Huntsman Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

12 Months Ended

Dec. 31, 2013

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of December 31, 2013, 2012 and 2011, accrued restructuring, impairment and plant closing costs by type of cost and initiative consisted of the following (dollars in millions):

	Workforce reductions(1)			Demolition and decommissioning			Non-cancelable contract costs			Other restructuring costs			Total(2)

Accrued liabilities as of January 1, 2011	$	36		$	1		$	7		$	5		$	49
2011 charges for 2010 and prior initiatives		4			2			10			7			23
2011 charges for 2011 initiatives		87			—			1			1			89
Reversal of reserves no longer required		(5	)		—			—			—			(5	)
2011 payments for 2010 and prior initiatives		(26	)		(3	)		(1	)		(8	)		(38	)
2011 payments for 2011 initiatives		(13	)		—			—			(1	)		(14	)
Net activity of discontinued operations		—			—			—			(2	)		(2	)
Foreign currency effect on liability balance		(10	)		—			—			—			(10	)

Accrued liabilities as of December 31, 2011		73			—			17			2			92
2012 charges for 2011 and prior initiatives		9			5			—			10			24
2012 charges for 2012 initiatives		64			—			—			5			69
Reversal of reserves no longer required		(15	)		—			—			(1	)		(16	)
2012 payments for 2011 and prior initiatives		(31	)		(6	)		(2	)		(11	)		(50	)
2012 payments for 2012 initiatives		(12	)		—			—			(6	)		(18	)
Foreign currency effect on liability balance		2			1			—			1			4

Accrued liabilities as of December 31, 2012		90			—			15			—			105
2013 charges for 2012 and prior initiatives		32			16			53			20			121
2013 charges for 2013 initiatives		28			—			—			8			36
Reversal of reserves no longer required		(22	)		—			(4	)		—			(26	)
2013 payments for 2012 and prior initiatives		(66	)		(16	)		(3	)		(19	)		(104	)
2013 payments for 2013 initiatives		(10	)		—			—			(8	)		(18	)
Net activity of discontinued operations		—			—			(3	)		—			(3	)
Foreign currency effect on liability balance		—			—			2			—			2

Accrued liabilities as of December 31, 2013	$	52		$	—		$	60		$	1		$	113

(1): The total workforce reduction reserves of $52 million relate to the termination of 403 positions, of which 324 positions had not been terminated as of December 31, 2013.
(2): Accrued liabilities remaining at December 31, 2013 and 2012 by year of initiatives were as follows (dollars in millions):

	December 31,

	2013		2012
2011 initiatives and prior	$	74	$	52
2012 initiatives		21		53
2013 initiatives		18		—

Total	$	113	$	105

Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):

	Polyurethanes			Performance Products			Advanced Materials			Textile Effects			Pigments			Discontinued Operations			Corporate and other			Total

Accrued liabilities as of January 1, 2011	$	—		$	1		$	2		$	25		$	8		$	8		$	5		$	49
2011 charges for 2010 and prior initiatives		—			—			—			14			7			—			2			23
2011 charges for 2011 initiatives		—			—			21			65			3			—			—			89
Reversal of reserves no longer required		—			—			(1	)		(4	)		—			—			—			(5	)
2011 payments for 2010 and prior initiatives		—			—			(1	)		(18	)		(13	)		—			(6	)		(38	)
2011 payments for 2011 initiatives		—			—			(7	)		(5	)		(2	)		—			—			(14	)
Net activity of discontinued operations		—			—			—			—			—			(2	)		—			(2	)
Foreign currency effect on liability balance		—			—			(2	)		(8	)		—			—			—			(10	)

Accrued liabilities as of December 31, 2011		—			1			12			69			3			6			1			92
2012 charges for 2011 and prior initiatives		—			1			4			14			4			—			1			24
2012 charges for 2012 initiatives		38			—			30			—			—			—			1			69
Reversal of reserves no longer required		—			—			—			(16	)		—			—			—			(16	)
2012 payments for 2011 and prior initiatives		—			(2	)		(15	)		(27	)		(5	)		—			(1	)		(50	)
2012 payments for 2012 initiatives		(12	)		—			(6	)		—			—			—			—			(18	)
Foreign currency effect on liability balance		1			—			2			2			(1	)		—			—			4

Accrued liabilities as of December 31, 2012		27			—			27			42			1			6			2			105
2013 charges for 2012 and prior initiatives		5			—			38			73			4			—			1			121
2013 charges for 2013 initiatives		—			18			—			1			—			—			17			36
Reversal of reserves no longer required		(9	)		—			(8	)		(9	)		—			—			—			(26	)
2013 payments for 2012 and prior initiatives		(14	)		—			(45	)		(41	)		(3	)		—			(1	)		(104	)
2013 payments for 2013 initiatives		—			(7	)		—			—			(1	)		—			(10	)		(18	)
Net activity of discontinued operations		—			—			—			—			—			(3	)		—			(3	)
Foreign currency effect on liability balance		—			(1	)		—			2			1			—			—			2

Accrued liabilities as of December 31, 2013	$	9		$	10		$	12		$	68		$	2		$	3		$	9		$	113


Current portion of restructuring reserves	$	4		$	10		$	12		$	15		$	2		$	3		$	9		$	55
Long-term portion of restructuring reserve		5			—			—			53			—			—			—			58

Details with respect to cash and noncash restructuring charges for the years ended December 31, 2013, 2012 and 2011 by initiative are provided below (dollars in millions):


Cash charges:
2013 charges for 2012 and prior initiatives	$	121
2013 charges for 2013 initiatives		36
Reversal of reserves no longer required		(26	)
Pension-related charges		7
Non-cash charges		13

Total 2013 Restructuring, Impairment and Plant Closing Costs	$	151


Cash charges:
2012 charges for 2011 and prior initiatives	$	24
2012 charges for 2012 initiatives		69
Reversal of reserves no longer required		(16	)
Non-cash charges		15

Total 2012 Restructuring, Impairment and Plant Closing Costs	$	92


Cash charges:
2011 charges for 2010 and prior initiatives	$	23
2011 charges for 2011 initiatives		89
Reversal of reserves no longer required		(5	)
Non-cash charges		60

Total 2011 Restructuring, Impairment and Plant Closing Costs	$	167

2013 RESTRUCTURING ACTIVITIES

During 2012, our Polyurethanes segment began implementing a restructuring program to reduce annualized fixed costs. As of December 31, 2013, our Polyurethanes segment restructuring reserve consisted of $9 million related to this program. In connection with this program, we recorded charges of $5 million and reversed charges of $9 million during 2013 primarily for workforce reductions. Our Polyurethanes segment also recorded pension-related charges of $6 million during 2013 related to this program.

During 2013, our Performance Products segment implemented a restructuring program to refocus our surfactants business in Europe. As of December 31, 2013, our Performance Products segment restructuring reserve consisted of $10 million related to this program. In connection with this program, we recorded charges of $13 million during 2013 primarily related to workforce reductions. Additionally, we recorded charges of $5 million during 2013 primarily related to workforce reductions in our Australian operation.

During 2011, our Textile Effects segment began implementing a significant restructuring program, including the closure of our production facilities and business support offices in Basel, Switzerland, as part of an ongoing strategic program aimed at improving the segment's long-term global competitiveness. In connection with this program, during 2013, our Textile Effects segment recorded charges of $53 million for the early termination of long-term fixed cost contracts, $16 million for decommissioning, $3 million for other restructuring and $1 million for workforce reductions and reversed charges of $5 million related to workforce reductions, as well as recorded a $9 million noncash charge for a pension settlement loss. In addition, during 2013, we reversed charges of $4 million that were no longer required for long term fixed costs contracts in relation to our consolidation of manufacturing activities and processes at our site in Basel, Switzerland.

As of December 31, 2013, our Pigments segment restructuring reserve consisted of $2 million primarily related to workforce reductions at our Scarlino, Italy plant. During 2013, our Pigments segment recorded charges of $4 million primarily related to the closure of our Grimsby, U.K. plant.

As of December 31, 2013, our Corporate and other segment restructuring reserve consisted of $9 million primarily related to a reorganization of our global information technology organization and a reorganization and regional consolidation of our purchasing activities. During 2013, we recorded charges of $18 million in Corporate and other primarily related to these initiatives. Our Corporate and other segment also recorded pension-related charges of $1 million during 2013 related to our initiatives.

2012 RESTRUCTURING ACTIVITIES

During 2012, our Polyurethanes segment implemented a restructuring program to reduce annualized fixed costs. In connection with this program, we recorded restructuring expenses of $38 million during 2012 primarily for workforce reductions. As of December 31, 2012, our Polyurethanes segment restructuring reserve consisted of $27 million related to this program.

During the fourth quarter of 2012, our Advanced Materials segment began implementing a global transformational change program, subject to consultation with relevant employee representatives, designed to improve the segment's manufacturing efficiencies, enhance commercial excellence and ensure its long-term global competitiveness. As of December 31, 2012, our Advanced Materials segment restructuring reserve consisted of $27 million primarily related to this program. During 2012, we recorded charges of $38 million of which $28 million related to our global transformational change program, $3 million related to the reorganization of our global structure and relocation of our divisional headquarters from Basel, Switzerland to The Woodlands, Texas and $3 million related primarily to a redesign of our planning process focused on inventory reduction. Our Advanced Materials segment also recorded noncash charges of $4 million related to pension settlements.

During 2011, our Textile Effects segment began implementing a significant restructuring program, including the closure of our production facilities and business support offices in Basel, Switzerland, as part of an ongoing strategic program aimed at improving the segment's long-term global competitiveness. In connection with this plan, during 2012, we recorded cash charges of $1 million for workforce reductions, $9 million for decommissioning and other restructuring expenses, and noncash charges of $11 million primarily for pension settlements. In addition, during 2012, our Textile Effects segment recorded charges of $4 million of which $2 million related to the closure of our St. Fons, France facility and $2 million related to a global transfer pricing initiative. We reversed charges of $16 million which were no longer required for workforce reductions at our production facility in Langweid, Germany, the simplification of the commercial organization and optimization of our distribution network, the consolidation of manufacturing activities and processes at our site in Basel, Switzerland and the closure of our production facilities in Basel, Switzerland.

As of December 31, 2012, our Pigments segment restructuring reserve consisted of $1 million primarily related to workforce reductions at our Scarlino, Italy plant. During 2012, our Pigments segment recorded charges of $4 million related to the closure of our Grimsby, U.K. plant.

As of December 31, 2012, our Corporate and other segment restructuring reserve consisted of $2 million primarily related to a reorganization and regional consolidation of our purchasing activities. During 2012, we recorded charges of $2 million in Corporate and other primarily related to workforce reductions in connection with this project.

2011 RESTRUCTURING ACTIVITIES

As of December 31, 2011, our Advanced Materials segment restructuring reserve consisted of $12 million related to workforce reductions in connection with a reorganization of its global structure and relocation of its divisional headquarters from Basel, Switzerland to The Woodlands, Texas. During 2011, our Advanced Materials segment recorded net charges of $20 million primarily related this activity.

On September 27, 2011, we announced plans to implement a significant restructuring of our Textile Effects segment, including the closure of our production facilities and business support offices in Basel, Switzerland, as part of an ongoing strategic program aimed at improving the Textile Effects segment's long-term global competitiveness. In connection with this plan during 2011, we recorded a charge of $62 million for workforce reduction, a pension curtailment gain of $38 million and a charge of $53 million for the impairment of long-lived assets at our Basel, Switzerland manufacturing facility. For purposes of calculating the impairment charge, the fair value of the Basel, Switzerland manufacturing facility was based on the discounted cash flows of that facility. As of December 31, 2011, our Textile Effects segment restructuring reserve consisted of $69 million, of which $2 million related to opening balance sheet liabilities from the Textile Effects Acquisition, $2 million related to workforce reductions at our production facility in Langweid, Germany, $2 million related to the simplification of the commercial organization and optimization of our distribution network, $15 million related to the consolidation of manufacturing activities and processes at our site in Basel, Switzerland, $47 million related to the closure of our production facilities and business support offices in Basel, Switzerland and $1 million related to the consolidation of our North Carolina sites.

In addition, during 2011, our Textile Effects segment recorded charges of $22 million, of which $5 million related to simplification of our commercial organization and optimization of our distribution network, $12 million related to non-workforce reductions incurred for the consolidation of our Switzerland manufacturing facilities, and $4 million related to the consolidation of our North Carolina sites. We reversed charges of $4 million which were no longer required for workforce reductions at our production facility in Langweid, Germany and the consolidation of manufacturing activities and processes at our site in Basel, Switzerland.

As of December 31, 2011, our Pigments segment restructuring reserve consisted of $3 million primarily related to workforce reductions at our Huelva, Spain and Scarlino, Italy plants. During 2011, our Pigments segment recorded charges of $10 million, of which $7 million related to the closure of our Grimsby, U.K. plant and $3 million related to workforce reductions at our Umbogintwini, South Africa plant.

As of December 31, 2011, our Corporate and other segment restructuring reserve consisted of $1 million primarily related to a reorganization and regional consolidation of our transactional accounting activities. During 2011, we recorded charges of $2 million in Corporate and other primarily related to workforce reductions in connection with this project.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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