Alcoa 2012 Annual Report Download - page 112
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periods’ layoff reserves, including a portion of those related to the Portovesme smelter in Italy due to the execution of a
new power agreement (see the European Commission Matters section of Note N).
In early 2010, management approved the permanent shutdown and demolition of the following structures, each of which
was previously temporarily idled for different reasons: the Eastalco smelter located in Frederick, MD (capacity of 195
kmt-per-year); the smelter located in Badin, NC (capacity of 60 kmt-per-year); an aluminum fluoride plant in Point
Comfort, TX; a paste plant and cast house in Massena, NY; and one potline at the smelter in Warrick, IN (capacity of
40 kmt-per-year). This decision was made after a comprehensive strategic analysis was performed to determine the best
course of action for each facility. Factors leading to this decision included current market fundamentals, cost
competitiveness, other existing idle capacity, required future capital investment, and restart costs, as well as the
elimination of ongoing holding costs. The asset impairments of $127 represent the write off of the remaining book value
of properties, plants, and equipment related to these facilities. Additionally, remaining inventories, mostly operating
supplies, were written down to their net realizable value resulting in a charge of $8 ($5 after-tax and noncontrolling
interests), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The
other exit costs of $46 represent $30 ($19 after-tax and noncontrolling interests) in asset retirement obligations and $14
($9 after-tax) in environmental remediation, both triggered by the decision to permanently shut down and demolish these
structures, and $2 ($1 after-tax and noncontrolling interests) in other related costs.
As of December 31, 2012, the separations associated with 2010 restructuring programs were essentially complete. In
2012 and 2011, cash payments of $3 and $7, respectively, were made against layoff reserves related to 2010
restructuring programs.
Alcoa does not include Restructuring and other charges in the results of its reportable segments. The pretax impact of
allocating such charges to segment results would have been as follows:
2012 2011 2010
Alumina $3 $39 $12
Primary Metals 20 212 145
Global Rolled Products 43 19 (11)
Engineered Products and Solutions 13 (3) 18
Segment total 79 267 164
Corporate 8 14 43
Total restructuring and other charges $87 $281 $207
101