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Restructuring and Other Charges | 6 Months Ended
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Jun. 30, 2016
Restructuring and Related Activities [Abstract] |
Restructuring and Other Charges | D. Restructuring and Other Charges – In the second quarter and six-month period of 2016, Alcoa recorded Restructuring and other charges of $23 ($16 after-tax and noncontrolling interest) and $116 ($77 after-tax and noncontrolling interest), respectively. Restructuring and other charges in the 2016 second quarter included $15 ($11 after-tax and noncontrolling interest) for layoff costs related to cost reduction initiatives and the planned separation of Alcoa (see Note P), including the separation of approximately 540 employees (300 in the Engineered Products and Solutions segment and 240 in the Transportation and Construction Solutions segment); $8 ($6 after-tax and noncontrolling interest) for additional net costs related to decisions made in the fourth quarter of 2015 to permanently close and demolish the Warrick (Indiana) smelter and to curtail the Wenatchee (Washington) smelter and Point Comfort (Texas) refinery (see below); a net charge of $8 ($4 after-tax and noncontrolling interest) for other miscellaneous items; and $8 ($5 after-tax and noncontrolling interest) for the reversal of a number of small layoff reserves related to prior periods. In the 2016 six-month period, Restructuring and other charges included $86 ($56 after-tax and noncontrolling interest) for additional net costs related to decisions made in the fourth quarter of 2015 to permanently close and demolish the Warrick (Indiana) smelter and to curtail the Wenatchee (Washington) smelter and Point Comfort (Texas) refinery (see below); $34 ($25 after-tax and noncontrolling interest) for layoff costs related to cost reduction initiatives and the planned separation of Alcoa (see Note P), including the separation of approximately 1,100 employees (800 in the Engineered Products and Solutions segment, 240 in the Transportation and Construction Solutions segment, and 30 each in the Primary Metals and Global Rolled Products segments); a net charge of $8 ($4 after-tax and noncontrolling interest) for other miscellaneous items; and $12 ($8 after-tax and noncontrolling interest) for the reversal of a number of small layoff reserves related to prior periods. In the 2016 six-month period, costs related to the closure and curtailment actions included accelerated depreciation of $70 related to the Warrick smelter as it continued to operate during the 2016 first quarter; $20 ($1 in the 2016 second quarter) for the reversal of severance costs initially recorded in the 2015 fourth quarter; and $36 ($9 in the 2016 second quarter) in other costs. Additionally in the 2016 six-month period, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value, resulting in a charge of $5 ($3 after-tax and noncontrolling interest) ($2 ($1 after-tax and noncontrolling interest) in the 2016 second quarter), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The other costs of $36 ($9 in the 2016 second quarter) represent $27 ($10 in the 2016 second quarter) for contract termination, $7 in asset retirement obligations for the rehabilitation of a coal mine related to the Warrick smelter, and $2 ($(1) in the 2016 second quarter) in other related costs. Additional charges may be recognized in future periods related to these actions. In the second quarter and six-month period of 2015, Alcoa recorded Restructuring and other charges of $217 ($141 after-tax and noncontrolling interest) and $394 ($299 after-tax and noncontrolling interest), respectively. Restructuring and other charges in the 2015 second quarter included $179 ($115 after-tax and noncontrolling interest) for exit costs related to decisions to permanently shut down and demolish a smelter and a power station (see below); $18 ($10 after-tax and noncontrolling interest) for the separation of approximately 120 employees (Alumina segment) and other charges related to the decisions to temporarily curtail both a portion of the capacity (443,000 metric-tons-per-year) at the refinery in Suriname and the remaining capacity (74,000 metric-tons-per-year) at the São Luís smelter in Brazil; $16 ($13 after-tax and noncontrolling interest) for layoff costs, including the separation of approximately 390 employees (210 in the Engineered Products and Solutions segment, 150 in the Primary Metals segment, and 30 in the Global Rolled Products segment); $10 ($7 after-tax and noncontrolling interest) related to post-closing adjustments associated with two December 2014 divestitures; a net credit of $5 ($3 after-tax and noncontrolling interest) for other miscellaneous items; and $1 ($1 after-tax and noncontrolling interest) for the reversal of a few layoff reserves related to prior periods. In the 2015 six-month period, Restructuring and other charges included the aforementioned $179 ($115 after-tax and noncontrolling interest); $159 ($149 after-tax and noncontrolling interest) related to the March 2015 divestiture of a rolling mill in Russia and post-closing adjustments associated with three December 2014 divestitures; $38 ($23 after-tax and noncontrolling interest) for the separation of approximately 800 employees (680 in the Primary Metals segment and 120 in the Alumina segment), supplier contract-related costs, and other charges associated with the aforementioned decisions to temporarily curtail certain capacity at the São Luís smelter and the refinery in Suriname; $29 ($21 after-tax and noncontrolling interest) for layoff costs, including the separation of approximately 600 employees (290 in the Engineered Products and Solutions segment, 150 in the Primary Metals segment, 60 in the Global Rolled Products segment, 50 in the Transportation and Construction Solutions segment, and 50 in Corporate); a net credit of $3 ($2 after-tax and noncontrolling interest) for other miscellaneous items; and $8 ($7 after-tax and noncontrolling interest) for the reversal of a number of small layoff reserves related to prior periods. In the second quarter of 2015, management approved the permanent shutdown and demolition of the Poços de Caldas smelter (capacity of 96,000 metric-tons-per-year) in Brazil and the Anglesea power station (includes the closure of a related coal mine) in Australia. The entire capacity at Poços de Caldas has been temporarily idled since May 2014 and the Anglesea power station was shut down at the end of August 2015. Demolition and remediation activities related to the Poços de Caldas smelter and the Anglesea power station began in late 2015 and are expected to be completed by the end of 2026 and 2020, respectively. The decision on the Poços de Caldas smelter was due to management’s conclusion that the smelter was no longer competitive as a result of challenging global market conditions for primary aluminum, which led to the initial curtailment, that have not dissipated and higher costs. For the Anglesea power station, the decision was made because a sale process did not result in a sale and there would be imminent operating costs and financial constraints related to this site in the remainder of 2015 and beyond, including significant costs to source coal from available resources, necessary maintenance costs, and a depressed outlook for forward electricity prices. The Anglesea power station previously supplied approximately 40 percent of the power needs for the Point Henry smelter, which was closed in August 2014. In the 2015 second quarter and six-month period, costs related to the shutdown actions included asset impairments of $86, representing the write-off of the remaining book value of all related properties, plants, and equipment; $11 for the layoff of approximately 100 employees (Primary Metals segment); and $82 in other exit costs. Additionally in the 2015 second quarter and six-month period, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value, resulting in a charge of $4 ($2 after-tax and noncontrolling interest), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The other exit costs of $82 represent $45 in asset retirement obligations and $29 in environmental remediation, both of which were triggered by the decisions to permanently shut down and demolish the aforementioned structures in Brazil and Australia (includes the rehabilitation of a related coal mine), and $8 in supplier and customer contract-related costs. 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:
|  | Second quarter ended June 30, |  |  | Six months ended June 30, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Alumina |  | $ | (1 | ) |  | $ | 10 |  |  | $ | 4 |  |  | $ | 17 |
Primary Metals |  |  | 10 |  |  |  | 173 |  |  |  | 88 |  |  |  | 198 |
Global Rolled Products |  |  | — |  |  |  | 1 |  |  |  | 2 |  |  |  | 136 |
Engineered Products and Solutions |  |  | 9 |  |  |  | 8 |  |  |  | 17 |  |  |  | 11 |
Transportation and Construction Solutions |  |  | 8 |  |  |  | 1 |  |  |  | 8 |  |  |  | 3 |
Segment total |  |  | 26 |  |  |  | 193 |  |  |  | 119 |  |  |  | 365 |
Corporate |  |  | (3 | ) |  |  | 24 |  |  |  | (3 | ) |  |  | 29 |
Total restructuring and other charges |  | $ | 23 |  |  | $ | 217 |  |  | $ | 116 |  |  | $ | 394 |
As of June 30, 2016, approximately 730 of the 1,100 employees associated with 2016 restructuring programs, approximately 3,800 of the 5,000 employees (previously 5,200) associated with 2015 restructuring programs, and approximately 2,600 of the 2,700 employees (previously 2,870) associated with 2014 restructuring programs were separated. The total number of employees associated with both 2015 and 2014 restructuring programs was updated to reflect employees, who were initially identified for separation, accepting other positions within Alcoa and natural attrition. Most of the remaining separations for the 2016 restructuring programs and all of the remaining separations for the 2015 and 2014 restructuring programs are expected to be completed by the end of 2016. In the 2016 second quarter and six-month period, cash payments of $9 and $11, respectively, were made against layoff reserves related to 2016 restructuring programs, $30 and $92, respectively, were made against layoff reserves related to 2015 restructuring programs, and $1 and $3, respectively, were made against layoff reserves related to 2014 restructuring programs. Activity and reserve balances for restructuring charges were as follows:
|  | Layoff costs |  |  | Other exit costs |  |  | Total |
Reserve balances at December 31, 2014 |  | $ | 98 |  |  | $ | 34 |  |  | $ | 132 |
2015: |  |  |  |  |  |  |  |  |  |  |  |
Cash payments |  |  | (111 | ) |  |  | (12 | ) |  |  | (123 | )
Restructuring charges |  |  | 299 |  |  |  | 233 |  |  |  | 532 |
Other* |  |  | (60 | ) |  |  | (231 | ) |  |  | (291 | )
Reserve balances at December 31, 2015 |  |  | 226 |  |  |  | 24 |  |  |  | 250 |
2016: |  |  |  |  |  |  |  |  |  |  |  |
Cash payments |  |  | (107 | ) |  |  | (22 | ) |  |  | (129 | )
Restructuring charges |  |  | 34 |  |  |  | 41 |  |  |  | 75 |
Other* |  |  | (31 | ) |  |  | 1 |  |  |  | (30 | )
Reserve balances at June 30, 2016 |  | $ | 122 |  |  | $ | 44 |  |  | $ | 166 |
* | Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation. In the 2016 six-month period, Other for layoff costs also included a reclassification of $1 in pension benefits costs, as this obligation was included in Alcoa’s separate liability for pension benefits obligations (see Note N). Additionally in the 2016 six-month period, Other for other exit costs also included a reclassification of $7 in asset retirement obligations, as this liability was included in Alcoa’s separate reserve for asset retirement obligations. In 2015, Other for layoff costs also included a reclassification of $35 in pension and other postretirement benefits costs, as these obligations were included in Alcoa’s separate liability for pension and other postretirement benefits obligations. Additionally in 2015, Other for other exit costs also included a reclassification of the following restructuring charges: $76 in asset retirement and $86 in environmental obligations, as these liabilities were included in Alcoa’s separate reserves for asset retirement obligations and environmental remediation.
The remaining reserves are expected to be paid in cash during the remainder of 2016, with the exception of approximately $25 to $30, which is expected to be paid over the next several years for ongoing site remediation work and special layoff benefit payments.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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