Alcoa 2015 Annual Report Download - page 135

As of December 31, 2015, approximately 2,500 of the 2,870 employees (previously 2,910) were separated. The total
number of employees associated with 2014 restructuring programs was updated to reflect employees, who were
initially identified for separation, accepting other positions within Alcoa and natural attrition. The remaining
separations for 2014 restructuring programs are expected to be completed by the end of 2016. In 2015 and 2014, cash
payments of $62 and $141, respectively, were made against layoff reserves related to 2014 restructuring programs.
2013 Actions. In 2013, Alcoa recorded Restructuring and other charges of $782 ($585 after-tax and noncontrolling
interests), which were comprised of the following components: $391 ($305 after-tax and noncontrolling interest)
related to the resolution of a legal matter (see Government Investigations under Litigation in Note N); $245 ($183
after-tax) for exit costs related to the permanent shutdown and demolition of certain structures at three smelter
locations (see below); $87 ($61 after-tax and noncontrolling interests) for layoff costs, including the separation of
approximately 1,110 employees (340 in the Primary Metals segment, 250 in the Global Rolled Products segment, 220
in the Engineered Products and Solutions segment, 85 in the Alumina segment, 75 in the Transportation and
Construction Solutions segment and 140 in Corporate), of which 590 relates to a global overhead reduction program,
and $9 in pension plan settlement charges related to previously separated employees; $25 ($17 after-tax) in net charges,
including $12 ($8 after-tax) for asset impairments, related to retirements and/or the sale of previously idled structures;
$25 ($13 after-tax and noncontrolling interests) for asset impairments related to the write-off of capitalized costs for
projects no longer being pursued due to the market environment; a net charge of $17 ($12 after-tax and noncontrolling
interests) for other miscellaneous items, including $3 ($2 after-tax) for asset impairments; and $8 ($6 after-tax and
noncontrolling interests) for the reversal of a number of small layoff reserves related to prior periods.
In May 2013, management approved the permanent shutdown and demolition of two potlines (capacity of 105,000
metric-tons-per-year) that utilize Soderberg technology at the Baie Comeau smelter in Québec, Canada (remaining
capacity of 280,000 metric-tons-per-year composed of two prebake potlines) and the full capacity (44,000 metric-tons-
per-year) at the Fusina smelter in Italy. Additionally, in August 2013, management approved the permanent shutdown
and demolition of one potline (capacity of 41,000 metric-tons-per-year) that utilizes Soderberg technology at the
Massena East, NY smelter (remaining capacity of 84,000 metric-tons-per-year composed of two Soderberg potlines).
The aforementioned Soderberg lines at Baie Comeau and Massena East were fully shut down by the end of September
2013 while the Fusina smelter was previously temporarily idled in 2010. Demolition and remediation activities related
to all three facilities began in late 2013 and are expected to be completed by the end of 2016 for Massena East and by
the end of 2017 for both Baie Comeau and Fusina.
The decisions on the Soderberg lines for Baie Comeau and Massena East were part of a 15-month review of 460,000
metric tons of smelting capacity initiated by management in May 2013 for possible curtailment, while the decision on
the Fusina smelter was in addition to the capacity being reviewed. Factors leading to all three decisions were in general
focused on achieving sustained competitiveness and included, among others: lack of an economically viable, long-term
power solution (Italy); changed market fundamentals; other existing idle capacity; and restart costs.
In 2013, exit costs related to the shutdown actions included $114 for the layoff of approximately 550 employees
(Primary Metals segment), including $83 in pension costs (see Note W); accelerated depreciation of $58 (Baie
Comeau) and asset impairments of $18 (Fusina and Massena East) representing the write-off of the remaining book
value of all related properties, plants, and equipment; and $55 in other exit costs. Additionally in 2013, remaining
inventories, mostly operating supplies and raw materials, were written down to their net realizable value resulting in a
charge of $9 ($6 after-tax), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated
Operations. The other exit costs of $55 represent $48 in asset retirement obligations and $5 in environmental
remediation, both of which were triggered by the decisions to permanently shut down and demolish these structures,
and $2 in other related costs.
As of December 31, 2015, the separations associated with 2013 restructuring programs were essentially complete. In
2015, 2014, and 2013, cash payments of $7, $39, and $33, respectively, were made against layoff reserves related to
2013 restructuring programs.
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