Alcoa 2014 Annual Report Download - page 78

Research and Development Expenses—R&D expenses were $218 in 2014 compared with $192 in 2013 and $197 in
2012. The increase in 2014 as compared to 2013 was primarily caused by spending related to an upgrade of a
Micromill™ in San Antonio, TX for the Global Rolled Products segment and additional spending related to inert anode
and carbothermic technology for the Primary Metals segment. The decrease in 2013 as compared to 2012 was mainly
driven by lower spending related to inert anode and carbothermic technology for the Primary Metals segment and other
various projects, mostly offset by spending related to an upgrade of a Micromill™ in San Antonio, TX for the Global
Rolled Products segment. The Micromill™ upgrade is expected to be completed by the end of 2015 and, as a result, the
Micromill™ will develop and qualify aluminum products for the automotive end market.
Provision for Depreciation, Depletion, and Amortization—The provision for DD&A was $1,371 in 2014 compared
with $1,421 in 2013. The decrease of $50, or 4%, was principally the result of net favorable foreign currency
movements due to a stronger U.S. dollar, particularly against the Australian dollar and Brazilian real, and a reduction in
expense related to the permanent shutdown of smelter capacity in Australia, Canada, the United States, and Italy that
occurred at different points during both 2013 and 2014 (see Primary Metals in Segment Information below). These
items were somewhat offset by new DD&A associated with both the acquisition of an aerospace business in November
2014 (see Engineered Products and Solutions in Segment Information below) and assets placed into service in January
2014 related to the completed automotive expansion at the Davenport, IA plant.
The provision for DD&A was $1,421 in 2013 compared with $1,460 in 2012. The decrease of $39, or 3%, was mostly
due to net favorable foreign currency movements due to a stronger U.S. dollar, particularly against the Australian
dollar and Brazilian real; a reduction in expense related to the permanent shutdown of smelter capacity in Canada, the
United States, and Italy that occurred mid-2013 (see Primary Metals in Segment Information below); and the absence
of expense due to the divestiture of U.S. hydroelectric power assets in late 2012 (see Primary Metals in Segment
Information below). These items were slightly offset by new depreciation associated with a hydroelectric power project
in Brazil (Machadinho). In early 2013, there was a change in the legal structure of the entity that owned the project
resulting in Alcoa recording its 30.99% share of the project’s assets directly, whereas in 2012, Alcoa’s share was
recorded as an equity method investment.
Impairment of Goodwill—In 2013, Alcoa recognized an impairment of goodwill in the amount of $1,731 ($1,719
after noncontrolling interest) related to the annual impairment review of the Primary Metals segment (see Goodwill in
Critical Accounting Policies and Estimates below).
Restructuring and Other Charges—Restructuring and other charges for each year in the three-year period ended
December 31, 2014 were comprised of the following:
2014 2013 2012
Asset impairments $ 406 $116 $ 40
Net loss on divestitures of businesses 332 - -
Layoff costs 259 201 47
Resolution of a legal matter - 391 85
Other 199 82 21
Reversals of previously recorded layoff and other exit costs (28) (8) (21)
Restructuring and other charges $1,168 $782 $172
Layoff costs were recorded based on approved detailed action plans submitted by the operating locations that specified
positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements,
and the expected timetable for completion of the plans.
2014 Actions. In 2014, Alcoa recorded Restructuring and other charges of $1,168 ($703 after-tax and noncontrolling
interest), which were comprised of the following components: $693 ($443 after-tax and noncontrolling interest) for exit
costs related to decisions to permanently shut down and demolish three smelters and two rolling mills (see below);
$332 ($163 after-tax and noncontrolling interest) for the divestitures of four operations (see Alumina, Primary Metals,
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