adopted and Recently_2
Recently Adopted and Recently Issued Accounting Guidance (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Adopted and Recently Issued Accounting Guidance | Adopted On January 1, 2020, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to the impairment model for expected credit losses. The new impairment model (known as the current expected credit loss ("CECL") model) is based on expected losses rather than incurred losses. The Company recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments and requires the measurement of expected credit losses on assets including those that have a low risk of loss. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements. Issued In August 2018, the FASB issued guidance that impacts disclosures for defined benefit pension plans and other postretirement benefit plans. These changes become effective for the Company's 2020 annual report. Management has determined that the adoption of this guidance will not have a material impact on the Consolidated Financial Statements and plans to adopt for the 2020 annual report. In December 2019, the FASB issued guidance that is intended to simplify various aspects related to the accounting for income taxes. These changes become effective on January 1, 2021, with early adoption permitted. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements and plans to adopt on January 1, 2021. In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. The Securities and Exchange Commission issued amendments to modernize the Regulation S-K disclosure requirements about description of business, legal proceedings and risk factors. The amendments permit registrants to take a more principles based approach to tailor business and risk factors disclosures to their circumstances and calls for enhanced human capital disclosures. The amendments, which became effective on November 9, 2020, are designed to improve the readability of these disclosures and discourage the repetition of non-material information. The adoption of this new guidance did not have a material impact on this Form 10-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. |
Arconic Inc. Separation Trans_2
Arconic Inc. Separation Transaction and Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Discontinued Operations | The results of operations of Arconic Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Sales $ — $ 1,765 $ 1,576 $ 5,427 Cost of goods sold — 1,483 1,292 4,612 Selling, general administrative, research and development and other expenses — 88 106 249 Provision for depreciation and amortization — 61 59 183 Restructuring and other charges — 63 (18) 58 Interest expense — — 7 — Other expense, net — 24 42 66 Income from discontinued operations — 46 88 259 Provision for income taxes — 9 38 106 Income from discontinued operations after income taxes $ — $ 37 $ 50 $ 153 The following table presents purchases of properties, plant and equipment, proceeds from the sale of businesses and the provision for depreciation and amortization of discontinued operations related to Arconic Corporation: Third quarter ended Nine months ended September 30, 2020 2020 2019 2020 2019 Capital expenditures $ — $ 40 $ 72 $ 175 Proceeds from the sales of businesses $ — $ — $ 112 $ — Provision for depreciation and amortization — 61 59 183 December 31, 2019 Total Assets of Discontinued Operations Cash and cash equivalents $ 71 Receivables from customers 385 Other receivables 135 Inventories 822 Prepaid expenses and other current assets 29 Current assets of discontinued operations 1,442 Properties, plants, and equipment, net 2,834 Goodwill 426 Intangibles, net 60 Deferred income taxes 383 Other noncurrent assets 196 Noncurrent assets of discontinued operations 3,899 Total assets of discontinued operations $ 5,341 Total Liabilities of Discontinued Operations: Accounts payable, trade $ 1,067 Accrued compensation and retirement costs 147 Taxes, including income taxes 22 Other current liabilities 188 Current liabilities of discontinued operations 1,424 Accrued pension benefits 1,430 Accrued other postretirement benefits 514 Other noncurrent liabilities and deferred credits 314 Noncurrent liabilities of discontinued operations 2,258 Total liabilities of discontinued operations $ 3,682 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results of Arconic's Reportable Segments | The operating results of the Company’s reportable segments were as follows. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total Third quarter ended September 30, 2020 Sales: Third-party sales $ 485 $ 271 $ 206 $ 172 $ 1,134 Inter-segment sales 1 — 1 — 2 Total sales $ 486 $ 271 $ 207 $ 172 $ 1,136 Profit and loss: Segment operating profit $ 39 $ 33 $ 10 $ 35 $ 117 Restructuring and other charges 9 — 9 — 18 Provision for depreciation and amortization 31 12 13 10 66 Capital expenditures 15 9 3 6 33 Third quarter ended September 30, 2019 Sales: Third-party sales $ 844 $ 391 $ 318 $ 241 $ 1,794 Inter-segment sales 1 — 4 — 5 Total sales $ 845 $ 391 $ 322 $ 241 $ 1,799 Profit and loss: Segment operating profit $ 161 $ 102 $ 40 $ 60 $ 363 Restructuring and other charges 43 — 1 — 44 Provision for depreciation and amortization 31 12 15 8 66 Capital expenditures 39 7 4 11 61 Engine Products Fastening Systems Engineered Structures Forged Wheels Total Nine months ended September 30, 2020 Sales: Third-party sales $ 1,851 $ 982 $ 710 $ 476 $ 4,019 Inter-segment sales 4 — 6 — 10 Total sales $ 1,855 $ 982 $ 716 $ 476 $ 4,029 Profit and loss: Segment operating profit $ 309 $ 199 $ 57 $ 91 $ 656 Restructuring and other charges 44 26 21 3 94 Provision for depreciation and amortization 92 36 40 29 197 Capital expenditures 48 24 11 17 100 Nine months ended September 30, 2019 Sales: Third-party sales $ 2,492 $ 1,185 $ 943 $ 752 $ 5,372 Inter-segment sales 9 — 10 — 19 Total sales $ 2,501 $ 1,185 $ 953 $ 752 $ 5,391 Profit and loss: Segment operating profit $ 465 $ 297 $ 81 $ 193 $ 1,036 Restructuring and other charges 296 6 198 5 505 Provision for depreciation and amortization 100 36 46 24 206 Capital expenditures 165 24 22 56 267 |
Schedule of Segment Reporting Information to Consolidated Income Before income Taxes | The following table reconciles Total segment operating profit to Income (loss) from continuing operations before income taxes: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Total segment operating profit $ 117 $ 363 $ 656 $ 1,036 Unallocated amounts: Restructuring and other charges (22) (56) (166) (572) Corporate expense (22) (51) (85) (170) Consolidated operating income $ 73 $ 256 $ 405 $ 294 Interest expense, net (77) (85) (305) (256) Other expense, net (8) (8) — (26) Income (loss) from continuing operations before income taxes $ (12) $ 163 $ 100 $ 12 |
Reconciliation of Capital Expenditures from Segments to Consolidated | The following table reconciles Total segment capital expenditures, which are presented on an accrual basis, with Capital expenditures as presented on the statement of cash flows. Differences between segment and consolidated totals are in Corporate and discontinued operations, including the impact of changes in accrued capital expenditures during the period. Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Total segment capital expenditures $ 33 $ 61 $ 100 $ 267 Corporate and discontinued operations 3 66 120 265 Capital expenditures $ 36 $ 127 $ 220 $ 532 |
Disaggregation of Revenue by Major End Market Served | The following table disaggregates segment revenue by major end market served. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total Third quarter ended September 30, 2020 Aerospace - Commercial $ 199 $ 169 $ 104 $ — $ 472 Aerospace - Defense 142 37 82 — 261 Commercial Transportation — 38 — 172 210 Industrial and Other 144 27 20 — 191 Total end-market revenue $ 485 $ 271 $ 206 $ 172 $ 1,134 Third quarter ended September 30, 2019 Aerospace - Commercial $ 571 $ 267 $ 226 $ — $ 1,064 Aerospace - Defense 120 41 65 — 226 Commercial Transportation 5 59 — 241 305 Industrial and Other 148 24 27 — 199 Total end-market revenue $ 844 $ 391 $ 318 $ 241 $ 1,794 Nine months ended September 30, 2020 Aerospace - Commercial $ 1,018 $ 650 $ 432 $ — $ 2,100 Aerospace - Defense 394 120 216 — 730 Commercial Transportation — 118 — 476 594 Industrial and Other 439 94 62 — 595 Total end-market revenue $ 1,851 $ 982 $ 710 $ 476 $ 4,019 Nine months ended September 30, 2019 Aerospace - Commercial $ 1,689 $ 803 $ 672 $ — $ 3,164 Aerospace - Defense 350 115 194 — 659 Commercial Transportation 17 179 — 754 950 Industrial and Other 436 88 77 (2) 599 Total end-market revenue $ 2,492 $ 1,185 $ 943 $ 752 $ 5,372 |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Layoff costs $ 17 $ — $ 93 $ 68 Reversals of previously recorded layoff reserves — — (10) (2) Pension, Other post-retirement benefits and Deferred Compensation - net settlements and curtailments 3 4 67 (8) Non-cash asset impairments — 8 — 442 Net loss on divestitures of assets and businesses — 42 9 54 Other 2 2 7 18 Restructuring and other charges $ 22 $ 56 $ 166 $ 572 |
Activity and Reserve Balances for Restructuring Charges | Layoff costs Other exit costs Total Reserve balances at December 31, 2019 $ 13 $ — $ 13 Cash payments (38) — (38) Restructuring charges 150 16 166 Other (1) (67) (16) (83) Reserve balances at September 30, 2020 $ 58 $ — $ 58 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expense (Net) | Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Non-service related net periodic benefit cost $ 8 $ 7 $ 19 $ 15 Interest income (1) (5) (5) (20) Foreign currency (gains) losses, net (5) 7 (12) 8 Net loss from asset sales 2 2 6 9 Deferred compensation 4 1 1 16 Other, net — (4) (9) (2) Total $ 8 $ 8 $ — $ 26 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | The components of net periodic benefit cost were as follows: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pension benefits Service cost $ 1 $ 6 $ 10 $ 19 Interest cost 17 59 81 177 Expected return on plan assets (21) (71) (115) (214) Recognized net actuarial loss 12 35 66 104 Amortization of prior service cost (benefit) — — — 1 Settlements 8 4 72 8 Net periodic benefit cost (1) 17 33 114 95 Discontinued operations — 21 20 69 Net amount recognized in continuing operations in Statement of Consolidated Operations $ 17 $ 12 $ 94 $ 26 Other postretirement benefits Service cost $ 1 $ 1 $ 3 $ 5 Interest cost 2 7 9 21 Recognized net actuarial loss — 1 2 3 Amortization of prior service cost (benefit) (2) (1) (5) (4) Curtailments (2) — (2) (58) Net periodic benefit cost (1) (1) 8 7 (33) Discontinued operations — 7 6 (22) Net amount recognized in continuing operations in Statement of Consolidated Operations $ (1) $ 1 $ 1 $ (11) (1) Service cost for continuing operations was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations. The amounts included in Net periodic benefit cost include costs related to both continuing and discontinued operations . |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provisions | The tax provisions for the third quarter and nine months ended September 30, 2020 and 2019 were comprised of the following: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pre-tax income (loss) at estimated annual effective income tax rate before discrete items $ (4) $ 124 $ 34 $ 9 Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income (2) (37) — — Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized (1) 4 — 18 Other discrete items (41) 14 (39) (23) Provision (benefit) for income taxes $ (48) $ 105 $ (5) $ 4 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of Information Used to Compute Basic and Diluted EPS | The information used to compute basic and diluted EPS attributable to the Company's common shareholders was as follows (shares in millions): Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) attributable to common shareholders: Income (loss) from continuing operations attributable to common shareholders $ 36 $ 58 $ 105 $ 8 Income (loss) attributable from discontinued operations — 37 50 153 Net income (loss) attributable to common shareholders 36 95 155 161 Less: preferred stock dividends declared (1) (1) (2) (2) Net income available to the Company's common shareholders - basic 35 94 153 159 Add: Interest expense related to convertible notes — 3 — — Net income available to the Company's common shareholders - diluted $ 35 $ 97 $ 153 $ 159 Average shares outstanding - basic 436 436 436 451 Effect of dilutive securities: Stock options — 1 — 1 Stock and performance awards 3 5 4 3 Convertible notes (1) — 15 — — Average shares outstanding - diluted 439 457 440 455 (1) The convertible notes matured on October 15, 2019 (see Note O ). No shares of the Company’s common stock were issued in connection with the maturity or the final conversion of the convertible notes. As of October 15, 2019, the calculation of average diluted shares outstanding ceased to include the approximately 15 shares of common stock and the corresponding interest expense previously attributable to the convertible notes. |
Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding | The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions). Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Convertible notes — — — 15 Stock options (1) 3 3 3 3 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
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: Third quarter ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Pension and other postretirement benefits (G) Balance at beginning of period $ (866) $ (2,281) $ (2,732) $ (2,344) Other comprehensive income: Unrecognized net actuarial loss and prior service cost/benefit (7) (6) (66) 60 Tax expense 3 2 11 (13) Total Other comprehensive income (loss) before reclassifications, net of tax (4) (4) (55) 47 Amortization of net actuarial loss and prior service cost (1) 16 39 133 54 Tax (expense) benefit (2) (4) (9) (24) (12) Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 12 30 109 42 Total Other comprehensive income 8 26 54 89 Transfer to Arconic Corporation $ (22) — $ 1,798 — Balance at end of period $ (880) $ (2,255) $ (880) $ (2,255) Foreign currency translation Balance at beginning of period $ (1,097) $ (587) $ (596) $ (583) Foreign currency translation 48 (87) (39) (91) Net amount reclassified from Accumulated other comprehensive loss (4) — — 14 — Other comprehensive income (loss) 48 (87) (25) (91) Transfer to Arconic Corporation — — (428) — Balance at end of period $ (1,049) $ (674) $ (1,049) $ (674) Available-for-sale securities Balance at beginning of period $ — $ — $ — $ (3) Other comprehensive income (loss) (5) — 1 — 4 Balance at end of period $ — $ 1 $ — $ 1 Cash flow hedges Balance at beginning of period $ (5) $ (1) $ (1) $ 4 Adoption of accounting standard — — — (2) Other comprehensive income (loss): Net change from periodic revaluations 2 — (6) (5) Tax expense 2 — 2 2 Total Other comprehensive income (loss) before reclassifications, net of tax 4 — (4) (3) Net amount reclassified to earnings 2 2 6 1 Tax expense (2) (1) (1) (1) — Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 1 1 5 1 Total Other comprehensive income (loss) 5 1 1 (2) Balance at end of period $ — $ — $ — $ — Accumulated other comprehensive loss $ (1,929) $ (2,928) $ (1,929) $ (2,928) (1) These amounts were recorded in Other expense, net (see Note F ). (2) These amounts were included in Provision (benefit) for income taxes on the Statement of Consolidated Operations. (3) A positive amount indicates a charge to earnings and a negative amount indicates a benefit to earnings. (4) Foreign currency translation charges were included in Restructuring and other charges on the Statement of Consolidated Operations due to the sale of foreign entities. (5) Realized gains and losses were included in Other expense, net on the Statement of Consolidated Operations. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory Components | September 30, 2020 December 31, 2019 Finished goods $ 539 $ 524 Work-in-process 683 741 Purchased raw materials 326 299 Operating supplies 44 43 Total inventories $ 1,592 $ 1,607 |
Properties, Plants, and Equip_2
Properties, Plants, and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plants, and Equipment, Net | September 30, 2020 December 31, 2019 Land and land rights $ 97 $ 99 Structures 1,016 938 Machinery and equipment 3,816 3,626 4,929 4,663 Less: accumulated depreciation and amortization 2,560 2,449 2,369 2,214 Construction work-in-progress 183 415 Properties, plants, and equipment, net $ 2,552 $ 2,629 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows: September 30, 2020 December 31, 2019 Right-of-use assets classified in Other noncurrent assets $ 119 $ 125 Current portion of lease liabilities classified in Other current liabilities 36 38 Long-term portion of lease liabilities classified in Other noncurrent liabilities 91 98 Total lease liabilities $ 127 $ 136 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | September 30, 2020 December 31, 2019 6.150% Notes, due 2020 — 1,000 5.400% Notes, due 2021 361 1,250 5.870% Notes, due 2022 476 627 5.125% Notes, due 2024 1,250 1,250 6.875% Notes, due 2025 1,200 — 5.900% Notes, due 2027 625 625 6.750% Bonds, due 2028 300 300 5.950% Notes due 2037 625 625 4.750% Iowa Finance Authority Loan, due 2042 250 250 Other (1) (6) 13 5,081 5,940 Less: amount due within one year 384 1,034 Total long-term debt $ 4,697 $ 4,906 (1) Includes various financing arrangements related to subsidiaries, unamortized debt discounts and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Fair Values of Financial Instruments | The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to the Company 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. September 30, 2020 December 31, 2019 Carrying Fair Carrying Fair Long-term debt, less amount due within one year $ 4,697 $ 5,079 $ 4,906 $ 5,337 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | Apr. 01, 2020company | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Concentration Risk [Line Items] | |||||||||
Number of independent, publicly-traded companies resulting from proposed separation transaction | company | 2 | ||||||||
Capital expenditures | $ 36 | $ 127 | $ 220 | $ 532 | |||||
Increase (decrease) in accounts payable, trade | (439) | (2) | |||||||
Tax misstatement recorded to retained earnings | $ 258 | $ 258 | $ 113 | ||||||
Revision of Prior Period, Error Correction, Adjustment | |||||||||
Concentration Risk [Line Items] | |||||||||
Capital expenditures | $ 83 | $ 83 | 117 | 55 | |||||
Increase (decrease) in accounts payable, trade | $ (83) | $ (83) | $ 117 | $ (55) | |||||
Tax misstatement recorded to retained earnings | $ 16 | ||||||||
Aerospace | Revenue Benchmark | Customer Concentration Risk | |||||||||
Concentration Risk [Line Items] | |||||||||
Concentration risk, percentage | 70.00% |
Arconic Inc. Separation Trans_3
Arconic Inc. Separation Transaction and Discontinued Operations - Narrative (Details) | Apr. 01, 2020company | Mar. 25, 2020USD ($) | Feb. 01, 2020USD ($) | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Mar. 01, 2020USD ($) | Feb. 07, 2020USD ($) |
Restructuring Cost and Reserve [Line Items] | |||||||||||
Number of independent, publicly-traded companies resulting from proposed separation transaction | company | 2 | ||||||||||
Separation, share distribution ratio | 0.25 | ||||||||||
Debt issuance costs incurred | $ 61,000,000 | $ 0 | |||||||||
Non-cash asset impairments | $ 0 | $ 8,000,000 | 0 | $ 442,000,000 | |||||||
Distributions to Arconic Corp | 0 | (1,255,000,000) | |||||||||
Accumulated other comprehensive loss | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Distributions to Arconic Corp | (22,000,000) | 1,370,000,000 | |||||||||
Additional capital | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Distributions to Arconic Corp | $ 22,000,000 | (2,611,000,000) | |||||||||
Aluminum Rolling Mill | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Disposal group, consideration | $ 50,000,000 | ||||||||||
Gain on sale of business | $ 59,000,000 | ||||||||||
Non-cash asset impairments | $ 6,000,000 | $ 53,000,000 | 6,000,000 | ||||||||
Hard Alloy Extrusions Plant In South Korea | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Disposal group, consideration | $ 62,000,000 | ||||||||||
Lien Notes | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Debt issuance costs incurred | $ 45,000,000 | $ 45,000,000 | |||||||||
Senior Notes | Second Lien Notes Due 2028 | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Aggregate principal amount | $ 600,000,000 | ||||||||||
Long-term debt, interest rate (percentage) | 6.125% | ||||||||||
Line of Credit | Senior Secured First Lien Term B Loan Facility Due 2027 | Secured Debt | |||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||
Aggregate principal amount | $ 600,000,000 | ||||||||||
Credit Agreement term | 7 years |
Arconic Inc. Separation Trans_4
Arconic Inc. Separation Transaction and Discontinued Operations - Summary of Results of Discontinued Operations (Details) - Discontinued Operations, Disposed of by Means Other than Sale - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Sales | $ 0 | $ 1,765 | $ 1,576 | $ 5,427 |
Cost of goods sold | 0 | 1,483 | 1,292 | 4,612 |
Selling, general administrative, research and development and other expenses | 0 | 88 | 106 | 249 |
Provision for depreciation and amortization | 0 | 61 | 59 | 183 |
Restructuring and other charges | 0 | 63 | (18) | 58 |
Interest expense | 0 | 0 | 7 | 0 |
Other expense, net | 0 | 24 | 42 | 66 |
Income from discontinued operations | 0 | 46 | 88 | 259 |
Provision for income taxes | 0 | 9 | 38 | 106 |
Income from discontinued operations after income taxes | $ 0 | $ 37 | $ 50 | $ 153 |
Arconic Inc. Separation Trans_5
Arconic Inc. Separation Transaction and Discontinued Operations - Summary of Property, Plant and Equipment Purchases of the Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Provision for depreciation and amortization | $ 0 | $ 61 | $ 59 | $ 183 |
Discontinued Operations, Disposed of by Means Other than Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Capital expenditures | 0 | 40 | 72 | 175 |
Proceeds from the sales of businesses | $ 0 | $ 0 | $ 112 | $ 0 |
Arconic Inc. Separation Trans_6
Arconic Inc. Separation Transaction and Discontinued Operations - Carrying Amount of Major Classes of Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Total Assets of Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Assets, Current, Total | $ 0 | $ 1,442 |
Disposal Group, Including Discontinued Operation, Assets, Noncurrent, Total | 0 | 3,899 |
Total Liabilities of Discontinued Operations: | ||
Current liabilities of discontinued operations (B) | 0 | 1,424 |
Disposal Group, Including Discontinued Operation, Liabilities, Noncurrent, Total | $ 0 | 2,258 |
Discontinued Operations, Disposed of by Means Other than Sale | ||
Total Assets of Discontinued Operations | ||
Cash and cash equivalents | 71 | |
Receivables from customers | 385 | |
Other receivables | 135 | |
Inventories | 822 | |
Prepaid expenses and other current assets | 29 | |
Disposal Group, Including Discontinued Operation, Assets, Current, Total | 1,442 | |
Properties, plants, and equipment, net | 2,834 | |
Goodwill | 426 | |
Intangibles, net | 60 | |
Deferred income taxes | 383 | |
Other noncurrent assets | 196 | |
Disposal Group, Including Discontinued Operation, Assets, Noncurrent, Total | 3,899 | |
Total assets of discontinued operations | 5,341 | |
Total Liabilities of Discontinued Operations: | ||
Accounts payable, trade | 1,067 | |
Accrued compensation and retirement costs | 147 | |
Taxes, including income taxes | 22 | |
Other current liabilities | 188 | |
Current liabilities of discontinued operations (B) | 1,424 | |
Accrued pension benefits | 1,430 | |
Accrued other postretirement benefits | 514 | |
Other noncurrent liabilities and deferred credits | 314 | |
Disposal Group, Including Discontinued Operation, Liabilities, Noncurrent, Total | 2,258 | |
Total liabilities of discontinued operations | $ 3,682 |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020USD ($)segment | Mar. 31, 2020 | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of Reportable Segments | segment | 4 | ||
Goodwill | $ 4,072 | $ 4,067 | |
Revenue Benchmark | Customer Concentration Risk | Aerospace | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 70.00% | ||
Revenue Benchmark | Customer Concentration Risk | Aerospace | General Electric Company | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Engineered Structures | |||
Segment Reporting Information [Line Items] | |||
Goodwill | $ 17 | ||
Margin between fair value of reporting unit and carrying value (percent) | 20.00% | 15.00% | 60.00% |
Engine Products | |||
Segment Reporting Information [Line Items] | |||
Goodwill | $ (17) |
Segment Information - Schedule
Segment Information - Schedule of Operating Results of Arconic's Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Sales: | $ 1,134 | $ 1,794 | $ 4,021 | $ 5,364 |
Segment operating profit | 73 | 256 | 405 | 294 |
Restructuring and other charges | 22 | 56 | 166 | 572 |
Provision for depreciation and amortization | 68 | 70 | 212 | 224 |
Capital expenditures | 36 | 127 | 220 | 532 |
Third-party sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 1,134 | 1,794 | 4,019 | 5,372 |
Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | (2) | (5) | (10) | (19) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 1,136 | 1,799 | 4,029 | 5,391 |
Segment operating profit | 117 | 363 | 656 | 1,036 |
Restructuring and other charges | 18 | 44 | 94 | 505 |
Provision for depreciation and amortization | 66 | 66 | 197 | 206 |
Capital expenditures | 33 | 61 | 100 | 267 |
Engine Products | Third-party sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 485 | 844 | 1,851 | 2,492 |
Engine Products | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | (1) | (1) | (4) | (9) |
Engine Products | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 486 | 845 | 1,855 | 2,501 |
Segment operating profit | 39 | 161 | 309 | 465 |
Restructuring and other charges | 9 | 43 | 44 | 296 |
Provision for depreciation and amortization | 31 | 31 | 92 | 100 |
Capital expenditures | 15 | 39 | 48 | 165 |
Fastening Systems | Third-party sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 271 | 391 | 982 | 1,185 |
Fastening Systems | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 0 | 0 | 0 | 0 |
Fastening Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 271 | 391 | 982 | 1,185 |
Segment operating profit | 33 | 102 | 199 | 297 |
Restructuring and other charges | 0 | 0 | 26 | 6 |
Provision for depreciation and amortization | 12 | 12 | 36 | 36 |
Capital expenditures | 9 | 7 | 24 | 24 |
Engineered Structures | Third-party sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 206 | 318 | 710 | 943 |
Engineered Structures | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | (1) | (4) | (6) | (10) |
Engineered Structures | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 207 | 322 | 716 | 953 |
Segment operating profit | 10 | 40 | 57 | 81 |
Restructuring and other charges | 9 | 1 | 21 | 198 |
Provision for depreciation and amortization | 13 | 15 | 40 | 46 |
Capital expenditures | 3 | 4 | 11 | 22 |
Forged Wheels | Third-party sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 172 | 241 | 476 | 752 |
Forged Wheels | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 0 | 0 | 0 | 0 |
Forged Wheels | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales: | 172 | 241 | 476 | 752 |
Segment operating profit | 35 | 60 | 91 | 193 |
Restructuring and other charges | 0 | 0 | 3 | 5 |
Provision for depreciation and amortization | 10 | 8 | 29 | 24 |
Capital expenditures | $ 6 | $ 11 | $ 17 | $ 56 |
Segment Information - Schedul_2
Segment Information - Schedule of Segment Operating Profit to Consolidated Income before Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Segment operating profit | $ 73 | $ 256 | $ 405 | $ 294 |
Interest expense, net | (77) | (85) | (305) | (256) |
Other expense, net | (8) | (8) | 0 | (26) |
Income (loss) before income taxes | (12) | 163 | 100 | 12 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating profit | 117 | 363 | 656 | 1,036 |
Restructuring and other charges | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating profit | 22 | 56 | 166 | 572 |
Corporate expense | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating profit | $ (22) | $ (51) | $ (85) | $ (170) |
Segment Information - Reconcili
Segment Information - Reconciliation of Capital Expenditures (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Capital expenditures | $ 36 | $ 127 | $ 220 | $ 532 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Capital expenditures | 33 | 61 | 100 | 267 |
Corporate expense | ||||
Segment Reporting Information [Line Items] | ||||
Capital expenditures | $ 3 | $ 66 | $ 120 | $ 265 |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue by Major End Market Served (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Major Customer [Line Items] | ||||
Sales: | $ 1,134 | $ 1,794 | $ 4,021 | $ 5,364 |
Third-party sales | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 1,134 | 1,794 | 4,019 | 5,372 |
Third-party sales | Engine Products | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 485 | 844 | 1,851 | 2,492 |
Third-party sales | Fastening Systems | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 271 | 391 | 982 | 1,185 |
Third-party sales | Engineered Structures | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 206 | 318 | 710 | 943 |
Third-party sales | Forged Wheels | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 172 | 241 | 476 | 752 |
Third-party sales | Aerospace - Commercial | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 472 | 1,064 | 2,100 | 3,164 |
Third-party sales | Aerospace - Commercial | Engine Products | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 199 | 571 | 1,018 | 1,689 |
Third-party sales | Aerospace - Commercial | Fastening Systems | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 169 | 267 | 650 | 803 |
Third-party sales | Aerospace - Commercial | Engineered Structures | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 104 | 226 | 432 | 672 |
Third-party sales | Aerospace - Commercial | Forged Wheels | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 0 | 0 | 0 | 0 |
Third-party sales | Aerospace - Defense | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 261 | 226 | 730 | 659 |
Third-party sales | Aerospace - Defense | Engine Products | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 142 | 120 | 394 | 350 |
Third-party sales | Aerospace - Defense | Fastening Systems | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 37 | 41 | 120 | 115 |
Third-party sales | Aerospace - Defense | Engineered Structures | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 82 | 65 | 216 | 194 |
Third-party sales | Aerospace - Defense | Forged Wheels | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 0 | 0 | 0 | 0 |
Third-party sales | Commercial Transportation | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 210 | 305 | 594 | 950 |
Third-party sales | Commercial Transportation | Engine Products | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 0 | 5 | 0 | 17 |
Third-party sales | Commercial Transportation | Fastening Systems | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 38 | 59 | 118 | 179 |
Third-party sales | Commercial Transportation | Engineered Structures | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 0 | 0 | 0 | 0 |
Third-party sales | Commercial Transportation | Forged Wheels | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 172 | 241 | 476 | 754 |
Third-party sales | Industrial and Other | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 191 | 199 | 595 | 599 |
Third-party sales | Industrial and Other | Engine Products | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 144 | 148 | 439 | 436 |
Third-party sales | Industrial and Other | Fastening Systems | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 27 | 24 | 94 | 88 |
Third-party sales | Industrial and Other | Engineered Structures | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | 20 | 27 | 62 | 77 |
Third-party sales | Industrial and Other | Forged Wheels | ||||
Revenue, Major Customer [Line Items] | ||||
Sales: | $ 0 | $ 0 | $ 0 | $ (2) |
Restructuring and Other Charg_3
Restructuring and Other Charges - Summary (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | ||||
Layoff costs | $ 17 | $ 0 | $ 93 | $ 68 |
Reversals of previously recorded layoff reserves | 0 | 0 | (10) | (2) |
Settlements | 3 | 4 | 67 | (8) |
Non-cash asset impairments | 0 | 8 | 0 | 442 |
Net loss on divestitures of assets and businesses | 0 | 42 | 9 | 54 |
Other | 2 | 2 | 7 | 18 |
Restructuring and other charges | $ 22 | $ 56 | $ 166 | $ 572 |
Restructuring and Other Charg_4
Restructuring and Other Charges - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($)employee | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2020USD ($)employee | Sep. 30, 2019USD ($)employee | |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | $ 22 | $ 56 | $ 166 | $ 572 | ||
Layoff costs | 17 | 0 | 93 | 68 | ||
Accelerated depreciation | 2 | 2 | 2 | |||
Settlements | 3 | 4 | 67 | (8) | ||
Benefit from termination of deferred benefit plan | 3 | 3 | ||||
Gain (loss) on sale of assets | 1 | 2 | 1 | |||
Impairment of assets to be disposed of | 5 | |||||
Non-cash asset impairments | 0 | 8 | 0 | 442 | ||
Other exit costs | 4 | |||||
Disks Long-Lived Asset Group | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Non-cash asset impairments | $ 428 | 428 | ||||
Primary Research and Development Facility | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Non-cash asset impairments | 14 | |||||
Small Additive Business | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Gain (loss) on sale of assets | (12) | |||||
Other postretirement benefits | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Curtailment benefit | 2 | 0 | 2 | 58 | ||
Other postretirement benefits | US | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Curtailment benefit | $ 58 | |||||
Pension benefits | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Settlements | 8 | 4 | 72 | 8 | ||
Pension benefits | US | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Settlements | 4 | 8 | ||||
Pension benefits | United Kingdom and United States | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Settlements | 72 | |||||
Engine Products | Disks Long-Lived Asset Group | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Non-cash asset impairments | 247 | 247 | ||||
Engineered Structures | Disks Long-Lived Asset Group | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Non-cash asset impairments | $ 181 | 181 | ||||
Layoff costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | $ 17 | $ 150 | $ 68 | |||
Number of employees associated with layoff costs | employee | 791 | 3,772 | 901 | |||
Layoff costs | Corporate expense | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees associated with layoff costs | employee | 23 | 494 | ||||
Layoff costs | Engine Products | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees associated with layoff costs | employee | 415 | 1,706 | 103 | |||
Layoff costs | Engineered Structures | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees associated with layoff costs | employee | 376 | 676 | 112 | |||
Layoff costs | Fastening Systems | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees associated with layoff costs | employee | 1,275 | 132 | ||||
Layoff costs | Forged Wheels | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of employees associated with layoff costs | employee | 92 | 60 | ||||
Facility closing | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | $ 5 | |||||
Facility closing | U.K. Forging Business | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | $ 43 | 6 | $ 43 | |||
Lease terminations | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | 12 | |||||
Executive severance | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | 2 | |||||
Employee severance, life insurance benefits | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | (16) | |||||
Reversal of prior period programs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring and other charges | $ (10) | $ (2) |
Restructuring and Other Charg_5
Restructuring and Other Charges - Activity and Reserve Balances for Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve beginning balance | $ 13 | |||
Cash payments | (38) | |||
Other | (83) | |||
Restructuring reserve ending balance | $ 58 | 58 | ||
Restructuring and other charges | 22 | $ 56 | 166 | $ 572 |
Accelerated depreciation | 2 | 2 | 2 | |
Settlements | 3 | 4 | 67 | (8) |
Benefit from termination of deferred benefit plan | 3 | 3 | ||
Impairment of assets to be disposed of | 5 | |||
Gain (loss) on sale of assets | 1 | 2 | 1 | |
Other postretirement benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Curtailment benefit | 2 | 0 | 2 | 58 |
Pension benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Settlements | 8 | 4 | 72 | 8 |
Pension benefits | United Kingdom and United States | ||||
Restructuring Reserve [Roll Forward] | ||||
Settlements | 72 | |||
Layoff costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve beginning balance | 13 | |||
Cash payments | (38) | |||
Other | (67) | |||
Restructuring reserve ending balance | 58 | 58 | ||
Restructuring and other charges | 17 | 150 | 68 | |
Other exit costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve beginning balance | 0 | |||
Cash payments | 0 | |||
Other | (16) | |||
Restructuring reserve ending balance | $ 0 | 0 | ||
Restructuring and other charges | 16 | |||
Facility closing | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring and other charges | 5 | |||
Facility closing | U.K. Forging Business | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring and other charges | $ 43 | $ 6 | $ 43 |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | ||||
Non-service related net periodic benefit cost | $ 8 | $ 7 | $ 19 | $ 15 |
Interest income | (1) | (5) | (5) | (20) |
Foreign currency (gains) losses, net | (5) | 7 | (12) | 8 |
Net loss from asset sales | 2 | 2 | 6 | 9 |
Deferred compensation | 4 | 1 | 1 | 16 |
Other, net | 0 | (4) | (9) | (2) |
Total | $ 8 | $ 8 | $ 0 | $ 26 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlements | $ 3 | $ 4 | $ 67 | $ (8) |
Pension benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 6 | 10 | 19 |
Interest cost | 17 | 59 | 81 | 177 |
Expected return on plan assets | (21) | (71) | (115) | (214) |
Recognized net actuarial loss | 12 | 35 | 66 | 104 |
Amortization of prior service cost (benefit) | 0 | 0 | 0 | 1 |
Settlements | 8 | 4 | 72 | 8 |
Net periodic benefit cost | 17 | 33 | 114 | 95 |
Discontinued operations | 0 | 21 | 20 | 69 |
Net periodic benefit cost | 17 | 12 | 94 | 26 |
Other postretirement benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 1 | 3 | 5 |
Interest cost | 2 | 7 | 9 | 21 |
Recognized net actuarial loss | 0 | 1 | 2 | 3 |
Amortization of prior service cost (benefit) | (2) | (1) | (5) | (4) |
Curtailments | (2) | 0 | (2) | (58) |
Net periodic benefit cost | (1) | 8 | 7 | (33) |
Discontinued operations | 0 | 7 | 6 | (22) |
Net periodic benefit cost | $ (1) | $ 1 | $ 1 | $ (11) |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Settlement charges | $ 3 | $ 4 | $ 67 | $ (8) | ||
Restructuring and other charges | 22 | 56 | 166 | 572 | ||
Pension benefits | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Settlement charges | 8 | 4 | 72 | 8 | ||
Pension benefits | UK | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Settlement charges | $ 62 | 62 | ||||
Pension benefits | Canada, UK, and US | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Settlement charges | 8 | 10 | ||||
Pension benefits | US | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Settlement charges | 4 | 8 | ||||
Other postretirement benefits | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Curtailment benefit | $ 2 | $ 0 | 2 | $ 58 | ||
Other postretirement benefits | US | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Curtailment benefit | $ 58 | |||||
Decrease in obligation, pension benefits | $ (6) | 75 | $ (6) | |||
Other postretirement benefits | US | Accumulated other comprehensive loss | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Curtailment benefit | 17 | |||||
Other postretirement benefits | US | Restructuring and other charges | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Curtailment benefit | 16 | |||||
Other postretirement benefits | US | Discontinued operations | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Curtailment benefit | $ 42 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | ||||||
Effective income tax rate reconciliation (percent) | 34.50% | 75.80% | 34.50% | 75.80% | ||
Effective income tax rate reconciliation, including discrete items (percent) | (400.00%) | 64.40% | (5.00%) | 33.30% | ||
Discrete income tax charge (benefit) | $ (41) | $ 14 | $ (39) | $ (23) | ||
Income tax benefit from tax law changes | 36 | 36 | ||||
Income tax charge (benefit) related to prior year items | (6) | 12 | (2) | 12 | ||
Other income tax expense (benefit) | 1 | $ 2 | 2 | 2 | ||
Income tax charge for remeasurement related to separation | 6 | |||||
Tax benefit for stock compensation | 5 | |||||
Income tax benefit from deduction of prior year foreign taxes | 25 | |||||
Tax misstatement recorded to retained earnings | $ 258 | $ 258 | $ 113 | |||
Foreign Tax Authority | ||||||
Income Tax Contingency [Line Items] | ||||||
Income tax benefit from tax law changes | $ 12 | |||||
Revision of Prior Period, Error Correction, Adjustment | ||||||
Income Tax Contingency [Line Items] | ||||||
Tax misstatement recorded to retained earnings | $ 16 |
Income Taxes - Summary of Tax P
Income Taxes - Summary of Tax Provisions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Pre-tax income (loss) at estimated annual effective income tax rate before discrete items | $ (4) | $ 124 | $ 34 | $ 9 |
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income | (2) | (37) | 0 | 0 |
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized | (1) | 4 | 0 | 18 |
Other discrete items | (41) | 14 | (39) | (23) |
Provision (benefit) for income taxes | $ (48) | $ 105 | $ (5) | $ 4 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Information Used to Compute Basic and Diluted EPS (Details) - USD ($) shares in Millions, $ in Millions | Oct. 15, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Income (loss) from continuing operations attributable to common shareholders | $ 36 | $ 58 | $ 105 | $ 8 | |||
Income from discontinued operations after income taxes (B) | 0 | 37 | 50 | 153 | |||
Net income (loss) | 36 | 95 | 155 | 161 | |||
Less: preferred stock dividends declared | (1) | (1) | (2) | (2) | |||
Net income available to the Company's common shareholders - basic | 35 | 94 | 153 | 159 | |||
Add: Interest expense related to convertible notes | 0 | 3 | 0 | 0 | |||
Net income available to the Company's common shareholders - diluted | $ 35 | $ 97 | $ 153 | $ 159 | |||
Average shares outstanding - basic (in shares) | 436 | 436 | 436 | 451 | |||
Effect of dilutive securities: | |||||||
Stock options (in shares) | 0 | 1 | 0 | 1 | |||
Stock and performance awards (in shares) | 3 | 5 | 4 | 3 | |||
Convertible notes (in shares) | 0 | 15 | 0 | 0 | |||
Average shares outstanding - diluted (in shares) | 439 | 457 | 440 | 455 | |||
Common stock outstanding (in shares) | 434 | 434 | 434 | 434 | 434 | ||
Decrease in average shares outstanding (in shares) | 15 | ||||||
Incremental common shares attributable to dilutive effect of accelerated share repurchase agreements (in shares) | 55 | ||||||
Convertible notes | |||||||
Effect of dilutive securities: | |||||||
Number of shares of common stock previously attributable to the convertible notes (in shares) | 15 | 0 | 0 | 0 | 15 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding (Details) - $ / shares shares in Millions | Oct. 15, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Convertible notes | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of anti-dilutive securities (in shares) | 15 | 0 | 0 | 0 | 15 |
Stock options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of anti-dilutive securities (in shares) | 3 | 3 | 3 | 3 | |
Weighted average exercise price of options (in usd per share) | $ 26.03 | $ 32.64 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | 2 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2020 | May 20, 2019 | |
Debt Instrument [Line Items] | |||
Accelerated stock repurchase program, shares to be repurchased, dollar amount | $ 500,000,000 | ||
Stock repurchased and retired (in shares) | 2.9 | ||
Repurchase price (USD per share) | $ 17.36 | ||
Stock repurchased and retired | $ 51,000,000 | ||
Stock repurchase program remaining authorized amount | $ 299,000,000 | ||
Revolving Credit Agreement | |||
Debt Instrument [Line Items] | |||
Credit Agreement term | 5 years |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | $ 3,449 | $ 4,850 | $ 4,605 | $ 5,569 | |
Other comprehensive income: | |||||
Total Other comprehensive income (loss), net of tax | 61 | (59) | 30 | 0 | |
Ending balance | 3,501 | 4,694 | 3,501 | 4,694 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | 73 | |||
Accumulated other comprehensive loss | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | (1,968) | (2,869) | (3,329) | (2,926) | |
Other comprehensive income: | |||||
Total Other comprehensive income (loss), net of tax | 61 | (59) | 30 | ||
Ending balance | (1,929) | (2,928) | (1,929) | (2,928) | |
Accumulated other comprehensive loss | Cumulative Effect, Period of Adoption, Adjustment | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | (2) | |||
Pension and other postretirement benefits | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | (866) | (2,281) | (2,732) | (2,344) | |
Other comprehensive income: | |||||
Unrecognized net actuarial loss and prior service cost/benefit | (7) | (6) | (66) | 60 | |
Tax expense | 3 | 2 | 11 | (13) | |
Total Other comprehensive income (loss) before reclassifications, net of tax | (4) | (4) | (55) | 47 | |
Amortization of net actuarial loss and prior service cost | 16 | 39 | 133 | 54 | |
Tax (expense) benefit | (4) | (9) | (24) | (12) | |
Amount reclassified from Accumulated other comprehensive loss, net of tax | 12 | 30 | 109 | 42 | |
Total Other comprehensive income (loss), net of tax | 8 | 26 | 54 | 89 | |
Transfer to Arconic Corporation | (22) | 0 | 1,798 | 0 | |
Ending balance | (880) | (2,255) | (880) | (2,255) | |
Foreign currency translation | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | (1,097) | (587) | (596) | (583) | |
Other comprehensive income: | |||||
Total Other comprehensive income (loss) before reclassifications, net of tax | 48 | (87) | (39) | (91) | |
Amount reclassified from Accumulated other comprehensive loss, net of tax | 0 | 0 | 14 | 0 | |
Total Other comprehensive income (loss), net of tax | 48 | (87) | (25) | (91) | |
Transfer to Arconic Corporation | 0 | 0 | (428) | 0 | |
Ending balance | (1,049) | (674) | (1,049) | (674) | |
Available-for-sale securities | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | 0 | 0 | 0 | (3) | |
Other comprehensive income: | |||||
Total Other comprehensive income (loss), net of tax | 0 | 1 | 0 | 4 | |
Ending balance | 0 | 1 | 0 | 1 | |
Cash flow hedges | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | (5) | (1) | (1) | 4 | |
Other comprehensive income: | |||||
Unrecognized net actuarial loss and prior service cost/benefit | 2 | 0 | (6) | (5) | |
Tax expense | 2 | 0 | 2 | 2 | |
Total Other comprehensive income (loss) before reclassifications, net of tax | 4 | 0 | (4) | (3) | |
Amortization of net actuarial loss and prior service cost | 2 | 2 | 6 | 1 | |
Tax (expense) benefit | (1) | (1) | (1) | 0 | |
Amount reclassified from Accumulated other comprehensive loss, net of tax | 1 | 1 | 5 | 1 | |
Total Other comprehensive income (loss), net of tax | 5 | 1 | 1 | (2) | |
Ending balance | 0 | 0 | 0 | 0 | |
Cash flow hedges | Cumulative Effect, Period of Adoption, Adjustment | |||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||
Beginning balance | $ 0 | $ 0 | $ 0 | $ (2) | |
[1] | The Company entered into a sale leaseback arrangement in October 2018 for a cast house that is now part of Arconic Corporation, and due to continuing involvement, the gain on sale was deferred. In connection with the adoption of the new lease accounting standard on January 1, 2019, the arrangement no longer required that the gain be deferred. As such, the associated $73 deferred gain, net of tax was recognized as a cumulative effect of an accounting change within Accumulated deficit. Also, the Company adopted the new hedge accounting guidance on January 1, 2019. As a result, an adjustment of $2 was recognized as a cumulative effect of an accounting change within Accumulated deficit with an offset to Accumulated other comprehensive loss related to the elimination of a separate measurement of ineffectiveness for its cash flow hedges. |
Receivables (Details)
Receivables (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($)agreement | Dec. 31, 2019USD ($) | |
Schedule Of Financial Receivables [Line Items] | |||||
Accounts receivable securitization arrangements | agreement | 2 | ||||
Deferred purchase program receivable | $ 53 | $ 246 | |||
Net cash funding received during the period | 153 | ||||
Amount of cash draws under arrangement during the period | 189 | ||||
Amount of cash repayments under arrangement during the period | 342 | ||||
Customer One | |||||
Schedule Of Financial Receivables [Line Items] | |||||
Accounts receivables sold | $ 8 | 32 | |||
Customer Two | |||||
Schedule Of Financial Receivables [Line Items] | |||||
Accounts receivables sold | 34 | 99 | |||
Arconic Corporation | |||||
Schedule Of Financial Receivables [Line Items] | |||||
Deferred purchase program receivable | $ 282 | ||||
Special purpose entity | |||||
Schedule Of Financial Receivables [Line Items] | |||||
Accounts receivables sold | $ 46 | 123 | |||
Receivables, maximum allowable purchase limit | 125 | ||||
Financing receivables, held as collateral | $ 28 | $ 28 | |||
Maximum | |||||
Schedule Of Financial Receivables [Line Items] | |||||
Funding of customer receivables sold, maximum | $ 300 | $ 400 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory Components (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 539 | $ 524 |
Work-in-process | 683 | 741 |
Purchased raw materials | 326 | 299 |
Operating supplies | 44 | 43 |
Total inventories | $ 1,592 | $ 1,607 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Inventories valued on a LIFO basis | $ 488 | $ 503 |
Total inventories valued on an average-cost basis | $ 127 | $ 133 |
Properties, Plants, and Equip_3
Properties, Plants, and Equipment, net (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 4,929 | $ 4,663 | |
Less: accumulated depreciation and amortization | (2,560) | (2,449) | |
Properties, plants and equipment excluding construction work in progress | 2,369 | 2,214 | |
Construction work-in-progress | 183 | 415 | |
Properties, plants, and equipment, net | 2,552 | 2,629 | |
Capital expenditures incurred but not yet paid | 29 | $ 71 | |
Revision of Prior Period | |||
Property, Plant and Equipment [Line Items] | |||
Less: accumulated depreciation and amortization | 171 | ||
Construction work-in-progress | 67 | ||
Land and land rights | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 97 | 99 | |
Land and land rights | Revision of Prior Period | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | (2) | ||
Structures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,016 | 938 | |
Structures | Revision of Prior Period | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | (120) | ||
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 3,816 | $ 3,626 | |
Machinery and equipment | Revision of Prior Period | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ (116) |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 17 | $ 21 | $ 53 | $ 64 |
Leases - Operating Lease Assets
Leases - Operating Lease Assets and Liabilities in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Right-of-use assets classified in Other noncurrent assets | $ 119 | $ 125 |
Current portion of lease liabilities classified in Other current liabilities | 36 | 38 |
Long-term portion of lease liabilities classified in Other noncurrent liabilities | 91 | 98 |
Total lease liabilities | $ 127 | $ 136 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrent | us-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrent |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2020 | May 21, 2020 | Apr. 24, 2020 | Apr. 06, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||||
Other | $ (6) | $ 13 | |||
Long-term debt | 5,081 | 5,940 | |||
Less: amount due within one year | 384 | 1,034 | |||
Total long-term debt | $ 4,697 | 4,906 | |||
6.150% Notes, due 2020 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 6.15% | 6.15% | |||
Amount outstanding | $ 0 | 1,000 | |||
5.400% Notes, due 2021 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 5.40% | 5.40% | 5.40% | ||
Amount outstanding | $ 361 | 1,250 | |||
5.870% Notes, due 2022 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 5.87% | 5.87% | |||
Amount outstanding | $ 476 | 627 | |||
5.125% Notes, due 2024 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 5.125% | ||||
Amount outstanding | $ 1,250 | 1,250 | |||
6.875% Notes, due 2025 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 6.875% | 6.875% | |||
Amount outstanding | $ 1,200 | 0 | |||
5.900% Notes, due 2027 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 5.90% | ||||
Amount outstanding | $ 625 | 625 | |||
6.750% Bonds, due 2028 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 6.75% | ||||
Amount outstanding | $ 300 | 300 | |||
5.950% Notes due 2037 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 5.95% | ||||
Amount outstanding | $ 625 | 625 | |||
4.750% Iowa Finance Authority Loan, due 2042 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate (percentage) | 4.75% | ||||
Amount outstanding | $ 250 | $ 250 |
Debt - Public Debt (Details)
Debt - Public Debt (Details) - USD ($) | May 21, 2020 | Apr. 06, 2020 | Oct. 15, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Apr. 24, 2020 |
Debt Instrument [Line Items] | |||||||
Payment for early redemption of debt | $ 59,000,000 | $ 0 | |||||
Early termination premium | $ 35,000,000 | ||||||
Interest expense | $ 17,000,000 | ||||||
1.63% Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt, interest rate (percentage) | 1.63% | ||||||
Early redemption of debt | $ 403,000,000 | ||||||
6.150% Notes, due 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt, interest rate (percentage) | 6.15% | 6.15% | |||||
Early redemption of debt | $ 1,000,000,000 | ||||||
Payment for early redemption of debt | $ 1,020,000,000 | ||||||
5.400% Notes, due 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt, interest rate (percentage) | 5.40% | 5.40% | 5.40% | ||||
Early redemption of debt | $ 589,000,000 | $ 300,000,000 | |||||
Payment for early redemption of debt | $ 315,000,000 | ||||||
Interest expense | 24,000,000 | ||||||
6.875% Notes, due 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt, interest rate (percentage) | 6.875% | 6.875% | |||||
Aggregate principal amount | $ 1,200,000,000 | ||||||
Deferred financing costs | $ 14,000,000 | ||||||
5.870% Notes, due 2022 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt, interest rate (percentage) | 5.87% | 5.87% | |||||
Early redemption of debt | $ 151,000,000 | ||||||
Interest expense | $ 4,000,000 |
Debt - Credit Facilities (Detai
Debt - Credit Facilities (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020USD ($) | Mar. 31, 2020 | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 26, 2020USD ($) | Jun. 25, 2020USD ($) | Feb. 29, 2020USD ($) | |
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Revolving Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Credit Agreement term | 5 years | ||||||
Long-term line of credit | $ 1,500,000,000 | $ 3,000,000,000 | |||||
Maximum borrowing capacity | $ 1,000,000,000 | $ 1,500,000,000 | |||||
Debt covenants, net debt to consolidated EBITDA ratio | 3.50 | ||||||
Increase in maximum common stock dividends and share repurchases allowed | $ 150,000,000 | ||||||
Maximum consolidated net debt to consolidated EBITDA ratio | 3.75 | ||||||
Amount outstanding | $ 0 | $ 0 | |||||
Amount borrowed | 0 | $ 0 | |||||
Revolving Credit Agreement | Any quarter ending on or prior to December 31, 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 5 | ||||||
Revolving Credit Agreement | Quarter ending March 31, 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 5.25 | ||||||
Revolving Credit Agreement | Quarter ending June 30, 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 5 | ||||||
Maximum common stock dividends and share repurchases | 100,000,000 | ||||||
Revolving Credit Agreement | Quarter ending September 30, 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 4.50 | ||||||
Revolving Credit Agreement | Quarter ending December 31, 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 4 | ||||||
Revolving Credit Agreement | All periods thereafter | |||||||
Debt Instrument [Line Items] | |||||||
Debt covenants, net debt to consolidated EBITDA ratio | 3.50 | ||||||
Maximum common stock dividends and share repurchases | $ 250,000,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Restricted cash | $ 3 | $ 55 |
Carrying value | ||
Derivative [Line Items] | ||
Long-term debt, less amount due within one year | 4,697 | 4,906 |
Fair value | ||
Derivative [Line Items] | ||
Long-term debt, less amount due within one year | $ 5,079 | $ 5,337 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) $ in Millions | Dec. 01, 2019USD ($)employee | Aug. 15, 2019USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jan. 31, 2020USD ($) | May 31, 2019USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||
Asset impairment charge (reversal) | $ 0 | $ 8 | $ 0 | $ 442 | |||||||||
Restricted cash | $ 3 | $ 55 | 3 | $ 55 | |||||||||
Engineered Structures | Small manufacturing facility in the United Kingdom | |||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||
Disposal group, consideration | $ 12 | ||||||||||||
Asset impairment charge (reversal) | $ (7) | $ 12 | 12 | ||||||||||
Engineered Structures | Small Additive Manufacturing Facility Member [Member] | |||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||
Disposal group, consideration | $ 1 | ||||||||||||
Asset impairment charge (reversal) | $ 9 | 9 | |||||||||||
Loss on sale of business | $ 13 | 13 | |||||||||||
Proceeds from the sales of businesses | $ 13 | ||||||||||||
Engine Products | Forgings Business | |||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||
Disposal group, consideration | $ 64 | ||||||||||||
Asset impairment charge (reversal) | $ 6 | $ 6 | |||||||||||
Loss on sale of business | 3 | 43 | 46 | ||||||||||
Restricted cash | $ 53 | $ 53 | |||||||||||
Sales | $ 30 | $ 95 | |||||||||||
Number of employees | employee | 540 |
Contingencies and Commitments (
Contingencies and Commitments (Details) € in Millions, $ in Millions | Jun. 06, 2019plaintiff | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($)location | Sep. 30, 2020EUR (€)location | Sep. 30, 2020EUR (€) | Dec. 31, 2019USD ($) | Sep. 30, 2018 |
Loss Contingencies [Line Items] | |||||||
Number of cleanup locations | location | 30 | 30 | |||||
Remediation reserve balance | $ 9 | $ 9 | $ 8 | ||||
Remediation reserve balance, classified as a current liability | 4 | 4 | 3 | ||||
Payments related to remediation expenses applied against the reserve | 1 | 1 | |||||
Income tax examination assessment outstanding | 181 | 181 | € 155 | ||||
Income tax reserve | 63 | € 54 | |||||
Tax indemnification receivable | 52 | 52 | € 45 | ||||
Number of plaintiffs | plaintiff | 247 | ||||||
Guarantees of third party related to project financing | 26 | 26 | |||||
Combined fair value of guarantees | 17 | 17 | 9 | ||||
Total amount committed under outstanding surety bonds | 43 | 43 | |||||
Surety bonds, amount outstanding | 26 | 26 | |||||
Bank Loan Obligations | |||||||
Loss Contingencies [Line Items] | |||||||
Letters of credit, total amount | 105 | 105 | |||||
Other Noncurrent Liabilities and Deferred Credits | Separation Agreement | |||||||
Loss Contingencies [Line Items] | |||||||
Guarantees of third party related to project financing | $ 1,183 | $ 1,183 | $ 1,353 | ||||
Alcoa Corporation | |||||||
Loss Contingencies [Line Items] | |||||||
Tax agreement, indemnification of ultimate liability (percent) | 49.00% | 49.00% | 49.00% | 49.00% | |||
Arconic Corporation | |||||||
Loss Contingencies [Line Items] | |||||||
Tax agreement, indemnification of ultimate liability (percent) | 34.00% | 34.00% | 34.00% | ||||
Howmet Aerospace | |||||||
Loss Contingencies [Line Items] | |||||||
Tax agreement, indemnification of ultimate liability (percent) | 17.00% | 17.00% | 17.00% | ||||
Recurring Costs of Managing Hazardous Substances and Environmental Programs | Maximum | |||||||
Loss Contingencies [Line Items] | |||||||
Percentage of cost of goods sold (percent) | 1.00% | 1.00% | |||||
Alcoa Corporation Workers Compensation Claims | |||||||
Loss Contingencies [Line Items] | |||||||
Letters of credit, total amount outstanding | $ 54 | $ 54 | |||||
Arconic Corporation Environmental Obligations | |||||||
Loss Contingencies [Line Items] | |||||||
Letters of credit, total amount outstanding | 29 | 29 | |||||
Arconic Corporation Environmental Obligations | Letters Of Credit, Pending Cancellation | |||||||
Loss Contingencies [Line Items] | |||||||
Letters of credit, total amount outstanding | $ 13 | $ 13 |