Alcoa 2015 Annual Report Download - page 82

management determined that the remaining capacity of the Massena East smelter was no longer competitive and the Point
Henry smelter had no prospect of becoming financially viable. Management also initiated the temporary curtailment of the
remaining capacity (62 kmt-per-year) at the Poços de Caldas smelter and additional capacity (85 kmt-per-year) at the São
Luís smelter, both in Brazil. These curtailments were completed by the end of May 2014. As a result of these curtailments,
200 kmt-per-year of production at the Poços de Caldas refinery was reduced by the end of June 2014.
Also in early 2014, management approved the permanent shutdown of Alcoa’s two rolling mills in Australia, Point
Henry and Yennora. This decision was made due to the significant impact of excess can sheet capacity in both
Australia and Asia. The two rolling mills had a combined can sheet capacity of 200 kmt-per-year and were closed by
the end of 2014. Demolition and remediation activities related to the two rolling mills began in mid-2015 and are
expected to be completed by the end of 2018.
Additionally, in August 2014, management approved the permanent shutdown and demolition of the capacity (150
kmt-per-year) at the Portovesme smelter in Italy, which had been idle since November 2012. This decision was made
because the fundamental reasons that made the Portovesme smelter uncompetitive remained unchanged, including the
lack of a viable long-term power solution. Demolition and remediation activities related to the Portovesme smelter will
begin in 2016 and are expected to be completed by the end of 2020 (delayed due to discussions with the Italian
government and other stakeholders).
In 2014, costs related to the shutdown and curtailment actions included $208 for the layoff of approximately 1,790
employees (1,210 in the Primary Metals segment, 470 in the Global Rolled Products segment, 80 in the Alumina
segment, and 30 in Corporate), including $26 in pension costs; accelerated depreciation of $204 related to the three
facilities in Australia as they continued to operate during 2014; asset impairments of $166 representing the write-off of
the remaining book value of all related properties, plants, and equipment; and $183 in other exit costs. Additionally in
2014, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable
value, resulting in a charge of $67 ($47 after-tax and noncontrolling interest), which was recorded in COGS. The other
exit costs of $183 represent $95 in asset retirement obligations and $42 in environmental remediation, both of which
were triggered by the decisions to permanently shut down and demolish the aforementioned structures in Australia,
Italy, and the United States, and $46 in other related costs, including supplier and customer contract-related costs.
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; $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 kmt-per-
year) that utilize Soderberg technology at the Baie Comeau smelter in Québec, Canada (remaining capacity of 280
58