Alcoa 2010 Annual Report Download - page 57

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 charges 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, 2010, approximately 5,500 of the 6,000 employees were terminated. The total number of
employees associated with 2009 restructuring programs was updated to reflect changes in plans (e.g., the previously
mentioned new power agreement at the Portovesme smelter in Italy – see 2010 Activity above), natural attrition, and
other factors. The remaining terminations are expected to be completed by the end of 2011. In 2010 and 2009, cash
payments of $60 and $62, respectively, were made against layoff reserves related to 2009 restructuring programs.
2008 Actions–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 thousand metric tons (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;
• 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;
• 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 were eliminated at Corporate,
resulting in severance charges of $14 and other exits costs of $3.
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