NOTE 5 – Impairment and Restructuring Charges

In 2017, the Company recorded $38 million of pre-tax restructuring charges. During the first quarter of 2017, the Company implemented an organizational restructuring effort in Argentina in order to achieve a more competitive cost position. The Company notified the local labor union of a planned reduction in workforce, which resulted in a strike by the labor union and an interruption of manufacturing activities during the second quarter of 2017. The Company finalized a new labor agreement with the labor union in the second quarter, ending the strike on June 1, 2017. For the year ended December 31, 2017, the Company recorded total pre-tax restructuring-related charges in Argentina of $17 million for employee-related severance and other costs.

During the second quarter of 2017, the Company announced a Finance Transformation initiative in North America for the U.S. and Canada businesses to strengthen organizational capabilities and drive efficiencies to support the growth strategy of the Company. For the year ended December 31, 2017, the Company recorded pre-tax restructuring charges of $6 million ($3 million of severance costs and $3 million of other costs) related to this initiative. The Company expects to incur between $1 million and $2 million of additional employee-related severance and other costs in 2018.

During the fourth quarter of 2017, the Company recorded $13 million of pre-tax restructuring charges related to its leaf extraction process in Brazil. The charges consisted of $6 million of abandonment of certain assets, $6 million of inventory write downs and $1 million related to other costs, including employee-related severance costs. The Company expects to incur $1 million of additional other costs in 2018.

Additionally for the year ended December 31, 2017, the Company recorded $2 million of other pre-tax restructuring charges including other employee-related severance costs in North America and a refinement of estimates for prior year restructuring activities.

In 2016, the Company recorded $19 million of restructuring charges consisting of $11 million of employee-related severance and other costs due to the execution of global information technology outsourcing contracts, $6 million of employee-related severance costs associated with the Company’s optimization initiatives in North America and South America, and $2 million of costs attributable to the 2015 Port Colborne plant sale.

A summary of the Company’s severance accrual at December 31, 2017, is as follows (in millions):


Balance in severance accrual as of December 31, 2016	$	7
Restructuring charge for employee-related severance costs:
Argentina		15
North America Finance Transformation		3
Other		3
Prior year restructuring activities		(2)
Payments made to terminated employees		(15)
Balance in severance accrual as of December 31, 2017	$	11

Of the $11 million severance accrual at December 31, 2017, $10 million is expected to be paid within the next 12 months.

The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise) as of October 1 of each year. No goodwill impairment was recognized in the fourth quarters of 2017, 2016, or 2015 related to the Company’s annual impairment testing.