Annual report pursuant to Section 13 and 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

v3.10.0.1
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
 12 Months Ended
Dec. 31, 2018
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS  
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

12.  RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of December 31, 2018, 2017 and 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, 2016

 

$

19

 

$

16

 

$

37

 

$

 5

 

$

77

2016 charges for 2015 and prior initiatives

 

 

 1

 

 

24

 

 

 9

 

 

13

 

 

47

2016 charges for 2016 initiatives

 

 

 1

 

 

 —

 

 

 —

 

 

 5

 

 

 6

Reversal of reserves no longer required

 

 

(2)

 

 

 —

 

 

 —

 

 

 —

 

 

(2)

Distribution of prefunded restructuring costs

 

 

(5)

 

 

(5)

 

 

 —

 

 

(1)

 

 

(11)

2016 payments for 2015 and prior initiatives

 

 

(8)

 

 

(15)

 

 

(4)

 

 

(13)

 

 

(40)

2016 payments for 2016 initiatives

 

 

(1)

 

 

 —

 

 

 —

 

 

(4)

 

 

(5)

Foreign currency effect on liability balance

 

 

(1)

 

 

(1)

 

 

(2)

 

 

 —

 

 

(4)

Accrued liabilities as of December 31, 2016

 

 

 4

 

 

19

 

 

40

 

 

 5

 

 

68

2017 (credits) charges for 2016 and prior initiatives

 

 

(1)

 

 

 3

 

 

 2

 

 

 2

 

 

 6

2017 charges for 2017 initiatives

 

 

10

 

 

 —

 

 

 —

 

 

 2

 

 

12

2017 payments for 2016 and prior initiatives

 

 

(1)

 

 

(21)

 

 

(2)

 

 

(2)

 

 

(26)

2017 payments for 2017 initiatives

 

 

(8)

 

 

 —

 

 

 —

 

 

(2)

 

 

(10)

Foreign currency effect on liability balance

 

 

 1

 

 

 1

 

 

 1

 

 

 —

 

 

 3

Accrued liabilities as of December 31, 2017

 

 

 5

 

 

 2

 

 

41

 

 

 5

 

 

53

2018 charges for 2017 and prior initiatives

 

 

 —

 

 

 —

 

 

 2

 

 

 —

 

 

 2

2018 charges for 2018 initiatives

 

 

 5

 

 

 —

 

 

 —

 

 

10

 

 

15

2018 payments for 2017 and prior initiatives

 

 

(2)

 

 

(1)

 

 

(2)

 

 

 —

 

 

(5)

2018 payments for 2018 initiatives

 

 

(1)

 

 

 —

 

 

 —

 

 

(5)

 

 

(6)

Reversal of reserves no longer required

 

 

(1)

 

 

 —

 

 

(29)

 

 

 —

 

 

(30)

Accrued liabilities as of December 31, 2018

 

$

 6

 

$

 1

 

$

12

 

$

10

 

$

29

(1)

The total workforce reduction reserves of $6 million relate to the termination of 50 positions, of which 8 positions had not been terminated as of December 31, 2018.

Accrued liabilities remaining at December 31, 2018 and 2017 by year of initiatives were as follows (dollars in millions):

 

 

 

 

 

 

 

 

 

December 31, 

 

December 31,

 

    

2018

    

2017

2016 and prior initiatives

 

$

19

 

$

51

2017 initiatives

 

 

 1

 

 

 2

2018 initiatives

 

 

 9

 

 

 —

Total

 

$

29

 

$

53

 

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, 2016

 

$

 5

 

$

 9

 

$

 4

 

$

55

 

$

 4

 

$

77

 

2016 charges for 2015 and prior initiatives

 

 

 —

 

 

16

 

 

 —

 

 

28

 

 

 3

 

 

47

 

2016 charges for 2016 initiatives

 

 

 4

 

 

 —

 

 

 —

 

 

 1

 

 

 1

 

 

 6

 

Reversal of reserves no longer required

 

 

(1)

 

 

 —

 

 

 —

 

 

 —

 

 

(1)

 

 

(2)

 

Distribution of prefunded restructuring costs

 

 

 —

 

 

(6)

 

 

 —

 

 

(5)

 

 

 —

 

 

(11)

 

2016 payments for 2015 and prior initiatives

 

 

(3)

 

 

(19)

 

 

 —

 

 

(14)

 

 

(4)

 

 

(40)

 

2016 payments for 2016 initiatives

 

 

(3)

 

 

 —

 

 

 —

 

 

(1)

 

 

(1)

 

 

(5)

 

Foreign currency effect on liability balance

 

 

 —

 

 

 —

 

 

(1)

 

 

(3)

 

 

 —

 

 

(4)

 

Accrued liabilities as of December 31, 2016

 

 

 2

 

 

 —

 

 

 3

 

 

61

 

 

 2

 

 

68

 

2017 charges for 2016 and prior initiatives

 

 

 —

 

 

 —

 

 

 —

 

 

 6

 

 

 —

 

 

 6

 

2017 charges for 2017 initiatives

 

 

 —

 

 

 1

 

 

 —

 

 

 7

 

 

 4

 

 

12

 

2017 payments for 2016 and prior initiatives

 

 

(1)

 

 

 —

 

 

 —

 

 

(25)

 

 

 —

 

 

(26)

 

2017 payments for 2017 initiatives

 

 

 —

 

 

 —

 

 

 —

 

 

(5)

 

 

(5)

 

 

(10)

 

Foreign currency effect on liability balance

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 —

 

 

 3

 

Accrued liabilities as of December 31, 2017

 

 

 1

 

 

 1

 

 

 3

 

 

47

 

 

 1

 

 

53

 

2018 charges (credits) for 2017 and prior initiatives

 

 

 —

 

 

 1

 

 

 —

 

 

(4)

 

 

 5

 

 

 2

 

2018 charges for 2018 initiatives

 

 

 —

 

 

 2

 

 

 3

 

 

 —

 

 

10

 

 

15

 

2018 payments for 2017 and prior initiatives

 

 

(1)

 

 

(1)

 

 

 —

 

 

 —

 

 

(3)

 

 

(5)

 

2018 payments for 2018 initiatives

 

 

 —

 

 

(1)

 

 

 —

 

 

 —

 

 

(5)

 

 

(6)

 

Reversal of reserves no longer required

 

 

 —

 

 

 —

 

 

 —

 

 

(29)

 

 

(1)

 

 

(30)

 

Accrued liabilities as of December 31, 2018

 

$

 —

 

$

 2

 

$

 6

 

$

14

 

$

 7

 

$

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of restructuring reserves

 

$

 —

 

$

 2

 

$

 4

 

$

10

 

$

 7

 

$

23

 

Long-term portion of restructuring reserves

 

 

 —

 

 

 —

 

 

 2

 

 

 4

 

 

 —

 

 

 6

 

 

Details with respect to cash and noncash restructuring charges for the years ended December 31, 2018, 2017 and 2016 by initiative are provided below (dollars in millions):

 

 

 

 

 

Cash charges:

 

 

 

 

2018 charges for 2017 and prior initiatives

 

 

$

 2

2018 charges for 2018 initiatives

 

 

 

15

Noncash charges:

 

 

 

 

Reversal of reserves no longer required

 

 

 

(30)

Other noncash charges

 

 

 

 8

Total 2018 restructuring, impairment and plant closing credits

 

 

$

(5)

 

 

 

 

 

 

Cash charges:

 

 

 

 

2017 charges for 2016 and prior initiatives

 

 

$

 6

2017 charges for 2017 initiatives

 

 

 

12

Pension-related charges

 

 

 

 1

Noncash charges:

 

 

 

 

Accelerated depreciation

 

 

 

 2

Other noncash credits

 

 

 

(1)

Total 2017 restructuring, impairment and plant closing costs

 

 

$

20

 

 

 

 

 

 

Cash charges:

 

 

 

 

2016 charges for 2015 and prior initiatives

 

 

$

47

2016 charges for 2016 initiatives

 

 

 

 6

Noncash charges:

 

 

 

 

Reversal of reserves no longer required

 

 

 

(2)

Gain on sale of land

 

 

 

(4)

Total 2016 restructuring, impairment and plant closing costs

 

 

$

47

 

2018 Restructuring Activities

 

In 2011, we implemented a significant restructuring of our Textile Effects segment (the “Textile Effects Restructuring Plan”), including the closure of our production facilities and business support offices in Basel, Switzerland. In connection with this plan, we recorded restructuring reserves covering, among other things, a non-cancelable long-term service agreement. In the fourth quarter of 2018, we settled this agreement in exchange for the payment of $10 million, $8 million of which will be paid in 2019 and $2 million will be paid in 2023. In connection with this settlement, we reversed the related restructuring reserve and recorded a net credit of $29 million in the fourth quarter of 2018. In addition, during 2018, we recorded a credit of $4 million primarily related to a gain on the sale of land at the Basel, Switzerland site.

 

Our Corporate and other segment recorded restructuring expense of $15 million in 2018 related to corporate initiatives.

 

2017 Restructuring Activities

In September 2011, we implemented the Textile Effects Restructuring Plan. In connection with this restructuring plan, during the year ended December 31, 2017, our Textile Effects segment recorded restructuring expense of approximately $6 million associated with this initiative, including $2 million for non-cancelable long-term contract termination costs and $4 million for decommissioning.

 

During the first quarter of 2017, we implemented 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 year ended December 31, 2017 related primarily to workforce reductions.

 

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 connection with the Textile Effects Restructuring Plan 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.