Alcoa 2009 Annual Report Download - page 57

• The shutdown of the Foil business in Bohai, resulting in severance charges of $6 for the reduction of
approximately 400 positions, asset impairments of $24, and other exits costs of $54, primarily related to lease
termination costs.
– The Engineered Products and Solutions segment was restructured through the following actions:
• Exiting of the Auto Cast Wheel business, through the closure of the only remaining facility, which employed
approximately 270, by June 2009 for severance costs of $2;
• Consolidation of operations in the Building and Construction Systems business to maximize operating
efficiencies and align capacity with the decline in the commercial building and construction markets,
resulting in severance charges of $6 for the elimination of approximately 400 positions;
• Alignment of production with demand across the Power and Propulsion business, resulting in the reduction
of approximately 250 positions for a cost of $6;
• Optimization of the Global Hard Alloy Extrusion operations, resulting in severance charges of $13 for a
headcount reduction of approximately 240 and asset impairments of $3 (previously reported as part of the
Flat-Rolled Products segment – see Segment Information);
• Other severance charges of $8 for the elimination of approximately 250 positions, asset impairments of $13,
and other exit costs of $1.
– In order to reduce overhead serving various businesses, approximately 130 positions will be eliminated at Corporate,
resulting in severance charges of $14 and other exits costs of $3.
In addition to the above actions, Alcoa intends to sell its Global Foil (the Sabiñánigo, Spain and Shanghai, China plants
were sold in late 2009) and Transportation Products Europe businesses in order to streamline its portfolio. As a result
of this decision, the assets and related liabilities of the Global Foil and Transportation Products Europe businesses were
classified as held for sale. Asset impairments of $129 ($100 after-tax) and $52 ($49 after-tax) were recognized to
reflect the estimated fair values of the Global Foil and Transportation Products Europe businesses, respectively. Also,
Alcoa and Orkla ASA agreed to exchange their stakes in the Sapa AB and Elkem Aluminium ANS joint ventures. This
portfolio action resulted in an impairment charge of $333 ($223 after-tax) to reflect the estimated fair value of Alcoa’s
investment in Sapa AB.
Earlier in 2008, Alcoa recorded $48 ($31 after-tax) in charges, which consisted of $44 ($29 after-tax) for the layoff of
approximately 870 employees and related curtailment of postretirement benefits and $4 ($2 after-tax) for other exit
costs, associated with the complete production curtailment of the Rockdale, TX smelter (267 kmt) due to ongoing
power supply issues with Rockdale’s onsite supplier and the uneconomical power that Alcoa was forced to purchase in
the open market as a result of such issues. Also during 2008, Alcoa recorded a loss of $43 ($32 after-tax) on the sale of
its Packaging and Consumer businesses. The remaining net charges in 2008 were comprised of $1 ($1 after-tax and
noncontrolling interests) for layoff related to a reduction in headcount of approximately 30, $4 for other exit costs ($6
after-tax), and $23 ($15 after-tax and noncontrolling interests) for reversals of previously recorded costs, slightly more
than half of which related to the reversal of a reserve related to a shutdown facility.
As of December 31, 2009, approximately 5,900 of the 6,200 employees were terminated. Cash payments of $112 and
$7 were made against the 2008 Restructuring Program layoff reserves in 2009 and 2008, respectively.
2007 Restructuring Program—In 2007, Alcoa recorded Restructuring and other charges of $268 ($201 after-tax and
noncontrolling interests), which were comprised of the following components: $257 ($174 after-tax) in asset
impairments associated with a strategic review of certain businesses; a $62 ($23 after-tax) reduction to the original
impairment charge recorded in 2006 related to the estimated fair value of the soft alloy extrusion business, which was
contributed to a joint venture effective June 1, 2007; and $73 ($50 after-tax and noncontrolling interests) in net charges
comprised of layoff charges of $35 ($26 after-tax and noncontrolling interests) related to the elimination of
approximately 400 positions and asset impairments of $19 ($12 after-tax) of various other businesses and facilities,
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