Restructuring and Other (Income) Charges, net

We continually perform strategic reviews and assess the return on our operations which sometimes results in a plan to restructure the business. The cost and benefit of these strategic restructuring initiatives are recorded as restructuring and other (income) charges, net recorded within Restructuring and other (income) charges, net on our consolidated statement of operations. These costs are excluded from our operating segment results.

We record an accrual for severance and other non-recurring costs under the provisions of the relevant accounting guidance. Additionally, in some restructuring plans write-downs of long-lived assets may occur. Two types of assets are impacted: assets to be disposed of by sale and assets to be abandoned. Assets to be disposed of by sale are measured at the lower of carrying amount or estimated net proceeds from the sale. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered. The useful lives of assets to be abandoned that have a remaining future service potential are adjusted and depreciation is recorded over the adjusted useful life. Below provides detail of the restructuring and other (income) charges, net incurred.

2017 activities

In January 2017, we initiated a reorganization to streamline our leadership team, flatten the organization and reduce costs. Because of this reorganization, we recorded $1.3 million, in severance and other employee-related costs for the year ended December 31, 2017.

During the year ended December 31, 2017, we also recorded $2.4 million of additional miscellaneous exit costs primarily associated with the exit of our Performance Chemicals' manufacturing operations in Palmeira, Santa Catarina, Brazil which began in the fourth quarter of 2016 (see 2016 activities below).

2016 activities

As a result of continued deteriorating market conditions within the South America region, on October 31, 2016, our Board of Directors approved a plan to exit our Performance Chemicals' manufacturing operations in Palmeira, Santa Catarina, Brazil. As a result, we recorded a non-cash pre-tax impairment charge to property, plant and equipment in the amount of $30.2 million and recorded severance costs of $1.8 million. The severance costs began to be paid in the fourth quarter of 2016. Refinery production ceased before year end, and the facility was decommissioned in 2017. We recorded $2.6 million of additional miscellaneous exit costs during the year ended December 31, 2016.

During the first quarter of 2016, we announced the closure of the Performance Chemicals' derivatives operation in Duque de Caxias, Rio de Janeiro, Brazil. As a result of this closure, we recorded $0.1 million impairment charge on fixed assets, $1.8 million in severance and other employee-related costs and $1.7 million of additional miscellaneous exit costs during year ended December 31, 2016.

During the first quarter of 2016, we also announced a company-wide restructuring to better align our workforce in light of changing macroeconomic and market realities. The restructuring decision resulted in workforce reductions at several of our locations. As a result, during the year ended December 31, 2016, we recorded severance and other employee-related charges of $2.7 million ($1.9 million related to Performance Chemicals segment and $0.8 million related to Performance Materials segment). We also recorded an impairment charge on fixed assets of $0.3 million in the year ended December 31, 2016 (related to the Performance Chemicals segment).

2015 activities

During 2015, we sold our 60 percent interest in a subsidiary in China for cash proceeds of $11.5 million and recorded a gain on the sales of the subsidiary of $10.3 million. Prior to its sale, this subsidiary operated under our Performance Materials operating segment. Additionally during 2015, we recognized income of $1.2 million associated with the sale of our Performance Materials' air purification business in 2014.

As part of a plan that was implemented to restructure a portion of our operations during 2015, we recorded an impairment of $4.0 million to write down inventory and property, plant and equipment associated with certain manufacturing operations of our Performance Chemicals segment.

Detail on the restructuring charges and asset disposal activities is provided below.



	Years Ended December 31,
In millions	2017		2016		2015
Restructuring and other (income) charges, net
Gain on sale of assets and businesses	$	—	$	—	$	(11.5	)
Severance and other employee-related costs ⁽¹⁾	1.3		6.3		—
Asset write-downs ⁽²⁾	—		30.6		4.0
Other (income) charges, net ⁽³⁾	2.4		4.3		—
Total restructuring and other (income) charges, net	$	3.7	$	41.2	$	(7.5	)

_______________


(1)	Represents severance and employee benefit charges.


(2)	Primarily represents accelerated depreciation and impairment charges on long-lived assets, which were or are to be abandoned. To the extent incurred the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations due to facility shutdowns are also included within the asset write-downs.


(3)	Primarily represents costs associated with rental payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable developments on previously recorded exit costs as recoveries associated with restructuring activities.

Roll forward of Restructuring Reserves

The following table shows a roll forward of restructuring reserves that will result in cash spending.



Balance at		Change in	Cash				Balance at		Change in	Cash				Balance at
12/31/2015 ⁽¹⁾		Reserve ⁽²⁾	Payments		Other ⁽³⁾		12/31/2016 ⁽¹⁾		Reserve ⁽²⁾	Payments		Other ⁽³⁾		12/31/2017 ⁽¹⁾
$	—	10.6	(8.3	)	(0.1	)	$	2.2	3.7	(5.5	)	(0.2	)	$	0.2

_______________


(1)	Included in "Accrued Expenses" on the consolidated balance sheet.


(2)	Includes severance and other employee-related costs, exited leases, contract terminations and other miscellaneous exit costs. Any asset write-downs including accelerated depreciation and impairment charges are not included in the above table.


(3)	Primarily non-cash charges and foreign currency translation adjustments.