Restructuring and Other Charges

Restructuring and other charges for each year in the three-year period ended December 31, 2018 were comprised of the following:



	2018			2017			2016
Asset impairments	$	13		$	58		$	80
Layoff costs	20			64			68
Pension and Other postretirement benefits - net settlement and curtailment charges	91			—			2
Net (gain) loss on divestitures of assets and businesses (T)	(109		)	57			3
Other	13			(3		)	27
Reversals of previously recorded layoff costs	(19		)	(11		)	(25		)
Restructuring and other charges	$	9		$	165		$	155

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.

2018 Actions. In 2018, Arconic recorded Restructuring and other charges of $9 ($9 after-tax), which included a net gain on the sale of several assets and businesses of $109 ($81 after-tax), primarily made up of a gain on the asset sale of Texarkana of $154 ($119 after-tax) and loss on the sale of the Eger, Hungary forgings business of $43 ($39 after-tax) (see note T); charges of $96 ($75 after-tax) for pension settlement and $23 ($18 after-tax) for pension curtailment; a postretirement curtailment benefit of $28 ($22 after-tax) (see note G); and a charge of $20 ($17 after-tax) for layoff costs, including the separation of approximately 125 employees (89 in the Engineered Products and Solutions segment and 36 in Corporate); a charge of $12 ($9 after-tax) for contract termination costs and asset impairments associated with the shutdown of a facility in Acuna, Mexico; a charge of $6 ($4 after-tax) for contract termination costs related to the New York office; a charge of $8 ($4 after-tax) for other miscellaneous items including accelerated depreciation and asset impairments; and a benefit of $19 ($15 after-tax) for the reversal of a number of layoff reserves related to prior periods.

As of December 31, 2018, approximately 110 of the 125 employees were separated. The remaining separations for 2018 restructuring programs are expected to be completed by the end of 2019. In 2018, cash payments of $9 were made against layoff reserves related to the 2018 restructuring programs.

2017 Actions. In 2017, Arconic recorded Restructuring and other charges of $165 ($143 after-tax), which were comprised of the following components: $69 ($47 after-tax) for layoff costs related to cost reduction initiatives including the separation of approximately 880 employees (400 in the Engineered Products and Solutions segment, 245 in the Global Rolled Products segment, 135 in the Transportation and Construction Solutions segment, and 100 in Corporate), a charge of $60 ($60 after-tax) related to the sale of the Fusina, Italy rolling mill; a charge of $41 ($41 after-tax) for the impairment of assets associated with the sale of the Latin America extrusions business (see Note T); a net benefit of $6 ($4 after-tax) for the reversal of forfeited executive stock compensation of $13, partially offset by a charge of $7 for the related severance; a net charge of $12 ($7 after-tax) for other miscellaneous items; and a favorable benefit of $11 ($8 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of December 31, 2018, approximately 570 of the 660 employees (previously 760) were separated. The total number of employees associated with 2017 restructuring programs was updated to reflect employees, who were initially identified for separation, accepting other positions within Arconic and natural attrition. The remaining separations for 2017 restructuring programs are expected to be completed by the end of 2019. In 2018 and 2017, cash payments of $34 and $28, respectively, were made against layoff reserves related to 2017 restructuring programs.

2016 Actions. In 2016, Arconic recorded Restructuring and other charges of $155 ($114 after-tax), which were comprised of the following components: $57 ($46 after-tax) for costs related to the exit of certain legacy Firth Rixson operations in the U.K.; $37 ($24 after-tax) for exit costs related to the decision to permanently shut down a can sheet facility; $20 ($14 after-tax) for costs related to the closures of five facilities, primarily in the Transportation and Construction Solutions segment and Engineered Products and Solutions segment, including the separation of approximately 280 employees; $53 ($33 after-tax) for other layoff costs, including the separation of approximately 1,315 employees (1,045 in the Engineered Products and Solutions segment, 210 in Corporate, 30 in the Global Rolled Products segment, and 30 in the Transportation and Construction Solutions segment); $11 ($8 after-tax) for other miscellaneous items, including $3 ($2 after-tax) for the sale of Remmele Medical, an RTI subsidiary; $2 ($1 after-tax) for a pension settlement; and $25 ($12 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

In 2016, management made the decision to exit certain legacy Firth Rixson facilities in the U.K. Costs related to these actions included asset impairments and accelerated depreciation of $51; other exit costs of $4; and $2 for the separation of 60 employees.

Also in 2016, management approved the shutdown and demolition of the can sheet facility in Tennessee upon completion of the Toll Processing and Services Agreement with Alcoa Corporation. Costs related to this action included $21 in asset impairments; $9 in other exit costs; and $7 for the separation of 145 employees. The other exit costs of $9 represent $4 in asset retirement obligations and $3 in environmental remediation, both of which were triggered by the decision to permanently shut down and demolish the can sheet facility in Tennessee, and $2 in other exit costs.

As of December 31, 2018, the separations associated with the 2016 restructuring programs were essentially complete. In 2018, 2017, and 2016, cash payments of $4, $26, and $16, respectively, were made against layoff reserves related to 2016 restructuring programs.

Activity and reserve balances for restructuring charges were as follows:



	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2015	$	84		$	9		$	93
2016
Cash payments	(73		)	(13		)	(86		)
Restructuring charges	70			27			97
Other⁽¹⁾	(31		)	(14		)	(45		)
Reserve balances at December 31, 2016	$	50		$	9		$	59
2017
Cash payments	$	(59	)	$	(6	)	$	(65	)
Restructuring charges	64			1			65
Other⁽²⁾	1			(2		)	(1		)
Reserve balances at December 31, 2017	$	56		$	2		$	58
2018
Cash payments	$	(47	)	$	(2	)	$	(49	)
Restructuring charges	111			13			124
Other⁽³⁾	(110		)	2			(108		)
Reserve balances at December 31, 2018	$	10		$	15		$	25

⁽¹⁾

In 2016, Other for layoff costs included reversals of previously recorded restructuring charges of $25, effects of foreign currency translation and other of $4, and a reclassification of $2 in pension costs, as the impact was reflected in Arconic’s separate liability for Accrued pension benefits. Other for other exit costs included reclassifications of $8 in asset retirement and $2 in environmental obligations, as the impacts were reflected in Arconic’s separate liabilities for asset retirement obligations and environmental remediation, and a reclassification of $4 in legal obligations, as the impact was included in Arconic’s separate liability for legal costs.


⁽²⁾	In 2017, Other for layoff costs included a reclassification of a stock awards reversal of $13, offset by reversals of previously recorded restructuring charges of $11 and foreign currency translation of $1.


⁽³⁾	In 2018, Other for layoff costs included reclassifications of $119 in pension costs and a $28 credit in postretirement benefits, as the impacts were reflected in Arconic's separate liabilities for Accrued pension benefits and Accrued postretirement benefits, and reversals of previously recorded restructuring charges of $19.

The remaining reserves are expected to be paid in cash during 2019, with the exception of approximately $5 to $7, which is expected to be paid over the next several years for lease termination costs.