Summary
This 8-K filing from Alcoa Inc. (now Howmet Aerospace Inc.) on February 21, 2014, announces significant restructuring activities involving the permanent shutdown of the Point Henry smelter and two rolling mills in Australia. The smelter, with a capacity of 190,000 metric tons per year, will cease operations in August 2014, while the rolling mills, capable of producing 200,000 metric tons of can sheet annually, will close by the end of 2014. This decision stems from a strategic review indicating the smelter's lack of financial viability and excess capacity in the can sheet market. Investors should note the substantial financial impact of these closures. Alcoa expects to record restructuring charges ranging from $490 million to $530 million ($250 million to $270 million after-tax, or $0.22 to $0.25 per diluted share) in 2014, with approximately 60% recognized in the first quarter. These charges encompass accelerated depreciation, employee separation costs, inventory write-downs, and asset retirement/environmental remediation expenses. A portion of these charges, approximately $185 million, will result in future cash outlays, with $120 million expected in 2014.
Key Highlights
- 1Permanent shutdown of Point Henry smelter (190,000 MT/year capacity) in August 2014.
- 2Closure of two rolling mills (200,000 MT/year can sheet capacity) by end of 2014.
- 3Expected restructuring charges of $490-$530 million ($250-$270 million after-tax) in 2014.
- 4Approximately 60% of restructuring charges to be recorded in Q1 2014.
- 5Charges include accelerated depreciation, employee costs, inventory write-downs, and asset retirement/environmental remediation.
- 6Estimated $185 million of restructuring charges will result in future cash outlays, with $120 million in 2014.
- 7Decision driven by smelter's lack of financial viability and excess can sheet capacity.