Restructuring Costs

9 Months Ended

Sep. 30, 2021

Restructuring Charges [Abstract]

Restructuring Costs

Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, we recognize eligible separation costs at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, we recognize eligible costs when management has approved the program, the affected employees have been properly notified and the costs are estimable.

Restructuring costs for the three and nine months ended September 30, 2021 and 2020 were as follows:

(Millions of dollars)	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
Employee separations 1	$	17	$	98	$	79	$	232
Contract terminations 1	1		—		1		3
Long-lived asset impairments 1	8		2		12		25
Other 2	9		12		32		36
Total restructuring costs	$	35	$	112	$	124	$	296
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, inventory write-downs, equipment relocation and project management, all of which are primarily included in Cost of goods sold.

For the nine months ended September 30, 2021, the restructuring costs were primarily related to actions across the company including strategic actions to address certain product lines. For the nine months ended September 30, 2020, the restructuring costs were primarily related to various voluntary and involuntary employee separation programs implemented across the company and strategic actions to address certain product lines, which were partially offset by a gain on the sale of a manufacturing facility that had been closed.

In 2021, all restructuring costs are excluded from segment profit. In 2020, only certain restructuring costs were excluded from segment profit. Restructuring costs included in segment profit were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
(Millions of dollars)	2021		2020		2021		2020
Construction Industries	$	—	$	2	$	—	$	7
Resource Industries	—		2		—		18
Energy & Transportation	—		18		—		39
Financial Products Segment	—		1		—		2

The following table summarizes the 2021 and 2020 employee separation activity:

(Millions of dollars)	Nine Months Ended September 30
	2021		2020
Liability balance, beginning of period	$	164	$	48
Increase in liability (separation charges)	79		232
Reduction in liability (payments)	(159)		(131)
Liability balance, end of period	$	84	$	149

Most of the liability balance at September 30, 2021 is expected to be paid in 2021 and 2022.