Alcoa 2013 Annual Report Download - page 121

adjustments to the fair value of the one remaining foil location while it was classified as held for sale due to foreign
currency movements; $20 ($8 after-tax and noncontrolling interests) for a litigation matter related to the former St.
Croix location (see Other Matters under Litigation in Note N); a net charge of $5 ($4 after-tax) for other miscellaneous
items; and $23 ($16 after-tax) for the reversal of previously recorded layoff reserves due to normal attrition and
changes in facts and circumstances, including a change in plans for Alcoa’s aluminum powder facility in Rockdale,
TX.
In late 2011, management approved the permanent shutdown and demolition of certain facilities at two U.S. locations,
each of which was previously temporarily idled for various reasons. The identified facilities are the smelter located in
Alcoa, TN (capacity of 215,000 metric-tons-per-year) and two potlines (capacity of 76,000 metric-tons-per-year) at the
smelter located in Rockdale, TX (remaining capacity of 191,000 metric-tons-per-year composed of four potlines).
Demolition and remediation activities related to these actions began in 2012 and are expected to be completed in 2015
for the Tennessee smelter and in 2013 for the two potlines at the Rockdale smelter (essentially complete as of
December 31, 2013). 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 were in general focused on achieving sustained
competitiveness and included, among others: lack of an economically viable, long-term power solution; changed
market fundamentals; cost competitiveness; required future capital investment; and restart 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 $6 ($4 after-tax), which was recorded in Cost of goods sold on the accompanying
Statement of Consolidated Operations. The other exit costs of $36 represent $18 ($11 after-tax) in environmental
remediation and $17 ($11 after-tax) in asset retirement obligations, both triggered by the decision to permanently shut
down and demolish these structures, and $1 ($1 after-tax) in other related costs.
Also, at the end of 2011, management approved a partial or full curtailment of three European smelters as follows:
Portovesme, Italy (150,000 metric-tons-per-year); Avilés, Spain (46,000 metric tons out of 93,000 metric-tons-per-
year); and La Coruña, Spain (44,000 metric tons out of 87,000 metric-tons-per-year). These curtailments were
completed by the end of 2012. The curtailment of the Portovesme smelter may lead to the permanent closure of the
facility, which would result in future charges, while the curtailments at the two smelters in Spain are planned to be
temporary. These actions were the result of uncompetitive energy positions, combined with rising material costs and
falling aluminum prices (mid-2011 to late 2011). As a result of these decisions, Alcoa recorded costs of $33 ($31 after-
tax) for the layoff of approximately 650 employees. As Alcoa engaged in discussions with the respective employee
representatives and governments, additional charges were recognized in 2012 (see 2012 Actions above).
As of December 31, 2013, the separations associated with 2011 restructuring programs were essentially complete. In
2013 and 2012, cash payments of $11 and $23, respectively, were made against layoff reserves related to the 2011
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:
2013 2012 2011
Alumina $11$3$39
Primary Metals 295 20 212
Global Rolled Products 15 43 19
Engineered Products and Solutions 27 13 (3)
Segment total 348 79 267
Corporate 434 93 14
Total restructuring and other charges $782 $172 $281
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