Other Charges

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

2023 Other Charges

Other charges were $22 million for the quarter and $40 million for the six months ended June 30, 2023, respectively. Costs primarily related to severance in the Engineering segment and expenses incurred due to the intercompany reorganization for the quarter and six month period ended June 30, 2023, respectively. Other charges for the quarter and year-to-date periods had an associated net income tax benefit of $34 million and $79 million, respectively, primarily comprised of a benefit of $124 million related to the resolution of a U.S. income tax audit, partially offset by an accrual of $85 million for the potential settlement of an international income tax matter, both recorded in the first quarter.

The following table summarizes the activities related to the company's pre-tax Other charges for the six months ended June 30, 2023:


	Six Months Ended June 30, 2023
(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Other charges		Total other charges




Balance, December 31, 2022	$	281	$	27	$	308	$	12	$	320
2023 Other charges	24		—		24		16		40
Less: Cash payments / receipts	(100)		(1)		(101)		—		(101)
Less: Non-cash charges	—		—		—		7		7
Foreign currency translation and other	(3)		—		(3)		—		(3)
Balance, June 30, 2023	$	202	$	26	$	228	$	35	$	263

2022 Other Charges

Russia-Ukraine Conflict

In response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia. As a result, Linde has reassessed its ability to control its Russian subsidiaries and determined that as of June 30, 2022 it can no longer exercise control over these entities. As such, Linde has deconsolidated its Russian gas and engineering business entities as of June 30, 2022. The deconsolidation of the company's Russian gas and engineering business entities resulted in a loss of $787 million ($730 million after tax) for the quarter and six months ended June 30, 2022.

The fair value of Linde’s Russian subsidiaries was determined using a probability weighted discounted cash flow model, which resulted in the recognition of a $407 million loss on deconsolidation when compared to the carrying value of the entities. This loss is recorded within other charges in the consolidated statements of income.

Upon deconsolidation an investment was recorded, which represents the fair value of net assets. The company did not receive any consideration, cash or otherwise, as part of the deconsolidation. Linde will maintain its interest in its Russian subsidiaries and will continue to comply with sanctions and government restrictions. The investment will be monitored for impairment in future periods.

Receivables, primarily loans receivable, with newly deconsolidated entities were reassessed for collectability resulting in a write-off of approximately $380 million.

Other charges related specifically to the Russia-Ukraine conflict were $114 million ($84 million after tax) for the quarter and six months ended June 30, 2022, and are primarily comprised of impairments of assets which are maintained by international entities in support of the Russian business.

Other charges

Other charges were $92 million and $88 million ($75 million and $74 million, after tax) for the quarter and six months ended June 30, 2022, respectively, primarily related to the impairment of an equity method investment in the EMEA segment.

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 statements 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.