Annual report pursuant to Section 13 and 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

v2.4.1.9
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
 12 Months Ended
Dec. 31, 2014
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS  
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

 

11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

        As of December 31, 2014, 2013 and 2012, 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
lease costs

 

Other
restructuring
costs

 

Total(2)

 

Accrued liabilities as of January 1, 2012

 

$
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

 

Pigments and Additives opening balance sheet liabilities

 

 
1

 

 

—

 

 

—

 

 

—

 

 
1

 

2014 charges for 2013 and prior initiatives

 

 
37

 

 
7

 

 
4

 

 
17

 

 
65

 

2014 charges for 2014 initiatives

 

 
64

 

 

—

 

 

—

 

 

—

 

 
64

 

Reversal of reserves no longer required

 

 
(4

)

 

—

 

 

—

 

 
(1

)

 
(5

)

2014 payments for 2013 and prior initiatives

 

 
(58

)

 
(7

)

 
(8

)

 
(13

)

 
(86

)

2014 payments for 2014 initiatives

 

 
(1

)

 

—

 

 

—

 

 
(1

)

 
(2

)

Net activity of discontinued operations

 

 

—

 

 

—

 

 
(2

)

 

—

 

 
(2

)

Foreign currency effect on liability balance

 

 
(4

)

 

—

 

 
(6

)

 

—

 

 
(10

)

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

Accrued liabilities as of December 31, 2014

 

$
87

 

$

—

 

$
48

 

$
3

 

$
138

 

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​  

(1)

The total workforce reduction reserves of $87 million relate to the termination of 1,572 positions, of which 1,418 positions had not been terminated as of December 31, 2014.

(2)

Accrued liabilities remaining at December 31, 2014 and 2013 by year of initiatives were as follows (dollars in millions):

                                                                                                                                                                                    

 

 

December 31,

 

 

 

2014

 

2013

 

2012 initiatives and prior

 

$
63 

 

$
95 

 

2013 initiatives

 

 
12 

 

 
18 

 

2014 initiatives

 

 
63 

 

 

—  

 

​

​

​  

​  

​

​  

​  

​

Total

 

$
138 

 

$
113 

 

​

​

​  

​  

​

​  

​  

​

​

​

​  

​  

​

​  

​  

​  

        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 & Other

 

Total

 

Accrued liabilities as of January 1, 2012

 

 

—

 

 
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

 

Pigments and Additives opening balance sheet liabilities

 

 

—

 

 

—

 

 

—

 

 

—

 

 
1

 

 

—

 

 

—

 

 
1

 

2014 charges for 2013 and prior initiatives

 

 
2

 

 
23

 

 
10

 

 
13

 

 
3

 

 

—

 

 
14

 

 
65

 

2014 charges for 2014 initiatives

 

 

—

 

 

—

 

 
1

 

 
6

 

 
57

 

 

—

 

 

—

 

 
64

 

Reversal of reserves no longer required

 

 
(1

)

 

—

 

 
(2

)

 
(1

)

 

—

 

 

—

 

 
(1

)

 
(5

)

2014 payments for 2013 and prior initiatives

 

 
(3

)

 
(22

)

 
(14

)

 
(25

)

 
(4

)

 

—

 

 
(18

)

 
(86

)

2014 payments for 2014 initiatives

 

 

—

 

 

—

 

 
(1

)

 
(1

)

 

—

 

 

—

 

 

—

 

 
(2

)

Net activity of discontinued operations

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 
(2

)

 

—

 

 
(2

)

Foreign currency effect on liability balance

 

 
(1

)

 
(2

)

 
(1

)

 
(6

)

 

—

 

 

—

 

 

—

 

 
(10

)

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

Accrued liabilities as of December 31, 2014

 

$
6

 

$
9

 

$
5

 

$
54

 

$
59

 

$
1

 

$
4

 

$
138

 

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​

​  

​  

​  

Current portion of restructuring reserves

 

$
3

 

$
9

 

$
2

 

$
11

 

$
59

 

$
1

 

$
4

 

$
89

 

Long-term portion of restructuring reserve

 

 
3

 

 

—

 

 
3

 

 
43

 

 

—

 

 

—

 

 

—

 

 
49

 

        Details with respect to cash and noncash restructuring charges for the years ended December 31, 2014, 2013 and 2012 by initiative are provided below (dollars in millions):

                                                                                                                                                                                    

Cash charges:

 

 

 

 

2014 charges for 2013 and prior initiatives

 

 
65

 

2014 charges for 2014 initiatives

 

 
64

 

Reversal of reserves no longer required

 

 
(5

)

Pension-related charges

 

 
2

 

Non-cash charges

 

 
32

 

​

​

​  

​  

​

Total 2014 Restructuring, Impairment and Plant Closing Costs

 

$
158

 

​

​

​  

​  

​

​

​

​  

​  

​  

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

 

​

​

​  

​  

​

​

​

​  

​  

​  

2014 RESTRUCTURING ACTIVITIES

        In connection with a September 2014 announcement of a feasibility study into a MDI production expansion at our Geismar, Louisiana facility, we concluded that certain capitalized engineering costs associated with a previously planned MDI production expansion at our Rotterdam, The Netherlands facility were impaired and our Polyurethanes segment recorded a noncash impairment charge of $16 million during 2014.

        During 2013, our Performance Products segment initiated a restructuring program to refocus its surfactants business in Europe. In connection with this program, in 2014 we completed the sale of our European commodity surfactants business, including the ethoxylation facility in Lavera, France to Wilmar. In addition, Wilmar has entered into a multi-year arrangement to purchase certain sulfated surfactant products from our facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy. Additionally, in 2014 we ceased production at our Patrica, Italy surfactants facility. During 2014, we recorded charges of $23 million primarily related to workforce reductions. We expect to complete this program by the end of 2015.

        During 2014, our Advanced Materials segment recorded charges of $11 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. We expect to incur charges related to this program through the second quarter of 2015.

        During 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 program, during 2014, our Textile Effects segment recorded charges of $19 million, including a $9 million noncash charge for a pension settlement loss. We expect to incur charges related to this program through 2015. In June 2014, we announced plans for the closure of our Qingdao, China plant to be completed by December 2015. During 2014, we recorded charges of $6 million primarily related to workforce reductions related to this initiative. We expect to incur charges related to this program through the end of 2016.

        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, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions. We expect to record additional restructuring expense in 2015 once negotiations of employee termination benefits with European works councils are completed.

        On February 12, 2015, we announced plans to reduce our titanium dioxide capacity by approximately 100 kt by closing specific operations at our Calais, France facility, subject to consultation with employees and appropriate representative groups. This plan is in addition to that announced on December 1, 2014.

        During 2014, our Corporate and other segment recorded charges of $13 million primarily related to the reorganization of our global information technology organization. We expect to incur charges related to this program through the end of 2015.

2013 RESTRUCTURING ACTIVITIES

        During 2012, our Polyurethanes segment began implementing a restructuring program to reduce annualized fixed costs. In connection with this program, we recorded cash 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 recorded charges of $13 million primarily related to workforce reductions in association with plans to refocus our surfactants business in Europe and $5 million primarily related to workforce reductions in our Australian operation.

        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 improve its long-term global competitiveness. During 2013, we recorded cash charges of $38 million and noncash charges of $4 million and reversed charges of $8 million.

        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, we recorded cash charges of $73 million, a noncash charge of $9 million for a pension settlement loss and reversed charges of $5 million.

        During 2013, our Corporate and other segment recorded charges of $18 million primarily related to workforce reductions in association with a reorganization of our global information technology organization.

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.

        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. During 2012, we recorded charges of $38 million, including 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 $10 million, an $11 million noncash charge primarily for pension settlements and reversed charges of $7 million. Additionally, we reversed charges of $9 million for other initiatives.