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Restructuring and Other Charges, Net

6 Months Ended

Jun. 30, 2021

Restructuring And Related Activities [Abstract]

Restructuring and Other Charges, Net

D. Restructuring and Other Charges, Net– In the second quarter and six-month period of 2021, Alcoa Corporation recorded Restructuring and other charges, net, of $33 and $40, respectively, which were comprised of the following components:

• A charge of $39 (both periods) related to the settlement of certain pension benefits (see Note L);

• A reversal of $5 (both periods) due to lower costs for waste treatment at a previously closed Suriname site;

• A reversal of $5 (both periods) due to lower costs for site remediation related to a previously closed site in Brazil;

• A charge of $3 and $9, respectively, for additional take or pay contract costs related to the curtailed Wenatchee (Washington) and Intalco (Washington) smelters;

• A net charge of $9 (six-month period only) related to the settlement and curtailment of certain other postretirement benefits resulting from the sale of the Warrick Rolling Mill (see Note L);

• A $12 reversal (six-month period only) of remaining environmental and asset retirement obligation reserves at a previously closed Tennessee site due to the completion of demolition and the determination that remaining site remediation is no longer required (see Note P). The reserves were originally established through a restructuring charge upon closure of the site; and,

• A net charge of $1 and $5, respectively, for several other insignificant items.

In the second quarter and six-month period of 2020, Alcoa Corporation recorded Restructuring and other charges, net, of $37 and $39, respectively, which were primarily comprised of costs related to the curtailment of the Intalco (Washington) smelter of $27 (both periods), and $11 and $13, respectively, for additional contract costs related to the curtailed Wenatchee (Washington) smelter, in addition to several insignificant items including impacts related to pension curtailments. 

Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:

		Second quarter ended June 30,								Six months ended June 30,
		2021				2020				2021				2020
Bauxite		$	—			$	—			$	—			$	—
Alumina			—				—				—				2
Aluminum			3				37				18				39
Segment total			3				37				18				41
Corporate			30				—				22				(2	)
Total Restructuring and other charges, net		$	33			$	37			$	40			$	39

During 2019, the Company completed the divestiture of the Avilés and La Coruña (Spain) aluminum facilities to PARTER Capital Group AG (PARTER) in a sale process endorsed by the Spanish government and supported by the workers’ representatives. In 2020, PARTER sold its majority stake in the facilities to an unrelated party. The Company had no knowledge of the subsequent transaction prior to its announcement, and has filed a lawsuit asserting that the sale was in breach of the sale agreement between Alcoa and PARTER (see Note P).

As a result of the divestiture, a restructuring reserve of $30 remained at December 31, 2020 related to financial contributions to the divested entities pursuant to the sale agreement. In the second quarter and six-month period of 2021, cash payments of $7 and $13, respectively, were made against the reserve. In accordance with the terms of the agreement, payments against the restructuring reserve may be made through the fourth quarter of 2021. These payments are dependent upon the divested entities meeting certain capital expenditure obligations.

Activity and reserve balances for restructuring charges were as follows:

		Severance and employee termination costs				Other costs				Total
Balance at December 31, 2019		$	35			$	102			$	137
Restructuring and other charges, net			16				36				52
Cash payments			(41	)			(79	)			(120	)
Reversals and other			(4	)			(2	)			(6	)
Balance at December 31, 2020			6				57				63
Restructuring and other charges, net			—				10				10
Cash payments			(3	)			(21	)			(24	)
Reversals and other			—				—				—
Balance at June 30, 2021		$	3			$	46			$	49

The activity and reserve balances include only Restructuring and other charges, net that impact the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other liability accounts such as environmental obligations (see Note P), asset retirement obligations, and pension and other postretirement reserves (see Note L) are excluded from the above activity and balances. Reversals and other includes reversals of previously recorded liabilities and foreign currency translation impacts.

The noncurrent portion of the reserve was $1 at both June 30, 2021 and December 31, 2020.

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- References

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

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