Alcoa 2013 Annual Report Download - page 73

and in 2013 for the two potlines at the Rockdale smelter (essentially complete at 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 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 kmt-per-year); Avilés, Spain (46 kmt out of 93 kmt-per-year); and La Coruña, Spain (44 kmt
out of 87 kmt-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
Interest Expense—Interest expense was $453 in 2013 compared with $490 in 2012. The decrease of $37, or 8%, was
primarily due to a 7% lower average debt level, which was mostly attributable to lower outstanding long-term debt due
to the June 2013 repayment of $422 in 6.00% Notes and payments associated with the loans supporting growth projects
in Brazil.
Interest expense was $490 in 2012 compared with $524 in 2011. The decline of $34, or 6%, was principally caused by
the absence of a $41 net charge related to the early retirement of various outstanding notes ($74 in purchase premiums
paid partially offset by a $33 gain for “in-the-money” interest rate swaps), somewhat offset by lower capitalized
interest ($8). The decrease in capitalized interest was largely attributable to the Estreito hydroelectric power project in
Brazil as construction was nearly complete, partially offset by an increase related to the aluminum complex in Saudi
Arabia.
Other Income, net—Other income, net was $25 in 2013 compared with $341 in 2012. The change of $316 was mainly
the result of the absence of a $320 gain on the sale of U.S. hydroelectric power assets (see below). Also, a higher
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