Quarterly report pursuant to Section 13 or 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

v3.2.0.727
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
6 Months Ended
Jun. 30, 2015
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS  
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

 

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

        As of June 30, 2015 and December 31, 2014, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):

                                                                                                                                                                                    

 

 

Workforce
reductions(1)

 

Demolition and
decommissioning

 

Non-cancelable
lease and contract
termination costs

 

Other
restructuring
costs

 

Total(2)

 

Accrued liabilities as of January 1, 2015

 

$

87

 

$

 

$

48

 

$

3

 

$

138

 

2015 charges for 2014 and prior initiatives

 

 

55

 

 

3

 

 

6

 

 

12

 

 

76

 

2015 charges for 2015 initiatives

 

 

44

 

 

 

 

 

 

 

 

44

 

Reversal of reserves no longer required

 

 

(1

)

 

 

 

 

 

 

 

(1

)

2015 payments for 2014 and prior initiatives

 

 

(25

)

 

(3

)

 

(3

)

 

(11

)

 

(42

)

2015 payments for 2015 initiatives

 

 

(4

)

 

 

 

 

 

 

 

(4

)

Net activity of discontinued operations

 

 

 

 

 

 

(1

)

 

 

 

(1

)

Foreign currency effect on liability balance

 

 

(6

)

 

 

 

3

 

 

 

 

(3

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Accrued liabilities as of June 30, 2015

 

$

150

 

$

 

$

53

 

$

4

 

$

207

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  


 

 

 

(1)          

The workforce reduction reserves relate to the termination of 1,344 positions, of which 1,268 positions had not been terminated as of June 30, 2015.

(2)          

Accrued liabilities by initiatives were as follows (dollars in millions):

                                                                                                                                                                                    

 

 

June 30,
2015

 

December 31,
2014

 

2013 and prior initiatives

 

$

68 

 

$

75 

 

2014 initiatives

 

 

98 

 

 

63 

 

2015 initiatives

 

 

41 

 

 

 

​  

​  

​  

​  

Total

 

$

207 

 

$

138 

 

​  

​  

​  

​  

​  

​  

​  

​  

        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 and
Additives

 

Discontinued
Operations

 

Corporate
and Other

 

Total

 

Accrued liabilities as of January 1, 2015

 

$

6

 

$

9

 

$

5

 

$

54

 

$

59

 

$

1

 

$

4

 

$

138

 

2015 charges for 2014 and prior initiatives

 

 

2

 

 

1

 

 

1

 

 

12

 

 

57

 

 

 

 

3

 

 

76

 

2015 charges for 2015 initiatives

 

 

13

 

 

 

 

3

 

 

1

 

 

27

 

 

 

 

 

 

44

 

Reversal of reserves no longer required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

(1

)

2015 payments for 2014 and prior initiatives

 

 

(4

)

 

(4

)

 

(2

)

 

(9

)

 

(19

)

 

 

 

(4

)

 

(42

)

2015 payments for 2015 initiatives

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Net activity of discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

(1

)

Foreign currency effect on liability balance

 

 

 

 

(1

)

 

 

 

2

 

 

(4

)

 

 

 

 

 

(3

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Accrued liabilities as of June 30, 2015

 

$

17

 

$

5

 

$

7

 

$

60

 

$

116

 

$

 

$

2

 

$

207

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Current portion of restructuring reserves

 

$

15

 

$

5

 

$

5

 

$

23

 

$

116

 

$

 

$

2

 

$

166

 

Long-term portion of restructuring reserves

 

 

2

 

 

 

 

2

 

 

37

 

 

 

 

 

 

 

 

41

 

        Details with respect to cash and noncash restructuring charges for the three and six months ended June 30, 2015 and 2014 by initiative are provided below (dollars in millions):

                                                                                                                                                                                    

 

 

Three months
ended
June, 2015

 

Six months
ended
June 30, 2015

 

Cash charges:

 

 

 

 

 

 

 

2015 charges for 2014 and prior initiatives

 

$

34

 

$

76

 

2015 charges for 2015 initiatives

 

 

20

 

 

44

 

Pension related charges

 

 

3

 

 

3

 

Reversal of reserves no longer required

 

 

 

 

(1

)

Accelerated depreciation

 

 

47

 

 

75

 

Non-cash charges

 

 

10

 

 

10

 

​  

​  

​  

​  

Total 2015 Restructuring, Impairment and Plant Closing Costs

 

$

114

 

$

207

 

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

Three months
ended
June 30, 2014

 

Six months
ended
June 30, 2014

 

Cash charges:

 

 

 

 

 

 

 

2014 charges for 2013 and prior initiatives

 

$

10

 

$

51

 

2014 charges for 2014 initiatives

 

 

6

 

 

6

 

Pension related charges

 

 

1

 

 

2

 

Reversal of reserves no longer required

 

 

(4

)

 

(8

)

Non-cash charges

 

 

 

 

1

 

​  

​  

​  

​  

Total 2014 Restructuring, Impairment and Plant Closing Costs

 

$

13

 

$

52

 

​  

​  

​  

​  

​  

​  

​  

​  

2015 RESTRUCTURING ACTIVITIES

        In June 2015, our Polyurethanes segment announced a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $13 million in the six months ended June 30, 2015 related primarily to workforce reductions.

        In June 2015, our Advanced Materials segment initiated a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $6 million in the six months ended June 30, 2015 related primarily to workforce reductions and accelerated depreciation recorded as restructuring, impairment and plant closing costs.

        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 the six months ended June 30, 2015, our Textile Effects segment recorded charges of $5 million for non-cancelable long-term contract termination costs, $3 million for decommissioning and $2 million in other restructuring costs associated with this initiative.

        On December 1, 2014, we announced that we are taking significant action to improve the global competitiveness of our Pigments and Additives segment. As part of a comprehensive restructuring program, we plan to reduce our workforce by approximately 900 positions. In connection with this restructuring program, during the six months ended June 30, 2015, our Pigments and Additives segment recorded charges of $50 million for workforce reductions, $3 million for pension related charges and $7 million in other restructuring costs associated with this initiative. We expect to complete this program by the middle of 2016.

        On February 12, 2015, we announced a plan to close the 'black end' manufacturing operations and ancillary activities at our Calais, France site, which will reduce our titanium dioxide capacity by approximately 100 kilotons, or 13% of our European titanium dioxide capacity. In connection with this announcement, we began to accelerate depreciation on the affected assets and recorded accelerated depreciation in the six months ended June 30, 2015 of $73 million as restructuring, impairment and plant closing costs. In addition, during the six months ended June 30, 2015, we recorded charges of $23 million for workforce reductions and non-cash charges of $10 million. We expect to complete this program by the end of 2016.

        On March 4, 2015, we announced plans to restructure our color pigments business, another step in our previously announced plan to significantly restructure our global Pigments and Additives segment, and recorded restructuring expense of approximately $4 million in the six months ended June 30, 2015 related to workforce reductions. We expect to complete this program by the end of 2015.

2014 RESTRUCTURING ACTIVITIES

        During 2013, our Performance Products segment initiated a restructuring program to refocus our surfactants business in Europe. In connection with this program, on June 25, 2014 we completed the sale of our European commodity surfactants business, including the ethoxylation facility in Lavera, France to Wilmar. In addition, Wilmar entered into a multi-year arrangement to purchase certain sulphated surfactant products from our facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy. Additionally, we ceased production at our Patrica, Italy surfactants facility in 2014. During the six months ended June 30, 2014, we recorded charges of $23 million primarily related to workforce reductions.

        During the six months ended June 30, 2014, our Advanced Materials segment recorded charges of $9 million primarily related to workforce reductions with our global transformational change program designed to improve the segment's manufacturing efficiencies, enhance its commercial excellence and improve its long-term global competitiveness. Our Advanced Materials segment also reversed reserves of $4 million related to this initiative that were no longer required.

        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 the six months ended June 30, 2014, our Textile Effects segment recorded charges of $2 million for long-term contract termination costs, $4 million for decommissioning, $1 million for workforce reduction and $1 million in other restructuring costs associated with this initiative. Additionally, we reversed reserves of $2 million related to this initiative that were no longer required. In June 2014, we announced plans for the closure our Qingdao, China plant to be completed by December 2015. During the six months ended June 30, 2014, we recorded charges of $5 million primarily related to workforce reductions related to this initiative. Additionally, we recorded charges of $1 million for long-term contract termination costs and $1 million for workforce reductions for other restructuring initiatives.

        During the six months ended June 30, 2014, our Corporate and other segment recorded charges of $6 million and reversed reserves of $1 million primarily related to workforce reductions in association with a reorganization of our global information technology organization. Additionally, we recorded charges of $1 million for other restructuring initiatives.