Alcoa 2010 Annual Report Download - page 102

– 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.
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 – see Note F) and Transportation Products Europe (sold in 2010 – see Note F) 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 (see Note B). 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 (see Notes F and I). 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 (see Note F). 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, 2010, the terminations associated with 2008 restructuring programs were essentially complete.
The total number of employees associated with 2008 restructuring programs was updated during 2010 to reflect
changes in plans, natural attrition, and other factors resulting in terminations of approximately 6,000 (previously
6,200). In 2010 and 2009, cash payments of $12 and $112, respectively, were made against layoff reserves related to
2008 restructuring programs.
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