Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

9 Months Ended

Sep. 30, 2016

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of September 30, 2016 and December 31, 2015, 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, 2016	$	109		$	16		$	38		$	5		$	168
2016 charges for 2015 and prior initiatives		6			28			8			30			72
2016 charges for 2016 initiatives		6			—			—			3			9
Reversal of reserves no longer required		(1	)		—			—			—			(1	)
Distribution of prefunded restructuring costs		(40	)		(5	)		—			(1	)		(46	)
2016 payments for 2015 and prior initiatives		(37	)		(13	)		(3	)		(29	)		(82	)
2016 payments for 2016 initiatives		(1	)		—			—			(2	)		(3	)
Foreign currency effect on liability balance		1			1			1			(1	)		2

Accrued liabilities as of September 30, 2016	$	43		$	27		$	44		$	5		$	119


(1)	The workforce reduction reserves relate to the termination of 489 positions, of which 436 positions had not been terminated as of September 30, 2016.
(2)	Accrued liabilities by initiatives were as follows (dollars in millions):

	September 30, 2016		December 31, 2015
2014 and prior initiatives	$	102	$	143
2015 initiatives		11		25
2016 initiatives		6		—

Total	$	119	$	168

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, 2016	$	5		$	9		$	4	$	55		$	90		$	1	$	4		$	168
2016 charges for 2015 and prior initiatives		—			16			—		37			16			—		3			72
2016 charges for 2016 initiatives		3			—			—		1			5			—		—			9
Reversal of reserves no longer required		—			—			—		(1	)		—			—		—			(1	)
Distribution of prefunded restructuring costs		—			(5	)		—		(5	)		(36	)		—		—			(46	)
2016 payments for 2015 and prior initiatives		(2	)		(18	)		—		(15	)		(43	)		—		(4	)		(82	)
2016 payments for 2016 initiatives		(2	)		—			—		(1	)		—			—		—			(3	)
Foreign currency effect on liability balance		—			—			—		1			1			—		—			2

Accrued liabilities as of September 30, 2016	$	4		$	2		$	4	$	72		$	33		$	1	$	3		$	119


Current portion of restructuring reserves	$	3		$	2		$	2	$	32		$	26		$	1	$	3		$	69
Long-term portion of restructuring reserves		1			—			2		40			7			—		—			50

Details with respect to cash and noncash restructuring charges for the three and nine months ended September 30, 2016 and 2015 by initiative are provided below (dollars in millions):

	Three months ended September 30, 2016			Nine months ended September 30, 2016
Cash charges:
2016 charges for 2015 and prior initiatives	$	44		$	72
2016 charges for 2016 initiatives		3			9
Reversal of reserves no longer required		—			(1	)
Gain on sale of land		(3	)		(3	)
Accelerated depreciation		1			8
Non-cash charges		—			2

Total 2016 Restructuring, Impairment and Plant Closing Costs	$	45		$	87

	Three months ended September 30, 2015		Nine months ended September 30, 2015
Cash charges:
2015 charges for 2014 and prior initiatives	$	11	$	87
2015 charges for 2015 initiatives		1		45
Pension related charges		—		3
Reversal of reserves no longer required		—		(1	)
Accelerated depreciation		2		77
Non-cash charges		—		10

Total 2015 Restructuring, Impairment and Plant Closing Costs	$	14	$	221

2016 RESTRUCTURING ACTIVITIES

In December 2015, our Performance Products segment announced plans for a reorganization of its commercial and technical functions and a refocused divisional business strategy to better position the segment for growth in coming years. In addition, a program was launched to capture growth opportunities, improve manufacturing cost efficiency and reduce inventories. In connection with this restructuring program, we recorded restructuring expense of $16 million in the nine months ended September 30, 2016.

In September 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 and in connection with revised estimates of site closure costs, during the nine months ended September 30, 2016, our Textile Effects segment recorded charges of $8 million for non-cancelable long-term contract termination costs and $28 million for decommissioning associated with this initiative.

In December 2014, we announced a comprehensive restructuring program to improve the global competitiveness of our Pigments and Additives segment. As part of the program, we are reducing our workforce by approximately 900 positions. In connection with this restructuring program, we recorded restructuring expense of $4 million in the nine months ended September 30, 2016.

In March 2015, we announced plans to restructure our color pigments business, another step in our comprehensive restructuring program in our Pigments and Additives segment, and recorded restructuring expense of approximately $12 million in the nine months ended September 30, 2016.

In July 2016, we announced plans to close our Pigments and Additives segment's South African titanium dioxide manufacturing facility. As part of the program, we recorded restructuring expense of approximately $5 million in the nine months ended September 30, 2016. Additionally, we recorded an impairment charge of $1 million during the second quarter of 2016. The majority of the long-lived assets associated with this manufacturing facility were impaired in the fourth quarter of 2015.

In connection with planned restructuring activities, our Pigments and Additives segment recorded accelerated depreciation as restructuring expense of $8 million during the nine months ended September 30, 2016.

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 $14 million in the nine months ended September 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 nine months ended September 30, 2015 related primarily to workforce reductions and accelerated depreciation recorded as restructuring, impairment and plant closing costs.

In September 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 nine months ended September 30, 2015, our Textile Effects segment recorded charges of $6 million for non-cancelable long-term contract termination costs, $4 million for decommissioning and $2 million in other restructuring costs associated with this initiative. In addition, we recorded charges of $5 million associated with other initiatives.

In December 2014, we announced that we were 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 nine months ended September 30, 2015, our Pigments and Additives segment recorded charges of $51 million for workforce reductions, $3 million for pension related charges and $12 million in other restructuring costs associated with this initiative.

In February 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 nine months ended September 30, 2015 of $73 million as restructuring, impairment and plant closing costs. In addition, during the nine months ended September 30, 2015, we recorded charges of $21 million for workforce reductions and non-cash charges of $10 million.

In March 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 $5 million in the nine months ended September 30, 2015 primarily related to workforce reductions.