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6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of September 30, 2011 and December 31, 2010, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
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Workforce
reductions(1) |
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Demolition and
decommissioning |
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Non-cancelable
lease costs |
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Other
restructuring
costs |
|
Total(2) |
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Accrued liabilities as of January 1, 2011
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$ |
36 |
|
$ |
1 |
|
$ |
1 |
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$ |
11 |
|
$ |
49 |
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2011 charges for 2006 and prior initiatives
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|
1 |
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|
1 |
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2 |
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2011 charges for 2009 initiatives
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1 |
|
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|
4 |
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|
5 |
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|
2011 charges for 2010 initiatives
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2 |
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|
2 |
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|
1 |
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5 |
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|
2011 charges for 2011 initiatives
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|
110 |
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|
110 |
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Reversal of reserves no longer required
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(4 |
) |
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(4 |
) |
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2011 payments for 2006 and prior initiatives
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(1 |
) |
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(1 |
) |
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2011 payments for 2008 initiatives
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(1 |
) |
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(1 |
) |
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2011 payments for 2009 initiatives
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(5 |
) |
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|
(5 |
) |
|
(10 |
) |
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2011 payments for 2010 initiatives
|
|
|
(13 |
) |
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(3 |
) |
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|
|
|
(1 |
) |
|
(17 |
) |
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2011 payments for 2011 initiatives
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(5 |
) |
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(5 |
) |
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Net activity of discontinued operations
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(2 |
) |
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(2 |
) |
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Foreign currency effect on liability balance
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(7 |
) |
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(7 |
) |
| |
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Accrued liabilities as of September 30, 2011
|
|
$ |
114 |
|
$ |
|
|
$ |
2 |
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$ |
8 |
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$ |
124 |
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| |
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-
(1)
- The total workforce reduction reserves of $114 million relate to the termination of 796 positions, of which 763 positions had not been terminated as of September 30, 2011.
-
(2)
- Accrued liabilities by initiatives were as follows (dollars in millions):
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September 30, 2011 |
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December 31, 2010 |
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2006 initiatives and prior
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$ |
5 |
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$ |
4 |
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2008 initiatives
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|
1 |
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2009 initiatives
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|
11 |
|
|
20 |
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2010 initiatives
|
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|
12 |
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|
24 |
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2011 initiatives
|
|
|
96 |
|
|
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| |
|
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Total
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$ |
124 |
|
$ |
49 |
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| |
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Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):
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Polyurethanes |
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Performance
Products |
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Advanced
Materials |
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Textile
Effects |
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Pigments |
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Discontinued
Operations |
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Corporate
and Other |
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Total |
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Accrued liabilities as of January 1, 2011
|
|
$ |
|
|
$ |
1 |
|
$ |
2 |
|
$ |
25 |
|
$ |
8 |
|
$ |
8 |
|
$ |
5 |
|
$ |
49 |
|
|
2011 charges for 2006 and prior initiatives
|
|
|
|
|
|
|
|
|
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|
|
1 |
|
|
1 |
|
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|
2 |
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|
2011 charges for 2009 initiatives
|
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|
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|
5 |
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|
5 |
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2011 charges for 2010 initiatives
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|
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|
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|
|
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3 |
|
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|
|
|
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|
2 |
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|
5 |
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|
2011 charges for 2011 initiatives
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|
|
|
|
|
|
|
28 |
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|
79 |
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|
3 |
|
|
|
|
|
|
|
|
110 |
|
|
Reversal of reserves no longer required
|
|
|
|
|
|
|
|
|
(1 |
) |
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(3 |
) |
|
|
|
|
|
|
|
|
|
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(4 |
) |
|
2011 payments for 2006 and prior initiatives
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
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|
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|
|
(1 |
) |
|
2011 payments for 2008 initiatives
|
|
|
|
|
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|
|
|
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|
|
|
|
|
(1 |
) |
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(1 |
) |
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2011 payments for 2009 initiatives
|
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(1 |
) |
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|
(9 |
) |
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|
|
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(10 |
) |
|
2011 payments for 2010 initiatives
|
|
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
(5 |
) |
|
(17 |
) |
|
2011 payments for 2011 initiatives
|
|
|
|
|
|
|
|
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(1 |
) |
|
(3 |
) |
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(1 |
) |
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|
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(5 |
) |
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Net activity of discontinued operations
|
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(2 |
) |
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(2 |
) |
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Foreign currency effect on liability balance
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|
|
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|
|
|
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(2 |
) |
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(5 |
) |
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(7 |
) |
| |
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Accrued liabilities as of September 30, 2011
|
|
$ |
|
|
$ |
1 |
|
$ |
25 |
|
$ |
84 |
|
$ |
6 |
|
$ |
6 |
|
$ |
2 |
|
$ |
124 |
|
| |
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Current portion of restructuring reserves
|
|
$ |
|
|
$ |
1 |
|
$ |
24 |
|
$ |
30 |
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$ |
6 |
|
$ |
6 |
|
$ |
2 |
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$ |
69 |
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|
Long-term portion of restructuring reserve
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|
|
|
|
|
|
|
1 |
|
|
54 |
|
|
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|
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|
|
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|
55 |
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|
Estimated additional future charges for current restructuring projects
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Estimated additional charges within one year
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|
|
|
|
|
|
|
1 |
|
|
7 |
|
|
3 |
|
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|
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|
11 |
|
|
Estimated additional charges beyond one year
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24 |
|
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|
24 |
|
Details with respect to cash and non-cash restructuring charges for the periods ended September 30, 2011 and 2010 by initiative are provided below (dollars in millions):
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Three Months Ended
September 30, 2011 |
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Nine Months Ended
September 30, 2011 |
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Cash charges:
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|
|
|
|
|
|
| |
2011 charges for 2006 and prior initiatives
|
|
$ |
|
|
$ |
2 |
|
| |
2011 charges for 2009 initiatives
|
|
|
2 |
|
|
5 |
|
| |
2011 charges for 2010 initiatives
|
|
|
2 |
|
|
5 |
|
| |
2011 charges for 2011 initiatives
|
|
|
99 |
|
|
110 |
|
|
Reversal of reserves no longer required
|
|
|
(1 |
) |
|
(4 |
) |
|
Non-cash charges
|
|
|
53 |
|
|
53 |
|
| |
|
|
|
|
|
|
Total 2011 Restructuring, Impairment and Plant Closing Costs
|
|
$ |
155 |
|
$ |
171 |
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| |
|
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Three Months Ended
September 30, 2010 |
|
Nine Months Ended
September 30, 2010 |
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Cash charges:
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|
|
|
|
|
|
| |
2010 charges for 2006 and prior initiatives
|
|
$ |
|
|
$ |
1 |
|
| |
2010 charges for 2009 initiatives
|
|
|
2 |
|
|
7 |
|
| |
2010 charges for 2010 initiatives
|
|
|
2 |
|
|
22 |
|
|
Reversal of reserves no longer required
|
|
|
|
|
|
(6 |
) |
| |
|
|
|
|
|
|
Total 2010 Restructuring, Impairment and Plant Closing Costs
|
|
$ |
4 |
|
$ |
24 |
|
| |
|
|
|
|
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During the nine months ended September 30, 2011, our Advanced Materials segment recorded net charges of $27 million primarily related to the reorganization of our global business structure. We expect to incur additional charges of $1 million through December 31, 2012, related to the relocation of our divisional headquarters from Basel, Switzerland to The Woodlands, Texas.
On September 27, 2011, we announced plans to implement a significant restructuring of our Textile Effects business, including a potential 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 business' long-term global competitiveness. Those plans are currently subject to employee consultation and accordingly provisional in nature. In connection with this plan, during the third quarter of 2011, we recorded a charge of $73 million for probable workforce reduction and $53 million for the impairment of long-lived assets at our Basel, Switzerland manufacturing facility. For purposes of calculating the impairment charge, the fair value of the Basel, Switzerland manufacturing facility was based on the discounted cash flows of that facility. We expect to incur additional restructuring and plant closing charges of approximately $31 million through 2013. In addition, during the nine months ended September 30, 2011, our Textile Effects segment recorded charges of $10 million of which $5 million related to simplification of the commercial organization and optimization of our distribution network, $2 million related to non-workforce reductions incurred for the consolidation of our Switzerland manufacturing facilities, and $2 million related to the consolidation of our North Carolina sites. We reversed charges of $3 million for workforce reductions at our production facility in Langweid, Germany and the consolidation of manufacturing activities and processes at our site in Basel, Switzerland because these changes were no longer required.
During the nine months ended September 30, 2011, our Pigments segment recorded charges of $9 million of which $5 million related to the closure of our Grimsby, U.K. plant and $3 million related to workforce reductions at our Umbogintwini, South Africa plant. We expect to incur additional charges of $3 million through December 31, 2012, primarily related to the closure of our Grimsby, U.K. plant.
During the nine months ended September 30, 2011, we recorded charges of $2 million in Corporate and other primarily related to workforce reductions in connection with a reorganization and regional consolidation of our transactional accounting activities.
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