Alcoa 2009 Annual Report Download - page 102

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 (see Note I); 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,
other exit costs of $47 ($31 after-tax and noncontrolling interests), primarily for accelerated depreciation associated
with the shutdown of certain facilities in 2007 related to the 2006 Restructuring Program, and reversals of previously
recorded layoff and other exit costs of $28 ($19 after-tax and noncontrolling interests) due to normal attrition and
changes in facts and circumstances.
In April 2007, Alcoa announced it was exploring strategic alternatives for the potential disposition of the businesses
within the Packaging and Consumer segment and the Automotive Castings business. In September 2007, management
completed its review of strategic alternatives and determined that the best course of action was to sell the Packaging
and Consumer and Automotive Castings businesses. As a result of this decision, the assets and related liabilities of the
Packaging and Consumer and Automotive Castings businesses were classified as held for sale. Alcoa recorded
impairment charges of $215 ($140 after-tax) related to the Packaging and Consumer businesses and $68 ($51 after-tax)
for the Automotive Castings business to reflect the write-down of the carrying value of the assets of these businesses to
their respective estimated fair values. In addition, Alcoa recorded a $464 discrete income tax charge related to goodwill
associated with the planned sale of the Packaging and Consumer businesses that would have been non-deductible for
tax purposes under the transaction structure contemplated at the time. In November 2007, Alcoa completed the sale of
the Automotive Castings business and recognized a loss of $4 ($2 after-tax) (see Note F). In December 2007, Alcoa
agreed to sell the Packaging and Consumer businesses for $2,700 in cash, and reduced the impairment charge by $26
($17 after-tax) and the discrete income tax charge by $322 as a result of the structure of the agreed upon sale (this sale
was completed in 2008 – see Note F).
As of December 31, 2008, the terminations associated with the 2007 restructuring program were essentially complete.
Cash payments of $1 and $20 were made against the 2007 Restructuring Program layoff reserves in 2009 and 2008,
respectively.
Alcoa does not include Restructuring and other charges in the results of its reportable segments. The pretax impact of
allocating Restructuring and other charges to such results would have been as follows (prior period amounts presented
were revised to reflect a change in segments – see Note Q):
2009 2008 2007
Alumina $5$89$ -
Primary Metals 30 94 (2)
Flat-Rolled Products 65 273 56
Engineered Products and Solutions 64 104 67
Packaging and Consumer - 45 189
Segment total 164 605 310
Corporate 73 334 (42)
Total restructuring and other charges $237 $939 $268
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