v3.22.4
Restructuring and Other Charges
 12 Months Ended
Dec. 31, 2022
Restructuring and Related Activities [Abstract]  
Restructuring and Other Charges Restructuring and Other Charges
Restructuring and other charges for each year in the three-year period ended December 31, 2022 were comprised of the following:
202220212020
Net loss (gain) on divestitures of assets and businesses (S)
$306 $1 $(49)
Asset impairments
92 34 15 
Settlements related to employee retirement benefit plans (H)
47 584 199 
Layoff costs2 3 23 
Other*
10 6 14 
Reversals of previously recorded layoff and other costs(1)(4)(14)
Restructuring and other charges$456 $624 $188 
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*In 2020, Other includes $2 related to the allocation of ParentCo’s corporate restructuring activity to Arconic (see Cost Allocations in Note A).
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.
2022 Actions. In 2022, Arconic recorded Restructuring and other charges of $456, which were comprised of the following components: a $306 net loss related to the sale of the Company's operations in Russia (See Russia in Note S); a $92 asset impairment charge related to the Extrusions segment (see below); a $46 charge for the settlement of certain employee retirement benefits related to U.S. pension plans (see Note H); a $5 charge related to several legacy non-U.S. matters, including $1 for an environmental remediation obligation related to Italy (see Environmental Matters in Note T) and $1 for the full settlement of certain employee retirement benefits related to Brazil (see Note H); a $2 charge related to idling certain operations in the Extrusions segment (actions initiated in 2021); and a net $5 charge for other items.
In September 2022, management initiated a business review of the Extrusions segment aimed at identifying alternatives to improve financial performance of this segment in future periods. Management continues to assess alternatives and no decisions or commitments were made as of December 31, 2022. In connection with this review, the Company updated its five-year strategic plan, the results of which indicated that there is an expected decline in the forecasted financial performance for the Extrusions segment (and asset group), including continued forecasted losses. As such, management evaluated the recoverability of the long-lived assets of the Extrusions asset group by comparing the aggregate carrying value to the undiscounted future cash flows. The result of this evaluation was that the long-lived assets were deemed to be impaired as the aggregate carrying value exceeded the undiscounted future cash flows. The impairment charge was measured as the difference between the aggregate carrying value and aggregate fair value of the long-lived assets. Fair value was determined using an orderly liquidation methodology for the machinery and equipment and a sales comparison approach for the land and structures. Significant judgments and assumptions were applied in estimating the fair value of the long-lived assets, including the use of market-based information specific to the machinery and equipment and information from recent sales or current listings of comparable
properties for the land and structures. As a result, the Company recorded an impairment charge of $90 for the Properties, plants, and equipment and $2 for the intangible assets (included within Other noncurrent assets).
2021 Actions. In 2021, Arconic recorded Restructuring and other charges of $624, which were comprised of the following components: a $584 charge for the settlement of certain employee retirement benefits (see Note H); a $34 charge for the impairment of several buildings and equipment due to management’s decision to abandon these assets located at the Company’s primary research and development facility; a $7 charge related to idling certain operations in the Extrusions segment, including layoff costs associated with approximately 115 employees; a $4 net benefit for legacy tax and legal matters related to Brazil; a $4 charge related to several legal matters, including the assumption of a related environmental remediation obligation (see Environmental Matters in Note T); a $4 credit for the reversal of reserves established in prior periods (see 2020 Actions below); a $1 additional loss on the sale of an aluminum rolling mill in Brazil (see Itapissuma in Note S); and a $2 net charge for other items.
As of September 30, 2021, the employee separations associated with 2021 restructuring programs were essentially complete. In 2021, the Company made cash payments of $2 against layoff reserves related to the 2021 restructuring programs.
2020 Actions.  In 2020, Arconic recorded a net charge of $188 in Restructuring and other charges, which were comprised of the following components: a $199 charge for the settlement of certain employee retirement benefits, virtually all within the United States and the United Kingdom (see Note H); a $25 benefit for contingent consideration received related to the 2018 sale of the Texarkana (Texas) rolling mill (see Note S); a $25 net gain related to the sales of an extrusions plant in South Korea and an aluminum rolling mill in Brazil (see Note S); a $21 charge for costs, of which $5 is for layoff costs associated with approximately 90 employees, related to the planned closure and related reorganizations of several small facilities in the Building and Construction Systems and Extrusions segments; an $18 charge for layoff costs associated with the separation of approximately 460 employees across the Company in response to the impact of the COVID 19 pandemic; a $14 credit for the reversal of reserves established in prior periods, including $5 related to an environmental matter (see Note T); a $4 charge for legacy non-income tax matters in Brazil; a $2 charge for an allocation of ParentCo’s corporate restructuring activity (see Cost Allocations in Note A); and an $8 net charge for other items.
In 2021, the total number of employees to be separated was updated to 500 from 550 to reflect employees initially identified for separation accepting other positions within the Company and natural attrition. As of December 31, 2021, the employee separations associated with 2020 restructuring programs were essentially complete. In 2021 and 2020, the Company made cash payments of $5 and $15, respectively, against layoff reserves related to the 2020 restructuring programs.
Segment Information.   The Company does not include Restructuring and other charges in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:
For the year ended December 31,202220212020
Rolled Products$302 $1 $(15)
Building and Construction Systems2 (2)5 
Extrusions90 7 (14)
  Segment total394 6 (24)
Corporate62 618 212 
$456 $624 $188 
Reserve Activity.   Activity and reserve balances for restructuring charges were as follows:
Layoff costsOther costsTotal
Reserve balances at December 31, 2019$20 $1 $21 
Separation-related adjustments(1)
2 — 2 
  Cash payments(24)(3)(27)
  Restructuring charges23 4 27 
  Other(2)
(8)(1)(9)
Reserve balances at December 31, 202013 1 14 
  Cash payments(10)(5)(15)
  Restructuring charges3 6 9 
  Other(2)
(4)(1)(5)
Reserve balances at December 31, 2021
2 1 3 
  Cash payments(3)(3)(6)
  Restructuring charges2 3 5 
  Other(2)
— (1)(1)
Reserve balances at December 31, 2022(3)
$1 $— $1 
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(1)Represents liabilities transferred from ParentCo on the Separation Date (see Note A).
(2)Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation.
(3)The remaining reserves are expected to be paid in cash during 2023.