E. Segment Information – Effective in the first quarter of 2017, management elected to change the profit and loss measure of Alcoa Corporation’s reportable segments from After-tax operating income (ATOI) to Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for internal reporting and performance measurement purposes. This change was made to enhance the transparency and visibility of the underlying operating performance of each segment. Alcoa Corporation calculates Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Previously, Alcoa Corporation calculated ATOI as Adjusted EBITDA minus (plus) the following items: Provision for depreciation, depletion, and amortization; Equity loss (income); Loss (gain) on certain asset sales; and Income taxes. Alcoa Corporation’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Also effective in the first quarter of 2017, management initiated a realignment of the Company’s internal business and organizational structure. This realignment consisted of combining Alcoa Corporation’s aluminum smelting, casting, and rolling businesses, along with the majority of the energy business, into a new Aluminum business unit, as well as moving the financial results of previously closed operations, such as the Warrick smelter and Suriname refinery, into Corporate. The realignment was executed to align strategic, operational, and commercial activities, as well as to take advantage of synergies and reduce costs. The new Aluminum business unit is managed as a single operating segment. Prior to this change, each of these businesses were managed as individual operating segments and comprised the Aluminum, Cast Products, Energy, and Rolled Products segments. The existing Bauxite and Alumina segments and the new Aluminum segment represent Alcoa Corporation’s operating and reportable segments. The chief operating decision maker function regularly reviews the financial information, including Sales and Adjusted EBITDA, of these three operating segments to assess performance and allocate resources.

Segment information for all prior periods presented was revised to reflect the new segment structure, as well as the new measure of profit and loss.

The operating results of Alcoa Corporation’s reportable segments were as follows (differences between segment totals and combined totals are in Corporate):


	Bauxite		Alumina			Aluminum			Total
Second quarter ended June 30, 2017
Sales:
Third-party sales – unrelated party	$	80	$	749		$	1,779		$	2,608
Third-party sales – related party		—		—			209			209
Intersegment sales		208		384			3			595

Total sales	$	288	$	1,133		$	1,991		$	3,412

Adjusted EBITDA	$	98	$	227		$	221		$	546
Supplemental information:
Depreciation, depletion, and amortization	$	19	$	53		$	108		$	180
Equity (loss) income		—		(6	)		3			(3	)
Second quarter ended June 30, 2016
Sales:
Third-party sales – unrelated party	$	87	$	601		$	1,335		$	2,023
Third-party sales – related party		—		—			262			262
Intersegment sales		182		321			2			505

Total sales	$	269	$	922		$	1,599		$	2,790

Adjusted EBITDA	$	99	$	114		$	180		$	393
Supplemental information:
Depreciation, depletion, and amortization	$	19	$	47		$	104		$	170
Equity loss		—		(7	)		(10	)		(17	)


	Bauxite		Alumina			Aluminum			Total
Six months ended June 30, 2017
Sales:
Third-party sales – unrelated party	$	150	$	1,483		$	3,392		$	5,025
Third-party sales – related party		—		—			402			402
Intersegment sales		427		745			7			1,179

Total sales	$	577	$	2,228		$	3,801		$	6,606

Adjusted EBITDA	$	208	$	524		$	427		$	1,159
Supplemental information:
Depreciation, depletion, and amortization	$	37	$	102		$	209		$	348
Equity loss		—		(5	)		(4	)		(9	)
Six months ended June 30, 2016
Sales:
Third-party sales – unrelated party	$	131	$	1,097		$	2,650		$	3,878
Third-party sales – related party		—		—			499			499
Intersegment sales		357		613			36			1,006

Total sales	$	488	$	1,710		$	3,185		$	5,383

Adjusted EBITDA	$	176	$	129		$	345		$	650
Supplemental information:
Depreciation, depletion, and amortization	$	36	$	92		$	207		$	335
Equity loss		—		(21	)		(17	)		(38	)

The following table reconciles total segment Adjusted EBITDA to consolidated net income (loss) attributable to Alcoa Corporation:


	Second quarter ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Total segment Adjusted EBITDA	$	546		$	393		$	1,159		$	650
Unallocated amounts:
Impact of LIFO (I)		(8	)		(1	)		(22	)		17
Metal price lag⁽¹⁾		11			2			17			4
Corporate expense⁽²⁾		(36	)		(50	)		(70	)		(86	)
Provision for depreciation, depletion, and amortization		(190	)		(178	)		(369	)		(355	)
Restructuring and other charges (D)		(12	)		(8	)		(22	)		(92	)
Interest expense		(25	)		(66	)		(51	)		(130	)
Other (expenses) income, net (N)		(6	)		23			94			(16	)
Other⁽³⁾		(43	)		(59	)		(81	)		(133	)

Consolidated income (loss) before income taxes		237			56			655			(141	)
Provision for income taxes		(99	)		(68	)		(209	)		(86	)
Net income attributable to noncontrolling interest		(63	)		(43	)		(146	)		(38	)

Consolidated net income (loss) attributable to Alcoa Corporation	$	75		$	(55	)	$	300		$	(265	)

⁽¹⁾

Metal price lag describes the timing difference created when the average price of metal sold differs from the average cost of the metal when purchased by Alcoa Corporation’s rolled aluminum operations. In general, when the price of metal increases, metal price lag is favorable, and when the price of metal decreases, metal price lag is unfavorable.

⁽²⁾	Corporate expense is primarily composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.

⁽³⁾	Other includes, among other items, the Adjusted EBITDA of previously closed operations as applicable, pension and other postretirement benefit expenses associated with closed and sold operations, and intersegment profit elimination.