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

3 Months Ended

Mar. 31, 2017

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of March 31, 2017 and December 31, 2016, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):


					Non-cancelable		Other
	Workforce		Demolition and		lease and contract		restructuring
	reductions(1)		decommissioning		termination costs		costs		Total(2)
Accrued liabilities as of January 1, 2017	$	26	$	18	$	42	$	5	$	91
2017 charges for 2016 and prior initiatives		1		2		1		4		8
2017 charges for 2017 initiatives		25		—		—		—		25
Distribution of prefunded restructuring costs		(1)		—		—		—		(1)
2017 payments for 2016 and prior initiatives		(6)		(5)		(2)		(5)		(18)
Net activity of discontinued operations		—		—		(1)		—		(1)
Foreign currency effect on liability balance		—		1		2		—		3
Accrued liabilities as of March 31, 2017	$	45	$	16	$	42	$	4	$	107

(1)

The workforce reduction reserves relate to the termination of 486 positions, of which 432 positions had not been terminated as of March 31, 2017.

(2)

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


	March 31,		December 31,
	2017		2016
2015 and prior initiatives	$	81	$	88
2016 initiatives		1		3
2017 initiatives		25		—
Total	$	107	$	91

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


			Performance		Advanced		Textile		Pigments		Discontinued		Corporate
	Polyurethanes		Products		Materials		Effects		and Additives		Operations		and other		Total
Accrued liabilities as of January 1, 2017	$	2	$	—	$	3	$	61	$	21	$	2	$	2	$	91
2017 charges for 2016 and prior initiatives		—		—		—		3		5		—		—		8
2017 charges for 2017 initiatives		—		—		—		6		19		—		—		25
Distribution of prefunded restructuring costs		—		—		—		—		(1)		—		—		(1)
2017 payments for 2016 and prior initiatives		(1)		—		—		(7)		(10)		—		—		(18)
Net activity of discontinued operations		—		—		—		—		—		(1)		—		(1)
Foreign currency effect on liability balance		—		—		1		2		—		—		—		3
Accrued liabilities as of March 31, 2017	$	1	$	—	$	4		65	$	34	$	1	$	2	$	107

Current portion of restructuring reserves	$	1	$	—	$	2	$	26	$	30	$	1	$	2	$	62
Long-term portion of restructuring reserves		—		—		2		39		4		—		—		45

Details with respect to cash and noncash restructuring charges for the three months ended March 31, 2017 and 2016 by initiative are provided below (dollars in millions):


	Three months ended March 31, 2017
Cash charges:
2017 charges for 2016 and prior initiatives	$	8
2017 charges for 2017 initiatives		25
Accelerated depreciation		1
Other non-cash charges		2
Total 2017 Restructuring, Impairment and Plant Closing Costs	$	36


	Three months ended March 31, 2016
Cash charges:
2016 charges for 2015 and prior initiatives	$	9
Reversal of reserves no longer required		(1)
Accelerated depreciation		4
Other non-cash charges		1
Total 2016 Restructuring, Impairment and Plant Closing Costs	$	13

2017 RESTRUCTURING ACTIVITIES

During the first quarter of 2017, we implemented the first phase of a restructuring program to improve competitiveness in our Textile Effects segment. In connection with this restructuring program, we recorded restructuring expense of $6 million in the three months ended March 31, 2017 related primarily to workforce reductions. We expect to incur additional charges of approximately $8 million through the end of the third quarter of 2018.

In March 2015, we implemented a restructuring program in our color pigments business (the “Color Pigments Restructuring”). In connection with the Color Pigments Restructuring, we recorded restructuring expense of approximately $4 million in the three months ended March 31, 2017. We expect to incur additional charges of approximately $7 million through the end of 2017.

In July 2016, we announced a plan 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 $1 million in the three months ended March 31, 2017. We expect to incur additional charges of approximately $4 million through the end of the third quarter of 2018.

In March 2017, we announced a plan to close the white end finishing and packaging operations of our titanium dioxide manufacturing facility at our Calais, France site. The announced plan follows the 2015 announcement of the closure of the black end manufacturing operations and would result in the closure of the entire facility. In connection with this closure, we recorded restructuring expense of $22 million in the three months ended March 31, 2017. We recorded $8 million of accelerated depreciation on the remaining long‑lived assets associated with this manufacturing facility during 2016. We expect to incur additional charges of approximately $41 million through the end of 2021.

2016 RESTRUCTURING ACTIVITIES

In December 2014, we implemented 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 $3 million in the three months ended March 31, 2016.

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 closure, we recorded restructuring expense of $1 million in the three months ended March 31, 2016.

In connection with the Color Pigments Restructuring, we recorded restructuring expense of approximately $3 million in the three months ended March 31, 2016.

In connection with planned restructuring activities, our Pigments and Additives segment recorded accelerated depreciation as restructuring expense of $4 million during the three months ended March 31, 2016.