Alcoa Announces Additional Actions on Pension and Other Postemployment Benefits (OPEB) in the United States
December 04 2019 - 4:10PM
Business Wire
Alcoa Corporation, a global leader in bauxite, alumina, and
aluminum products, today announced additional actions to reduce
liabilities and volatility risk from pensions and other
postemployment benefits (OPEB).
The actions are in alignment with Alcoa’s strategic priorities,
including making balance sheet improvements, and will reduce the
Company’s pension and OPEB liabilities by approximately $190
million, before remeasurements for affected plans, in the fourth
quarter 2019. The Company will record a non-cash settlement charge
of approximately $75 million (pre- and after-tax), or $0.40 per
share, in the fourth quarter of 2019.
In October of 2019, Alcoa offered lump sum buyouts to specific
participants in its U.S. defined benefit pension plans. As a
result, the Company paid approximately $110 million from plan
assets on November 30, 2019 to about 1,700 participants and was
relieved of the corresponding pension liability.
Separately, Alcoa intends to make two changes to retiree benefit
plans that will affect the OPEB liability associated with specific
U.S. retirees.
- Effective January 1, 2021, Alcoa will transition specific
retirees to a Medicare Exchange plan with a Company-provided
contribution. The change will improve cost predictability and allow
participants to elect coverage from a choice of available options.
Approximately 6,000 participants will be individually
notified.
- Life insurance coverage for certain retirees will end effective
December 31, 2019, and the Company will provide a one-time,
discretionary cash payment totaling approximately $15 million to
those affected. Approximately 8,900 retirees will receive their
portion of the discretionary payment in December 2019, along with
information on coverage conversion options. A similar action in
2018 affected U.S. salaried retirees.
In addition to the liability reduction, annual OPEB expense is
expected to decrease by approximately $18 million beginning in
2020. Further, OPEB cash payments will decrease by approximately $4
million in 2020 and by approximately $14 million annually,
beginning in 2021.
About Alcoa
Alcoa (NYSE: AA) is a global industry leader in bauxite,
alumina, and aluminum products, and is built on a foundation of
strong values and operating excellence dating back more than 130
years to the world-changing discovery that made aluminum an
affordable and vital part of modern life. Since developing the
aluminum industry, and throughout our history, our talented Alcoans
have followed on with breakthrough innovations and best practices
that have led to efficiency, safety, sustainability, and stronger
communities wherever we operate. Visit us online on www.alcoa.com,
follow @Alcoa on Twitter, and on Facebook at
www.facebook.com/Alcoa.
Forward-Looking Statements
This press release contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “anticipates,” “believes,” “could,”
“estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,”
“plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,”
“would,” or other words of similar meaning. All statements that
reflect the Company’s expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and
unknown risks, uncertainties, and changes in circumstances that are
difficult to predict. Although the Company believes that the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, it can give no assurance that these
expectations will be attained and it is possible that actual
results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and
uncertainties. Additional information concerning factors that could
cause actual results to differ materially from those projected in
the forward-looking statements is contained in the Company’s
filings with the U.S. Securities and Exchange Commission. The
Company disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable
law.
Dissemination of Company Information
Alcoa Corporation intends to make future announcements regarding
company developments and financial performance through its website,
www.alcoa.com, as well as through press releases, filings with the
Securities and Exchange Commission, conference calls, and
webcasts.
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Investor Contact James Dwyer 412-992-5450
James.Dwyer@alcoa.com
Media Contact Jim Beck 412-315-2909 Jim.Beck@alcoa.com
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