Cost Reduction Programs and Other Charges

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Cost Reduction Programs and Other Charges

2020 Charges

Cost reduction programs and other charges were $249 million and $380 million for the quarter and six months ended June 30, 2020, respectively ($187 million and $282 million, after tax). The following table summarizes the activities related to the company's cost reduction charges for the quarter and six months ended June 30, 2020:


	Quarter Ended June 30, 2020
(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total
Americas	$	25	$	8	$	33	$	6	$	39
EMEA	112		4		116		(3)		113
APAC	1		—		1		(5)		(4)
Engineering	7		7		14		7		21
Other	47		2		49		31		80
Total	$	192	$	21	$	213	$	36	$	249

	Six Months Ended June 30, 2020
(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total
Americas	$	31	$	23	$	54	$	6	$	60
EMEA	138		4		142		—		142
APAC	3		2		5		3		8
Engineering	21		7		28		8		36
Other	57		5		62		72		134
Total	$	250	$	41	$	291	$	89	$	380

Cost Reduction Programs

Total cost reduction program related charges were $213 million and $291 million for the quarter and six months ended June 30, 2020, respectively ($151 million and $207 million after tax).

Severance costs

Severance costs are $192 million and $250 million for the quarter and six months ended June 30, 2020, respectively. As of June 30, 2020 these actions were substantially complete, with the remainder anticipated to be completed by the end of 2021.

Other cost reduction charges

Other cost reduction charges of $21 million and $41 million for the quarter and six months ended June 30, 2020, respectively, are primarily charges related to the execution of the company's synergistic actions including location consolidations and business rationalization projects, software and process harmonization, and associated non-recurring costs.

Merger-related Costs and Other Charges

Linde incurred merger-related costs and other charges which totaled $36 million and $89 million ($36 million and $75 million after tax) for the quarter and six months ended June 30, 2020, respectively.

Cash Requirements

The total cash requirements of the cost reduction program and other charges during the six months ended June 30, 2020 are estimated to be approximately $296 million and are expected to be paid through 2022. Total cost reduction programs and other charges, net of payments in the condensed consolidated statements of cash flows for the six months ended June 30, 2020 also reflects the impact of cash payments of liabilities, including merger-related tax liabilities, accrued as of December 31, 2019.

The following table summarizes the activities related to the company's cost reduction related charges for the six months ended June 30, 2020:


(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total




Balance, December 31, 2019	$	117	$	16	$	133	$	67	$	200
2020 Cost Reduction Programs and Other Charges	250		41		291		89		380
Less: Cash payments	(64)		(13)		(77)		(37)		(114)
Less: Non-cash charges	—		(24)		(24)		(64)		(88)
Foreign currency translation and other	1		1		2		2		4
Balance, June 30, 2020	$	304	$	21	$	325	$	57	$	382

2019 Charges

Cost reduction programs and other charges were $141 million and $230 million for the quarter and six months ended June 30, 2019, respectively ($113 million and $194 million after tax), including merger-related costs of $65 million and $121 million for the quarter and six months ended June 30, 2019, respectively ($52 million and $105 million after tax) and synergy-related charges, primarily severance, of $76 million and $109 million for the quarter and six months ended June 30, 2019, respectively ($61 million and $89 million after tax).

Classification in the condensed consolidated financial statements

The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated statement of cash flows, the impact of these costs, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 10 - Segments, Linde excluded these costs from its management definition of segment operating profit; a reconciliation of segment operating profit to consolidated operating profit is shown within the segment operating profit table.