Quarterly report pursuant to Section 13 or 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

v3.8.0.1
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
 9 Months Ended
Sep. 30, 2017
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS  
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

 

As of September 30, 2017 and December 31, 2016, accrued restructuring costs of continuing operations 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

 

$

 4

 

$

19

 

$

40

 

$

 5

 

$

68

2017 charges for 2016 and prior initiatives

 

 

 —

 

 

 5

 

 

 1

 

 

 1

 

 

 7

2017 charges for 2017 initiatives

 

 

 6

 

 

 —

 

 

 —

 

 

 —

 

 

 6

2017 payments for 2016 and prior initiatives

 

 

 —

 

 

(21)

 

 

(1)

 

 

(2)

 

 

(24)

2017 payments for 2017 initiatives

 

 

(2)

 

 

 —

 

 

 —

 

 

 —

 

 

(2)

Foreign currency effect on liability balance

 

 

 1

 

 

 1

 

 

 2

 

 

 —

 

 

 4

Accrued liabilities as of September 30, 2017

 

$

 9

 

$

 4

 

$

42

 

$

 4

 

$

59

(1)

The workforce reduction reserves relate to the termination of 163 positions, of which 116 positions had not been terminated as of September 30, 2017.

 

(2)

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

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2017

    

2016

2015 and prior initiatives

 

$

55

 

$

67

2016 initiatives

 

 

 —

 

 

 1

2017 initiatives

 

 

 4

 

 

 —

Total

 

$

59

 

$

68

 

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

 

Corporate

 

 

 

 

    

Polyurethanes

    

Products

    

Materials

    

Effects

    

and other

    

Total

 

Accrued liabilities as of January 1, 2017

 

$

 2

 

$

 —

 

$

 3

 

$

61

 

$

 2

 

$

68

 

2017 charges for 2016 and prior initiatives

 

 

 —

 

 

 —

 

 

 —

 

 

 7

 

 

 —

 

 

 7

 

2017 charges for 2017 initiatives

 

 

 —

 

 

 —

 

 

 —

 

 

 6

 

 

 —

 

 

 6

 

2017 payments for 2016 and prior initiatives

 

 

(1)

 

 

 —

 

 

 —

 

 

(23)

 

 

 —

 

 

(24)

 

2017 payments for 2017 initiatives

 

 

 —

 

 

 —

 

 

 —

 

 

(2)

 

 

 —

 

 

(2)

 

Foreign currency effect on liability balance

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

 —

 

 

 4

 

Accrued liabilities as of September 30, 2017

 

$

 1

 

$

 —

 

$

 3

 

 

53

 

$

 2

 

$

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of restructuring reserves

 

$

 1

 

$

 —

 

$

 2

 

$

14

 

$

 2

 

$

19

 

Long-term portion of restructuring reserves

 

 

 —

 

 

 —

 

 

 1

 

 

39

 

 

 —

 

 

40

 

 

Details with respect to cash and noncash restructuring charges from continuing operations for the three and nine months ended September 30, 2017 and 2016 by initiative are provided below (dollars in millions):

 

 

 

 

 

 

 

 

 

    

Three months ended September 30, 2017

 

Nine months ended September 30, 2017

Cash charges:

 

 

 

 

 

 

2017 charges for 2016 and prior initiatives

 

$

 2

 

$

 7

2017 charges for 2017 initiatives

 

 

 —

 

 

 6

Pension-related charges

 

 

 —

 

 

 1

Accelerated depreciation

 

 

 —

 

 

 2

Gain on sale of land

 

 

(1)

 

 

(3)

Total 2017 Restructuring, Impairment and Plant Closing Costs

 

$

 1

 

$

13

 

 

 

 

 

 

 

 

 

    

Three months ended September 30, 2016

 

Nine months ended September 30, 2016

Cash charges:

 

 

 

 

 

 

2016 charges for 2015 and prior initiatives

 

$

40

 

$

56

2016 charges for 2016 initiatives

 

 

 1

 

 

 4

Gain on sale of land

 

 

(3)

 

 

(3)

Reversal of reserves no longer required

 

 

 —

 

 

(1)

Total 2016 Restructuring, Impairment and Plant Closing Costs

 

$

38

 

$

56

 

2017 RESTRUCTURING ACTIVITIES

 

In September 2011, we implemented a significant restructuring of our Textile Effects segment, including the closure of our production facilities and business support offices in Basel, Switzerland (the “2011 Textile Effects Restructuring”). In connection with this restructuring plan, during the nine months ended September 30, 2017, our Textile Effects segment recorded restructuring expense of approximately $4 million associated with this initiative. We expect to receive an income of upfront installment payment from the sale of property at the Basel, Switzerland site of approximately $5 million through the end of 2017 to cover our large portion of contract settlement payments.

 

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 $7 million in the nine months ended September 30, 2017 related primarily to workforce reductions. We expect to incur additional charges of approximately $2 million through the end 2017.

 

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 connection with the 2011 Textile Effects Restructuring, 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.