Restructuring and Other Charges

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring and other charges for each year in the three-year period ended December 31, 2019 were comprised of the following:



	2019			2018			2017
Non-cash asset impairments	$	570		$	13		$	58
Layoff costs	103			20			64
Pension and Other postretirement benefits - net settlement and curtailment charges	(49		)	91			—
Net (gain) loss on divestitures of assets and businesses (S)	(20		)	(109		)	57
Other	26			13			(3		)
Reversals of previously recorded layoff costs	(10		)	(19		)	(11		)
Restructuring and other charges	$	620		$	9		$	165

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.

2019 Actions. In 2019, Arconic recorded Restructuring and other charges of $620 ($512 after-tax), this included a non-cash charge for asset impairments of $570 ($477 after-tax), primarily comprised of $428 ($345 after-tax) for impairment of the Disks long-lived asset group, a charge of $112 ($109 after-tax) for impairment of assets associated with agreements to sell the Company’s Brazilian rolling mill operations ($53), the U.K. forgings business ($46), and a small additive business ($13), a charge of $25 ($19 after-tax) for impairment of a trade name intangible asset and properties, plant, and equipment related to the Company’s primary research and development facility, and a charge of $5 ($4 after-tax) for an impairment of a cost method investment of the GRP segment; a charge of $103 ($78 after-tax) for layoff costs, including the separation of approximately

1,310 employees (484 in the GRP segment, 460 in Corporate, and 366 in the EP&F segment); a charge of $26 ($21 after-tax) for other miscellaneous items including lease terminations of $12 primarily related to a corporate aircraft, accelerated depreciation of $9, a net charge of $2 for executive severance net of the benefit of forfeited executive stock compensation, and a charge for various other exit costs of $4; and a charge of $9 ($7 after-tax) for pension settlement accounting. These charges were partially offset by a benefit of $58 ($45 after-tax) from the elimination of the life insurance benefit for the U.S. salaried and non-bargaining hourly retirees of the Company and its subsidiaries; a benefit of $10 ($9 after-tax) from the reversal of a number of current year layoff reserves; and a gain of $20 ($17 after-tax) for contingent consideration received from the Texarkana sale.

As of December 31, 2019, approximately 947 of the 1,310 employees were separated. The remaining separations for the 2019 restructuring programs are expected to be completed in 2020. In 2019, cash payments of $65 were made against layoff reserves related to 2019 restructuring programs.

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 Hungary forgings business of $43 ($39 after-tax) (see note S); 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 F); and a charge of $20 ($17 after-tax) for layoff costs, including the separation of approximately 125 employees (89 in the EP&F 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, 2019, the separations associated with the 2018 restructuring programs were essentially complete. In 2019 and 2018, cash payments of $4 and $9, respectively, 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: a charge of $69 ($47 after-tax) for layoff costs related to cost reduction initiatives including the separation of approximately 880 employees (403 in the EP&F segment, 336 in the GRP segment, and 141 in Corporate), a charge of $60 ($60 after-tax) related to the sale of the 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 S); 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 benefit of $11 ($8 after-tax) for the reversal of a number of small layoff reserves related to prior periods.

As of December 31, 2019, the separations associated with the 2017 restructuring programs were essentially complete. In 2019, 2018, and 2017, cash payments of $5, $34, and $28, respectively, were made against layoff reserves related to the 2017 restructuring programs.

Activity and reserve balances for restructuring charges were as follows:



	Layoff costs			Other exit costs			Total
Reserve balances at December 31, 2016	$	50		$	9		$	59
2017
Cash payments	(59		)	(6		)	(65		)
Restructuring charges	64			1			65
Other⁽¹⁾	1			(2		)	(1		)
Reserve balances at December 31, 2017	$	56		$	2		$	58
2018
Cash payments	$	(47	)	$	(2	)	$	(49	)
Restructuring charges	111			13			124
Other⁽²⁾	(110		)	2			(108		)
Reserve balances at December 31, 2018	$	10		$	15		$	25
2019
Cash payments	$	(74	)	$	(5	)	$	(79	)
Restructuring charges	56			574			630
Other⁽³⁾	39			(581		)	(542		)
Reserve balances at December 31, 2019	$	31		$	3		$	34


⁽¹⁾	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.


⁽²⁾	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.

⁽³⁾

In 2019, Other for layoff costs included reclassifications of a $58 credit for elimination of life insurance benefits for U.S. salaried and non-bargaining hourly retirees, a charge of $9 for pension plan settlement accounting, 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 $10.

In 2019, Other for other exit costs included a charge of $428 for impairment of the Disks long-lived asset group; a charge of $112 for impairment of assets associated with agreement to sell the Company’s Brazilian rolling mill operations, the U.K. forgings business, and a small additive business; a charge of $25 for impairment of properties, plants, and equipment related to the Company’s primary research and development facility and a trade name intangible asset; a charge of $12 for lease terminations; a charge of $9 for accelerated depreciation as the impacts were primarily reflected in various noncurrent asset accounts; a charge of $5 related to the impairment of a cost method investment of GRP, and a charge of $1 related to other miscellaneous items; partially offset by a gain of $20 related to contingent consideration from the Texarkana sale. Additionally, Other included the reclassification of $9 in lease exit costs to reduce right-of-use assets within Other noncurrent assets in accordance with the new lease accounting standard.

The remaining reserves are expected to be paid in cash during 2020.