Segment Information

Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, building and construction, industrial applications, defense, and packaging. Arconic’s segments are organized by product on a worldwide basis. In the first quarter of 2018, the Company changed its primary measure of segment performance from Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) to Segment operating profit, which more closely aligns segment performance with Operating income as presented in the Statement of Consolidated Operations. Segment performance under Arconic’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Arconic’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and other charges and Impairment of goodwill. Segment operating profit also includes certain items that, under the previous segment performance measure, were recorded in Corporate, such as the impact of LIFO inventory accounting, metal price lag, intersegment profit eliminations, and derivative activities. Segment operating profit may not be comparable to similarly titled measures of other companies. Prior period financial information has been recast to conform to current year presentation. Differences between segment totals and consolidated Arconic are in Corporate.

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



	Engineered Products and Solutions		Global Rolled Products		Transportation and Construction Solutions		Total Segment
Second quarter ended June 30, 2018
Sales:
Third-party sales	$	1,596	$	1,451	$	562	$	3,609
Intersegment sales	—		46		—		46
Total sales	$	1,596	$	1,497	$	562	$	3,655
Profit and loss:
Segment operating profit	$	212	$	123	$	97	$	432
Restructuring and other charges	9		1		—		10
Provision for depreciation and amortization	70		53		12		135

Second quarter ended June 30, 2017
Sales:
Third-party sales	$	1,485	$	1,271	$	504	$	3,260
Intersegment sales	—		37		—		37
Total sales	$	1,485	$	1,308	$	504	$	3,297
Profit and loss:
Segment operating profit	$	250	$	133	$	71	$	454
Restructuring and other charges	8		17		6		31
Provision for depreciation and amortization	66		51		12		129



	Engineered Products and Solutions		Global Rolled Products		Transportation and Construction Solutions		Total Segment
Six months ended June 30, 2018
Sales:
Third-party sales	$	3,137	$	2,817	$	1,099	$	7,053
Intersegment sales	—		88		—		88
Total sales	$	3,137	$	2,905	$	1,099	$	7,141
Profit and loss:
Segment operating profit	$	433	$	235	$	164	$	832
Restructuring and other charges	10		—		—		10
Provision for depreciation and amortization	141		104		25		270

Six months ended June 30, 2017
Sales:
Third-party sales	$	2,972	$	2,519	$	960	$	6,451
Intersegment sales	—		71		—		71
Total sales	$	2,972	$	2,590	$	960	$	6,522
Profit and loss:
Segment operating profit	$	497	$	269	$	139	$	905
Restructuring and other charges	14		74		9		97
Provision for depreciation and amortization	130		101		24		255

The following table reconciles Total segment operating profit to Consolidated income before income taxes:



	Second quarter ended						Six months ended
	June 30,						June 30,
	2018			2017			2018			2017
Total segment operating profit	$	432		$	454		$	832		$	905
Unallocated amounts:
Restructuring and other charges	(15		)	(26		)	(22		)	(99		)
Corporate expense	(93		)	(108		)	(153		)	(203		)
Consolidated operating income	$	324		$	320		$	657		$	603
Interest expense	(89		)	(183		)	(203		)	(298		)
Other (expense) income, net	(41		)	132			(61		)	448
Consolidated income before income taxes	$	194		$	269		$	393		$	753

The total assets of Arconic's reportable segment were as follows:



	June 30, 2018		December 31, 2017
Engineered Products and Solutions	$	10,447	$	10,325
Global Rolled Products	4,153		3,955
Transportation and Construction Solutions	1,087		1,041
Total segment assets	$	15,687	$	15,321

The following table reconciles Total segment assets to Consolidated assets:



	June 30, 2018		December 31, 2017
Total segment assets	$	15,687	$	15,321
Unallocated amounts:
Cash and cash equivalents	1,455		2,150
Deferred income taxes	626		743
Corporate fixed assets, net	304		310
Fair value of derivative contracts	57		91
Other	90		103
Consolidated assets	$	18,219	$	18,718