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, 2016

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

12. RESTRUCTURING, IMPAIRMsENT AND PLANT CLOSING COSTS

As of December 31, 2016, 2015 and 2014, 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 and contract termination costs			Other restructuring costs			Total(2)
Accrued liabilities as of January 1, 2014	$	52		$	—		$	60		$	1		$	113
Adjustment to 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
Adjustment to Pigments and Additives opening balance sheet liabilities		1			—			—			—			1
2015 charges for 2014 and prior initiatives		71			24			15			23			133
2015 charges for 2015 initiatives		58			1			—			8			67
Reversal of reserves no longer required		(7	)		—			(6	)		—			(13	)
2015 payments for 2014 and prior initiatives		(68	)		(8	)		(17	)		(21	)		(114	)
2015 payments for 2015 initiatives		(26	)		(1	)		—			(8	)		(35	)
Foreign currency effect on liability balance		(7	)		—			(2	)		—			(9	)

Accrued liabilities as of December 31, 2015		109			16			38			5			168
2016 charges for 2015 and prior initiatives		4			24			9			29			66
2016 charges for 2016 initiatives		7			—			—			5			12
Reversal of reserves no longer required		(2	)		—			—			—			(2	)
Distribution of prefunded restructuring costs		(41	)		(5	)		—			(1	)		(47	)
2016 payments for 2015 and prior initiatives		(43	)		(16	)		(4	)		(29	)		(92	)
2016 payments for 2016 initiatives		(7	)		—			—			(4	)		(11	)
Net activity of discontinued operations		—			—			1			—			1
Foreign currency effect on liability balance		(1	)		(1	)		(2	)		—			(4	)

Accrued liabilities as of December 31, 2016	$	26		$	18		$	42		$	5		$	91


(1)	The total workforce reduction reserves of $26 million relate to the termination of 375 positions, of which 339 positions had not been terminated as of December 31, 2016.
(2)	In December 2015, we prepaid $49 million of severance and other restructuring costs related to restructuring programs in our Pigments and Additives, Textile Effects and Performance Products segments. Certain of the severance costs were prepaid to a third party who distributed the severance payments to affected employees when they were terminated in 2016.
(3)	Accrued liabilities remaining at December 31, 2016 and 2015 by year of initiatives were as follows (dollars in millions):

	December 31,
	2016		2015
2014 initiatives and prior	$	84	$	143
2015 initiatives		4		25
2016 initiatives		3		—

Total	$	91	$	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 and Additives			Discontinued Operations			Corporate and other			Total
Accrued liabilities as of January 1, 2014	$	9		$	10		$	12		$	68		$	2		$	3		$	9		$	113
Adjustment to 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
Adjustment to Pigments & Additives opening balance sheet liabilities		—			—			—			—			1			—			—			1
2015 charges for 2014 and prior initiatives		2			3			1			42			77			—			8			133
2015 charges for 2015 initiatives		17			8			5			2			34			—			1			67
Reversal of reserves no longer required		(4	)		(1	)		—			(7	)		—			—			(1	)		(13	)
2015 payments for 2014 and prior initiatives		(4	)		(8	)		(2	)		(34	)		(59	)		—			(7	)		(114	)
2015 payments for 2015 initiatives		(11	)		(1	)		(5	)		(1	)		(16	)		—			(1	)		(35	)
Foreign currency effect on liability balance		(1	)		(1	)		—			(1	)		(6	)		—			—			(9	)

Accrued liabilities as of December 31, 2015		5			9			4			55			90			1			4			168
2016 charges for 2015 and prior initiatives		—			16			—			28			19			—			3			66
2016 charges for 2016 initiatives		4			—			—			1			6			—			1			12
Reversal of reserves no longer required		(1	)		—			—			—			—			—			(1	)		(2	)
Distribution of prefunded restructuring costs		—			(6	)		—			(5	)		(36	)		—			—			(47	)
2016 payments for 2015 and prior initiatives		(3	)		(19	)		—			(14	)		(52	)		—			(4	)		(92	)
2016 payments for 2016 initiatives		(3	)		—			—			(1	)		(6	)		—			(1	)		(11	)
Net activity of discontinued operations		—			—			—			—			—			1			—			1
Foreign currency effect on liability balance		—			—			(1	)		(3	)		—			—			—			(4	)

Accrued liabilities as of December 31, 2016	$	2		$	—		$	3		$	61		$	21		$	2		$	2		$	91


Current portion of restructuring reserves	$	2		$	—		$	1		$	24		$	14		$	2		$	2		$	45
Long-term portion of restructuring reserves		—			—			2			37			7			—			—			46

Details with respect to cash and noncash restructuring charges for the years ended December 31, 2016, 2015 and 2014 by initiative are provided below (dollars in millions):

Cash charges:
2016 charges for 2015 and prior initiatives	$	66
2016 charges for 2016 initiatives		12
Reversal of reserves no longer required		(2	)
Accelerated depreciation		8
Non-cash credits, net		(3	)

Total 2016 restructuring, impairment and plant closing costs	$	81


Cash charges:
2015 charges for 2014 and prior initiatives	$	133
2015 charges for 2015 initiatives		67
Reversal of reserves no longer required		(13	)
Pension-related charges		3
Accelerated depreciation		74
Non-cash charges		38

Total 2015 restructuring, impairment and plant closing costs	$	302


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

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 2016. All expected charges have been incurred as of the end of 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 (the "Textile Effects Restructuring Plan"). In connection with the Textile Effects Restructuring Plan and in connection with revised estimates of site closure costs, during 2016, our Textile Effects segment recorded charges of $9 million for non-cancelable long-term contract termination costs and $20 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 (the "Pigments and Additives Restructuring Plan"). As part of the Pigments and Additives Restructuring Plan, we are reducing our workforce by approximately 900 positions. In connection with the Pigments and Additives Restructuring Plan, we recorded restructuring expense of $3 million in 2016. We expect to incur additional charges of approximately $4 million through the end of 2017.

In March 2015, we announced plans to restructure our color pigments business (the "Color Pigments Restructuring Plan"), another step in our Pigments and Additives Restructuring Plan, and recorded restructuring expense of approximately $15 million in 2016. We expect to incur additional charges of approximately $10 million through the end of 2017.

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 $6 million in 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. We expect to incur additional charges of approximately $5 million through the third quarter of 2018.

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

2015 RESTRUCTURING ACTIVITIES

In June 2015, our Polyurethanes segment initiated a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $13 million during 2015 related primarily to workforce reductions. All expected charges have been incurred as of the end of 2015.

During 2013, our Performance Products segment initiated a restructuring program to refocus its surfactants business in Europe (the "Performance Products Restructuring Plan"). As part of our Performance Products Restructuring Plan, we recorded cash charges of $8 million primarily related to workforce reductions in 2015.

In June 2015, our Advanced Materials segment initiated a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $11 million during 2015 related primarily to workforce reductions and accelerated depreciation recorded as restructuring, impairment and plant closing costs.

In connection with the Textile Effects Restructuring Plan, during 2015, we recorded charges of $9 million for non-cancelable long-term contract termination costs, $21 million for decommissioning and $1 million of other restructuring charges associated with this initiative. During the fourth quarter of 2015, we settled certain of our obligations under these long-term contracts and recorded a restructuring charge of $14 million. In addition, we recorded charges of $6 million associated with other initiatives.

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 2015 of $68 million as restructuring, impairment and plant closing costs. In addition, during 2015, we recorded charges of $30 million primarily for workforce reductions and non-cash charges of $17 million.

In connection with the Pigments and Additives Restructuring Plan, during 2015, our Pigments and Additives segment recorded charges of $61 million for workforce reductions, $3 million for pension related charges and $15 million in other restructuring costs.

In connection with our Color Pigments Restructuring Plan, we recorded restructuring expense of approximately $4 million during 2015 primarily related to workforce reductions.

During the fourth quarter of 2015, we determined that the South African asset group of our Pigments and Additives segment was impaired and recorded an impairment charge of $19 million.

During 2015, our Corporate and other segment recorded charges of $8 million primarily related to a reorganization of our global information technology organization.

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.

In connection with the Performance Products Restructuring Plan, 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.

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.

In connection with the Textile Effects Restructuring Plan, during 2014, our Textile Effects segment recorded charges of $19 million, including a $9 million noncash charge for a pension settlement loss. In June 2014, we announced plans for the closure of our Qingdao, China plant, which was completed in 2015. During 2014, we recorded charges of $6 million primarily related to workforce reductions related to this initiative.

As part of the Pigments and Additives Restructuring Program, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions.

During 2014, our Corporate and other segment recorded charges of $13 million primarily related to the reorganization of our global information technology organization.