Restructuring and Other Charges

Restructuring and other charges for each year in the three-year period ended December 31, 2017 were comprised of the following:



	2017			2016			2015
Asset impairments	$	58		$	80		$	—
Layoff costs	64			70			97
Net loss on divestitures of businesses (F)	57			3			136
Other	(3		)	27			(11		)
Reversals of previously recorded layoff costs	(11		)	(25		)	(8		)
Restructuring and other charges	$	165		$	155		$	214

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.

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 agreement to sell the Latin America Extrusions business (see Note F); 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, 2017, approximately 300 of the 880 employees were separated. The remaining separations for 2017 restructuring programs are expected to be completed by the end of 2018. In 2017, cash payments of $28 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; $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 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, 2017, approximately 1,280 of the 1,700 (previously 1,750) employees were separated. The total number of employees associated with 2016 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 2016 restructuring programs are expected to be completed by the end of 2018. In 2017 and 2016, cash payments of $26 and $16 were made against layoff reserves related to 2016 restructuring programs.

2015 Actions. In 2015, Arconic recorded Restructuring and other charges of $214 ($192 after-tax), which were comprised of the following components: a $136 ($134 after-tax) net loss related to the March 2015 divestiture of a rolling mill in Russia and post-closing adjustments associated with the December 2014 divestitures of three rolling mills located in Spain and France; $97 ($70 after-tax) for layoff costs, including the separation of approximately 1,505 employees (590 in the Engineered Products and Solutions segment, 425 in the Transportation and Construction Solutions segment, 400 in Corporate and 90 in the Global Rolled Products segment); an $18 ($13 after-tax) gain on the sale of land related to one of the rolling mills in Australia that was permanently closed in December 2014; a net charge of $7 ($4 after-tax) for other miscellaneous items; and $8 ($3 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of December 31, 2017, the separations associated with the 2015 restructuring programs were essentially complete. In 2017, 2016 and 2015, cash payments of $5, $55 and $18, respectively, were made against layoff reserves related to 2015 restructuring programs.

Arconic does not include Restructuring and other charges in the results of its reportable segments. The pre-tax impact of allocating such charges to segment results would have been as follows:



	2017		2016		2015
Engineered Products and Solutions	$	30	$	78	$	46
Global Rolled Products	72		40		121
Transportation and Construction Solutions	52		14		8
Segment total	154		132		175
Corporate	11		23		39
Total restructuring and other charges	$	165	$	155	$	214

Activity and reserve balances for restructuring charges were as follows:



	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2014	$	48		$	20		$	68
2015:
Cash payments	(45		)	(12		)	(57		)
Restructuring charges	97			7			104
Other*	(16		)	(6		)	(22		)
Reserve balances at December 31, 2015	84			9			93
2016:
Cash payments	(73		)	(13		)	(86		)
Restructuring charges	70			27			97
Other*	(31		)	(14		)	(45		)
Reserve balances at December 31, 2016	50			9			59
2017:
Cash payments	(59		)	(6		)	(65		)
Restructuring charges	64			1			65
Other*	1			(2		)	(1		)
Reserve balances at December 31, 2017	$	56		$	2		$	58

Other includes reversals of previously recorded restructuring charges and the effects of foreign currency translation. In 2017, Other for layoff costs also includes the reclassification of a stock awards reversal of $13. In 2016, Other for other exit costs also included a reclassification of $8 in asset retirement and $2 in environmental obligations, as these liabilities were included in Arconic’s separate reserves for asset retirement obligations and environmental remediation. Other for other exit costs also included a reclassification of $4 in legal obligations, as these liabilities were included in Arconic’s separate reserves for legal costs. In 2015, Other for other exit costs included a reclassification of $5 for certain obligations included in Arconic’s separate reserves for warranties, lease terminations and tax indemnities.

The remaining reserves are expected to be paid in cash during 2018.