Restructuring and Other Charges

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

In the 2021 third quarter Arconic recorded Restructuring and other charges of $14, which were comprised of the following components: a $5 charge for the settlement of certain employee retirement benefits (see Note G); a $3 charge related to several legal matters, including the assumption of a related environmental remediation obligation (see Environmental Matters in Note P); a $3 charge related to idling certain operations in the Extrusions segment; a $3 charge for the settlement of legacy tax matters related to Brazil; a $1 charge for other items; and a $1 credit for the reversal of reserves established in prior periods.

In the 2021 nine-month period, Arconic recorded Restructuring and other charges of $612, which were comprised of the following components: a $573 charge for the settlement of certain employee retirement benefits (see Note G); 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 $6 charge related to idling certain operations in the Extrusions segment, including layoff costs associated with approximately 115 employees; a $4 net benefit for the settlement of legacy tax matters related to Brazil; a $3 charge related to several legal matters, including the assumption of a related environmental remediation obligation (see Environmental Matters in Note P); a $3 credit for the reversal of reserves established in prior periods; a $1 additional loss on the sale of an aluminum rolling mill in Brazil (see Itapissuma in Note O); and a $2 net charge for other items.

In the 2020 third quarter Arconic recorded Restructuring and other charges of $3, which were comprised of the following components: a $3 charge for the settlement of certain employee retirement benefits (see Note G); a $2 credit for the reversal of reserves established in prior periods; a $1 charge for layoff costs associated with the separation of approximately 30 employees in the Extrusions segment in response to the impact of the COVID-19 pandemic; and a $1 charge for other items.

In the 2020 nine-month period, Arconic recorded Restructuring and other charges of $61, which were comprised of the following components: a $58 charge for the settlement of certain employee retirement benefits (see Note G); a $25 net gain related to the sales of an extrusions plant in South Korea and an aluminum rolling mill in Brazil (see Note O); an $18 charge for layoff costs associated with the separation of approximately 440 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; an $11 charge for costs, of which $8 is for layoff costs associated with approximately 140 employees, related to the planned closure and related reorganizations of several small facilities in the Building and Construction Systems and Extrusions segments; a $4 charge for legacy non-income tax matters related to Brazil; a $2 charge for an allocation of ParentCo’s corporate restructuring activity (see Cost Allocations in Note A); and a $7 charge for other items. As of September 30, 2021, the total expected employee separations related to actions initiated in the 2020 nine-month period were 450. The reduction of 130 was due to employees initially identified for separation accepting other positions within the Company, natural attrition, and other events that occurred in the second half of 2020 and/or 2021 nine-month period. Accordingly, the Company reduced its estimated layoff costs associated with these actions by $8, of which $2 were reflected as reversals in the 2021 nine-month period (see above).

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:


	Third quarter ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Rolled Products	$	—	$	(1)	$	1	$	15
Building and Construction Systems	—		—		(1)		6
Extrusions	3		1		6		(27)
Segment total	3		—		6		(6)
Corporate	11		3		606		67
	$	14	$	3	$	612	$	61

As of September 30, 2021, the employee separations associated with 2021 and 2019 restructuring programs were essentially complete and approximately 485 of the 500 (550 as of December 31, 2020) employees associated with 2020 restructuring programs were separated. The total number of employees related to the 2020 restructuring programs was previously updated to reflect employees initially identified for separation accepting other positions within the Company and natural attrition. The remaining separations for the 2020 restructuring programs are expected to be completed by the end of 2021.

In the 2021 third quarter and nine-month period, Arconic made cash payments of $1 and $2, respectively, against layoff reserves related to the 2021 restructuring programs, less than $1 and $4, respectively, against layoff reserves related to the 2020 restructuring programs, and $1 and $3, respectively, against layoff reserves related to the 2019 restructuring programs.

Activity and reserve balances for restructuring charges were as follows:


	Layoff costs		Other costs		Total
Reserve balances at December 31, 2019	$	20	$	1	$	21
Separation-related adjustments(1)	2		—		2
Cash payments	(24)		(3)		(27)
Restructuring charges	23		4		27
Other(2)	(8)		(1)		(9)
Reserve balances at December 31, 2020	13		1		14
Cash payments	(9)		(2)		(11)
Restructuring charges	2		5		7
Other(2)	(3)		(1)		(4)
Reserve balances at September 30, 2021(3)	$	3	$	3	$	6

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(1)Represents liabilities transferred from ParentCo on April 1, 2020 in connection with the Separation (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 the remainder of 2021, with the exception of $2 that is expected to be paid in 2022 related to special termination benefits.