Alcoa 2009 Annual Report Download - page 56

Restructuring and Other Charges—Restructuring and other charges for each of the three years in the period ended
December 31, 2009 were comprised of the following:
2009 2008 2007
Asset impairments $ 54 $670 $214
Layoff costs 186 183 35
Other exit costs 37 109 47
Reversals of previously recorded layoff and other exit costs* (40) (23) (28)
Restructuring and other charges $237 $939 $268
*Reversals of previously recorded layoff and other exit costs resulted from changes in facts and circumstances that led to
changes in estimated costs.
Layoff costs were recorded based on approved detailed action plans submitted by the operating locations that specified
positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements,
and the expected timetable for completion of the plans.
2009 Restructuring Program—In 2009, Alcoa recorded Restructuring and other charges of $237 ($151 after-tax and
noncontrolling interests), which were comprised of the following components: $177 ($121 after-tax and noncontrolling
interests) for the layoff of approximately 6,600 employees (2,980 in the Engineered Products and Solutions segment;
2,190 in the Flat-Rolled Products segment; 1,080 in the Primary Metals segment; 180 in the Alumina segment; and 170
in Corporate) to address the impact of the global economic downturn on Alcoa’s businesses and a $9 ($6 after-tax)
curtailment charge due to the remeasurement of pension plans as a result of the workforce reductions; $41 ($20 after-
tax) in adjustments to the Global Foil and Transportation Products Europe businesses held for sale due to unfavorable
foreign currency movements for both businesses and a change in the estimated fair value for the Global Foil business
and $13 ($11 after-tax) in other asset impairments; $18 ($12 after-tax) for the write-off of previously capitalized third-
party costs related to potential business acquisitions due to the adoption of changes to accounting for business
combinations and net costs of $19 ($10 after-tax and noncontrolling interests) for various other items, such as
accelerated depreciation and lease termination costs for shutdown facilities; and $40 ($29 after-tax and noncontrolling
interests) for reversals of previously recorded layoff and other exit costs due to normal attrition and changes in facts
and circumstances.
As of December 31, 2009, approximately 4,400 of the 6,600 employees were terminated. Cash payments of $62 were
made against the 2009 Restructuring Program layoff reserves in 2009.
2008 Restructuring Program—In late 2008, Alcoa took specific actions to reduce costs and strengthen its portfolio,
partly due to the economic downturn. Such actions included targeted reductions, curtailments, and plant closures and
consolidations, which will reduce headcount by approximately 5,300, resulting in layoff charges of $138 ($98 after-tax
and noncontrolling interests), asset impairments of $156 ($88 after-tax and noncontrolling interests), and other exit
costs of $58 ($57 after-tax). The significant components of these actions were as follows:
– As a result of market conditions, the Primary Metals segment reduced production by 483 kmt and the Alumina
segment reduced production by a total of 1,500 kmt (fully implemented in early 2009; further reductions occurred later
in 2009). These production curtailments as well as targeted reductions will result in the elimination of approximately
1,110 positions totaling $23 in layoff costs. Asset impairments of $116 related to these two segments were also
recognized, including the write off of $84 in engineering costs related to a 1,500 kmt planned expansion of Jamalco’s
Clarendon, Jamaica refinery.
– The Flat-Rolled Products segment was restructured through the following actions:
• Restructuring and downsizing of the Mill Products businesses in Europe and North America, resulting in
severance charges of $53 for the reduction of approximately 850 positions;
• Alignment of production with demand at operations in Russia, through the elimination of approximately
1,400 positions resulting in severance charges of $7;
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