Quarterly report pursuant to Section 13 or 15(d)

RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

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RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
6 Months Ended
Jun. 30, 2013
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS  
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

        As of June 30, 2013 and December 31, 2012, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):

 
  Workforce
reductions(1)
  Demolition and
decommissioning
  Non-cancelable
lease and
contract
termination
costs
  Other
restructuring
costs
  Total(2)  

Accrued liabilities as of January 1, 2013

  $ 90   $   $ 15   $   $ 105  

2013 charges for 2009 initiatives

                1     1  

2013 charges for 2011 initiatives

    1     8     19     2     30  

2013 charges for 2012 initiatives

    21             10     31  

2013 charges for 2013 initiatives

    13             1     14  

Reversal of reserves no longer required

    (9 )               (9 )

2013 payments for 2008 and prior initiatives

    (1 )               (1 )

2013 payments for 2009 initiatives

    (1 )           (1 )   (2 )

2013 payments for 2011 initiatives

    (7 )   (8 )   (1 )   (2 )   (18 )

2013 payments for 2012 initiatives

    (18 )           (10 )   (28 )

2013 payments for 2013 initiatives

    (2 )           (1 )   (3 )

Net activity of discontinued operations

            (2 )       (2 )

Foreign currency effect on liability balance

    (3 )               (3 )
                       

Accrued liabilities as of June 30, 2013

  $ 84   $   $ 31   $   $ 115  
                       

(1)
The workforce reduction reserves relate to the termination of 814 positions, of which 683 positions had not been terminated as of June 30, 2013.

(2)
Accrued liabilities by initiatives were as follows (dollars in millions):

 
  June 30,
2013
  December 31,
2012
 

2008 and prior initiatives

  $ 1   $ 2  

2009 initiatives

    5     7  

2010 initiatives

    9     9  

2011 initiatives

    41     34  

2012 initiatives

    48     53  

2013 initiatives

    11      
           

Total

  $ 115   $ 105  
           

        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   Discontinued
Operations
  Corporate
and
Other
  Total  

Accrued liabilities as of January 1, 2013

  $ 27   $   $ 27   $ 42   $ 1   $ 6   $ 2   $ 105  

2013 charges for 2009 initiatives

                    1             1  

2013 charges for 2011 initiatives

                30                 30  

2013 charges for 2012 initiatives

    3         28                     31  

2013 charges for 2013 initiatives

        4             2         8     14  

Reversal of reserves no longer required

    (5 )       (2 )   (2 )               (9 )

2013 payments for 2008 and prior initiatives

                (1 )               (1 )

2013 payments for 2009 initiatives

                    (2 )           (2 )

2013 payments for 2011 initiatives

                (18 )               (18 )

2013 payments for 2012 initiatives

    (7 )       (20 )               (1 )   (28 )

2013 payments for 2013 initiatives

        (2 )                   (1 )   (3 )

Net activity of discontinued operations

                        (2 )       (2 )

Foreign currency effect on liability balance

    (1 )       (1 )   (1 )               (3 )
                                   

Accrued liabilities as of June 30, 2013

  $ 17   $ 2   $ 32   $ 50   $ 2   $ 4   $ 8   $ 115  
                                   

Current portion of restructuring reserves

  $ 10   $ 2   $ 30   $ 27   $ 2   $ 4   $ 8   $ 83  

Long-term portion of restructuring reserves

    7         2     23                 32  

Estimated additional future charges for current restructuring projects

                                                 

Estimated additional charges within one year

        1     7     66                 74  

Estimated additional charges beyond one year

                                 

        Details with respect to cash and non-cash restructuring charges for the periods ended June 30, 2013 and 2012 by initiative are provided below (dollars in millions):

 
  Three months
ended
June 30, 2013
  Six months
ended
June 30, 2013
 

Cash charges:

             

2013 charges for 2009 initiatives

  $ 1   $ 1  

2013 charges for 2011 initiatives

    9     30  

2013 charges for 2012 initiatives

    8     31  

2013 charges for 2013 initiatives

    12     14  

Pension related charges

    1     5  

Reversal of reserves no longer required

    (2 )   (9 )

Non-cash charges

        1  
           

Total 2013 Restructuring, Impairment and Plant Closing Costs

  $ 29   $ 73  
           


 

 
  Three months
ended
June 30, 2012
  Six months
ended
June 30, 2012
 

Cash charges:

             

2012 charges for 2007 and prior initiatives

  $   $ 2  

2012 charges for 2009 initiatives

    3     4  

2012 charges for 2010 initiatives

    1     1  

2012 charges for 2011 initiatives

    1     4  

2012 charges for 2012 initiatives

    1     6  

Reversal of reserves no longer required

    (1 )   (13 )

Non-cash charges

        1  
           

Total 2012 Restructuring, Impairment and Plant Closing Costs

  $ 5   $ 5  
           

2013 RESTRUCTURING ACTIVITIES

        During the six months ended June 30, 2013, our Polyurethanes segment recorded charges of $3 million and reversed charges of $5 million related to workforce reductions in association with our program to reduce annualized fixed costs by approximately $75 million. Our Polyurethanes segment also recorded pension-related settlement charges of $5 million related to this program.

        During the six months ended June 30, 2013, our Performance Products segment recorded charges of $4 million primarily related to workforce reductions in our Australian operation. We expect to incur additional charges of $1 million through December 2013, also related to this initiative.

        During the six months ended June 30, 2013, our Advanced Materials segment recorded charges of $28 million primarily related to workforce reductions in association with our global transformational change program designed to improve the segment's manufacturing efficiencies. Our Advanced Materials segment also recorded a $1 million noncash charge for asset impairments and reversed charges of $2 million related to this initiative. We expect to incur additional charges of $7 million through March 2014, also related to this initiative.

        On September 27, 2011, we announced plans to implement a significant restructuring of our Textile Effects business, 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. In connection with this plan, during the six months ended June 30, 2013, our Textile Effects segment recorded charges of $19 million for long-term fixed cost contracts, $8 million for decommissioning, $2 million for other restructuring and $1 million for workforce reduction and reversed charges of $2 million related to workforce reduction associated with this initiative. We expect to incur additional charges of $66 million through March 2014, also related to this initiative.

        During the six months ended June 30, 2013, our Pigments segment recorded charges of $3 million primarily related to the closure of our Grimsby, U.K. plant.

        During the six months ended June 30, 2013, our Corporate and other segment recorded charges of $8 million primarily related to workforce reductions in association with a reorganization of our global information technology organization.

2012 RESTRUCTURING ACTIVITIES

        During the six months ended June 30, 2012, our Polyurethanes segment recorded charges of $5 million primarily related to fixed cost reduction programs.

        During the six months ended June 30, 2012, our Advanced Materials segment recorded charges of $3 million primarily related to the reorganization of our global business structure and 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 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. In connection with this plan, during the six months ended June 30, 2012, we recorded restructuring charges of $3 million and a $1 million noncash charge for asset impairments. In addition, during the six months ended June 30, 2012, our Textile Effects segment recorded charges of $2 million primarily related to the closure of our St. Fons, France facility and a global transfer pricing initiative. Also during the six months ended June 30, 2012, we reversed $13 million of reserves that were primarily related to workforce reductions that were no longer required at our production facility in Langweid, Germany, the consolidation of manufacturing activities and processes at our site in Basel, Switzerland and closure of our production facilities in Basel, Switzerland.

        During the six months ended June 30, 2012, our Pigments segment recorded charges of $3 million related to the closure of our Grimsby, U.K. plant.