D. Restructuring and Other Charges – In the second quarter and six-month period of 2014, Alcoa recorded Restructuring and other charges of $110 ($54 after-tax and noncontrolling interests) and $571 ($328 after-tax and noncontrolling interests), respectively.

Restructuring and other charges in the 2014 second quarter included $107 ($51 after-tax and noncontrolling interest) for exit costs related to decisions to permanently shut down and demolish two smelters and two rolling mills (see below) and $3 ($3 after-tax) for other miscellaneous items, including layoff costs for the separation of approximately 75 employees (30 in the Global Rolled Products segment, 30 in Corporate, and 15 in the other three segments combined).

In the 2014 six-month period, Restructuring and other charges included $443 ($240 after-tax and noncontrolling interest) for exit costs related to decisions to permanently shut down and demolish two smelters and two rolling mills (see below); $68 ($44 after-tax and noncontrolling interest) for the temporary curtailment of two smelters and a related production slowdown at one refinery (see below); $33 ($26 after-tax) for asset impairments related to prior capitalized costs for a modernization project at a smelter in Canada that is no longer being pursued; $17 ($11 after-tax) for layoff costs, including the separation of approximately 245 employees (115 in the Engineered Products and Solutions segment, 30 in the Global Rolled Products segment, 10 in the Alumina and Primary Metals segments combined, and 90 in Corporate); $17 ($11 after-tax) of charges for other miscellaneous items; and $7 ($4 after-tax and noncontrolling interests) for the reversal of a number of small layoff reserves related to prior periods.

In the 2014 first quarter, management approved the permanent shutdown and demolition of the remaining capacity (84,000 metric-tons-per-year) at the Massena East smelter in New York and the full capacity (190,000 metric-tons-per-year) at the Point Henry smelter in Australia. The capacity at Massena East was fully shut down by the end of the first quarter of 2014 and the Point Henry smelter is expected to be shut down in August 2014. Demolition and remediation activities related to both the Massena East and Point Henry smelters will begin in the second half of 2014 and are expected to be completed by the end of 2020 and 2018, respectively.

The decisions on the Massena East and Point Henry smelters are part of a 15-month review of 460,000 metric tons of smelting capacity initiated by management in the 2013 second quarter for possible curtailment. Through this review, management determined that the remaining capacity of the Massena East smelter was no longer competitive and the Point Henry smelter has no prospect of becoming financially viable. Management also initiated the temporary curtailment of the remaining capacity (62,000 metric-tons-per-year) at the Poços de Caldas smelter and additional capacity (85,000 metric-tons-per-year) at the São Luís smelter, both in Brazil. These curtailments were completed by the end of May 2014. As a result of these curtailments, production at the Poços de Caldas refinery was reduced (200,000 metric-tons-per-year), which was completed by the end of the 2014 second quarter.

Also in the 2014 first quarter, management approved the permanent shutdown of Alcoa’s two rolling mills in Australia, Point Henry and Yennora. This decision was made due to the significant impact of excess can sheet capacity in both Australia and Asia. The two rolling mills have a combined can sheet capacity of 200,000 metric-tons-per-year and will be closed by the end of 2014. Demolition and remediation activities related to the two rolling mills will begin in 2015 and are expected to be completed by the end of 2018.

In the second quarter and six-month period of 2014, costs related to the shutdown and curtailment actions included $4 and $137, respectively, for the layoff of approximately 1,830 employees (1,230 in the Primary Metals segment, 470 in the Global Rolled Products segment, 90 in the Alumina segment, and 40 in Corporate); accelerated depreciation of $91 and $150, respectively, related to the three facilities in Australia as they continue to operate during 2014; and $10 and $133, respectively, in other exit costs. Additionally, the costs in the 2014 six-month period also include asset impairments of $91, representing the write-off of the remaining book value of all related properties, plants, and equipment. Furthermore in the six-month period of 2014, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value resulting in a charge of $34 ($20 after-tax and noncontrolling interest), respectively, which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The other exit costs of $133 in the 2014 six-month period represent $55 in asset retirement obligations and $38 in environmental remediation, both triggered by the decisions to permanently shut down and demolish the aforementioned structures in the U.S. and Australia, and $40 in other related costs, including supplier and customer contract-related costs. Additional charges of approximately $110 are expected to be recognized throughout the remainder of 2014 related to these shutdown actions in Australia.

In the second quarter and six-month period of 2013, Alcoa recorded Restructuring and other charges of $244 ($170 after-tax and noncontrolling interests) and $251 ($175 after-tax and noncontrolling interests), respectively.

Restructuring and other charges in the 2013 second quarter included $103 ($62 after noncontrolling interest) related to a legal matter; $86 ($70 after-tax) for exit costs related to the permanent shutdown and demolition of certain structures at two non-U.S. locations (see below); $29 ($19 after-tax) for asset impairments and related costs for retirements of previously idled structures; $24 ($18 after-tax and noncontrolling interests) for the layoff of approximately 470 employees (190 in the Global Rolled Products segment, 180 in the Engineered Products and Solutions segment, 55 in the Primary Metals segment, and 45 in Corporate); a charge of $4 ($2 after-tax) for other miscellaneous items; and $2 ($1 after-tax and noncontrolling interests) for the reversal of a number of small layoff reserves related to prior periods.

In the 2013 six-month period, Restructuring and other charges included $218 ($151 after-tax and noncontrolling interests) for the previously mentioned legal matter, exit costs at two non-U.S. locations, and retirements of previously idled structures combined; $27 ($20 after-tax and noncontrolling interests) for layoff costs, including the separation of approximately 530 employees (190 in the Global Rolled Products segment, 180 in the Engineered Products and Solutions segment, 115 in the Primary Metals segment, and 45 in Corporate) and a pension plan settlement charge related to previously separated employees; a charge of $8 ($5 after-tax) for other miscellaneous items; and $2 ($1 after-tax and noncontrolling interests) for the reversal of a number of small layoff reserves related to prior periods.

In the 2013 second quarter, management approved the permanent shutdown and demolition of (i) two potlines (capacity of 105,000 metric-tons-per-year) that utilize Soderberg technology at the smelter located in Baie Comeau, Québec, Canada (remaining capacity of 280,000 metric-tons-per-year composed of two prebake potlines) and (ii) the smelter located in Fusina, Italy (capacity of 44,000 metric-tons-per-year). The two Soderberg lines at Baie Comeau were fully shut down by the end of September 2013 while the Fusina smelter was previously temporarily idled in 2010. Demolition and remediation activities related to the two Soderberg lines and the Fusina smelter began in the fourth quarter of 2013 and are expected to be completed by the end of 2015 and 2017, respectively.

The decision on the two Soderberg lines was part of a 15-month review of 460,000 metric tons of smelting capacity initiated by management earlier in the 2013 second quarter for possible curtailment (announced on May 1, 2013), while the decision on the Fusina smelter was in addition to the capacity being reviewed. Factors leading to both decisions were in general focused on achieving sustained competitiveness and included, among others: lack of an economically viable, long-term power solution (Italy); changed market fundamentals; other existing idle capacity; and restart costs.

In both the second quarter and six-month period of 2013, exit costs related to these actions included accelerated depreciation of $23 (Baie Comeau) and asset impairments of $14 (Fusina) representing the write-off of the remaining book value of all related properties, plants, and equipment, and $49 in other exit costs. Additionally, in both the second quarter and six-month period of 2013, remaining inventories, mostly operating supplies and raw materials, were written down to their net realizable value resulting in a charge of $7 ($5 after-tax), which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations. The other exit costs of $49 represent $44 in asset retirement obligations and $5 in environmental remediation, both triggered by the decisions to permanently shut down and demolish these structures.

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,
	2014		2013		2014		2013
Alumina	$	—	$	—	$	7	$	—
Primary Metals		84		94		415		94
Global Rolled Products		23		7		113		10
Engineered Products and Solutions		—		19		4		22

Segment total		107		120		539		126
Corporate		3		124		32		125

Total restructuring and other charges	$	110	$	244	$	571	$	251

As of June 30, 2014, approximately 745 of the 2,075 employees associated with 2014 restructuring programs and approximately 1,350 of the 1,660 employees associated with 2013 restructuring programs were separated. The remaining separations for the 2014 and 2013 restructuring programs are expected to be completed by the end of 2014.

In the 2014 second quarter and six-month period, cash payments of $22 and $23, respectively, were made against the layoff reserves related to the 2014 restructuring programs and $8 and $32, respectively, were made against the layoff reserves related to the 2013 restructuring programs.

Activity and reserve balances for restructuring charges were as follows:


	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2012	$	59		$	52		$	111

2013:
Cash payments		(63	)		(11	)		(74	)
Restructuring charges		201			85			286
Other*		(101	)		(84	)		(185	)

Reserve balances at December 31, 2013		96			42			138

2014:
Cash payments		(61	)		(6	)		(67	)
Restructuring charges		154			140			294
Other*		(5	)		(132	)		(137	)

Reserve balances at June 30, 2014	$	184		$	44		$	228

Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation. In the 2014 six-month period, Other for other exit costs also included a reclassification of the following restructuring charges: $55 in asset retirement and $42 in environmental obligations, as these liabilities are included in Alcoa’s separate reserves for asset retirement obligations and environmental remediation (see Note H), respectively. In 2013, Other for layoff costs also included a reclassification of $92 in pension costs, as this obligation was included in Alcoa’s separate liability for pension obligations. Also in 2013, Other for other exit costs also included a reclassification of the following restructuring charges: $58 in asset retirement and $12 in environmental obligations, as these liabilities were included in Alcoa’s separate reserves for asset retirement obligations and environmental remediation, respectively.

The remaining reserves are expected to be paid in cash during 2014, with the exception of approximately $40 to $45, which is expected to be paid over the next several years for lease termination costs, ongoing site remediation work, and special separation benefit payments.